Freddie Mac: Guide Bulletin 2021-24: Servicing Updates
June 30, 2021
Source: Freddie Mac
COVID-19 FORECLOSURE MORATORIUM
The foreclosure moratorium last announced in Guide Bulletin 2021-23 will expire on July 31, 2021. Between July 31, 2021 and when the Consumer Financial Protection Bureau (CFPB) final rule dated June 28, 2021 goes into effect on August 31, 2021, Servicers are prohibited from making any new foreclosure referrals or first legal filings that would be prohibited by CFPB’s final rule. Once the CFPB rule is in effect, Servicers must comply with applicable law.
FLEX MODIFICATION FOR BORROWERS WITH A COVID-19 HARDSHIP
Effective August 31, 2021, but Servicers can implement the changes earlier, when operationally possible
We are announcing temporary changes to the Flex Modification to further assist Borrowers who have been negatively impacted by the COVID-19 pandemic and who may require additional payment relief beyond what is currently available. To provide this additional relief, we are adjusting the Flex Modification waterfall so that a Mortgage with a mark-to-market-loan-to-value (MTMLTV) ratio of less than 80% may receive an interest rate reduction. These temporary changes apply only to Borrowers who meet the following eligibility criteria:
• The Borrower must have a COVID-19 related hardship or be subject to an evaluation under the criteria described in Bulletin 2020-15 for “Flex Modification evaluations for failed COVID-19 Payment Deferral”; and
• The Mortgage must have been current or less than two months delinquent as of the National Emergency Declaration effective date of March 1, 2020; and
• The Borrower must be at least 90 days delinquent as of the evaluation date for the COVID-19 Flex Modification or must be at least 60 days delinquent and subject to an evaluation under the criteria described in Bulletin 2020-15 for “Flex Modification evaluations for failed COVID-19 Payment Deferral”
These changes impact the waterfall Servicers use to determine the terms of the Flex Modification. Most steps in the process will remain in effect. For ease of reference, we are including the waterfall below.
Effective August 31, 2021, Servicers must use the lesser of Freddie Mac’s posted Flex Modification interest rate or the pre-modification interest rate, regardless of MTMLTV ratio, for all Borrowers who meet the criteria described in the above bullets. All other applicable Flex Modification requirements, including reduced eligibility requirements communicated in Bulletins 2020-10 and 2020-15 and the requirements in Guide Sections 9206.2 through 9206.19, remain in effect.
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