Compliance Calendar

• Our investor reporting cycle will change to align with an industry standard monthly calendar cycle, and we will also encourage and accept daily loan-level reporting.
• Freddie Mac will draft monthly principal and interest and payoff remittances directly from the Servicer.

Bulletin 2016-15

Bulletin 2017-4

Bulletin 2017-15

Bulletin 2019-06 (Most Recent Revised and Clarified Requirements)

Accessory unit comparable sale selection

Previously, Freddie Mac required an appraisal to include at least one comparable sale with an accessory unit when the subject 1-unit property has a legal accessory unit. Based on Seller feedback, we recognize there are situations where comparable sales with an accessory unit are limited.

To provide flexibility and expand access to credit, we are modifying this requirement to provide alternatives for the appraiser to consider when a comparable sale with an accessory unit is not available.

If a comparable sale with an accessory unit is not available in the subject neighborhood, the appraiser can use a comparable sale in the subject neighborhood without an accessory unit as long as the appraiser can justify and support such use in the appraisal report. Freddie Mac will purchase eligible Mortgages secured by a property with an accessory unit if the appraiser can develop an accurate opinion of market value for the property. Refer to Guide Section 5601.12 for additional guidance on appraising a property with an accessory unit.

Additionally, to provide greater specificity, we are identifying an accessory unit as an additional living space that includes at least a kitchen, a bathroom, and a separate entrance and is independent of the primary dwelling unit.

Guide impact: Section 5601.12

Appraisal re-use for a subsequent transaction

Previously, an appraisal update was required for a subsequent transaction, regardless of the time elapsed from the effective date of the original appraisal. Based on Seller feedback and to provide efficiency and potential cost savings, we are revising our requirement to state that an appraisal update is not required unless the effective date of the appraisal is more than 120 days prior to the new Note Date for the subsequent “no cash-out” refinance.

Guide impact: Section 5601.8

In response to Seller feedback, we are providing Sellers with the flexibility to use Modification Construction Conversion Documentation for Mortgages secured by Manufactured Homes.

We are also updating delivery instructions to reflect this change. Guide impacts: Sections 4602.3 and 6302.28

CHOICEHome is our innovative, affordable mortgage product for Manufactured Homes that are titled as real property and have features and characteristics of a site-built home. This offering expands availability of financing for manufactured housing for families with moderate incomes and complements our existing programs for Borrowers with low- and very-low incomes.

A Manufactured Home is granted CHOICEHome certification and is eligible for CHOICEHome financing if the Manufactured Home meets certain specifications, such as a higher pitch roof, a permanent foundation with masonry perimeter, dry wall throughout, energy-efficient features such as additional insulation and windows with a low-e rating and a garage or carport.

Additional requirements for a Mortgage secured by a CHOICEHome provided in the revised Section 5703.9 include, but are not limited to, the following:

Freddie Mac prior approval

Although the eligibility requirements are provided in the Guide, a Seller must obtain Freddie Mac’s written approval before selling Mortgages secured by a CHOICEHome to Freddie Mac. Sellers should contact their Freddie Mac representative or the Customer Support Contact Center at 800-FREDDIE for more information.

Guide impacts

The contents of existing Section 5703.9 are moving to new Section 5703.10. We are also updating Sections 5703.9, 6302.25 and Guide Exhibits 19 and 34 to reflect the CHOICEHome requirements.

Homeownership education is required for certain Mortgages, as described in Section 5103.6. To align with the information typically included in the homeownership education completion certificates, we are updating the Guide to specify that homeownership education programs “provided by” rather than “developed by” mortgage insurance companies, HUD-approved counseling agencies, Housing Finance Agencies or Community Development Financial Institutions are acceptable.

Delivery requirements

To provide greater specificity, Guide Chapter 6302 is being updated to:

• Describe all valid values for ULDD Data Points Counseling Confirmation Type/Counseling Confirmation Type Other Description (Sort IDs 576/577) and Counseling Format Type/Counseling Format Type Other Description (Sort IDs 578/579) for Home Possible Mortgages and HomeOne Mortgages
• Include new Section 6302.9(b)(ii) to reflect the delivery requirements of the ULDD Data Points noted above for homeownership education for any transaction when the credit reputation for all Borrowers is established using Noncredit Payment References, previously announced in Bulletin 2017-2

Guide impacts

We are updating Sections 5103.6, 6302.9, 6302.14 and 6302.41 to align with these changes.   

We are enhancing the functionality of Forms 483, 987E, 988SF, 989SF and 990SF as follows:

• Deleting the instruction page(s) and adding tooltips, which appear when a Seller hovers over certain fields in the forms
• Auto populating certain fields within the forms to eliminate reentering the same information within the form
• Added language requesting that the notary stamp is shaded over with a pencil or crayon for visibility
• Made minor language changes throughout the forms for specificity

Additionally, in Forms 987E and 483 we made the following edits:

·         Language referencing “Beneficiary Bank” has been replaced with “Receiving Bank”

These enhancements will provide flexibility and convenience for Seller/Servicers when completing these forms.

Guide impacts: Forms 483, 987E, 988SF, 989SF and 990SF

Based on Seller feedback, we are reviewing the functionality of Form 91 and are temporarily removing the automatic calculations from all subtotal fields within the form. Sellers using Form 91 must complete the calculations manually. No changes are being made to the form content. We will inform Sellers in a future communication when our analysis is complete and enhanced functionality is added back to Form 91. 

• B2-1-01, Occupancy Types: This topic was updated to align with the recent changes announced in Lender Letter LL 2019-04, Loan Level Price Adjustments for Second Homes.
• B2-3-05, Properties Affected by a Disaster: Minor edits were made to this topic to align with the Desktop Underwriter® (DU®) 10.3 updates. 
• B3-6-02, Debt-to-Income Ratios: We added a reference to high LTV refinance transactions to align with existing DTI policy. 
• B5-5.3-02, Loans with Resale Restrictions: Loan and Borrower Eligibility: Reverted an erroneous edit to occupancy requirements.

We have updated the Guide to clarify the following: 

▪ Texas Section 50(a)(6) loans are not eligible for remote notarization.  

▪ In alignment with the Guide to Delivering eMortgages, we are adding a reference that products that require special purpose legal documents are not eligible for delivery as eMortgages. 

Effective Date 

These changes are effective immediately.

The Investor Reporting Change Initiative (Initiative) will result in changes to Freddie Mac’s remittance cycles and reporting requirements for single-family Mortgages. Freddie Mac has determined that certain loan-level reporting requirements for Mortgages originated and delivered to Freddie Mac with a biweekly payment schedule in accordance with Section 4201.9 (“biweekly Mortgages”) must be modified. These modified requirements do not apply to Mortgages where the Servicer and Borrower agree to a biweekly payment plan in accordance with Section 8104.2 after the Mortgage has been sold to Freddie Mac.

Servicers must service biweekly Mortgages in accordance with the following requirements: 

• Reporting monthly principal and interest: Servicers must report the biweekly contractual principal and interest payment as stated on the Note. If a Servicer reports more than one payment in an Accounting Cycle, then the cumulative principal received and forecasted scheduled interest for that Accounting Cycle must be reflected in each reported loan-level transaction.
• Reporting DDLPI: Once the Initiative is implemented, Servicers must report the DDLPI for each biweekly installment. However, if the Due Date falls on the first day of the month, Servicers must report that DDLPI as the second day of the month.
• Reporting inactivation of biweekly Mortgages: Do not inactivate a biweekly Mortgage that becomes 120 days delinquent as ordinarily required by Section 8303.21. Instead, Servicers must report $0 principal and $0 scheduled interest, and not advance the DDLPI until at least one full biweekly payment is collected from the Borrower.

Note: If a Servicer attempts to inactivate a biweekly Mortgage that becomes 120 days delinquent by selecting “inactivation” in the Freddie Mac Service Loans application or reporting Loan Level Reporting exception code 40 (Inactivation), it will receive an edit. To clear the edit, Servicers must report $0 principal and $0 scheduled interest and not advance the DDLPI until at least one full biweekly payment is collected from the Borrower.

Guide impacts: Sections 4201.9, 8303.15 and 8303.21 and Exhibit 60

Effective for Mortgages with Settlement Dates on and after May 1, 2019 

Freddie Mac believes that reducing home utility costs places families in a better financial situation and helps preserve home affordability over time. Therefore, under our Duty to Serve plan, we have committed to facilitate the financing of energy efficiency improvements and energy efficient homes with the objective of helping more families across the United States attain and maintain home affordability. In support of our continuing efforts to preserve housing affordability, we are introducing GreenCHOICE Mortgages SM, Freddie Mac’s solution for energy efficient home improvements.

Selling requirements

The requirements for GreenCHOICE Mortgages, outlined in the table below, are found in new Guide Chapter 4606 and expand our support for homeowners looking to finance energy and/or water efficient improvements or purchase a home and finance energy and/or water efficient improvements through existing products. These changes will assist more low- and moderate-income Borrowers in becoming home owners and/or maintaining homeownership by allowing them to spend less on energy and/or water expenses each month and more towards their monthly housing expense.

Delivery requirements

We are updating the Guide to include special delivery requirements for GreenCHOICE Mortgages. Sellers must now deliver a new valid value of “J08” for ULDD Data Point Investor Feature Identifier (IFI) (Sort ID 368) to indicate a Mortgage is a GreenCHOICE Mortgage. 

Loan Selling Advisor® will be updated in support of these changes for Mortgages with Settlement Dates on and after May 1, 2019.

Credit Fee in Price

To help offset transactional costs, Freddie Mac will apply a $500 credit for Credit Fees in Price (the “GreenCHOICE Mortgage Credit”) when Sellers deliver IFI “J08.” Sellers must deliver the IFI in order to receive the GreenCHOICE Mortgage Credit.

Transfer of Servicing requirements

For GreenCHOICE Mortgages originated under the provisions of Chapter 4606 where energy and/or water efficiency improvements are completed after the Note Date, a Transfer of Servicing (TOS) involving such Mortgages is prohibited until all energy and/or water efficiency improvements have been completed and the appraiser has provided a completion report pursuant to Guide Section 4606.4.

For a TOS, the Transferor Servicer and Transferee Servicer each agree and acknowledge that Freddie Mac’s approval of the TOS is conditioned on each Servicer’s representation and warranty to Freddie Mac that each have met the additional requirements in updated Section 7101.4(b), which sets forth certain prohibited TOS. For example, a TOS involving Mortgages subject to outstanding requirements that must be met prior to a TOS (such as completion of all energy and/or water efficiency improvements for GreenCHOICE Mortgages sold to Freddie Mac under Chapter 4606) is prohibited. 

Servicing requirements 

As provided in new Section 8104.6, a Servicer that services any Mortgage that was permitted to be delivered to Freddie Mac prior to completion of improvements must, in addition to other Servicing requirements, comply with the Servicing requirements related to completion of such improvements. Such Servicing requirements include, but are not limited to, control of the completion escrow account (and application of any remaining funds), retention of certain documentation in the Mortgage file and receipt of a completion report.

Guide impacts

We are adding new Chapter 4606 and new Sections 3401.30 and 8104.6, deleting Chapter 4405 and updating Sections 3301.11, 3401.23, 4203.1, 4301.4, 4301.8, 5401.1, 5601.2, 5601.9, 5601.11, 6302.8, 6302.23, 6302.34, 7101.4 and Guide Exhibits 19 and 34.

Effective May 1, 2019
When the Initiative is implemented, Freddie Mac will process and settle mortgage modifications daily, except on the first Business Day of each month. We are updating the Guide to reflect this exception. However, Servicers will still have the ability to report daily, including on the first Business Day of the month.

Guide impact: Section 9206.18

The Board of Governors of the Federal Reserve System (“Board”) is amending Regulation D (Reserve Requirements of Depository Institutions) to revise the rate of interest paid on balances maintained to satisfy reserve balance requirements (“IORR”) and the rate of interest paid on excess balances (“IOER”) maintained at Federal Reserve Banks by or on behalf of eligible institutions. 

• IORR is 2.35 percent and IOER is 2.35 percent, a 0.05 percentage point decrease from their prior levels 

The amendments are intended to enhance the role of such rates of interest in maintaining the Federal funds rate into the target range established by the Federal Open Market Committee (“FOMC” or “Committee”).

• The Guide has been updated to clarify that completion escrow accounts must be custodial accounts that satisfy the criteria in the Servicing Guide. 
• This clarification aligns with existing policies in the Selling and Servicing Guides that apply to HomeStyle® Renovation Mortgages.

Maryland Senate Bill 512 adds the following new protections for federal or state employees affected by government shutdowns:

• Applies to actions for the foreclosure of a mortgage or deed-of-trust on an owner-occupied residential property
• The court shall stay the foreclosure proceedings if the defendent presents evidence satisfactory to the court that the defendant is a federal or state employee that is involuntarily furloughed from work without pay because of a government shutdown, regardless of whether the employee is required to report to work during the furlough
• The stay shall be granted for a time that the court considers reasonable, but not longer than 30 days after the end of the government shutdown without showing sufficient cause by a party to the action

The Illinois Department of Financial and Professional Regulation adopted rules to amend certain parts of its Residential Mortgage License Act that include independent loan processor licensing, as well as bond and advertising requirements. These provisions are effective immediately.

Utah Senate Bill 140 amends provisions related to real estate, including

• defines terms; 
• amends provisions regarding the Division of Real Estate's issuance of a citation; 
• establishes criteria and parameters for temporary authorization to act as a mortgage loan originator; 
• amends the grounds for disciplinary action against a sales agent, principal broker, or association broker;  
• permits a real estate appraiser to conduct an evaluation; and 
• makes technical and conforming changes.

Utah House Bill 247 repeals the following “RESPA Caption” requirement promulgated under Utah Code Ann. § 17-21-18.5(4)(a) & (b):

“(a) For recording a document that is subject to and complies with the Real Estate Settlement and Procedure Act, 12 U.S.C. Sec. 2601 et seq. for a residential property constructed for at least one family but no more than four families, the county recorder shall receive:

(i) $14 for each deed of conveyance;

(ii) $40 for each deed of trust; and

(iii) $14 for each assignment of a deed of trust when recorded concurrently with the assigned deed of trust.

(b) If a person submits for recording a document described in Subsection (4)(a), the person shall notify the county recorder by including the word ‘RESPA’ in at least 16 point font on the front page of each document.”

[Note: The 'RESPA' repeal impacts UT Deeds of Trusts and Assignments]

Utah Senate Bill 193 amends provisions enforced by the attorney general.  This bill

• modifies the applicability of the Protection of Personal Information Act;
• amends the penalty for a violation of the Protection of Personal Information Act or the Consumer Credit Protection Act; 
• establishes a statute of limitations for an enforcement action under the Protection of 16 Personal Information Act or the Consumer Credit Protection Act; 
• allows funds in the Attorney General Litigation Fund to be used for education and outreach on certain matters; 
• modifies the available remedies in an action under the Utah Antitrust Act; and 
• makes technical and conforming changes.

The Servicing Guide has been updated to include changes related to the following:

• Mortgage Insurance (MI) Termination Solicitations*

• Miscellaneous Revisions

Mortgage Insurance (MI) Termination Solicitations

In response to servicer feedback, we are clarifying Servicing Guide B-8.1-04, Termination of Conventional Mortgage Insurance to indicate that a servicer is authorized to solicit a borrower for MI termination based on original value only.

Effective Date

This policy clarification is effective immediately.

Miscellaneous Revisions

Eliminations and Rescissions of Foreclosure Sales Process Update. We have updated the Servicing Guide to reflect that servicers must access the Eliminations/Rescissions Daily Report on Fannie Mae Connect. We will no longer send the report to servicers via email.

In addition, while the process to submit a request for elimination and/or a rescission remains the same, the Elimination/Rescission Request Template has been updated to require the 9-digit Seller/Servicer ID number for each mortgage loan.

Updated Servicing Guide Topics

• E-4.1-02, Eliminations and Rescissions of Foreclosure Sales
• F-4-01, References to Fannie Mae's Website

Effective Date

The use of Fannie Mae Connect for the Elimination/Rescissions Daily Report is effective immediately. However, servicers may contact elimination_questions@fanniemae.com if there are questions about this report.

Reimbursement of Recording Costs in Connection with Charge-Offs**. In response to inquiries from our customers, we are updating the Servicing Guide to clarify that we will reimburse servicers for the cost to record a required release of lien in the real property records in connection with an approved mortgage loan charge-off.

Updated Servicing Guide Topics

• C-1.2-04, Satisfying the Mortgage Loan and Releasing the Lien
• C-1.2-05, Charging for a Release of Lien
• D1-1-02, Evaluating a First Lien Mortgage Loan for Charge-Off and Release of Lien
• F-1-05, Expense Reimbursement
• F-1-25, Requesting Fannie Mae’s Approval via Fannie Mae’s Servicing Solutions System
• F-4-01, List of Contacts

Effective Date

This policy clarification is effective for applicable recording costs that servicers incur on or after May 15, 2019.

**Policy change also applies to Home KeeperTM mortgage loans but is not applicable to Home Equity Conversion Mortgage (HECM) loans.

As of the date of this Circular, all Lender Appraisal Processing Program (LAPP) and all Individual (IND) cases must have a COE in the “Active or Pending” status before the appraisal can be requested. On a case-by-case basis, Loan Guaranty Service, or the VA Regional Loan Center of jurisdiction can authorize a waiver to allow appraisals to be requested through the appraisal system (WebLGY). 

We currently purchase ARMs, including those indexed to the London Interbank Offered Rate (LIBOR). Due to the anticipated discontinuance of the publication of the LIBOR index in 2021, we will no longer purchase LIBOR ARMs with Settlement Dates more than six months after the Note Date. This change is effective immediately and is being implemented in consultation with the FHFA.

We will continue to purchase newly originated LIBOR ARMs while we work with the industry on a LIBOR index transition plan.

Loan Selling Advisor® will be updated by May 21, 2019 to reflect this change.

Our ARM eligibility requirements in Guide Section 4401.3 and Guide Exhibit 17S, Available Mortgage Products, will be updated to reflect this change in a future Guide Bulletin.

Today, the Federal Housing Administration (FHA) is notifying FHA-approved mortgagees via this communication of an inconsistency in its Single Family Housing Policy Handbook 4000.1 (SF Handbook) update issued on March 27, 2019. The update highlights corrected borrower qualification language for the FHA-HAMP option in Section III.A.2.k.v.(B)(2) of the SF Handbook. 

The correction to the qualification criteria is in bold below and should read as follows: 

(2) Borrower Qualifications

The Mortgagee must ensure that the Borrower meets the following eligibility criteria for the FHA-HAMP Option: 

• The Mortgagee’s calculations show that the resulting monthly Mortgage Payment not exceeding 40 percent of the Borrower’s gross monthly income can be offered, provided that either:
  • the Borrower(s) existing front-end ratio is greater than 31 percent; or
  • 85 percent of the Borrower’s surplus income is insufficient to cure arrears within six months. 

The criteria noted above will be incorporated into a future update of the SF Handbook. In the interim, mortgagees should continue to utilize the correct evaluation process in the Loss Mitigation Home Retention Option Priority Waterfall in Section III.A.2.j.iii. 

We updated the Selling Guide to include changes related to the purchase and securitization of certain LIBOR ARM loans as previously announced in LL-2019-05.

• Sellers must comply with the ULDD Phase 3 requirements, including the HMDA data, for mortgages with application received dates on and after January 1, 2019 and delivery dates beginning on May 20, 2019

We are updating the delivery instructions for Home Possible Mortgages originated with gifts and grants from the Seller as the originating lender to align the implementation note guidance with what was previously announced in Bulletin 2017-11. The note guidance instructs Sellers to deliver the valid value of “Originating Lender” for ULDD Data Point, Down Payment Source Type (Sort ID 173), and “Grant” for ULDD Data Points, Down Payment Type/Down Payment Type Other Description (Sort IDs 175/176).

Loan Selling Advisor was updated on March 5, 2018 to accept the new valid values, which allows Sellers to begin delivering them as soon as they are able. Sellers will be required to deliver the new valid values on and after the ULDD Phase 3 mandate on May 20, 2019.

Guide impact: Section 6302.14