Compliance Calendar

For COFI ARMs with interest rate adjustments based on a lookback date after January 31, 2022, Servicers must use the Enterprise 11th District COFI Replacement Index.

The Federal Home Loan Bank of San Francisco will cease publishing the 11th District Monthly Weighted Average Cost of Funds Index (COFI) after the publication of the December 2021 index on January 31, 2022. As a result, Freddie Mac must select a replacement index for any Freddie Mac ARMs indexed to COFI to be used after January 31, 2022.

Freddie Mac has chosen a new index, called the Enterprise 11th District COFI Replacement Index, which will be based on the Federal Cost of Funds Index (Fed COFI) with a spread adjustment.

Freddie Mac will publish the Enterprise 11th District COFI Replacement Index on a dedicated web page on the last Business Day of every month starting on February 28, 2022 (for the month of January 2022). We will provide a link to the web page in a Servicing Bulletin closer to the time of the transition.

Most Freddie Mac COFI ARM Notes contain standard index replacement language stating that “If the Index is no longer available, the Note Holder will choose a new index which is based upon comparable information.”

Freddie Mac will conduct outreach to ascertain if a Servicer services Freddie Mac COFI ARMs with Notes that contain non-standard index replacement language. The Servicer must provide a copy of each Note that is representative of each variation of non-standard index replacement language and request instructions on how to proceed. Freddie Mac will contact the Servicer if further action is needed.

If the terms of the Note require other Servicing data changes, such as changes to the Margin, upon implementation of the Enterprise 11th District COFI Replacement Index, the Servicer must notify Freddie Mac of such changes via the Servicing Data Corrections tool available via Servicing Gateway.

On or before the date of the next mortgage interest rate adjustment that uses the Enterprise 11th District COFI Replacement Index, the Servicer must provide impacted Borrowers with written notice identifying the replacement index and stating where the index is posted. In addition, the Servicer must store a copy of this notice in the Freddie Mac mortgage file and send a copy of the notice to the Document Custodian with instructions to store the notice with the original Note.

To learn more about the COFI transition please visit the Freddie Mac Reference Rate web page, COFI FAQs and COFI Playbook.

PROPERTY INSPECTION

Effective February 1, 2022, but Servicers are encouraged to implement the changes immediately. This update supersedes the property inspection updates announced in Guide Bulletin 2020-7.

At the direction of FHFA, under the Servicing Alignment Initiative and jointly with Fannie Mae, we are simplifying our property inspection requirements to enable Servicers to manage Mortgage delinquencies more efficiently.

Guide Section 9202.12 currently requires Servicers to order a property inspection on or after the 60th day of Delinquency and to obtain the complete inspection report by the 75th day of Delinquency if it has not received a payment in the last 30 days or has not achieved Quality Right Party Contact (QRPC) in accordance with Section 9102.3. With this change, we now require the property inspection to be ordered by the 90th day of Delinquency, and for the complete inspection report to be obtained by the 120th day of Delinquency. We are also making the following additional changes to property inspection requirements:

• Providing an expanded list of circumstances when a Servicer must not complete a property inspection in a calendar month
• Instructing Servicers to document the mortgage file if extenuating circumstances cause inspection delays
• Adjusting an existing requirement so that if the property is found to be vacant or if occupancy is unknown, property inspections must continue if the Mortgage remains 90 or more days delinquent, regardless of QRPC and prospective resolution to the Delinquency

Refer to Section 9202.12 for a complete description of these changes.

Initial delinquency inspection

To simplify the servicer’s process and support our collateral management strategies, we updated the required initial delinquency inspection order date from no earlier than the 60th day of delinquency to no earlier than the 90th day of delinquency. We also provided additional clarifications, including when servicers are not permitted to complete an inspection when the property is borrower/tenant occupied.

Effective: Servicers are encouraged to implement this policy change immediately, but must do so by Feb. 1, 2022.

Mortgage insurance data process

In SVC-2010-09, we announced the requirement that servicers instruct mortgage insurance (MI) companies to release MI-related data to us. Mortgage loans with an MI application date after Oct. 1, 2014 are covered under MI master policies that include a provision requiring mortgage insurers to release MI-related data directly to Fannie Mae. We updated the Guide to further clarify that servicers must continue to instruct mortgage insurers to release data to us as applicable for mortgage loans insured under MI master policies in effect prior to Oct. 1, 2014.

The revised Mortgage Insurance Disclosure Instructions and Release Template is posted on our website and is now referenced in F-1-02, Escrow, Taxes, Assessments, and Insurance. We also removed F-2-07, Mortgage Insurer Contact Information for MI Disclosure Instructions and Release Forms, as this information is available by self-service options.

Effective: This policy update is effective immediately

This Bulletin announces updates to quality control, income and assets, user forms and certificates, and additional guide updates and reminders.

QUALITY CONTROL

Reverification of data received from Freddie Mac designated third-party service providers

Due to the reliability of automated reports obtained from Freddie Mac designated third-party service providers, we have updated the Guide to state that documentation of income, employment or sources of funds used in the original underwriting process received from a third-party service provider designated by Freddie Mac is not required to be reverified in certain instances. The report must be accessed directly from the service provider’s electronic database and the Mortgage file must contain no evidence of misrepresentations in connection with the Borrower’s application, documentation or with any part of the underwriting of the Mortgage.

Furthermore, if all of a Borrower’s qualifying income has been verified through an automated report obtained from a Freddie Mac designated third-party service provider, then the Seller’s quality control would not be required to obtain information from the Internal Revenue Service (IRS) using IRS Form 4506-C.

The list of Freddie Mac designated third-party service providers is available at our Asset and Income Modeler web page(opens in new window). For additional information and guidance, please refer to our FAQs(opens in new window).

Additionally, in conjunction with these updates, reverification requirements for Mortgages utilizing automated income and asset assessment with Loan Product Advisor offerings have been moved from Guide Chapters 5901, 5902 and 5903 to Chapter 3402.

Guide impacts: Sections 3402.5 through 3402.8, 5901.5, 5902.7 and 5903.5

E-mail reverifications of employment and income

We now permit e-mail reverifications of employment and income and have added requirements for these reverifications that are consistent with those for e-mail verifications completed for 10-day pre-closing verifications.

Guide impact: Section 3402.5

INCOME AND ASSETS

Age of tax return requirements

We have updated our age of tax return requirements, originally published in Bulletin 2021-2 for the 2020 tax year, to reflect dates specific to the 2021 tax year.

In addition, we have included requirements applicable in the event of a future IRS filing due date extension, which replace the requirements added with Bulletin 2021-16 that were based on the IRS filing due date extensions dates issued in May 2021.

Refer to Section 5302.4 for complete details.

Reminders

Sellers are encouraged to always confirm with the Borrower that the tax returns provided are those most recently filed with the IRS. Sellers are responsible for determining stable monthly income, which may require additional documentation and analysis.

The Seller must include a written analysis of the income and amount in the Mortgage file. In addition, all documentation used to establish stable monthly income must be retained in the Mortgage file.

Refer to Section 5304.1(d) for additional guidance about self-employed income when tax returns for the most recent calendar year are not yet available.

FAQs

For additional information and guidance, please refer to the FAQs for age of tax return requirements(opens in new window), originally published January 2021 and updated with this Bulletin.

Guide impacts: Sections 5302.4 and 5903.6

Home Equity Line of Credit (HELOC) as an eligible asset

We have specified that a HELOC is considered an eligible source of funds towards the Down Payment, Closing Costs and reserves, provided that the Mortgage file includes evidence that the HELOC is secured by the Borrower’s real property and that the HELOC proceeds have been disbursed to the Borrower.

Loan Product Advisor feedback messages will be updated at a later date to reflect HELOC proceeds as an eligible asset.

Guide impacts: Sections 5401.1, 5401.2 and 5501.3

USER FORMS AND CERTIFICATES

Loan Selling Advisor user identification and certification forms

Loan Selling Advisor authorized user and certification forms for Sellers, Selling Agents, Warehouse Lenders and Document Custodians have been retired. Sellers, Warehouse Lenders and Document Custodians may now designate their authorized users in Access Manager or a Freddie Mac Loan Advisor^® registration form (opens in new window).

Freddie Mac will continue to accept user identification forms until April 2, 2022. Sellers, Warehouse Lenders and Document Custodians are encouraged to review existing authorized user designations and may do so by running the User Application Access Report through Freddie Mac Access Manager (opens in new window).

Impacted forms include:

• Form 900, Loan Selling Advisor® Authorized User Identification and Certification Form

  Form 900SA, Loan Selling Advisor® Selling Agent Identification and Authorized User Role Form

  Form 900WHL, Loan Selling Advisor^® Warehouse Lender Authorized User Identification Form, and

  Form 901, Loan Selling Advisor® Document Custodian Authorized User Identification and Certification Form

Certificates of incumbency

Effective February 9, 2022

We are updating our certificates of incumbency forms to state that Freddie Mac may postpone a funding date or exercise applicable remedies under Section 3601.1 should a Seller/Servicer or Warehouse Lender fail to provide accurate signatures of authorized employees or roles delegated to authorized employees. Additionally, any new certificate of incumbency forms received will supersede any prior forms and will be binding for two years or until written notice to the contrary or a new form is received.

Impacted forms include:

• Form 988SF, Certificate of Incumbency for a Bank, Savings Bank, Savings and Loan Association, Credit Union, Corporation or Limited Liability Company

  Form F988SF – HFA, Certificate of Incumbency for Housing Finance Agency

  Form 989SF, Certificate of Incumbency For Limited Partnerships, and

  Form 990SF, Agreement and Certificate of Incumbency: Warehouse Lender

Form 990SF is also being updated to require Warehouse Lenders to list their Authorized Employees and administrators on the form. Authorized Employees are currently listed on Form 900WHL, Loan Selling Advisor^® Warehouse Lender Authorized User Identification Form, which has been retired. Finally, Form 990ASF, Warehouse Lender Addendum to Certificate of Incumbency, is being removed from the Guide. Warehouse Lenders may make all changes on Form 990SF.

Guide impacts: Forms 988SF, 988SF – HFA, 989SF, 990ASF and 990SF

ADDITIONAL GUIDE UPDATES AND REMINDERS

Community Land Trust Mortgages

Freddie Mac requires Sellers of Community Land Trust Mortgages to review the Ground Lease for each Mortgage submitted for purchase to Freddie Mac to ensure conformity with one of the two approved Model Ground Leases.

With this update and with prior written approval, Sellers who submit Mortgages from Community Land Trusts that are certified under a Freddie Mac-approved program may be exempt from Seller review of the Community Land Trust’s ground lease. Interested Sellers should contact their Freddie Mac representative or the Customer Support Contact Center at 800-FREDDIE.

Additionally, clarification has been added to the Guide regarding the eligibility of Condominium Units that are part of a Community Land Trust.

Guide impacts: Sections 4502.3 and 4502.10

EXPIRATION: COVID-19 SELF-EMPLOYMENT INCOME REQUIREMENTS (BULLETIN 2020-44)

Effective immediately, we are expiring the COVID-19 temporary requirements for self-employment income originally published in Bulletin 2020-19 and subsequently updated in Bulletin 2020-44, provided that the most recent complete federal income tax returns in the Mortgage file are not older than 2020.

If the most recent tax returns in the Mortgage file are dated before 2020, the requirements in Bulletin 2020-44 continue to apply.

All Mortgages must comply with the requirements and guidance in Guide Chapters 5301, 5302 and 5304 for underwriting Borrowers with self-employed income.

REMINDER: BUSINESS OPEN AND OPERATING

The requirements and guidance published in Bulletin 2020-8 and subsequently updated in Bulletins 2020-27 and 2020-35 regarding verifying that the Borrower’s business is open and operating within 20 Business Days prior to the Note Date continue to apply.

This Lender Letter contains the COVID origination policies previously published that are still in effect with the changes noted below. We removed all prior COVID policies that expired in 2021 and 2020.

▪ Effective immediately we are retiring the COVID-19 temporary requirements for borrowers with qualifying income derived from self-employment provided the most recent federal income tax returns are not older than 2020. Lenders may follow standard Selling Guide policies with respect to self-employment income.

If the most recent federal income tax returns are dated before 2020, lenders must continue to apply the prior requirements, which are now described (unchanged) in the Attachment to this Lender Letter.

Note that the temporary requirements for Verification of Self-employment continue to apply to all loans using self-employment income to qualify.

▪ Removed guidance for furloughed borrowers; refer to temporary leave income in B3-3.1-09, Other Sources of Income for additional information.

The Selling Guide has been updated to include changes to the following:

▪ Desktop appraisals: allowing the use of desktop appraisals for certain purchase transactions

▪ HomeStyle® Renovation

o HomeStyle Renovation loan agreement: updates renovation completion timeframes and information required in the loan renovation agreement o Loan Quality Connect™ for HomeStyle Renovation loan reviews: using Loan Quality Connect to submit HomeStyle Renovation requests

▪ Loan-level price adjustment credit for HomePath® properties: providing a credit to the lender to reimburse the borrower for the cost of the appraisal when a loan securing a HomePath property is sold to us

▪ Asset documentation flexibility for certain refinances: simplifies documentation requirements for assets

▪ Anti-money laundering provisions of the Bank Secrecy Act: clarifying reporting requirements related to anti-money laundering Bank Secrecy Act requirements

▪ Loans secured by properties located in Guam: removing the restriction requiring lenders to negotiate the sale of loans secured by properties in Guam

▪ Miscellaneous updates:

o Loan limits

o Credit reports and public records In addition, an update to the following is described in this Announcement:

▪ Comparable sales for new (or recently converted) projects: adding back allowable comparables if there are no closed sales in a new subject project or subdivision

This update provides advance notice of changes to master servicing processes and systems, including timeline changes to guaranty fee relief after four months of delinquency.

This Lender Letter provides advance notice of upcoming changes to our Master Servicing processes and systems. These changes further simplify and streamline servicer reporting and will be introduced in a phased approach beginning September 2021. Feb. 2, 2022

▪ Update the effective date for the changes described in

o Streamline investor reporting with LSDU self-serve capabilities

o 2022 cash simplification changes o Guaranty fee relief after four months delinquency

The ML provides a technical update and clarifies that the first legal deadline and Reasonable Diligence Time Frame are extended by 180 days from the later of either:

• the expiration of the foreclosure moratorium for FHA-insured Single Family Mortgages; or
• the expiration of the borrower’s COVID-19 forbearance or the Home Equity Conversion Mortgage (HECM) COVID-19 extension period.

Fannie Mae published updates to its COVID-19 frequently asked questions for mortgage origination to provide additional information on the temporary policies.

In this bulletin, Freddie Mac announces the introduction of Total MI Reconciliations, revision of Guide Exhibit 33, updated documentation requirements for Streamlined Short Sale and Deed-in-Lieu of Foreclosure, and additional guide updates and reminders.

In this servicing guide announcement, Fannie Mae announces updates to short sales, Mortgage lease, deed-in-lieu of foreclosure eligibility requirements, Homestyle Renovation mortgage loans, allowable foreclosure attorney fees, and Mortgage Release document preparation cost.

New Hampshire Senate Bill 134 adopts, among other things, the revised uniform law on notarial acts and the uniform real property electronic recording act effective 180 days after passage (February 12, 2022).

In this bulletin, Freddie Mac announces temporary condominium and cooperative project requirements and Topic 5600 reorganization.

In this circular, the Veterans Benefits Administration (VA) extends the rescission date for the loan payment relief for borrowers affected by COVID-19 from April 1, 2022, to July 1, 2022.