freddie mac covid 19 relief · 2020. 6. 2. · freddie mac covid 19 relief: forbearance and payment...
TRANSCRIPT
Freddie Mac COVID 19 Relief:Forbearance and Payment Deferral
Custom Session: NAMB
Presenters: Tara Connors and Donna Bent
NOTE: This document is not a replacement or substitute for the information
found in the Freddie Mac Single-Family Seller/Servicer Guide and/or terms
of your Master Agreement and/or other Pricing Identifier Terms.
© 2020 Freddie Mac | 2
2020 Freddie Mac | 2
Freddie Mac Policy
Freddie Mac COVID 19 Relief Policy can be implemented when:A borrower experiences the involuntary inability to pay his/her mortgage because of the COVID-19 outbreak. Impacts could include illness, reduction in income, unemployment, or other circumstances.
To assist impacted borrowers with Freddie Mac-owned mortgages, Servicers must:
Waive assessments of new
penalties or late fees during
forbearance, trial and repayment
plan periods
Complete credit bureau reporting as
required by applicable law including
the Fair Credit Reporting Act and the
CARES Act
Suspend all foreclosure
activity through June 30,
2020, with the exception of
properties that are vacant or
abandoned
Work with bankruptcy counsel
to determine the appropriate
time to file for relief from stay
© 2020 Freddie Mac | 3
2020 Freddie Mac | 3
Eligibility
Establish a policy
that determines what
constitutes a COVID-
19 related hardship
and apply it
consistently
The loan must not
have been greater than
31 days delinquent as
of March 1, 2020, the
National Emergency
Declaration effective
date, to be eligible for
our COVID-19 Payment
Deferral and
Modification options
© 2020 Freddie Mac | 4
2020 Freddie Mac | 4
Alternatives to Foreclosure Hierarchy: COVID-19
Reinstatement and Relief Options
Freddie MacEnhanced
Relief RefinanceSM
▪ Full or partial reinstatement
▪ Repayment plan
▪ Forbearance
▪ Payment Deferral
F O R E C L O S U R E
Liquidation Options
Standard Deed-in-Lieu of Foreclosure
Standard Short Sale
Flex Modification
Streamlined Offer
Cap and Extend Modification
Extend Modification
COVID-19 Payment Deferral
Flex Modification
Streamlined Offer
Mandatory July 1, 2020Evaluations through June 30, 2020
BorrowerForbearance Plan Plan Requirements Servicer RequirementsEligibility
Hardships
Unemployment
Reduction in income
Increase in housing
expenses due hardship
outside borrower’s control
Long-term or permanent
disability
Divorce, legal separation, or
separation of borrowers
unrelated by marriage
Death of a Borrower or a
primary or secondary wage
earner
Distant employment
transfer/relocation
Other
Definition
A written agreement defining
whether the Borrower may
make either reduced or no
monthly payments for a
specified period of time
A Forbearance Plan may be
the solution for a borrower
experiencing an eligible
hardship such as illness,
unemployment, reduction in
income and others.
Borrower eligibility
Delinquency• Current or delinquent
Hardship: COVID-19 impact
Documentation• No Borrower Response
Package required
• Limited Quality Right Party
Contact acceptable
--Reason for Default
--Ability and commitment to
repay debt
--Introduction of alternatives
to foreclosure
Property eligibility and
exclusions• Eligible: Primary residences,
second homes, investment,
vacant, or condemned
properties
• Ineligible: Abandoned
Extensions• Meets all Forbearance Plan
eligibility requirements
Forbearance Plan terms
Suspended payments or
reduced payments• P+I must be lower than
contractual P+I
Late charges• No accrual during
Forbearance Plan period
Forbearance Plan terms• 1-6 months and one or more
extension of 1-6 months -
total forbearance terms not to
exceed 12 months
• Cumulative plans may cause
borrower’s delinquency to
exceed 12 months of the
borrower’s contractual
monthly payment
Plan termination• Failure to meet terms
• Eligibility criteria not met
• Hardship is resolved
• Termination request
Documenting terms• Must be in writing
Servicer responsibilities
Contact requirements• At Servicer’s discretion,
various methods to contact
Borrower to evaluate
Borrower’s eligibility or
eligibility for extension
Procedures• Establish written policies and
procedures to determine:
borrower’s hardship, whether
to require a reduced payment,
and Servicer’s decision-
making process
Post-forbearance options to
bring loan current• Full reinstatement
• Pay off loan
• Repayment plan
• Payment Deferral*
• Extend Modification
• Cap and Extend Modification
• COVID-19 Payment Deferral*
• Flex Modification
*Available July 1, 2020
Servicer reporting
Electronic Default Reporting
(EDR) requirements• EDR Code 09
• Start date
• Reason for default / Code 032
National Emergency
Declaration
• Report for every month the
Forbearance Plan is in effect
Credit bureau reporting in
accordance with applicable
law
Number of permitted
forbearance plans over life
of loan• No limit
Reporting
Forbearance Plan
COVID-19 ReliefEffective April 8, 2020
This job aide is a summarization
of detailed material found in the
referenced Bulletins and the
Guide. Please review the
Servicing Bulletins 2020-4, 6, 7,
and 10 and Guide Chapter 9203
for more complete
requirements. If you have any
questions, please reach out to
your Servicing Account Manager
or 1-800-FREDDIE.
© 2020 Freddie Mac | 6
2020 Freddie Mac | 6
Post Forbearance Transition
Current
Forbearance
Period (6 months)Periodic check-ins with borrower
PITI
$1500
$1500
Apr SeptMay AugJune July Oct
Contact
borrower to
determine
resolution to
the delinquency
• Full Reinstatement
• Partial Reinstatement
• Repayment Plan
• Payment Deferral
• Extend Modification
• Cap and Extend Mod
• COVID-19 Payment
Deferral
• Flex Modification
March 2020
1st Payment
missed: Bwr confirms
COVID-19
hardship and
requests FB
$9,000 owed
$1500 $1500$1500 $1500 $1500
© 2020 Freddie Mac | 7
If the borrower is not eligible for a COVID-19
Payment Deferral, evaluate the borrower for
a streamlined offer of a Flex Modification
Proactively solicit eligible borrowers for a
COVID-19 Payment Deferral within 15 days prior
to the expiration of the forbearance agreement if:
• The mortgage was current or less than 31
days delinquent as of the Emergency
Declaration effective date
• The mortgage does not meet any
eligibility exclusions
Post Forbearance Transition
If Limited QRPC is not achieved at the end of
the COVID-19 Forbearance
Delinquency Resolution
© 2020 Freddie Mac | 9
2020 Freddie Mac | 9
Delinquency Resolution: COVID-19 Relief
Extend Modification
Borrower resumes close to contractual
payment
Advanced escrow may be spread over 60
months in a repayment plan
Term is only extended by number of payments
missed
May provide interest rate relief
Cap and Extend Modification
Borrower resumes contractual payment
Delinquencies (including escrow) are
capitalized
Term is extended only enough to achieve equal to or just less
than contractual payment
May provide interest rate relief
Flex Modification
Target payment reduction of 20% or
greater
Delinquencies (including escrow
advances) are capitalized
Term is extended to 480 months
May provide interest rate relief
May result in principal forbearance
Loan was lessthan 31 daysdelinquent
at the time ofthe declaration
COVID-19 Payment Deferral
Borrower resumes contractual payment
Up to 12 months delinquencies
(including escrow advances) create non-
interest bearing principal forbearance
Term is NOT extended
Interest rate remains unchanged
Evaluations prior to July 1, 2020 Jul 1, 2020
No trial period
Trial Period Plan required
COVID-19 Payment DeferralBulletin 2020-15
© 2020 Freddie Mac | 11
Payment Deferral: Eligibility
Borrower
• COVID-19 hardship is resolved
• Capability to resume contractual
payment
• Inability to afford reinstatement
or repayment plan
• No borrower response package
is required
If borrower is eligible for HAMP incentives, and if
borrower transitions from forbearance to COVID-19
Payment Deferral, Borrower will NOT lose ‘good
standing’ status
Property
• Primary residence
• Second home
• Investment property
• All occupancy (owner, tenant, vacant)
• May be condemned
© 2020 Freddie Mac | 12
Mortgage Ineligibility
• FHA, VA, GHS
• Subject to recourse
• Prior COVID-19 Payment Deferral
Mortgage Eligibility
• Must have been current or less than 31 days
delinquent as of the NED (March 1, 2020)
• Be 31 days delinquent but less than or equal
to 360 days delinquent as of the date of the
evaluation
• Conventional, first lien mortgage owned or
guaranteed by Freddie Mac
• May be a fixed rate, step-rate, or ARM
• If MI, must have delegation to approve or
seek approval
COVID-19 Payment Deferral
© 2020 Freddie Mac | 13
2020 Freddie Mac | 13
COVID-19 Payment Deferral Terms
To determine deferral forbearance
▪ Delinquent Principal and Interest
» No more than 12 P&I payments can be deferred
▪ Other expenses that are permitted to be deferred per Guide Section
9206.15 (b)
• Funds advanced or to be advanced to third parties prior to the
Payment Deferral for taxes and insurance
• Incurred foreclosure costs, including attorney fees and title costs
incurred as part of the foreclosure process
• Property preservation and property inspection fees
• Other expenses paid to a third party related to the preservation of
Freddie Mac’s lien priority
© 2020 Freddie Mac | 14
2020 Freddie Mac | 14
COVID-19 Payment Deferral Terms
Ensure:
▪ Payment schedule remains unchanged
▪ Monthly P&I portion of the payment remains unchanged
▪ Interest rate and adjustment schedule (if applicable) remains
unchanged
▪ Maturity date remains unchanged
If the mortgage was previously modified and there is deferred principal, it must
continue to be deferred and will be due and payable upon maturity, sale or
transfer of the property, refinance or payoff
© 2020 Freddie Mac | 15
2020 Freddie Mac | 15
COVID-19 Payment Deferral: Escrow
No escrow analysis required at the time of the
COVID-19 Payment Deferral
Advances must be included in deferred UPB
If escrow is delinquent, servicer is not required to
establish an escrow account as a condition of the
COVID-19 Payment Deferral
If the loan is subject to
mortgage insurance and
the MICO has not
provided delegation to
Freddie Mac, the servicer
must obtain delegation or
seek approval from the
MICO
https://sf.freddiemac.com/
general/delegated-
mortgage-insurance-
companies
Escrow account shortages must not be deferred
© 2020 Freddie Mac | 16
2020 Freddie Mac | 16
COVID-19 Payment Deferral Agreement
• Customize form
for your
organization
• Insert applicable
data into the
highlighted
sections
• Ensure Agreement
complies with
applicable law
Flex Modification
© 2020 Freddie Mac | 18
2020 Freddie Mac | 18
Key Characteristics of the Flex Modification
Housing Expense
to Income ratio
HTI ratio for
borrowers <90
days
delinquent
40%
Required
reduction in
most cases
20%
Payment
Reduction Amortization
480months
Forbearance
MTMLTV
ratio
100%
possible
additional
80%
post
capitalize
d UPB30%
not to
exceed
© 2020 Freddie Mac | 19
2020 Freddie Mac | 19
Flex Modifications for COVID-19 Relief
Pro-active Solicitation
Within 15 days of expiration of a COVID-19 Forbearance the Servicer must send a streamlined offer for a Flex Modification in the following scenarios:
If borrower is not eligible for declines the
COVID-19 Payment Deferral and…Then…
was less than 31 days delinquent at the
time of the Declaration
Evaluate borrower for a streamlined offer of a
Flex Modification in accordance with
guidelines
does not meet COVID-19 eligibility
Evaluate borrower for a streamlined offer of a
Freddie Mac Flex Modification, provided
borrower is 90 days or more delinquent for a
fixed rate mortgage or 60 days delinquent for
a step-rate or adjustable rate mortgage
Questions?