pnc thomas declaration - originator keeps the notes & mortgages

8/12/2019 PNC Thomas Declaration - Originator keeps the notes & mortgages

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IN THE COURT OF COMMON PLEAS

MONTGOMERY COUNTY, OHIO

PNC Bank, National Association, et al.

Plaintiff,

v.

Peter K. Newman, et al.

Defendants.

)

)

)

))

)

))

)

)

))

)

Case No: 2010-cv-07091

JUDGE Steven K. Dankof

MAGISTRATE David H. Fuchsman.

PLAINTIFFS SUPPLEMENTAL REPLY

IN SUPPORT OF ITS MOTION FOR

SUMMARY JUDGMENT ON

DEFENDANTS COUNTERCLAIM FORVIOLATION OF FDCPA

The only issue currently before the Court is whether Plaintiff PNC Bank, National

Association, successor by merger to National City Bank, successor by merger to National City

Mortgage Co, (PNC) can be held liable for the alleged violations of the FDCPA. PNC has

already established that (1) it is a successor by merger to Peter and Susan Newmans (the

Newmans) original lender, National City Mortgage Co (NCMC), (2) it properly acquired the

Newmans Note and Mortgage through that merger before the Newmans defaulted on the Note,

and (3) it is and at all relevant times has been the servicer of the Newmans loan and holder of

the Note and Mortgage. (See PNCs Reply in Support of its Motion for Summary Judgment).

The FDCPA does not apply to loan originators and servicers who acquire loans before they are in

default. 15 U.C.S. 1692a(6)(F)(ii)-(iii). Thus, as a matter of law, the FDCPA does not apply to

PNC. Consequently, there is no dispute that PNC is entitled to summary judgment on the

Newmans FDCPA claim.

ELECTRONICALLY FILEDCOURT OF COMMON PLEASThursday, August 11, 2011 3:16:48 PMCASE NUMBER: 2010 CV 07091 Docket ID: 1637GREGORY A BRUSHCLERK OF COURTS MONTGOMERY COUNTY O


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Nevertheless, the Newmans have argued that the question of ownership of their loan

needs to be resolved before the Court can rule on PNCs Motion since Federal Home Loan

Mortgage Corporation (Freddie Mac) is an investor on their loan. As PNC already explained,

this question is a red herring, and the answer to it will have no effect on the outcome of PNCs

pending Motion in particular, or the outcome of this case in general. Nevertheless, as it has been

invited by the Court to make an additional submission regarding Freddie Macs rights with

respect to the Newmans loan, PNC submits the attached affidavit of Ms. Dorothy Thomas that

explains the lender/investor relationship in general and the PNC/Freddie Mac relationship with

respect to the Newmans loan in particular. (Exhibit 1 hereto).

As Ms. Thomas explains, ordinarily, investors acquire from loan originators such as

NCMC, and now PNC, the right to receive income from the mortgage. In return, investors pay

NCMC or PNC a fee from the payments they collect for administering all day-to-day activities

on the loan. (Tomas Affidavit at 4). These activities range from performing collection

activities and posting payments to enforcing delinquent loans through foreclosures. (Id. at 4).

For an investor to acquire the right to foreclose on the mortgage securing a particular loan in

which it invests, it must (1) obtain and record an assignment from the originator of the note

evidencing the loan and the mortgage securing the loan and (2) take physical possession of the

original note and mortgage. (See id. at 5, 7). Freddie Mac ordinarily does not take notes and

mortgages related to loans it purchases from originators by assignment and therefore does not

ordinarily enforce delinquent loans through foreclosure. (See id 6-7). In fact, Freddie Mac

has a fifty-four page, seventy-three chapter guide for its servicers on how they must enforce


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3

delinquent loans through foreclosure from its filing, to foreclosure sale, to reporting the

foreclosure to the IRS. (Id. at 6 and Exhibit A1).

With respect to the Newmans loan, all of the above holds true Freddie Mac invested in

their loan, received the right to receive income from the loan, kept PNC as the servicer of the

loan, did nottake the Note and Mortgage by assignment, and left the Note and Mortgage in

PNCs hands. (Id. at 10-11). Under Ohio law, PNC, as the originator and holder of the

Newmans Note is the only party that can enforce the Note by foreclosing on the Newmans

Mortgage. Once the foreclosure is completed, the judgment on the Note is rendered and the

Newmans interest in the property is foreclosed, the Note will be cancelled, the Mortgage will be

recorded as satisfied, and no other party would be able subsequently to pursue the Newmans for

any obligation under the Note or the Mortgage. (Id. 8, 11, 13) Until then, if Freddie Mac

decided to proceed with the foreclosure on its own (and it virtually never does as a practical

matter), it would need to obtain from PNC and record a formal assignment of the Note and

Mortgage, take physical possession of the Note and Mortgage from PNC and then substitute

itself into this action. See Wachovia Bank of Del., N.A. v. Jackson, Stark App. No. 2010-CA-

00291, 2011 Ohio 3203, at 40-42; United States Bank Natl Assn v. Duvall, Cuyahoga App.

No. 94714, 2010 Ohio 6478, 2-3; Deutsche Bank Nat'l Trust Co. v. Triplett, Cuyahoga App.

No. 94924, 2011 Ohio 478, 15-16.

Similarly, until Freddie Mac goes through the process of obtaining and recording an

assignment from PNC and taking physical possession of the Note and Mortgage from PNC, it

cannot sell to any other party the right to collect payments from the Newmans or enforce their

loan obligations through foreclosure. Freddie Mac can sell to a third party only what it currently

1Full set of Freddie Macs servicer guidelines is available at http://www.freddiemac.com/sell/guide.


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has, which, with respect to the Newmans loan is the right to receive (1) payments actually

collected from the Newmans and (2) proceeds of any foreclosure sale. (Thomas Affidavit at

11-12).

Consequently, the Newmans concern, however genuine, that more than one foreclosure

action may be initiated against them is entirely unfounded.2 Most importantly, theissue of their

loan ownership, aside from being without merit, has no bearing on whether PNC is covered by

FDCPA. PCN is entitled to judgment in its favor on the pending Motion for Summary Judgment

on the FDCPA claim.

Respectfully submitted,

/s/ Mary E. LentzGary W. Gottschlich (0003760)

Mary E. Lentz (0043985)

201 East Sixth StreetDayton, Ohio 45402

Phone: (937) 913-0200

Fax: (937) [email protected];[email protected]

Attorneys for Plaintiff PNC Bank, National Association.

2The Court should note that it is not in dispute that in over a year and a half since the Newmans stopped making

mortgage payments to PNC in January 2010, no other party has demanded payment on the Note from them.
mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


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CERTIFICATE OF SERVICE

I hereby certify that on August 11, 2011, the foregoing was electronically filed with the

Clerk of the Court system which will send a notice of electronic filing to the following:

George B. Patricoff

Assistant County Prosecutor

301 West Third Street; 5th

Floor

Dayton, Ohio 45402Counsel for Montgomery County Treasurer

David E. Cliffe525 Vine Street, Suite 800

Cincinnati, Ohio 45202

Attorney for Defendant PNC Bank

Peter and Susan Newman

594 Garden Road

Dayton, Ohio 45419

Defendants

State of Ohio, Department of Taxation

c/o Ohio Attorney General Lindsey McCarron150 E. Gay Street, 21

stFloor

Columbus, Ohio 45315

/S/ Mary E. Lentz

Mary E. Lentz


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IN THE COURT OF COMMON PLEASMONTGOMERYCOUNTY OHIO

PNC Bank, National Association, et al.Plaintiff,

v.Peter K.Newman, et al.

Defendants.

) Case No: 2010-cv-07091))))))))))

JUDGE Steven K. DankofMAGISTRATE David H. Fuchsman.SUPPLEMENTAL AFFIDAVIT INSUPPORT OF PLAINTIFF S MOTIONFOR SUMMARY JUDGMENT ONDEFENDANTS COUNTERCLAIMFORVIOLATION OF FDCPA

I Dorothy Thomas, being first duly sworn, state that the following facts are true based uponmy personal knowledge and information I have learned through a review of PNC Bank, NationalAssociation s business records:

1. I am of the age of majority and am competentto testify with respect to thefollowingmatters.

2. I am Mortgage Officer ofPNC Mortgage, a division ofPNC Bank, National

Association ( PNC ), successor by merger to National CityBank, successor by merger toNational CityMortgageCo ( NCMC). I am authorized to make this Affidavit on behalfofPNC.I have responsibility for, and knowledge of, the files and documents related to the above-captioned matter and of the procedures involved in foreclosures of loans originated by PNC or itspredecessors that are sold to Federal Home LoanMortgage Corporation ( Freddie Mac ) as aninvestor.

3. I am familiar with and have access to the records ofPNC with respect to the loanreferenced herein. These records are kept in the course ofPNC s regularly conducted loanadministration activities and it is the regular practice of PNC to keep these records. I have

Exhibit 1


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personally reviewed the documents, records, and other data relied on to make the statements inthis Affidavit.

4. In general, when a loan originated by one ofPNC s predecessors, such asNCMC,was sold to an investor, unless the particular investor required assignment and physical transferof the mortgage note, the note remained in the possession of the originator and the originator wasresponsible for its servicing. Servicing involves collecting and crediting payments from theborrower, administering the loan, handling escrow, maintaining loan paperwork, etc. A servicerkeeps a percentage of the mortgagepayments it collects from the borrowers as its servicing fee

and sends the rest of the funds to the investor. The servicer s obligations concerning what to doif the note went into default would be described in the particular investor s servicing guide or inthe servicer s contractwith the investor. Unless the loan is soldwith servicing rights (i.e.servicing rights are also released to the investorupon sale of the loan), the investor gains only theright to receive income from the mortgage.

5. With respect to loans purchased by Freddie Mac, when it purchases a loan fromthe originator, it does not normally take physical possession of the mortgage note and does notnormally record an assignment ofthe mortgagenote. With respect to loans sold byNCMC toFreddieMac, NCMC would historically keep physical possession of the notes evidencingborrower obligations on those loans and would act as servicers for Freddie Mac.

6. Freddie Mac s servicing guide, relevant portion of which is attached here asExhibit A (Chapter 66: Foreclosure), expressly requires servicers of its loans to initiate andcomplete foreclosures on the loans inwhich Freddie Mac invests. (See Section 66.1 stating TheServicermust initiate foreclosure. . . Freddie Mac requires the Servicer to manage theforeclosure process to acquire clear and marketable title to the property in a cost-effective,


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expeditious and efficient manner ; Section 66.2 at diagram titled Process for all Mortgages thatare delinquent or in default indicating that Servicer must initiate and complete foreclosures).

7. On the loans it purchases, Freddie Mac never itself initiates foreclosures and doesnot otherwise seek to enforcemortgage notes securingborrowers' obligations on the loans,unless a written assignment of the particular note and mortgage is executed by the loan originatorassigning the note and mortgage to Freddie Mac. Once an assignment is made, only the party towhom the note and mortgage are assigned can enforce them.

8. Once the obligations under a mortgage note are enforced by foreclosing on themortgage securing the debt evidenceby the note, the note is cancelled and can no longer beenforced by any other entity.

9. With respect to Susan and Peter Newman's (the Newmans ) loan, it wasoriginated byNCMC when the Newmans gaveNCMC a Note datedMay 16, 2003 for 300,000that was securedby the Mortgage, also date May 16,2003, on the property located at 594 GardenRoad, Dayton, OH 45419 (the Property ).

10. On August 3, 2003, sold the Newman's loan to Freddie Mac, but the Note andMortgage remained inNCMC's possession and were never assigned to Freddie Mac. NCMCremained the holder and servicer of the Note and Mortgage.

11. With respect to the Newmans' loan, Freddie Mac bought fromNCMC (a) theright to receive income from the payments on the Note actually collected by NCMC and (b) incase ofNewmans' default, the right to receive the proceeds from the foreclosure sale. (SeeExhibit A at Section 66.61). Because no assignment ofthe Note andMortgage took place,Freddie Mac did not buy fromNCMC any rights to pursue the Newmans in any way for theirfailure to makepayments under the Note.


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12. On November 9, 2009, through its merger with National City Bank, PNCacquired all assets and obligations ofNCMC, including all of its rights and obligations to serviceand enforce the Note. Freddie Mac remained having only the right to receive income from thepayments made by the Newmans under the Note and proceeds of the foreclosure sale in case ofthe Newmans default.

13. When PNC initiated these proceedings to enforce the Newmans obligationsunder the Note by foreclosing on the Mortgage, it was both the servicer and holder of the Note.PNC is the only party that can enforce the terms of the Note and Mortgage because of 1) its

contractual obligation to Freddie Mac to carry out the foreclosure on the Newmans Mortgageand 2) its status as holder of the Note. Once the foreclosure is completed and a judgment isentered in this case, the Note evidencing the Newmans loan obligation will be cancelled and noother party will be able to enforce it.

FURTHER FFI NT S YETH N UGHT

y presence this _\~ day of August, 2011.BLIC

sionExpires:1 3 0

-4-


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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.1: Introduction(01/14/11)

Changes to these requirements have been announced and will become effective on 10/01/11.

The Servicermust initiate foreclosurein accordance with this chapterwhen there is no viable alternative toforeclosure. Additionally,Freddie Mac requires the Servicerto manage the foreclosure process to acquiretitle to the property in a cost-effective, expeditious and efficient manner.

At least monthly, and preferably more often,the Servicermust communicate with the foreclosure attorneyor trustee to obtain updates on the case and provide the attorney or trustee with necessary documentationor information.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.1: Introduction(Future effective date 10/01/11)

These requirements will become effective on 10/01/11. View current requirements.

The Servicermust initiate foreclosurein accordance with this chapter onlywhen there is no viablealternative to foreclosure. Additionally,Freddie Mac requires the Servicerto manage the foreclosureprocess to acquireclear and marketabletitle to the property in a cost-effective, expeditious and efficientmanner.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.2: Foreclosure

process (01/14/11)


The requirements necessary to process foreclosuresare outlinedin this chapter. Foreclosure occurs in thepart of the Mortgage servicing cycle represented by the fifth box in the following process flow. This processflow givesthe Servicera general overview of the process for performing foreclosures.

66.1: Introduction (01/14/11)

66.1: Introduction (Future effective date 10/01/11)

66.2: Foreclosure process (01/14/11)

Page 1 of 54AllRegs Online Batch Print

8/11/2011http://www.allregs.com/tpl/batchPrint.aspx?did3=&lid=7e3f840a-a03c-412f-bbe3-319c1ee...

Exhibit A


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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.2: Foreclosureprocess (Future effective date 10/01/11)


This section has been deleted.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.3: Foreclosurecontents (01/14/11)


Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.3: Foreclosureprocess (Future effective date 10/01/11)

66.2: Foreclosure process (Future effective date 10/01/11)

66.3: Foreclosure contents (01/14/11)

Topic Section(s)

Beginning the foreclosure

Overview 66.6-66.7

Timing for initiating foreclosure 66.8-66.11

Approving initiation of foreclosure 66.12-66.14

Selecting foreclosure counsel or trustee 66.15

Initiating foreclosure 66.16-66.21

Managing the foreclosure

Overview 66.22-66.23

Monitoring the foreclosure process 66.24-66.29

Monitoring the foreclosure time lines 66.30-66.33

Maintaining the property 66.34-66.36

Completing the foreclosure


Obtaining the value of the property 66.39-66.41

Preparing bidding instructions 66.42-66.46

Preserving deficiency rights 66.47-66.52

Completing the foreclosure 66.53-66.58

Completing third-party sale 66.59-66.62

Expense reimbursement and foreclosure reporting


Reimbursing foreclosure expenses 66.65-66.69

ReportsFreddie Macsends Servicers 66.70-66.73

Credit Repository and Internal Revenue Service (IRS)Reporting

66.74-66.75




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The requirements necessary to process foreclosures are outlined in this chapter.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.4: Generalrequirements (01/14/11)

When processing aforeclosure, the Servicer must comply with:

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.5: Freddie Mac's

66.3: Foreclosureprocess(Future effective date 10/01/11)

Topic Section(s)Beginning the foreclosure

Overview 66.6-66.7


Approving initiation of foreclosure 66.12-66.14



Managing the foreclosure



Monitoring theStateforeclosure time lines 66.30-66.33


Completing the foreclosure


Obtaining the value of the property 66.39-66.41

Preparing bidding instructions 66.42-66.46

Preserving deficiency rights 66.47-66.52

Delivering clear and marketable title 66.53

Vesting title and avoiding transfer taxes 66.54

File retention 66.55

Reporting foreclosure sale results 66.56

Completing third-party sales 66.59-66.62

Expense reimbursement and reportingto other entities

Expense reimbursement 66.63

Credit Repository and Internal Revenue Service (IRS)Reporting

66.74-66.75

66.4: General requirements (01/14/11)

1. The terms and conditions of the Mortgage documents

2. Applicable federal, State and local laws and customs

3. Requirements of FHA, VA,Rural Housing Service (RHS)or the mortgage insurer (MI), if applicable




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rights (06/30/11)

Freddie Macreservesthe right to:

IfFreddie Macdeterminesthatthe Servicer hasdirectly or indirectly passed or charged to Freddie Mac anynon-reimbursableexpenses itemized in Section 71.24 or charged Freddie Macfor Servicing obligationscovered by the Servicing Spread(as set forth in Section 54.4) or in violation of Section 54.5(a), thenFreddie Mac may pursue any or all the remedies specified in the Guide and the other PurchaseDocuments, as applicable.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.6: Beginning theforeclosure process (01/14/11)


This section specifiesthe requirements necessary to begin foreclosure. Beginning foreclosure is the firststage in the foreclosure process, as shown below. This process flowprovidesa general overview of theprocess for beginning foreclosure. Refer to the requirements in this chapter for more details.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume

2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.6: Beginning theforeclosure process (Future effective date 10/01/11)



66.5:Freddie Mac'srights (06/30/11)

1. Select the foreclosure counsel or trustee

2. Direct and manage the actions taken by the foreclosure counsel or trustee, on a case-by-case orindividual State basis

3. Assesscompensatory feesand/or seek repayment of losses sustained due to errors, omissions ordelays bythe Serviceroritsagent

66.6: Beginning the foreclosure process (01/14/11)

66.6: Beginning the foreclosure process (Future effective date 10/01/11)




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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.7: Beginning theforeclosure contents (02/01/96)


Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.7: Beginning theforeclosure contents (Future effective date 10/01/11)



Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.8: Initiation offoreclosure (01/14/11)

Initiation of foreclosure is the submission of a Mortgage case and appropriate foreclosure documentation tolitigation (foreclosure) counsel or trustee after taking all appropriate actions to accelerate the Mortgage.The Servicer isconsidered to have initiated foreclosure on the date the caseis sentto the foreclosurecounsel or trustee.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.9: When toinitiate foreclosure on a First-Lien Mortgage (01/14/11)


The Servicermust initiate foreclosure on a First-Lien Mortgage no later than 150 days from the Due Date

of Last Paid Installment (DDLPI) (120th day of Delinquency) unless a workout or relief option has beenapproved or the property has one of the conditions in Section 66.12.

Additionally, unlessFreddie Macrequires the Servicerto obtainFreddie Mac'sapproval prior to initiatingforeclosure, if the Borrower has abandoned the property, thenthe Servicermust initiate foreclosure assoon as it is legally possible to do so. Refer to Section 66.12.

66.7: Beginning the foreclosure contents (02/01/96)

Topic Section(s)


Approving initiation for foreclosure 66.12-66.14



66.7: Beginning the foreclosure contents (Future effective date 10/01/11)

66.8:Initiation of foreclosure (01/14/11)

66.9: When to initiate foreclosure on a First-Lien Mortgage (01/14/11)




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The Servicermust comply with the requirements of the FHA, VA, Rural Housing Service (RHS)or MI, ifapplicable.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.9: Pre-referralaccount review (Future effective date 10/01/11)


Following expiration of the breach letter (refer to Section 64.5 regarding requirements for sending out thebreach letter), and once the second Borrower Solicitation Package Borrower response time frame hasexpired without affirmative response from the Borrower, but in no event less than seven days prior toreferral to foreclosure, the Servicer must review the Mortgage account to verify that: it made every attemptto achieve quality right party contact in accordance with Section 64.4, and there is no approved paymentarrangement or pending alternative to foreclosure offer for which the Borrower response period has notexpired.

In the event that the Servicer finds that there is an approved payment arrangement or a pending offer foran alternative to foreclosure for which the Borrower response period has not expired, then the Servicermust not refer the Mortgage to foreclosure.

The Servicer must document the results of their review in its Mortgage file or servicing system.

Servicers must not postpone foreclosure referral due to the pending review of an escalated case. (Refer toSection 51.5.1 for Servicer requirements regarding escalated cases.)

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.9.1: When toinitiate foreclosure on a First-Lien or a Second Mortgage/Home Improvement Loan (HIL)(Future effective date 10/01/11)

The Servicermust initiate foreclosure on a First-Lien Mortgage no later than 150 days from the Due Date

of Last Paid Installment (DDLPI) (120th day of Delinquency)when the pre-referral account review indicatesthat there is not an approved payment arrangement or a pending alternative to foreclosure offer.

However, a Mortgage must not be referred to foreclosure if:

66.9:Pre-referral account review(Future effective date 10/01/11)

66.9.1: When to initiate foreclosure on a First-Lienor a SecondMortgage/Home Improvement Loan

(HIL)(Future effective date 10/01/11)

A complete Borrower Response Package is received and the Servicer is still within the 30-day timeperiod for evaluating the package (Note: If a complete Borrower Response Package is submitted

after the loan is referred to foreclosure, the foreclosure process continues while an evaluation isbeing performed for an alternative to foreclosure.); or

The Servicer has extended an offer for an alternative to foreclosure, and the period for theBorrower's response has not expired; or

The Borrower is approved for mortgage assistance under the Hardest Hit Funds initiative as set forthin Bulletin 2010-25

The Borrower has accepted an offer for an alternative to foreclosure and is performing in accordance




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On a Second Mortgage/HIL the Servicermust submit a recommendation toFreddie Macto initiate

foreclosure no later than150days from theDue Date of Last Paid Installment (DDLPI)(120th day ofDelinquency). See Section 66.13 for details on submitting the recommendation toFreddie Mac.

Additionally, unlessFreddie Macrequires the Servicerto obtainFreddie Mac'sapproval prior to initiatingforeclosure(refer to Section 66.12 for instances where Freddie Mac must approve the referral of theMortgage to foreclosure), if the Borrower has abandoned the property, thenthe Servicer mayinitiateforeclosure as soon as it is legally possible to do so.

The Servicermust comply with theforeclosure referralrequirements of the FHA, VA,Rural HousingService (RHS)or MI, if applicable.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.9.2: Solicitationduring the foreclosure process (Future effective date 10/01/11)

with its terms

66.9.2: Solicitation during the foreclosure process(Future effective date 10/01/11)

(a) applicable. applicable.

Continued collection efforts and solicitation during the foreclosure process

Attempts to contact the Borrower and related loss mitigation solicitations must continue throughoutthe foreclosure process and up to 60 days prior to a foreclosure sale date for judicial foreclosures or30 days prior to a foreclosure sale date for non-judicial foreclosures, unless:

Loss mitigation solicitations while the Mortgage is in foreclosure must be communicated to andcoordinated with the foreclosure attorney, as appropriate. A Servicer must keep the attorney/trusteeinformed of the status of relevant alternative to foreclosure negotiations and must notify theattorney/trustee within two Business Days after arrangements for an alternative to foreclosure havebeen agreed to or within two Business Days after the Mortgage is fully reinstated.

The Servicer has established quality right party contact with the Borrower and determined thatthe Borrower does not intend to pursue an alternative to foreclosure, or

The Servicer has previously evaluated the Borrower for all alternatives to foreclosure anddetermined foreclosure is the appropriate course of action

(b) Solicitation from the foreclosure attorney/trustee

Within five Business Days following the foreclosure referral, but no later than the 125th day ofDelinquency, the foreclosure attorney/trustee must send a post-referral to foreclosure solicitation

letter. A model solicitation letter is included in Exhibit 94, Post-Referral to Foreclosure SolicitationLetter. Use of the model letter is optional; however, it illustrates the level of specificity that is deemedto be in compliance with the requirements of this section. (Note: The post-referral to foreclosuresolicitation letter may be sent at a later date, but no later than necessary to comply with applicablelaw.)

This attorney/trustee post-referral to foreclosure solicitation letter must communicate the following:

The Servicer may have sent to the Borrower one or more Borrower Solicitation Packages




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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.10: When toinitiate foreclosure on a Second Mortgage/Home Improvement Loan (HIL) (01/14/11)


The Servicermust submit a recommendation toFreddie Macto initiate foreclosure no later than150days

from theDue Date of Last Paid Installment (DDLPI)(120th day of Delinquency) on a Second Mortgage/HIL.See Section 66.13 for details on submitting the recommendation toFreddie Mac.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.10: When toinitiate foreclosure on a Second Mortgage/Home Improvement Loan (HIL) (Future effective date10/01/11)



Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.11: Delayinginitiation of foreclosure (01/14/11)

The attorney/trustee may:

The Borrower can still be evaluated for an alternative to foreclosure even if the Borrowerpreviously indicated disinterest

If the Borrower has not received or no longer has the Borrower Solicitation Package, then theBorrower should contact the Servicer to obtain a Borrower Solicitation Package

The Borrower must submit a complete Borrower Response Package to the Servicer in order to

be considered for alternatives to foreclosure

The Servicer's contact information for submitting a complete Borrower Response Package

Amend the post-referral to foreclosure solicitation letter to address situations where a courtcould fail or refuse to halt the sale

Include contents of the Borrower Solicitation Package as set forth in Section 64.6(c) with thepost-referral to foreclosure solicitation letter provided to the Borrower

Combine other notices and disclosures, when appropriate, with the post-referral to foreclosure

solicitation letter

applicable.applicable.

66.10: When to initiate foreclosure on a Second Mortgage/Home Improvement Loan (HIL)

(01/14/11)

66.10: When to initiate foreclosure on a Second Mortgage/Home Improvement Loan (HIL)(Future

effective date 10/01/11)




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Ifthe Servicer iswaiting for a decision fromFreddie Macon a workout recommendation, the Servicer isstillrequired to initiate foreclosure as required in Section 66.9 or 66.10 unlessthe Servicerobtainsapproval in

writing fromFreddie Macto postpone the initiation. To obtain this approval,the Servicer mustsubmit Form105, Multipurpose Loan Servicing Transmittal, to Freddie Mac(see Directory 5).

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.11: Delayinginitiation of foreclosure (Future effective date 10/01/11)



Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.12: Approvinginitiation of foreclosure on a First-Lien Mortgage or Second Mortgage/Home Improvement Loan(HIL) in First-Lien position (01/14/11)

The Servicer isresponsible for initiating foreclosure on a First-Lien Mortgage, or a Mortgage originated asa Second Mortgage/Home Improvement Loan (HIL)that is now in First Lien position. The Servicer doesnotneedFreddie Mac'sapproval unless one or more of the following conditions exist.

If the 2- to 4- unit property was built before 1978 and located in Massachusetts, or built before 1960 andlocated in New York City (Brooklyn, Bronx, Manhattan, Queens or Staten Island), refer to the requirementsin Section 66.14 before initiating foreclosure.

Refer to Chapter 67, Adverse Matters, for additional Servicing requirements for Servicing Mortgages ondistressed properties.

66.11: Delaying initiation of foreclosure (01/14/11)

66.11: Delaying initiation of foreclosure (Future effective date 10/01/11)

66.12: Approving initiation of foreclosure on a First-Lien Mortgage or Second Mortgage/Home

Improvement Loan (HIL)in First-Lien position (01/14/11)

If the Property Has... ThenThe ServicerMust... And...

Hazardous Substances located onor near that could impact thehabitability, value or occupancy ofthe property

RequestFreddie Mac'sapproval toinitiate foreclosure by submittingForm 105, Multipurpose LoanServicing Transmittal, for a First-Lien Mortgage or Form 102, SecondMortgage/HIL Servicing Transmittal,toFreddie Mac (see Directory 5)within five Business Days ofdiscovering the condition

Freddie Macwill approve ordeny the initiation of foreclosureand provide any necessaryinstructions tothe Servicer

Damage from fire, flood or naturalor man-made disaster

Deteriorated and requires assetpreservation or the property is aManufactured Home that hassignificantly decreased in value

A forfeiture action being litigated




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Refer to Chapter 68, Servicing Mortgages Impacted by a Disaster, for additional requirements forMortgages secured by properties affected by a disaster.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.12.1: Approvinginitiation of foreclosure on Mortgaged Premises owned by Borrowers in active military service(06/30/11)

The Servicemembers Civil Relief Act of 2003, as amended,and other applicable laws contain provisionsregarding foreclosure of Mortgaged Premises. The Servicermust be familiar and comply with these laws.

If a Borrower is on active duty, the Servicermust requestFreddie Mac'sapproval to initiate foreclosure bysubmitting toFreddie Mac (see Directory 5)Form 105, Multipurpose Loan Servicing Transmittal, for a FirstLien Mortgage and Form 102, Second Mortgage/HIL Servicing Transmittal, for a Second Mortgage/HIL.The Servicermust include information regarding any statutory protection the Borrower is entitled to andwhether the Borrower has invoked such protection.

Servicers must not initiate or resume foreclosure for at least 90 days after a service member has beenreleased from active dutyor, if applicable, such longer period as specified in the following paragraph.During this period,the Servicermust work with the Borrower to explore all available workout andreliefoptionsas provided in the Guide. If no alternativeto foreclosureis agreed upon during this period,theServicermust submit Form 105, Multipurpose Loan Servicing Transmittal,toFreddie Mac (see Directory5)forFreddie Mac'sapproval to proceed with foreclosure.

Pursuant to the Housing and Economic Recovery Act of 2008,as amended in 2010,Servicers must notinitiate or resume foreclosure for at least nine months after the service member has been released fromactive duty, when the release occurs on or before December 31, 2012. During this period, all otherrequirements in this section and Chapter 82 continue to apply.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.13: Approvinginitiation of foreclosure on a Second Mortgage/Home Improvement Loan (HIL) (06/30/11)

To initiate foreclosure on a Mortgage originated as a Second Mortgage/HIL, which is still in second lienposition,the Servicermust obtainFreddie Mac'sapproval by completing and submitting Form 102, SecondMortgage/HIL Servicing Transmittal, toFreddie Mac (see Directory 5).

Whenthe Servicersubmitsa recommendation toFreddie Mac (see Directory 5), it mustinclude:

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.14: Tenant-occupied properties built before 1978 (06/30/11)

66.12.1: Approving initiation of foreclosure on Mortgaged Premises owned by Borrowers in activemilitary service (06/30/11)

66.13: Approving initiation of foreclosure on a Second Mortgage/Home Improvement Loan (HIL)

(06/30/11)

1. The name of the owner of the firstmortgage and the name, address, phone number and contactperson of the Servicer of the firstmortgage on the form

2. A payoff statement for the firstmortgage




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Before initiating foreclosure on atenant occupied property built before 1978, the Servicermust conduct asearchof records atthe local oversight authority that administers lead-based paint lawand/or health codecompliance (such asa State or localDepartment of Healthor Department of Housing) to determinewhether there are any outstanding lead-based paintor health codecitationsor violationsagainst theproperty or property owner.

If there are any outstanding citations or violations, or ifthe Servicer isaware of any lead-based paintlitigation affecting the property or property owner, thenthe Servicermust notifyFreddie Mac (seeDirectory 5)of the situation by submitting Form 105, Multipurpose Loan Servicing Transmittal,in additionto the following:

After reviewing the documentation,Freddie Macwill providethe Servicerwith instructions on the course ofaction to take.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.15: How toselect foreclosure counsel or trustee (06/30/11)

The Servicer is responsible for selecting attorneys and trustees, and its selection decisions must not beinfluenced by inappropriate considerations. Refer to Section 54.5 for additional information on prohibitionsrelating to foreclosure and bankruptcy referrals.

When making foreclosure and bankruptcy referrals,the Servicermust ensure thatit isdiversifying referralsby engaging in a relationship with at least two law firms, or trustees, in higher-volume States (States inwhichthe Servicer has250 or more Freddie Mac foreclosure and bankruptcy referrals in a calendar year).

In higher-volume States,the Servicermust take one of the following approaches to diversifying foreclosureand bankruptcy referrals:

Ifthe Servicerfailsto diversifyits foreclosure and bankruptcy referrals in a higher-volume State,FreddieMacmay denythe Servicer'sforeclosure and bankruptcy fees and costs in that State andassess theServicer a compensatory fee of$500.

In addition, all Servicers must have a contingency plan in place, either in the form of a stand-alonedocument or incorporated into policies and procedures, to redirect new foreclosure and bankruptcyreferrals in the event a law firm or trusteethe Servicer isusing is no longer able to accept new referrals.

66.14:Tenant-occupiedpropertiesbuilt before 1978(06/30/11)

1. The number and ages of children less than seven years old residing in the property

2. A copy of the citation

3. Copies of documentation related to a lead-based paint violation

66.15: How to select foreclosure counsel or trustee (06/30/11)

1. The Servicermust make foreclosure and bankruptcy referrals on Mortgagesit serviceson behalf ofFreddie Mac to at least two law firms or trustees, ensuring that at least a substantial minority of thereferrals are made to the law firm or trustee that receives the fewest referrals, or

2. The Servicermust make foreclosure and bankruptcy referrals to at least two law firms or trustees,with respect toitsentire servicing portfolio, ensuring that at least a substantial minority of the

referrals are made to the law firm or trustee that receives the fewest referrals.




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The Servicermust use the same entity that it retainsto representit in a bankruptcy action on a Mortgage toprocess the foreclosure.

The foreclosure counsel or trustee must be free from any conflict of interest with the Borrower.

(a)

Foreclosure on a property in a State where Freddie Mac hasdesignated counsel or trustees

Freddie Mac hasdesignated counsel or trustees in the following selected States:

The Servicermust use one ofFreddie Mac'sdesignated counsel or trustees for the foreclosure(unless the Mortgage on whichthe Servicer isforeclosing was sold toFreddie Macwith recourse or itis an FHA Mortgage, VA Mortgage, or Section 502 GRH Mortgage) if the Mortgage is secured by a:

1. Arizona

2. California

3. Connecticut

4. District of Columbia

5. Florida

6. Georgia

7. Illinois

8. Indiana

9. Maryland

10. Massachusetts

11. Michigan

12. Nevada

13. New Jersey

14. New York

15. North Carolina

16. Ohio

17. Pennsylvania

18. South Carolina

19. Texas

20. Virginia

21. Washington

22. West Virginia




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Additionally,Freddie Macmay requirethe Servicerto useFreddie Mac'sdesignated counsel ortrustees on 1-unit properties in one or more of the selected States based onFreddie Mac'sevaluation ofthe Servicer'sforeclosure performance.Freddie Macwill notifythe Servicerin writing ifthe Servicermust use designated counsel or trustees inany ofthe selected States.

Refer to Exhibit 79, Designated Litigation Counsel/Trustee,which is available athttp://www.freddiemac.com/service/msp/desig_counsel.html, for a listing of the designatedcounsel or trustees in the applicable States. Even ifthe Servicer isnot required to use designated

counsel or trustees,the Servicermay elect to use them for foreclosures or bankruptcies inany oftheStateslisted in Exhibit 79. Becausethe Servicermust use the same entity for all related legalactions, ifit retained bankruptcy counsel that is not a designated counsel,the Servicermust not referthe foreclosure to one ofFreddie Mac'sdesignated counsel.

1. 2- to 4- unit property inArizona,California, Connecticut,the District of Columbia,Florida,Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Nevada,New Jersey,New York,North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia,Washingtonor WestVirginia

2. A Manufactured Home inArizona,California, Connecticut,the District of Columbia,Florida,Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, Nevada,New Jersey,New York,

North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia,Washingtonor WestVirginia

3. 1- to 4- unit property in Texas and the Mortgage was aTexas Equity Section 50(a)(6) Mortgage

(b) Foreclosure on a property in a State whereFreddie Mac doesnot have designated counsel ortrustees or whenthe Servicer isnot required to use designated counsel or trustees

Unlessthe Serviceruses Freddie Mac'sdesignated counsel or trustees as required in Section 66.15(a),the Servicermust select either a foreclosure counsel or trustee, as appropriate under applicablelaw, to representthe Servicerin the foreclosure action.

The Servicermust use the same entity to conduct a foreclosure and any bankruptcy pertaining to a

particular Mortgage. In those States where it may be common practice to use a trustee to conduct aforeclosure, the trustee must be associated with a bankruptcy law firm meeting the criteria specifiedin Section 53.1.1. Any bankruptcy filed on a Mortgage in foreclosure being processed by a trustee,must be handled by the trustee's associated bankruptcy law firm. The trustee and the associatedbankruptcy law firm must transfer information regarding the case seamlessly and must not in anyway increase the bankruptcy orStateforeclosure time lines.

The foreclosure counsel or trusteethe Servicerchoosesmust meet the eligibility requirements inSection 53.1.1.

When selecting the foreclosure counsel or trustee,the Servicermust base the selection on the priorperformance of the foreclosure counsel or trustee in the following areas:

The Servicermust communicateFreddie Mac's Stateforeclosure time line expectations andFreddieMac'sallowable fee schedule to the foreclosure counsel or trustees whomthe Servicer selects. The

1. Completing foreclosures

2. Delivering clear and marketable title toFreddie Mac

3. Facilitating reinstatements and workouts with Borrowers

4. Resolving litigation delays (foreclosure counsel only)




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2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.15.1:Compensatory fee for failure to use designated counsel or trustee when required (06/30/11)

Ifthe Servicer isrequired to useFreddie Mac'sdesignated counsel or trustee for a foreclosure andtheServicerusesanother counsel or trustee,Freddie Macwillassess the Servicer$500 andFreddie Macwillnot reimbursethe Servicerfor any foreclosure expenses thatit incurs. Additionally,Freddie Macmayassess thecompensatory feesdescribed in Section 66.33, if applicable.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.15.2: Use of

designated counsel or trustees and foreclosure time line penalties (01/14/11)


The Servicerwill not be penalized for a foreclosure and/or bankruptcy handled by a designated counsel ortrustee that is not completed withinFreddie Mac'srequired time lines, as long as the delay was not causedbythe Servicer'sfailure to refer the Mortgage to foreclosurein accordance with the Guide requirementsand/or send all of the documentation, information, signatures and/or funds to the designated counsel ortrustee as required.

Ifthe Servicerelectsto useFreddie Mac'sdesignated counsel or trustees, andthe Servicer doesnot usethat same designated counsel or trustee for both foreclosure and bankruptcy,Freddie Macwill not givetheServicercredit for using designated counsel or trustees for purposes of foreclosure time line penaltyprotection.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.15.2:Foreclosure counsel and trustee fees (Future effective date 10/01/11)


Foreclosurecounsel or trustee fees must be reasonable and comparable to those customarily charged inthe area where the property is located. Exhibit 57A, Approved Attorney Fees and Title Expenses, providesFreddie Mac's expense limits for attorney fees. The Servicer must obtain Freddie Mac's written approvalprior to incurring attorney fees in excess of the expense limits. Refer to Section 71.11 for details onobtaining Freddie Mac's written pre-approval for exceeding the expense limits in Exhibit 57A. The attorneyfees in Exhibit 57A do not apply to Mortgages referred to designated counsel. Servicers must paydesignated counsel for the fees they submit on the 104DC claim; Freddie Mac will reimburse the Servicerfor those amounts submitted on the 104DC claim.


Servicermust also communicate to the attorney or trustee that if they pay the Servicer or its vendor,either directly or indirectly, for any of the Servicing obligations covered by the Servicing Spread orany expenses itemized in Section 71.24, Freddie Mac may preclude the attorney or trustee who paysany such expenses on Freddie Mac Mortgages from processing future foreclosures or bankruptciesfor Freddie Mac.

66.15.1:Compensatory feefor failure to use designated counsel or trustee when required (06/30/11)

66.15.2: Use of designated counsel or trustees and foreclosure time line penalties (01/14/11)

66.15.2:Foreclosurecounseland trustee fees(Future effective date 10/01/11)




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2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.16: Initiatingforeclosure (01/14/11)

After taking all appropriate actions to accelerate the Mortgage,the Servicermust initiate foreclosure with

the foreclosure counsel or trustee. IfFreddie Macneedsto execute a document forthe Servicerto conductthe foreclosure,the Servicer mustsubmit the document with Form 105, Multipurpose Loan ServicingTransmittal, toFreddie Mac (see Directory 5).

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.16.1: Initiatingforeclosure on a Mortgage secured by a Manufactured Home (06/30/11)

In addition to the requirements in Section 66.16, if the Mortgage is secured by a Manufactured Home,theServicermust notify the foreclosure attorney or trustee that the property is a Manufactured Home whenitsubmitsthe case to the foreclosure attorney or trustee.The Servicermust also provide the attorney/trusteewith evidence that the property is legally classified as real property under the laws in the State where theproperty is located.

66.16:Initiatingforeclosure (01/14/11)

(a) Designated counsel or trustee

1. Send the designated counsel or trustee the following information by facsimile transmission orother electronic means:

a. Name, mailing address and telephone number of the Borrower(s)

b. Property address (if different from the Borrower's mailing address)

c. A statement that the Mortgage is a Freddie Mac-owned Mortgage andincludesthe nine-digit Freddie Mac loan number

d. Name and address of the person to contact inthe Servicer'sforeclosure department

2. Submit the Mortgage case file and appropriate foreclosure documentation, as outlined inSection 66.19,to the designated counsel or trustee

(b) Non designated counsel or trustee

Submit the Mortgage case file and appropriate foreclosure documentation to the foreclosure counselor trustee.

66.16.1:Initiatingforeclosure on a Mortgage secured by a Manufactured Home (06/30/11)

(a)

Evidence that the property is real property in a non-certificate of title State

The Servicermust provide the foreclosure attorney or trustee with copies of the followingdocumentation in non-certificate of title States (see Section H33.7) evidencing that the ManufacturedHome and the land are real property under the laws of the State where the property is located:

Information stating the legal basis (statutory or common law) for determining that theManufactured Home is real property that is exempt from certificate of title requirements. Thisinformation may be included in the documentation received at origination of the Mortgage fromthe title insurance company that the Manufactured Home is real property, and




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This and any other relevant information must be provided within five days of the initiation of foreclosure sothat the foreclosure attorney or trustee has the information necessary to simultaneously enforce the liens(whenever possible) and so as not tounnecessarilylengthentheforeclosureprocess.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.17: Foreclosingin the Servicer's name (04/01/11)

The Servicermust instruct the foreclosure counsel or trustee to process the foreclosure inthe Servicer'sname.

If an assignment of the Security Instrumentto Freddie Machas been recorded, then the SecurityInstrument must be assigned back to the Servicerbefore the foreclosure counsel or trustee files the firstlegal action. Refer to Section 66.18 for an explanation of first legal action.

Evidence that a certificate of title has not been issued, such as the manufacturer's statement oforigin, if the manufacturer's statement of origin is not required to be surrendered to a Stateagency

(b) Evidence that the property is real property in a certificate of title surrender State

The Servicermust provide the foreclosure attorney or trustee with copies of the followingdocumentation in certificate of title surrender States (see Section H33.7) evidencing that theManufactured Home and the land are real property under the laws of the State where the property islocated:

A certificate of cancellation, notification letter or other acknowledgment from the Department ofMotor Vehicles (DMV) or the appropriate State agency to which the certificate of title wassurrendered, or a copy of the documents submitted in connection with the surrender along withevidence that the documents were delivered and received by the appropriate State agency,and

Copies of the documents, such as an affidavit of affixture, recorded in the land records as partof the title surrender procedures to show the Manufactured Home has been converted to realproperty

(c) Evidence of clear and marketable title to the Manufactured Home and land in certificate of titleStates

The Servicermust provide the foreclosure attorney or trustee with the following documentation incertificate of title States (see Section H33.7) evidencing the Borrower's ownership of both theManufactured Home and the land on which it is permanently affixed and documentation evidencingthat the land is legally classified as real property under the laws in the State where the property islocated:

The original or a copy of the certificate of title showing the Borrower as owner of theManufactured Home. The certificate of title must have a notation of the originalSeller/Servicer's security interest in the Manufactured Home in the name of the Seller and its

successors in interest and assigns and have a notation of all intervening assignments from theoriginal mortgagee to each successive Servicer, ending with the current Servicer, and

A copy of the deed evidencing ownership of the land showing the owner of the land on thedeed to be identical to the owner of the Manufactured Home on the certificate of title

66.17: Foreclosing inthe Servicer'sname (04/01/11)




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To have the Security Instrument assigned back tothe Servicer,the Servicermust submit a completedassignment with Form 105, Multipurpose Loan Servicing Transmittal, toFreddie Mac (see Directory9).Freddie Macwill execute the assignment and return it tothe Servicerwithin seven Business Days ofreceiving the documents.

Ifthe Servicer isforeclosing on a Mortgage registered with the Mortgage Electronic Registration SystemsInc. (MERS),the Servicermustpreparean assignment of the Security Instrument from MERS tothe

Servicerand instruct the foreclosure counsel or trustee to foreclose inthe Servicer'sname and take title inFreddie Mac'sname according to the requirements of Section 66.54.The Servicermustrecord theprepared assignment where required by State law. State mandated recordings are non-reimbursable byFreddie Mac, are not considered part of the Freddie Mac allowable attorney fees and must not be billed tothe Borrower.

If the Mortgage is an FHA, Section 502 GRH or VA Mortgage, thenthe Servicer mustfollow FHA,RuralHousing Service (RHS)or VA guidelines to determine in whose name the foreclosure action should bebrought.

Ifthe Servicer isforeclosing on a property in the State of Oregon,the Servicermust destroy anyunrecorded assignment to Freddie Mac no later than 10 days after the datethe Servicerreferstheforeclosure toitsforeclosure attorney or trustee. If the Borrower subsequently reinstates his or her

Mortgage,the Servicer doesnot need to prepare a new assignment to Freddie Mac. Refer to Section 22.14for additional information onFreddie Mac'srequirements for assignments of the Security Instrument.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.18: What is thefirst legal action? (12/16/02)

The first legal action is the first public action required in the jurisdiction where the property is located, suchas filing a complaint or petition, recording a notice of default, or publication of a notice of sale.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.18.1: Choosing a

judicial or nonjudicial foreclosure process (01/14/11)

In States wherethe Servicer hasthe option of pursuing a judicial or nonjudicial foreclosure process,theServicermust choose the nonjudicial process. However, ifthe Servicerbelieves itsfiling of a judicialforeclosure will preserve the right to pursue a deficiency judgment,the Servicermust obtainFreddie Mac'sapproval prior to initiating the judicial foreclosure.The Servicermust requestFreddie Mac'sapproval bysubmitting a completed Form 105, Multipurpose Loan Servicing Transmittal, toFreddie Mac(seeDirectory 5)with an explanationof therequest and any supporting documentation. Refer to Section 66.47regarding when to requestFreddie Mac'sapproval to preserve deficiency rights.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.19: What isappropriate foreclosure documentation? (01/14/11)

Appropriate foreclosure documentation includes all documents required by the foreclosure counsel ortrustee to complete the first legal action.The Servicermust continue to comply with applicable law, but at a

66.18: What is the first legal action? (12/16/02)

66.18.1: Choosing a judicial or nonjudicial foreclosure process (01/14/11)

66.19: What is appropriate foreclosure documentation? (01/14/11)




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minimum, must supply the foreclosure attorney or trustee with the following:

Ifthe Servicer uses Freddie Mac'sdesignatedcounsel/trustee to process a foreclosure,the Servicer must

refer to Exhibit 79, Designated Counsel/Trustee, for the required documentationthe Servicermust supplyto initiate a foreclosure.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.20: Obtainingthe original Note (01/14/11)

If the original Note is needed to perform the foreclosure,the Servicermust request the Note from theDocument Custodianholding the Note by submitting to theDocumentCustodian a completed Form 1036,Request for Release of Documents,or an electronic or system-generated version of the form(or, in thecase of the Designated Custodian, a copy of the electronically generated 1036 Release Receipt Report)inaccordance with the requirements of Section 18.4(e).

Ifthere isa full or partial reinstatement of the Mortgage,the Servicermust returnthe Noteto the DocumentCustodianwitheither the original Form 1036 or a copy.

For foreclosures referred to designated counsel, ifthe Servicerfailsto provide the above information in atimely manner as required by the designated counsel, the designated counsel may request the Note fromthe Document Custodian holding the Note by submitting to the Document Custodian a completed Form1036DC, Designated Counsel's Request for Release of Documents. The designated counsel may contactthe Servicerto identify the Document Custodian holding the Note, andthe Servicermust cooperate inproviding the necessary information. In addition, the Servicermust pay any release fees and expensesrequired by the Document Custodian.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.21: Reportingrequirements (06/30/11)

The Servicermust notifyFreddie Macvia an Electronic Default Reporting (EDR) transmission within thefirst three Business Days of the month following the month thatthe Servicer initiated foreclosure. Use adefault action code of 43 and provide the date foreclosure was initiated. For additional informationonEDR

1. Copies of the Note (or the original Note if required by applicable law) evidencing the indebtednessalong with any intervening assignments, endorsements, powers of attorney or any applicablemodifying instrument, such as a modification, a conversion agreement or an assumption ofindebtedness and release of liability agreement

2. Mortgage or Deed of Trust

3. Copy of the original title insurance policy

4. Copy of the breach, acceleration or demand letter sent to the Borrower

5. Military affidavits

6. Executed Substitution of Trustee, as necessary

7. Payoff statement with per diem interest as of the date of the foreclosure referral

66.20: Obtaining the original Note (01/14/11)

66.21: Reporting requirements (06/30/11)




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requirements, refer to Section 64.10.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.22: Managingthe foreclosure process (01/14/11)


The requirements necessary to manage a foreclosureare detailedin thissection. Managing a foreclosureis the second stage in the foreclosure process, as shown below. This process flowprovidesa generaloverview of the process for managing a foreclosure. Refer to the requirements in this chapter for moredetails.


2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.22: Managingthe foreclosure process (Future effective date 10/01/11)



Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.23: Managingthe foreclosure contents (02/01/99)


66.22: Managing the foreclosure process (01/14/11)

66.22: Managing the foreclosure process (Future effective date 10/01/11)

66.23: Managing the foreclosure contents (02/01/99)

Topic Section(s)


Monitoring the foreclosure time lines 66.30-66.33




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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.23: Managingthe foreclosure process (Future effective date 10/01/11)


The requirements necessary to manage a foreclosure are detailed in Sections 66.24 through 66.36.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.24: Servicer'sresponsibility to work with foreclosure counsel or trustee (03/23/11)


Oncethe Servicer hasinitiated foreclosure on a Mortgage,the Servicermust work with the foreclosurecounsel or trustee and:

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.24: Servicer'sresponsibility to work with foreclosure counsel or trustee (Future effective date 10/01/11)


Oncethe Servicer hasinitiated foreclosure on a Mortgage,the Servicermust work with the foreclosurecounsel or trustee andto:


66.23: Managing the foreclosureprocess(Future effective date 10/01/11)

Topic Section(s)

Managingthe foreclosure process 66.24-66.29

Monitoring theStateforeclosure time lines 66.30-66.32


66.24:Servicer's responsibility to workwith foreclosure counsel or trustee (03/23/11)

1. Monitor the progress of the foreclosure

2. Facilitate prompt and efficient completion of the foreclosure proceedings and acquisition of clear andmarketable title, including conducting the foreclosure in a way that will expedite an eviction of thetenant or Borrower

3. Facilitate reinstatement, when possible

66.24:Servicer's responsibility to workwith foreclosure counsel or trustee (Future effective date

10/01/11)

1. Identify any viable alternatives to foreclosure

2. Monitor the progress of the foreclosure




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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.25: Providinginformation to the foreclosure counsel or trustee; Servicer use of connectivity and invoice

processing systems (04/01/11)

3. Facilitate prompt and efficient completion of the foreclosure proceedings and acquisition of clear andmarketable title, including conducting the foreclosure in a way that will expedite an eviction of thetenant or Borrower

66.25: Providing information to the foreclosure counsel or trustee; Servicer use of connectivity andinvoice processing systems(04/01/11)

(a) Responsibility to provide information to foreclosure counsel or trustee

For any Mortgagethat the Servicer refersfor foreclosure,the Servicermust provide complete writtenreinstatement or payoff figures to the attorney, trustee, workout specialist or outsourcing vendorrequesting the information.This informationmust be providedwithin two Business Days of the dateon which a written requestis received. The Servicermay provide the written reinstatement or payofffigures via a paper document, facsimile or e-mail.

If the foreclosure counsel or trustee requests additional documentation fromthe Servicer(such ascertificates of judgment or proofs of claim) while a case is pending,the Servicermust provide theadditionaldocumentation within two Business Days of receiving the request.

(b) Connectivity and invoice processing systems

A Servicer, whether acting directly or through any vendor, service provider or outsourcing companymay employ electronic monitoring, management, reporting or information and document deliveryprocesses technology, referred to here as a "Connectivity System," and an invoice processingsystem as outlined below.

Connectivity System

A Servicer may employ a Connectivity System to assist with fulfilling Servicing obligations such as:

If a Servicer uses a Connectivity System:

Packaging and referring foreclosure and bankruptcy cases to attorneys and trustees;

Communicating information and delivering documents between the Servicer and its attorneysand trustees as well as any other third parties requiring access to the Connectivity System; and

Managing and monitoring foreclosure and bankruptcy cases.

Freddie Mac will reimburse a Servicer for the actual cost of the connectivity fee up to the

maximum expense limit specified in Exhibit 57, 1- to 4- Unit Property Approved ExpenseAmounts;

The Servicer must provide all attorneys and trustees use of and access to the identicalConnectivity System;

The Servicer must permit, or continue to permit, attorneys and trustees to integrate their owntechnology systems with the Connectivity System at no cost to the attorneys or trustees; and

The Servicer must not pass on any Connectivity System related charges to the Borrower or the




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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.25.1: Monthlyforeclosure reporting (06/30/11)

Oncethe Servicer hasreported that foreclosure is initiated on a Mortgage (refer to Section 66.21),theServicermust report a default action code 68(Date of first legal action)with thecorrespondingdate of thefirst legal action(as defined in Section 66.18).The Servicermust continue to report that the Mortgage is inforeclosure initsmonthlyElectronic Default Reporting (EDR)transmission using a default action code of43(Referred to foreclosure)until:

For additional informationonEDRrequirements, refer to Section 64.10.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.26: Respondingto and reporting Borrower defenses (06/30/11)

Invoice processing system

A Servicer may employ an invoice processing system for managing the submission and payment ofinvoices.

If a Servicer, whether acting directly or through a vendor or outsourcing company, processesattorney or trustee invoices electronically:

The amounts specified in Exhibit 57 for connectivity and invoice processing systems are themaximum amounts for which a Servicer may seek reimbursement for the life of the default (i.e., theduration of the foreclosure, including any related bankruptcy referral).

For example, if a Servicer has already referred a file to foreclosure and it then becomes necessary totake action with respect to a bankruptcy related to such Mortgage, or if a Servicer has alreadyreferred a file for bankruptcy and foreclosure has commenced following the bankruptcy referral, theServicer may be reimbursed only for one connectivity fee. Likewise in this scenario, if the Servicer isusing an invoice processing system, then the Servicer may only seek reimbursement for oneinvoicing fee associated with the foreclosure and for one invoicing fee associated with the bankruptcyduring the life of the default.

attorney or trustee.

Freddie Mac will reimburse the Servicer for the actual cost of the invoicing fee up to themaximum expense limits specified in Exhibit 57; and

The Servicer must not pass on any invoice processing related charges to the Borrower or theattorney or trustee.

66.25.1: Monthly foreclosure reporting (06/30/11)

The Servicerreportsthe results of a foreclosure sale or the execution of a deed-in-lieu of foreclosure,or

The Servicerreportsthat the Mortgage is fully reinstated or paid off, or

A workout is completed

66.26: Responding to and reporting Borrower defenses (06/30/11)




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Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.27:Reimbursement of expenses for responding to Borrower defenses (05/17/11)

(a) Responding to Borrower defenses

The Servicermust respond to legal actions, such as bankruptcy and contested foreclosure, broughtby the Borrower during the foreclosure. Refer to Chapter 67 for specific requirements for handlingbankruptcy matters.

(b) Reporting a bankruptcy filing

If the Borrower files bankruptcy during the foreclosure process,the Servicermust report thebankruptcy filing toFreddie Mac.The Servicermust submit this notification via anElectronic DefaultReporting (EDR)transmission within the first three Business Days of the month following the monththat the bankruptcy was filed.The Servicermust include the date of the filing and the applicabledefault action code to indicate the bankruptcy chapter number, as shown below.

The Servicermust also notifyFreddie Macwhen the bankruptcy plan is confirmed by using a defaultaction code of 69(Bankruptcy plan confirmed), and provide the date the plan was confirmed.TheServicermust continue to report each month that the Borrower is in bankruptcy until the bankruptcyis cleared or the stay lifted andthe Servicer hasreported the event toFreddie Mac.

When the bankruptcy is cleared or the stay is lifted,the Servicermust notifyFreddie Macvia an EDRtransmission within the first three Business days of the month following the month that the actionoccurred. Use a default action code of 76(Bankruptcy court clearance obtained/stay lifted)andprovide the date that the action occurred.

For additional informationonEDRrequirementsrefer to Section 64.10.

Bankruptcy Chapter Default Action Code

Chapter 12 bankruptcy petition filed 59




(c) Reporting a contested foreclosure and/or other litigation

The Servicermust notifyFreddie Macof a contested foreclosure.The Servicermust also notifyFreddie Macof any pending litigation that affects the enforceability of the Mortgage or themarketability of the property securing the Mortgage.(Refer to Section 67.17.) The Servicermustsubmit this notification via an EDR transmission within the first three Business Days of the monthfollowing the month that the action occurred. Use a default action code of 33(Contested foreclosureand litigation)and provide the date that the action occurred.

The Servicermust report each month that the foreclosure is being contested or about the otherlitigation as long as the case is pending.

For additional informationonEDRrequirements, refer to Section 64.10.

66.27: Reimbursement of expenses for responding to Borrower defenses (05/17/11)




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Freddie Macwill reimbursethe ServicerforFreddie Mac'sproportionate share of expenses for respondingto Borrower defenses. Refer toChapter 71for details regarding expense reimbursements.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.28: Reportinglead-based paint violations (01/14/11)

If during the foreclosure processthe Servicer isnotified that lead-based paint violations exist on theproperty, thenthe Servicermust report such violations on Form 105, Multipurpose Loan ServicingTransmittal, toFreddie Mac (see Directory 5)within five Business Days of learning of the violation.TheServicermust include:

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.29: Expensesthat may become First Liens on the property (01/14/11)

The Servicermust obtain bills, and make payment for all expenses requiring payment under the SecurityInstrument. Such expenses may include, but are not limited to, real estate or personal property taxes,special assessments, water bills, ground rents and other charges including condominium, homeownersassociation (HOA) and Planned Unit Development (PUD) regular assessments, that are, or may become, aFirst Lien priority on the property or that if not paid would result in the subordination of Freddie Mac'sinterest in the property. If the Borrower's Escrow Funds are insufficient to pay these items as they become

due during foreclosure, or if there is no Escrow account or if the Escrow account does not hold funds forthese expenses,the Servicermust advance funds to pay these expenses, when and to the extentnecessary, to protectFreddie Mac'sinterest in the property.

The Servicer must contact Freddie Mac(see Directory 5)and obtain Freddie Mac's approval beforeadvancing payment of these expenses on low balance Mortgages that are at least 120 days delinquent andfor which escrow is insufficient to pay charges when due (see UPB requirements for low balanceMortgages in Section B65.50).

Additionally, the Servicer must contact Freddie Mac (see Directory 5)and obtain Freddie Mac's writtenapproval before making payments to taxing authorities when federal, State or local income tax liens wouldtake priority over Freddie Mac's First Lien position.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.30: Foreclosuretime lines (01/14/11)


A foreclosure time line is the time it takes to process a foreclosure. The time line is measured in days from

66.28: Reporting lead-based paint violations (01/14/11)

1. The number and ages of children less than seven years old residing in the property on the form

2. A copy of the citation

3. Copies of documentation related to a lead-based paint violation

66.29: Expenses that may become First Liens on the property (01/14/11)

66.30:Foreclosure time lines (01/14/11)




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theDue Date of Last Paid Installment (DDLPI)to the date of the foreclosure sale.

Therefore, the time line consists of the time it should take to initiate foreclosure (see Sections 66.9 and66.10), and the time it should take from the initiation of foreclosure to the foreclosure sale date.

The time line does not include any post-sale redemption or confirmation periods.

Freddie Mac hasa time line for each State which is the number of days it should take to process aforeclosure in the State under most circumstances.

If the foreclosure sale was delayed due to one of the circumstances in Section 66.32,Freddie Macwilladjust the time line to account for the delay.

Freddie Mac Single-Family Seller/Servicer Guide/Single-Family Seller/Servicer Guide, Volume2/Chs. 64-69: Servicing Nonperforming Mortgages/Chapter 66: Foreclosure/66.30: Stateforeclosure time lines (Future effective date 10/01/11)

These requirements will become effective on 10/01/11. View curr