freddie mac covid 19 relief · 2020. 6. 2. · freddie mac covid 19 relief: forbearance and payment...

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



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



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.



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


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



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


Flex Modification

Target payment reduction of 20% or

greater

Delinquencies (including escrow

advances) are capitalized

Term is extended to 480 months


May result in principal forbearance

Loan was lessthan 31 daysdelinquent

at the time ofthe declaration


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


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


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 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



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



COVID-19 Payment Deferral: Escrow

No escrow analysis required at the time of the


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


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

https://sf.freddiemac.com/general/delegated-mortgage-insurance-companies



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



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



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?

freddie mac covid 19 relief · 2020. 6. 2. · freddie mac covid 19 relief: forbearance and payment...

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