Freddie Mac Revises Various Requirements in Bulletin 2021-31

Recently, Freddie Mac published updates to the Seller/Servicer Guide including revisions to risk mitigation policies, notification requirements and deadlines for change of control and legal proceedings, and criteria for reestablishing credit after foreclosure.  Freddie Mac also announced changes regarding the Cash-Released XChange and Servicing-Released XChange program, including revisions to the Document Custodian options.  Finally, Freddie Mac clarified that Sellers may refinance Texas Equity Section 50(a)(6) mortgages under specific terms.

Section 2101.12 will require early reporting of ownership control (change of control) and enumerated legal proceedings, termination, or suspensions for mortgages with settlement dates on or after January 13, 2022.  A major change in ownership or organization and/or change of control will require notification to Freddie Mac at least 60 calendar days prior to the event.  This deadline was previously 14 business days.  Terminations, suspension, bankruptcy, or legal proceedings identified in Section 2101.12 requiring a notification to Freddie Mac within seven business days after the event must be reported within one business day after the event.

Timelines for reestablishment of credit are also shortened for Manually Underwritten Mortgages that have a bankruptcy extinguished under Chapter 7.  For bankruptcies caused by extenuating circumstances, the recovery period is shortened to 24 months (previously 36 months) from the completion date of the foreclosure.  For bankruptcies caused by financial mismanagement, the recovery period is reduced to 48 months (previously 84 months) from the bankruptcy discharge.  This change is effective immediately.

Several additional changes have also been made to the Seller/Servicer guide affecting confidentiality obligations, Texas-specific mortgages, and data delivery requirements for property values.