Freddie Mac Foreclosure Fraud Timeline Management

8/9/2019 Freddie Mac Foreclosure Fraud Timeline Management

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Solving Default Management

Challenges Series

Foreclosure Timeline Management


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Customer Educat ion

Table of ContentsTopic

Tools and tips for recorded sessions .. ..

Objective / Agenda .. ...

Foreclosure process flow

Accelerate the mortgage

Refer to Counsel/Designated Counsel

Prepare for foreclosure...

Initiate foreclosure

Manage the foreclosure

Schedule the foreclosure sale

Conduct the foreclosure sale..

Post foreclosure sale activities..

Wrap-up and resources

Slide Number

3

4 - 5

6-7

8-9

10-14

15-19

20-26

27-30

31-34

35-39

40-43

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Customer Educat ion

Tools and Tips

Visit our Learning Center to view other distance learning offerings:www.FreddieMac.com/learn

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Customer Educat ion

Objectives

We want to provide you with an overview of thedefault management area with a focus on common

servicing challenges regarding foreclosure timelinemanagement.



Customer Educat ion

Agenda

Overview, challenges and best practices for foreclosuretimeline management:

Prepare for foreclosure

Selecting counsel/designated counsel and required documentation




Conduct the foreclosure sale

Bidding instructions

Reporting requirements

Post foreclosure sale activities

Expense reimbursement

Canceling insurance



Customer Educat ion

Foreclosure Process Flow



Customer Educat ion

Foreclosure Process Flow

Prepare for Foreclosure Initiate Foreclosure Manage the Foreclosure

Schedule the

Foreclosure Sale

Conduct the

Foreclosure Sale

Post-FC Sale

Responsibilities



Customer Educat ion

Accelerating the Mortgage

First-lien, not previously modified

First-lien, previously modified

Second mortgage/HIL


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Customer Educat ion

Accelerating the Mortgage- Best Practices

Send an acceleration letter as soon as youidentify that the delinquent mortgage has a

borrower no contact situation or you identify

that the property is abandoned.


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Customer Educat ion

Selecting the Foreclosure Counsel orTrustee

Designated Counsel/Trustee

Non-designated Counsel/Trustee


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Customer Educat ion

Benefits of Using Designated Counsel

Loans in the Designated Counsel program receive

foreclosure timeline benefits in the Servicer Performance

Profile Foreclosure and bankruptcy fees and costs are managed

directly between Freddie Mac and Designated Counsel

Counsel will order the BPO (Brokers Price Opinion), and

prepare the bidding instructions for the foreclosure sale

Form 104DC(hard copy or online) is the only documentationrequired for reimbursement of foreclosure and bankruptcy

costs


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Customer Educat ion

Select Foreclosure Counsel


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Customer Educat ion Select Foreclosure Counsel, contd


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Customer Educat ion

Designated Counsel- Best PracticesPromote competition by hiring two or more attorneys in

each state where your volume is sufficient to warrantusing more than one attorney. Refer business to the

firms with the best timelines and performance

Always communicate your expectations to the attorney inwriting

Give the foreclosure attorney a current list of your

department personnel including name, telephone number

and title. Update this list regularly


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Customer Educat ion

Prepare for Foreclosure

Required documentation for counsel:

Copies of Note (original if required)

Mortgage or Deed of Trust

Copy of original title insurance policy

Copy of breach,accelerations or demand letter sent toborrower

Military affidavits

Executed Substitution of Trustee, as necessary

Payoff statement with per diem interest as of the date of the

foreclosure referral


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Customer Educat ion

Documentation- Best PracticesWhen acquiring new servicing portfolios address missing

mortgage assignment problems and other loan

documentation deficiencies through due diligence

reviews

Maintain a database of information. Include contactnames and telephone numbers to help you locate

representatives of prior Servicers who may need to sign

missing assignmentsProvide all reinstatement and payoff figures within 24

hours after you receive the request


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Customer Educat ion

Question

What percentage of delays in foreclosure are due

to poor coordination between attorneys and

Servicers?

a) 5%

b) 10%

c) 30%

d) 50%


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Customer Educat ion

Question

What percentage of delays in foreclosure are due

to poor coordination between attorneys and

Servicers?

a) 5%

b) 10%

c) 30%

d) 50%


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Customer Educat ion

Collect and Prepare Documentation

Begin collecting and preparing documentation

required for foreclosure referral before theacceleration period ends.


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Customer Educat ion

Initiate Foreclosure

120th day of

(150

C t Ed t i


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Customer Educat ion

Initiate Foreclosure, contdIf the mortgage is Then

Secured by a property that has

one or more of the following

conditions:

Hazardous substances onor near the property (for

example, toxic mod, lead

paint)

Damage from fire, flood,

natural or man-madedisaster

Deterioration and requires

asset preservation

A Manufactured home thathas significantly decreased

in home value

A forfeiture or pre-seizure

action being litigated (for

example, governmentseizure)

You must not initiate foreclosure without Freddie Macs prior approval.

Perform the following steps to request Freddie Macs approval:

1. Complete Form 105, Multipurpose Loan Servicing Transmittal(for

first-lien mortgages) or Form 102, Second Mortgage/HIL Servicing

Transmittal (for second mortgages and home improvement loans).

2. Send or fax the form to the following address within five business

days of discovering the condition:

Overnight or Regular Mail Fax

Attention: Foreclosure/Bankruptcy Unit (703) 918-98019

Freddie Mac

8250 Jones Branch DriveMailstop A61McLean, VA 22102

Freddie Mac will provide you with further instructions.

C t Ed t i


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Customer Educat ion


Secured by a property

that is owned by a

borrower in active

military service

You must not initiate foreclosure without Freddie Macs prior approval.

Perform the following steps to request Freddie Macs approval to initiate

foreclosure on a property owned by a borrower in active military service:

1. Complete Form 105, Multipurpose Loan Servicing Transmittal(for first-lien mortgages) or Form 102, Second Mortgage/HIL Servicing

Transmittal(for second mortgages and home improvement loans).

2. Attach the following documentation to the Form 105 or Form 102:

Information on any statutory protection available to the servicemember

Whether the borrower has invoked any statutory protection

3. Send or fax the form and supporting documentation to the following

address:



Freddie Mac8250 Jones Branch Drive

Mailstop A61McLean, VA 22102

Freddie Mac will provide you with further instructions

Customer Educat ion


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Customer Educat ion


Secured by a property

that is owned by a

borrower that has beenreleased from active duty

Effective through December 31, 2010, you must notinitiate foreclosure or resume

foreclosure proceedings for at least 9 months after the borrower has been

released from active duty. During this period, work with the borrower to explorethe relief and workout options that Freddie Mac offers.

If you and the borrower cannot agree upon an alternative to foreclosure during

this period, you must request Freddie Macs approval to proceed with foreclosure.

To do this, send or fax us Form 105, Multipurpose Loan Servicing Transmittal:



Freddie Mac8250 Jones Branch Drive

Mailstop A61McLean, VA 22102

Customer Educat ion


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Customer Educat ion


Low Balance Mortgages

You must recommend a charge-off to Freddie Mac

instead of a foreclosure for a loan with an unpaid

principal balance (UPB) of $5,000.00 or less,

regardless of the equity in the property Refer to Section B65.50 of the Guide for information

on managing delinquent low balance mortgages

Customer Educat ion


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Customer Educat ion


Manufactured Homes

If the mortgage is secured by a Manufactured Home,you must notify the foreclosure attorney that the

property is in fact secured by a Manufactured Home

at the time of the foreclosure referral

Provide the foreclosure attorney with the appropriate

documents evidencing the property is classified asreal property, per the state laws in which the

property is located

Customer Educat ion


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Custo e ducat o

Initiate Foreclosure Best Practices

Communicate our foreclosure timeline

requirements to all of your staff and attorneys

Encourage them to actively decrease timelines

Instruct all of your staff and attorneys to strive fortimelines that are less than our published state

foreclosure timelinesMany of them include cushions for normal delays

Customer Educat ion


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Manage the ForeclosureReport the foreclosure status each month:

EDR Code 43, (Referred to Foreclosure)

No less than one time per month, and preferably more

often, the attorney should send you a status update on

each foreclosure, bankruptcy, or eviction caseAdhere to Freddie Macs allowable expenses for legal

fees and costs, and property preservation

Freddie Mac approval is required for incurring costs that exceed

those listed in Exhibits 57 and 57A of the Guide

Request approval prior to incurring the expense. Send an e-mail

to [email protected]

Customer Educat ion


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Manage the Foreclosure, contd

Process the foreclosure in your institutions namename, or MERS (Mortgage Electronic Registration

System), if applicable

Refer to section 66.17 of the Guide

Customer Educat ion


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Manage the Foreclosure, contd

Respond to borrowers actions and resolve payment

disputes

Respond to payoff and reinstatement requests within 2

business days

Report approved repayment plans by transmitting EDR

Code 12, Repayment Plan

Customer Educat ion


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Manage the Foreclosure

Best Practices

After you have initiated foreclosure, continue to pursue a

repayment plan or an alternative to foreclosure inaccordance with Chapters A65 and B65 of the Guide

Work with your attorney to promptly document the

repayment plan in a written agreement or court stipulation

that allows the foreclosure process to resume if the

borrower defaults

As a best practice, request bi-monthly status updates

from the foreclosure attorney

Customer Educat ion


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Schedule the Foreclosure Sale

Obtain a property valuation, either an automated value orBrokers Price Opinion (BPO) from us via BPODirect no

less than 30 days prior to the foreclosure sale date, toassist in establishing bidding instructions

https://www.bpodirect.net

Request Freddie Mac approval to delay a scheduledforeclosure sale if your proposed delay causes you toexceed FM timelines

Report delays to foreclosure sale, such as bankruptcy orprobate via Midanet

Refer to Exhibit 83 of the Guide, for the foreclosure

timelines, by state

Customer Educat ion


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Schedule the Foreclosure Sale Best Practices

Analyze your average timeline performance for completed

foreclosures in each state on a monthly basis If your average foreclosure timelines exceed our foreclosure

timeline in a particular state, you will have the remainder of the

calendar year to improve your performance and possibly avoidpenalties

Use Freddie Macs Timeline ManagerSM to help you proactively

manage loans through the foreclosure process

Reminder: use the appropriate EDR code when

transmitting delay reasons to Freddie Mac

Customer Educat ion


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Question

The maximum allowable delay for Chapter 7

Bankruptcy is the same as the Chapter 13

Bankruptcy?

a) True

b) False

Customer Educat ion


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Question

The maximum allowable delay for Chapter 7

Bankruptcy is the same as the Chapter 13

Bankruptcy?

a) True

b) False

Customer Educat ion


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Conducting the Foreclosure Sale-

Bidding

Instructions forConventional

Mortgages

Customer Educat ion


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Conduct the Foreclosure Sale

Freddie Mac requires servicers to report the foreclosure sale

results within one business day of the sale through the

Foreclosure Sale/DIL Transmission via Midanet

Report changes to the foreclosure sales results, or changes in

confirmation or redemption periods to Freddie Mac bysubmitting a Form 105, Multipurpose Loan

ServicingTransmittal

You can also provide us with this information via e-mail [email protected]

Report deeds in lieu of foreclosure within one business day of

receiving the executed deed

Customer Educat ion


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Question

You must report the Foreclosure Sales Results

within the first 3 business days of the month

following the foreclosure sale date?

a) True

b) False

Customer Educat ion


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Question

You must report the Foreclosure Sales Results

within the first 3 business days of the month

following the foreclosure sale date?

a) True

b) False

Customer Educat ion


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Conduct the Foreclosure Sale Best Practices

Obtain your confirmation via Midanet

indicating you have reported the foreclosure sale

results and retain for your records

Report accurate results the same day as theforeclosure sale date to:

Avoid late reporting penalties

Maximize points on your Servicer Performance Profile for the

Default Management criterion Average Number of Days to

Report Foreclosure Sales

Customer Educat ion


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Post Foreclosure Sale Responsibilities

Request reimbursement of expenses incurred up to and

including the acquisition date on Freddie Mac Real Estate

Owned (REO) properties The acquisition date is:

The foreclosure sale date or

Date of the expiration of the redemption period and/or

Confirmation/ratification date (whichever occurs last)

Request reimbursement of allowable expenses incurred afterthe acquisition date no later than 60 days after settlement of

the sale of the REO

Refer to section 71.7 of the Guide

Customer Educat ion


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Post Foreclosure Sale Responsibilities,

contd

Monitor status of the property via REO Manager

File and conclude property insurance claims, if

applicable, and cancel the existing property insurance

upon receipt of the Property Condition Certificate (PCC)and apply for premium refunds

Within 14 days of receiving the PCC indicating property is

vacant and inspected, cancel the property insurancepolicy

Customer Educat ion


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Post Foreclosure Sale Responsibilities,

contd

Pay any outstanding fees that are still owed after the

foreclosure sale such as real estate taxes and municipalliens

Pay and maintain as current special assessments, HOAdues and condo assessments, and for leasehold

properties, all payments required under the lease

Pay all utility bills incurred on an REO property after theREO acquisition until you receive the PCC


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Customer Educat ion


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Wrap-Up

We provided you with an overview of the following

default management areas with a focus on common

servicing challenges regarding foreclosure timelinemanagement:

Prepare for foreclosure




Conduct the foreclosure sale

Post-foreclosure sale activities

Customer Educat ion


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Resources

The Single-Family Seller/Servicer Guide

www.allregs.com

http://www.FreddieMac.com/singlefamily/

FreddieMac.com

Single-Family Seller/Servcier GuideBulletins

The Learning Center

Training questions

[email protected]

571-382-5214

Customer Educat ion
http://www.allregs.com/http://www.allregs.com/


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Freddie Mac Foreclosure Fraud Timeline Management

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