Freddie Mac Establishes New Principal Reduction Modification Form (Form 1205-PR: Post Settlement Correction Request for the Principal Reduction Modification)

Freddie Mac issued Guide Bulletin 2016-18 establishing a new form to facilitate the processing of a Principal Reduction Modification. The new form is Form 1205-PR: Post Settlement Correction Request for the Principal Reduction Modification. Servicers must use Form 1205-PR for borrowers who opt out of the principal reduction post-settlement option. Servicers must also use Form 1205-PR when a borrower completes an active trial period plan under a mortgage modification program, other than a Principal Reduction Modification, if the servicer requests that forborne principal be forgiven postsettlement. The new Form is effective October 1, 2016; however, servicer may implement the new form sooner if able to do so.

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