Freddie Mac Introduces Extend Modification for Disaster Relief

Freddie Mac issued Bulletin 2017-25 (Bulletin), introducing the Freddie Mac Extend Modification for Disaster Relief (Extend Modification). The Extend Modification is similar to the existing Capitalization and Extension Modification for Disaster Relief (Disaster Relief Modification). The primary difference between these two modification options is that the Disaster Relief Modification requires the capitalization of arrearages, while the Extend Modification does not permit the servicer to capitalize arrearages, and instead extends the mortgage term by a month equal to the number of missed monthly payments. The Extend Modification is the first mortgage modification option available in Freddie Mac’s evaluation hierarchy for borrowers impacted by an eligible disaster. The Bulletin sets forth requirements and features of the Extend Modification, including eligibility requirements, modification terms, and details regarding the collection of funds to cover escrow shortages and escrow advances. The Bulletin also announces revisions to: eligibility requirements for the Disaster Relief Modification; requirements regarding the distribution of insurance loss settlements; and requirements pertaining to borrower-requested cancellation of borrower-paid mortgage insurance. Unless stated otherwise in the Bulletin, the requirements described in the Bulletin are temporary and the Single-Family Seller/Servicer Guide will not be updated to include the requirements. Servicers must retain a copy of the Bulletin to ensure compliance with the temporary requirements. Servicers must implement the Extend Modification and the revisions to the existing Capitalization and Extension Modification for Disaster Relief no later than February 1, 2018 (however, servicers may implement earlier if operationally ready to do so). All other updates are effective immediately.

Click here to view the Freddie Mac Guide Bulletin 2017-25