Effective
April 1, servicers managing Freddie Mac loans will no longer be allowed to
foreclose on properties in the name of Mortgage
Electronic Registration Systems (MERS).
This was one of a several changes announced yesterday by Freddie Mac through Single-Family
Seller/Servicer Guide Bulletin 2011-5.
According to the directive, Freddie has "eliminated the option for the foreclosure counsel or trustee to conduct a foreclosure in the name of MERS. Effective for Mortgages registered with MERS that are referred to foreclosure on or after April 1, 2011, Servicers must prepare an assignment of the Security Instrument from MERS to the Servicer and instruct the foreclosure counsel or trustee to foreclose in the Servicer’s name and take title in Freddie Mac's name." In states where required the
servicer must also record the prepared assignment; Freddie Mac will not pay the
recording fees.
Using a few excerpts from the release, other
changes to foreclosure and bankruptcy procedures in the Bulletin include...
FORECLOSURE SALE POSTPONMENTS: To streamline processes, Servicers are permitted to
postpone a scheduled foreclosure sale when Freddie Mac designated counsel handles the
foreclosure, provided the newly scheduled sale date is within the state
foreclosure time lines.
REVISED REQUIREMENTS RELATING TO FORECLOSURE AND BANKRUPTCY COMPENSATION: Freddie wants to ensure foreclosure and bankruptcy related servicing obligations are met in the most cost-conscious, effective manner. These revisions include prohibiting any arrangement with
attorneys or trustees that result in financial or other direct and indirect
compensation to the servicers or an affiliate or allowing vendors and others to
influence the selection of counsel.
NEW REIMBURSABLE EXPENSES: CONNECTIVITY AND INVOICING: Freddie Mac will now reimburse Servicers for limited expenses incurred for their attorneys’ and trustees’ use of connectivity and/or invoice processing systems during the Foreclosure and bankruptcy process. The vendor must bill these charges directly to the Servicer, rather than the attorney or trustee, and the Servicer must pay the vendor directly for these charges. No charges for connectivity or invoice processing may be passed on to the Borrower, the attorney or the trustee
PROPERTY PRESERVATION – PROPERTY INSPECTIONS AND NEW REIMBURSABLE EXPENSES: Freddie has revised property preservation requirements and reimbursable expense limits for abandoned properties to allow Servicers to complete additional preservation activities without our prior approval, and to encourage proactive preservation and maintenance of abandoned properties. Effective June 1 (but
encouraged prior to that date) the Servicer must perform an interior inspection
on any property that has been abandoned upon confirmation of abandonment or
within 30 days before a scheduled foreclosure sale. Interior property inspections are now reimbursable up to a maximum amount of $20 for each inspection ($40 maximum aggregate amount per property). Freddie Mac also increased the
allowable fees for exterior inspections from a maximum aggregate amount of $16 for all required inspections to a maximum amount of $10 for each required exterior property inspection, provided that such inspections are completed within the State foreclosure time lines.
INTERACTION WITH STATE HFAs: New requirements
for Servicer interaction with State Housing Finance Agencies (HFAs) using
"Mortgage Assistance Programs". The requirement that services obtain copies
of any relevant documents describing the amount and type of financial
assistance provided to the borrower has been eliminated and changes have been
made to the timing of several reporting requirements to HFAs and to Freddie
Mac,
Servicers
are also directed to review the Detail Adjustment Report (DAR) for information
on the detailed amount that Freddie Mac has determined would be charged off in
connection with a short payoff, charge-off, or third party sale.
HERE is the full Bulletin.