On April 22, 2020, as part of its response to the COVID-19 Crisis, Freddie Mac issued Bulletin 2020-12, addressing temporary changes to its selling requirements intended to alleviate issues presented by crisis-related forbearances.
For purposes of Bulletin 2020-12, “Note Date” has specific meanings defined in the letter, as applicable: “to the modification date for Seller-Owned Modified Mortgages, the Conversion Date for Seller-Owned Converted Mortgages, the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages, or the assumption agreement date . . . .”
The Bulletin defines “mortgage in forbearance” to be one in which the borrower: 1) requested forbearance and attested to hardship as required; or 2) was approved for a forbearance as a result of financial hardship related to the COVID-19 crisis that occurred after the Note Date.
The bulletin notes that loans in forbearance are generally not suitable for sale, and that sellers or servicers who are aware that the borrower has requested forbearance due to financial hardship are generally considered to be aware of circumstances that materially affect the value of the mortgage, making it ineligible to sell. Nonetheless, Freddie Mac is “temporarily updating [its] Mortgage eligibility requirements to allow Sellers to deliver certain Mortgages in forbearance that would not otherwise be eligible for sale under the Guide.” The Bulletin lays out specific requirements for eligibility of loans to be delivered to it on which the borrowers have been detrimentally affected by financial hardship due to COVID-19.
Specific dates and qualifications apply depending on contract type, and the bulletin should be referred to for those specifics. The Guide will not be updated to reflect these temporary changes.
Freddie Mac also issued an FAQ for mortgages in forbearance, referenced explicitly in the Bulletin, which is available here.