Freddie Mac recently issued Guide Bulletin 2020-28 (Guide Bulletin) announcing updates regarding eligible disasters and other servicing guidance related to COVID-19.
Specifically, the Guide Bulletin provides updated guidance on: (i) eligible disasters; (ii) credit reporting requirements for borrowers impacted by an eligible disaster; (iii) a payment deferral program designed to assist borrowers who became delinquent due to a short-term hardship caused by an eligible disaster that has since been resolved (i.e., Disaster Payment Deferral); (iv) servicer incentives (e.g., extend modifications and capitalization and extension modifications); (v) insurance loss proceeds disbursements to borrowers impacted by COVID-19 hardships; (vi) electronic default reporting involving mortgages with an ongoing COVID-19 related hardship that are also impacted by an eligible disaster; and (vii) escrow shortage repayment periods following a COVID-19/Disaster Payment Deferral.
Notably, the Guide Bulletin updates the definition of “eligible disaster” to mean a financial hardship that impacts the borrower’s ability to pay his or her current contractual monthly payment, and either: (i) the property securing the mortgage loan experienced an insured loss; (ii) the property securing the mortgage loan is located in a FEMA-Declared Disaster Area eligible for individual assistance; or (iii) the borrower’s place of employment is located in a FEMA-Declared Disaster Area eligible for individual assistance.
With the exception of the provisions regarding the Disaster Payment Deferral (which become effective on October 1, 2020), the changes announced in the Guide Bulletin are effective immediately.