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Fannie and Freddie Mac Insured Loss Events Updates

Fannie Mae and Freddie Mac previously published bulletins in November of 2017, providing temporary disaster-related insured loss settlement servicing requirements applicable to any mortgage loan where the property securing the mortgage, or the borrower’s place of employment, was located in a FEMA-Declared Disaster Area eligible for Individual Assistance impacted by a disaster on or after August 25, 2017. To review Proctor’s previous detailed communication on this topic, click here.

In efforts to expedite the release of loss settlement funds, Fannie and Freddie announced the temporary requirements would be incorporated into the Guide. These requirements will no longer be limited to losses caused by an eligible disaster. Servicers are encouraged to implement these changes immediately, but must do so by July 1, 2019.

In order to provide an atmosphere where Servicers may focus their efforts on assisting delinquent borrowers, disaster-related guidelines are changing to provide more flexibility. Where Servicers were required to ascertain the number of impacted mortgages and the extent of damage caused to properties in the event of a disaster, it is now permissible for Servicers to forgo this action if the mortgage was current or 30 or fewer days delinquent at the time of the disaster. However, Servicers are required to initiate collection efforts if the borrower subsequently becomes more than 30 days delinquent.

To review the impacted Guide sections and associated revisions, see:
Fannie Mae Bulletin SVC2019-02 and Guide Sections B-5-01 and D1-3-01
Freddie Mac LL2019-08 and Guide Sections 8202.11 and 8404.2

Proctor will continue to monitor these topics and provide updates as they develop.