June 30 Guide Bulletin Announces Important Document Custodial Operational Changes June 30, 2009, Single-Family Advisory E-mail

With our June 30 Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-16, we are announcing that beginning October 1, 2009, Freddie Mac will no longer directly provide note certification and custody services. Freddie Mac will transfer the notes and related documents currently held by Freddie Mac's Document Custodial Operations (DCO) to the Designated Custodian, The Bank of New York Mellon Trust Company, N.A. (BNYM).

On or before October 1, 2009, each Seller/Servicer currently using DCO must submit the appropriate forms and other documents, as detailed below and in the Guide Bulletin, to establish a custodial relationship with either BNYM or another third-party document custodian.

Today's Guide Bulletin provides detailed information on:

Seller and Servicer responsibilities related to note delivery, certification and custody during the transition period which begins October 1, 2009. The transition period extends to the Effective Date of the Custodial Relationship the Servicer must establish with either the Designated Custodian or another third-party document custodian.
The process and requirements with respect to contracting with the Designated Custodian or, at the Seller/Servicer’s option, another third-party document custodian
The announcement of a new Form 1035DC, Designated Custodial Agreement: Single-Family Mortgages, that must be used to establish a custodian relationship with BNYM
Document custody fees and charges information

In addition, as a result of the upcoming DCO change, we are announcing that:

Sellers selling mortgages to Freddie Mac through the Freddie Mac selling system Servicing Released Sales Process must establish a contractual relationship with the Designated Custodian and deliver notes for such mortgages to the Designated Custodian for certification
Sellers must deliver the Intervening Assignments when delivering notes to any document custodian
In connection with Transfers of Servicing or transfers of custody, Servicers must deliver Intervening Assignments to the document custodian, including BNYM, in its capacity as vendor/agent for Freddie Mac or as Designated Custodian

What you need to know

Below is some high-level information and key dates regarding the upcoming DCO changes. We highly recommend reading today's Guide Bulletin for more detailed information.

Servicers currently using DCO to hold the notes for mortgages they serviced for Freddie Mac will receive Designated Custodian Registration Forms, via e-mail, in mid-July to enable them to submit the documents required to enter into an agreement with BNYM as Designated Custodian by October 1, 2009.
If a Seller/Servicer currently using DCO’s custodial services elects to use a third-party document custodian other than BNYM, they must follow the procedures provided in Guide Chapter 18, with respect to contracting with a document custodian and transfers of custody, which include, but are not limited to, submitting Form 1035, Custodial Agreement: Single-Family Mortgages.
Each Seller/Servicer will be notified of the Effective Date of its Custodial Relationship with the Designated Custodian or another third-party document custodian.
If you are an impacted Seller or Servicer and do not receive the e-mail package of forms by July 24, 2009, or if you are electing to use a third-party document custodian other than BNYM and have questions regarding the Form 1035, please contact Freddie Mac at institutional_eligibility@freddiemac.com or call the Counterparty Credit Risk Management (CCRM) customer service line (571) 382-3434, option 2.

Key Transition Dates

Through 09/30/09

Sellers currently using Freddie Mac’s DCO to certify notes should continue to deliver notes for certification according to existing Guide requirements.
Servicers should continue to deliver supplemental documents, return previously released documents and request release of documents from DCO according to existing requirements.

On or before this date, each Seller/Servicer currently using DCO must submit either

Form 1035DC, Designated Custodial Agreement, and related forms to BNYM to establish a relationship with BNYM, as Designated Custodian; or
Form 1035, Custodial Agreement, executed by the Seller/Servicer and a third-party document custodian, to Freddie Mac requesting approval to enter into a custodial relationship with a third-party document custodian.

10/01/09

The notes and related documents currently held by Freddie Mac at its DCO facility will be moved to a BNYM vault on or before this date.
Beginning on this date, Sellers who use DCO to certify notes and Sellers selling mortgages under the Servicing Released Sales Process must deliver the notes and intervening assignments for certification to DCO, in care of BNYM, at a new address. In addition, for mortgages sold through MIDANET®, Sellers must deliver a separate file containing all of the data that must be certified.
BNYM, as agent for Freddie Mac, will certify and maintain custody of the notes delivered or transferred to it, beginning on this date and through the Custodial Agreement Effective Date.

Between 10/01/09 and the Effective Date of the Custodial Agreement

Sellers and Servicers must use the following address when delivering notes for certification to DCO, delivering supplemental documents or returning previously released documents:

Freddie Mac – Document Custodial Operations
c/o The Bank of New York Mellon Trust Company, N.A.
2220 Chemsearch Blvd., Suite 150
Irving, TX 75062

For more detailed information

We have many resources to help with this transition:

Review the June 30, 2009 Guide Bulletin for more detailed information on topics such as fees and charges, timing of data in the selling system, Form 16SF, Annual Eligibility Certification Report, and document custodial functions that will remain at Freddie Mac.
Visit our Document Custody Web page for transition related updates.
Questions regarding the Designated Custodian Registration Forms should be directed to BNYM, at either FreddiemacCustodian@bnymellon.com, or the BNYM Document Custody Support Line at (800) 211-2677.
Contact your Freddie Mac representative or (800) FREDDIE for any other transition-related questions.