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U.S. Department of the Treasury Publishes New HAMP Trial Period RequirementsJuly 6, 2009, Single-Family Advisory E-mail

Today, the U.S. Department of the Treasury published revised Home Affordable Modification program (HAMP) Trial Period requirements. In response, Freddie Mac is providing Servicers with a Frequently Asked Questions (FAQ) document and instructing Servicers to comply with the guidance contained in the FAQ document. We are requiring Freddie Mac Servicers to immediately begin following the new requirements in our FAQ when working with eligible borrowers who have Freddie Mac-owned mortgages.

Specifically, the newly issued Trial Period FAQ document provides detailed information on the Trial Period and Modification Effective Dates and reporting to the program administrator. The following is a high-level summary of the new requirements, including additional instructions for reporting to Freddie Mac and using the Borrower Qualification Worksheet.

Trial Period Effective Date

  • The Trial Period Plan Effective Date is determined by when the Servicer sends the Trial Period Plan Offer to the borrower. The Trial Period starts on the Trial Period Plan Effective Date, which is inserted by the Servicer into the Trial Period Plan.
  • A borrower’s first Trial Period payment is due on the Trial Period Plan Effective Date. However, if the borrower’s first Trial Period payment is not received by the end of the month in which it is due, Servicers must consider the Trial Period Plan offer expired.

Extension of Modification Effective Date

  • If a borrower does not make the third Trial Period payment on its due date, which is the first day of the third Trial Period month, you may include an interim month between the third Trial Period month and the day the first modified payment is due. In this case, the first modified payment due date is the first day of the second month following the final Trial Period month. The effective date of the borrower’s modified interest rate and modified principal balance is also delayed by one month to the first day of the first month following the final Trial Period month.
  • Servicers and borrowers will not be entitled to accrue incentive compensation for the interim month if the borrower does not make a Trial Period payment during that month.
  • Servicers must modify the Home Affordable Modification Agreement Cover Letter to inform borrowers of the effects of the interim month, such as the delay in the effective date of the modified interest rate, the increase in the delinquent interest capitalized, and the loss of one month’s accrual of the incentive payment if the borrower does not make an additional Trial Period payment.

Reporting to the Program Administrator

  • If a borrower’s Trial Period payment is received on or before the last day of the month in which the Trial Period Plan Effective Date occurs, Servicers must report to Fannie Mae, the program administrator, when a borrower begins the start of the Trial Period, even if all of the required documentation has not been received.
  • Servicers must provide the program administrator the Trial Period setup attributes no later than the fourth business day of the month immediately following the month in which the first Trial Period Plan Effective Date occurs, provided the first Trial Period payment was received. The program administrator must also receive the modification setup attributes by the Servicer no later than the fourth business day of the month in which the first modified payment is due.

Reporting to Freddie Mac

  • In their weekly summary level activity report, Freddie Mac Servicers must begin reporting the number of loans for which the first Trial Period payment was received, even if all of the required documentation has not been provided, and separately report the number of loans for which the Servicer executed the Trial Period Plan. We have updated the Program Performance Reporting Spreadsheet that Servicers must use for their weekly HAMP reporting to reflect these new requirements. Servicers must immediately begin using the revised spreadsheet starting with their next report. The revised spreadsheet can be on Freddie Mac’s secure HAMP Web site using your Mortgage Servicing Products ID and password.
  • When reporting the Trial Period Effective Date through Electronic Default Reporting (EDR), Freddie Mac Servicers must report default action code "09 - Forbearance Plan" and, effective October 1, 2009, default reason code "HMP" in the first EDR transmission after the first Trial Period payment was received, provided the payment was made by the last day of the month in which the Trial Period Plan Effective Date occurs.

Using the Borrower Qualification Worksheet

In the event the Servicer chooses to include an interim month between the Trial Period and the borrower’s first modified payment due date, Freddie Mac Servicers must not use the Borrower Qualification Worksheet to assist in determining the borrower’s final modification terms. Servicers are reminded that they are responsible for the accuracy of all data entered into the Worksheet by ensuring that all data is entered accurately, and for the integrity of the results. Further, Servicers are reminded that they may not use the Worksheet for any purpose other than to assist them in connection with their servicing of mortgages for Freddie Mac under the Single-Family Seller/Servicer Guide (Guide) Chapter C65.

Future Single-Family Seller/Servicer Guide Update

We will be updating our Guide requirements in a future Guide Bulletin to reflect these changes. Until this update is communicated, Servicers must adhere to the revised Trial Period requirements outlined in the Trial Period FAQ document, Therefore, it is important for Servicers to thoroughly review the Trial Period FAQ document in its entirety for complete details on these requirements and additional requirements for reporting to the program administrator. For your convenience, examples are also provided to help clarify the new Trial Period requirements.

Applicability of Other FAQ Documents Published by Treasury to Freddie Mac Servicers

Freddie Mac Servicers are reminded that they must service Freddie Mac loans being modified under HAMP solely in accordance with the requirements of Guide Chapter C65 and other Freddie Mac directives (e.g. Single-Family Advisory communications) concerning implementation of HAMP. Further, Servicers may not rely on exceptions or waivers granted by the program administrator with respect to non-GSE loans under Supplemental Directive 09-01. Instead, Servicers must consult with Freddie Mac before applying such interpretations, exceptions, or waivers to their servicing of Freddie Mac’s mortgages. Freddie Mac is in the process of reviewing other FAQ documents published by the program administrator on Treasury’s HAMP Servicer Web site to determine their applicability to the servicing of Freddie Mac loans.

For more information, visit these resources:

 

© 2009 Freddie Mac

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