Hurricanes Katrina and Rita Information for Sellers and Servicers

(Revised as of June 18, 2008)

Since Hurricanes Katrina and Rita devastated the Gulf Coast in August and September 2005, we've been working closely with our Sellers and Servicers to provide ongoing assistance, relief and support to borrowers impacted by the storms.

We are proud and appreciative of the outstanding work that our Sellers and Servicers have done to help borrowers who were affected by Hurricanes Katrina and Rita. Together, we have demonstrated our mutual commitment to assist these borrowers, focusing our relief efforts on the most impacted areas, while gradually resuming normal business operations in step with the recovery progress.

To best apply Katrina-Rita specific policies to your Freddie Mac mortgages, you need to know:

• If a property securing a mortgage is located in an eligible Disaster Area, as described in our Guide Bulletins, and
• When originating mortgages in the eligible Disaster Areas, the current Zone number Freddie Mac has assigned to the county/parish in which the property is located. The three-zone methodology for mortgage servicing has been discontinued.

Our current requirements are announced in our June 17, 2008 Single-Family Seller/Servicer Guide [PDF 177K] (Guide) Bulletin.

Important Information Sellers and Servicers Need to Know About the June 17, 2008 Guide Bulletin

For Sellers

• The three-zone methodology, which assigns a zone number to each county/parish in eligible disaster areas.
• The temporary special collateral requirements announced in our special September 30, 2005 Guide Bulletin, as modified in our special May 1, 2006 Guide Bulletin. Such requirements remain in effect until further notice and continue to apply to:
  • Mortgages secured by damaged properties located in Zone One
  • Mortgages secured by properties located in Zone Two and Zone Three, regardless of the condition of the property
• Special Characteristics Code (SCC) 821 on Forms 11 and Forms 13SF, as applicable when selling mortgages affected by Hurricanes Katrina and Rita.

Temporary selling requirements for mortgages affected by Hurricanes Katrina and Rita, originally announced in our special September 30, 2005 Bulletin (and as amended by subsequent special Bulletins) will not be further extended. Mortgages originated under these temporary selling requirements must have note dates on or before June 30, 2008, and must be delivered on or before September 30, 2008. These temporary requirements will not apply to mortgages with note dates on or after July 1, 2008, and such mortgages will need to comply with the selling requirements found in a Seller's Purchase Documents.

Freddie Mac is also not extending the median income limit exemption for Home Possible® Mortgages secured by properties located in eligible Disaster Areas affected by Hurricanes Katrina and Rita. Home Possible Mortgages with note dates on or after July 1, 2008, that are secured by properties located in eligible Disaster Areas affected by Hurricanes Katrina and Rita must comply with the median income limits described in Guide Section A34.7. Home Possible Mortgages originated subject to the median income exemption must have note dates on or before June 30, 2008, and be delivered to Freddie Mac on or before September 30, 2008.

For Servicers

Temporary requirements for credit reporting and borrower-paid mortgage insurance cancellation remain in effect for eligible mortgages until no longer applicable. As of December 31, 2007, we have discontinued the following temporary servicing requirements:

• Temporary requirements for Electronic Default Reporting
• Streamlined underwriting requirements for loan modifications
• Delegation to approve a short payoff
• Documentation requirements for long-term forbearance
• A Servicers’ ability to extend forbearance on an individual assessment without prior approval from Freddie Mac

As of January 1, 2008, Servicers must follow our Guide requirements for managing distressed and abandoned properties (Sections 67.27 and 67.28) and for properties impacted by a disaster (Chapter 68).

Servicers should continue to work with borrowers to provide appropriate assistance, including continued suspension or reduction of mortgage payments, to address the particular circumstances faced by each borrower.