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12.2.3.5 Transition Following a Forbearance Plan

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Before the borrower’s forbearance plan concludes, the servicer should attempt to obtain QRPC with the borrower in order to determine if the hardship has been resolved and, if not, how it may be resolved. The servicer should consider the borrower’s current financial circumstances and the status of the mortgage at the time of the disaster.152

Transition evaluation options available after October 1, 2020, are dependent upon whether or not the servicer obtained QRPC with the borrower and whether or not the borrower was on a Trial Period Plan (TPP) at the time of the disaster.153 If the borrower is current or fewer than sixty days delinquent (i.e., had not missed more than one monthly mortgage payment) as of the eligible disaster and QRPC is obtained, then the servicer must determine whether or not the borrower is able to resolve the delinquency through a reinstatement or repayment plan. If the borrower can resolve the delinquency through a reinstatement or repayment plan, then the servicer should accept a reinstatement and/or enter a repayment plan with the borrower. If the borrower is not able to resolve the delinquency through a reinstatement or repayment plan, then the servicer should evaluate the borrower in accordance with the following disaster evaluation hierarchy:

  • 1. Disaster Payment Deferral;
  • 2. Freddie Mac Flex Modification;
  • 3. Freddie Mac Standard Short Sale;
  • 4. Freddie Mac Standard Deed in Lieu of Foreclosure.154

If the borrower was sixty days or more delinquent (i.e., had missed more than one monthly mortgage payment) as of the date of the disaster, then the servicer must evaluate the borrower in accordance with the standard loss mitigation evaluation hierarchy set out in section 9201.2 of the Seller/Servicer Guide.155

If the servicer has not obtained QRPC during the forbearance plan, then the servicer must proactively solicit the borrower and offer a Disaster Payment Deferral within fifteen days after the expiration of the forbearance plan if the borrower was current or fewer than sixty days delinquent as of the date of the disaster and the mortgage does not meet any of the eligibility exclusions for a Disaster Payment Deferral.156

To proactively solicit a borrower for a Disaster Payment Deferral, the servicer must send a solicitation letter and a Disaster Payment Deferral Agreement. The solicitation letter must, at a minimum, provide the details of the Disaster Payment Deferral and instructions on how to accept the offer. The letter must also include language that additional forbearance options are available (as applicable) if the borrower’s hardship is ongoing, or that a Freddie Mac Flex Modification may be available if the borrower needs payment relief.157 If the borrower is ineligible for a solicitation for a Disaster Payment Deferral or the borrower was eligible for a Disaster Payment Deferral but declined the offer, the servicer must determine if the borrower is eligible for a streamlined offer for a Flex Modification.158

If a borrower who was performing in accordance with the terms of a Trial Period Plan (TPP) is placed on disaster-related forbearance, the servicer, within thirty days prior to the end of the forbearance period, must determine whether the borrower’s financial circumstances continue to be adversely impacted by the disaster. Such a determination is based on verbal confirmation with the borrower about their current financial condition and the most recent property inspection or the current conditions of the property based on discussions with the borrower.159

Footnotes

  • 152 See Freddie Mac Single-Family Seller-Servicer Guide, § 8404.6, Transition following disaster-related forbearance; Freddie Mac, Disaster Relief Reference Guide 4 (updated Nov. 2020), available at https://sf.freddiemac.com.

  • 153 As of October 1, 2020, Freddie Mac eliminated the Extend Modification for Disaster Relief (Extend Modification) and the Capitalization and Extend Modification for Disaster Relief (Disaster Relief Modification) as available loss mitigation options and replaced those options with the Payment Deferral for Disaster Relief (Disaster Payment Deferral). Freddie Mac, Disaster Relief Reference Guide 5 (updated Nov. 2020), available at https://sf.freddiemac.com. The Disaster Payment Deferral, which replaces the Extend Modification and the Disaster Relief Modification, was introduced on July 15, 2020 in Freddie Mac Bulletin 2020-28. Freddie Mac Bulletin 2020-28, Eligible Disasters and other Servicing Guidance Related to COVID-19 (July 15, 2020), available at https://guide.freddiemac.com. The Disaster Payment Deferral became effective as of October 1, 2020, and evaluation for this option was mandatory as of that date.

  • 154 Freddie Mac Seller/Servicer Guide, § 9203.26(d), Disaster Payment Deferral.

  • 155 Freddie Mac Seller/Servicer Guide, § 9203.26(d), Disaster Payment Deferral.

  • 156 Freddie Mac Seller/Servicer Guide, § 9203.26(d), Disaster Payment Deferral. Mortgages that are ineligible for a Disaster Payment Deferral include: FHA/VA and Guaranteed Rural Housing loans; mortgages subject to recourse; mortgages subject to an approved short sale or deed in lieu of foreclosure; mortgages subject to a previous Disaster Payment Deferral related to the same eligible disaster event; mortgages currently subject to an unexpired offer to the borrower for a mortgage modification or other alternative to foreclosure; and borrowers currently performing under a modification Trial Period Plan, a non-disaster forbearance plan, or repayment plan. Id. at § 9203.26(a)(v), Disaster Payment Deferral.

  • 157 Freddie Mac Seller/Servicer Guide, § 9203.26(c), Disaster Payment Deferral.

  • 158 Freddie Mac, Disaster Relief Reference Guide 7 (updated Nov. 2020), available at https://sf.freddiemac.com.

  • 159 Freddie Mac, Single-Family Seller/Servicer Guide, § 8404.6(c), Transition following disaster-related forbearance.