SELLING GUIDANCE RELATED TO COVID-19 TEMPORARY

TO: Freddie Mac Sellers May 19, 2020 | 2020-17

We are reissuing Bulletin 2020-17 on May 22, 2020 to notify Sellers of a correction to the original publication.

When the Bulletin was first published on 5/19/2020 at 1pm, the language in the last column of the “is subject to a

repayment plan” row in the Eligibility Requirements table incorrectly included the language “being refinanced or

any other Mortgage” at the end of the statement. This language was removed from the table in AllRegs as of

5/19/2020 at 4:42pm and has also been removed in this reissuance. In addition, we are updating the second

column (Eligibility requirements) of that same row of the table, to add the word “consecutive” to more

specifically describe the three payment requirement. No other changes have been made to the Bulletin.

SUBJECT: SELLING GUIDANCE RELATED TO COVID-19

We continue to work closely with Fannie Mae under the guidance of the FHFA to address the ongoing economic

implications and uncertainty related to the coronavirus disease (COVID-19) pandemic and its impacts on Borrowers and

the Mortgage origination process.

This Bulletin provides:

• Temporary purchase and refinance eligibility requirements for Borrowers with existing Mortgages

• An update to representation and warranty framework requirements related to Mortgages subject to forbearance

agreements

• An extension of temporary requirements for purchase of Mortgages in forbearance

We are also reminding Sellers of additional resources, including our Selling FAQs related to COVID-19, which we

continue to update.

Note Date references

All references to the Note Date refer to the modification date for Seller-Owned Modified Mortgages, the Conversion Date

for Seller-Owned Converted Mortgages, the Effective Date of Permanent Financing for Construction Conversion and

Renovation Mortgages, or the assumption agreement date, as applicable.

TEMPORARY PURCHASE AND REFINANCE ELIGIBILITY REQUIREMENTS FOR BORROWERS

WITH EXISTING MORTGAGES

In an effort to support responsible lending and sustainable homeownership during this unprecedented COVID-19

pandemic, we are implementing the following temporary purchase and refinance requirements for Borrowers with

existing Mortgages.

Effective date

These temporary requirements are effective for Mortgages with Application Received Dates on and after

June 2, 2020 and until further notice. Sellers are encouraged to implement these requirements to their loans in

process.

Eligibility requirements

In addition to meeting all other requirements of the Purchase Documents and regardless of the Loan Product

Advisor

Risk Class, as of the Note Date of the new Mortgage, each existing Mortgage on which the Borrower is

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obligated that is secured by either the subject property or any other 1- to 4-unit residential property, must meet the

requirements described in the following table:

If any existing Mortgage …

Eligibility requirements

Use of proceeds if the subject

transaction is a “no cash-out” or

cash out refinance

Is current as of the Note Date (i.e., the

Borrower made all Mortgage

payments due in the month prior to

the Note Date no later than the last

Business Day of that month) and not

in a repayment plan, loan modification

Trial Period Plan, Payment Deferral or

subject to another loss mitigation

program

No additional eligibility requirements

As stated in Guide Sections

4301.4 and 4301.5

Is not current as of the Note Date (as

defined above) OR is in a repayment

plan, loan modification Trial Period

Plan or Payment Deferral

The new Mortgage is ineligible unless

the amounts outstanding on any existing

Mortgage are resolved by meeting the

applicable additional eligibility

requirements below

N/A

Was fully reinstated on or after the

Application Received Date but prior to

the Note Date

Seller must document the source of

funds used for reinstatement. The

source of funds must be an eligible

source as described in Section 5501.3.

Proceeds may not be used to

reinstate the Mortgage being

refinanced or any other Mortgage

Additional eligibility requirements

Is subject to a repayment plan

The Borrower must either:

(i) Have successfully completed the

repayment plan, OR

(ii) Be performing under the plan (i.e.,

has not missed any payments due

under the plan) and must have

made at least three consecutive

payments

In connection with the Mortgage

being refinanced, proceeds may

be used to pay off the remaining

payments under the repayment

plan

Is subject to a Payment Deferral

The Borrower must have made at least

three consecutive timely payments

following the approval of the payment

deferral agreement

In connection with the Mortgage

being refinanced, proceeds may

be used to pay off the deferred

amount under the Payment

Deferral

Is subject to a modification Trial

Period Plan

The Borrower must have successfully

completed the Trial Period Plan

In connection with the Mortgage

being refinanced, proceeds may

be used to pay off the modified

Mortgage

Is subject to a loss mitigation program

not mentioned above

The Borrower must either:

(i) Have successfully completed the

loss mitigation program, OR

In connection with the Mortgage

being refinanced, proceeds may

be used to pay off the remaining

payments under the program

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If any existing Mortgage …

Eligibility requirements

Use of proceeds if the subject

transaction is a “no cash-out” or

cash out refinance

(ii) Be performing under the program

(i.e. has not missed any payments

due under the program) and must

have made at least three

consecutive full monthly payments

Documentation requirements and guidance

In addition to reviewing the Borrower’s credit report, Sellers must exercise additional due diligence to verify whether

or not each Mortgage is current (as defined above), has been reinstated after the Application Received Dates, or is in

a repayment plan, loan modification Trial Period Plan, Payment Deferral or is subject to another loss mitigation

program, as well as whether the additional requirements in the table above are met, if applicable. The Seller must

include any related documentation in the Mortgage file. Examples of ways the Seller may confirm compliance with

the above requirements include:

• Reviewing the payment history provided by the servicer(s) for each existing Mortgage

• Reviewing the Borrower-provided Mortgage statements or electronic Mortgage history for each existing Mortgage

• Using a third-party verification service to confirm Mortgage payment history

• For Mortgages being refinanced, reviewing the pay-off statement

Evaluation of Mortgage payment history for Manually Underwritten Mortgages

For Manually Underwritten Mortgages, Mortgage payments missed during COVID-19-related forbearance are not

considered significant derogatory credit information for the purpose of compliance with requirements in Section 5202.5.

Enhanced Relief Refinance

Mortgages

These temporary requirements do not apply to Enhanced Relief Refinance

Mortgages. All of the requirements in Guide

Chapter 4304, including the payment history requirements applicable to the Mortgage being refinanced and the use of

refinance proceeds, continue to apply.

Loan Product Advisor

and Guide updates

Loan Product Advisor

feedback messages and the Guide will not be updated to reflect these temporary requirements.

REPRESENTATION AND WARRANTY FRAMEWORK RELIEF FOR MORTGAGES SUBJECT TO

FORBEARANCE AGREEMENTS

Effective immediately, we are updating our requirements such that a Mortgage that was subject to a forbearance

agreement during the payment history period may be eligible for relief from enforcement of selling representations and

warranties regardless of the forbearance agreement, provided the acceptable payment history requirements in Section

1301.11 are met. These Mortgages also continue to be eligible for relief based on a satisfactory conclusion of a Freddie

Mac quality control review of the Mortgage file if the Mortgage otherwise meets the requirements in version 2 of the selling

representation and warranty framework.

Section 1301.11 will be updated with a future Bulletin to remove the requirement that in order to qualify for selling

representation and warranty relief, a Mortgage must not have been subject to a forbearance agreement during the

payment history period.

EXTENSION OF TEMPORARY REQUIREMENTS FOR PURCHASE OF MORTGAGES IN

FORBEARANCE

We are extending the temporary requirements for purchase of Mortgages in forbearance announced in Bulletin 2020-12.

These requirements are now effective for Mortgages with Note Dates on or after February 1, 2020 and on or before

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June 30, 2020, and Settlement Dates on or after May 1, 2020

and on or before August 31, 2020. The chart below has

been updated to reflect these changes.

Contract type

Additional effective date requirements

Guarantor and MultiLender Contracts

• Mortgages with Note Dates on or after February 1, 2020 and on

or before March 31, 2020 must have Settlement Dates on or

before May 31, 2020

• Mortgages with Note Dates on or after April 1, 2020 and on or

before June 30, 2020 must have Settlement Dates on or before

August 31, 2020 (Revised)

Cash Contracts: Mortgages that are in

forbearance, but not yet delinquent

Cash Contracts: Mortgages that are in

forbearance, that are no more than 30 days

delinquent

The Cash Settlement Date must be no later than the 20th of the month

after the month the Mortgage became 30 days delinquent (see the

definition below).

For example:

• Notes with a first payment due date of April 1: If the Borrower

does not pay the April payment, the Mortgage will become 30

days delinquent at the close of business on April 30. For these

loans, the Settlement Date must be on or before May 20.

• Notes with first payment due dates of April 2 – April 30: If the

Borrower did not pay the April payment, the Mortgage will

become 30 days delinquent at the close of business on May

31. For these loans, the Settlement Date must be on or before

June 20.

ADDITIONAL RESOURCES

We encourage Sellers to review the following resources:

• Freddie Mac Single-Family web page on COVID-19

• Freddie Mac Selling FAQs related to COVID-19

• The Center for Disease Control’s web page on COVID-19

• The Appraisal Foundation’s Appraiser Qualifications and Standards Q&As

• The Appraisal Institute’s Coronavirus-related Direction for Appraisers

• National Association of Realtors Coronavirus Guide for Realtors

CONCLUSION

We appreciate the support that Sellers continue to extend to Borrower coping with hardships attributed to COVID-19. If

you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or

call the Customer Support Contact Center at 800-FREDDIE.

Sincerely,

Danny Gardner

Senior Vice President, Client and Community Engagement