9102.4: Servicer collection efforts (11/14/18)

© Freddie Mac Single-Family Seller Servicer Guide

Refer to Bulletin 2018-14 and 2018-22 which announced updates to evaluation notices and Borrower solicitation letters and revisions to Borrower contact requirements and property inspection requirements. The revisions may be implemented prior to the mandatory implementation of the January 1, 2019 and March 1, 2019 versions of this section, respectively.

(a) All collection efforts The Servicer must treat each Delinquency individually by varying the collection techniques to fit the individual circumstances. The Servicer must avoid establishing a fixed routine; which is particularly ineffective when dealing with chronically delinquent Borrowers. All collection efforts must be based on the extent of the Delinquency and the Servicer's knowledge of the following factors:

Borrower's prior payment history
Borrower's credit history
Borrower's employment situation
Borrower's reason for default
Borrower's willingness and ability to repay
Borrower is deceased or the property is included as part of the Borrower's estate
Mortgaged Premises' condition
Mortgaged Premises' occupancy status

If there is a known potential risk of loss or ownership to Freddie Mac, the Borrower must be referred for loss mitigation immediately.

Borrowers on Automatic Withdrawal (Automated Clearing House (ACH))

Servicers should encourage Borrowers to set up ACH payment arrangements. If a Borrower agreed to have his or her monthly payments automatically withdrawn from a bank account, the Servicer must ensure that the correct monthly payment is withdrawn (especially after an Escrow analysis has taken place) and processed timely. If the ACH payment cannot be processed on the specified date the Borrower has agreed to, the Servicer must begin efforts to contact the Borrower within 48 hours to determine the reason for the missed payment.

(b) Minimum collection efforts The Servicer must, at a minimum:

Be readily available to the Borrower to offer financial counseling and advice on curing the Delinquency and explaining alternatives to foreclosure
Make personal contact with the Borrower as early and often as necessary to promptly cure the Delinquency. (Mortgages in Bankruptcy or litigation may be excluded if necessary under applicable law, rules of professional responsibility or court rules.)Servicers are authorized to use alternative outreach methods to contact the Borrower as permitted by applicable law including, but not limited to, e-mail, text messaging or voice response unit (VRU) technology.
Continue to contact the Borrower if satisfactory arrangements have not been made to cure the Delinquency or until the Servicer determines foreclosure is appropriate
Issue the breach letter (may also be referred to as the "notice of acceleration" or "demand letter") for all Mortgages no later than the 60th day of Delinquency. If State law requires the breach letter (or any other pre-breach letter) to be sent prior to the 60th day of Delinquency in order to be able to refer the Mortgage to foreclosure by the 120th day of Delinquency (i.e., 150 days after the DDLPI), the Servicer must send the breach letter on such earlier date. If the Servicer determines the property is vacant or abandoned pursuant to Section 9202.14, then the Servicer must:
Issue a breach letter within 10 days of the determination, provided the Mortgage is greater than 30 days delinquent and, in any case, no later than the 60th day of Delinquency; and
Refer the Mortgage to foreclosure after expiration of the breach letter, unless the Servicer establishes quality right party contact with the Borrower to resolve the Delinquency. Regardless of whether quality right party contact is achieved, the Mortgage must be referred to foreclosure no later than the 120th day of Delinquency unless one of the exceptions to postpone foreclosure referral described in Sections 9301.6 and 9301.7 applies.
Contact the lessor for leasehold Mortgages and any lender with a prior lien on the fee simple landowner/lessor's fee simple interest
Continue skip trace efforts until all reasonable sources have been attempted or contact numbers and addresses have been verified

Servicers that maintain a call center must meet minimum call center performance standards as set forth in Section 9201.5.

The following chart lists the minimum collection efforts that must be made in an attempt to bring a delinquent Mortgage current.

Note: If the day a Servicer is required to call a Borrower is not a Business Day and the Servicer is not open on such day to conduct loss mitigation and collection activities, the Servicer may call the Borrower on the next Business Day.

Days after Due Date	Action required
17	Mail late notices/reminder letters to delinquent Borrowers by the 17th day after the Due Date or the next Business Day if the 17th day after the Due Date is not a Business Day
36	Initiate contact with each delinquent Borrower as early in the delinquency cycle as possible to secure a payment or payment arrangement but no later than the 36th day after the Due Date of an unpaid monthly installment, unless ACH payment arrangements or other arrangements to cure the Delinquency have been established. The Servicer may tailor its contact attempts appropriately based on the risk characteristics of the Mortgage, each Borrower's level of Delinquency and previous payment habits and the minimum contact requirements set forth in this Section 9102.4. Borrower contact must continue at least every fifth day at varying times throughout the day until the earlier of the 210th day after the Due Date of an unpaid monthly installment or quality right party contact is achieved and: The Servicer determines that the Borrower does not want to pursue an alternative to foreclosure or the Delinquency is cured; The Servicer achieves quality right party contact and has obtained from the Borrower a promise to pay the delinquent amount by a specified date (not to exceed 30 days); A complete Borrower Response Package is received in accordance with Section 9102.5(c); or The Borrower enters into a relief or workout option with the Servicer.
45	If a Servicer has not achieved quality right party contact and a resolution to the Delinquency, the Servicer must send at least one Borrower Solicitation Package to the delinquent Borrower no later than the 45th day after the Due Date of an unpaid monthly installment. If a Servicer has achieved quality right party contact and has obtained from the Borrower a resolution to the Delinquency, the Servicer is not required to send the Borrower Solicitation Package. However, in such instance, the Servicer must comply with any early intervention notice that may be required under applicable law. If the Borrower fails to perform under the conditions of a relief or workout option, the Servicer must resume collection efforts, including sending the Borrower Solicitation Package. Generally, the Borrower Solicitation Package must include a Borrower Solicitation Letter (see Exhibit 1145), Form 710, Mortgage Assistance Application, frequently asked questions (FAQs) and foreclosure rescue scam information. However, a Servicer may choose to send only the Borrower Solicitation Letter and elect to send Form 710, FAQs and foreclosure rescue scam information upon establishing quality right party contact. In addition, the Servicer may provide the FAQs and foreclosure rescue scam information on its web site and provide a link to that information in the Borrower Solicitation Letter. See also Section 9102.5(c) for specific information on what must be included in the solicitation to the Borrower. Note: When sending the Borrower Solicitation Package, Servicers are authorized to edit Form 710, if permitted by applicable law, to exclude references to IRS Form 4506-T and IRS Form 4560T-EZ; or, to the extent required by applicable law, to indicate that such forms may be required to complete the application and the circumstances when such forms must be obtained or processed in accordance with Section 9102.5(b)(2).
45-60	Order the initial property inspection no later than day 45 and obtain a complete property inspection report by day 60 unless: (i) the Servicer has established quality right party contact or (ii) a full monthly Mortgage payment has been received within the last 30 days. If the property is found to be vacant or tenant-occupied, property inspections must continue as long as the Mortgage remains 45 or more days delinquent, regardless of whether the Servicer achieves quality right party contact. Contact each known superior lienholder, if applicable.
60	Mail the breach letter for all Mortgages, including First Lien Mortgages and modified Mortgages no later than the 60th day of Delinquency (i.e., 90 days after the DDLPI). If State law requires the breach letter (or any other pre-breach letter or notice) to be sent prior to the 60th day of Delinquency in order to be able to refer the Mortgage to foreclosure as required in Sections 9301.6 and 9301.7, the Servicer must send the breach letter on such earlier date.
60-105	Send Freddie Mac Streamlined Flex Modification Solicitation Letter and Streamlined Flex Modification Trial Period Plan Notice as set forth in Section 9102.5 to Borrowers eligible for a streamlined offer for a Flex Modification in accordance with Section 9206.3. Send 60-75 days after the Due Date of an unpaid monthly installment for an eligible Borrower with a Step-Rate Mortgage; otherwise, 90-105 days after the Due Date of an unpaid monthly installment for all other eligible Borrowers.
105 and greater	Within 15 days prior to foreclosure referral, the Servicer must review the Mortgage file to ensure that: the Servicer made every attempt to achieve quality right party contact in accordance with Section 9102.3, the breach letter has been issued and expired, at least one Borrower Solicitation Package or Borrower Solicitation Letter has been sent by the 45th day after the Due Date of an unpaid monthly installment and the response period has expired without an affirmative Borrower response, and there is neither an approved payment arrangement nor an alternative to foreclosure offer pending for which the Borrower response period has not expired.
120	Refer all Mortgages secured by properties other than Primary Residences and Mortgages secured by Primary Residences when permitted by applicable law, including First Lien Mortgages and modified Mortgages with expired breach letters to foreclosure no later than the 120th day of Delinquency (150 days after the DDLPI) unless one of the exceptions in Sections 9301.6 and 9301.7 applies
121 and greater(or earlier if referral to foreclosure occurs prior to day 120)	Refer all Mortgages secured by Primary Residences to foreclosure after expiration of the breach letter, but no earlier than 151 days from the DDLPI (121st day of Delinquency). Refer to Sections 9301.6 and 9301.7 for additional requirements related to foreclosure referral.
211	After the 210th day after the Due Date of an unpaid monthly installment, the Servicer has discretion on the continuation and frequency of contact attempts with a delinquent Borrower. However, the Servicer must discontinue all contact attempts 60 days prior to a foreclosure sale date for a judicial foreclosure or 30 days prior to a foreclosure sale date for a non-judicial foreclosure, unless the Servicer is required to continue contact attempts by applicable law.

Use of a Collection and Loss Mitigation Tool

Servicers may use their own methodology or a tool that uses statistical models to predict worsening Delinquency and use the results of the tool to tailor its collection efforts ("Collection and Loss Mitigation Tool"), to determine when contact attempts should begin. Regardless of the methodology or tool employed, Servicers must comply with the minimum collection time frames in this section even if a Collection and Loss Mitigation Tool is used, including initiating contact attempts no later than 36 days after the Due Date of an unpaid monthly installment. Servicers using a Collection and Loss Mitigation Tool when managing contact attempts must make model specifications and code available to Freddie Mac upon request.

Servicers must conduct periodic reviews to ensure the effectiveness of the Collection and Loss Mitigation Tool, including compliance with applicable laws, such as anti-discriminatory laws. Freddie Mac reserves the right to require a Servicer to discontinue the use of a Collection and Loss Mitigation Tool for Freddie Mac Mortgages.

(c) Special Servicing, Early Delinquency Counseling and NextJob® re-employment services The requirements for special Servicing, Early Delinquency Counseling and NextJob® re-employment services, as described in this section, apply to Freddie Mac Home Possible® Mortgages (see Chapter 4501).

(i) Special Servicing — Welcome Letter Servicers must send the Borrower a letter, shortly after closing and before the first Mortgage payment is due, stressing the importance of making timely payments and advising the Borrower to contact the Servicer if he or she experiences any financial problems. The letter may be incorporated into the welcome letter sent to Borrowers after closing. The letter must include the following:

Instructions on how to contact the Servicer if the Borrower is having difficulty making the Mortgage payment on time
The Servicer's business hours
A toll-free telephone number to reach the Servicer

(ii) Early Delinquency Counseling — The following provisions apply to Early Delinquency Counseling:

Early Delinquency Counseling is counseling provided to a delinquent Borrower by a nonprofit third-party homeownership-counseling agency or an eligible Servicer, that involves identifying the reason(s) a Borrower did not make a Mortgage payment on time and working with the Borrower to resolve any financial problems so that future Mortgage payments can be made on a timely basis. The counseling includes a personal and interactive relationship with the Borrower that deals with money management, budgeting and debt management counseling.
Applicable Time Periods. Servicers must offer Early Delinquency Counseling including household budget management counseling at no charge to delinquent Borrowers for each Delinquency that occurs during the first year following the Note Date. In addition, if at any time during the life of the Mortgage, the Borrower is having difficulty making Mortgage payments, the Servicer should advise the Borrower to speak with the Servicer or contact a counseling agency for further assistance.
The Servicer must provide counseling in accordance with at least one of the following options:
A nonprofit third-party homeownership counseling agency
A Servicer. The Servicer may conduct the counseling provided the Servicer has policies and procedures in place to offer the same kind of comprehensive counseling, budgeting and advising capabilities as a counseling agency.
A HUD-approved national counseling agency specified by Freddie Mac. The Servicer may use this option to refer delinquent Borrowers with Home Possible Mortgages to Freddie Mac for counseling services provided by a national counseling agency, without charge to the Servicer. To refer a delinquent Borrower for counseling services provided by an agency, the Servicer must complete the "Counseling Agency-Servicer Referral" template in accordance with the instructions provided in the template and send the referral via secure e-mail to Freddie Mac at FM_Counseling_Outreach@Freddiemac.com. The template is accessible at http://www.freddiemac.com/singlefamily/docs/counseling_servicer_referral.xls. The template contains instructions for carrying out referrals to the agencies and for identifying Mortgages that are ineligible for referral. After Freddie Mac receives the referral, Freddie Mac and the agency will contact the Borrower to offer counseling services to the Borrower. For more information about the network of national counseling agencies, Servicers should visit Freddie Mac's My Home web site at http://myhome.freddiemac.com/mortgage-help/trusted-advisors.html.

If a Servicer relies on a counseling agency, it must be fully aware of the status or outcome of all counseling efforts the counseling agency undertakes with a specific Borrower.

Initial Contact with delinquent Borrower. If the Borrower is experiencing a Delinquency, the Servicer must:
Send a letter advising the Borrower of the availability of free counseling
Contact the delinquent Borrower to determine the Borrower's current financial situation and the reason for the Delinquency
Counseling Process and Actions. The counseling must include the following:
Analyzing the Borrower's financial situation and developing a plan of action for solving the Delinquency, which in most cases will be a budget worksheet or workout plan giving priority to the Mortgage payment
Developing a budget and debt repayment plan enabling the Borrower to meet his or her financial obligations
Reviewing the budget worksheet or workout plan with the Borrower and the Servicer, if applicable, so a decision can be made on how to proceed
In addition to minimum collection efforts set forth in this section, the Servicer must offer Early Delinquency Counseling no later than the 30th day after the Due Date and schedule or conduct the initial counseling session with the Borrower no later than the 45th day after the Due Date.
Mortgage file. Regardless of whether the Servicer or a counseling agency provides the counseling, the Servicer must include in the Mortgage file:
A copy of the "Welcome Letter" as described in Section 9102.4(c)(i)
The date(s) that counseling was offered
The Borrower's response(s)
The name of the counseling agency providing the counseling (if not the Servicer)
A brief summary of the results of the counseling
Transfer of Servicing. If the Mortgage is included in a Transfer of Servicing before the end of the one-year period during which Early Delinquency Counseling is required, the transferee Servicer must be informed of the requirement and must be able to provide the required counseling or make arrangements for a counseling agency, as necessary.

(iii) NextJob re-employment services Increasing homeownership opportunities in underserved markets across the nation, including in rural and high-needs areas, is a key component of Freddie Mac's Duty to Serve plan. High-needs areas include middle Appalachia, the lower Mississippi Delta and colonies and other tracts located in areas subject to persistent poverty. As part of our Duty to Serve plan, we are providing an opportunity for distressed Borrowers with a Home Possible Mortgage who reside in a high-needs area to receive re-employment services through NextJob. NextJob is a re-employment services company that assists Borrowers with job search skills and training to increase the Borrower's likelihood of re-employment after the loss of a job, reduced hours or other employment challenges that threaten the Borrower's ability to make timely mortgage payments. NextJob will contact the Borrower and offer re-employment services, which include:

One-on-one job coaching
Access to "Job Talk" webinars, and
Access NextJob's proprietary online job search training program

Servicers are encouraged to refer Borrowers with Home Possible Mortgages in Duty to Serve high-needs areas (refer to Exhibit 40, Duty to Serve High-Needs Areas) who have suffered a loss of income due to unemployment or underemployment to Freddie Mac for referral to NextJob.

The Borrower qualifications appear in the table below:

NextJob Re-employment Services Eligibility Requirements
Borrower eligibility	The Borrower must have: · Suffered a loss of income due to unemployment or underemployment, and · Requested loss mitigation assistance from the Servicer
Mortgage eligibility	The Mortgage must be: · Located in a designated Duty to Serve high-needs area listed in Exhibit 40 · A Home Possible Mortgage
Eligibility exclusions	The following Borrowers are not eligible for NextJob re-employment services: · Borrowers who are 12 months or more delinquent at the time of Servicer evaluation · Borrowers in active repayment plans · Borrowers in active modification Trial Period Plans · Borrowers approved for short sales or deeds-in-lieu of foreclosure · Borrowers with Mortgages: o Subject to active non-routine litigation o Subject to active bankruptcy proceedings o That is FHA, VA or RHS insured o With a foreclosure sale scheduled within the next 60 days, or o That have been referred to foreclosure if the parties are in mediation

If a Borrower meets the eligibility criteria above, Servicers participating in the NextJob program must provide the following information to Freddie Mac on a Microsoft Excel® spreadsheet for each Borrower the Servicer is referring, in the format provided in Exhibit 41, NextJob Referral Template for Borrowers with Home Possible Mortgages, which includes the following information:

Freddie Mac loan number
Borrower name
Borrower phone number
Borrower State of residence, and
Servicer contact name and e-mail address

The Servicer must send the Excel spreadsheet to Rural_Borrower_Help@FreddieMac.com up to twice per month only on the 15th or 30th day of the month. Servicers with no eligible Borrowers for a particular month are not required to make a submission.

Three to six Business Days after receiving the submission, Freddie Mac will e-mail the Servicer a list of Borrowers who were referred to NextJob.

NextJob will contact Borrowers by phone and work with them to complete the "Homeowner Re-employment Registration" and "Waiver Agreement" to initiate the re-employment services. NextJob will attempt to contact the Borrowers for 20 days. NextJob will provide job skills services and ask the Borrower to complete a survey at the end of the skills training.

Freddie Mac will e-mail the Servicer monthly updates in a report entitled "Disposition of NextJob Referrals."