7101.4: Additional conditions for Transfers of Servicing (08/13/18)

Owned by Kacey Olson
Nov 23, 2018
3 min read

© Freddie Mac Single-Family Seller Servicer Guide

As a condition of Freddie Mac's approval of a Transfer of Servicing request, the Transferor Servicer and Transferee Servicer must warrant that they have met the additional requirements in this section with respect to the Mortgages related to the Transfer of Servicing.

(a) Mortgage insurance coverage The Transfer of Servicing must comply with the requirements of each MI that insures any of the Mortgages. Before the Effective Date of Transfer, the Transferor Servicer must obtain a commitment from each MI to continue to provide coverage required by Freddie Mac for the benefit of the Transferee Servicer. If any MI will not continue to provide coverage for the benefit of the Transferee Servicer, the Transferor Servicer must obtain a written commitment by another MI to provide equivalent coverage.

(b) Negotiated transactions The Mortgages related to the Transfer of Servicing must not be subject to a negotiated contract that prohibits Transfers of Servicing.

(c) Additional delivery data for Concurrent Transfers of Servicing For Concurrent Transfers of Servicing, the additional Mortgage delivery data required must be submitted by:

  • The Transferor Servicer if the data are submitted at the time the Mortgages are delivered to Freddie Mac, or
  • The Transferee Servicer if the data are submitted after Mortgage delivery

The Transferor Servicer must obtain Freddie Mac's approval before Mortgage delivery for the Transferee Servicer to submit the data after Mortgage delivery.

If Freddie Mac approves post-delivery submission of the data, the Transferor Servicer must provide to the Transferee Servicer copies of the origination file documents required to complete accurate data delivery.

(d) Participations The participation interest the Seller/Servicer retains for Mortgages sold in part to Freddie Mac must be retained by the Transferor Servicer or sold to the Transferee Servicer in an approved Transfer of Servicing.

(e) Mortgages in a Trial Period The Transferor Servicer must provide special notification to the Transferee Servicer of each Mortgage related to the Transfer of Servicing that is subject to a Trial Period Plan and must confirm that the Transferee Servicer is aware of and agrees to assume the additional responsibilities associated with the Servicing of these Mortgages. If the Transfer of Servicing involves Mortgages in a Trial Period or already subject to a modification, the Transferor Servicer must affirmatively answer the related questions in the Freddie Mac Service Loans application and identify the applicable modification initiative on the Proposed Mortgage List and Final Mortgage List, as those terms are identified in Section 7101.2(b) (e.g., Home Affordable Modification ProgramSM (HAMP®), Freddie Mac Standard Modification, Freddie Mac Streamlined Modification, Freddie Mac Flex Modification®, etc.).

(f) Modified Mortgages that have a step-rate provision or partial principal forbearance The Servicer must affirmatively answer the appropriate question in the Service Loans application regarding whether any of the Mortgages related to the Transfer of Servicing includes modified Mortgages that have a step-rate provision (i.e., the interest rate is subject to incremental increases beginning in year 6 of the modification) or a partial principal forbearance.

(g) Mortgages modified electronicallyHAMP Mortgages are the only Mortgages that were permitted to be modified using Electronic, as defined in Chapter 1401, modification agreements. If any of the Mortgages related to the Transfer of Servicing have been modified electronically, the Transferor Servicer must respond affirmatively to that question in the Service Loans application. See Section 9205.20(b) for requirements governing the HAMP eModification Agreement.

(h) Maintain financial eligibility requirements Prior to the Effective Date of Transfer, the Transferor Servicer must evaluate whether or not the proposed Transfer of Servicing will in any way impair its ability to demonstrate to Freddie Mac's satisfaction, that it has sufficient capitalization, profitability, liquidity and funding sources to support its ongoing operations and its commitments to Freddie Mac following the Transfer of Servicing, and the Transferee Servicer must conduct the same evaluation of itself.