9211.1: Hardest Hit Fund (04/11/18)

Owned by Kacey Olson
Nov 24, 2018
12 min read

© Freddie Mac Single-Family Seller Servicer Guide

This section provides requirements relating to mortgage assistance programs developed and administered by State Housing Finance Agencies ("HFAs") and funded by the Innovation Fund for the Hardest Hit Housing Markets or Hardest Hit Fund (HHF) Initiative for which Freddie Mac requires Servicer participation.

Detailed requirements are provided for the following programs:

  • Unemployment mortgage assistance
  • Mortgage reinstatement assistance
  • Modification assistance
  • Transition assistance

(a) General requirements The following are general Servicing requirements for participating in any of the HFA mortgage assistance programs. In addition to these general requirements, Servicers must comply with the additional Servicing requirements unique to each HFA program, as specified in Section 9211.1(b).Servicers must have procedures and specific points of contact in place to respond to HFA (or its designated third-party provider) requests and notifications with respect to Borrowers receiving assistance under any HFA program funded by the HHF. Subsequent references to an HFA in this section include its designated third-party provider. The HFA determines Borrower eligibility criteria and underwrites the Borrower for all HFA mortgage assistance programs. Unless permitted by the HFA, Servicers may not determine Borrower eligibility or communicate a determination of eligibility or qualification for an HFA program to a Borrower.

  • Borrower referral and authorization Servicers may refer potentially eligible Borrowers to the HFA in accordance with the relevant HFA's requirements. Servicers may directly solicit Borrowers for participation in HFA mortgage assistance programs if the Servicer receives written consent to perform such solicitation from the HFA. In connection with a Borrower's request for mortgage assistance under an HFA program, Servicers must receive written authorization from each Borrower to release his or her nonpublic personal financial information to the HFA and if authorized, must provide the HFA with relevant Borrower and Mortgage-specific information so that the HFA may complete its evaluation of the Borrower for assistance. The Borrower's written authorization to release his or her nonpublic personal financial information to the HFA and all communications that include a Borrower's nonpublic personal information must comply with Section 1301.2 and all applicable federal, State and local laws relating to data security, privacy and the safeguarding of Borrower personal information.
  • Mortgages with credit enhancements Servicers must comply with the requirements of, and obtain approvals as necessary from, the FHA, VA, RHS and/or MI. Credit enhancement on a Mortgage must stay in place regardless of the Borrower's participation in an HFA mortgage assistance program.
  • Another relief or workout arrangement Servicers must not deny or delay consideration of a Borrower for a relief or workout option pending approval for HFA mortgage assistance. Servicers also must not require a Borrower to first request financial assistance from an HFA as a condition of consideration for a relief or workout option. If a Borrower is currently performing under a relief or workout arrangement that has not been completed and the Borrower requests financial assistance from an HFA, the Servicer must permit the Borrower to continue with the relief or workout arrangement until he or she enters into either an unemployment mortgage assistance, mortgage reinstatement or modification assistance agreement with the HFA that renders the existing relief or workout arrangement no longer appropriate.
  • Reporting to Freddie Mac Servicers must provide Freddie Mac with a list of all Mortgages for which assistance was provided using the Spreadsheet for Hardest Hit Fund Mortgageslocated at FreddieMac.com/singlefamily/service/hfa_relief.html. This spreadsheet must be submitted to Hardest_Hit@freddiemac.com by the fifth Business Day of every month for all Mortgages that received assistance in the prior month.
  • Credit reporting Servicers must continue to report a "full-file" status report to the four major credit repositories in accordance with the Fair Credit Reporting Act (FCRA) and credit bureau standards as provided by the Consumer Data Industry Association (CDIA).
  • Acceptance and application of funds If funds from an HFA are used to assist with payments a Borrower is required to make, such as payments required under a Freddie Mac Standard Short Sale, Servicers must accept and treat funds submitted by the HFA in the same manner as if the Borrower submitted a payment to be applied towards the Mortgage. For non-Escrowed Mortgages, the Borrower will continue to be responsible for payment of all Escrow-related expenses. The Servicer must process the Mortgage in accordance with the requirements of the Guide if the Servicer discovers non-payment of any charge otherwise payable by Escrow such as real estate taxes and property insurance.
  • Servicer notifications to HFA For Borrowers evaluated for, or receiving assistance, the Servicer must notify the HFA of any:
    • Changes or adjustments to the Borrower's monthly payment amount in accordance with a time frame that is agreed upon in writing between the HFA and the Servicer, as applicable, if the Borrower is receiving assistance under an unemployment mortgage assistance or other mortgage assistance program
    • Scheduled foreclosure sale that cannot be halted
  • Document retention Servicers must retain all documents, communications and information pertaining to the Borrower's mortgage assistance under an HFA program in the Mortgage file. In addition, Servicers must comply with the documentation retention requirements set forth in Chapter 3302.
  • Collection and solicitation activities If a Servicer receives notification from an HFA that a Borrower is conditionally approved for a mortgage assistance program, a Servicer is notrequired to continue collection calls and solicitation activity as outlined in Chapter 9102, unless the Servicer receives notice that the Borrower did not qualify for assistance from the HFA.
  • Foreclosure actions Upon notification that a Borrower is conditionally approved under a mortgage assistance program, a Servicer must not refer the Borrower's Mortgage to foreclosure or conduct a scheduled foreclosure sale for 45 days or longer as required by applicable law, unless the HFA notifies the Servicer that the Borrower has been determined to be ineligible for mortgage assistance. In addition, a Servicer must not refer the Mortgage to foreclosure or conduct a scheduled foreclosure sale during the period of mortgage assistance unless the full Mortgage payment, or other payment as required by the applicable program, is not received from the HFA in a timely manner. Servicers are reminded that to the extent that they suspend foreclosure proceedings, they must ensure that they take all appropriate action necessary to preserve the right to re-commence foreclosure proceedings from the point of suspension should the Borrower fail to qualify for HFA mortgage assistance or should the applicable payment(s) not be received from an HFA when it is due (e.g., for unemployment mortgage assistance programs, the payment should be received in the month in which it is due during the term of HFA mortgage assistance). Servicers are further reminded that when communicating a postponement request for a pending foreclosure sale to foreclosure counsel, the Servicer must identify the reason for the postponement (i.e., HFA mortgage assistance).Servicers are permitted to suspend foreclosure actions (referral and sale) for a period exceeding 45 days, as necessary, to facilitate the processing of mortgage assistance and receipt of funds, provided that the Servicer follows up with the HFA on a regular basis to determine (i) whether the Borrower is still eligible for mortgage assistance and (ii) when such funds will be received. Further, if the initial 45 day postponement must be extended, Servicers must continue to communicate with foreclosure counsel on a regular basis regarding the status of HFA assistance. Servicers are reminded that in the event a foreclosure sale occurs, the Servicer's performance will be measured against Freddie Mac's State foreclosure time lines without consideration given to the Servicer's postponement of the foreclosure sale (refer to Exhibit 83, Freddie Mac State Foreclosure Time Lines).Servicers are not required to accept mortgage assistance payments if a notice of trustee/sheriff sale has been recorded, and the trustee/sheriff sale is scheduled less than seven days from the date the Servicer is notified of Borrower approval by the HFA. Servicers must notify the HFA if a scheduled foreclosure sale cannot be halted because a court with jurisdiction over the foreclosure proceeding (if any) or public official fails or refuses to halt the sale.

(b) Specific program requirements

  1. Unemployment Mortgage Assistance Program HFA unemployment mortgage assistance programs extend Mortgage payment relief to eligible Borrowers by funding all or part of a Borrower's Mortgage payment. The HFA will determine Borrower eligibility criteria for financial assistance, monitor the Borrower for continued eligibility during the period of mortgage assistance, and:
  • Establish the amount of Borrower contribution to the Mortgage payment (if any) and the period of assistance
  • Document the terms of the agreement for mortgage assistance
  • Collect Borrower payments, if required, for subsequent submission to the Servicer
  • Remit a full contractual payment to the Servicer on behalf of the Borrower each month during the period of assistance

(i) Borrowers receiving HFA assistance With the exception of a short sale or Freddie Mac Standard Deed-in-Lieu of Foreclosure ("deed-in-lieu of foreclosure") under Chapter 9209, a Borrower receiving unemployment mortgage assistance from the HFA may not simultaneously receive a relief or workout option. If the Borrower is in a Trial Period Plan under any modification program, when approved for unemployment mortgage assistance, the Servicer must notify the Borrower in writing that participation in the HFA's unemployment mortgage assistance program will cancel participation in his or her existing Trial Period Plan upon receipt of the first payment from the HFA. Once a Servicer receives funds from the HFA on behalf of the Borrower, the Servicer must cancel any existing relief or workout arrangement with the Borrower, unless the relief or workout arrangement is a short sale or deed-in-lieu of foreclosure or the Borrower has a permanent modification under Chapter 9206 or Chapter 9205.

(ii) Transition from HFA assistance to other alternatives to foreclosure Within 30 days following notification that the Borrower has been re-employed or upon notification of expiration of the period of assistance, whichever is earlier, Servicers must re-evaluate the Borrower for a reinstatement or relief option as provided in Chapter 9203 or a workout option in accordance with the evaluation hierarchy provided in Section 9201.2.

(iii) Cancellation of agreement If the Servicer does not receive a full contractual payment from the HFA in the month that it is due, the Servicer must consider the mortgage assistance with the HFA to be canceled and resume normal Servicing activity (including resumption of collection activities as applicable) in accordance with the requirements of the Guide and other Purchase Documents. The Servicer must use good business judgment to determine whether mitigating circumstances caused the payment to be late (such as a clerical error of the HFA). Exceptions must be documented and retained in the Mortgage file.

(iv) Reporting requirements Reporting to Freddie Mac Servicers must notify Freddie Mac via an EDR transmission within the first three Business Days of the month following the month in which they received notification that the Borrower entered into an agreement with an HFA for mortgage assistance. Servicers must report default action code 09 ("Forbearance Plan") and default reason code 016 ("Unemployment") and provide the date of such notification. Servicers must continue to report each month that the Borrower is receiving mortgage assistance from the HFA until the period of assistance ends. Reporting the cancellation of a Flex Modification Trial Period Plan For Borrowers who are in a Flex Modification Trial Period Plan and who have been approved for unemployment mortgage assistance, the Servicer must:

  • Cancel the Flex Modification Trial Period Plan in the month in which the mortgage assistance agreement becomes effective; and
  • Save the Mortgage in Workout Prospector®to the applicable "Borrower Declined Terms/Ineligible" status
  1. Mortgage Reinstatement Program To assist eligible Borrowers with reinstating their Mortgage, the HFA will deliver a one-time lump sum payment through Automated Clearing House (ACH) credit or other method acceptable to the Servicer. The Servicer may not require reinstatement to occur before any relief or workout option in the Guide, but the HFA may agree to do so if it is deemed appropriate for the Borrower. If a Servicer receives full or partial reinstatement funds under an HFA mortgage reinstatement program and the Borrower is in a modification Trial Period Plan, the Servicer must not cancel the Trial Period Plan unless it has the Borrower's consent to do so.
  • Borrowers receiving full reinstatement assistance Once a Mortgage is reinstated, Servicers must evaluate each Borrower's individual circumstances to determine if additional assistance in the form of a relief or workout option is appropriate.
  • Borrowers approved for partial reinstatement assistance If the Servicer receives notification from the HFA that the Borrower has been approved for funds that only partially reinstate the Mortgage, the Servicer must accept those funds if an additional relief or workout solution, such as a repayment plan or a mortgage modification, will fully reinstate the Mortgage. If the Servicer has not yet made contact with the Borrower to discuss the appropriate solutions to resolve the Delinquency, it must attempt to achieve quality right party contact (QRPC) with the Borrower to obtain any necessary information to evaluate the Borrower for a relief or workout solution in accordance with the Guide that will fully reinstate the Mortgage. In addition, if the Borrower is eligible for a modification solution for which no financial documentation is required, the Servicer may send (or resend) the Borrower a Trial Period Plan offer for that modification. In the following circumstances, the Servicer must notify the HFA that funds cannot be applied to the Mortgage until there is a comprehensive solution for reinstating the Mortgage:
    • The Servicer is unable to achieve QRPC and obtain a commitment from the Borrower to resolve the Delinquency
    • The Borrower does not respond to the Servicer's offer for a retention solution that will fully reinstate the Mortgage (e.g., a mortgage modification)
    • The Borrower declines the Servicer's offer for a retention solution that will fully reinstate the Mortgage
  • Reporting requirements Servicers must report the reinstatement (full or partial) to Freddie Mac in accordance with the requirements of Section 9203.6 and Section 9102.7.
  1. Modification Assistance Program To assist eligible Borrowers with qualifying for a modification, certain HFAs provide funds to Servicers through their modification assistance programs. Funds may be applied to assist such Borrowers to meet housing expense-to-income ratio parameters or loan-to-value ratio requirements, or to ensure a more positive net present value result. For Freddie Mac-owned or guaranteed Mortgages, Servicers must participate in modification assistance programs offered by an HFA, provided that:
  • The modification assistance program does not require the Servicer or Freddie Mac to make a financial contribution or match any assistance provided by the HFA
  • Program participation and parameters for receiving assistance do not conflict with Freddie Mac's modification requirements under the Guide and the Servicer's other Purchase Documents, as applicable
  • Receipt of funds does not impair the First Lien priority of the Mortgage
  • Funds are remitted to the Servicer from the HFA in a one-time lump sum payment

(i) Modification assistance programs limited to re-amortization of the Mortgage balance If the HFA approves the Borrower for modification assistance funds to curtail principal and there is a re-amortization of the Mortgage balance, the Servicer must apply funds in accordance with the following requirements.

  • If the Mortgage is current at the time HFA funds are received, Servicers must comply with the requirements in Section 8103.7 on applying partial prepayments of principal and recalculating the monthly Mortgage payments.
  • If the Mortgage is delinquent at the time HFA funds are received, the Servicer must apply HFA funds first toward outstanding arrearages and any other past due amounts advanced, including expenses, to bring the Mortgage current, and any remaining funds must be applied to curtail principal as set forth in Section 8103.7. The Servicer must recalculate the Borrower's monthly Mortgage payment based on the new Mortgage balance and otherwise comply with all other requirements in Section 8103.7.
  • If the Mortgage has partial principal forbearance at the time of receipt of HFA funds, HFA funds must first be applied to outstanding arrearages and any other past due amounts advanced, including expenses, and any remaining funds must be applied in accordance with HFA instructions. If funds will be applied to the interest-bearing balance, Servicers must work with the HFA to ensure that such funds do not pay off the interest-bearing balance, thereby causing the deferred principal balance to become due. The Mortgage payment may be recalculated only to the extent that there are sufficient funds to apply to the interest-bearing balance.

For all partial prepayments of principal where the Mortgage balance is re-amortized, the Servicer must not adjust the interest rate nor extend the maturity date. Further, if there was a prior modification, all other terms and conditions of such prior modification also remain unchanged. In addition, the Servicer must prepare and require execution of a modification agreement reflecting the recalculated monthly Mortgage payment in accordance with Section 8103.7 and in compliance with applicable law.

A partial prepayment of principal where the monthly Mortgage payment is recalculated based on the new Mortgage balance will not be considered as a "previously modified Mortgage" for purposes of qualifying for a Flex Modification in the future.

(ii) Modification assistance programs - modification of terms option If the HFA approves the Borrower for modification assistance that includes funds to be applied to curtail principal in conjunction with a modification, the Servicer must apply such funds after the Borrower successfully completes the Trial Period and prior to the first payment due date of the modified Mortgage. The Servicer must first apply HFA funds to outstanding arrearages and any other past due amounts advanced, including expenses, and then apply any remaining funds to the principal balance. The Servicer must use the Mortgage balance that remains after application of HFA funds to calculate the final modification terms. If the Borrower does not receive HFA funds prior to the first modified payment due date, the Servicer must determine whether the modification can still be completed in accordance with the Guide.

  1. Transition Assistance Program If a Borrower can no longer afford to retain his or her home, certain HFAs provide funds through transition assistance programs to assist Borrowers with expenses related to transition to a new home and/or to facilitate completion of a short sale or deed-in-lieu of foreclosure transaction. For Freddie Mac-owned or guaranteed Mortgages, Servicers must participate in transition assistance programs offered by HFAs in connection with the HHF provided that HFA program parameters do not conflict with Freddie Mac's short sale and deed-in-lieu of foreclosure requirements or any other requirements under the Guide and the Servicer's other Purchase Documents, as applicable. If HFA funds would be applied to subordinate lien balances, such funds must be applied prior to application of amounts Freddie Mac would permit to be paid on subordinate lien balances pursuant to the Guide and the Servicer's other Purchase Documents, as applicable. Further, the HFA may provide payments to subordinate lien holders that equal or exceed the maximum amount Freddie Mac will permit to be paid to subordinate lien holders; however, in such cases, the Servicer must not apply any Freddie Mac funds to subordinate lien balances. If total HFA funds to be applied to subordinate lien balances are less than the maximum amount Freddie Mac would permit to be paid to a subordinate lien holder, the Servicer may apply Freddie Mac funds toward the difference up to the maximum amount permitted to be paid to a subordinate lien holder as set forth in the Guide and other Purchase Documents, as applicable. A Borrower who receives HFA transition funds to assist with relocation expenses (e.g., moving costs, deposits, etc.) may also receive any similar payment permitted by Freddie Mac under the Guide and the Servicer's other Purchase Documents, as applicable. Refer to Section 9208.4 for specific instructions on applying relocation incentives and transition funds.