On July 15, Freddie Mac implemented updates that eliminated many property management functions which were formerly required of Servicers. These changes are effective for properties with a foreclosure sale held, or deed-on-lieu executed, on or after this date, as well as for properties which are in active REO status as of this date. CRFS has conducted a thorough review of FHLMC’s updates with our analysis results listed below. FHLMC Bulletin 2019-6 and Bulletin 2019-12 provide full details on this update.
New non-claimable expenses
Beginning July 15, 2019, the below expense types for loans that have a foreclosure sale date or deed-in lieu date on or after July 15, 2019 should not be claimed. Additionally, any of these expenses which are incurred by the Servicer after the July 15, 2019 effective date should not be claimed.
- Property Preservation Expenses
- Property Inspections
- Property Taxes
- HOA, PUD, Co-op dues
Note: There will be loans with foreclosure sale or deed-in-lieu dates prior to July 15th where expenses were already incurred under previous FHLMC directives. In those instances, expenses incurred post foreclosure/deed-in-lieu can be claimed as long as they were incurred prior to the July 15th effective date.
Beginning July 15, 2019, CRFS will use the foreclosure sale/deed-in-lieu date to determine if an insurance premium was paid within the claimable timeframe. This change to foreclosure sale/deed-in-lieu date replaces the old process of utilizing the PCC date for REO properties.