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Financial Services Law Insights and Observations

Freddie Mac updates Covid-19 servicing guidance

Federal Issues Covid-19 Freddie Mac Forbearance CARES Act Foreclosure

Federal Issues

On April 8, Freddie Mac updated previous guidance to servicers relating to working with borrowers impacted by Covid-19. Among other things, the guidance: (i) requires servicers to report activity to the credit bureaus for borrowers impacted by Covid-19; (ii) suspends all foreclosure actions, including initiation of the foreclosure process; (iii) waives milestone timelines for filing motions for relief from automatic stay in bankruptcy cases; (iv) waives requirements that forbearance cannot extend a delinquency beyond 12 months; (v) confirms that servicers must send the borrower the forbearance plan agreement to reflect the terms of the Covid-19 forbearance; and (vi) requires servicers to make good faith efforts at quality right party contact to evaluate the borrower for a forbearance plan. The guidance also clarifies that servicers should not submit disaster reporting codes for Covid-19 related issues, stating that Freddie Mac will continue to address the Covid-19 pandemic as unique and distinct from other “eligible disaster” provisions in the Freddie Mac guides.