Freddie Mac's Shutdown Workaround for Furloughed Workers

Freddie Mac has issued guidance to its lenders and servicers in an effort to keep the mortgage market flowing during the lengthening government shutdown.  The second shutdown-related Single-Family Seller/Servicer Guide Bulletin issued on Monday covers both temporary workarounds for origination processes hindered by the impasse and restates help that is available to existing borrowers. 

The bulletin allows lenders to deliver mortgages to Freddie Mac even if the borrower is not receiving a paycheck because of the shutdown.  Such loans must meet other Freddie Mac requirements and the borrower must expect that the borrowers' paychecks will resume when the government reopens.  The previous bulletin allowed mortgage originators to forego employment verifications for federal employees where it was not possible to obtain such verification.  

The current bulletin restates the option outlined last week that permits servicers to accept a recent tax return in lieu of an IRS Transcript Request Form (4506-T) for a loan workout or modification as long as IRS is unable to process the requests.

Servicers are also reminded that Freddie Mac's mortgage relief policies are available to its borrowers affected by the shutdown.  Eligible homeowners, whether public or private sector employees, can be granted forbearance from loan payments for three to 12 months.  Servicers are not allowed to report these accommodations to the credit bureaus.

Dave Lowman, Executive Vice President, Single-Family Business at Freddie Mac said, "We're issuing this guidance to help ensure the continued smooth operation of the mortgage market during the temporary shutdown of the federal government. Today's bulletin is intended to give lenders the certainty to continue approving and delivering new mortgages that meet Freddie Mac guidelines to eligible borrowers, such as federal employees and contractors, during the temporary shutdown. We are also reminding servicers of our forbearance options to assist qualified homeowners with Freddie Mac mortgages to minimize the shutdown's impact on our nation's families and communities."