In its Seller/Servicer Guide Bulletin 2021-31, Freddie Mac addressed revisions to seller/servicer and related third-party risk mitigation requirements and updates to its lost note affidavit requirements, among other things.
“After internal analysis and review of industry best practices, we are updating requirements related to seller/servicer risk mitigation, including those related to seller/servicer counterparties providing critical services,” Freddie stated. These changes aim to enhance the requirements and provide greater specificity.”
The revisions, effective Jan. 13, 2022, include:
- Fortifying business continuity planning, including the expansion of a current requirement that Freddie Mac be designated as an intended third-party beneficiary in agreements with related third parties.
- Enhancing information security requirements, including that Freddie Mac be notified and provided with certain details within 48 hours in the event of a security incident (as defined in Guide Section 1302.2(c)).
- Specifying Freddie Mac's existing remedies in the event of breach by a seller/servicer.
- Adding glossary definitions for change of control, material adverse effect, related third party and senior management.
Freddie Mac defines a third party (i.e., a seller/servicer counterparty such as a mortgage broker, correspondent, loan origination system vendor, contract underwriter, appraisal management company, data center, settlement agent, TPP (as defined in Section 1401.2), selling agent, servicing agent, document custodian, warehouse lender, outsourced vendor, mortgage insurer or reinsurer) that the seller/servicer engages to provide it with technology, origination, underwriting, processing, technical, interim financing, closing, loss mitigation, (re)insurance, servicing and other services and support that are generally designed to advance the Seller/Servicer’s origination and/or servicing of mortgages.
The bulletin also states, “In Bulletin 2020-29, we announced requirements for servicers to deliver lost note affidavits (LNAs) to Freddie Mac. The new provisions required servicers to make available to Freddie Mac upon request verification regarding the validity of the LNA form in any given state from a person licensed to practice law in that state. Based on servicer feedback, we are revising the requirement to allow in-house counsel or outside counsel to perform this review and provide a legal analysis without the state licensing requirement.”