fhlmc servicing guide

FHLMC Servicing Guide: An Overview (Updated 12/24/2025)

Today, December 24th, 2025, at 19:30:38, this guide details procedures for managing Federal Home Loan Mortgage Corporation loans, ensuring compliance and efficient servicing.

This FHLMC Servicing Guide, updated as of December 24th, 2025, provides comprehensive instructions for servicers of loans purchased by Federal Home Loan Mortgage Corporation (FHLMC). It’s crucial for maintaining consistent, high-quality loan administration. The guide outlines requirements for post-closing procedures, payment application, and loss mitigation strategies;

Servicers must adhere to these guidelines to ensure investor confidence and protect the integrity of the mortgage market. The guide details specific remittance procedures and protocols for handling delinquent loans, emphasizing proactive loss mitigation options like forbearance and loan modifications. Furthermore, it establishes clear reporting requirements, including monthly servicing reports and exception reporting, alongside guidelines for hazard insurance and property preservation. Compliance with this guide is paramount, subject to regular audits.

II. Eligibility Requirements for Servicers

To become an approved FHLMC servicer, firms must demonstrate robust financial stability, operational capacity, and a commitment to compliance with all applicable regulations. A thorough background check and a review of servicing history are essential components of the approval process. Servicers are required to maintain adequate staffing levels with qualified personnel experienced in mortgage servicing procedures, as outlined in the updated guide from December 24th, 2025.

Furthermore, adherence to strict data security standards and the implementation of effective quality control systems are non-negotiable. FHLMC mandates ongoing monitoring of servicer performance, including regular audits to ensure continued compliance. Servicers must also possess the technological infrastructure to support electronic data exchange and reporting requirements, facilitating efficient loan administration and investor communication.

III; Loan Delivery and Initial Servicing

Upon loan purchase by FHLMC, servicers are responsible for the seamless transfer and accurate initial setup within their systems. This includes verifying loan documentation, establishing proper escrow accounts, and confirming borrower information aligns with FHLMC’s requirements, as of December 24th, 2025. Timely loan system registration is crucial for efficient payment processing and reporting.

Post-closing procedures demand meticulous attention to detail, encompassing the accurate recording of the loan in the servicer’s system and the prompt notification to the borrower regarding servicing contact information. Servicers must adhere to specific guidelines for initial statement delivery and ensure all required disclosures are provided. A smooth transition minimizes borrower disruption and maintains FHLMC’s operational standards.

A. Post-Closing Procedures

Following loan funding, meticulous post-closing procedures are paramount for FHLMC loan servicing, as of December 24th, 2025. These encompass a thorough review of the loan file to confirm completeness and accuracy, verifying compliance with all applicable regulations and FHLMC guidelines. Servicers must promptly address any discrepancies identified during this review.

Critical steps include establishing the loan in the servicing system, setting up the escrow account (if applicable), and preparing the initial loan statement for the borrower. Accurate data entry and adherence to FHLMC’s data standards are essential. Furthermore, servicers are responsible for sending required notices and disclosures to the borrower within specified timeframes, ensuring transparency and compliance.

B. Loan System Registration

Effective December 24th, 2025, proper Loan System Registration is crucial for FHLMC servicers. This involves enrolling each newly serviced loan within FHLMC’s designated electronic system, ensuring seamless data transmission and reporting. Registration requires accurate input of loan-specific details, including loan number, borrower information, property address, and outstanding principal balance.

Servicers must adhere strictly to FHLMC’s system requirements and data formatting guidelines to avoid rejection or delays. Successful registration confirms the loan’s eligibility for FHLMC guarantees and facilitates efficient payment processing and reporting. Regular system updates and adherence to security protocols are also vital for maintaining accurate loan data and preventing unauthorized access.

IV. Payment Processing and Application of Funds

As of December 24th, 2025, FHLMC mandates strict adherence to established payment processing protocols. Servicers are responsible for accurately collecting, processing, and applying borrower payments to outstanding loan balances. All payments must be applied in accordance with FHLMC’s prioritization rules, ensuring proper allocation to principal, interest, escrow, and any applicable fees.

Timely and accurate remittance of funds to FHLMC is paramount. Servicers must utilize approved electronic funds transfer methods and comply with specified remittance schedules. Detailed records of all payment transactions must be maintained for audit purposes. Any discrepancies or exceptions require immediate investigation and reporting to FHLMC, maintaining transparency and accountability.

A. Remittance Procedures

Updated December 24th, 2025, FHLMC requires servicers to remit funds electronically via the designated payment portal. Remittance schedules are strictly enforced, typically occurring monthly, with specific deadlines communicated by FHLMC. Each remittance must include a detailed remittance report, accurately reconciling all collected payments against outstanding loan balances.

Servicers are responsible for ensuring the accuracy and completeness of all remittance data. Any discrepancies, such as short payments or incorrect loan numbers, must be promptly investigated and resolved. FHLMC may assess penalties for late or inaccurate remittances. Detailed instructions and support resources are available on the FHLMC website, aiding servicers in maintaining compliance with these critical procedures.

B. Handling of Delinquencies

As of December 24th, 2025, FHLMC mandates a proactive approach to delinquency management. Servicers must implement early outreach programs to borrowers exhibiting signs of financial hardship, aiming to prevent loan defaults. Consistent contact attempts, including phone calls and written correspondence, are crucial.

A standardized delinquency reporting process is required, with escalating reporting requirements based on the severity and duration of the delinquency. Servicers must adhere to FHLMC’s timelines for initiating loss mitigation options. Strict adherence to regulatory guidelines and fair lending practices is paramount throughout the delinquency handling process, ensuring borrower rights are protected and consistent treatment is applied;

V. Loss Mitigation Options

Updated December 24th, 2025, FHLMC emphasizes a comprehensive suite of loss mitigation tools. Forbearance Agreements offer temporary payment relief for borrowers facing short-term financial difficulties, allowing adjusted repayment plans. Loan Modifications provide permanent changes to loan terms – interest rate, loan term, or principal balance – to make payments more affordable.

Short Sales and Foreclosure are considered last resorts. FHLMC requires servicers to thoroughly evaluate all other options before pursuing these actions. Strict guidelines govern short sale approvals and foreclosure timelines, prioritizing borrower communication and minimizing losses. Servicers must document all loss mitigation efforts meticulously, adhering to FHLMC’s reporting requirements and legal standards.

A. Forbearance Agreements

As of December 24th, 2025, FHLMC’s guidelines for Forbearance Agreements prioritize temporary relief for borrowers experiencing short-term hardship. These agreements allow for a reduction or suspension of monthly payments for a defined period, typically up to twelve months. Servicers must assess the borrower’s financial situation to determine eligibility and appropriate forbearance terms.

Detailed documentation is crucial, including the reason for hardship, the agreed-upon forbearance plan, and the repayment terms post-forbearance. FHLMC requires servicers to actively monitor borrowers during the forbearance period, ensuring they understand their obligations. Successful completion of the forbearance plan requires borrowers to resume regular payments or explore alternative loss mitigation options.

B. Loan Modifications

Updated December 24th, 2025, FHLMC’s Loan Modification guidelines aim to create more affordable payment solutions for borrowers facing long-term financial challenges. Modifications can involve reducing the interest rate, extending the loan term, or deferring principal. Servicers must evaluate each borrower’s capacity to repay based on verified income and expenses.

A thorough analysis of the property’s value is also required to ensure the modification aligns with FHLMC’s lending standards. Modifications must be structured to minimize future default risk while providing sustainable relief. Detailed documentation, including the borrower’s financial profile and the modification terms, is essential for FHLMC review and approval. Ongoing monitoring post-modification is also crucial.

C. Short Sales and Foreclosure

As of December 24th, 2025, FHLMC’s guidelines for Short Sales and Foreclosure prioritize minimizing losses while adhering to legal and regulatory requirements. A short sale, where the property is sold for less than the outstanding loan balance, requires FHLMC approval and a documented hardship from the borrower. Servicers must diligently market the property to achieve the highest possible sale price.

Foreclosure is considered a last resort, initiated only after all other loss mitigation options have been exhausted. Strict adherence to state and federal laws is paramount throughout the foreclosure process. Proper documentation, including notices and legal filings, is critical. FHLMC requires servicers to maintain property preservation standards during foreclosure to protect its investment and mitigate further loss.

VI. Reporting Requirements

Updated December 24th, 2025, FHLMC mandates comprehensive reporting from servicers to ensure loan performance transparency and compliance. Monthly Servicing Reports are crucial, detailing loan status, payment history, delinquencies, and loss mitigation activities. These reports must be submitted accurately and on time through the designated FHLMC reporting system.

Exception Reporting is also required for specific events, such as property damage, borrower disputes, or legal proceedings. Servicers must promptly notify FHLMC of any deviations from standard servicing procedures. Accurate and timely reporting is vital for FHLMC’s risk management and portfolio oversight, enabling proactive identification and resolution of potential issues. Failure to comply with reporting requirements may result in penalties.

A. Monthly Servicing Reports

As of December 24th, 2025, FHLMC requires servicers to submit detailed Monthly Servicing Reports. These reports encompass a comprehensive overview of each loan’s performance, including current loan balance, interest rate, payment status (current, 30/60/90+ days delinquent), and escrow account activity.

Data must accurately reflect the last day of each reporting period. Reports also include information on loss mitigation efforts, such as forbearance agreements or loan modifications. Submission is typically electronic, adhering to FHLMC’s specified data format and transmission protocols. Timely and accurate reporting is paramount for FHLMC’s portfolio monitoring and risk assessment, ensuring efficient loan administration and investor confidence.

B. Exception Reporting

Updated December 24th, 2025, FHLMC mandates Exception Reporting beyond standard monthly submissions. This covers critical events requiring immediate attention, such as confirmed borrower deaths, bankruptcies filed, or property damage exceeding pre-defined thresholds.

Servicers must report any discrepancies identified during loan servicing, including errors in payment application or escrow account calculations. Furthermore, any suspected fraud or misrepresentation must be reported promptly. Exception reports necessitate a detailed narrative explaining the event and its potential impact on the loan. Timely exception reporting allows FHLMC to proactively manage risk, protect investor interests, and ensure compliance with regulatory requirements, maintaining portfolio integrity.

VII. Insurance and Property Preservation

As of December 24th, 2025, FHLMC requires servicers to diligently maintain adequate hazard insurance on all properties securing loans. Policies must cover the full replacement cost, protecting against fire, wind, and other covered perils. Property Preservation is paramount; servicers must promptly address property deterioration, including securing vacant properties and performing necessary repairs.

Regular property inspections are crucial, documenting property condition and identifying potential hazards. Servicers are responsible for initiating and managing insurance claims, ensuring timely resolution and proper fund disbursement. Failure to maintain adequate insurance or properly preserve properties can result in financial penalties and potential loan losses, impacting investor returns and portfolio performance.

A. Hazard Insurance Requirements

Updated December 24th, 2025, FHLMC mandates comprehensive hazard insurance coverage for all mortgaged properties. Policies must meet specific requirements, including coverage for fire, windstorm, hail, and other standard perils. The coverage amount must equal the full replacement cost of the improvements, not the loan balance.

Servicers are responsible for verifying insurance coverage annually and promptly addressing any lapses. FHLMC requires proof of insurance, typically through declarations pages. Deductibles are subject to limitations, and servicers must ensure compliance. Force-placed insurance may be utilized if borrowers fail to maintain coverage, but at a potentially higher cost. Proper documentation of all insurance-related activities is essential for audit purposes.

B. Property Inspection Guidelines

As of December 24th, 2025, FHLMC requires property inspections in specific circumstances, such as during loss mitigation or when a property appears vacant or unoccupied. These inspections aim to assess the property’s condition and identify potential risks. Servicers must utilize qualified inspectors adhering to FHLMC’s standards.

Inspection reports must detail the property’s physical state, including structural integrity, deferred maintenance, and any hazards present. FHLMC emphasizes the importance of documenting findings with photographs; Follow-up inspections may be necessary to verify remediation of identified issues. The goal is to protect the investor’s interest and ensure the property maintains its value. Accurate and timely reporting of inspection results is crucial for compliance.

VIII. Escrow Administration

Updated December 24th, 2025, FHLMC mandates diligent escrow administration for properties with escrow accounts. Servicers are responsible for accurately collecting and disbursing funds for property taxes, hazard insurance, and potentially, flood insurance; Regular analysis of escrow accounts is required to prevent shortages or surpluses.

Adjustments to monthly escrow payments must be made promptly based on changes in tax assessments or insurance premiums. FHLMC guidelines dictate specific tolerances for escrow deficiencies and surpluses. Servicers must adhere to these limits and notify borrowers of any necessary adjustments. Proper documentation of all escrow-related transactions is essential for audit purposes, ensuring transparency and compliance with investor requirements.

IX. Investor Reporting and Communication

As of December 24th, 2025, maintaining clear and consistent communication with investors is paramount for FHLMC servicers. Regular reporting on loan performance, delinquency rates, and loss mitigation activities is mandatory. Servicers must utilize the designated FHLMC reporting platforms, ensuring data accuracy and timely submission.

Prompt notification of significant events, such as defaults, foreclosures, or material property damage, is crucial. FHLMC expects servicers to respond swiftly to investor inquiries and provide comprehensive documentation upon request. Adherence to reporting timelines and formats is strictly enforced, contributing to investor confidence and market stability. Effective communication fosters a strong working relationship and facilitates efficient loan administration.

X. Compliance and Audit

Updated December 24th, 2025, strict adherence to all applicable federal, state, and local laws and regulations is non-negotiable for FHLMC servicers. This includes, but isn’t limited to, regulations concerning fair lending, consumer protection, and data privacy. Regular internal audits are essential to identify and rectify any compliance deficiencies.

FHLMC reserves the right to conduct comprehensive audits of servicer operations to ensure ongoing compliance with servicing guidelines. Servicers must maintain thorough documentation of all servicing activities, readily available for review. Any identified violations may result in penalties, including financial sanctions or termination of the servicing agreement. Proactive compliance efforts are vital for maintaining a sound and reputable servicing operation.