Investor Reporting Change Initiative Business Requirements Review Briefing

Transcription

1 Investor Reporting Change Initiative Business Requirements Review Briefing

2 Objectives To provide a more in-depth review to further your understanding of the new servicing requirements, which were announced as part of the Investor Reporting Change Initiative (IRCI) in Single- Family Seller/Servicer Guide Bulletin To offer a comprehensive overview of the Initiative, how it will affect your organization, and a look at the detailed requirements your operations and technology partners need to implement the change Freddie Mac 2

3 Benefits to you. A more flexible process for investor reporting. Greater operational efficiencies. Increased transparency and actionable feedback from Freddie Mac. A more complete picture of investor reporting data Freddie Mac 3

4 Investor Reporting Change Initiative Business Requirements Review Briefing Day Freddie Mac 4

5 Agenda Day 2 Inactivation Reinstatements Loan Modifications Loan Payoffs Pre Foreclosure Sales Daily Payoff Draft Reports Cutover Descriptions and Definitions Next Steps Resources 2017 Freddie Mac 5

6 Inactivation Servicers will be able to inactivate a loan in its fourth month of delinquency without referring the loan to foreclosure (EDR Code 43). If the Servicer does not report the inactivation (LLR Code 40) in the fourth month of delinquency, Freddie Mac will process it for you. Servicers will continue to report the EDR code 43 when referring the loan to foreclosure Freddie Mac 6

7 Inactivation Timeline Placeholder Inactivation Timeline Illustration 2017 Freddie Mac 7

8 Reinstatements Partial Reinstatements» A partial reinstatement must be at least one full contractual monthly payment.» Servicers may report partial reinstatements Freddie Mac 8

9 Reinstatements Partial Reinstatement Timeline Placeholder Partial Reinstatement Timeline Illustration 2017 Freddie Mac 9

10 Reinstatements (con t) Full Reinstatements» In order to fully reinstate a loan, the Servicer must report all principal in addition to delinquent interest after inactivation and scheduled interest for the next cycle.» Code 20 in Delinquency Reporting System is no longer needed to reinstate a loan Freddie Mac 10

11 Full Reinstatement Timeline Placeholder Full Reinstatement Timeline Illustration 2017 Freddie Mac 11

12 Loan Modifications Freddie Mac will settle loan modifications daily.» If a modification settles during the current cycle with a First Modified Payment due date in the current cycle, the Servicer can report the newly modified terms within the same cycle. Servicers will be able to send the next cycle scheduled interest on modified loans in the same month as the loan modification settlement Freddie Mac 12

13 Loan Modifications (con t) First Modified payment due date in following month:» If the modification is settled by Freddie Mac in the current cycle with a First Modified Payment due date of the following month, Freddie Mac will accept the next cycle scheduled interest on postmodification terms in the current month Freddie Mac 13

14 Loan Modifications (con t) Adjustments to drafting» Freddie Mac will adjust the draft for the Loan Modification Capitalized Interest (LMCI), Miscellaneous Principal (MISP), Miscellaneous Interest (MISI), and Reinstatement Adjustments (REI), if applicable, as a cash adjustment in the month of settlement if the modification settles on or before the P&I Determination Date.» Freddie Mac will adjust the draft LMCI, MISP, MISI, and REI adjustments credits (if applicable) as a cash adjustment in the month following settlement if the modification settles after the P&I Determination Date Freddie Mac 14

15 Loan Modifications Placeholder - Illustration of a happy path modification 2017 Freddie Mac 15

16 Daily Payoff Draft Freddie Mac will draft payoffs daily. Servicers should continue to report payoffs within two business days of receipt of funds. The Payoff Determination Date is the date Freddie Mac will calculate the draft amount of the payoff transactions based on the Servicers reporting. Payoffs reported on or prior to the Payoff Determination Date will post to the Draft Report five business days after the payoff exception date Freddie Mac 16

17 Loan Payoffs If the Payoff is reported timely, Freddie Mac will:» Draft the monthly interest amount reported in the prior cycle.» Draft the payoff amount (remaining balance + exception interest) on the fifth business day after the payoff exception date.» Generate a draft report two business days prior to the draft date. Payoff reversal reported in the same cycle:» Freddie Mac will process a credit for the payoff transaction two business days following successful reporting of the payoff reversal Freddie Mac 17

18 Loan Payoffs (cont.) 2017 Freddie Mac 18

19 Pre-Foreclosure Sale Pre-foreclosure sale. Freddie Mac will:» Identify pre-foreclosure sales with a new exception code.» Draft all delinquent interest and exception interest the same day as the payoff draft. Adjustments to the draft will be reflected as shown below:» Charge-off adjustment, found in the Detail Adjustment Report (DAR), will be an adjustment processed on the same date as the payoff draft if the short sale settles on or before Payoff Determination Date.» Charge-off (DAR) adjustments will be processed on the 2 nd Business Day after the Get Actual (settlement) date, if the short sale settles after Payoff Determination Date Freddie Mac 19

20 TOS (Transfer of Servicing) Transfers of servicing will be effective on the first calendar day of the month of the transfer (instead of the 16 th ). Freddie Mac will update the Servicer of record after the prior cycle ends on the 1 st Business Day of the following month for any loans that are being transferred. All payment activity will be drafted from the Servicer that successfully reported the transaction Freddie Mac 20

21 Reports Reports (includes examples of some updated reports)» All reports will reflect the calendar month.» Existing edit error reports will include all new edits.» Missing Loan Report The Missing Loan Report will be generated at P&I Determination Date minus two business days or 75 percent of portfolio reported, whichever occurs first.» ARM Report Report will include the servicing spread (not the contract minimum) in the existing ARM report. Report will include monthly ARM loans on the existing ARM report Freddie Mac 21

22 Reports (con t)» Monthly Account Statement The Monthly Account Statement (MAS) will include: All activities that occurred between the monthly accounting cycle (1 st to EOM) with revisions on 1 st of the next month. The principal reported on loans from 1 st to EOM of the accounting cycle and all revisions on EOM+1 based on Transaction Type. The forecasted scheduled Interest reported on loans from the prior cycle based on every applicable Transaction Type for the accounting cycle. Accounting cycle date on the report header to MM/YYYY format. Partial reinstatement amounts within the Non-Exception Transaction Type category/amounts. MAS excludes the Inactivation (40) transaction type. MAS will be generated once a month on the next business day following the end of the reporting period (EOM+2 BD) Freddie Mac 22

23 Reports (con t) New Reports (includes examples of some new reports)» Recast Report Includes all loans where the P&I constant changed during the cycle due to a recast.» Step Schedule Report All future step rate schedule information on a step rate loan Freddie Mac 23

24 Reports (con t)» Paid-Off Transfer of Servicing (TOS) Loan Report Includes loans within the transfer population, that were paid off the month prior to TOS effective date Freddie Mac 24

25 Reports (con t)» Draft Report The report will replace the Seller Servicer Remittance Analysis Report. The report has a summary view of the amounts due on a specific draft date during a monthly cycle. Each amount due category within the summary view has underlying loan level breakdowns on principal and interest amounts as applicable: P&I Liquidations Adjustment transaction types 2017 Freddie Mac 25

26 Reports (con t) The Draft Report includes the following categories within the P&I draft: Current cycle interest due (reported in the prior cycle). Previous cycle actual principal (reported after the P&I Determination Date). Actual principal reported for current cycle through P&I Determination Date. A preliminary draft report will be available daily in Service Loans application. The final report will be available one day after the P&I Determination Date Freddie Mac 26

27 Cutover Descriptions and Definitions Cutover Month Accounting Cycle Reporting Cycle The month that Freddie Mac and Servicers transition from the current monthly accounting and reporting cycles to daily reporting using a monthly accounting cycle of the 1 st - EOM. The time period that Freddie Mac collects loan activity for processing. The accounting cycle begins on the first business day and ends on the last business day of the month. The time period that Servicers can report loan activity each month. For pre-cutover, this is from the 16 th through EOM minus 4 business days. After cutover, this will be from the 1 st business day through EOM plus one business day Freddie Mac 27

28 2017 Freddie Mac 28

29 Extend the Cutover Accounting Cycle until EOM The loan level reporting DDLPI will drive delinquency information in the cutover month. Drafting will begin shortly after the cutover month. Daily loan modification will occur the month after cutover. The month of cutover, the loan modifications will be processed two business days before the accounting cutoff. Implement a temporary moratorium on transfer of servicing activity the month before and the month of cutover. (Resume TOS processing after the month of cutover) Freddie Mac 29

30 Wrap Up Now that you have completed Day 2 of the IRCI Business Requirements Review Briefing, you should understand:» Additional detailed requirements that you need to implement with your operations and technology partners.» The comprehensive view of the changes and how your organization will be impacted Freddie Mac 30

31 Next Steps/ Resources Stay informed! Visit the Investor Reporting Change Initiative Webpage: y/service/investor_reporting_changes. html Review Guide Bulletin : y/guide/bulletins/pdf/bll1615.pdf Sign-up on the Single Family Business Subscription Center: y/news/subscribe.html 2017 Freddie Mac 31

32 Thank you for your participation! 2017 Freddie Mac 32