Hazard Loss Reporting Update. November 2017

Transcription

1 Hazard Loss Reporting Update November 2017

2 Agenda Change Highlights Guide Form 1140 Process Flow Charts PRS Naming Conventions Hazard Loss Enhancement _November 2017 Freddie Mac 2

3 Change Highlights Extending timeframe for Part I submission from 7 days to 14 days Eliminating requirements for reporting on losses less than $25k for SBL loans and less than $50k for non-sbl (some exclusions apply) Adding dollar/percentage of UPB for Part II submission Modifying form into 3 distinct pieces for process simplification & clarification:» Part I Notification» Part I Update (required if Part II is NOT required)» Part II Submission Details Creating a Borrower Cert specific to Hazard losses requiring Freddie Mac approval to simplify close-out process & documentation Hazard Loss Enhancement _November 2017 Freddie Mac 3

4 Guide Highlights Guide 43.8(a) Part I Notification due within 14 days after Servicer knowledge of loss Part I Notification required if:» Event of default exists under the Loan Documents» Death or serious injury results from the event» Mortgage was originated as a held-for-sale asset, but has not been securitized» SBL Mortgage and estimated loss is greater than $25,000» Non-SBL Mortgage and estimated loss is greater than $50,000 Hazard Loss Enhancement _November 2017 Freddie Mac 4

5 Guide Highlights Cont d Guide 43.8(a) Conditions for Freddie Mac approval of the Borrower s restoration plans include:» There was an event of default under the Loan Documents» The number of units that sustained any damage is 10% or more of Property s total units» The estimated loss amount is greater than $500,000 or 10% of the outstanding UPB» The mortgage has not been securitized, has a Risk Rating greater than six, and the estimated loss is greater than $50,000» The Borrower s insurance coverage is insufficient to cover the loss to the Property or loss of rents/business income and the estimated loss is greater than $50,000» Death or serious injury has resulted from the event Consent Request Tracker entry only required when the Servicer is requesting approval to permit the Borrower to pay down the mortgage in lieu of restoring all or a portion of the damaged property. Hazard Loss Enhancement _November 2017 Freddie Mac 5

6 Form 1140 Updates Form has been broken into 3 separate and distinct pieces» Part I Notification Very abbreviated form asking for key data points that should be known within a short timeframe Due for all loans that meet the notification loss threshold Due within 14 days after Servicer knowledge of loss» Part I Update OR Part II Submission Details Either/Or submission; Servicer DOES NOT submit both If Freddie Mac approval is required, submit Part II Submission Details. Otherwise, Part I Update Due within 90 days after submission of Part I - Notification Allows for greater transparency and tracking of submission parts Eliminates the need for double entry of same data between Part I and Part II Hazard Loss Enhancement _November 2017 Freddie Mac 6

7 Form 1140 Updates Part I - Notification» Notification - Upload the completed form to the Document Management System (DMS), using the File Submission link to Submit to Hazard Loss» If the restoration is already complete, the Servicer must upload a fully completed Form 1140, Part I Notification and Part I Update to DMS and use the File Submission link to Submit to Hazard Loss Part I - Update» If Part II submission is not required, within 90 calendar days after the Servicer initially submitted the Part I Notification form, or earlier upon Freddie Mac request, the Servicer must upload the Part I Update form to the Property Reporting System (PRS) in the corresponding PRS entry Hazard Loss Enhancement _November 2017 Freddie Mac 7

8 Form 1140 Updates Part II Submission Details» If none of the Freddie Mac approval conditions exist, then the Servicer is not required to complete Part II of Form 1140» If Freddie Mac approval of the Borrower s restoration plans is required, the Servicer must complete Form 1140, Part II within 90 calendar days after the Servicer initially submitted Form 1140, Part I - Notification, and provide it to Freddie Mac as follows If the Servicer has not previously submitted Form 1140, Part I - Notification, the Servicer must upload the completed Part I - Notification and Part II to DMS and use the File Submission link to Submit to Hazard Loss If the Servicer has previously submitted Form 1140, Part I - Notification, the Servicer must upload Part II directly to the corresponding PRS entry Hazard Loss Enhancement _November 2017 Freddie Mac 8

9 Form 1140 Updates Part II Submission Details (Cont d)» Freddie Mac will review the Servicer's recommendations and provide approval or directions for alternate action. Under most circumstances, Freddie Mac will delegate responsibility to the Servicer for managing and approving disbursement requests» If delegation of disbursement requests is not approved, the Servicer must submit Form 1140-DR to the corresponding PRS entry» If the Servicer is requesting approval to permit the Borrower to pay down the Mortgage in lieu of restoring all or a portion of the damaged Property, the Servicer must make a Consent Request Tracker (CRT) entry and submit corresponding consent request approval documentation to Freddie Mac Hazard Loss Enhancement _November 2017 Freddie Mac 9

10 Securitized Loan Hazard Loss Reporting The Sub-Servicing Agreement between Master and Primary Servicers is the binding document on reporting protocol As a resource for Servicers, Freddie Mac created K-deal and SBL-Deal best practice documents that include recommendations for hazard loss reporting protocol for these programs Best practice documents are located at FreddieMac.com-Asset Management References Hazard Loss Enhancement _November 2017 Freddie Mac 10

11 Process Flow Chart Hazard Loss Enhancement _November 2017 Freddie Mac

12 Beginning Stages Hazard Loss Enhancement _November 2017 Freddie Mac

13 Freddie Mac Approval Thresholds Hazard Loss Enhancement _November 2017 Freddie Mac

14 Servicer Delegated Loss Hazard Loss Enhancement _November 2017 Freddie Mac

15 Freddie Mac Approval Required Hazard Loss Enhancement _November 2017 Freddie Mac

16 PRS Naming Conventions To upload backup documentation into PRS, you will need to strictly follow the file naming convention provided below Type of Documents Uploaded to PRS Form 1140 part I Form 1140 part II Form 1140DR Other backup documentation FM LIT Attachment File Naming Convention Form 1140 part I.xxx Form 1140 part II.xxx Form 1140DR.xxx PRS - Other-External.xxx FM LIT Attachment.xxx Hazard Loss Enhancement _November 2017 Freddie Mac

17 Next Steps Report any issue immediately by sending an to the Loan Compliance mailbox with Hazard Loss Issue in the subject line Loan Compliance Monitoring Desk Reference and Seller/Servicer PRS User Guide are posted to the Asset Management Resource Center Hazard Loss Enhancement _November 2017 Freddie Mac

18 Making sure you receive Freddie Mac s Go to Scroll down and enter your address in the box that says, Don t Miss Out. Subscribe Now! Click on the link in the you receive to sign up for desired topics in the Multifamily News Preference Center We encourage you to sign up for all six News Topics, the Asset Management Business Functions, all Product Types and Property Reporting System at a minimum to ensure you receive various communications Click on Subscribe to finish your registration Hazard Loss Enhancement _November 2017 Freddie Mac 18