Freddie Mac Offers Shutdown Work-Arounds

Lenders can continue to deliver mortgages to Freddie Mac even if the borrower is not receiving a paycheck as a result of the government shutdown, the company said in a bulletin issued on Monday.

Such loans can be delivered to Freddie Mac as long as they meet the company's other criteria and as long as the lender is certain the borrower will return to work when the shutdown ends.

The bulletin also reminds servicers that furloughed government workers are eligible for Freddie Mac's mortgage relief policies. Eligible homeowners, whether public- or private-sector employees, can be granted forbearance from loan payments for three to 12 months, and these actions will not reported to the credit bureaus.

In addition, servicers can accept a borrower's most recently signed federal tax return or similar tax transcript when tax information is needed to evaluate a borrower for Freddie Mac's Home Affordable Modification Program, standard modifications or other loan workout option.

The government-sponsored enterprise also announced that mortgage originators may forego employment verifications for federal employees when it is not possible to obtain such verification due to the shutdown. What's more, servicers are allowed to accept a recent tax return in lieu of an Internal Revenue Service Transcript Request Form (4506-T) for a loan workout or modification, as long as the IRS is unable to process the requests.

Dave Lowman, executive vice president, single-family business at Freddie Mac, says the purpose of the bulletin is 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,’ Lowman says. ‘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.’

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