Freddie Mac has issued a letter instructing servicers to participate in state housing finance agencies' (HFAs) mortgage assistance programs administered under the U.S. Treasury Department's Hardest Hit Fund initiative.
Certain HFA programs provide funds to servicers that may be applied to assist borrowers in meeting housing expense-to-income ratio parameters or loan-to-value ratio requirements, or to ensure a more positive net present value result.
According to Freddie Mac, servicers of Freddie-owned or -guaranteed mortgages must participate in the programs, provided the programs meet certain guidelines. For example, the program cannot require the servicer or Freddie Mac to make a financial contribution. Eligible HFA programs must also not conflict with Freddie Mac's modification guidelines or servicers' other purchase documents, and the receipt of funds cannot impair Freddie's first-lien priority. Additionally, to be Freddie Mac compliant, the programs must remit funds to the servicer in a single, lump-sum payment.