Effective April 1, servicers managing Freddie Mac loans will no longer be allowed to foreclose on properties in the name of Mortgage Electronic Registration Systems (MERS). This was one of a several changes announced yesterday by Freddie Mac through Single-Family Seller/Servicer Guide Bulletin 2011-5.
According to the directive, Freddie has "eliminated the option for the foreclosure counsel or trustee to conduct a foreclosure in the name of MERS. Effective for Mortgages registered with MERS that are referred to foreclosure on or after April 1, 2011, Servicers must prepare an assignment of the Security Instrument from MERS to the Servicer and instruct the foreclosure counsel or trustee to foreclose in the Servicer’s name and take title in Freddie Mac's name." In states where required the servicer must also record the prepared assignment; Freddie Mac will not pay the recording fees.
Other changes to foreclosure and bankruptcy procedures in the Bulletin include:
- Servicers are permitted to postpone a scheduled foreclosure sale when a designated counsel handles the foreclosure, provided the newly scheduled sale date is within the state foreclosure timelines defined in the Guide.
- Revision of requirements to add certain prohibitions relating to foreclosure and bankruptcy referrals, and, as applicable, adding remedies that Freddie Mac may exercise. These include prohibiting any arrangement with attorneys or trustees that result in financial or other direct or indirect benefits to the servicers or an affiliate or allowing vendors and others to influence the selection of counsel.
- Providing additional details about servicing obligations and expressly prohibiting Servicers from charging Freddie Mac, trustees, or attorneys for obligations compensated by the servicing spread.
Source: http://www.mortgagenewsdaily.com/03242011_freddie_mac_servicers_mers.asp
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