Reporting Transactions and Resolving Loan-Level Edits ...

Reporting Transactions & Resolving Loan-Level Edits Reference Guide

October 2023

Notice

This information is not a replacement or substitute for the requirements in the Freddie Mac Single-Family Seller/Servicer Guide or any other contractual agreements. This information does not constitute an agreement between Freddie Mac and any other party. ? 2023 Freddie Mac

Last Updated: October 2023 All rights reserved.

Table of Contents

Chapter 1: Introduction

The Investor Accounting Process ........................................................................................................................... 1-1 Reporting Mediums ................................................................................................................................................. 1-2 Understanding the Basics ....................................................................................................................................... 1-3 Investor Accounting-Related Reports ..................................................................................................................... 1-3 When You Need Assistance ................................................................................................................................... 1-3 Additional Educational Resources .......................................................................................................................... 1-3

Chapter 2: Common Data Elements for Loan-Level Transactions

Common Data Elements ......................................................................................................................................... 2-1 Beginning and Ending Gross Unpaid Principal Balance ......................................................................................... 2-2 Accounting Net Yield ............................................................................................................................................... 2-2 Due Date of the Last Paid Installment .................................................................................................................... 2-2 Last Payment Received Date.................................................................................................................................. 2-3 Mortgage P&I (P&I Constant).................................................................................................................................. 2-3 Principal Due ........................................................................................................................................................... 2-4 Interest Due............................................................................................................................................................. 2-7 Additional Data Elements for Modified Mortgages.................................................................................................. 2-9 Mortgage Insurance Cancellation ......................................................................................................................... 2-10

Chapter 3: Loan-Level Transactions

Loan-Level Transactions ......................................................................................................................................... 3-1 P&I Newly Funded Mortgages ................................................................................................................................ 3-2 P&I Transactions ..................................................................................................................................................... 3-4 Inactivations .......................................................................................................................................................... 3-10 Full Reinstatements .............................................................................................................................................. 3-11 Balance Corrections .............................................................................................................................................. 3-13 P&I Recasts........................................................................................................................................................... 3-16 Prepayments and Curtailments............................................................................................................................. 3-18 Reporting Corrected Transactions (Revisions) ..................................................................................................... 3-20 Payoffs .................................................................................................................................................................. 3-21 Transfers to REO .................................................................................................................................................. 3-31 Third-Party Foreclosure Sales .............................................................................................................................. 3-33 FHA/VA Foreclosure/Conveyances ...................................................................................................................... 3-35 Reporting Loan Modifications................................................................................................................................ 3-38

REPORTING TRANSACTIONS & RESOLVING LOAN-LEVEL EDITS REFERENCE GUIDE PUBLIC | PAGE i

Chapter 4: Drafting Funds Due

What is Drafting?..................................................................................................................................................... 4-1 How Do I Establish ACH Drafting of Monthly Principal and Interest Payments and Payoffs?................................ 4-2 What is the P&I Draft Date? .................................................................................................................................... 4-2 Drafting Payoffs....................................................................................................................................................... 4-4 Draft Report ..............................................................................................................................4-5 Monitoring Your Draft Report .................................................................................................................................. 4-8 Additional Cash Management Reports ................................................................................................................. 4-18

Chapter 5: Adjustable-Rate, Step-Rate, and Interest-Only Mortgages

What is an Adjustable-Rate Mortgage (ARM)?....................................................................................................... 5-2 Common ARM Terminology.................................................................................................................................... 5-2 ARM Programs........................................................................................................................................................ 5-2 Non-Standard ARMs ............................................................................................................................................... 5-3 Convertible ARMs ................................................................................................................................................... 5-3 Note Rate Changes................................................................................................................................................. 5-3 Most Recently Available Index ................................................................................................................................ 5-4 Rounding ................................................................................................................................................................. 5-5 Rounding the New ANY .......................................................................................................................................... 5-5 Caps ........................................................................................................................................................................ 5-6 Calculating the New ANY........................................................................................................................................ 5-7 ANY Terminology .................................................................................................................................................... 5-7 When to Use the New ANY ..................................................................................................................................... 5-8 ANY Calculation for the WAC ARM Guarantor Program ........................................................................................ 5-8 ANY Calculation for the ARM Guarantor Program.................................................................................................. 5-9 ANY Calculation for the ARM Cash and WAC ARM Cash Programs................................................................... 5-10 Rate Change Notification ...................................................................................................................................... 5-10 Using the Rate Change Notification ...................................................................................................................... 5-11 Loan Setup ............................................................................................................................................................ 5-12 Sample for the WAC ARM Guarantor Program .................................................................................................... 5-12 Sample for the ARM Guarantor Program.............................................................................................................. 5-13 Sample for the WAC ARM Cash and ARM Cash Program .................................................................................. 5-14 Identify and Resolve ARM Interest Discrepancies................................................................................................ 5-14 Convertible ARMs ................................................................................................................................................. 5-16 Servicer Obligations .............................................................................................................................................. 5-16 Investor Impacts .................................................................................................................................................... 5-16 Buydown Features ................................................................................................................................................ 5-16 Eligibility for Conversion ........................................................................................................................................ 5-17 Summary of the Repurchase and Resale Process ............................................................................................... 5-18 Special Warranties ................................................................................................................................................ 5-19 Convertible ARMs Sold with Recourse ................................................................................................................. 5-19 Step-Rate Mortgages ............................................................................................................................................ 5-20 Future Step Rate Schedule Report ....................................................................................................................... 5-20 Reporting When a Step-Rate Mortgage Adjusts................................................................................................... 5-21

REPORTING TRANSACTIONS & RESOLVING LOAN-LEVEL EDITS REFERENCE GUIDE

PUBLIC | PAGE ii

Initial InterestSM (Interest-Only) Mortgages ........................................................................................................... 5-21 How to Report When the Interest-Only Period Ends ............................................................................................ 5-22

Chapter 6: Resolving Loan-Level Edits

Overview ................................................................................................................................................................. 6-1 Missing Loans ......................................................................................................................................................... 6-2 Types of Edits.......................................................................................................................................................... 6-2 Understanding the Edit and Warning Tables .......................................................................................................... 6-3 Edits You Do Not Have to Address ......................................................................................................................... 6-4 Edits and Warnings ................................................................................................................................................. 6-5

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