Freddie Mac Debt Forgiveness Question

Provident Funding, is asking for a cash contribution ($10-15k) from seller to approve short sale. I asked if, by agreeing, the investor (Freddie Mac) would forgive the remainder of the loan and asked for a sample of the approval letter.  Here is her response:

 

"Investors is requesting a contribution to proceed with short sale. Investor usually does not go after the buyer once SPO is closed however, I cannot give any document stating that. Please let me know."

 

This was a purchase money mortgage at the time, but he later moved out and used it as a rental.

 

Anyone else have success getting debt forgiveness language in the approval letter when Freddie Mac is the owner of the loan?

 

Thanks for your help.

 

Jennie Blackburn

Views: 349

Replies to This Discussion

Permalink Reply by Jim Schneider on February 21, 2011 at 11:55am

From Freddie Mac's Seller / Servicer Guide:

B65.41: Closing, reporting and remittance requirements (01/14/11)
...
(b) Charging off the deficiency

When Freddie Mac receives the information in Section B65.41(a) on a short payoff, it will produce and send the Servicer a charge-off form. The charge-off form indicates the difference between the ending balance of the Mortgage plus interest from the DDLPI to the payoff date, and the proceeds from the sale of the property. This difference must be charged off. 
 (underlining mine)

I'd show that to your sellers directly from the guide, hopefully that will alay their concerns.

Permalink Reply by Jennie Blackburn on February 21, 2011 at 12:17pm

Thanks, Jim, that's great!

 

Jennie
Jim Schneider said:

From Freddie Mac's Seller / Servicer Guide:

B65.41: Closing, reporting and remittance requirements (01/14/11)
...
(b) Charging off the deficiency

When Freddie Mac receives the information in Section B65.41(a) on a short payoff, it will produce and send the Servicer a charge-off form. The charge-off form indicates the difference between the ending balance of the Mortgage plus interest from the DDLPI to the payoff date, and the proceeds from the sale of the property. This difference must be charged off. 
 (underlining mine)

I'd show that to your sellers directly from the guide, hopefully that will alay their concerns.

Permalink Reply by Kevin - Greenville, SC on February 19, 2012 at 3:33pm

DEFICIENCY FROM SHORT PAYOFFS AND DEEDS-IN-LIEU OF FORECLOSURE
We have updated the Guide to reinforce the requirement that the Servicer, for itself and on behalf of
Freddie Mac, must waive all rights to pursue payment of the remaining balance owed by the Borrower
under a Freddie Mac-owned Mortgage for all approved short payoffs and deed-in-lieu of foreclosure
transactions that have closed in accordance with the Guide and applicable law.
Sections B65.41, Closing, Reporting and Remittance Requirements, and B65.48, Closing, Reporting and
Remittance Requirements, have been updated to reflect this additional information.

http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1205.pdf

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