Freddie Mac told servicers managing its loans this week that they can no longer foreclose in the name of Mortgage Electronic Registration Systems.
The directive came in a bulletin issued Wednesday and takes effect April 1.
The bulletin from the government-sponsored enterprise also gives guidance in several other areas. Servicers now may postpone foreclosure sales handled by designated counsel as long as the newly scheduled foreclosure sale date is within Freddie Mac's foreclosure timeline. The bulletin also advises on changes to requirements on foreclosure and bankruptcy referrals, reimbursable expenses, and property preservation.
"We have updated the guide to eliminate the option for the foreclosure counsel or trustee to conduct a foreclosure in the name of MERS," the bulletin states. The directive is effective for mortgages registered with MERS that are referred to foreclosure on or after April 1, Freddie Mac said.
"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," the bulletin says.
"Servicers must record the prepared assignment where required by state law. State mandated recording fees are not reimbursable by Freddie Mac, are not considered part of the Freddie Mac allowable attorney fees and must not be billed to the borrower," the GSE said.
After June 1, servicers must perform an interior property inspection on abandoned properties, as per the bulletin. The inspection must occur upon confirmation the property has been abandoned; and within 30 days prior to a scheduled foreclosure sale, Freddie said.
Although the new interior property inspection requirements are not effective until June, servicers are being encouraged to begin them as soon as possible.