Does Freddie Mac Own Your Loan?

Originally Published: 8/22/2012

We have seen instances where listing agents have taken contracts on short sales before determining which short sale programs might be available to the seller. This is a very risky practice, and could create legal liability to the listing agent.

For example, If the property is the seller’s primary residence, it is imperative that the listing agent check to see if the seller’s primary mortgage is owned by Freddie Mac at the time of listing. The reason is that Freddie Mac has very specific requirements as to when it will consider a seller for its HAFA program. If Freddie Mac owns the loan, then the seller must apply for its HAFA program before a contract is signed. Freddie Mac will not allow a property to be reviewed for the HAFA program if there is a contract in effect. So if a contract is signed before applying for HAFA, the seller is automatically disqualified from HAFA, and thus unable to get the deficiency  relief and/or relocation assistance to which the seller would have been entitled.

The seller can easily verify if Freddie Mac owns their loan by going to the Freddie Mac website, and completing the self service look up.

Nevertheless, to insure that your seller has the opportunity to participate in the short sale program that offers the greatest benefit to the seller, we strongly suggest that any listing agent require (or at least strongly recommend) that their seller contact an attorney before accepting any short sale contract offers for their primary residence. Otherwise, you run the risk that the seller could be excluded from programs that could offer substantial (or total deficiency relief) and/or substantial relocation assistance.

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