_E." ..

" __
..._ v-_....
-
llIUl_f_Drooo
III!!I Freddie """ W~
~-­
o....e-..,e:.e.-.o-. .-. I' Md_'" 211C!I<J1IO

iiQMac

Oclobef 15, 2009

The Honorable Chief J ustice Peggy A. Quince

r:Jo the Cleflc of Court
SlJpreme Court of FIoricIa
500 South Duval Street
Tallahassee , FL 32399-1900

Re: Comment, on the Final Re port and Recommendation. on Residential

Mortgage Foreclosure Cases

De ar Chief Justice Quince:

We appreoate the opponunity to comment on the F"eJ Report and Reccxrmenda/iofls

00 Residential Mcxtgage Fot'edosufe cases issued by the Florida Supreme Court r ask
Force ("Task forcel . Freddie Mac support, the effort, of the Ta sk Force to keep
famines In their homes by f3Clhtaling communication. between servicers . nd
I'Iomeownllf1l. Our comments focus on the Task Force', recommendation to requ ire
plaintiffs in fore<;IQSUrl! action s to verify Ihal lhey own and hold the mortgage secured by
!he property ,ubjed to forecIosur. _

Freddie Mac does not originale Ioaru. In ee prima/y resldential mortgage rnaf\l;e1. We
fulfil our mission by purchasing mortgage. In the secondary market and securitizing
them Iota mortgage-related securities !hat can be $Old to w,vesl Qf1i, Banks and non-bank
financial companies typically service the monljlage5 thaI we own in ac.cordance with the
requirements set forth in our Slngle-Fam~y SellerlServicer Guide (the "Guide"), vmich is
ocr master servicin g contract.' Using a variety or foreclosure prevention methods,
Freddie Mac , through OUf servcers. has helped more than 85 ,000 borrowers Iowel' lheir
mortg age payments or mod ify their loan. to I more sU$tlinabie level In the first half ot
2009. Freddie Mac is also pla ying a key role in .ustaiolng homeownlIrship by supporting
President Obam a's Making Home Affordable Program,

Guidinll Princ iple .

It is our uode rstilnding thai the primary purpos e of the mediation program is to facilitate
communications between homeowners and servicers about foreclosure a~ematives

, The Sing/ft-Femty S4!IlerlServicer Guide ill one 01 the Purdlase Documents that " inc:ofporated
by re'ersf1C8 inlO. end constitutes e p;"t of. each P\lrd'ulM Contr.d w!Itl • Seller/Se<vk:er A
saner ill required 10 sesvioe .. mortgages \NIl the saner ha$ sold 10 FredClle Mac and lIu
assenled to service for Fteddie Mac in lIOXOf'll8nCe with 1lle standanls Ml lorlh In 1lle SelJlIr"s
Purchase Documents. Even if. SeMcefwho _ fTIOI1VIIlI85 for FreddJe Mac Is no! silo lhe
5eller oIlhe Mortgages 10 Fl'8Cldie Mac. tile 5efvlc:er musl MtYiee loans in aceordance WI\Illhe

"""'.
Final Report and Recommendations
00 Mortgage Foreclo5ure Cases
October 15, 2009
Page 2

before homes are actually sold in foreclosure. Freddie Mac worb closely with
ex-perienced mortgage service~ to help keep families in their homes. We req uire our
servicers to make attempts to contact and communicate with borrowers early in the
delinquency. When a borrower Is late on a mortgage payment. servicers must contact
the borrower to determine why the borrower missed the payment and make
arrangements to collect the amount owed. 1/ a borrower is experiencing financial
difflCUl1y in making his mortgage payment sllth that the mortgage Is in eeteun or In
imminent danger of defaull. the servicef must work with the ecercwer to find a
sustainable fOfeclosure prellention strategy. 6efore foreclosing on a property, our
servlcers must consider foreclosure al1ematilles, such as repayment plans, Joan
modifications, refin ancings, and forbearance plans.

Based on our experience, we recommend the Task FOfce develop a mediation pfOgram
based 00 the following primary guiding principles. First, we suggest the lime peOOcl
between filing a foredosure action and mediation should be specified and limrted in
duration. Mediation programs should not unnecessarily delay the foreclosure process.
A prolonged time period adds to the oegatille impact already experie nced in these
markets as properlies fall Into further eisrepalr. compounded by continued depreciating
property lIalues. AddiliooaJly, a prolonged time period causes borrowers to incur
increased mortgage arrearages and other fees associated with foreclosure. DelaY1l in
the foreclosure process also expose communities to increased sodal disorder and crime
due to blighted property condilions. Currently, the averase foreclosure period In Florida
for a Freddie Mac loan is about 17 months. During the first six months, our servcers are
making attempts to wo rll with homeOWl1ers to pursue Joan restructurings or other
foreclosure altemawll'S.

Second, we belielle mediation should not be required if the homeowner does not request
mediation or if the loan has been prelliously modified. Where prior loan modifications
have been unsuccessful, mediation will likely result in unnecessary delaY1l of rccecesure
proceedings resulting In greater JoSSl!lS to the consumer. Homeowners who halle
restructured their loans, bu1 were still unable to keep their home may not benefrt!rom
mediation. tn such cases, mediation will not serve the intended purpose of keeping
families in homes they can afford.

th ird, we believe mediation l hould be offered only to homeowners who are occupying
the property as a prim ary residence, and not using the property for investment purposes.
A borrower who is occupying the horne as a prim ary residence Is more likely to alle nd
mediation and worll with servicers to keep the home. A borrower who does not occupy
the property may not hllll8 II desire to sustain homeOWl1ership.

Recommandatlon regarding vertflcation of ~owne f$hl p" of the mortgage

The Task Force has recommended a requ irement for a plaintiff in a foreclosure action 10
verify that iI owns and holds the note. Typically, the plaintiff in a foreclosure action does
not ownthe undertying note or loan that is SllCUred by the property subject to the
foreclosure proceeding. Freddie Mac's servicers initiate foreclos ure actions in their
names, ellen though they are not the owners of the notes or ioans In question, because
they are the mortgagees as shown on the land records and they are Ihe holders or
Otherwise In possession of the notes. During foreclosure proceedings, our servcers and

2
Anal Report and Recommendations
on Mortgage Foreclosure Cases
October 15, 2009
P.,. 3

foreclosure counsel have authority to negotiate and execute lo'ln restl'\lcturings and
other foreclosure a~emalives with borrowers as well as attend mediation. To requ ire
invesl ors wtle do not service the loan to be II party In the loreclosure action and attend
mediation would be costly and unduly borden some, wIllch may re su ~ in additional costs
being passed on 10 the borrower. The intended purpose of the mediation program could
be IIchieved effectively w~hout this verification requirement.

Additionally, the requirement thal lhe plaintiff VlI rffy ownersh ip 01the note Is not
consistent with stale law. Florida lew (Fla. Stat. 673.30 11 ) states that in order to enforce
a debt, the p1ainliff need only be either the holder 01 the note secured by the mortgag e or
a non-holder in possession of the note. Therefore , we recommend removing the
req uirement lor plaintiffs to show that they own the note.

Thank you for considering Freddfe Mac's views . We support efforts that give borrowers
an opportunity to refinance or modify Into affordable and sustainable loans as an
a~emative to foreclosure. Please contact me if you have any questions or would like
any add~ional lnformallon .

Sin rely,