Banking Law Bulletin

Freddie Mac Issues - Guidance Relating to Federal Government Shutdown

Yesterday, Freddie Mac issued a temporary guidance to lenders designed to minimize disruption to the mortgage market during the temporary federal shutdown that began on October 1, 2013. The changes were announced in Guide Bulletin 2013-19 and are effective today (October 8, 2013). These temporary requirements supersede any other temporary guidance previously announced relating to Freddie Mac and the shutdown. The guidance will terminate automatically when the federal government reopens. The guidance can be found at under Business Resources - Single Family News Center. You are urged to review the guidance and the details set out therein.

Some of the highlights thereof are as follows:

  • Lenders can deliver mortgages to Freddie Mac when the borrower is not receiving a paycheck as a result of the temporary shutdown provided the loan meets Freddie Mac’s other requirements and provided the Bank expects the borrower to return to work when the government reopens.
  • Freddie Mac’s mortgage relief policies are available to public and private sector employees affected by the temporary federal government shutdown. Borrower forbearance can be provided, but must not be reported to credit bureaus. Forbearance can range from up to 3 to 12 months depending upon the particular circumstance of the borrower.
  • Servicers can accept a borrower’s most recent signed federal tax return while the IRS is unable to process an IRS transcript request from such information if and as needed to evaluate a borrower for Freddie Mac’s Home Affordable Modification Program and other workout options.
  • During the shutdown, verification of employment for government employees is still required, including for those on furlough, but can be obtained from a third party service provider.
  • If your Bank is serving FHA, the Department of Veteran’s Affairs and/or Rural Housing Service Mortgages you should refer to those government agencies for any requirements issued during the shutdown.

The foregoing is not intended to be legal advice, but rather, to provide accurate information regarding banking law and regulatory matters. For more information regarding any of the foregoing items, please contact any member of our banking practice group: Dennis W. Gorman (, William G. Keller, Jr. (, James A. Rapp (, William M. McCleery, Jr. (, Ted M. Niemann (, Michael A. Bickhaus ( or Andrew K. Cashman (, at (217) 223-3030 or visit us on the web at We invite and welcome all questions and comments.

Schmiedeskamp Robertson Neu & Mitchell LLP
525 Jersey Street, Quincy, Illinois 62301
(217) 223-3030

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