We have a customer who has a home mortgage loan and has been called to active military duty. Customer has notified us of his activation and is requesting relief under the SSCRA. So far, so good. But... the loan was sold to Freddie Mac. Rather than reduce the loan to 6% as required by SSCRA, Freddie Mac is asking us to keep the loan terms unchanged and they will reimburse us quarterly for the amount that would be needed to lower the loan to the 6% rate. We in turn would then reimburse the borrower quarterly. While the end result might meet the "spirit" of the law, I do not think that it meets the "letter" of the law, in that the borrower's payments are not being reduced while he is on active duty. He would still make the same monthly payment but would receive a quarterly rebate. I think that Freddie Mac wants to do it this way so that when the customer is no longer on active duty, the loan can just pick up where it was and they will not have to make so many changes in their records. What are your thoughts on how this should be handled? Thanks for your input.

If you still own the loan, I would lower it to 6% and reduce their monthly payment accordingly. The borrower (service member) is entitled to immediate relief and shouldn't have to wait until after the fact.

Are you handling the servicing? You said you sold the loan to Freddie Mac. I'd run this by legal.

You must have sold the loan to Freddie with servicing retained. If this is the case & you control the servicing of the account, simply reduce the interest rate and payment to the customer and carry the receivable from Freddie until the end of each quarter.

Do you have that request from Freddie Mac in writing? If so, there are a NUMBER of Freddie Mac critics who would love to know about it!

(Of course, you would need to block out any references to the loan number, customer name, address, and other NPPI!)

Don't you love when these "quasi" government agencies feel they can simply ignore laws they find inconvenient?