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Agency Hot Topics. Discussion TopicsGeneral and Basic Custodian EligibilityAudits and ReviewsDocument ImagingLost Note AffidavitsInventory ReconciliationFreddie Mac Contacts . Agency Hot Topics. General Eligibility Requirements: the Document Custodian MustBe designated by the Seller/ServicerEnter into a custodial agreement with the Seller/Servicer and Freddie MacComply with all Single-Family Seller/Servicer Guide (Guide) requirements pertaining to Notes and assignments held for Freddie1139
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1. Agency Hot Topics David Wilson
Operations Manager
Operations Management Group
Freddie Mac
2. Agency Hot Topics Discussion Topics
General and Basic Custodian Eligibility
Audits and Reviews
Document Imaging
Lost Note Affidavits
Inventory Reconciliation
Freddie Mac Contacts
3. Agency Hot Topics General Eligibility Requirements: the Document Custodian Must
Be designated by the Seller/Servicer
Enter into a custodial agreement with the Seller/Servicer and Freddie Mac
Comply with all Single-Family Seller/Servicer Guide (Guide) requirements pertaining to Notes and assignments held for Freddie Mac
Comply with any other requirements which Freddie Mac may specify to ensure the safety and security or enforceability of the Notes and assignments held by the Document Custodian
4. Agency Hot Topics General Eligibility Requirements, the Document Custodian Must
Comply with standards, including custodial performance, and such fiduciary responsibilities as may be prescribed by Freddie Mac, in its discretion, from time-to-time.
Notify Freddie Mac and the Seller/Servicer if, at any time, the Document Custodian fails to meet any applicable eligibility requirements.
5. Agency Hot Topics Basic Eligibility Requirements, the Document Custodian must be one of the following:
A financial institution that is supervised and regulated by the Federal Deposit Insurance Corporation, Board of Governors of the Federal Reserve System, Office of the Controller of the Currency, Office of Thrift Supervision, or
A third-party Document Custodian which is a subsidiary of such a supervised and regulated financial institution listed above that is authorized to perform trust services under applicable law, or
A Federal Home Loan Bank chartered pursuant the Federal Home Loan Bank Act
6. Agency Hot Topics Basic Eligibility Requirements, the Document Custodian must
Not be in receivership, conservatorship or liquidation. Any federally-regulated parent of the Document Custodian also must not be in receivership, conservatorship or liquidation.
Have Acceptable Net Worth of $1,000,000 or greater.
Be equipped with secure, fire-resistant storage facilities with adequate controls on access. If fire-resistant requirements aren’t set by the regulator, a minimum two hours fire protection is recommended.
Maintain the Notes and assignments in such a way as to ensure security and confidentially and prohibit unauthorized access or use of information contained in Notes and assignments.
7. Agency Hot Topics Basic Eligibility Requirements, the Document
Custodian must
Use employees who are knowledgeable in the handling of Notes and assignments and of the functions and duties of a Document Custodian as required by Freddie Mac
Access the electronic version of the Guide via AllRegs using a the link on http://www.freddiemac.com/singlefamily/
8. Agency Hot Topics Basic Eligibility Requirements, the Document
Custodian must
Maintain the following insurance coverages, that at a minimum
Financial institution bond, or equivalent insurance, covering any loss from
Employee dishonesty
Physical damage and destruction, or loss of, any Notes and assignments while in custody or while in transit
if the Document Custodian has contractually agreed, with the Seller/Servicer, to assume liability coverage for Notes and Assignments in transit
Errors and omissions insurance covering claims from the Document Custodian’s breach of duty, neglect, errors or omissions, misstatement, misleading statement or wrongful acts committed in the conduct of custodial services.
9. Agency Hot Topics Basic Eligibility Requirements, the Document Custodian
must
Have and maintain a document tracking and reporting system, that at a minimum
Provides, in an electronic format acceptable to Freddie Mac, an accounting of all Notes held for Freddie Mac identified by the Freddie Mac loan number and the Servicer’s six-digit Seller/Servicer number
Monitors receipt of Notes, assignments and related documentation
Monitors the release of Notes and assignments requested by the Servicer
Tracks the physical location of the Notes and related documents
Cross references the Freddie Mac loan number with number assigned by the Servicer
Accurately accounts for documents transferred or released
10. Agency Hot Topics Basic Eligibility Requirements, the Document Custodian
must
Have and maintain a disaster recovery plan, that at a minimum, contains:
A process by which the physical recovery/restoration of documents will occur
A process to recover tracking system data, including any electronically maintained information
A process to relocate/restore facilities to ensure continuing ability to perform required custodial functions
A provision for the testing and maintenance of the plan
A provision to notify Freddie Mac of disaster within 24 hours of the disaster. Telephone number: (800) FREDDIE
11. Agency Hot Topics Basic Eligibility Requirements, the Document
Custodian must
Have and implement written procedures that ensure compliance with Freddie Mac requirements and prudent practices in performing the duties of a Document Custodian including, at minimum:
Certification and maintenance of documents
Document release and transfer
Access to documents
Tracking and reporting
12. Agency Hot Topics Document Custodian Audits and Reviews
Frequency:
Large Document Custodian – Annually
Small and Mid Size Document Custodian – 12 to 24 months
Length of Audit – 1 to 1-1/2 days
Common issues:
data Integrity
inadequate Physical Security Controls for Building and/or Vault
inadequate Fire Protection
inadequate Policies and Procedures
inadequate Business Continuity Planning and Disaster Recovery
inadequate Note Tracking System
13. Agency Hot Topics Document Custodian Audits and Reviews
Best practices:
Designate a single audit contact
Have subject matter experts available
Ensure availability of requested documents
Prepare to discuss your largest risk(s)
Address recent changes and future plans
Testing of Business Continuity Plans (BCP) including notification of Freddie Mac
Adequate Vault Security (Sign in log; Escorts)
Protecting Borrower Identifiable Information
Including documents and data at rest and in transit.
14. Agency Hot Topics Document Imaging
What documents may a Document Custodian maintain electronically?
The Document Custodian can hold images of any documents it contracts or is assigned to hold on behalf of the Seller/Servicer. Originals must be held in keeping with Volume II, Chapter 52.2 of the Guide
Can images be utilized to complete the initial file review?
The Document Custodian may perform initial file review using an image of mortgage Note documents, but must validate borrower(s) signatures on the Note are original and that if endorsements were executed by live signature, that endorsement signatures are original
Additional information concerning imaged documents
The use and safekeeping of images are subject to the same security and access requirements as are original documents
Original documents may not be destroyed without Freddie Mac’s written approval or direction
15. Agency Hot Topics Document Imaging
Retention of Original Forms 1034, Custodial Certification Schedule and 1036, Request for Release of Documents
Original Forms 1034 (except 1034E) may be imaged and destroyed immediately after certification or originals may be destroyed 3 months after certification
Original Form 1034E and Selling System Delivery Cover Sheet may be destroyed immediately after the certification status in the system
Original Form 1036 may be imaged and destroyed if your note tracking system contains the date and reason for release of Note
Original or imaged Form 1036 may be destroyed three months after the Note is returned to the Document Custodian or the mortgage is paid in full
16. Agency Hot Topics Lost Note Affidavits (LNA)
When is an LNA acceptable?An LNA may be certified only when accompanied by written approval from Freddie Mac. The LNA, with original signatures and notarization, must include a complete copy of the Note showing endorsements from the original payee to the Seller of the Note to Freddie Mac.
When is a Lost Instrument Bond acceptable?Freddie Mac does not accept Lost Instrument Bonds.
Can a copy of the recorded mortgage be used in lieu of a copy of the Note?Freddie Mac does not accept an LNA with a copy of the recorded mortgage. Seller/Servicers who have received approval to deliver LNAs, but are unable to obtain a complete copy of the Note, must contact Freddie Mac for further instruction(s).
17. Agency Hot Topics Lost Note Affidavits (LNA)
Does the copy of the Note require an endorsement?If the copy of the Note does not include the complete endorsement chain through to the Seller, the LNA must contain a statement to the effect that the photocopy of the Note was made in the ordinary course of business prior to the Note's endorsement. Original endorsements on the Note copy are not acceptable.
If a copy of a mortgage is attached, would an endorsement be required?Freddie Mac does not accept an LNA with a copy of the recorded mortgage.
Are lost document affidavits acceptable for co-op documents such as stock certificates and recognition agreements?Freddie Mac does not accept lost document affidavits for co-op documents.
18. Document Custodian Inventory Reconciliation
What should be delivered for each vault location
A list of nine-digit Freddie Mac loan numbers for all Freddie Mac owned Notes in your vault. No additional information should be included in the file.
The file name should include the seven digit Custodian Number and the date the file was created.
How should the listing be delivered
The inventory listing should be delivered by e-mail (sodmgmt@freddiemac.com) or courier on compact disc. The file format should be text (.txt).
Frequency
Beginning 4th Quarter 2009, Document Custodians will required to deliver inventory lists on a quarterly basis, or more frequently at Freddie Mac’s discretion.
E-mail notification to deliver the inventory list will be sent to the Document Custodian contact we have on file. Please be sure that you notify us if contact information changes. Agency Hot Topics
19. Agency Hot Topics Document Custodial Operations Contacts
John T. Daugherty Sr. Director, Settlement Operationsjohn_daugherty@freddiemac.com(703) 918-5770
David Wilson Manager, Settlement Operationsdavid_wilson@freddiemac.com(703) 918-8579
Customer Management & Technology Integration
Philip Theis
Customer Management Director
philip_theis@freddiemac.com
(703) 903-2441
20. Agency Hot Topics Custodial Eligibility Contacts
Pam WilliamsDirector, Counterparty Credit Risk Managementpam_williams@freddiemac.com(571) 382-3455
Amy OdiorneInstitutional Risk Analystamy_odiorne@freddiemac.com(571) 382-3936
External Operational Risk Contacts
Robert CopeDirector, External Operational Risk Managementrobert_cope@freddiemaccom(703) 903-4305
Michelle BakerManager, External Operational Risk Managementmichelle_baker@freddiemac.com(865) 357-4784