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Question:

What is an Address Confidentiality Program (ACP), and why is it important to both the origination and servicing divisions of mortgage companies and financial institutions?

Answer:

States created ACPs to protect victims of stalking, domestic violence, sexual assault, human trafficking, and other crimes from being located by individuals who intend to cause them harm. ACP programs conceal a participant’s real address by providing a mail forwarding service and giving participants a legal substitute address to use in place of their actual physical address. Further, ACPs prohibit those with knowledge of a
victim’s location information from disclosing it to other parties.

Originating lenders and servicers must develop policies and procedures addressing ACPs to ensure compliance. Generally, lenders and servicers must know the physical address of their customers as part of their customer identification program (CIP). However, the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN) issued guidance explaining that it understands the need to protect victim anonymity in these circumstances. In an effort to support state ACP requirements, FinCEN authorized the following exception:

A customer who participates in a state-created ACP shall be treated as not having a residential or business street address and a secretary of
state or other state entity serving as a designated agent of the customer consistent with the terms of the ACP will act as another contact individuals for the purpose of complying with FinCEN's rules. Therefore, a [financial institution] should collect the street address of the ACP sponsoring agency for purposes of meeting its CIP address requirement.

Investors and agencies, such as Fannie Mae and Freddie Mac, have also published guidance with regard to ACPs. Fannie Mae directs sellers/servicers to comply with the following requirements for loans in which a borrower is enrolled in a state ACP:

• Include both a property address and a legal substitute mailing address for a loan delivery;
  Report Special Feature Code (SFC 877) when delivering a loan to Fannie Mae;
• For loans serviced, complete Fannie Mae’s post-purchase adjustment process within five days of receiving notification that a borrower enrolled in or unenrolled in one of these programs, and
• Provide notice of program enrollment and the borrower’s mailing address to any transferee servicer upon the transfer of servicing rights.
  

Freddie Mac directs sellers to comply with all applicable federal and state laws related to ACPs and

• Within five business days after the funding date for any mortgage for which the borrower is a participant in an ACP, email the following information to loan_delivery_funding_ops@freddiemac.com:
  • Freddie Mac Loan Number
  • Borrower Name
  • Borrower ACP Mailing Address (including, when applicable, any lot
    number or required uniquely identifiable number)