• Memorializes the Bureau's informal guidance on various issues and makes additional clarifications and technical amendments.
• Creates tolerances for the total of payments
• Adjusts a partial exemption mainly affecting housing finance agencies and nonprofits
• Extends coverage of the TILA-RESPA integrated disclosure (integrated disclosure) requirements to all cooperative units
• Provides guidance on sharing the integrated disclosures with various parties involved in the mortgage origination process

• Introduced a fidelity bond coverage amount cap of $150 million.
• Added an errors and omissions coverage amount cap of $30 million for seller/servicers that have singlefamily and multifamily mortgage loan portfolios.
• Clarified that fidelity bond and errors and omissions insurance coverage must be equal to a percentage of the greater of the seller/servicer’s annual:
  • total UPB of single-family and multifamily mortgage loan annual originations, or
  • highest monthly total UPB of single-family and multifamily servicing of mortgage loans that the seller/servicer owns, including mortgage loans owned by the seller/servicer and serviced by others.
• Increased the maximum allowed deductible for fidelity bond and errors and omissions insurance to:
  • 10% for mortgage loan portfolios less than $1 billion, or
  • 15% for mortgage loan portfolios greater than or equal to $1 billion.
• Clarified when we will consider a captive or reinsurance arrangement for fidelity bond and errors and omissions insurance.
• Eliminated a surety bond requirement.
• Updated fidelity bond and errors and omissions insurance coverage requirements for master servicers and subservicers to clarify that master servicers are responsible for maintaining coverage for any loans serviced by others on their behalf.
• Changed the requirement for when the seller/servicer must notify us of a fidelity bond or errors and omissions insurance loss from 10 business days from the date of the loss event to within 30 days from discovery.
• Clarified the provisions related to Fannie Mae’s rights under a seller/servicer’s fidelity bond and errors and omissions insurance policy.
• Eliminated the annual requirement for a seller/servicer to provide a copy of the fidelity bond or errors and omissions insurance policy upon Fannie Mae’s request. (We will rely instead on related information sellers/servicers provide us annually.)

• Requires a person authorized to sell residential property subject to foreclosure to file a notice of foreclosure with the Department of Labor, Licensing, and Regulation under certain circumstances.

Effective for foreclosure actions filed on or after October 1, 2018: 

• A foreclosing lienholder may submit a a document from a defendant’s bankruptcy case, which will serve as an “admission by the defendant” that he or she intended to surrender the property
  • This will create a rebuttable presumption that the defendant has waived any defense to foreclosure if certain conditions are met
  • The bill does not prevent the defendant from raising a defense based upon the lienholder’s action or inaction following the lienholder’s filing

Effective October 1, 2018; however, Servicers may implement earlier if they are able to do so

In response to Servicer feedback, we are revising certain requirements regarding cancellation of Borrower-paid mortgage insurance to provide more specificity and streamline our requirements.

To assist Servicers in managing cancellations of Borrower-paid mortgage insurance, changes include, but are not limited to, those described below: 

• Enhancing the list of defined terms specific to our requirements for mortgage insurance by including a new term, “Non-HPA Mortgage.” HPA Mortgages, Non-HPA Mortgages and Pre-HPA Mortgages are distinguished by their Origination Dates in relation to the HPA Effective Date and the Mortgaged Premises securing such Mortgages. The terms “HPA Mortgages,” “Non-HPA Mortgages,” “Pre-HPA Mortgages” and “HPA Effective Date” are defined in Section 8203.1.

• For Borrowers impacted by Eligible Disasters, making permanent the temporary revisions to payment history requirements for Borrower-requested cancellation of Borrower-paid mortgage insurance announced in Bulletin 2017-25

• Rearranging the charts in Sections 8203.2 and 8203.3 regarding Borrower-requested cancellation of Borrower-paid mortgage insurance to make them more user-friendly and easier to comprehend. For example, grouping the requirements according to whether the request is based on the original value (as “value” is defined in Section 4203.1) or the current value.

• Allowing a Servicer to process and/or respond to a Borrower’s written or verbal request to cancel Borrower paid mortgage insurance, as well as solicit such Borrowers that may be close to, or have reached, their applicable mortgage insurance cancellation points in Sections 8203.2 and 8203.3

• Regarding Borrower-requested cancellation of Borrower-paid mortgage insurance based on: 

     - The original value: for evidence of value, clarifying that a Servicer is not required to also order and obtain a current value
     - The current value:

          - For requests to cancel mortgage insurance on the basis of substantial improvements to the Mortgaged Premises, we are providing              a description and examples of what constitutes substantial improvements for mortgage insurance cancellation purposes

          - For evidence of value, requiring a Servicer to verify the current value by ordering and obtaining a new BPO through BPOdirect®,              unless applicable law requires that an appraisal be used or it is determined to be in the Borrower’s best interest (e.g., at the                    option of the Borrower). Currently, a Servicer must order and obtain either a BPO or appraisal to verify the current value.

• Removing the separate automatic cancellation requirements for Pre-HPA Mortgages, allowing for automatic cancellation of Borrower-paid mortgage insurance on such Mortgages based on the date on which the loan-to-value (LTV) ratio is first scheduled to reach 78% based on the original value and the amortization schedule 

• Specifying that a modified Mortgage’s UPB is the total UPB, including any deferred (non-interest bearing) UPB as a result of a prior modification

• Removing outdated requirements, including the deletion of Section 8203.6, as it pertained to Balloon/Reset Mortgages

Servicers should review Chapter 8203 in its entirety for the revised requirements.

Servicers are reminded that they must comply with all applicable law including, but not limited to, the Homeowners Protection Act of 1998, as amended, when processing and/or responding to requests for Borrower requested or automatic cancellation of Borrower-paid mortgage insurance.

Guide impacts: Sections 8203.1 through 8203.7 and Section 9205.11 

An advance copy of the new Form RD 3555-21 is being provided for lender process and IT development purposes.  This form has been fully vetted through USDA channels and will be adopted on October 1, 2018.

The Guaranteed Underwriting System (GUS) will be updated with the new version of the form on October 1, 2018 and will then be able to be pre-filled via GUS.

KEY DATES: 

• October 1, 2018, the new version of Form RD 3555-21 will be posted to the USDA eForms and GUS web sites.
• November 1, 2018, USDA will discontinue use of Form RD 3555-21 (revision date June 2016).  All loan packages must include Form RD 3555-21 (revision date October 2018).

Thank you for your support of the Single Family Housing Guaranteed Loan Program.

Questions regarding this announcement may be directed to the National Office Division at (202) 720-1452.

Effective for all reimbursement claims submitted in the Freddie Mac Reimbursement System on and after October 1, 2018

In Bulletin 2015-9, we revised our property insurance reimbursement requirements to allow for the reimbursement of “unearned” property insurance premiums (as described in Bulletin 2015-9) under certain conditions. There may be exceptional situations where a Servicer is not able to recover the unearned property insurance premiums from the Borrower as part of a short sale or deed-in-lieu of foreclosure transaction despite its best efforts. Therefore, we are expanding the scenarios under which a Servicer may seek reimbursement to include short sales and deeds-in-lieu of foreclosure.

If the Servicer was unsuccessful at recovering the unearned property insurance premiums from the Borrower in the short sale or deed-in-lieu of foreclosure transaction, the Servicer seeking reimbursement for such premiums may file a claim for reimbursement in the Reimbursement System up to the periods prescribed in Section 9701.7. 

Pursuant to Section 9701.21 regarding standard supporting documentation for expense reimbursement, if the reimbursement request is selected for audit, Freddie Mac will instruct the Servicer to provide, to the extent possible, documentation showing the Servicer’s attempt to recover the unearned property insurance premiums from the Borrower. Such documentation may include a copy of the Borrower’s waiver of funds under which the Borrower agreed to assign any refund of unearned property insurance premiums.

Temporary process to seek reimbursement

For reimbursement claims submitted in the Reimbursement System on and after June 13, 2018, but prior to
October 1, 2018, where Freddie Mac curtailed a portion of the property insurance premiums, a Servicer seeking reimbursement for such unearned property insurance premiums as described above may send an exception request to 104_Expense@freddiemac.com. The exception request must include supporting documentation such as:

• The bill number listed on the Servicer’s claim for reimbursement in the Reimbursement System, where Freddie Mac curtailed a portion of the property insurance premiums; and
• As applicable, standard supporting documentation for expense reimbursement listed in Section 9701.21. This would include any documentation showing the Servicer’s attempt to recover the unearned property insurance premiums from the Borrower.

Upon review and consideration by Freddie Mac, we will reimburse the Servicer up to the periods prescribed in Section 9701.7.

Non-reimbursable expenses 

We are updating Section 9701.15 to specify that sales tax is considered a non-reimbursable expense unless it is included within the total expense of a line item that does not exceed the related expense limits set forth in the Guide.

Guide impacts: Sections 8101.2 and 9701.15 

In response to customer feedback, Reverse Mortgage Loan Servicing Manual 5-04, Property Management, has been updated to revise hazard insurance coverage requirements related to HECM REO. 

• For HECM loans, the servicer must place a property insurance policy on the acquired property in accordance with HUD guidelines and up to the HUD foreclosure appraisal amount or deed-in-lieu property valuation amount, as applicable.
• In the rare instance the servicer is unable to obtain a HUD foreclosure appraisal or deed-in-lieu property valuation, the servicer must place coverage in accordance with HUD guidelines and up to the unpaid principal balance (UPB) amount.
• The requirements for REO hazard insurance coverage for Home Keeper mortgage loans remain unchanged. 

Mortgage Insurance Claims Process

• Participating mortgage insurers will now process all submitted claims using an algorithm, known as the MI Factor, to estimate expenses
• The explanation of benefits documentation for claims settled using MI Factor will indicate that the claim was paid using the algorithm, and for claims settled in this fashion, servicers will no longer be required to submit supplemental claim submissions and claim appeals to the mortgage insurer
• We are discontinuing the curtailment billing process for all claims settled using the MI Factor
• Claims settled with mortgage insurers not participating in the MI Factor process will continue to require supplemental claims 
• Additionally, claim appeals will continue to be required as needed, and Fannie Mae’s curtailment billing process will continue

Notification of Law Firm Matter Transfers

• We have updated the Guide to require that servicers provide notice to us at least five business days prior to transferring any default-related matter that results in an aggregate of 30 or more transfers within a six-month period from a single law firm to another law firm in the same state

• Section 3. Form The information contained in the commitment letter shall be written in clear, understandable language and easily read type.
• Section 4. Content All lenders shall issue a commitment letter in connection with every mortgage loan. The commitment letter shall be signed by the lender.  A commitment letter may be signed electronically pursuant to the Vermont Uniform Electronic Transactions Act, 9 V.S.A. §§270 – 290, as amended from time to time.
• Section 4. Content The commitment letter shall include, but not be limited to, the information required by subdivision A, B, or C of this section, as applicable. The information shall be (i) grouped together in a meaningful way, and/or (ii) bolded or otherwise made easily distinguishable from the remainder of the text. [Please see final rule for complete requirements]
• Section 5. Timing of Issuance All commitment letters, except as provided in subsections 5(A), 5(B), and 5(C) of this regulation, shall be delivered to the borrower no less than three business days prior to the closing [Please see final rule for exceptions relating to hardship and waiver of the three business day requirement, as well as the definition of "delivered" as defined by the regulation]

We continue to review our policies and identify opportunities to relieve servicers of post-foreclosure sale responsibilities, where possible. In 2017, we accepted responsibility to pay property taxes for acquired properties with a foreclosure sale date or final acceptance of an executed Mortgage Release occurring on or after August 1, 2017. We are now accepting responsibility to pay property taxes for all acquired properties in Fannie Mae’s real estate owned (REO) inventory, including acquired properties with a foreclosure or Mortgage Release date that precedes this aforementioned effective date.

Additionally, to further reduce servicers’ costs and operational risk, E-4.3-01, Managing the Property Post-Foreclosure Sale has been updated to remove the requirement for servicers to pay co-op fees and assessments or ground rents for certain acquired properties in Fannie Mae’s REO inventory, except when directed by us.

Effective Date
We will assume responsibility for

• property taxes for all acquired properties effective October 1, 2018, without regard to the foreclosure sale or Mortgage Release date;
• ground rents for all acquired properties effective October 1, 2018, without regard to the foreclosure sale or Mortgage Release date; and
• co-op fees and assessments for all acquired properties with a foreclosure sale or Mortgage Release date occurring on or after October 1, 2018.

This policy becomes effective for all HECM originations with FHA case numbers assigned on or after October 1, 2018, through September 30, 2019. 

 Interim procedures must be followed for all case numbers assigned October 1st, until the fully automated protocols become operational on or before December 1, 2018.

[Please see Mortgagee Letter 2018-06 for complete details]

• FHA will perform a risk assessment of appraisals submitted for use in new HECM originations. Based on the outcome of that assessment, FHA may require a second appraisal be obtained prior to approving the reverse mortgage for insurance endorsement. Under the new policy, mortgagees must not approve or close a HECM before FHA has performed the collateral risk assessment and, if required, a second appraisal is obtained. 
• If FHA communicates that a second appraisal is required, the mortgagee must use the lower of the two appraisal values to underwrite the loan. The cost of the second appraisal, if required, is then eligible to be financed as part of the HECM closing costs. 

Effective for foreclosure actions filed on or after October 1, 2018: 

• A foreclosing lienholder may submit a a document from a defendant’s bankruptcy case, which will serve as an “admission by the defendant” that he or she intended to surrender the property

• This will create a rebuttable presumption that the defendant has waived any defense to foreclosure if certain conditions are met

• The bill does not prevent the defendant from raising a defense based upon the lienholder’s action or inaction following the lienholder’s filing

• Introduced a fidelity bond coverage amount cap of $150 million.
• Added an errors and omissions coverage amount cap of $30 million for seller/servicers that have singlefamily and multifamily mortgage loan portfolios.
• Clarified that fidelity bond and errors and omissions insurance coverage must be equal to a percentage of the greater of the seller/servicer’s annual:
  • total UPB of single-family and multifamily mortgage loan annual originations, or
  • highest monthly total UPB of single-family and multifamily servicing of mortgage loans that the seller/servicer owns, including mortgage loans owned by the seller/servicer and serviced by others.
• Increased the maximum allowed deductible for fidelity bond and errors and omissions insurance to:
  • 10% for mortgage loan portfolios less than $1 billion, or
  • 15% for mortgage loan portfolios greater than or equal to $1 billion.
• Clarified when we will consider a captive or reinsurance arrangement for fidelity bond and errors and omissions insurance.
• Eliminated a surety bond requirement.
• Updated fidelity bond and errors and omissions insurance coverage requirements for master servicers and subservicers to clarify that master servicers are responsible for maintaining coverage for any loans serviced by others on their behalf.
• Changed the requirement for when the seller/servicer must notify us of a fidelity bond or errors and omissions insurance loss from 10 business days from the date of the loss event to within 30 days from discovery.
• Clarified the provisions related to Fannie Mae’s rights under a seller/servicer’s fidelity bond and errors and omissions insurance policy.
• Eliminated the annual requirement for a seller/servicer to provide a copy of the fidelity bond or errors and omissions insurance policy upon Fannie Mae’s request. (We will rely instead on related information sellers/servicers provide us annually.)

Eligible Bidders at Foreclosure Sale 

• The successful bidder must submit an affidavit to the court affirming that the bidder does not own property in the state that is more than 120 days tax delinquent. 
• The affidavit must also affirm that the successful bidder does not have an outstanding judgement regarding noncompliance with state or local building codes.  
• These affirmation must also be true for an entity that the bidder owns, manages, or controls, or for any entity that owns manages, or controls the bidder.
• If a court confirms the affidavit to be false, the court can refuse to confirm the sale, can order the bidder’s deposit forfeited, and can order a new sale. 
• If the court finds that the bidder knowingly made a false affirmation, the bidder may be fined up to $1,000 and barred from bidding for up to a year.

• Authorizing a certain lending institution that makes a certain loan secured by a certain first mortgage or first deed of trust to create a certain escrow account solely for the payment of water and sewer facilities assessments on a certain request;
• Providing that certain provisions of law do not apply to the payment of water and sewer facilities assessments under a certain direct reduction method;
• Providing that funds in a certain escrow account for use for certain purposes may not be used in a certain manner; etc.

• Amends the Uniform Electronic Recording Act to establish that the clerk of a circuit court may take certain acts with respect to the acceptance of electronic documents and the conversion of paper documents to electronic form for recording.
• Authorizes the State Department of Assessments and Taxation as well as the counties to collect certain fees and taxes by electronic means.
• Allows the Administrative Office of the Courts to establish standards to implement the act.

• Expands the definition of "unfair or deceptive trade practices" to include "abusive" trade practices. 
• Broadens the coverage and increase penalties under the Maryland Consumer Protection Act.
• Prohibits an unlicensed person from making a covered loan.
• Allows a lender, on or after January 1, 2019, to make a loan under the provisions of this subtitle so long as, among other things, the lender makes a written election in the agreement specifying that this subtitle will govern the loan.

Connecticut Senate Bill 395 provides consumer protections during the application process for a reverse annuity mortgage loan. Prior to accepting an a final and complete application for a reverse annuity mortgage loan, entities must:

• Inform the prospective applicant of the counseling requirements and provided the prospective applicant with a list of at least five independent housing counseling agencies approved by the United States Department of Housing and Urban Development to engage in reverse annuity mortgage loan counseling.
• Receive a certification signed by (A) the prospective applicant or the prospective applicant's authorized representative, and (B) a counselor from an independent housing counseling agency that the applicant has received reverse annuity mortgage loan counseling from such counselor.
• Receive a certification of the reverse annuity mortgage loan origination signed by (A) the prospective applicant or the prospective applicant's authorized representative, and (B) the reverse annuity mortgage loan originator.
• Received a certification that indicates either: (A) The reverse annuity mortgage loan counseling session, or (B) the reverse annuity mortgage loan origination was conducted in person.

The lender shall maintain any certification described in subsection (a) of this section in an accurate, reproducible and accessible format for the term of the reverse annuity mortgage loan.

A violation of the provisions of this section shall be deemed an unfair or deceptive act or practice in the conduct of trade or commerce pursuant to subsection (a) of section 42-110b of the general statutes.

Eliminates the requirement that a mortgagor represented by counsel attend the first foreclosure mediation session in person.

• Prohibits credit rating agencies from charging a fee to consumers to place or remove a security freeze from the consumer's account.
• Requires credit rating agencies to notify other credit rating agencies of a consumer's request to place or remove a security freeze from such consumer's account.
• Increase the amount of identity theft prevention or mitigation services provided after a security breach.

Effective October 1, 2018, but Sellers and Servicers may adopt sooner if they are operationally able to do so 

As announced in Bulletin 2018-8, in response to requests from Seller/Servicers approved to sell and/or service eMortgages, we are updating Form 960 to require Sellers completing a Concurrent Transfer of Servicing transaction to identify whether eMortgages are included in the transaction and, if so, to designate the appropriate Document Custodian. For information on approval to sell eMortgages to, and/or service eMortgages for, Freddie Mac, visit our eMortgage web page.

PART I. MORTGAGE AND DEED OF TRUST CHANGES

§ 161‑10.  Uniform fees of registers of deeds 

Amended to add:

"In all other cases, the fees provided in subdivision (1) of this subsection shall apply to the registration or filing of any subsequent instrument that relates to a previously recorded deed of trust or mortgage. For the purposes of this section, the term "subsequent instrument" has the same meaning as set forth in G.S. 161‑14.1(a)(3)."

§ 161‑14.1.  Recording subsequent entries as separate instruments

Amended as follows:

"An instrument that amends, modifies, or restates an original instrument, such as an amendment or modification agreement or an amended and restated instrument."

PART III. REGULATE SOLICITATION OF COPIES

§ 75‑43.  Solicitation of a fee for copy of recorded documents 

New section added:

"(a)        Any person, firm, or corporation soliciting a fee in exchange for providing a copy of a record available at the register of deeds office shall state on the top of the document used for the solicitation, in conspicuous type, all of the following:

(1)        That the solicitation is not from a State agency or a local unit of government.

(2)        That no action is legally required by the person being solicited.

(3)        The fee for obtaining a copy of the record directly from the register of deeds that has custody of the record.

(4)        The information necessary to contact the register of deeds that has custody of the record.

(5)        The name and physical address of the person, firm, or corporation soliciting the fee.

(b)        A document used for a solicitation governed by this section shall not contain deadline dates or be in a form or contain language designed to make the document appear to be issued by a State agency or local unit of government or to appear to impose a legal duty on the person being solicited.

(c)        A person, firm, or corporation soliciting a fee in exchange for providing a copy of a record may not charge a fee that is greater than four times the amount the register of deeds with custody of the record would charge for a copy of the same record.

(d)       A violation of this section constitutes an unfair trade practice under G.S. 75‑1.1 and is subject to all of the enforcement and penalty provisions under this Article.

(e)        For the purposes of this section, the term "solicit" means to advertise or market to a nonbusiness entity with whom the solicitor has no preexisting business relationship."

We are clarifying the policies related to employment verification to address borrowers who work in occupations that result in a series of short-term job assignments (such as a skilled construction worker, longshoreman, or stagehand), where a union facilitates the borrower’s placement in each assignment. 

In these cases, the Selling Guide now permits this type of union to provide: 

• the verbal verification of employment for a union member who is currently employed, and 

• an executed employment offer or contract for future employment for a union member who is not scheduled to begin employment until after the loan closes. All other existing requirements for employment offers or contracts described in B3-3.1-09, Other Sources of Income, apply. 

Effective Date: Lenders can take advantage of this change immediately.

In response to lender feedback and to better align with industry practices, we have expanded our policy regarding employment-related assets used as qualifying income.

We increased the maximum LTV, CLTV, and HCLTV ratio from 70% to 80% for loans where the asset owner is at least 62 years old at the time of the loan closing. If the asset(s) is jointly owned, all owners must be borrowers on the loan and the borrower whose employment-related asset is being used as income must be at least 62 years old at the time of closing. 

Effective Date: Desktop Underwriter® (DU®) will be updated in a future release to reflect this change. Until that time, loans that receive an Approve/Ineligible recommendation due to a LTV, CLTV, or HCLTV ratio over 70% may be delivered to Fannie Mae when the lender ensures the loan complies with the updated policy. 

We are clarifying the comparable sales requirement for appraisals of MH Advantage homes. Appraisers must use sales of other MH Advantage homes when available. If fewer than three MH Advantage sales are available, then the appraiser must supplement with the best and most appropriate sales available, which may include site-built homes. 

Effective Date: Lenders can take advantage of this change immediately. 

Outsourcing of Mortgage Processing and Third-Party Originations 

This month we simplified the selling policy regarding the outsourcing of mortgage processing and third-party originations. These changes provide additional clarity with regard to our expectations for lenders in their management of third-party originators. As part of this simplification effort we have:

- eliminated unnecessary examples, 

- removed recommendations and best practices, leaving only the requirements necessary for compliance with the Selling Guide, and 

- consolidated existing content into an easy to read table.

B4-2.1-01, General Information on Project Standards has been revised to include high LTV refinance loans in the list of projects or loan transactions eligible for a project review waiver. This change was made to align with a recent update to B4-2.1-02, Waiver of Project Review.

Prohibits auto lenders from remotely disabling a vehicle without first giving notice of the disabling to the debtor.

• Defines a “payment assurance device” as “any device installed in a vehicle that can be used to remotely disable the vehicle”
• Requires written notice of the possible remote disabling of a vehicle “in the method and timetable” agreed in the initial contract between the parties 
• identifies permissible methods of notice transmittal
• specifies the permitted period between the postmarking of the notice and the date on which the auto lender or its agent obtains the right to disable the vehicle.

Selling

• Age of documentation requirements - Specific age of documentation requirements will remain in effect for a period of six months for Mortgages with Note Dates on and before March 14, 2019, and apply to Mortgages secured by properties, or for Borrowers with places of employment (as applicable), located in Eligible Disaster Areas affected by Hurricane Florence that have Application Received Dates on or before, and Note Dates after, September 14, 2018. Please see guide for complete details.
• Property damage - As with any disaster, as specified in Section 5601.2(c), the Seller should take appropriate steps, including a property inspection, to determine if a Mortgage remains eligible for sale to Freddie Mac. Please see guide for complete details.
• Automated collateral evaluation (ACE) appraisal waivers - Sellers may not accept ACE appraisal waiver offers for properties located in Eligible Disaster Areas as a result of Hurricane Florence unless the related Mortgage has a Note Date prior to September 14, 2018 and the Seller has confirmed and documented the condition of the Mortgaged Premises has not been adversely impacted by Hurricane Florence and retains such documentation in the Mortgage file. 
• Loan Collateral Advisor® – collateral representation and warranty relief - For Mortgages with Note Dates prior to September 14, 2018 that are secured by properties located in Eligible Disaster Areas as a result of Hurricane Florence and that received collateral representation and warranty relief through Loan Collateral Advisor, the Seller must take appropriate steps to determine whether the property has been damaged by Hurricane Florence. Freddie Mac will continue to offer collateral representation and warranty relief if the Seller confirms and documents that the property has not been adversely impacted by Hurricane Florence and retains such documentation in the Mortgage file. 
• Loan Product Advisor - Due to a system constraint, in the event a Seller resubmits a Mortgage to Loan Product Advisor after closing, the Loan Product Advisor Feedback Certificate will indicate that the Mortgage is “not eligible” for collateral representation and warranty relief. Upon submission to either Loan Quality Advisor® or Loan Selling Advisor®, the collateral representation and warranty relief decision will be corrected to accommodate the flexibility identified above and will indicate an “eligible” collateral representation and warranty relief decision. 
• System update - Loan Selling Advisor and Loan Quality Advisor will be updated on October 17, 2018. Please see guide for complete details.
• Seller reimbursement for property inspections - Freddie Mac will reimburse Sellers for property inspections completed on and before March 14, 2019 in Eligible Disaster Areas affected by Hurricane Florence when specific requirements are met. Please see guide for complete details.
• Reminder for Freddie Mac Relief Refinance MortgagesSM - A Seller is not required to obtain a property inspection or new appraisal when a property valuation (either an HVE point value estimate or an appraisal) was relied on prior to a disaster, and a Seller can use an HVE point value estimate with a high or medium confidence score after a disaster without obtaining a property inspection or appraisal to determine property condition.

Servicing

•  Temporary reimbursement process for property inspections - We are reminding Servicers that the temporary reimbursement process for property inspections of Mortgaged Premises located in Eligible Disaster Areas initially announced in Bulletin 2017-21, restated in our July 18, 2018 Industry Letter and recently updated in Bulletin 2018-14 is effective for all property inspections completed in accordance with Chapters 8202 or 8404 and conducted on and after August 29, 2017. 

Effective for all submissions and resubmissions to Loan Product Advisor on and after October 4, 2018

Currently, for all Loan Product Advisor Accept Mortgages, the Seller must review the Selected Borrower credit report to determine if it includes Tradelines for which the Borrower is not the primary account holder, but is listed as an authorized user. If the report contains authorized user accounts, the Loan Product Advisor decision is considered valid only if additional requirements are met.

As a result of enhancements being made to Loan Product Advisor, Sellers will only be required to meet additional requirements if the Feedback Certificate contains a feedback message instructing them to do so.

If the Seller receives a feedback message regarding authorized user account(s), the message will indicate the following requirements:

• The Mortgage file must contain documentation evidencing that for each authorized user account:
➢ Another Borrower on the Mortgage owns the Tradeline in question, or
➢ The Tradeline is owned by the Borrower’s spouse, or
➢ The Borrower has been making the payments on the account for the last 12 months
OR

• If the Seller is unable to document one of the above requirements for each authorized user account, the Seller may make the determination that the authorized user accounts have an insignificant impact on the Borrower’s overall credit history and the information on the credit report is representative of the Borrower’s own credit reputation. The Seller should base its determination on the number of the Borrower’s own Tradelines, as well as their age, type, size and the payment history, as compared to the authorized user accounts. The Seller must document its determination in the Mortgage file.
Guide impact: Section 5201.1

The Board is adopting a final rule (final rule) to establish single-counterparty credit limits for bank holding companies and foreign banking organizations with $250 billion or more in total consolidated assets, including any U.S. intermediate holding company of such a foreign banking organization with $50 billion or more in total consolidated assets, and any bank holding company identified as a global systemically important bank holding company under the Board's capital rules. 

The final rule implements section 165(e) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires the Board to impose limits on the amount of credit exposure that such a bank holding company or foreign banking organization can have to an unaffiliated company in order to reduce the risks arising from the company's failure.

Effective October 15, 2018

In Bulletin 2017-10, we updated the Guide to include a simplified, automated process for Sellers to receive cash payups for fixed-rate Mortgages with certain specified loan attributes. To take advantage of these cash payups, Sellers were required to deliver ULDD Data Point Investor Feature Identifier (Sort ID 368) and enter the applicable valid value of H64 through H68 provided in Section 6302.39.

As announced in our August 31, 2018 Single-Family News Center article, effective October 15, 2018, we will no longer require Sellers to deliver values H64 through H68 in ULDD Data Point Investor Feature Identifier (Sort ID 368) for Mortgages with low loan balances.

In connection with this change, we are updating the cash payup loan allocation edits for Mortgages with low loan balances to clarify that the basis for eligibility of such Mortgages for cash specified pool types is the original Note Amount (ULDD Sort ID 319, or Sort ID 349, as applicable).

Also, we are enhancing this automated process to include cash payups for fixed-rate Mortgages with certain specified loan attributes, previously handled through the Cash Desk’s manual spot bid process, specifically:
• Mortgages with original Note amounts less than or equal to $200,000
• Investment Property Mortgages
• Mortgages secured by Mortgaged Premises located in the State of New York
• Mortgages with an Indicator Score of less than 700
• Mortgages with a 10-year term

Eligibility for the cash payups will be determined based on the Seller’s contract parameters and the attributes of the delivered Mortgages as described in Section 6101.3(d). If a Mortgage does not meet the requirements for the applicable Cash Contract, the Seller will not be able to allocate the Mortgage to the contract.

We are deleting Section 6302.39 and moving all requirements for cash payups for fixed-rate Mortgages to Section 6101.3(d).

In addition, super conforming Mortgages sold under 100% super conforming Cash Contracts may be subject to price adjustments. See Chapter 4603 for special eligibility requirements for super conforming Mortgages. Further, we are adding the following Mortgages to the list of Mortgages excluded from the calculation of the maximum amount of super conforming Mortgages that a Seller may sell to Freddie Mac:
• Mortgages that receive cash specified payups

• Freddie Mac Enhanced Relief Refinance® Mortgages (new exclusion)
Loan Selling Advisor will be updated at a future date, which we will communicate to Sellers, to prevent the delivery of IFIs H64, H65, H66, H67 and H68.
Guide impacts: Sections 6101.3, 6302.31, 6302.39, 6401.1 and Exhibit 34

Rhode Island Banking Bulletin 2018-4 provides forms that are required by R.I. Gen. Laws Chapter 34-27 and are designated for use in compliance with regulation 230-RICR-40-10-3 – Home Loan Protection.

FORM 1HLPA PROHIBITED ACTS OF LENDERS AND LOAN BROKERS IN R.I. GEN. LAWS § 34-25.2-1 et seq

• This form must be provided no later than three (3) business days of application.

FORM 2HLPA PROHIBITED ACTS OF LENDERS AND LOAN BROKERS IN R.I. GEN. LAWS § 34-25.2-1 et seq

• This form must be provided no later than three (3) business days of application.

FORM 3HLPA RHODE ISLAND HOME LOAN PROTECTION ACT DISCLOSURE TANGIBLE NET BENEFIT

• This form must be provided prior to or upon consummation of the home loan.

FORM 4HLPA RHODE ISLAND HOME LOAN PROTECTION ACT DISCLOSURE HIGH-COST HOME LOAN

• This form is to be provided to the applicant at such time that it is determined by the creditor that the new loan is a “high-cost home loan,” but in sufficient time as to enable the applicant to receive, prior to closing the loan, face-to-face counseling on the advisability of the high-cost home loan transaction, with a third party non profit organization. Applicant must complete, and creditor must receive a certificate of face-to-face counseling with a third-party non profit organization approved by the united states department of housing and urban development prior to making any high-cost home loan.

FORM 5HLPA RHODE ISLAND HOME LOAN PROTECTION ACT DISCLOSURE

• This form is to be provided to the applicant at such time that it is determined by the creditor that the new loan is a “high-cost home loan,” but in sufficient time as to enable the applicant to receive, prior to closing the loan, face-to-face counseling on the advisability of the high-cost home loan transaction, with a third party non profit organization. Applicant must complete, and creditor must receive a certificate of face-to-face counseling with a third-party non profit organization approved by the united states department of housing and urban development prior to making any high-cost home loan.

This Mortgagee Letter provides updated guidance regarding the submission of HECM assignment requests to HUD. The guidance in this Mortgagee Letter is effective immediately. All policy updates will be incorporated into a forthcoming update of the HUD Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1).  The policies in this Mortgagee Letter modify or supersede Mortgagee Letter 2017-05, where there is conflict.

Evidence of Current Hazard Insurance

In lieu of a current hazard insurance declaration page, HUD will accept a document from the hazard insurance provider (i.e., hazard insurance company underwriting the property and responsible for paying a claim) on its letterhead that contains the following information: 

•  Name of the insured;

•  Address of insured property;

• Type of coverage;

• Insurance policy number;

• Insurance policy limits;

• Effective date of the insurance policy;

• Expiration date of the insurance policy;

• Name and contact information for the insurer; and

• Annual insurance premium.

Alternative Evidence of Death of Borrower

If a servicer is unable to obtain a copy of a deceased borrower or co-borrower’s death certificate, HUD will accept alternative evidence of the death for purposes of Claim Type 22 review, such as an obituary or documentation from a health care institution.

Clarification of “Current” Taxes

Taxes are considered “current” for purposes of CT-22 review when taxes are paid prior to delinquency as defined by the local taxing authority. Servicers are reminded that the eligibility determination is made at the point of assignment of the mortgage to the Secretary, not at the point of request for assignment. Any tax bill that becomes delinquent before recordation of the assignment must be paid by the borrower for the HECM to be assigned.

Evidence of Completion of Required Repairs

Where repairs were required at origination and evidenced by a repair rider to the mortgage, servicers must submit evidence that the repairs have been completed when submitting a CT-22 request. Form HUD-92051¹ or successor form and supporting documents if applicable, should be provided by servicers as evidence of completion of required repairs.

Clarification Regarding Mobile Home Title

Servicers must submit evidence that a mobile home is treated as real property under the laws of the state in which the property securing the HECM mortgage is located (e.g., copy of documents from taxing authority evidencing that the home is taxed as real property).

Timeframe for Filing Claim Following Preliminary Title Approval

Servicers must file their claim for insurance benefits within 60 calendar days from receiving Preliminary Title Approval. If the claim for insurance benefits is not filed within 60 calendar days from the issuance of Preliminary Title Approval, Preliminary Title Approval will be rescinded, and the servicer must submit a new CT-22 request.

Pre-Due and Payable Corporate Advance

Servicers must include, as an additional item in the Compliance Package, a detailed explanation of all pre-Due and Payable corporate advances. This explanation must include the date of the disbursement, the expense that was paid and any information relating to repayment received.

Effective for Mortgages with Settlement Dates on and after October 27, 2018; but Sellers may implement immediately

Previously, for a “no cash-out” refinance Mortgage, proceeds could be used to disburse cash to the Borrower (or other payee) not to exceed 2% of the new refinance Mortgage, or $2,000, whichever was less.
To provide flexibility in the disbursement of cash back to the Borrower, we are revising our requirements to permit cash back up to the greater of 1% of the Mortgage amount or $2,000.

Guide impacts: Sections 4301.4, 4602.5 and 5703.4

In response to Seller feedback, we evaluated our requirements for Home Possible and Home Possible Advantage Mortgages and are combining Home Possible and Home Possible Advantage into one offering in an effort to better help Sellers originate Home Possible Mortgages.

The revised Home Possible Mortgage offering will:

• Provide Sellers with ease of use and operational efficiencies by eliminating the need to maintain two separate offerings
• Continue to meet the needs of low- and moderate-income Borrowers looking for a 3% down payment option by offering the same loan-to-value (LTV) and total LTV (TLTV) ratio flexibilities currently offered for Home Possible Advantage. Certain requirements and permissible loan attributes will continue to vary depending on LTV and TLTV ratios
• Expand access to credit by providing new flexibilities that will help increase homeownership opportunities for more Borrowers
  

[Please see bulletin for complete details and a chart comparing the current requirements for Home Possible and Home Possible Advantage Mortgage offerings to the revised requirements for the consolidated Home Possible Mortgage offering]

In response to your feedback, Loan Product Advisor® is being updated on October 29, 2018, to combine Home Possible® and Home Possible Advantage® into one offering. This eliminates the need to maintain two separate offerings and provides enhanced credit flexibilities included in the Freddie Mac Single-Family Seller/Servicer Guide (Guide) Bulletin 2018-13 [PDF].

For More Information

• Read Guide Bulletin 2018-13 [PDF]. (Home Possible Mortgages)
• Visit our Home Possible Mortgages web page.

We are making enhancements to Loan Collateral Advisor that will create appraisal review efficiencies, increase eligibility rates for representation and warranty relief for property value only and extend value representation and warranty relief for Mortgages secured by Condominium Units. Loan Collateral Advisor enhancements will provide: 

• Simplified risk scoring system 

➢ A single-risk score instead of the current two-score structure, which will make the appraisal review process more efficient and will be communicated to the Seller as the Loan Collateral Advisor risk score. The Loan Collateral Advisor risk score will be represented by a single score on a scale of one to five, provided in .5 increments, with one representing the lowest appraisal valuation risk score. 

➢ Greater transparency into our relief eligibility by identifying our representation and warranty relief threshold. Eligible Mortgages with loan-to-value (LTV)/ total LTV (TLTV)/ Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios less than or equal to 95% that have an appraisal with a Loan Collateral Advisor risk score of 2.5 or less will receive representation and warranty relief. 

• Clearer feedback messaging – Fewer feedback messages will be returned on appraisals that are eligible for value representation and warranty relief and a redefined message structure will now group messages into categories. The revised messaging system will provide greater clarity to help identify potential issues during the appraisal review process. 

For all eligible Mortgages, representation and warranty relief will be provided for value only to increase the overall relief eligibility rates. Sellers will no longer receive representation and warranty relief for condition and marketability of the Mortgaged Premises. 

For Mortgages that are eligible for value representation and warranty relief Sellers are responsible for ensuring the Mortgaged Premises meets our eligibility requirements, the accuracy and completeness of the appraiser’s description of the subject property and for the requirements in Section 5601.9. 

Sellers will not be responsible for underwriting the appraisal to ensure the opinion of market value is accurate and adequately supported, the appraiser explaining how the final value conclusion was determined and the appraiser making appropriate adjustments. 

Additionally, Construction Conversion and Renovation Mortgages are being added to the list of ineligible Mortgages. 

Guide impact: Section 5601.9 

Additional resources 

Sellers should refer to our September 6, 2018 Single-Family Update e-mail for the new Loan Collateral Advisor feedback messages.

We are notifying Servicers that in Bulletin 2018-19, we announced that we were eliminating the mandatory expiration date on the Form 960 (“Concurrent Transfer of Servicing (CTOS) Agreement”), which results in Sellers and their respective Transferee Servicers no longer needing to submit a new CTOS Agreement annually. This creates operational efficiencies and streamlines the CTOS process. 

Effective October 31, 2018, the expiration date field on the CTOS Agreement is optional. CTOS Agreements where the expiration date field is left blank will remain in effect until Freddie Mac, the Transferor Servicer (Seller), or the Transferee Servicer terminate the CTOS Agreement.

In addition to making the expiration date on the CTOS Agreement optional, we updated the form to remove the aggregate UPB field, references to Senior Subordinate Mortgages, and references to remittance types and cycles that Freddie Mac no longer supports. The terms and conditions were also updated to be consistent with the Servicing Contract. 

With the Transferee Servicer’s agreement, Freddie Mac will remove the expiration date on all CTOS Agreements currently with expiration dates of November 1, 2018 or later. To effect this change, Freddie Mac has provided each Transferee Servicer with a list of existing CTOS Agreements that they have with each Transferor Servicer (Seller) and requested the them to indicate on the list which agreements should no longer be subject to an expiration date and which agreements should remain subject to their existing expiration date. The Transferee Servicer must return the list via email to TOS@freddiemac.com no later than December 14, 2018 and must copy the Transferor Servicer (Seller) on such e-mail. Freddie Mac will deem those CTOS Agreements that the Transferee Servicer indicated to be no longer to be subject to an expiration date to continue in effect until terminated by the Transferor Servicer (Seller), Transferee Servicer, or Freddie Mac in accordance with the updated Form 960. 

If the Transferee Servicer does not provide the list to Freddie Mac by December 14, 2018 indicating that they wish to remove the expiration date of their CTOS Agreement(s), then such agreements will expire in accordance with their expiration dates. 

The Transferor Servicer’s delivery of Mortgages to Freddie Mac and CTOS of the related Servicing Contract Rights to the Transferee Servicer after the expiration date on the related CTOS Agreement, which the Transferee Servicer has indicated should no longer be subject to an expiration date, shall be deemed to be the Transferor Servicer’s acceptance of Freddie Mac’s and the Transferee Servicer’s removal of the expiration date. 

All other CTOS requirements in Chapter 7101 remain unchanged. 

We have updated Sections 7101.2, Form 960 and Directory 3 to reflect these changes.

ADDITIONAL GUIDE UPDATES 

Servicer indemnification of Freddie Mac

We are updating our requirements related to Servicer indemnification of Freddie Mac to: 

• Specify that a Servicer’s indemnification of Freddie Mac applies to both direct and indirect losses, damages or expenses 

• Require that Servicers that open and maintain Custodial Accounts at their own institution indemnify Freddie Mac for any loss, damage or expense that results directly or indirectly from a bankruptcy or insolvency 

Guide impacts: Sections 8101.9 and 8302.3 

Insured depository tier ratings 

We are updating our minimum insured depository tier rating requirements to remove ratings that are no longer provided by Fitch. 

Guide impact: Section 8302.5

Directory updates International e-mails 

We are updating the Directory to prohibit e-mails from being sent from an international e-mail address to the Freddie Mac Legal Division at nonroutine_litigation@freddiemac.com and legal_escalations@freddiemac.com. An international e-mail address contains characters that do not exist in the American Standard Code for Information Interchange (ASCII). 

Guide impacts: Directories 1 and 5

BPOdirect® valuations 

We are updating Directory 5 to include the e-mail address of BPOQuestion@freddiemac.com for notifying Freddie Mac if: 

• An authorized user’s (a) name changes, (b) position/title changes, (c) employment is terminated, or (d) authorization expires or terminates 

• Any loss, theft or unauthorized disclosure or use of any authorized user’s ID, password, PIN or any other Confidential Means of Access occurs 

• The Servicer has knowledge or reason to believe that an authorized user’s Confidential Means of Access to BPOdirect is no longer secure for any reason 

Guide impact: Directory 5