Compliance Calendar

Search for current regulatory changes & updates from Fannie, Freddie, FHA, VA, and USDA.

Compliance Calendar for December 2018

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Extension of Relief Refinance Mortgages (Same Server and Open Access) and updated income requirements

Effective: December 1, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2017-17 →
Tags: Income, Underwriting
View Details
  • We are extending the expiration date of the Freddie Mac Relief Refinance Mortgage – Same Servicer and Relief Refinance Mortgage – Open Access offerings.
    • Must now have Application Received Dates on or before December 31, 2018 and Settlement Dates on or before September 30, 2019.
  • We are updating the documentation requirements for alimony, separate maintenance and child support income types to state that evidence of receipt of the total documented amount, rather than the court ordered amount as previously stated, is required.

Forbearance Workout Options - New Consolidated Forbearance Plan

Effective: December 1, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2018-04 →
Tag: Loss Mitigation
View Details

In alignment with Freddie Mac and at the direction of the Federal Housing Finance Agency, we are simplifying our forbearance polices by introducing a new consolidated forbearance plan. This update will make it easier for servicers to assist borrowers who are experiencing a short-term hardship and simplify servicing by improving operational efficiency.

We have updated our Guide to streamline our current forbearance plan workout options into a single policy, including forbearance plans related to unemployment, unique hardships, military indulgence, and disaster events, and to simplify our policy on disaster assistance. 

There a multiple guide section updates - please see Announcement for complete details.

Forbearance plan requirements

Effective: December 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Guide Bulletin 2018-9 →
Tag: Loss Mitigation
View Details

Effective December 1, 2018, but Servicers may implement immediately

To support Freddie Mac’s continued commitment to improving our loss mitigation offerings, we are monitoring and assessing the appropriateness of each currently available solution. Based on Servicer and industry stakeholder feedback, and at the direction of the FHFA and in coordination with Fannie Mae, we are consolidating our shortterm, long-term and unemployment forbearance plan offerings into a single streamlined policy. Borrowers impacted by Eligible Disasters continue to be subject to special forbearance plan requirements described in Guide Chapter 8404 and Bulletins 2017-14, 2017-19, 2017-21, 2017-25 and 2017-29.

By streamlining our forbearance plan offerings and requirements and allowing Servicers to approve longer forbearance periods without requiring the Borrower to submit a Borrower Response Package, we expect greater operational efficiencies and improved outcomes for Borrowers who need a temporary recovery period. Under our new requirements, the Servicer may approve forbearance plans that last for up to six months and may offer consecutive forbearance plans of up to 12 total months without requiring a Borrower Response Package.

Because we are consolidating several forbearance plan programs into one set of requirements, we are
restructuring Chapter 9203 and removing references throughout the Guide to short-term, long-term and
unemployment forbearance and replacing them with “forbearance plan,” as applicable.

The restructured forbearance plan offering is described in detail in Guide Sections 9203.12 through 9203.17. The following table provides an overview of the restructured forbearance program. 

Please see Guide Bulletin for complete Forbearance eligibility requirements table. 

Delinquency The Borrower may be current or delinquent in his or her Mortgage, but the
forbearance plan must not result in an overall Mortgage Delinquency that exceeds
360 days (i.e., to be in an active forbearance plan, the Borrower must not have
missed more than 12 contractual monthly Mortgage payments).
Hardship The Borrower must have an eligible hardship as described in Section 9202.2 and
Guide Form 710, Mortgage Assistance Application. The Borrower’s hardship may be
verbally stated. The Servicer must report the hardship reason via EDR in accordance
with Section 9102.7.
Documentation The Servicer is not required to collect a complete Borrower Response Package to
evaluate the Borrower for a forbearance plan or a forbearance plan extension.
However, if the Servicer does not collect a complete Borrower Response Package,
then the Servicer’s evaluation must be based on information provided by the
Borrower resulting from quality right party contact established in accordance with the
requirements in Section 9102.3(b).

Reporting Third-Party Foreclosure Sale Redemptions

Effective: December 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Freddie Mac Servicing Bulletin 2018-14 →
Tag: Foreclosure
View Details

As result of the automation of settlement for third-party foreclosure sale transactions via Workout Prospector®, we are removing the requirement that Servicers report a third-party foreclosure sale redemption transaction via 

Guide Form 105. The Servicer will no longer be required to report these transactions to Freddie Mac and the following mailboxes will be retired: • NPL_Third_Party_Sales@freddiemac.com • NPL_File_Management@freddiemac.com Guide impacts: Section 9301.42 and Directory 5

New Mexico and Hawaii Allowable Foreclosure Attorney Fees

Effective: December 1, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   Servicing Guide Announcement SVC-2018-06 →
Tags: Foreclosure, New Mexico, Hawaii
View Details

We are updating the Allowable Foreclosure Attorney Fees Exhibit to reflect a change to the maximum allowable foreclosure attorney fees for mortgage loans secured by properties in New Mexico and Hawaii.

Effective Date
These new fees apply to all matters referred to counsel for initiation of foreclosure proceedings, regardless of referral date, as long as the matter is still active as of September 18, 2018. Servicers are encouraged to implement the new fees for the impacted files as soon as possible, but must do so no later than December 1, 2018. Servicers may exercise reasonable discretion in determining how to implement the fees, including working as needed with the law firm or an applicable invoicing technology provider.

Properties Impacted by Disasters

Effective: December 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Freddie Mac Servicing Bulletin 2018-22 →
Tag: Disaster
View Details

Disaster-related forbearance plans

In a continuing effort to create operational efficiencies and to provide a more flexible evaluation process for Borrowers and Servicers, we are clarifying certain disaster-related forbearance plan requirements. Except as otherwise provided in the table below, Borrowers impacted by Eligible Disasters continue to be subject to all other special forbearance plan requirements in Guide Chapter 8404 and Bulletins 2017-14, 2017-19, 2017- 21, 2017-25 and 2017-29. 

The following table provides the disaster-related forbearance plan requirement changes:

Disaster-related forbearance plan requirements

Mortgage eligibility

Current Guide language Revised Guide language

The Mortgage may be secured by the following property types: 

▪ Primary Residence, 

▪ Second home, or 

▪ Investment Property The property may be vacant or condemned, but not abandoned.

C

Servicers have discretion to place a Borrower who is or becomes 31 or more days delinquent in a forbearance plan in accordance with the requirements in Sections 9203.12 through 9203.17. Servicers should determine whether to provide forbearance and the length of such forbearance by assessing: ▪ The extent of the property damage based on property inspections, and/or ▪ The financial impact to the Borrower as a result of the Eligible DisasterServicers have discretion to place a Borrower who is or becomes 31 or more days delinquent in a forbearance plan for up to 90 days in accordance with the requirements in Sections 9203.12 through 9203.17, and Sections 8404.4 and 8404.6. Servicers should consider the following factors in its evaluation decision when determining whether to provide forbearance, if it has relevant information regarding: ▪ The Borrower’s financial circumstances, and/or
The short-term forbearance plan may not exceed 90 days without either achieving quality right party contact or receiving approval from Freddie Mac.▪ The extent of the property damages caused by the Eligible Disaster

Circumstances where QRPC has been achieved

Servicer may offer up to six months of forbearance without obtaining a complete BRP, but must attempt to obtain a complete BRP if forbearance exceeds six months in length. However, if the Borrower is unable to provide financial documentation, the Servicer may offer the Borrower successive forbearance plans (not to exceed 12 months in aggregate) without obtaining a complete BRP.The Servicer is not required to obtain a complete BRP, and may offer:
▪ Forbearance for a period of one to six months, and, if necessary
▪ One or more successive forbearance plan periods of one to six months The forbearance plan may not be extended beyond a date that would cause the Delinquency to exceed a cumulative total of 12 months of the Borrower’s contractual monthly Mortgage payment, including taxes and insurance (if the Servicer is collecting Escrow for those expenses) without prior approval from Freddie Mac.  

Transitioning from a forbearance plan

At the end of the forbearance period, the Servicer must reassess the Borrower's circumstances based on updated property inspections and Borrower financial information, if required by the relief or workout options, to determine if forbearance should continue to be extended, whether the Borrower is eligible for another relief or workout option, or whether the Servicer should initiate or resume collection or foreclosure proceedings.At the end of the forbearance period, the Servicer must reassess the Borrower’s circumstances to determine whether the Borrower’s hardship has been resolved. The determination may be based on information from the Borrower as a result of QRPC and/or an updated property inspection assessment of the extent of property damage. If the hardship has been resolved and the Borrower is ready to transition to a permanent solution, the Servicer must evaluate the Borrower for the most appropriate workout option to cure the Delinquency in accordance with the requirements in Section 8404.6. If the hardship has not been resolved, then the Servicer must evaluate the Borrower’s eligibility for extended forbearance.

Guide impacts: Sections 8404.4 and 8404.6 

Fannie Mae Selling Guide Updates

Effective: December 4, 2018
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2018-09 →
Tags: Underwriting, Income, Insurance, Property - Appraisal
View Details

Calculating Self-employment Income 

  • Lenders may receive enforcement relief when using a Fannie Mae-approved vendor tool immediately, including the newly approved LoanBeam’s FNMA SEI 1084 workbook
  • If lenders use it to calculate income and enter the monthly income amount in Desktop Underwriter® (DU®), we will provide representation and warranty enforcement relief on the accuracy of the calculation of the amount of self-employment income

The Guide has been updated to reflect the use of approved vendor tools and the criteria that will result in enforcement relief. The list of Approved Vendor Tools is available on Fannie Mae’s website. In addition, the Special Feature Codeslist has been updated to include SFC 777. 

Commission Income and Unreimbursed Business Expenses DU Version 10.3 

  • We are removing the different treatment of commission income based on the percentage of employment income. 
  • Going forward all commission income will be treated the same, and individual tax returns (or tax transcripts) will no longer be required. 
  • We are updating our policy regarding commission income and unreimbursed business expenses due to recent changes made by the IRS that are effective with the reporting of 2018 federal income taxes.

[Please see guide announcement for complete details]

DU Version 10.3 

  • The Selling Guide has been updated to reflect the changes that were announced in the DU/Desktop Originator® Version 10.3 Release Notes

On-Frame Modular and Modular Construction Small Business Administration Loans 

  • On-frame modular homes that comply with local building codes, attached to a permanent foundation, and are built using the same materials as comparable stick-built homes are now an eligible property type. These homes will follow the same eligibility and underwriting criteria as stick-built homes. 
  • We are also clarifying that multi-unit buildings such as attached condos and townhomes may be built using modular construction techniques that comply with local building codes. 
  • No additional delivery data points are required as a result of these changes.

Small Business Administration Loans (May implement immediately; must implement by March 2019)

  • We are clarifying that all Small Business Administration (SBA) loans secured by the subject property must be treated as subordinate financing and included in the calculation of the CLTV and HCLTV ratios. 
  • The monthly payment of the subordinate lien must also be included in the borrower’s DTI ratio calculation unless the lender can satisfy the requirements in Business Debt in Borrower’s Name in B3-6-05, Monthly Debt Obligations.

Kroll Rating Agency Flood Insurance

  • Policies related to property insurance carrier requirements for sellers and servicers have been consolidated into the Selling Guide. 
  • The following changes were made to our property insurance carrier ratings requirements: added Kroll Bond Rating Agency as an acceptable rating agency, and removed the more restrictive rating requirements for co-op projects; the general carrier rating requirements now apply.

Flood Insurance (May implement immediately; must implement by March 1, 2019)

  • In our continued efforts to simplify and consolidate policies shared by the Selling and Servicing Guides, duplicative policies related to flood insurance coverage requirements have been consolidated from the Servicing Guide B-3, Flood Insurance Requirements, into the Selling Guide, B7-3-07, Flood Insurance Coverage Requirements. 
  • In addition, several clarifications have been made.

[Please see guide announcement for complete details]

Miscellaneous Updates

  • B2-3-01, General Property Eligibility
  • B5-5.3-02, Loans with Resale Restrictions: Loan and Borrower Eligibility
  • E-1-03, List of Contacts

[Please see guide announcement for complete details]

10-Day Pre-Closing Verification Requirements For Union Members

Effective: December 5, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Guide Bulletin 2018-24 →
Tag: Income
View Details

Previously, we allowed Sellers to obtain the 10-day pre-closing verification (10-day PCV) from the union instead of from the employer for any Borrower who was a union member and was in between employers at the time of loan closing.

We are specifying that the Seller may obtain the 10-day PCV from the union for a Borrower who is in between employers at the time of loan closing or is employed at the time of loan closing. This provides additional flexibility in recognition of the fact that in some instances it may be easier to reach the union than the Borrower's employer for the verification.

The applicable Loan Product Advisor® feedback message has been updated to align with this change.

Guide impact: Section 5303.2

Additional Guide Updates and Reminders

Effective: December 5, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Guide Bulletin 2018-24 →
Tags: Underwriting, Certification, Endorsement, and Delivery, Loan Documents
View Details

Exhibit 19

We are updating Exhibit 19 to reflect that Freddie Mac Enhanced Relief Refinance® Mortgages with Settlement Dates on or after January 1, 2019 are excluded from the CS/LTV ("A-Minus Fees") – Non-Loan Product Advisor Mortgages Credit Fee in Price and are subject to the Indicator Score/Loan-to-Value for Mortgages other than Relief Refinance Mortgages Credit Fee in Price.

Guide impact: Exhibit 19

Form 1077, Uniform Underwriting and Transmittal Summary

Effective for Mortgages with Application Received Dates on or after June 5, 2019, but Seller/Servicers may begin using the revised form immediately

Freddie Mac and Fannie Mae have completed a joint review of the Uniform Underwriting and Transmittal Summary (Form 1077/1008). As a result, we are making updates to the form, including:

  • Removing the contact signature field
  • Removing outdated information
  • Adding a Project Classification Code of "Exempt from Review" for Mortgages delivered to Freddie Mac

Guide impacts: Section 5701.12 and Form 1077

Form 1077 alternative announced in Bulletin 2018-12

Effective immediately, we are updating the Guide to align with Bulletin 2018-12, which announced an alternative equivalent form is permitted in the Mortgage file in lieu of Form 1077.

Guide impacts: Sections 4602.13 and 5701.12

Freddie Mac Access Manager reminder

In Bulletin 2018-8 we updated the Guide in preparation for the availability of Freddie Mac Access Manager. This automated and delegated administration tool allows authorized Seller/Servicers and certain Related Third Parties to create, manage and provision their user registration and access to Systems (as defined in Section 2401.1). Key benefits of Access Manager include:

  • Grant fast access to Freddie Mac tools
  • Control access by putting provisioning power in the Seller/Servicer's hands
  • Submit information electronically, which saves time
  • Eliminate most manual forms
  • Reduce processing time
  • Get on-demand reporting, which improves transparency of real-time data
  • Lower risk with ability to occasionally recertify Seller/Servicer's user base to facilitate approved usage and role assignments

As announced in our December 3, 2018 Single-Family News Center article, Access Manager is available to authorized Seller/Servicers using certain Freddie Mac Systems listed on our Access Manager web page.

For more information, including how to register and become authorized to use Access Manager, please visit the Access Manager web page at http://www.freddiemac.com/sing....

Exhibits 4 and 5

Exhibit 4, Single Family Uniform Instruments, is being updated to include revised version dates for the Maine MERS® Mortgage Assignment and Louisiana Mortgage, as well as other technical corrections. Exhibit 5 Authorized Changes to Notes, Riders, Security Instruments and the Uniform Residential Loan Application, is being updated to delete the authorized change to the Maine MERS Mortgage Assignment (Form 3749).

Guide impacts: Exhibits 4 and 5

Desktop Underwriter/Desktop Originator Release Notes DU Version 10.3

Effective: December 8, 2018
Industry: Mortgage Lending
Source: Fannie Mae   Release Notes DU Version 10.3 →
Tags: Underwriting, Property - Appraisal
View Details

During the weekend of Dec. 8, 2018, Fannie Mae will implement Desktop Underwriter® (DU®) Version 10.3, which will include the changes described below. The changes in this release will apply to new loan casefiles submitted to DU on or after the weekend of Dec. 8, 2018. Loan casefiles created in DU Version 10.2 and resubmitted after the weekend of Dec. 8 will continue to be underwritten through DU Version 10.2. The changes in this release include the following: 

  • DU Risk Assessment Update 
  • Appraisal Waiver Changes 
  • Retirement of DU Version 10.1 
  • Updates to Align with the Selling Guide

Please see release notes for complete details.

Appraisal Waiver Policy for Disasters

Effective: December 8, 2018
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2018-09 →
Tag: Property - Appraisal
View Details

Appraisal Waiver Policy for Disasters 

  • With this update, we are adding the flexibility that lenders are now permitted to exercise appraisal waiver offers on loans in process at the time of a disaster. 
  • In order to use this flexibility, lenders must meet the same property eligibility requirements currently in place for loans already closed but not yet delivered when a disaster strikes.
  • DU will be updated the weekend of December 8, 2018 

Automated Income and Asset Assessment with Loan Product Advisor

Effective: December 9, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Bulletin 2018-23 →
Tags: Underwriting, Income, Assets
View Details

We are introducing automated income assessment with Loan Product Advisor® and automated asset assessment with Loan Product Advisor. These new capabilities are designed to streamline the loan origination process, reduce origination costs and provide Sellers with the opportunity for relief from enforcement of certain representations and warranties related to the Borrower’s employed income and/or assets. In addition, based on the results of Loan Product Advisor’s assessment, certain existing documentation and Seller quality control program requirements may not apply.

EFFECTIVE DATE 

The automated income assessment with Loan Product Advisor and automated asset assessment with Loan Product Advisor capabilities are effective for Loan Product Advisor submissions and resubmissions on and after December 9, 2018. 

PARTICIPATION DETAILS AND REQUIREMENTS 

To take advantage of these optional capabilities, the Seller must obtain a verification report of the Borrower’s income or asset information, as applicable, from one of the third-party service providers designated by Freddie Mac. Based on information submitted, Loan Product Advisor will retrieve the verification report, assess for representation and warranty relief eligibility and return the results of the assessment in the Feedback Certificate. Refer to new Guide Chapter 5901 for requirements on automated income assessment with Loan Product Advisor and new Chapter 5902 for requirements on automated asset assessment with Loan Product Advisor. To learn more about these new capabilities, register for our Automated Income Assessment with Loan Product Advisor and Automated Asset Assessment with Loan Product Advisor webinars. Additional resources will also be available at the Freddie Mac Learning Center and on FreddieMac.com. Guide impacts: Chapters 5901, 5902, Guide Sections 1301.11, 3402.5, 3402.8, 5302.3, 5302.5 and 5501.3

Market Conditions Addendum to VA Appraisal

Effective: December 11, 2018
Industry: Mortgage Lending
Source: VA   VA Circular 26-18-29 →
Tags: Underwriting, Property - Appraisal
View Details

1. Purpose. The purpose of this Circular is to announce that the Department of Veterans Affairs (VA) no longer requires appraisers to include Fannie Mae Form 1004MC, in all VA appraisal reports. 

2. Background. Due to current conditions in the real estate market, Fannie Mae eliminated additional appraisal requirements to supplement the minimum standards set forth in the Uniform Standards of Professional Appraisal Practice. Specifically, Fannie Mae no longer requires appraisers to document an overview of neighborhood market conditions and trends in using Fannie Mae Form 1004MC. Reporting market trend activity will remain an important undertaking for appraisers and they will continue to do so even without the requirement to complete Form 1004MC. 

3. Action. Effective immediately, VA no longer requires appraisers to include this form in all VA appraisal reports. However, the market trend information is still required within the appraisal reports. 

4. Questions. All inquiries should be sent to colenders@vba.va.gov. 

5. Rescission. This Circular is rescinded January 1, 2020. 

Master Insurance Policy For Unaffiliated Projects

Effective: December 12, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Guide Bulletin 2018-24 →
Tag: Insurance
View Details

Currently, a Mortgage is not eligible for sale to Freddie Mac if the Mortgage is secured by a Condominium Unit in a Condominium Project or by a unit in a Planned Unit Development (PUD) with a master or blanket insurance policy that combines insurance coverage for multiple unaffiliated Condominium Projects or PUDs.

In response to Seller/Servicer feedback, we are expanding our insurance requirements to accept a master or blanket insurance policy that combines insurance coverage for multiple unaffiliated Condominium Projects and PUDs. Each covered project must have a dedicated policy limit and a specific dedicated deductible that meets certain requirements. Also, the policy must clearly state that each association is a named insured. Additional requirements must be met, including that the insurance policy complies with all requirements of the Guide and other Purchase Documents applicable to master or blanket insurance policies covering affiliated PUDs or Condominium Projects.

Guide impact: Section 8202.2

Allowable Bankruptcy Attorney Fee Clarification

Effective: December 12, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2018-09 →
Tag: Bankruptcy
View Details

The Allowable Bankruptcy Attorney Fees Exhibit has been amended to clarify that the maximum allowable fee for the Proof of Claim Form 410A Loan Payment History includes both the preparation of the form by the law firm and the review of the form prepared by the servicer.

Servicing Guide Updates

Effective: December 12, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Guide Bulletin 2018-26 →
Tags: Insurance, Assumptions, Loss Mitigation, Property Preservation
View Details

Mortgage Servicing Contract Rights

  • Updates to the Guide to provide detail on the requirements for obtaining financing using Freddie Mac mortgage Servicing Contract Rights as collateral (“Conveyance”)
  • We are also updating the Guide to include requirements for collateral securing a Conveyance

[Please see guide bulletin for complete requirements]

Revised requirements for unaffiliated projects with a master insurance policy 

  • We are expanding our insurance requirements to accept a master or blanket insurance policy that combines insurance coverage for multiple unaffiliated Condominium Projects and PUDs. 
  • Each covered project must have a dedicated policy limit and a specific dedicated deductible that meets certain requirements. 
  • Additionally, the policy must clearly state that each association is a named insured. 
  • Other requirements also must be met, including that the insurance policy complies with all requirements of the Guide and other Purchase Documents applicable to master or blanket insurance policies covering affiliated PUDs and Condominium Projects.

Revisions to Guide Form 1077, Uniform Underwriting and Transmittal Summary

  • We have revised the form, including the removal of the contact signature field and outdated information
  • When using Form 1077 to determine the eligibility for assumptions with a release of liability, Transfers of Ownership, as applicable, and workout Mortgage assumptions, Servicers must use the revised form to document the creditworthiness of the transferee

Freddie Mac Access Manager reminder

  • As announced in our December 3, 2018 Single-Family News Center article, Access Manager is available to
    authorized Seller/Servicers using certain Freddie Mac Systems listed on our Access Manager web page

Additional Guide Updates

  1. Form 1205, Post-Settlement Correction Requests - updated definitions and modifications tabs to reflect current operational requirements and delete items that are no longer applicable
  2. Property preservation - We are allowing Servicers to maintain and execute winterization and yard maintenance without the restriction of the seasonal time frames
  3. Servicer execution of documents - We are updating Sections 9301.9 and 9301.12 to reflect the changes announced in Bulletin 2018-22 that increase Servicer authority to execute documents when Mortgages are assigned to Freddie Mac

RHS Updates to Handbook 1-3555 Chapter 9

Effective: December 15, 2018
Industry: Mortgage Lending
Source: USDA   RHS - PN 516 Updates to Handbook 1-3555 →
Tags: Underwriting, Income
View Details

Announces updates to HB-1-3555 Chapter 9: Chapter 9 was streamlined to provide a more efficient format with greater clarification for all income types. The guide will be updated.

See update for all changes.

Chapter 9:

References to “qualifying” income are revised to “eligibility” income as applicable for annual income.
Paragraph 9.4, all subsections A through E are removed. This guidance was added to Attachment 9-A.
Paragraph 9.5, All subsections A through E are removed. This guidance was added to Attachment 9-A.
Paragraph 9.7, “Documenting Repayment Income” is removed.
Paragraph 9.8, “Agency Review of Repayment Income” is renumbered to Paragraph 9.9.
Paragraph 9.9, “Overview for Repayment Income” is renumbered to Paragraph 9.7.
Paragraph 9.10, “Stable and Dependable Income” is renumbered to Paragraph 9.8.
All subsections A through D are removed and has been add to Attachment 9-A.
Paragraph 9.12, “Documenting Repayment Income” is removed. This guidance was added to Attachment 9-A.
Paragraph 9.13, “Optional Documentation of Income” is renumbered to Paragraph
9.10.
A new matrix, Attachment 9-A, provides an encompassing resource for income, adjusted annual income deductions, and assets. The matrix includes guidance for the treatment of income and assets specifically for annual and repayment income consideration.
Attachment 9-A has been renumbered to Attachment 9-B “Income and Documentation Worksheet.” 

Attachment 9-B has been renumbered to Attachment 9-C “Case Study: Income Calculation Worksheet.”
Attachment 9-C has been renumbered to Attachment 90-D “Annual Income, Excluded Sources” and Attachment 9-D “Julian Calendar” has been removed.
REMOVE INSERT
Chapter 9 dated 03-09-16: Chapter 9 dated 03-09-16: Pages 9-1 thru 9-52, Pages 9-1 thru 9-10, Attachments 9-A, 9-B, 9-C, Attachments 9-A, 9-B, 9-C,
9-D and 9-F. 9-D and 9-F revised 09-19-18.

Pennsylvania Fast-Track Foreclosure Process for Vacant Properties

Effective: December 19, 2018
Industry: Mortgage Servicing
Source: Pennsylvania   Alert →
Tags: Pennsylvania, Foreclosure
View Details

The Vacant and Abandoned Real Estate Foreclosure Act (the “Act”) provides for an accelerated foreclosure for vacant properties.

Once a foreclosure lawsuit is commenced the creditor can choose one of two methods to certify that a property is vacant either through a municipal code officer or through the court system.

Municipal Code Officer Method

  • A municipal code officer will inspect the mortgaged property and draft a report certifying that the property is vacant and abandoned. The creditor is responsible for compensating the code officer for the work performed. 
  • The report must then be sent to the owner of the property and/or the obligor under the mortgage with a notice that the owner must request a hearing to refute the vacancy determination, and if they fail to do the finding will become final.

Judicial Method

  • Requires that the creditor file an affidavit which can be provided by a code enforcement officer, the creditor or any competent adult with knowledge of the condition of the property (including a property inspector or agent) with photographs showing the condition of the property to evidence the alleged abandonment of the property. 
  • This Affidavit and a Rule to Show Cause is then served on the property owner or obligor, who then must respond with a statement under oath certifying that the property is not vacant and abandoned. 
  • In the event a property owner or obligor responds, a hearing will be set and a judge will make the final determination.

Once the property is certified as vacant and abandoned, the foreclosure process becomes streamlined and the typical obstacles that a creditor may encounter in moving to a sheriff’s sale are eliminated. The property is not subject to mediation, conciliation, diversion, or any other local program to encourage resolution of owner-occupied residential foreclosures. Eliminating the need for service by the Sheriff all subsequent documents may be served by first class mail to an address specified by the owner, or if no address is specified by first class mail and posting on the property. Most notably, once the property is certified as vacant the sheriff must schedule the property for a sheriff’s sale within 60 days of the filing of the writ of execution and the creditor’s payment of the acceleration fee. Finally, the Act also allows a creditor to exercise a limited right to possession while the foreclosure is pending to maintain the yard and exterior of the property and to remedy any potential health or safety hazards.

Super Conforming Mortgages

Effective: December 19, 2018
Industry: Mortgage Lending
Source:   Freddie Mac Selling Bulletin 2018-15 →
Tag: Underwriting
View Details

Effective for Mortgages with Settlement Dates on and after December 19, 2018 

Loan Product Advisor is being updated to assess super conforming Mortgages with original loan amounts greater than $1,000,000. As a result, we will no longer require that these Mortgages be manually underwritten. All super conforming Mortgages, regardless of original loan amount, must be submitted through Loan Product Advisor. Loan Product Advisor and Loan Selling Advisor® will be updated by December 19, 2018 to reflect this change.

Guide impacts: Sections 4603.3, 4603.4 and Guide Exhibit 25

Illinois Residential Mortgage License Act

Effective: December 19, 2018
Industry: Mortgage Lending
Source: Illinois   Alert →
Tags: Illinois, Licensing
View Details
  • clarifies the definition of a “bona fide nonprofit organization”
  • provides a list of prohibited acts and practices
  • stipulates that a licensee filing a Mortgage Call Report is not required to file an annual report with the Secretary of Financial and Professional Regulation (Secretary) disclosing applicable annual activities
  • repeals a provision requiring the Secretary to obtain loan delinquency data from HUD as part of an examination of each licensee
  • clarifies that the notice of change in loan terms disclosure requirements do not apply to any licensee providing notices of changes in loan terms pursuant to the CFPB’s Know Before You Owe mortgage disclosure procedure under TILA and RESPA, while removing the provision that previously excluded licensees limited to soliciting residential mortgage loan applications as approved by the Secretary from the requirements to provide disclosure of changes in loan terms
  • removes certain criteria concerning the operability date for submitting licensing information to the Nationwide Multistate Licensing System
  • makes other technical and conforming changes

Illinois Amends Provisions under RMLA

Effective: December 19, 2018
Industry: Mortgage Lending
Source: Illinois   IL House Bill 5542 →
Tag: Licensing
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Amends the Residential Mortgage License Act of 1987. 

  • Provides for a list of specified activities that constitute violations of the Act (rather than a list of required averments that must be attached to an application for a license under the Act). 
  • Provides that a licensee filing a Mortgage Call Report is not required to file a report of applicable annual activities with the Secretary of Financial and Professional Regulation. 
  • Provides that specified licensee disclosures do not apply to any licensee providing notices of changes in loan terms pursuant to the federal Consumer Financial Protection Bureau's Know Before You Owe mortgage disclosure procedure (rather than excluding licensees limited to solicit residential mortgage loan applications as approved by the Secretary of Financial and Professional Regulation). 
  • Makes conforming changes. 
  • Repeals provisions concerning a requirement that the Secretary of Financial and Professional Regulation conduct, as part of an examination of each licensee, a review of the licensee's loan delinquency data. 
  • Replaces "Commissioner" with "Secretary" in order to update references to the Secretary of Financial and Professional Regulation. 

Impact of Federal Government Shutdown

Effective: December 26, 2018
Industry: Mortgage Lending, Mortgage Servicing
Source: Fannie Mae   Lender Letter-2018-06 →
Tags: Income, Assets, Underwriting, Insurance, Loss Mitigation
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Selling Policies

Employment Directly Affected by the Shutdown

For borrowers employed by the federal government or other individuals whose employment is directly impacted by the shutdown, a loan is not rendered ineligible for purchase or securitization by Fannie Mae solely based upon the shutdown. The following guidance relates to our standard employment policies: 

  • If the lender is unable to obtain a verbal verification of employment (VOE) during the shutdown, the Selling Guide already permits the lender to obtain the verbal VOE after loan closing, up to the time of loan delivery. If the verbal VOE cannot be obtained prior to delivery, the loan is ineligible for sale to us.
  • For borrowers in the military, the Selling Guide currently allows for a Leave and Earnings Statement dated within 30 calendar days (or 31 days for longer months) prior to the note date in lieu of a verbal VOE.
  • If a borrower is furloughed on or after closing of the mortgage loan due to the shutdown, the loan remains eligible for sale, provided the lender has been able to obtain all required documentation (for example, paystubs, IRS W-2s, verbal VOEs) prior to delivery of the loan.
  • If employment has been validated by the Desktop Underwriter® (DU®) validation service, the validation will remain eligible for representation and warranty relief on employment provided the lender complies with the “close by” date in the DU message. Otherwise, the standard guidance provided above related to obtaining a VOE would apply.

Government Verifications

In some instances, we require validation through a government agency, such as the IRS and the Social Security Administration (SSA), for certain documentation or information provided by the borrower. During the shutdown, these requests may not be processed. We are implementing the following temporary policies with regard to those two agencies.

IRS Transcripts: We require lenders to have each borrower (regardless of income source) complete and sign a separate IRS Request for Transcript of Tax Return (Form 4506-T) at or before closing, except when all of a borrower’s income has been validated by the DU validation service. We do not require lenders to obtain tax transcripts from the IRS prior to closing, but do require that it be included as part of the lender’s post-closing quality control processes (unless all borrower income has been validated through the DU validation service).

As part of the DU validation service, DU can validate certain income types using tax transcript data obtained from an eligible verification report. As a result of the shutdown, requests for those verification reports may not be fulfilled with the IRS and may remain in pending status until normal operations resume. DU will continue to return validation messages for tax transcript verification reports received before the shutdown, but will not be able to access any new verification reports for validation.

Social Security Number Validation: When data integrity issues pertaining to the borrower’s Social Security number are identified, a lender may be required to validate the Social Security number with the SSA using SSA-89. Because these requests may not be processed during the shutdown, Fannie Mae is temporarily revising this policy to enable lenders to obtain the verification prior to delivery of the loan. If the Social Security number cannot be validated prior to delivery, the loan is not eligible for sale to Fannie Mae.

Selling Loans Requiring Flood Insurance

On December 21, 2018, legislation was passed that extends the National Flood Insurance Program’s (NFIP’s) authorization to May 31, 2019. However, the NFIP may have limited ability to issue new policies, issue increased coverage on existing policies, or issue renewal policies during the shutdown. To help ensure the continued availability of mortgage financing to borrowers seeking to purchase properties located in Special Flood Hazard Areas (SFHAs), we will purchase loans secured by properties located in SFHAs that do not have an active flood insurance policy as long as the conditions noted below are met.

Lenders are reminded that Fannie Mae accepts flood policies from private insurers that provide equivalent terms and conditions of coverage provided under the standard policy of the NFIP for the appropriate property type.

Conditions for Loan Purchase

This policy is applicable to mortgage loans closed and purchased or securitized by Fannie Mae during the shutdown.

Until evidence of active flood insurance is obtained, a lender may deliver a mortgage loan to Fannie Mae on the condition that the borrower can provide acceptable evidence of 

  • a completed application for flood insurance and a copy of a check or the settlement statement reflecting payment of the initial premium, or
  • the assignment of an existing flood insurance policy from the property seller to the purchaser.

Lenders must

  • have a process in place to identify mortgaged properties securing loans sold to Fannie Mae that do not have proper evidence of active flood insurance,
  • take all steps (insofar as permitted by applicable law) necessary to facilitate the issuance of coverage once the shutdown ends, and
  • retain documentation to support acceptable evidence of flood insurance.

When selling mortgage loans affected by the shutdown, lenders must provide all applicable loan delivery data elements and special feature codes, including: 

  • Special Feature Code 170, or
  • Property Flood Insurance Indicator (ULDD Sort ID 65) = TRUE and Special Flood Hazard Area Indicator (ULDD Sort ID 24) = TRUE.

Regardless of the provisions of this Lender Letter, the lender remains obligated for all selling representations and warranties concerning the existence of a standard policy issued under the NFIP or an equivalent policy from a private insurer.

As a reminder, refinance loans secured by properties in SFHAs typically already have acceptable flood insurance coverage in place at the time of closing. Such policies only require a change to the mortgagee named on the policy if the refinance lender is not the original lender. As a result, these mortgage loans are subject to the above requirements only if the renewal date of the borrower's existing coverage will occur during the shutdown and prior to sale to Fannie Mae. If coverage expires before the mortgage loan is sold, lenders must comply with the procedures described above, adapted appropriately to a renewal.

Lenders are advised to consult counsel to determine if they have the requisite authority to originate or otherwise deal in such mortgage loans.

Servicing Policies

Servicing Loans Requiring Flood Insurance

The servicer must track properties securing mortgage loans for which new policies, an increase in coverage or renewal of existing policies would have occurred during the shutdown and must retrospectively perform all steps (insofar as permitted by applicable law) necessary to facilitate the issuance of proper flood insurance coverage. The servicer must retain documentation to support acceptable evidence of flood insurance.

Other Servicing Policies

The shutdown may impact a borrower’s ability to make scheduled mortgage payments. To assist borrowers who are unable to make their monthly mortgage loan payment as a result of the shutdown, the servicer can offer forbearance. The servicer must follow Servicing Guide D2-3.2-01, Forbearance Plan.

A borrower who is currently performing on a repayment plan or Trial Period Plan and is impacted by the shutdown may seek consideration for a forbearance plan. If the borrower does convert from a repayment plan or a Trial Period Plan to a forbearance plan, the borrower may subsequently be eligible for a repayment plan or modification upon successful completion of forbearance plan and if eligible, must be placed on a new repayment plan or Flex Modification Trial Period Plan.