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Compliance Calendar for February 2020

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FNMA Servicing Guide Updates

Effective: February 1, 2020
Industry: Mortgage Servicing
Source: Fannie Mae   Servicing Guide Announcement SVC-2019-07 →
Tags: Insurance, Servicing
Details

The Servicing Guide has been updated to include changes or clarifications related to the following: 

• Canceling Property and/or Flood Insurance When Fannie Mae Acquires the Property 

• Miscellaneous Revisions 

    o Consolidation of Application and Approval of Seller/Servicer Policy 

    o Update to Contacts

Guide Form 1008, Uniform Underwriting and Transmittal Summary (Mandatory Use Date Extended)

Effective: February 1, 2020
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-03 →
Tag: Underwriting
Details

As of 10/9/2019, Fannie Mae is extending the mandatory use date of Form 1008 to a yet-to-be-determined date.  However, Lenders may use the updated version of the form immediately if they choose to.

B1-1-01, Contents of the Application Package: In December 2018, we updated the Uniform Underwriting and Transmittal Summary (Form 1008) and at the time we communicated an effective date of July 1, 2019. Based on industry feedback we have moved the effective date to align with the mandated use of the redesigned Uniform Residential Loan Application (Form 1003) for applications dated on and after February 1, 2020. In addition, we updated the Guide to allow for the use of a similar document in lieu of Form 1008 to allow lenders to use their own version of an underwriting form. With the effective date of the Form 1008 extended, Fannie Mae and Freddie Mac are considering a few additional updates to the Form, which we will communicate at a later date.

Guide Form 1077, Uniform Underwriting and Transmittal Summary (Mandatory Use Date Extended)

Effective: February 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Bulletin 2019-7 →
Tag: Underwriting
Details

As of 10/9/2019, Freddie Mac is extending the mandatory use date of Form 1077 to a yet-to-be-determined date.  However, Seller/Servicers may use the updated version of the form immediately if they choose to.

In Bulletin 2018-24, Freddie Mac announced an updated version of Form 1077 developed after joint review with Fannie Mae. Seller/Servicers could begin using the revised form immediately but would be required to use the revised form for Mortgages with Application Received Dates on or after June 5, 2019. 

As a result of industry feedback, for Seller/Servicers using Form 1077, we are extending the mandatory usage date for the revised form. While Seller/Servicers may use the revised form sooner if they choose to, they must use the revised form for Mortgages with Application Received Dates on or after February 1, 2020, which aligns with the previously announced requirement for mandatory use of revised Form 65, Uniform Residential Loan Application. 

Freddie Mac and Fannie Mae are discussing additional changes to Form 1077 and will notify Sellers of those changes in a future Guide Bulletin. 

Fidelity Bond and Errors and Omissions Reporting Mailbox

Effective: February 1, 2020
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-09 →
Tag: Compliance
Details

Sellers/servicers are reminded they must report fidelity bond and errors and omissions events to us: 

▪ within 30 days after discovery of the occurrence of a single fidelity bond or errors and omissions policy loss that is mortgage related and the amount exceeds the lesser of $250,000 or the policy’s deductible, even when no claim will be filed or when Fannie Mae’s interest will not be affected; and 

▪ within ten business days of receipt of a notice from the insurer regarding the intended cancellation, reduction, nonrenewal, or restrictive modification of the seller/servicer’s fidelity bond or errors and omissions policy.

We updated the Guide to include this mailbox for reporting these events to us: fidelity_bond_and_errors_and_omissions_claims@fanniemae.com.

Guide Form 1077, Uniform Underwriting and Transmittal Summary (Mandatory Use Date Extended)

Effective: February 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Guide Bulletin 2019-8 →
Tag: Loss Mitigation
Details

As of 10/9/2019, Freddie Mac is extending the mandatory use date of Form 1077 to a yet-to-be-determined date.  However, Seller/Servicers may use the updated version of the form immediately if they choose to.

Guide Form 1077

In Bulletin 2019-7, Freddie Mac announced the extension of the mandatory usage date for the revised Form 1077, Uniform Underwriting and Transmittal Summary. While Sellers/Servicers may begin to use the revised form sooner if they choose, they must use the revised form for Mortgages with Application Received Dates on or after February 1, 2020, which aligns with the previously announced requirement for mandatory use of revised Form 65, Uniform Residential Loan Application.

We have updated Form 1077 to reflect this change.

Fidelity Bond and Errors and Omissions Mailbox

Effective: February 1, 2020
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2019-08 →
Tags: Certification, Endorsement, and Delivery, Secondary, Investor Reporting
Details

Sellers/servicers are reminded that they must report fidelity bond and errors and omissions events to us 

  • within 30 days after discovery of the occurrence of a single fidelity bond or errors and omissions policy loss that is mortgage related and the amount exceeds the lesser of $250,000 or the policy’s deductible, even when no claim will be filed or when our interest will not be affected; and 
  • within 10 business days of receipt of a notice from the insurer regarding the intended cancellation, reduction, nonrenewal, or restrictive modification of the seller/servicer’s fidelity bond or errors and omissions policy. 

The Selling Guide has been updated to include the following mailbox for reporting these events to us: fidelity_bond_and_errors_and_omissions_claims@fanniemae.com. 

Updated Selling Guide Topics 

  • A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events 
  • E-1-03, List of Contacts

GreenCHOICE Mortgage℠ special delivery requirements for no cash-out refinance

Effective: February 4, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Guide Bulletin 2020-01 →
Tag: Certification, Endorsement, and Delivery
Details

Effective for Mortgages with Settlement Dates on and after February 4, 2020

  • We are updating Section 6302.16, Refinance Mortgages with special characteristics, to include special delivery requirements for these Mortgages 
  • For GreenCHOICE Mortgages paying off existing outstanding energy and/or water efficiency related debt that are “no cash-out” refinance Home Possible Mortgages or HomeOne Mortgages with an LTV ratio greater than 95% but less than or equal to 97%, Sellers must deliver ULDD Data Point, Related Loan Investor Type (Sort ID 222) and enter the valid value of “FRE” and, if available, ULDD Data Point, Related Investor Loan Identifier (Sort ID 221)

Guide impacts: Sections 4606.4 and 6302.16

Duty to Serve and “No cash-out” Refinance Mortgage Proceeds

Effective: February 4, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Bulletin 2019-25 →
Tags: Underwriting, Property - Appraisal, Closing
Details

DUTY TO SERVE - GreenCHOICE Mortgages

Based on our research, and to further support the preservation of affordable housing, among other updates, we are expanding Guide Chapter 4606 to:

  • Introduce a “no cash-out” refinance option to pay off outstanding debt incurred to make energy and/or water efficiency improvements with a GreenCHOICE Mortgage
  • Add new requirements for “no cash-out” refinance GreenCHOICE Mortgages for Home Possible® and HomeOneSM Mortgages with loan-to-value (LTV) ratios greater than 95% but less than or equal to 97%
  • Add options in lieu of an energy report when determining the cost effectiveness of solar panels

We are also updating Guide Section 5601.12 to expand our collateral valuation guidance for properties with solar panels, energy-efficiency improvements, and/or water-efficiency improvements, including the option to use the Appraisal Institute’s Residential Green and Energy Efficient Addendum in the appraisal process.

We are revising Section 6302.23 to update the delivery requirements for GreenCHOICE Mortgages. Sellers must enter one of the following valid values for ULDD Data Point Investor Feature Identifier (Sort ID 368):

  • "J08” to indicate a GreenCHOICE Mortgage, for a purchase or “no cash-out” refinance Mortgage to finance energy- and/or water-efficiency improvements as described in Section 4606.4(a)

or

  • "J28” to indicate a Duty to Serve (DTS) GreenCHOICE Mortgage to pay off outstanding energy debt, for a “no cash-out” refinance Mortgage as described in Section 4606.4(b)

No Cash-out Refinance Mortgage Proceeds

Revising the Guide to allow proceeds of a "no cash-out" refinance to be used to pay down any junior liens that are secured by the Mortgaged Premises and were used in their entirety to acquire the subject property.

Credit Underwriting - Third-Party Money Transfer Applications (Manually Underwritten Mortgages)

Effective: February 5, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Guide Bulletin 2020-01 →
Tags: Underwriting, Income, Credit - Liabilities
Details
  • Due to the increased use of third-party money transfer applications and services (e.g., PayPal and Venmo), we are updating requirements for documentation of tradelines and noncredit payment references for Manually Underwritten Mortgages 
  • As an added flexibility, Sellers may now verify the Borrower’s payment history with documentation from a third-party money transfer application or service

Guide impact: Section 5202.2

Retirement of biweekly Mortgages

Effective: February 5, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Guide Bulletin 2020-01 →
Tags: Underwriting, Closing, Loan Documents
Details
  • Due to lack of demand and an increase in associated operational costs, Freddie Mac is retiring the eligibility for sale of Mortgages originated with a biweekly payment schedule, previously eligible for sale only on a negotiated basis as biweekly Mortgages
  • Section 4201.9 has been removed from the Guide, and related chapters have been updated to reflect this change
  • We are also removing the Biweekly Note and Rider used to document biweekly Mortgages from the Uniform Instruments web page.

Guide impacts: Sections 1402.7, 4201.9, 6205.2 and Exhibit 4

Loans with Resale Restrictions: Loan and Borrower Eligibility, and HomeReady Mortgage Loan and Borrower Eligibility

Effective: February 5, 2020
Industry: Consumer Lending
Source: Fannie Mae   Fannie Mae Selling Guide Announcement SEL-2020-01 →
Tags: Underwriting, Income, Property - Appraisal
Details

Clarifying that HomeReady income limits only apply to a loan with a resale restriction if the loan is delivered under the HomeReady product.

Automated Clearing House (ACH) Drafting

Effective: February 6, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-22 →
Tag: Secondary
Details

We are updating the Guide to reflect that the following fees and amounts (which were previously drafted monthly from Seller's ACH account) will be included in the net amount drafted from that account on the fifth Business Day after the applicable Settlement Date (daily ACH process) for Mortgages sold to Freddie Mac under the Guarantor and MultiLender Swap Programs:

  • Gold Rush® fees and adjustments
  • Buyup and buydown adjustments
  • Guarantor settlement interest

These fees and amounts will be included together with initial Credit Fees in Price, buyup proceeds and buydown fees drafted by Freddie Mac in accordance with the provisions of the daily ACH process described in Guide Section 6303.2(a).

We are also revising Chapter 6303 to clarify references to the Seller monthly invoice and activity statement.

Guide impacts: Sections 6201.10, 6201.12, 6303.1 and 6303.2

Condominium Projects

Effective: February 6, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-22 →
Tags: Underwriting, Property - Appraisal, Secondary
Details

Effective February 6, 2020, but Sellers are encouraged to implement on or after November 21, 2019

Currently Sellers have to deliver Condominium Unit Mortgages with approved Project Waiver Requests (PWRs) within 180 days of the date of the Freddie Mac Condo Project Advisor® Feedback Certificate. This date is indicated as the expiration date on the Feedback Certificate.

In response to Seller feedback and to provide additional flexibility, we are requiring Sellers to deliver Mortgages with approved PWRs within 120 days after the Note Date. In connection with this change, as of November 21, 2019, the Feedback Certificate will no longer indicate an expiration date.

Guide impact: Section 5701.1

Regulation D: Reserve Requirements of Depository Institutions - Interest Rates

Effective: February 12, 2020
Industry: Consumer Lending
Source: Other   Final Rule →
Tag: Banking
Details
  • Revises the rate of interest paid on balances maintained to satisfy reserve balance requirements (IORR) to 1.60% and the rate of interest paid on excess balances (IOER) to 1.60%

Delinquency Exception Reporting

Effective: February 12, 2020
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2020-01 →
Tag: Investor Reporting
Details
  • We have updated the Guide to clarify that we will make the delinquency
    status exception reports available in Asset Management Network (AMN) on the second calendar day following the second business day of the month

Voluntary Partial Cancellation

Effective: February 12, 2020
Industry: Mortgage Servicing
Source: Freddie Mac   Bulletin 2020-2 →
Tag: Servicing Transfers
Details
  • New Chapter 7102 includes the VPC contract language required for bulk and flow VPC transactions
  • The provisions of Chapter 7102 and new Guide Exhibit 30 for VPC Agreements or Exhibit 31 for Flow VPC Agreements will be incorporated into VPC Agreements and Flow VPC Agreements entered into on or after February 12, 2020 for Transfers of Servicing with an Effective Date of Transfer on or after March 1, 2020

Military Lending Act (MLA) Rule Revision - Interpretation Change

Effective: February 28, 2020
Industry: Consumer Lending
Source: Other   Alert →
Tags: Banking, Consumer, Auto, Military Lending Act
Details
  • Effective immediately, withdraws a 2017 provision concerning the exemption of credit secured by a motor vehicle or personal property
    • The 2017 Rule stated that additional costs may be added to an extension of credit so long as these costs relate to the object securing the credit, and not the extension of credit itself. In particular, the 2017 Rule stated that if credit is extended to cover “Guaranteed Auto Protection insurance or a credit insurance premium” the loan is covered by the MLA
  • Reinstates the 2016 Rule, which states that loans secured by “personal property” do not fall within the exception to “consumer credit” if the creditor “simultaneously extends credit in an amount greater than the purchase price”