Compliance Calendar

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Compliance Calendar for March 2020

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Duty to Serve: Properties Subject to Income-Based Resale Restrictions

Effective: March 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-22 →
Tags: Underwriting, Property - Appraisal
Details

This Bulletin announces new and revised requirements to facilitate a secondary market for Mortgages secured by income-based resale restricted properties that use deed restrictions, subordinated loans, or similar legal mechanisms that include provisions to keep a home affordable for individuals and households with very low-, low-, or moderate-incomes.

We are expanding Guide Chapter 4406 to provide additional guidance and new requirements for Mortgages secured by properties subject to income-based resale restrictions. These include:

  • Allowing the following to be eligible
    • 2-unit Primary Residences; and
    • CHOICEHomeSM Mortgages, provided that the Seller has written approval from Freddie Mac to deliver these Mortgages
  • Revising our requirements to permit cash-out refinance transactions and to permit Borrowers to obtain cash proceeds from refinance transactions as long as the subsidy provider or program administrator approved the transaction
  • Adding requirements relating to the subsidy provider and program administrator
  • Adding guidance regarding how to calculate the Borrower’s required Down Payment based on the subsidized purchase price
  • Specifying that subsidy providers may be entitled to obtain “excess proceeds” in certain instances when the income-based resale restrictions survive foreclosure or the recordation of a deed-in-lieu of foreclosure where proceeds remain following the sale or transfer of an REO property
  • Permitting the subsidy provider or program administrator of eligible shared equity homeownership programs to be both the source of the Affordable Second and the property seller in certain instances

Guide impacts: Sections 4406.1, 4406.2, 5703.9 and 6302.37

Duty to Serve: Mortgages with Affordable Seconds®

Effective: March 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-22 →
Tags: Underwriting, Property - Appraisal
Details

We are eliminating the limits on the share of appreciation (equity sharing) an Agency or subsidy provider funding an Affordable Second® can receive when the Agency or subsidy provider is managing an eligible income-based resale restriction program and meets other eligibility criteria.

Guide impacts: Section 4204.2 and Glossaries A-I and J-Z

We are revising our requirements for Mortgages with Affordable Seconds to allow:

  • Sellers to be the source of Affordable Seconds under certain circumstances when the First Lien Mortgage is a Home Possible® Mortgage and the Seller has an established Affordable Seconds program that supports Community Reinvestment Act (CRA) mandates
  • Affordable Seconds to be funded by a nonprofit not affiliated with a Government Agency, provided that the Seller receives Freddie Mac’s prior written approval

Guide impact: Section 4204.2

We are updating Section 6302.34 to add special delivery requirements for Mortgages with Affordable Seconds from certain allowable sources. If applicable, Sellers must enter the following valid values for ULDD Data Point Investor Feature Identifier (Sort ID 368):

  • “J07” for a non-profit not affiliated with a Government Agency Affordable Second
  • “J54” for a Home Possible Mortgage with a Seller-funded Affordable Second

Guide impacts: Section 6302.34 and Exhibit 34

We are updating the Freddie Mac Affordable Seconds Checklist and adding a link to it in the Guide for ease of reference. In addition, access our new Affordable Seconds and Gifts, Grants and Affordable Seconds quick references to learn more about these sources of funds and submission to Loan Product Advisor®.

Duty to Serve: Properties Subject to Resale Restrictions

Effective: March 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-22 →
Tags: Underwriting, Property - Appraisal
Details

Mortgages secured by properties subject to resale restrictions

We are updating the requirements for Mortgages secured by properties subject to resale restrictions that we announced in Bulletin 2018-16 to:

  • Clarify that:
    • The resale restriction controls may be administered by the subsidy provider or a program administrator
    • When a Mortgage secured by a resale-restricted property is in foreclosure and/or subject to an approved short sale, the right of first refusal must have a time period not exceeding 90 days
  • Provide guidance for appraisal comparable sales selection when resale restrictions terminate and when they survive foreclosure or recordation of a deed-in-lieu of foreclosure

Guide impact: Guide Section 4406.1

Resale Restrictions and Right of First Refusal

Effective: March 1, 2020
Industry: Mortgage Servicing
Source: Freddie Mac   Freddie Mac Guide Bulletin 2019-23 →
Tags: Servicing, Servicing Transfers
Details

This bulletin provides guidance for servicers when servicing mortgages secured by properties subject to resale restrictions or regarding any right of first refusal.

CHOICEHome℠ Specifications

Effective: March 1, 2020
Industry: Mortgage Lending
Source:   Guide Bulletin 2020-01 →
Tags: Underwriting, Property - Appraisal
Details
  • We are updating the manufacturer’s specifications for CHOICEHomeSM to encourage manufacturing efficiency and enhance the marketability of this product
  • A Manufactured Home is granted CHOICEHome certification and is eligible for CHOICEHome financing if the Manufactured Home meets certain specifications. By updating our CHOICEHome specifications, we are aligning with market expectations and providing additional standardization that will be beneficial to the industry and to Borrowers. These changes include the removal of the requirement that the CHOICEHome must include a garage or carport
  • We are also making revisions to provide greater specificity about CHOICEHome requirements, including appraisal requirements.
  • A Seller must obtain written approval before selling Mortgages secured by a CHOICEHome to Freddie Mac. 
Guide impact: Section 5703.9  

Taxpayer First Act

Effective: March 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Guide Bulletin 2020-01 →
Tags: Underwriting, Income
Details
  • We are updating Section 5302.4 to provide that if taxpayer consent is required under the Act, Sellers must ensure that the form of consent obtained from the taxpayer permits the use and sharing of the tax return or tax return information with and by any actual or potential owners of the Mortgage, as well as their service providers, successors and assigns
  • The Mortgage Industry Standards Maintenance Organization (MISMO®) model taxpayer consent language meets this purpose

Approved Mortgage Insurance Forms

Effective: March 1, 2020
Industry: Mortgage Lending
Source: Fannie Mae , Freddie Mac   Lender Letter LL-2019-08 →
Tags: MIP-PMI, Underwriting, Certification, Endorsement, and Delivery
Details
  • Fannie Mae and Freddie Mac have worked with approved mortgage insurers to update their master primary policies and related endorsements and other forms
  • Any loan sold to or securitized by us that has mortgage insurance and has a loan application date on or after March 1, 2020, must be insured under one of the new approved Forms
  • Any loan that has mortgage insurance and has a loan application date prior to March 1, 2020, may be insured under either one of the new approved Forms or any form previously approved for use at the time of the loan application date
  • A revised list of the approved Forms for each provider is available at https://www.fanniemae.com/content/tool/approved-mortgage-insurance-forms.pdf

Mortgage Insurance Master Policy Updates

Effective: March 1, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Bulletin 2019-24 →
Tags: Insurance, Underwriting, Closing
Details

Every Mortgage sold to Freddie Mac that requires mortgage insurance and has an Application Received Date on and after March 1, 2020 must be insured under one of the new Master Policies. Mortgages insured under any other master policy will not be eligible for sale to Freddie Mac.

Every Mortgage sold to Freddie Mac that requires mortgage insurance and has an Application Received Date prior to March 1, 2020 may be insured under either: 

  • The new Master Policies, or
  • Any pre-existing master policy between the Seller/Servicers and an MI, as long as the Seller/Servicer first confirms with the MI that such policy was approved by Freddie Mac for use as of the Application Received Date

Washington Provisions Regarding Security Breaches

Effective: March 1, 2020
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Washington   Washington House Bill 1071 →
Tags: Washington, Information Security/Data Breach
Details

Washington House Bill 1071 enacts provisions relating to breach of security systems and protecting personal information.

eMortgages, ARM Notes and Riders: Lifetime Floor, Low Loan Balance Cash Specified Payup and Additional Guide Updates

Effective: March 4, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Selling Bulletin 2020-3 →
Tags: Underwriting, Loan Documents, Certification, Endorsement, and Delivery, Closing
Details

This bulletin contains updates related to the following:

  • ARM notes and riders that support the LIBOR transition
  • Cash payups for low loan balances up to and including $225,000
  • Document custodian requirements and the use of powers of attorney for eMortgages

The Bulletin also includes other updates that may be important to your business.


Regulation A: Extensions of Credit by Federal Reserve Banks

Effective: March 4, 2020
Industry: Consumer Lending
Source: Other   Final Rule →
Tag: Banking
Details

Effective March 4, 2020

  • Interest rates applicable to credit extended by a Federal Reserve Bank.
    • (a) Primary credit. The interest rate at each Federal Reserve Bank for primary credit provided to depository institutions under § 201.4(a) is 1.75 percent. 
    • (b) Secondary credit. The interest rate at each Federal Reserve Bank for secondary credit provided to depository institutions under § 201.4(b) is 2.25 percent.

New York Reverse Mortgage Loans

Effective: March 5, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: New York   Emergency Rule →
Tags: New York, HECM, Reverse Mortgages
Details

Repeals and replaces Part 79 of 3 NYCRR, in its entirety, as follows: 

  • Section 79.1 Scope and application of this Part
  • Section 79.2 Definitions
  • Section 79.3 Authority to make reverse mortgage loans
  • Section 79.4 Advertising restrictions
  • Section 79.5 Requirements for reverse mortgage loans
  • Section 79.6 Maintenance of real property securing reverse mortgage loans
  • Section 79.7 Termination of reverse mortgage loans
  • Section 79.8 Permitted fees, costs and payments
  • Section 79.9 Required disclosures and counseling for reverse mortgage loans
  • Section 79.10 Availability of RPL 280 and RPL 280-a loans
  • Section 79.11 Prohibited conduct and administrative penalties
  • Section 79.12 Special provisions regarding payment of real estate taxes and insurance
  • Section 79.13 Policies and procedures

New York Reverse Mortgages

Effective: March 5, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: —   Alert →
Tags: New York, HECM
Details
  • Regulates reverse mortgages issued under FHA’s HECM program
  • Requires lenders offering reverse mortgages in New York to obtain approval from the Superintendent of the New York Department of Financial Services (Superintendent) in order to make HECMs in New York
  • Lending provisions of the rule:
    • defines unfair or deceptive practices and prohibits specific language representations
    • requires disclosure of certain consumer protection information that will be promulgated by a form specified by the Superintendent
    • requires lenders and borrowers be represented by an attorney at closing, and each such party must have at least one attorney present to conduct the closing
  • Servicing provisions of the rule:
    • must inform and provide notice to a borrower, by telephone and first-class mail, when his or her line of credit or life expectancy set aside is depleted to 10% or less of its value
      • such notice must inform the borrower, in plain language, of his or her obligations relating to the property
    • prohibited from making an advance payment for any obligation arising from the borrower’s property
    • in the event a borrower defaults upon the payment of insurance premiums or real property taxes, the lender may only pay those premiums and/or taxes which are in arrears
    • in the event a lender seeks to foreclose on a reverse mortgage loan on the basis that the property is no longer the primary residence of or occupied by the borrower, if during the verification of the borrower’s primary residence and/or occupancy no responses are received in response to mailings relating thereto, such lender must cause a telephone call to be made to the borrower, or if the borrower is unreachable by telephone, to the third-party contact (if designated)
      • prior to the commencement of a foreclosure proceeding, an in-person visit must also be made to the borrower; the lender may not charge a fee for any such visit and inspection
      • the lender must wait at least 30 days following the in-person visit, in addition to any additional time or notice requirements specified by any other provision of law, before initiating a foreclosure action on the basis that the property is no longer the primary residence of the borrower
      • if the borrower contacts the lender and provides proof of residence or occupancy after such visit, but before the commencement of the foreclosure action, the lender is barred from initiating such foreclosure action
        • the bill also provides that compliance with its requirements is a condition precedent to commencing a foreclosure action, and failure to comply is a complete defense to such action
        • any person injured by any violation of the bill’s requirements or any violation of the rules and regulations of HUD relating to the HECM program may bring an action to recover treble damages, plus the prevailing plaintiff’s reasonable attorneys’ fees

Effective March 5, 2020; the Superintendent must amend, add and/or repeal any rules and regulations necessary to implement the bill’s provisions by June 3, 2020

Property Insurance

Effective: March 13, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Update 2019-5 →
Tag: Insurance
Details

PROPERTY INSURANCE

Effective March 13, 2020; however, Sellers/Servicers may implement immediately

We require that property insurance for each Mortgaged Premises be provided by an insurer with a certain minimum rating. Currently, for U.S. insurers (and reinsurers) rated by A.M. Best Company (A. M. Best), we require a minimum Financial Strength Rating of B/III.

To strengthen our insurer rating requirements, we are updating the Guide to require a minimum A.M. Best Financial Strength Rating of B+/III for U.S. insurers (and reinsurers).

Guide impacts: Sections 8202.1 and 8202.8

District of Columbia Special servicing provisions for COVID-19

Effective: March 15, 2020
Industry: Mortgage Servicing
Source: District of Columbia   DC Superior Court Memorandum Staying All Evictions →
Tags: District of Columbia, Foreclosure
Details

The District of Columbia Superior Court issued a memorandum staying all evictions, including those involving foreclosed homeowners, until May 1, 2020.

Massachusetts Special financial institutions provisions for COVID-19

Effective: March 15, 2020
Industry: Consumer Lending
Source: Massachusetts   Guidance →
Tag: Banking
Details

The Massachusetts Division of Banks issued guidance encouraging financial institutions to work with COVID-19 affected customers and communities, including by: (i) waiving fees; (ii) increasing ATM cash withdrawal limits; (iii) easing restrictions on cashing checks; (iv) increasing credit card limits; and (v) offering payment accommodations to assist members having payment difficulty. The guidance notes that “prudent efforts” to modify loan terms would not be subject to examiner criticism, and institutions can ease their terms for new loans consistent with prudential banking practices. In the guidance, the Division also committed to work with affected institutions to reduce the burden when scheduling examinations and inspections, utilize off-site reviews, and work with institutions experiencing difficulties fulfilling reporting requirements. It further acknowledged that institutions may need to temporarily close facilities and encouraged them to offer alternative service options where practical and notify the Division regarding business disruptions or other significant developments, such as staff shortages, rapid withdrawal of deposits or other signs of erosion in consumer confidence.

California Special servicing provisions for COVID-19

Effective: March 16, 2020
Industry: Mortgage Servicing
Source: California   California Executive Order N-28-20 →
Tags: California, Foreclosure
Details

California published Executive Order N-28-20 requesting that financial institutions implement an immediate moratorium on foreclosures and related evictions arising from the nonpayment of rent or mortgage payments due to a substantial decrease in income or increase in medical expenses caused by the Covid-19 pandemic.

Massachusetts Special servicing provisions for COVID-19

Effective: March 16, 2020
Industry: Mortgage Servicing
Source: Massachusetts   Massachusetts Bill HD.4935 →
Tags: Massachusetts, Foreclosure
Details

Massachusetts issued an emergency bill placing a moratorium on evictions and foreclosures as long as the governor’s emergency declaration for the Covid-19 outbreak is active.

Special Relief for those Potentially Impacted by COVID-19

Effective: March 16, 2020
Industry: Mortgage Servicing
Source: VA   Circular 26-20-7 →
Tags: Loss Mitigation, Disaster, COVID-19
Details

Servicers may employ the following relief for Veterans impacted by COVID-19

Forbearance Request

  • Servicers should work with impacted borrowers who are unable to make their mortgage payments to ensure they are evaluated for VA Loss Mitigation options outlined in Chapter 5 of the VA Servicer Handbook M26-4, https://www.benefits.va.gov/WARMS/M26_4.asp. 
  • Encourages all servicers to adopt a policy of late charge waivers on affected loans.
  • Servicers are encouraged to suspend credit bureau reporting on affected loans.

Kansas Special servicing provisions for COVID-19

Effective: March 17, 2020
Industry: Mortgage Servicing
Source: Kansas   Kansas Executive Order No. 20-06 →
Tags: Kansas, Foreclosure
Details

Kansas published an Executive Order prohibiting banks or financial lending entities operating in Kansas from foreclosing on a residential property in Kansas where the foreclosure is based on a default or violation of the mortgage are substantially caused by a financial hardship resulting from the COVID-19 pandemic.

New Hampshire Special servicing provisions for COVID-19

Effective: March 17, 2020
Industry: Mortgage Servicing
Source: New Hampshire   NH Emergency Order #4 →
Tags: New Hampshire, Foreclosure
Details

New Hampshire published Emergency Order #4 temporarily prohibiting evictions and foreclosures, including judicial and non-judicial foreclosure actions, during the declared State of Emergency.

New York Mortgage Servicing Rules

Effective: March 17, 2020
Industry: Mortgage Servicing
Source: New York   Alert →
Tags: New York, Cash Management, Periodic Statements, Loss Mitigation, Foreclosure, Fees, Correspondence|Compliants, Record Retention
Details
  • Crediting payments from borrowers and handling late payments.  Notably, the Final Rule requires payments received by a servicer to be credited, or treated as credited, on the business day received.
  • Annual account statements which must be provided to borrowers in plain language showing certain information.  Subject to certain exceptions, the Final Rule also requires servicers to provide borrowers a payment history for the preceding 36 months within 30 days of receipt of a request for such statement from a borrower.
  • Dual tracking prohibitions that restrict servicers from taking certain foreclosure actions depending on whether the servicer has already made the first foreclosure notice or filing.
  • The fees permitted to be collected by servicers and how often such fees may be charged to a borrower.  For example, the Final Rule requires servicers to maintain a current schedule of standard or common fees, and to make such schedule available on its public website and to borrowers upon request.
  • The handling of borrower complaints and inquiries, including the requirement that every welcome packet and periodic statement that is delivered to a borrower, and any website maintained by a servicer must provide, among other information, (i) an address to which borrowers can direct complaints and inquiries, and (ii) the toll-free telephone number or collect calling services that enables borrowers to speak with a living person during regular business hours, trained to answer inquiries and instruct borrowers on how to file written complaints.  
  • Early intervention and loss mitigation, including provisions that require servicers to provide certain delinquent borrowers with a single point of contact, early intervention notice, appropriate loss mitigation options and modifications, and appeal rights. In addition, and subject to certain exceptions, the Final Rule requires a servicer to send a late payment notice to a borrower informing the borrower that his or her payment is late no later than the 17th day of the delinquency.
  • The books and records that servicers (registered or exempt) are required to maintain as well as other reports the Superintendent may require servicers to file, such as a quarterly volume of servicing report.
  • Crediting payments from borrowers and handling late payments.  Notably, the Final Rule requires payments received by a servicer to be credited, or treated as credited, on the business day received.
  • Annual account statements which must be provided to borrowers in lain language showing certain information.  Subject to certain exceptions, the Final Rule also requires servicers to provide borrowers a payment history for the preceding 36 months within 30 days of receipt of a request for such statement from a borrower.
  • Dual tracking prohibitions that restrict servicers from taking certain foreclosure actions depending on whether the servicer has already made the first foreclosure notice or filing.
  • The fees permitted to be collected by servicers and how often such fees may be charged to a borrower.  For example, the Final Rule requires servicers to maintain a current schedule of standard or common fees, and to make such schedule available on its public website and to borrowers upon request.
  • The handling of borrower complaints and inquiries, including the requirement that every welcome packet and periodic statement that is delivered to a borrower, and any website maintained by a servicer must provide, among other information, (i) an address to which borrowers can direct complaints and inquiries, and (ii) the toll-free telephone number or collect calling services that enables borrowers to speak with a living person during regular business hours, trained to answer inquiries and instruct borrowers on how to file written complaints.  
  • Early intervention and loss mitigation, including provisions that require servicers to provide certain delinquent borrowers with a single point of contact, early intervention notice, appropriate loss mitigation options and modifications, and appeal rights. In addition, and subject to certain exceptions, the Final Rule requires a servicer to send a late payment notice to a borrower informing the borrower that his or her payment is late no later than the 17th day of the delinquency.
  • The books and records that servicers (registered or exempt) are required to maintain as well as other reports the Superintendent may require servicers to file, such as a quarterly volume of servicing report.

Connecticut Special servicing provisions for COVID-19

Effective: March 18, 2020
Industry: Mortgage Servicing
Source: Connecticut   Connecticut Guidance on COVID-19 Related Issues →
Tags: Connecticut, Loss Mitigation, Fees
Details

Connecticut issued guidance to residential mortgage servicers on Covid-19-related issues, encouraging servicers to work with all borrowers whose ability to make loan repayments may be impacted by Covid-19; including waiving late fees, offering forbearance plans or other deferment options, and having adequate staff available to proactively work with borrowers.

Temporary Servicing Guidance Related to COVID-19

Effective: March 18, 2020
Industry: Mortgage Servicing
Source: Freddie Mac   Bulletin 2020-4 →
Tags: Disaster, COVID-19, Loss Mitigation, Foreclosure
Details

CREDIT REPORTING REQUIREMENTS

  • Servicers must not report to the credit repositories a Borrower who is on an active forbearance plan, repayment plan or Trial Period Plan as a result of a COVID-19 related hardship

FORBEARANCE PLANS

  • A COVID-19 related hardship is an eligible hardship under existing Guide requirements
  • This may include long-term or permanent disability/serious illness of a Borrower/co-Borrower or dependent family member, reduction in income, death or other eligible hardship reasons
  • Servicers must achieve quality right party contact with the Borrower to verify the hardship, and once verified must work with the Borrower to apply the appropriate solution, including the application of a forbearance plan, if applicable
  • In accordance with existing Freddie Mac forbearance plan requirements described in Section 9203.13, no documentation is required from the Borrower in order to verify the hardship
  • Servicers are authorized to approve forbearance plans for all Borrowers who have a COVID-19 related hardship, regardless of property type
    • Until further notice the Mortgaged Premises may be a Primary Residence, second home or Investment Property

LOAN MODIFICATIONS

  • Servicers must evaluate Borrowers with a COVID-19 related hardship for the Extend Modification and the Cap and Extend Modification
  • Servicers must conduct Extend Modification and Cap and Extend Modification evaluations in accordance with all existing requirements, with the following adjustments:
    • The Borrower must have a COVID-19 related hardship (e.g., unemployment or reduction in regular work hours).
      Note: The Servicer is not required to obtain documentation to verify the borrower’s hardship.
    • The Borrower must have been current or less than 31 days delinquent (i.e., must not have missed more than one monthly payment) as of the date of the National Emergency declaration related to COVID-19, March 13, 2020.
    • When instructed to provide program title information in the Workout Prospector or Guide Form 1128, Loss Mitigation Transmittal Worksheet, as applicable, the Servicer must label the modifications as “Extend Modification for COVID-19” and “Cap and Extend Modification for COVID-19,” respectively.

BORROWER CONTACT REQUIREMENTS AND COVID-19 LOSS MITIGATION HIERARCHY

  • Servicers must initiate outreach attempts no later than 30 days prior to the end of the Borrower’s COVID-19 related forbearance 
  • Servicers must attempt to contact the Borrower until quality right party contact (QRPC) has been established or until the forbearance plan has expired
  • If QRPC is established with a Borrower who was 31 days or more delinquent (i.e., had missed more than one monthly payment) prior to the National Emergency declaration, then the Borrower is not eligible for the Extend Modification (or Cap and Extend Modification), and the Servicer must evaluate the Borrower in accordance with the standard evaluation hierarchy
  • If QRPC is established with a Borrower who was current or less than 31 days delinquent (i.e., the Borrower had not missed more than one monthly payment) prior to the National Emergency declaration, and the Borrower is unable to resolve the Delinquency through a reinstatement or repayment plan, the Servicer then must evaluate the Borrower for the loss mitigation options set forth in the following COVID-19 related evaluation hierarchy:
    • 1.Extend Modification 
    • 2.Cap and Extend Modification 
    • 3.Freddie Mac Flex Modification® 
    • 4.Short sale 
    • 5.Deed-in-lieu of foreclosure
  • If QRPC is not established at the end of the COVID-19 related forbearance, and the Borrower is eligible for a streamlined offer for a Flex Modification, the Servicer must send the Borrower an offer for a Flex Modification

FORECLOSURE SALE MORATORIUM

  • Servicers must suspend all foreclosure sales for the next 60 days. 
  • This foreclosure suspension does not apply to Mortgages on properties that have been determined to be vacant or abandoned.

Impact of COVID-19 on Servicing

Effective: March 18, 2020
Industry: Mortgage Servicing
Source: Fannie Mae   LL-2020-02 →
Tags: Disaster, COVID-19, Loss Mitigation, Foreclosure, Delinquent Loans, Property Preservation, Investor Reporting, MIP-PMI
Details

Forbearance plan eligibility

  •  Servicers should evaluate borrowers for a forbearance plan who have experienced a hardship resulting from COVID-19 (for example, unemployment, reduction in regular work hours, or illness of a borrower/co-borrower or dependent family member) which has impacted their ability to make their monthly mortgage loan payment
  • Servicers must achieve quality right party contact (QRPC) with the borrower prior to offering a forbearance plan
  • When determining eligibility for a forbearance plan for a borrower impacted
    by COVID-19, the property securing the mortgage loan may be a principal residence, a second home, or an investment property

Evaluating the borrower for a mortgage loan modification after a forbearance plan

For borrowers who have received a forbearance plan in response to COVID-19, Servicers must 

  • must begin attempts to contact the borrower no later than 30 days prior to the expiration of the forbearance plan term, 
  • must continue outreach attempts until either QRPC is achieved or the forbearance plan term has expired, and 
  • must analyze each case carefully in accordance with the requirements in the table below before determining which mortgage loan modification is most appropriate for the borrower

We are extending the availability of the Fannie Mae Extend Modification for Disaster Relief to borrowers impacted by COVID-19.

  • Please refer to LL-2020-02 for complete requirements

Credit bureau reporting 

  • Servicers must suspend reporting the status of a mortgage loan to credit bureaus during an active forbearance plan, or a repayment plan or Trial Period Plan where the borrower is making the required payments as agreed, even though payments are past due, as long as the delinquency is related to a hardship resulting from COVID-19

Suspension of foreclosure sales

  • Servicers must suspend all foreclosure sales for the next 60 days 
  • This foreclosure suspension does not apply to mortgage loans on properties that have been determined to be vacant or abandoned

Use of Fannie Mae’s Disaster Response Network

  • Our Disaster Response Network (DRN) is operational and can be used to assist borrowers who are financially impacted by COVID19 
  • The DRN has trained financial counselors who will work with borrowers to create a workable budget based upon the borrower’s present financial situation and assist in explaining options including obtaining unemployment benefits and any new special assistance 
  • We encourage servicers to refer Fannie Mae borrowers to our Disaster Response Network at 1-877-542-9723

Updated 3/25/20:

Attempting to establish QRPC

  • Servicers are authorized to use various outreach methods to contact the borrower as permitted by applicable law, including, but not limited to: mail;  email; texting; and voice response unit technology

Reporting a reason for delinquency code

  • Servicers must report reason for delinquency code 022, Energy Environment Costs, when reporting the delinquency status of mortgage loans impacted by COVID-19
  • For mortgage loans where Servicers would have reported reason for delinquency code 022, Energy-Environment Costs, the servicer must now use reason for delinquency code 007, Excessive Obligations

Property inspections and preservation

  • If Servicers are unable to complete a property inspection or property preservation activity in accordance with the Servicing Guide, it must document their efforts and the reason for any exception in the mortgage loan file
    • N O T E : The servicer’s inability to complete property inspections due to COVID-19 related impacts must not impact the servicer’s disbursement of insurance loss proceeds
  • As a reminder, Servicing Guide D2-2-10, Requirements for Performing Property Inspections authorizes a curbside (drive-by) inspection if there is potential danger to the inspector
  • Additionally, the Property Preservation Matrix and Reference Guide authorizes servicers to utilize alternative data or other means available to determine occupancy status when inspection results are unknown due to lack of access

Obtaining valuations associated with MI termination requests

  • If a BPO or appraisal is required to verify the current value of the property, the servicer must notify the borrower that it will be unable to approve the termination request until the BPO or appraisal is completed (along with all other requirements for terminating the mortgage insurance being satisfied)

Submission of financial statements and reports

  • Sellers/Servicers who must submit financial statements and the Lender Record Information (Form 582) within 90 days after the end of their fiscal year will now have an extension to April 30, 2020

Foreclosure and Eviction Moratorium

Effective: March 18, 2020
Industry: Mortgage Servicing
Source: FHA   Mortgagee Letter 2020-04 →
Tags: Foreclosure, Disaster, COVID-19
Details
  • Institutes a foreclosure and eviction moratorium for all FHA-insured Single Family mortgages for a period of 60 days
    • The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process
    • Evictions of persons from properties secured by FHA-insured Single Family mortgages are also suspended for a period of 60 days
    • Deadlines of the first legal action and reasonable diligence timelines are extended by 60 days

Indiana UCCC Filings

Effective: March 18, 2020
Industry: Consumer Lending
Source: Indiana   Senate Bill 395 →
Tags: Consumer, Banking, UCCC
Details

SECTION 1. IC 24-4.5-1-106, AS AMENDED BY P.L.140-2013, SECTION 18

  • (2) The dollar amounts shall change on January 1 of each even-numbered odd-numbered year if the percentage of change, calculated to the nearest whole percentage point, between the Index at the end of the preceding odd-numbered year and the Reference Base Index is ten percent (10%) or more, with exceptions
  • (4) The department shall issue an emergency rule under IC 4-22-2-37.1 announcing: (a) sixty (60) days before January 1 of each odd-numbered year in which dollar amounts are to change

Maryland Special servicing provisions for COVID-19

Effective: March 19, 2020
Industry: Mortgage Servicing
Source: Massachusetts   Maryland Industry Advisory 03/19/2020 →
Tags: Maryland, Foreclosure
Details

Maryland published an Industry Advisory immediately staying all foreclosures of residential properties in Maryland.

New York Special servicing provisions for COVID-19

Effective: March 19, 2020
Industry: Mortgage Servicing
Source: New York   NYSDFS Letter to Servicers (03-19-20) →
Tags: New York, Delinquent Loans, Loss Mitigation, Fees, Credit Reporting, Foreclosure
Details

New York published guidance on servicing during the COVID-19 national emergency declaration, including: proactive borrower contact; payment forbearance; credit reporting; grace periods for Trial Loan Modifications, late payment waivers; foreclosures and evictions; and business continuity plans.

New York COVID-19 Directive to Mortgage Servicers

Effective: March 19, 2020
Industry: Mortgage Servicing
Source: New York   Letter →
Tags: New York, Disaster, COVID-19, Loss Mitigation, Foreclosure, Fees, Credit Reporting
Details

The Department is issuing guidance to urge all regulated and exempt mortgage servicers to do their part during this outbreak to alleviate the adverse impact caused by COVID-19 on those mortgage borrowers (“mortgagors”) who demonstrate they are not able to make timely payments, including taking reasonable and prudent actions, and subject to the requirements of any related guarantees or insurance policies, to support those adversely impacted mortgagors by:

  • Forbearing mortgage payments for 90 days from their due dates;
  • Refraining from reporting late payments to credit rating agencies for 90 days;
  • Offering mortgagors an additional 90-day grace period to complete trial loan modifications, and ensuring that late payments during the COVID-19 pandemic does not affect their ability to obtain permanent loan modifications;
  • Waiving late payment fees and any online payment fees for a period of 90 days;
  • Postponing foreclosures and evictions for 90 days; and
  • Ensuring that mortgagors do not experience a disruption of service if the mortgage servicer closes its office, including making available other avenues for mortgagors to continue to manage their accounts and to make inquiries; and
  • Proactively reaching out to mortgagors via app announcements, text, email or otherwise to explain the above-listed assistance being offered to mortgagors.

USDA Updates HB-1-3555 Chapter 1, General Program Requirements

Effective: March 19, 2020
Industry: Mortgage Lending
Source: USDA   PN 534 →
Details

General Program Requirements, to replace field office and State Director references with the appropriate division as a result of the SFHGLP reorganization and add training requirements for new SFHGLP specialists. 

  • Paragraph 1.2 C - clarified the new centralization process, replaced CSC with NFAOC and updated the terminology, removed field office from the list. 
  • Paragraph 1.3 - condensed last paragraph and inserted SFHGLD email box.
  • Paragraph 1.5; rephrased last paragraph for clarity. 
  • Paragraph 1.6 B - revisions made for clarity and flow. 
  • Paragraph 1.7 - removed redundant language. 
  • Paragraph 1.8 - revised paragraph, additional guidance for processing applications for American Indian Tribes is provided in Chapter 16. 
  • Paragraph 1.9 A - Field office was replaced with Agency. 
  • Paragraph 1.9 C - titles of Agency directors were changed to reflect the new organizational structure for exception authority. 
  • Paragraph 1.10 B - guidance was provided to lenders and Agency employees on disclosing known relationships or associations. Reference to Instruction 1900-D was removed. 
  • Paragraph 1.11 - removed reference to interest rate in the first paragraph, provided clarification on the process for reporting unauthorized assistance, and Agency resolution process. 
  • Paragraph 1.12 - added new section to provide guidance on SFH University training and loan approval process for new specialists. 
  • New Attachment 1-A, “Notice of Relationship/Association between SFHGLP Applicant and Rural Development Employee; 
  • New Attachment 1-B, “Requirements for Handling SFHGLP Application of Employee, Relative or Associate; 
  • New Attachment 1-C, “Delegation of Loan Approval Authority;”

USDA Updates HB-1-3555 Chapter 10, ​Credit Analysis

Effective: March 19, 2020
Industry: Mortgage Lending
Source: USDA   PN 534 →
Tags: Credit - Liabilities, Underwriting
Details

Credit Analysis to clarify credit qualifications, adverse credit, and Federal debts. A matrix was added to assist USDA employees and lending/real estate partners to efficiently locate credit analysis guidance. 

Paragraph 10.2

Added specific language to confirm delinquent non-tax Federal debt and delinquent court ordered child support will render an applicant ineligible. 

Clarified the CAIVRS response must be an “A” for an applicant to be eligible. 

Paragraph 10.3

Streamlined guidance for acceptable credit reports and removed the need to order an RMCR for certain circumstances. 

Added guidance to clarify lenders may follow credit repository guidelines, lending laws, etc. to determine if joint applicants must have separate credit reports. 

Added guidance to confirm USDA does not require unmarried applicants to be on the same credit report, loan application, Form RD 3555-21, etc. 

Added guidance to confirm all credit repository information is available and no bureaus are frozen. 

Paragraphs 10.5 – 10.16: 

Eliminated These sections have been relocated to the appropriate topic in the new Attachment 10-A “Credit Matrix”. 

Attachment 10-A (current version): Credit Underwriting: Eliminated 

A new Attachment 10-A “Credit Matrix” replaces the current attachment. 

Attachment 10-B: The Credit Review: Eliminated 

The guidance in Attachment 10-B has been relocated to the appropriate topic in the new Attachment 10-A “Credit Matrix”.  

RHS Single Family Housing Direct Programs Continuity of Operations

Effective: March 20, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: USDA   SFH Direct Loan and Grant Programs Bulletin →
Tags: Property - Appraisal, Underwriting, Income, Credit - Liabilities, Foreclosure
Details

To help mitigate potential program delivery concerns during this time of uncertainty, we offer the following guidance, flexibility and information to our customers:

  • Site assessments of existing homes and new construction sites by RD staff may be waived to protect the safety of our staff and our most vulnerable customers.
  • Appraisal orders through our vendors are continuing with minimal disruption.
  • For eligible applicants who have been issued a Certificate of Eligibility and impacted by COVID-19, an extension of eligibility is available. For approved applicants with a pending loan closing, please contact USDA staff so that we can work with your closing agent and other parties to potentially coordinate the closing via mail or email.  
  • Pre-construction conferences and reviews of work in progress can occur by phone or through qualified third parties.
  • Applicants must remain eligible for assistance at the time of approval and closing. If an adverse change to applicant income or credit has occurred prior to closing, additional payment assistance subsidy may be available.
  • Self-Help Grantee organizations are encouraged to limit workers to immediate family members or small groups of 10 or less at worksites. This alternative method of construction may take some additional coordination and scheduling but will enable families to continue working on new homes. Volunteer labor outside of immediate households is discouraged and especially for higher risk populations. We understand that this can cause time delays, so requests for grant amendments and time extensions should be submitted in accordance with RD Instruction 1944-I, 1944.420 as early as practical. Please contact Rural Development and Regional Technical and Management Assistance contractor staffs so that we may offer additional assistance.
  • Foreclosures on borrowers with USDA Single Family Housing Direct (SFHD) loans are suspended for a period of 60 days. Similarly, evictions of persons from properties secured by SFHD loans are also suspended for a period of 60 days.

Colorado Special servicing provisions for COVID-19

Effective: March 20, 2020
Industry: Mortgage Servicing
Source: Colorado   Colorado Executive Order D 2020 012 →
Tags: Colorado, Foreclosure, Loss Mitigation
Details

Colorado issued an executive order limiting evictions and foreclosures because of Covid-19, and encourages a 90-day deferment of payment for all consumer loans, including residential mortgage loans.

Washington Special servicing provisions for COVID-19

Effective: March 20, 2020
Industry: Mortgage Servicing
Source: Washington   Guidance →
Tags: Washington, Delinquent Loans, Loss Mitigation, Credit Reporting, Fees, Foreclosure
Details

Washington published guidance to servicers regarding support for borrowers impacted by Covid-19, including: proactive borrower contact; payment forbearance; credit reporting; grace periods for Trial Loan Modifications, late payment waivers; online payment waivers; and foreclosures.

Massachusetts Special origination provisions for COVID-19

Effective: March 20, 2020
Industry: Mortgage Lending
Source: Massachusetts   MA Emergency Order on Sale and Transfer Inspections →
Tags: Massachusetts, Underwriting
Details

The Massachusetts Department of Fire Services released a memorandum temporarily permitting the inspections of smoke detectors and carbon monoxide alarms, which sellers are normally required (under various provisions of Massachusetts law) to have completed prior to the transfer of title, to be deferred due to the COVID-19 pandemic.

Massachusetts Special origination provisions for COVID-19

Effective: March 20, 2020
Industry: Mortgage Lending
Source: Massachusetts   Order →
Tags: Massachusetts, Underwriting
Details

Massachusetts ordered that the inspections for smoke alarms and carbon monoxide detectors required by state law in connection with residential property sales may be deferred, provided that (1) the buyer agrees to take responsibility for equipping the property with the requisite alarms and detectors; and (2) the inspection is conducted within 90 days after the state of emergency for the Covid-19 outbreak is lifted.

Foreclosure and Eviction Relief in Connection with Presidentially Declared COVID-19 National Emergency

Effective: March 20, 2020
Industry: Mortgage Servicing
Source: USDA   Bulletin →
Tags: Loss Mitigation, Foreclosure, Disaster, COVID-19
Details
  • Institutes a foreclosure and eviction moratorium for all USDA Single Family Housing Guaranteed Loans Program (SFHGLP) loans for a period of 60 days
    • The moratorium applies to the initiation of foreclosures and to the completion of foreclosures in process
    • Evictions of persons from properties secured by USDA guaranteed loans are also suspended for a period of 60 days
    • Deadlines of the first legal action and reasonable diligence timelines are extended by 60 days
  • Loan servicers seeking to assist SFHGLP borrowers may also pursue any of the relief options referenced in Chapter 18 of the program Handbook found at: https://www.rd.usda.gov/files/...
  • Questions regarding program policy and this announcement may be directed to the National Office Division at sfhgld.program@usda.gov or (202) 720-1452

California DBO Guidance to Financial Institutions for COVID-19

Effective: March 22, 2020
Industry: Consumer Lending
Source: California   Guidance →
Tags: California, Banking, COVID-19
Details

The California DBO is encouraging financial institutions to 

  • Waive certain fees (e.g., ATM fees, overdraft fees, late payment fees, early withdrawal penalties)
  • Increase ATM daily cash withdrawal limits;
  • Ease restrictions on cashing out-of-state and non-customer checks;
  • Increase credit card limits for creditworthy borrowers; and
  • Offer payment accommodations, such as allowing borrowers to defer or skip some payments or extending the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by Covid-19-related disruptions.

California Special servicing provisions for COVID-19

Effective: March 22, 2020
Industry: Mortgage Servicing
Source: California   California Guidance for Lenders During the COVID-19 Pandemic →
Tags: California, Loss Mitigation, Credit Reporting
Details

California recommends that licensees offer payment accommodations, such as allowing borrowers to defer or skip some payments or extend the payment due date, which would avoid delinquencies and negative credit bureau reporting caused by COVID-19-related disruptions.

Impact of COVID-19 on Appraisals

Effective: March 23, 2020
Industry: Mortgage Lending
Source: Fannie Mae   FNMA Lender Letter(LL-2020-04) →
Tags: Property - Appraisal, Underwriting
Details

This Lender Letter provides information about the following:

  • Temporary appraisal requirement flexibilities: allowing exterior-only inspection appraisals or desktop appraisals
  • Desktop appraisals: allowing for purchase transactions when an interior and exterior appraisal is not available
  • Exterior-only inspection appraisals: allowing for purchase and refinances of Fannie Mae-owned loans
  • Revisions to the scope of work, statements of assumptions and limited conditions, and appraiser’s certifications:
  • requiring modified language to be used with exterior-only and desktop appraisals
  • Additional form instructions for appraisals: requiring identification of “exterior” or “desktop” on the interior and exterior
  • reports
  • Identification of a Fannie Mae loan: reminding lenders about our Loan Lookup tool to identify Fannie Mae-owned loans
  • Appraisal waivers: encouraging lenders to accept waiver offers when eligible
  • Delivery requirements: changes are not required at this time in Loan Delivery
  • Completion reports (Form 1004D): allowing alternatives when a Form 1004D cannot be obtained
  • HomeStyle® Renovation and HomeStyle Energy requirements: requiring traditional appraisals for these transactions

Effective: These temporary flexibilities are effective immediately for all loans in process and remain in place for loans with

application dates on or before May 17, 2020.

Impact of COVID-19 on Originations

Effective: March 23, 2020
Industry: Mortgage Lending
Source: Fannie Mae   Fannie Mae Lender Letter(LL-2020-03) →
Tags: Employment, Income, Assets, Insurance, Loan Documents
Details

This Lender Letter provides information about the following:

  • Verbal verification of employment: Offering flexibilities related to the lender’s process for obtaining the verbal verification of employment.
  • Continuity of income: Reminding lenders of the importance of ensuring sustainable homeownership for borrowers in light of recent events.
  • Submission of financial statements and reports: Extending the deadline for submission of financial statements and Form 582 to Apr. 30, 2020.
  • Notes, electronic records, and signatures: Reminding lenders of our existing policies regarding possession of the original promissory note before loan purchase, and electronic signature requirements.
  • Title insurance: Reminding lenders we accept lender’s policies of title insurance written on the 2006 ALTA loan title insurance form or a local equivalent, which includes “gap coverage.”
  • Business continuity plans: Reminding sellers and servicers to have and to follow their own business continuity and resiliency plans.

Effective: These temporary flexibilities are effective immediately for all loans in process and remain in place for loans with application dates on or before May 17, 2020. Note that the Selling Guide and DU messages will not be updated to reflect these temporary policies.

Selling Guidance Related to COVID-19

Effective: March 23, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Bulletin 2020-5 →
Tags: Underwriting, Property - Appraisal, Loan Documents, Insurance
Details

The coronavirus disease (COVID-19) is a rapidly evolving situation with significant economic implications and impacts to our Sellers and their Borrowers. In response to our Sellers' questions and concerns, this Bulletin provides:

  • Temporary guidance related to our credit underwriting requirements
  • Temporary guidance related to our property valuation requirements
  • Expansion of our automated collateral evaluation eligibility
  • An extension to the deadline for certain annual reporting requirements

This Bulletin also provides reminders regarding:

  • Use of Electronic Records and Signatures
  • Title insurance
  • Seller/Servicer business continuity plan requirements and information about Freddie Mac's business continuity plan

We have been working closely with Fannie Mae under the guidance of the FHFA to introduce these temporary measures to help provide Sellers with the clarity and flexibility to continue to lend in a prudent and responsible manner. We are actively monitoring the developments and will continue to issue additional guidance as appropriate.

 CREDIT UNDERWRITING

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Regulation D: Reserve Requirements of Depository Institutions

Effective: March 24, 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 0.10 percent
  • Revises the rate of interest paid on excess balances (“IOER”) to 0.10 percent

Regulation D: Reserve Requirements of Depository Institutions

Effective: March 24, 2020
Industry: Consumer Lending
Source: Other   Final Rule →
Tag: Banking
Details
  • Amends Regulation D (Reserve Requirements of Depository Institutions, 12 CFR part 204) to lower reserve ratios on transaction accounts maintained at depository institutions to zero percent

NYDFS COVID-19 Consumer Relief by State-Regulated Financial Institutions

Effective: March 24, 2020
Industry: Consumer Lending
Source: New York   Emergency Rule →
Tags: New York, Banking, COVID-19
Details

New York regulated institutions are required to

  • make applications for forbearance of any payment due on a residential
    mortgage of a property located in New York and grant such forbearance for a period of ninety (90) days to any such individual
    • Does not affect any mortgage loans made, insured, or securitized by any agency or instrumentality of the United States, any Government Sponsored Enterprise, or a Federal Home Loan Bank, or the rights and obligations of any lender, issuer, servicer or trustee of such obligations, including servicers for the Government National Mortgage Association
  • Eliminate fees charged for the use of automated teller machines (“ATMs”) that are owned or operated by the regulated banking organization 
  • Eliminating any overdraft fees 
  • Eliminating any credit card late payment fees

Regulated institutions are encouraged, consistent with safe and sound banking practices, to take additional reasonable and prudent actions to assist individuals demonstrating financial hardship as a result of the COVID-19 pandemic in any manner they deem appropriate. 

As soon as reasonably practicable, and in no event not later than ten (10) business days following the promulgation of this regulation, all regulated institutions shall e-mail, publish on their website, mass mail, or otherwise similarly broadly communicate to customers how to apply for COVID-19 relief and provide their contact information. 

Maryland Special servicing provisions for COVID-19

Effective: March 24, 2020
Industry: Mortgage Servicing
Source: Maryland   Maryland Industry Advisory 03/24/2020 →
Tags: Maryland, Foreclosure, Fees, Credit Reporting, Loss Mitigation, Delinquent Loans
Details

Maryland published an Industry Advisory to all Maryland-licensed mortgage servicers to take steps immediately to mitigate the impact of this crisis on their customers by way of: waiving late fees; waiving online and telephone payment fees; forgoing negative credit reporting; offering forbearance or other options; extending trial modification periods; taking steps to ensure borrowers are able to timely make inquires and manage their accounts; reaching out to borrowers proactively to provide information on available assistance; and ensuring all borrower-facing staff are fully informed regarding any assistance available and are proactive in informing borrowers of such.

Minnesota Special servicing provisions for COVID-19

Effective: March 24, 2020
Industry: Mortgage Servicing
Source: Minnesota   MN Emergency Executive Order 20-14 →
Tags: Minnesota, Foreclosure, Fees
Details

Minnesota published Executive Order 20-14 suspending evictions and writs of recovery, imposing a moratorium on all pending and future foreclosures and related evictions when the foreclosure or foreclosure-related eviction is caused by the Covid-19 pandemic, and prohibiting late fee waivers during the Covid-19 pandemic.

FHFA Stress Testing of Regulated Entities

Effective: March 24, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: Other   Final Rule →
Tags: Dodd-Frank Act, Stress Testing
Details
  • Modifies the minimum threshold for the regulated entities to conduct stress tests increased from $10 billion to $250 billion
  • Removes of the requirements for Federal Home Loan Banks (Banks) subject to stress testing
  • Removes the adverse scenario from the list of required scenarios

Regulation A: Extensions of Credit by Federal Reserve Banks

Effective: March 24, 2020
Industry: Consumer Lending
Source: Other   Final Rule →
Tag: Banking
Details
  • The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs
  • Effective March 15, 2020, the primary credit rate in effect at each of the twelve Federal Reserve Banks is 0.25 percent
  • Effective March 15, 2020, the secondary credit rate in effect at each of the twelve Federal Reserve Banks is 0.75 percent

Servicing Requirements and Relief Related to COVID-19

Effective: March 25, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: Freddie Mac   Bulletin 2020-07 →
Tags: Investor Reporting, Property Preservation, MIP-PMI, Loss Mitigation, Delinquent Loans, Closing, Loan Documents, COVID-19
Details

EDR – Reporting Mortgages impacted by COVID-19

  • Default reason code 032 is currently used to report “Contaminated drywall"; however, is being redefined as “National Emergency Declaration” 
    • Going forward, for a Servicer to notify Freddie Mac of a Borrower whose reason for default is related to contaminated drywall, the Servicer must report this to Freddie Mac using default reason code 011 (“Property problem”)
  • Beginning with monthly reporting April 1, 2020, Servicers must begin reporting Default Reason Code 032 for all COVID-19 related hardships on delinquent mortgages, and must not delay reporting during Freddie Mac’s conversion period to change the code name from “Contaminated drywall” to “National Emergency Declaration”
  • Servicers must report all COVID-19 related hardships using default reason code 032 instead of reporting the code of the more specific hardship reason
  • Servicers must continue to report all applicable default action codes, including code 09 if the Mortgage is on a forbearance plan
  • As a reminder, the COVID-19 pandemic is not an eligible disaster and therefore, Servicers must not report default reason code 034 (Eligible Disaster Area)

Property inspections for insurance loss settlements and delinquent Mortgages and property preservation on abandoned properties

  • If Serviceers are are unable to complete any required inspection or adhere to any property preservation requirement as a result of the COVID-19 pandemic, that they must document the reason in the Mortgage file and Freddie Mac will consider them to be in compliance with our requirements during this period
  • Freddie Mac will notify Servicers when this temporary requirement relief will be discontinued
  • NOTE: The Servicer’s inability to complete property inspections due to COVID-19 related impacts must not impact the Servicer’s disbursement of insurance loss proceeds

Property valuations – Mortgage insurance cancellation

  • Where the Servicer is unable to fulfill new property valuations using a BPO or appraisal, Servicers must notify the Borrower that it is unable to approve cancellation requests until a property valuation can be completed, and all requirements satisfied 
  • Freddie Mac will notify Servicers when this temporary requirement relief will be discontinued
  • Mortgage insurance cancellations based on automatic cancellation, and where the Borrower request to cancel is based on the original value, may continue to be fulfilled

Streamlined Flex Modification evaluations for Borrowers with a COVID-19 related hardship

  • Borrower must have a COVID-19 related hardship (as described in Bulletin 2019-4)
  • Borrower must have been current or less than 31 days delinquent (i.e., must not have missed more than one monthly payment) as of the date of the National Emergency declaration related to COVID-19, March 13, 2020

Outreach and collection techniques

  • The Servicer's collection techniques must include the use of: 
    • Telephone contacts or face-to-face interviews 
    • Written communications such as notices and letters 
    • Other responsible collection techniques as permitted under applicable law including, but not limited to, e-mail, text messaging, voice response unit (VRU) technology or a Servicer's web portal 
  • If the Servicer discovers that the Borrower's contact information (phone number or mailing address) is invalid, then it should initiate skip trace activities to obtain alternate phone numbers or mailing addresses
  • Servicers must continue efforts in order to establish quality right party contact (QRPC)

Annual Reporting Deadline Extension

  • The deadline has been extended to April 30, 2020 for reporting the following:
    • Guide Form 16SF, Annual Eligibility Certification Report
    • Audited or reviewed financial statements
    • Annual Document Custodian Eligibility Certification

Use of Electronic Records and Signatures

  • Seller/Servicers may currently take full advantage of Electronic Records and Signatures in connection with their origination processes – both with Borrowers and with related third parties, as detailed in Guide Chapter 1401
    • This includes the use of Electronic real estate purchase and sale agreements, as well as Electronic initial and final disclosures often provided at closing
  • Seller/Servicers may also use Electronic Signatures and Records as part of the closing process, and, in many instances, to conduct Electronic closings in which even the Note is created and signed electronically (i.e., “eMortgage” closings), as detailed in Chapter 1402
    • In order for eMortgages to be eligible for sale to Freddie Mac, there is a specific approval process the Seller/Servicer must follow, but in most instances such approvals are forthcoming within a week after Seller/Servicer integration with approved systems and the MERS® eRegistry

Business Continuity Plans

  • Sellers and Servicers must maintain a business continuity plan in accordance with the requirements in Section 1302.3
  • Business continuity plans must support an ongoing ability to conduct business operations in the event of a disaster or other interruption to business operations and processes
  • Sellers and Servicers must follow their business continuity plans during the COVID-19 pandemic

Massachusetts Special servicing provisions for COVID-19

Effective: March 25, 2020
Industry: Mortgage Servicing
Source: Massachusetts   Memo →
Tags: Massachusetts, Foreclosure, Loss Mitigation, Fees, Investor Reporting, Credit Reporting, Delinquent Loans
Details

Massachusetts Division of Banks (DOB) issued a memorandum to financial institutions, mortgage lenders, and mortgage loan servicers outlining the actions the DOB “fully expects” institutions will take to alleviate the impact of Covid-19 on mortgage borrowers. The actions include (i) postponing foreclosures for 60 days; (ii) forbearing payments for 60 or more days; (iii) waiving fees for late payment and online payment for at least 60 days; (iv) refraining from reporting late payments to credit rating agencies for 60 days; (v) offering an additional 60-day grace period for borrower to complete trial loan modifications; (vi) ensuring borrowers do not experience a disruption of service if a mortgage servicer closes its office; and (vii) proactively reaching out to borrowers to explain the assistance being offered. The memorandum also emphasizes that reasonable and prudent efforts to assist borrowers are consistent with safe and sound banking practices and will not be subject to examiner criticism.

Loan Product Advisor AIM Feedback Message Updates - Income and Employment

Effective: March 29, 2020
Industry: Mortgage Servicing
Source: Freddie Mac   Freddie Mac Bulletin 2019-25 →
Tags: Income, Underwriting
Details
  • Improvements to Loan Product Advisor® feedback messaging for our asset and income modeler (AIM) income offerings – March 29, 2020
  • Updates to rental income requirements
  • Revisions to our verification of employment requirements for Mortgages using Leave and Earnings Statements

Reporting Anti-Money Laundering Activity

Effective: March 31, 2020
Industry: Mortgage Servicing
Source: Fannie Mae   Servicing Guide Announcement SVC-2019-07 →
Tags: Servicing, Investor Reporting
Details
  • All sellers/servicers, including those not subject to the anti-money laundering provisions of the Bank Secrecy Act (BSA), must now report loan-level instances of suspicious activity using the self-report functionality in Loan Quality Connect.

Reporting Anti-Money Laundering Activity

Effective: March 31, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: Fannie Mae   SEL-2019-08 →
Tags: BSA/AML, Investor Reporting
Details
  • All sellers/servicers, including those not subject to the anti-money laundering provisions of the Bank Secrecy Act (BSA), must now report loan-level instances of suspicious activity using the self-report functionality in Loan Quality Connect.