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Compliance Calendar for August 2020

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Changes to Servicer Principal and Interest Advance Requirements

Effective: August 1, 2020
Industry: Mortgage Servicing
Source: Fannie Mae   LL-2020-08 →
Tags: COVID-19, Investor Remittances, Claims Processing

Fannie Mae is aligning policies with Freddie Mac to limit servicer obligations to advance scheduled monthly payments to four months for scheduled/scheduled (S/S) remittance type mortgage loans effective for August 2020 remittance activity based on July 2020 reporting activity.

The lender letter addresses:

  • Eligibility criteria for S/S remittance type mortgage loans 
  • Entering the Stop Delinquency Advance Process 
  • One-time transition to the Stop Delinquency Advance Process in Aug. 2020
  • Reporting and remitting for eligible S/S remittance type mortgage loans under the Stop
    Delinquency Advance Process
  • Contractual payments received from borrowers under the Stop Delinquency Advance
  • Exiting the Stop Delinquency Advance Process

Please see LL-2020-08 for complete details.

Louisiana Electronic Notarial Acts

Effective: August 1, 2020
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Louisiana   ​Louisiana House Bill 274 →
Tags: Louisiana, Notary

Louisiana House Bill 274 provides for the execution of electronic notarial acts, recordation of tangible copies of electronic acts, limitations relative to remote online notarization, definitions, rulemaking, duties of notaries public, and recordkeeping requirements, generally effective August 1, 2020 with some noted exceptions.

Loan Selling Advisor - ARM Cash Program

Effective: August 3, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2020-18 →
Tag: Secondary

We are enhancing Loan Selling Advisor to provide a streamlined, uniform pricing methodology that will enable Note Rate contract pricing for ARM Cash Contracts, consistent with fixed-rate pricing methodology. The pricing methodology will not rely on Weighted Average Coupon (WAC) pricing, weighted average Contract Level Tolerances or the assessment of Yield Maintenance Fees.

Modifications include updating the ARM Cash Contract commitment process to remove weighted average terms and calculations. In addition, we are updating associated contract terms that are included in Guide Form 15, Loan Purchase Statement for ARM Cash. There are no changes to the underlying loan level information available in Form 15.

As a result of these changes, as it relates to ARM Cash Contracts, we are updating the Guide to remove references to “WAC,” Contract Level Tolerance and Yield Maintenance Fees.

For pipeline contracts with a contract expiration date on or after August 3, 2020, the contract will not rely on WAC pricing and will not be assessed a Yield Maintenance Fee.

Capitalized terms used above that are not defined in the Glossary are defined in Section 6102.2.

Guide impacts: Sections 1501.44401.44401.56102.1 through 6102.96302.16302.26302.76302.406303.16303.28302.18Exhibit 17SForm 15 and the Glossary

Permissible Interest on Loans that are Sold, Assigned, or Otherwise Transferred

Effective: August 3, 2020
Industry: Consumer Lending
Source: CFPB   Final Rule →
Tag: Banking

The OCC published a final rule to clarify that when a bank transfers a loan, the interest permissible before the transfer continues to be permissible after the transfer, effective August 2, 2020.

Fannie Mae Selling Guide update clarifies and revises policies

Effective: August 5, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: Fannie Mae   Selling Guide Announcement SEL-2020-04 →
Tags: Property - Appraisal, Loss Mitigation, Certification, Endorsement, and Delivery

The Selling Guide has been updated to include changes to the following:

▪ Solar panel policies: clarified the underwriting and appraisal requirements associated with different financing structures used for the purchase of solar panels.

▪ Representations and warranties framework for loans in forbearance: aligning the Guide with previously announced LL2020-06 stating loans in forbearance are eligible for enforcement relief based on the payment history, without regard to being in forbearance.

▪ Removal of Master Agreements: removed references to Master Agreements as they are no longer applicable to the lender contract process.

Appraisal Requirements, Forbearance Reps and Warrants and Document Custody

Effective: August 5, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: Freddie Mac   Selling Bulletin 2020-31 →
Tags: Property - Appraisal, Loss Mitigation, Servicing, Servicing Transfers

Building sketch exhibit for appraisal reports

We have simplified the building sketch requirements for appraisal reports and removed the requirement that each unit’s entry way be included on the building sketch exhibit for all 2- to 4-unit properties.

Additionally, when any subject property has a floor plan that is unusual or is functionally obsolete, the appraiser is required to provide a floor plan sketch that reflects the obsolescence. Comments and/or adjustments, if applicable, are also required within the appraisal report addressing any limitations to market appeal in comparison with other properties within the subject’s neighborhood or market area.

Subsequent appraisal report clarification

Freddie Mac permits the use of Form 1033One-Unit Residential Appraisal Desk Review Report, under specific conditions. With this Bulletin, we are acknowledging the use of a desk review in Section 5601.13 as an acceptable subsequent opinion of market value.

Additionally, we are providing direction on documentation requirements when the Seller obtains multiple opinions of value. If an appraisal desk or field review is used to underwrite the Mortgage, it must be retained in the Mortgage file.

Representation and warranty framework relief for Mortgages subject to forbearance agreements

In Bulletin 2020-17, we announced that a Mortgage that was subject to a forbearance agreement during the payment history period may be eligible for relief from enforcement of selling representations and warranties regardless of the forbearance agreement, provided the acceptable payment history requirements in Section 1301.11 are met. These Mortgages also continue to be eligible for relief based on a satisfactory conclusion of a Freddie Mac quality control review of the Mortgage file if the Mortgage otherwise meets the requirements in version 2 of the selling representation and warranty framework

We are now updating Section 1301.11 to reflect this change and remove the requirement that in order to qualify for selling representation and warranty relief, a Mortgage must not have been subject to a forbearance agreement during the payment history period.

Document custody

Bulletin 2020-29 announced the following updates related to document custody.

Original Security Instrument requirements

Removed the requirement that, when a Security Instrument is stored as an Electronic document, the Servicer represents and warrants to, and covenants with, Freddie Mac that all Security Instruments that have been recorded have been delivered to the Document Custodian as original paper documents showing their recording information. Per Section 3301.1, Sellers are required to comply with the requirements of Guide Chapter 3302.

Appraising Properties with Solar Panels

Effective: August 6, 2020
Industry: Mortgage Lending
Source: Fannie Mae   One-Page Overview →
Tag: Property - Appraisal

Fannie Mae has created a one-page overview to explain appraisal requirements for properties with solar panels, broken down by common types of ownership and debt financing to support recent updates in Selling Guide Sections B2-3-04, Special Property Eligibility Considerations and B4-1.3-05, Improvements Section of the Appraisal Report.

Revision of Effective Date for COVID-19 Multisubject: Updated Temporary Guidance for Verification of Self-Employment; Rental Income; 203(k) Rehabilitation Escrow Account

Effective: August 12, 2020
Industry: Mortgage Lending, Mortgage Servicing
Source: FHA   FHA Mortgagee Letter 2020-24 →
Tags: 203(K), Income, Underwriting, Servicing

The purpose of this Mortgagee Letter (ML) is to revise the effective date for verification of self-employment and receipt of rental income published in Mortgagee Letter 2020-23 and to inform Mortgagees of Single Family’s modification of requirements in response to impacts from the Presidentially Declared COVID-19 National Emergency including: 

• Modification to self-employment income requirements by issuing guidance for verification of business operations; 

• Modification to rental income requirements; and 

• Modification to the Approval of Extension Requests and Release of Funds under FHA 203(k) Rehabilitation Mortgage Insurance Program. 

The guidance in the Mortgagee Letter supersedes previously announced guidance in ML 2020-23.

Missouri Provisions Relating to Notaries Public

Effective: August 28, 2020
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Missouri   Missouri House Bill 1655 →
Tags: Missouri, Notary, Closing, Loan Documents

Missouri House Bill 1655 allows electronic signatures to be certified by a notary with the electronic notarization process to be overseen by the Missouri Secretary of State

Missouri Provisions Regarding Licensing Requirements

Effective: August 28, 2020
Industry: Mortgage Lending
Source: Missouri   Missouri Senate Bill 599 →
Tags: Missouri, Licensing
  • Modifies 443.717 to provide that a mortgage loan originators prelicensing education course completed by an individual shall not satisfy the prelicensing education requirement if the course precedes an application by a certain period as established by the NMLSR 
  • Imposes additional requirements for brokers doing business in the state under 443.825

Note Endorsement Update

Effective: August 31, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Selling Guide Bulletin 2020-26 →
Tags: Loan Documents, Closing

In Bulletin 2020-3, we announced that, effective for Mortgages with Note Dates on or after August 31, 2020, endorsement of a Note may not be made using a power of attorney (e.g., an endorsement from a Correspondent to the Seller). Based on Seller feedback, we are removing this requirement and instead requiring, effective immediately, that with respect to each Note, the Seller is responsible for the validity of all endorsements and represents and warrants that each endorsement is valid for preservation of negotiability and the Document Custodian did not endorse such Note. The prohibition on Sellers’ endorsements being made using powers of attorney remains in effect.

Guide impact: Section 6301.3

Note endorsement requirement update

Effective: August 31, 2020
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2020-3 →
Tags: Loan Documents, Closing

This bulletin is updating Section 6301.3(c) to specify that no endorsement to a Note may be made using a power of attorney (e.g., an endorsement from a Correspondent to the Seller).