Compliance Calendar for June 2018

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Form 710, Mortgage Assistance Application

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2017-08 →
Tag: Loss Mitigation

In alignment with Freddie Mac and at the direction of FHFA, we are updating Form 710 (formerly the Uniform Borrower Assistance Form) and renaming it the Mortgage Assistance Application. The redesigned Form 710 is intended to simplify the workout application process for both borrowers and servicers.

Form 710 has been rewritten and reorganized to:

  • eliminate requests for information that are not used to evaluate borrowers for a workout option;
  • remove multiple forms of income and hardship documentation;
  • simplify language by removing industry jargon and reducing the number of borrower certifications;
  • add contact information for servicers, HUD, and CFPB should borrowers need assistance completing the form; and
  • provide borrowers with information about obtaining language or translation assistance.

Form 710, Mortgage Assistance Application

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Bulletin 2017-18 →
Tag: Loss Mitigation

At the direction of the FHFA, under the Servicing Alignment Initiative ("SAI") and jointly with Fannie Mae, we are announcing specific requirement changes related to hardship, income and other documentation that must be submitted for a complete Borrower Response Package. To promote a better Borrower experience and in response to industry feedback, we are:

  • Rebranding Guide Form 710 from Uniform Borrower Assistance Form to Mortgage Assistance Application (MAAp) and updating the form. These changes provide a more flexible, streamlined application process for Borrowers and evaluation process for Servicers. 
  • Reducing the supporting documentation required to substantiate the Borrower’s hardship and income. These changes simplify the solicitation process and improve the Borrower’s experience.
  • Revising Form 710, Mortgage Assistance Application
  • Revising several requirements related to Borrower evaluations; based on changes to Form 710

New Loan Selling Advisor Critical Edits

Effective: June 1, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Announcement →
Tags: Property - Appraisal, Underwriting
  • Beginning February 26, 2018, you'll receive a new warning edit if the Project Dwelling Unit Count (Sort ID 45) for a condominium unit mortgage doesn't match the same field on the appraisal submitted through the Uniform Collateral Data Portal. This warning edit will become critical on June 1.
  • As detailed in Single-Family Seller/Servicer Guide Sections 4501.12 and 5103.6, when all borrowers on a purchase transaction affordable mortgage are first-time homebuyers, at least one borrower must complete a homeownership education program. Sellers must also deliver the corresponding Counseling Confirmation Type (Sort IDs 576/577) and Counseling Format Type (Sort ID 578) for participating borrower(s). Beginning June 1, you'll receive critical edits if these requirements aren't met.

FinCEN Suspicious Activity Report (SAR) Updated

Effective: June 1, 2018
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Other   FinCEN Announces Update to the Suspicious Activity Report (SAR) →
Tag: BSA/AML

In June of 2018, the FinCEN Suspicious Activity Report (SAR) available on the BSA E-Filing System will be updated to adhere to the changes defined in Federal Register notice posted on February 2nd, 2017 (https://www.federalregister.gov/documents/2017/02/02/2017-02235/proposed-collection-comment-request-update-and-revision-of-the-fincen-suspicious-activityreports).

Batch filers will be required to submit the updated FinCEN SAR data in an XML based file, rather than the current ASCII based fixed-length delimited file.

Freddie Mac Bulletin 2018-6 Borrower hardship, income and other documentation

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Borrower hardship, income and other documentation →
Tag: Foreclosure

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

In anticipation of the mandatory effective date for the revised Borrower hardship, income and other documentation requirements associated with Form 710, Mortgage Assistance Application (MAAp), on June 1, 2018, we are updating Section 9206.5 and Exhibit 101, Income Calculation Guidelines for Alternatives to Foreclosure Options.

To be consistent with the MAAp, we are removing the requirement in Section 9206.5 that unemployment benefits may not be used when evaluating a Borrower for a Freddie Mac Flex Modification®.

As a reminder, unemployment is considered a temporary hardship and the Servicer must consider unemployed Borrowers for unemployment forbearance under Sections 9203.22 through 9203.24.

We are updating Exhibit 101 to more closely align the examples included in the exhibit with the income documentation requirements included in the MAAp.

Guide impacts: Section 9206.5 and Exhibit 10

Freddie Mac Bulletin 2018-6 Recast modification agreements, Mortgage file maintenance and Purchase Documents

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Recast modification agreements, Mortgage file maintenance and Purchase Documents →
Tag: Loss Mitigation
Recast modification agreements

In response to Servicer feedback on our requirements for recasting a Mortgage following partial prepayments (curtailments), we are specifying that, if the number of Mortgages a Servicer modifies in accordance with Section 8103.7 exceeds a total of 10 in a given month, then, in lieu of sending copies of each modification agreement, the Servicer must complete Form 1102, Modified Principal and Interest Payment, including information for all such modifications. The Servicer must send the completed form to Freddie Mac (see
Directory 3).
Guide impacts: Section 8103.7 and Directory 3

Mortgage file maintenance and Purchase Documents
Regarding Mortgage file maintenance, we require:
  • The Seller (if it services the Mortgage for Freddie Mac) and any Transferee Servicer to maintain the Mortgage file for so long as each services the Mortgage for Freddie Mac; and
  • If the Mortgage was sold under the Servicing Released Sales Process, the Seller to comply with the Mortgage file and related data retention requirements set forth in Exhibit 28A

Based on Seller/Servicer feedback, we are updating Section 3301.1 to specify that, except with respect to Mortgages sold under the Servicing Released Sales Process that are covered by Exhibit 28A, for the sake of convenience, in connection with any Transfer of Servicing, copies of documents and related data from the Mortgage file may be maintained by the Transferor Servicer.

Sellers and/or Transferor Servicers who retain copies of any or all of the Mortgage file may do so until the later of seven years after all associated representation and warranty obligations expire as set forth in Loan Coverage Advisor® or after any Transfer of Servicing, as applicable. The Mortgage file and copies of the Mortgage file, or any portion thereof, are, and will remain at all times, the property of Freddie Mac.

As a reminder, the Mortgage file must be maintained in accordance with Chapter 3302 and contain all applicable

documents listed in Chapters 3301 and 3401.


In addition, we are updating the Guide to expressly require Transferor Servicers to provide to Transferee Servicers, on or before the Effective Date of Transfer, copies of:

  • All of the Transferor Servicer’s Purchase Documents applicable to any of the Mortgages related to a Transfer of Servicing (excluding any Credit Fees in Price and Credit Fees in Yield); and
  • All of the Purchase Documents of any preceding Transferor Servicer that are applicable to any of the Mortgages related to a Transfer of Servicing (excluding any Credit Fees in Price and Credit Fees in Yield)
With respect to Transfers of Servicing that have taken place prior to April 11, 2018, we are requiring Transferor
Servicers to provide such Purchase Documents to a Transferee Servicer in response to such Servicer’s written

request.


Guide impacts: Sections 1201.8, 1501.1, 3301.1 and 7101.2

Contact information for The Bank of New York Mellon Trust Company, N.A.
As announced to Sellers in Bulletin 2018-5, for Seller/Servicers that use The Bank of New York Mellon Trust
Company, N.A. (BNYM) as their Designated Custodian, we updated the e-mail address provided in Directory 4 to
contact BNYM for information related to requests for the physical or constructive possession of a Note and/or
other documents to Freddie.Mac.Releases@bnymellon.com

NCUA Stress-Testing Rule

Effective: June 1, 2018
Industry: Consumer Lending
Source: Other   Stress-Testing Final Rule →
Tag: Banking

The NCUA’s capital planning and stress testing requirements would provide a measure of regulatory relief under a final rule (Part 702) approved by the Board.

The NCUA Board rule requiring capital planning and stress testing for federally insured credit unions with assets of $10 billion or greater anticipated the possibility of covered credit unions being allowed to conduct stress tests once the NCUA had completed three stress tests. The Board approved a proposed rule making changes at its October 2017 open meeting.

Under the final rule approved today, credit unions with assets of less than $20 billion will continue to develop annual capital plans, but those plans will no longer be submitted to the NCUA each year by May 31. Credit unions with assets greater than $20 billion will continue to submit plans that must be approved by the agency.

Under the final rule, the NCUA will no longer be required to conduct supervisory stress tests. Credit unions subject to the rule will conduct stress testing themselves. NCUA has reserved the right to conduct stress tests on covered credit unions if it deems such action necessary.

Credit unions with assets of less than $15 billion will no longer be subject to stress-testing requirements. Credit unions with assets greater than $15 billion will be required to conduct stress testing, though credit unions with assets greater than $20 billion will be subject to a 5 percent minimum stress test capital ratio.

Truth in Lending Act (Regulation Z) Amendments to Closing Disclosure Timing Requirements

Effective: June 1, 2018
Industry: Mortgage Lending
Source: CFPB   CFPB Final Rule →
Tag: Compliance - Closing Disclosures
  • Amends TRID to allow lenders to disclose revised estimates for resetting the tolerances on any Closing Disclosure (including the initial and corrected CDs), without regard to how many business days before closing the change occurred (e.g. the “black hole” prohibiting a Closing Disclosure from resetting Loan Estimate closing costs tolerances four or more days before closing will no longer exist).
  • Only the above “black hole” four-business day limit in current comment 19(e)(4)(ii)-1 is removed by the 2018 TRID Final Rule. All other existing timing requirements for providing a Loan Estimate, revised Loan Estimate and initial and revised Closing Disclosures remain
  • A revised Closing Disclosure must be provided to the consumer within three business days of receiving information sufficient to establish a valid changed circumstance.

Important Commentary from Richard Horn, Partner, GarrisHorn, PLLC:

I want to highlight an issue that could be a cause for concern, which relates to the accuracy of the CD. As you may know, the Black Hole provision has the effect of disincentivizing lenders from providing the initial CD very early in the transaction, because doing so can create a long period of time that falls in the Black Hole, meaning the lenders would have to absorb legitimate cost increases during this long period. Some commenters to the proposed rule cautioned the CFPB against eliminating this disincentive, because lenders might provide CDs very early in the process with largely inaccurate information, possibly as early as the day after the initial LE is provided, which could cause consumer confusion and other market issues. 

 
The CFPB, in response to these concerns, stated in the preamble that it believes the existing accuracy standard for the CD will prevent lenders from providing the CD very early. The CFPB clarified that the accuracy standard that applies to any estimated information on the CD is the “best information reasonably available” standard, and cautioned that this standard requires lenders to perform “due diligence” to obtain information before providing any CD. The preamble references an existing commentary example of a lender that does not request the actual cost of the lender’s title insurance policy from the title company before providing a CD, and states that the lender has not exercised due diligence, i.e., it has not satisfied the accuracy standard for the CD. The CFPB stated that it “will continue to monitor the market for practices that do not comply with the rule’s Closing Disclosure accuracy standard.” This preamble language could signal that this will become an issue in federal and state TRID examinations.  

FINRA Sanction Guidelines

Effective: June 1, 2018
Industry: Consumer Lending
Source: Other   FINRA Regulatory Notice 18-17 →
Tag: Banking
  • Revising Sanction Guidelines to instruct adjudicators in the disciplinary process to consider customer-initiated arbitrations that result in adverse arbitration awards or settlements when assessing sanctions. 
  • When a respondent’s disciplinary history, and history of arbitration awards and arbitration settlements together with the violation found in a disciplinary case, form a pattern, the Sanction Guidelines advise that adjudicators should consider imposing more stringent sanctions. 
  • These revisions to the Sanction Guidelines take effect for all complaints filed in FINRA’s disciplinary system beginning on June 1, 2018
  • They are available on FINRA’s website at www.finra.org/Industry/Enforcement/SanctionGuidelines.

View Full Notice (PDF 75.59 KB)

VA Circular 26-18-11 Change to Winterization Fee Policy

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: VA   Change to Winterization Fee Policy →
Tags: Foreclosure, Delinquent Loans

Veterans Benefits Administration Circular 26-18-11

1. Purpose. This Circular provides updated guidance on winterization fees for preservation of properties securing VA-guaranteed loans.

2. Background. Property preservation requirements, including those for winterization, are outlined in Appendix H of VA Manual 26-4, VA Servicer Guide, and on the VALERI website at https://www.benefits.va.gov/homeloans/servicers_valeri.asp.

3. Action. Effective Friday, June 1, 2018, winterization fees (where payable) will be allowed all year around. The current restriction for winterization activities in certain states to occur between October 1 and March 31 will be lifted.

4. Questions. Inquiries may be directed to valerihelpdesk.vbaco@va.gov.

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

FHA Oregon Appraisal Fee Changes

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: FHA   VALERI Servicing Newsflash, May 21, 2018 →
Tags: Oregon, Fees, Foreclosure

Effective Friday, June 1, 2018, liquidation appraisal fees will increase in Oregon. The changes will be updated and reflected on the VALERI Fee Cost Schedule located at http://www.benefits.va.gov/HOMELOANS/servicers_valeri_rules.asp.

Ginnie Mae Pooling Eligibility of VA Refinance Loans

Effective: June 1, 2018
Industry: Mortgage Lending, Mortgage Servicing
Source: Other   APM 18-04 →
Tag: Secondary

New Pooling Eligibility Criteria

Effective with mortgage-backed securities guaranteed on or after June 1, 2018, a refinance loan insured or guaranteed under the United States Department of Veteran Affairs benefit program in chapter 37 of title 38 of the United States Code is eligible for Ginnie Mae securities only if it meets the following condition.

The note date of the refinance loan must be on or after the later of:

a) the date that is 210 days after the date on which the first monthly payment was made on the mortgage being refinanced, and

b) the date on which 6 full monthly payments have been made on the mortgage being refinanced.

Impact on Security Issuances Dated June 1, 2018 or Later

Refinances, including refinances that bear a note date prior to the date of this announcement, that do not meet the condition implemented by the Act and announced in this memorandum are not eligible for inclusion in any new pool or loan package in the Ginnie Mae I or the Ginnie Mae II MBS Program.

Ginnie Mae understands that some Issuers have already certified pools and loan packages for June 2018 issuances, which may contain loans that do not meet the seasoning requirements implemented by the Act and reflected on this memorandum. Ginnie Mae’s Office of Issuer and Portfolio Management will be contacting any impacted Issuers ahead of the June 1st issuance date to provide additional guidance on curing any pools or loan packages that have become defective as a result of the recently enacted statutory prohibition.

Notwithstanding the foregoing, Issuers are required to review and evaluate the eligibility of any VA Refinances submitted with any pools or loan packages scheduled for June delivery or later. Issuers may also contact the Pool Processing Agent, at (800) 234-4662 Option 1, to determine status of pools in the pipeline.

Impact on Security Issuances Dated May 1, 2018 or Earlier

Refinances that do not meet the seasoning condition implemented by the Act and announced in this memorandum remain eligible collateral for securities that were previously issued with a date of May 1, 2018, or earlier, assuming they meet all other pooling and program requirements. The Ginnie Mae guaranty attached to any security issued with a date of May 2018 or earlier is not affected by the Act or this memorandum, even if such security is backed by one or more pools or loan packages containing refinances that do not meet the condition implemented by the Act.

Chapter 24 of the MBS Guide has been amended effective immediately in accordance with this announcement. Ginnie Mae will publish a subsequent memorandum announcing new document custodian certification requirements for VA refinance loans.

Attachment(s):

APM_18-04.pdf    
Chapter_24.pdf 

Maine AAA Matrix New Plaintiff's Discovery Fees for Foreclosure Referrals

Effective: June 1, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   Excess Attorney Fee/Cost Guidelines Matrices →
Tags: Foreclosure, Fees

We have revised the Maine AAA matrix to include new Plaintiff's Discovery fees for foreclosure referrals effective on or after June 1. Excess fees are permitted for preparation of the Request for Admissions ($150) and for taking the borrower's deposition ($500). To view the updated matrix, visit the Excess Attorney Fee/Cost Guidelines page.

Proposed Changes to Eligibility of Certain Rural Areas

Effective: June 4, 2018
Industry: Mortgage Lending
Source: USDA   Bulletin →
Tags: Underwriting, Application

Determining Property Eligibility by Application Date

On March 16, 2018, the proposed ineligible area maps for the Rural Development Single Family Housing (SFH) and Multi-Family Housing programs were posted to the USDA Income and Property Eligibility Site at https://eligibility.sc.egov.usda.gov.  Users will need to select the “Proposed Ineligible Areas” tab after choosing the appropriate program (e.g. Single Family Housing Guaranteed) to view the new ineligible area maps.  The “Proposed Ineligible Areas” maps show all ineligible, non-rural areas and not only the new non-rural areas.  In some cases, previously ineligible areas will now become eligible rural areas. 

The new ineligible areas will become effective on June 4, 2018. 

Loan Guarantee Processing

On June 4, 2018, all properties for new applications must be located in an eligible rural area based on the new maps.  However, a property that is located in an area being changed from rural to non-rural may be approved if all of the following conditions are met:

  1. The application is dated and received by the lender prior to June 4, 2018 and the Loan Estimate was issued by the lender within 3 days of application receipt.
  2. The applicant has a signed/ratified sales contract on a property that is dated prior to June 4, 2018. 
  3. Applicant meets all other loan eligibility requirements.

If the property is located in an area being changed from rural to non-rural, lenders must provide Rural Development all of the following information in addition to all other required documentation.  For loans submitted via the Guaranteed Underwriting System (GUS), the documentation must be uploaded into the system.

  • Copy of the signed/ratified and dated sales contract.
  • Copy of the Loan Estimate issued to the applicant.
  • Verification that the property was located in an eligible rural area prior to June 4, 2018.  Note: Maps of the “Previous Eligible Areas” will be available on the Eligibility site beginning June 4, 2018.  A printout of the map indicating the property address was previously eligible is acceptable.

GUS underwriting recommendations will display an INELIGIBLE property determination for property that is no longer located in an eligible rural area.  The INELIGIBLE property determination is the second half of the GUS underwriting recommendation.  For example, an ACCEPT/INELIGIBLE underwriting recommendation will apply to a request where the applicant’s credit and capacity assessment is an ACCEPT (first part of the underwriting recommendation) however the property is located in an INELIGIBLE area (second part of the underwriting recommendation).  This does not prevent the lender from completing the final submission to Rural Development.  The Rural Development reviewer will be able to override the property eligibility determination when the lender has uploaded the required documentation noted above.

To assist Rural Development in processing your loan guarantee request expeditiously, lenders should ensure the documentation noted above is submitted to Rural Development for review when requesting the guarantee. 

USDA Changes to Eligibility of Certain Rural Areas

Effective: June 4, 2018
Industry: Mortgage Lending
Source: USDA   USDA Income and Property Eligibility Site →
Tags: Property - Appraisal, Underwriting

On June 4, 2018, the new ineligible area maps for the Rural Development Single Family Housing (SFH) and Multi-Family Housing programs will be updated to the USDA Income and Property Eligibility Site at https://eligibility.sc.egov.usda.gov.  The current maps will be moved to the "Previous Eligibility Areas" tab.   

Single Family Housing Loan Guarantee Processing

On June 4, 2018, all properties for new applications must be located in an eligible rural area based on the new eligibility maps.  However, a property that is located in an area being changed from rural to non-rural may be approved if all of the following conditions are met:  

  1. The application is dated and received by the lender prior to June 4, 2018 and the Loan Estimate was issued by the lender within 3 days of application receipt.
  2. The applicant has a signed/ratified sales contract on a property that is dated prior to June 4, 2018
  3. Applicant meets all other loan eligibility requirements.  

If the property is located in an area being changed from rural to non-rural, lenders must provide Rural Development all of the following information in addition to all other required documentation.  For loans submitted via the Guaranteed Underwriting System (GUS), the documentation must be uploaded into the system.  

  • Copy of the signed/ratified and dated sales contract.
  • Copy of the Loan Estimate issued to the applicant.
  • Verification that the property was located in an eligible rural area prior to June 4, 2018.  Note: Maps of the “Previous Eligible Areas” (eligibility maps prior to June 4, 2018) will be available on the Eligibility site beginning June 4, 2018.  A printout of the map indicating the property address was previously eligible is acceptable.  

GUS underwriting recommendations will display an INELIGIBLE property determination for property that is no longer located in an eligible rural area.  The INELIGIBLE property determination is the second half of the GUS underwriting recommendation.  For example, an ACCEPT/INELIGIBLE underwriting recommendation will apply to a request where the applicant’s credit and capacity assessment is an ACCEPT (first part of the underwriting recommendation) however the property is located in an INELIGIBLE area (second part of the underwriting recommendation).  This does not prevent the lender from completing the final submission to Rural Development.  The Rural Development reviewer will be able to override the property eligibility determination when the lender has uploaded the required documentation noted above.  

To assist Rural Development in processing your loan guarantee request expeditiously, lenders should ensure the documentation noted above is submitted to Rural Development for review when requesting the guarantee. 

USDA Handbook 1-3555 Chapter 12: Property and Appraisal Requirements

Effective: June 4, 2018
Industry: Mortgage Lending
Source: USDA   PN 513 →
Tags: Compliance - Initial Disclosures, Underwriting, Application

Chapter 12: Property and Appraisal Requirements

  • Section 12.3.B: to update the link to “USDA Rural Development Property and Income Eligibility Website”;
  • Section 12.3.C: The policy is updated to require:
    • Loan application dated prior to the date of the updated maps.
    • Loan Estimate is issued within three days of the loan application.
    • Ratified sales contract dated prior to the date of the updated maps.
    • The borrower and property must meet all other eligibility requirements.
  • Section 12.9.A: to updated link to the HUD Handbook website
  • Attachment 12-A: to update the website link 

FNMA SEL-2018-05 - MH Advantage Properties

Effective: June 5, 2018
Industry: Mortgage Lending
Source: Fannie Mae   MH Advantage Properties →
Tag: Underwriting

We are pleased to introduce the MH Advantage initiative. MH Advantage is manufactured housing that is designed to meet specific construction, architectural design, and energy efficiency standards that are more consistent with site built homes. The goal of this initiative is to help bridge the gap in affordable housing by encouraging more consumers to consider manufactured homes as an alternative to site built homes. Loans secured by MH Advantage properties are afforded a number of flexibilities over standard manufactured housing, including higher LTV ratios, standard mortgage insurance, and reduced loan-level price adjustments.


Examples of the physical characteristics for MH Advantage include

  • specific architectural and aesthetic features, such as distinctive roof treatments (eaves and higher pitch roofline), lower profile foundation, garages or carports, porches, and dormers;
  • construction elements including durability features, such as durable siding materials; and
  • energy efficiency standards (minimum energy ratings apply).

MH Advantage is open to all manufacturers. Participating manufacturers will enter into an agreement with us allowing them to attach an “MH Advantage Sticker” to the home in proximity to the home’s HUD Data Plate. The Sticker identifies the home as having been designed to accommodate the physical characteristics for an MH Advantage property. The lender will confirm the presence of the Sticker, and additional information about site improvements to the property, but is not responsible for confirming the physical characteristics of the home. 

Requirements for Loans Secured by MH Advantage Properties

The following table describes the requirements for delivery of loans secured by MH Advantage properties. 

Requirements
Property Eligibility 

The lender must confirm the following by reviewing photographs in the appraisal report:
  • the property is MH Advantage as evidenced by MH Advantage Sticker;
  • the HUD Data Plate and HUD certification labels are present;
  • the presence of a driveway leading to the home (or to the garage or carport, if one is present); and
  • the presence of a sidewalk connecting either the driveway, or a detached garage or carport
Appraisal
  • Manufactured Home Appraisal Report (1004C), and
  • Completion Report (1004D), if applicable
Eligible Transactions
  • MH Advantage loans follow the same DU eligibility requirements as manufactured homes, with the exception that the maximum LTV ratio is increased to 97% for certain purchases and limited cash-out refinances. All requirements that pertain to loans with LTV ratios 95.01 – 97% apply.
  • The CLTV ratio may be up to 105% with Community Seconds.
  • Loans may be originated as HomeReady and subject to all HomeReady requirements.
  • HomeStyle Renovation and HomeStyle Energy may also be combined with MH Advantage.
Underwriting
  • Lenders must use DU to underwrite.
  • The “Manufactured Home: MH Advantage” Subject Property Type must be used (even if the property is in a project).
Mortgage Insurance

MH Advantage loans are subject to standard mortgage insurance coverage requirements; the deeper coverage required for manufactured homes does not apply.

Delivery

A new Special Feature Code (SFC) 859 is required at delivery in addition to SFC 235. There are no other new requirements related to loan delivery.

MH Advantage loans are delivered using:
  • ConstructionMethodType (Sort ID 51): “Manufactured”
  • ManufacturedHomeWidthType (Sort ID 33): “MultiWide” or “SingleWide"
  • If the property is located in a condo, co-op, or PUD, the related project data points are also required.

Loan-Level Price Adjustments (LLPA)

The 50 basis point LLPA that is applicable to manufactured housing does not apply to MH  

All other standard requirements that apply to manufactured housing apply to MH Advantage.
NO T E : The Eligibility Matrix, Loan-Level Price Adjustment Matrix, and Special Feature Codes documents have all been updated to reflect these changes. For more information about MH Advantage, see our website.

Effective Dates
Beginning today, lenders can:
  • underwrite MH Advantage loans in DU Version 10.2,
  • submit MH Advantage loans to EarlyCheck to validate the data via a new set of MH Advantage edits,
  • deliver whole loans to us, and
  • deliver loans in an MBS with pool issue dates after May 1, 2018. 

FNMA SEL-2018-05 - Inspection of Manufactured Homes with Structural Modifications

Effective: June 5, 2018
Industry: Mortgage Lending
Source: Fannie Mae   Inspection of Manufactured Homes with Structural Modifications →
Tag: Underwriting

Currently, the Selling Guide requires that when a manufactured home has an addition or a structural modification and is not located in a state with an agency responsible for inspecting these modifications, then the property must be inspected by a licensed professional engineer. The engineer must certify that the addition or structural change was completed in accordance with the HUD Manufactured Home Construction Safety Standards. 

With this update, if the state does not have this requirement, then the structural modification must be inspected and the structural modifications be deemed structurally sound by a third party who is regulated by the state and is qualified to make the determination. Certification of compliance with HUD Manufactured Home Construction and Safety Standards is no longer required.

Effective Date
Lenders can take advantage of this change immediately

FNMA SEL-2018-05 - Project Standards Updates

Effective: June 5, 2018
Industry: Mortgage Lending
Source: Fannie Mae   Project Standards Updates →
Tag: Underwriting

In response to lender feedback, we have made several updates to our condo, co-op, and PUD project policies. These updates will simplify our policies and increase flexibilities when originating loans secured by units in a project. 

The following table describes the updates. Refer to the Selling Guide for additional details and clarifications. 

Single-Entity Ownership 

  • Waive the single-entity ownership requirement when the purchase transaction will result in a reduction in the single-entity ownership concentration (maximum single entity ownership 49%, no delinquent dues, no pending or active special assessments)
  • Exempt units held by non-profits, affordable housing programs (including units subject to non-eviction rent regulation codes), or institutions of higher education from the percentage of single entity ownership calculation
  • Allow single-entity ownership in projects with 21 or more units to increase to 20%

Commercial Space 

  • Exempt commercially owned or operated parking spaces from the project’s commercial space calculations
  • Increase commercial space to 355%

Established Project Definition

  • Allow a new condo project to be reviewed as an “established” project if it meets all the requirements for an established project other than the 90% unit conveyance policy. Allow 80% conveyance if the developer is holding back units as rental stock if additional requirements are met.

Investment Property Transactions

  • Allow investor transactions to be eligible for Limited Review for LTV, CLTV, and HCLTV to 75%

FHA Project Review

  • Allow delivery of conventional loans secured by units in established condo projects approved by FHA’s HUD Review and Approval Process (HRAP)

Two-to Four-Unit Condo Projects

  • Waive project review requirements, with the exception of some basic requirements that apply

Projects Consisting of Manufactured Homes

  • Allow Full Review of established condo projects
  • Condo and PUD projects subject to community land trusts, deed restrictions, leasehold estates, or shared equity arrangements may be eligible under the Fannie Mae Project Eligibility Review Service (PERS)

Legal Non-Conforming Zoning

  • Align project standards policy to standard appraisal policy that requires the appraiser to comment on the market response to legal non-conforming zoning 

Projects Operating as a Hotel or Motel (“Condotel” Policy) 

Clarify criteria for identifying projects that operate as hotels or motels. The HOA and/or project cannot: 

  • be licensed or managed/operated as a commercial hotel, motel, resort, or hospitality entity 
  • restrict owners ability to occupy the unit during any part of the year 
  • require owners to make their unit available for rental pooling (daily or otherwise) 
  • require that the unit owners share profits from the rental of units to the HOA, management company, or resort or hotel rental company 

Live-Work Condo Projects 

  • Simplify current policy with the requirement that live-work projects be primarily residential in nature and must be in compliance with local zoning or development regulations for live-work projects Limited Equity Co-ops 
  • Allow limited-equity co-ops to be evaluated through the PERS process for project approval (both streamlined PERS and standard PERS) – limited equity feature must be related to an affordable housing preservation program and is in compliance with our requirements on resale restrictions when applicable

In addition to these changes, we also took the opportunity to streamline and reorganize some of the content. For example, we removed the topic pertaining to detached condos. It was replaced with a new topic that clearly describes the requirements that apply to projects and transactions for which a project review is waived. We also removed duplicate content that appeared in multiple topics, such as Project Type Codes. These are now listed in their entirety in only one topic.

Effective Dates
Lenders may apply these changes when reviewing projects immediately. The weekend of June 23, 2018 the following systems will be updated to support these changes:

  • DU Version 10.2,
  • Collateral Underwriter® (CU®),
  • Uniform Collateral Data Portal® (UCDP®),
  • EarlyCheck™, and
  • Loan Delivery – Whole loans can be delivered beginning June 23, 2018, and loans in MBS with pool issue dates on or after July 1, 2018

Condo Project Manager (CPM) will be updated to align with these changes in August 2018. In the interim, lenders may continue to use CPM for projects that do not require the additional flexibilities described in this announcement. For projects that are newly eligible under these expanded eligibility requirements, lenders may complete the applicable project review outside of CPM. 

Tennessee New Standards of Practice for Debt Collectors

Effective: June 5, 2018
Industry: Mortgage Servicing
Source: Tennessee   Bankers Advisory Alert →
Tags: Tennessee, Delinquent Loans

Applicable to a “debt collector” meaning a person acting on behalf of a collection service licensed or required to be licensed by the Board to collect, or attempt to collect, delinquent accounts, bills or other forms of indebtedness.

  • In the event a debt collector seeks to acquire location information about a consumer from a 3rd party, the debt collector must identify himself or herself and state that he/she is attempting to confirm or correct location information, and may only identify his/her employer if expressly requested. The debt collector cannot state that the consumer owes a debt, may not communicate with the 3rd party more than once unless requested to do so, may not communicate by post card, may not use any language or symbol on an envelope that indicates the debt collector is in the debt collection business, and, should the debt collector become aware that the consumer is represented by an attorney, may not communicate with any person other than that attorney.
  • The standards provide that it may be assumed that communication at the consumer’s location after 8:00am and before 9:00 pm local time is a convenient time. The debt collector, if he or she knows the consumer is represented by an attorney, may only communicate with that attorney unless the attorney consents to direct communication with the consumer. Further, a debt collector may not communicate with the consumer at his or her place of employment if the debt collector has reason to know that the employer prohibits the consumer from receiving such communication. If a consumer notifies the debt collector in writing that he or she wishes to cease communication, then the debt collector must cease all communication except to advise the consumer that the collector is terminating further efforts to collect the debt, notify the consumer that the collector may invoke specific remedies which are undertaken in the ordinary course of business, or to notify the consumer that the collector intends pursue a specific remedy.
  • The standards also prohibit harassing and abusive behavior. A debt collector may not use violence or criminal means to harm the consumer or his or her reputation or property; may not use obscene or profane language; may not publish a list of consumers who refuse to pay the debt; and may not repeatedly or continuously telephone a consumer with the intent to annoy, abuse, or harass any person.
  • A debt collector may not engage in unfair debt collection practices. Such practices include the collection of any amount that is not expressly authorized by the agreement creating the debt or other amounts that are prohibited by law. The debt collector may not accept, solicit, or deposit a postdated check with the intent of depositing the check prior to such date, or for the purpose of threatening criminal prosecution. Further, the debt collector may not take or threaten to take any non-judicial action the purpose of which is to dispossess the consumer of property if there is no right to possession through an enforceable security interest, there is no present intent to take possession of the property, or the property is exempt from dispossession by law.

Residential Real Property is Abandoned or in Foreclosure

Effective: June 7, 2018
Industry: Mortgage Servicing
Source: Washington   Bankers Advisory Alert →
Tags: Washington, Foreclosure, HECM

As noted in the Substitute Bill Digest, the Act “modifies provisions relating to nonjudicial foreclosures, required beneficiary remittances, notice of preforeclosure for residential reverse mortgages, and a process for when residential real property is determined by a local government to be abandoned, in mid-foreclosure, and a nuisance.”

Fannie Mae Multifamily Underwriting Requirements for Moderate Rehabilitation Mortgage Loans and Supplemental Mortgage Loans

Effective: June 11, 2018
Industry: Consumer Lending, Mortgage Lending
Source: Fannie Mae   Lender Memo 18-02 →
Tag: Multifamily

Fannie Mae is increasing delegation to Lenders and streamlining underwriting requirements for Moderate Rehabilitation Mortgage Loans and Supplemental Mortgage Loans by:

  • lowering the minimum Rehabilitation Work requirements to $8,000/unit from $10,000/unit for a Moderate Rehabilitation Mortgage Loan;
  • modifying the “New Loan” test requirements for a Supplemental Mortgage Loan and clarifying the calculations used to determine the maximum amount of the Supplemental Mortgage Loan; and
  • clarifying the debt service requirements for an interest-only Supplemental Mortgage Loan.

Servicing Guide Updates

Effective: June 13, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   SVC-2018-04 →
Tags: Claims Processing, Foreclosure, Loss Mitigation

Establishment of Drafting Arrangements for Custodial Funds

The Selling Guide was updated with Announcement SEL-2018-01 on January 30, 2018 to redesign and simplify the process of submitting an executed Certificate of Authority, Incumbency, and Specimen Signatures (Form 360). This form is now the sole document used to validate signatures on Forms 482 and 1072. F-1-03, Establishing and Implementing Custodial Accounts, has now been updated to reflect the use of the revised Form 360.

The Reverse Mortgage Loan Servicing Manual 2-05, Establishing Custodial Bank Accounts, has been updated to mirror the applicable changes to the Servicing Guide.

Vacancy Notice Posting Reimbursement

To better serve our customers and align our reimbursement policy with industry best practice, we have updated F-1-05Expense Reimbursement, with a new $10 reimbursement limit for a one-time vacancy notice posting for any servicer that chooses to post such a notice in accordance with the guidelines in the Property Preservation Matrix and Reference Guide

Part A Consolidation. 

The Master Terms and Conditions of the Software Subscription Agreement was updated by
Master Terms and Conditions Bulletin 18-01 on April 1, 2018 and has been incorporated into the Selling Guide as an Exhibit, E-2-04, Software Subscription Agreement Master Terms and Conditions. Reference to this Agreement within the Servicing Guide has been updated.

Incorporation of Imminent Default Evaluation for a Conventional Mortgage Loan Modification*. We have
incorporated the imminent default evaluation used for determining eligibility for a conventional mortgage loan modification introduced with LL-2017-08 on October 11, 2017 into the Guide. 

Please see Announcement for complete Guide section updates.

Servicing Guide Updates

Effective: June 13, 2018
Industry: Mortgage Servicing
Source: Freddie Mac   Guide Bulletin 2018-9 →
Tags: Delinquent Loans, Loss Mitigation, Insurance

Next Job Re-Employment Services

A key component of Freddie Mac’s Duty to Serve plan is increasing homeownership opportunities in underserved markets across the nation, including in rural and high-needs areas. High-needs areas include the middle Appalachia, lower Mississippi Delta and colonias and other tracts located in areas subject to persistent poverty.

This initiative supports Home Possible Borrowers in these areas by offering re-employment services through
NextJob.

NextJob is a re-employment services company that assists Borrowers with job search skills and training to
increase the Borrower’s likelihood of new employment after experiencing a job loss, reduced hours or other
employment challenges that threaten the Borrower’s ability to make timely mortgage payments. NextJob will contact the Borrower and offer their services, which include:
  • One-on-one job coaching
  • Access to “Job Talk” webinars, and
  • Access to NextJob’s proprietary online job search training program
Servicers are encouraged to refer Home Possible Borrowers in Duty to Serve high-needs areas who have

suffered loss of income due to unemployment or underemployment to Freddie Mac for referral to NextJob. New Exhibit 40, Duty to Serve High-Needs Areas, lists the Duty to Serve high-needs areas by State.

Please refer to the Guide Bulletin for the NextJob re-employment services eligibility requirements table and next steps required when a borrower meets the eligibility criteria.

Special property insurance requirements for Condominium Projects and Planned Unit Developments

In response to Seller/Servicer inquiries, we are updating our property insurance requirements to include additional detail on the requirements for special endorsements, as follows:
  • The inflation guard endorsement is required when it is applicable to the coverage and available in the insurance market
  • The building ordinance or law endorsement is not required if the building is legally conforming under current building, zoning or land use laws or is not available; however, it is required if the enforcement of any law or ordinance results in increased costs such as demolition or loss to the undamaged portions of the building and the coverage is available in the insurance market
  • The steam boiler and machinery or equipment breakdown endorsement is required if the building has a central heating ventilation and cooling (HVAC) system and the coverage is available in the insurance market 
Additional Guide Updates Include:

  • Directory updates
  • Automatic transfer of funds from a Principal and Interest Custodial Account
  • Release of documents to Seller/Servicers from Document Custodians
  • REO claims for reimbursement
  • Tenant-occupied properties built before 1978
  • Reminder of temporary moratorium of Subsequent Transfer of Servicing 
  • Freddie Mac Access Manager
  • Tri-Party Agreements
  • Removal of the super Accelerated Remittance Option
  • Current Guide PDF on FreddieMac.com

Please refer to the Guide Bulletin for complete details.

Fannie Mae Modification Interest Rate Adjustment Exhibit

Effective: June 14, 2018
Industry: Mortgage Servicing
Source: Fannie Mae   Fannie Mae Modification Interest Rate Adjustment Exhibit →
Tag: Loss Mitigation

The Fannie Mae Modification Interest Rate is subject to periodic adjustments based on an evaluation of prevailing market rates. The servicer must use the current Fannie Mae Modification Interest Rate indicated below when evaluating a borrower for a conventional mortgage loan modification. 

The new rate effective June 14, 2018 is 4.625%.

VALERI Manifest 18.2

Effective: June 16, 2018
Industry: Mortgage Servicing
Source: VA   VALERI Servicer Newsflash →
Tag: Claims Processing

The following enhancements will be included:

CQ 13380 - Updates the Claim Bulk Upload template to reflect the addition of "State Pre-Foreclosure Fee" line item. The new version of the template and the VALERI Fee Cost Schedule will both be available at https://www.benefits.va.gov/ho... on Monday, June 18, 2018.

CQ 12765 – Updates claims logic to disallow Title V Septic fee for Massachusetts properties if VA did not accept custody and pay acquisition for the property.

FHA Claim and Non-Claim Bulk Upload Template Updates

Effective: June 18, 2018
Industry: Mortgage Servicing
Source: FHA   VALERI Servicer Newsflash, May 21, 2018 →
Tags: Claims Processing, Foreclosure

Both the claim and non-claim bulk upload templates will be updated effective Monday, June 18, 2018. A new line item, the “State Pre-Foreclosure Fee,” will be added to the Claim Bulk Upload template. Templates will be available on June 18, 2018 at

http://www.benefits.va.gov/HOMELOANS/servicers_valeri_guides.asp.

HomeReady® Income Limits 2018

Effective: June 23, 2018
Industry: Mortgage Lending
Source: Fannie Mae   Selling Notice →
Tags: Underwriting, Income
  • On June 23, 2018, the 2018 HomeReady income limits will be implemented in Desktop Underwriter® (DU®) and published on our website for use with manually underwritten loans.
  • DU will apply the 2018 limits to new DU loan casefiles created on or after June 23, 2018.
  • Loan casefiles created prior to June 23 will continue to use the 2017 limits.
  • For manually underwritten HomeReady loans, lenders are encouraged to use the 2018 limits immediately, but are required to use them for loans with application dates on or after August 1, 2018.
  • For loan casefile submitted or resubmitted on or after June 23, 2018, DU will also use the 2018 income limits and census tract designations when issuing the housing goals Observation messages.

FNMA SEL-2018-05 - Miscellaneous Selling Guide Updates

Effective: June 23, 2018
Industry: Mortgage Lending
Source: Fannie Mae   Miscellaneous Selling Guide Updates →
Tags: Underwriting, Certification, Endorsement, and Delivery

Flash Settlement for MBS

Last year we eliminated Flash MBS processing fees and instead offered Flash MBS as an acceptable, standard, and no cost delivery option. This has reduced selling costs and increased flexibility for same month pooling and allowed lenders to receive book-entry delivery on Fannie Mae MBS as soon as 72 hours.

In our continuing effort to increase pooling flexibility, we will now allow lenders to receive book-entry delivery on Fannie Mae’s published Majors as soon as 48 hours after we receive the Loan Delivery submission. This reduced time-line for book-entry turnaround is only applicable for Fannie Mae’s published Majors. Single issuer MBS must still be delivered 72 hours prior to book-entry.

Additionally, we are updating the Pool Settlement Calendars to reflect the 5th business day before the end of the month as the last date to submit Single Family MBS, allowing for an additional day of pooling.

Effective Date
The change to Flash Majors will occur with MBS delivered on or after July 1, 2018. The change to the Pool Settlement Calendars will begin with the July Calendar. 

Desktop Underwriter Bankruptcy and Mortgage Delinquency Assessment

The Selling Guide has been updated to include the policies related to bankruptcy and mortgage delinquency assessment that were described in the DU Version 10.2 June Update Release Notes. When inaccurate information exists in a credit report, lenders will have the ability to instruct DU to disregard (in the eligibility assessment) inaccurate bankruptcy or mortgage delinquency information, or disregard a bankruptcy that was due to extenuating circumstances.

Effective Date
These changes will apply to new loan casefiles submitted or resubmitted to DU on or after the weekend of June 23, 2018. See the DU Version 10.2 June Update Release Notes for additional information.

HomeStyle Energy in DU

The Selling Guide has been updated to align with updates to DU regarding HomeStyle Energy mortgage loans. Because these updates will allow DU to identify transactions having energy-related improvements, the Selling Guide policy requiring lenders to manually confirm HomeStyle Energy requirements outside of DU has been removed.

Effective Date
These changes will apply to new loan casefiles submitted or resubmitted to DU on or after the weekend of June 23, 2018.
See the DU Version 10.2 Release Notes for additional information.
NO T E : As specified in the DU Version 10.2 Release Notes, two new fields are being added to DU to identify HomeStyle Energy loan submissions: Energy Improvement Amount and PACE Loan Payoff Amount. An amount must be entered in one or both of these fields for DU to be able to underwrite the loan casefile as HomeStyle Energy. If a lender’s loan origination system cannot be updated with these two new fields by June 23, the lender can access the DU user interface to enter the data. Alternatively, we will allow lenders to continue to manually apply the HomeStyle Energy policies to DU loan casefiles until their systems have been updated. 

HomeStyle Renovation Forms

We have posted model Renovation Loan documents and related Summary Pages that may be used in connection with HomeStyle Renovation Loans.The following special purpose model documents are now available:

  • Multistate Renovation Contract – Fannie Mae Model Document (Form 3730), and
  • Multistate Renovation Loan Agreement – Fannie Mae Model Document (Form 3731).

Also, the following model riders are now available:

  • Multistate Renovation Loan Rider to Security Instrument – Fannie Mae Model Document (Form 3732), and
  • Multistate Renovation Loan Investor Rider to Security Instrument – Fannie Mae Model Document (Form 3733). 

The Selling Guide has been updated to include references to these new forms.

Effective Date
These documents may be used immediately; however, because they are model documents, usage is strictly optional.

Miscellaneous Selling Guide Updates

Multiple Appraisals. Earlier this year, we clarified the policy in B4-1.3-12, Quality Assurance regarding second appraisals. With this update, we moved a similar policy that existed in B4-1.1-02, Lender Responsibilities, to a more appropriate location in the Guide, B4-1.2-02, Appraisal Age and Use Requirements. The multiple appraisal policy is now clearly described in the two topics where lenders are most likely to look for that information. 

Primary Mortgage Insurance Absence Reason Code 97. Currently, if a loan is delivered without mortgage insurance, one of two codes is required:

  • MI Code 95 – No MI Based on Original LTV
  • MI Code 97 – MI Canceled Based on Current LTV

We have updated the Approved Mortgage Insurers and Related Identifiers, published on our website and referenced in the Selling Guide, to reflect that Primary MI Absence Reason Code 97 may only be used for non-flow deliveries. This code is only appropriate for non-flow deliveries because it indicates that even though the original LTV ratio was greater than 80%, no mortgage insurance is required because mortgage insurance was canceled based on a new value obtained after origination. (Note that this update did not result in a direct change to the Selling Guide text.) 

DU Version 10.2 June Update

Effective: June 25, 2018
Industry: Mortgage Lending
Source: Fannie Mae   Desktop Underwriter/Desktop Originator Release Notes →
Tag: Underwriting

During the weekend of June 23, 2018, Fannie Mae will implement an update to Desktop Underwriter® (DU®) Version 10.2. The changes in this release will apply to DU Version 10.2 loan casefiles submitted or resubmitted to DU on or after the weekend of June 23, 2018.

This release includes updates to the following:

  • Bankruptcy and Mortgage Delinquency Assessment
  • HomeStyle® Energy
  • DU Validation Service
  • Potential Casefile Reuse
  • IPC Data Field Retirement
  • HFA Preferred™ and Preferred Risk Sharing
  • Updates to Align with the Selling Guid

EarlyCheck Version 5.6

Effective: June 25, 2018
Industry: Mortgage Lending, Mortgage Servicing
Source: Fannie Mae   EarlyCheck Release Notes →

During the weekend of June 23, 2018, Fannie Mae will implement EarlyCheckTM Version 5.6 which will introduce the changes noted below. The updates in this release will apply to loans submitted to EarlyCheck via the User Interface and Direct Integration and may require changes to users’ systems or processes.

  • New and Modified Edits 
  • Support for New ULDD Data Points
  • Changes to EarlyCheck Loan-Level Results
  • New Uniform Closing Dataset (UCD) Comparison Section

Fannie Mae UCD Collection Solution - Additional UCD Schema validations

Effective: June 25, 2018
Industry: Mortgage Lending, Mortgage Servicing
Source: Fannie Mae   Uniform Closing Dataset (UCD) Release Notes →
Tag: UCD

The UCD collection solution will be updated with additional XML schema validations to ensure complete and MISMO compliant data is provided. With this change, the GSEs will have the same schema validation approach. In reviewing UCD submissions we have identified some data quality issues (i.e.

invalid date formats, invalid enumerations) which these additional schema validations will prevent. Effective June 25, 2018, all UCD XML file submissions will be validated against the MISMO 3.3.0 B299 schema posted on the MISMO website.

Lenders and vendors can begin validating UCD XML files now using the MISMO Schema v3.3.30 posted on the MISMO website. In addition, on June 1, 2018, testing will be allowed using the new Fannie Mae UCD collection solution test environment (see below). For assistance with addressing schema issues, contact your Fannie Mae representative or send an email to the UCD mailbox.

NOTE: All schema validation errors will result in a FATAL edit preventing the UCD file from receiving a “successful” status. After June 25, 2018, the UCD submission must receive a “successful status” for the loan to be eligible for delivery. 

North Carolina Real Property Provisions

Effective: June 25, 2018
Industry: Mortgage Lending
Source: North Carolina   North Carolina House Bill 852 →
Tags: North Carolina, Loan Documents

PART I. MORTGAGE AND DEED OF TRUST CHANGES

§ 39‑13.  Spouse need not join in purchase‑money mortgage 

Amended to read: 

"A mortgage or deed of trust given by the purchaser of real property to secure a loan, the proceeds of which were used to pay all or a portion of the purchase price of the encumbered real property, regardless of whether the secured party is the seller of the real property or a third‑party lender, shall be good and effectual against the purchaser's spouse as well as the purchaser, without requiring the spouse to join in the execution of such the mortgage or deed of trust."

PART II. PROBATE AND REGISTRATION CHANGES

§ 47‑17.1.  Documents registered or ordered to be registered in certain counties to designate draftsman; exceptions

Added provision:

"This section shall not apply to other instruments presented for registration. For the purposes of this section, the register of deeds shall accept the written representation of the individual presenting the deed or deed of trust for registration, or any individual reasonably related to the transaction, including, but not limited to, any employee of a title insurance company or agency purporting to be involved with the transaction, that the individual or law firm listed on the first page is a validly licensed attorney or validly existing law firm in this State or another jurisdiction within the United States."

§ 47‑18.3.  Execution of corporate instruments; authority and proof

[multiple updates pertaining to LLCs -- please refer to the bill text]

VA Loan Seasoning for Ginnie Mae Mortgage-Backed Securities-HUD Interpretive Rule

Effective: June 25, 2018
Industry: Mortgage Lending
Source: FHA   Interpretive Rule →
Tags: Underwriting, Secondary

Highlights (Please see interpretive rule for complete details):

  • It is HUD's interpretation that as of the enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act, any VA refinanced mortgage loan that does not meet the seasoning requirements contained in section 309(b) of the Act is ineligible to serve as collateral for Ginnie Mae MBS. 
  • Ginnie Mae MBS guaranteed before the enactment of the Act, that contain VA refinanced mortgage loans that do not meet the seasoning requirements contained in the Act, are unaffected by the Act. 
  • For Multiclass Securities, the Act permits Ginnie Mae to guarantee Multiclass Securities even where the trust assets consist of direct or indirect interest in certificates guaranteed by Ginnie Mae without regard to whether the underlying VA mortgage loans are in compliance with the seasoning requirements in section 309(b) of the Act.
  • HUD's interpretation of section 309(b) of the Act, titled “Protecting Veterans from Predatory Lending,” is also consistent with the purposes of both section 309 of the Act and the Ginnie Mae Charter.

​Elimination of the project review type for 2- to 4-Unit Condominium Projects

Effective: June 28, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2018-5 →
Tag: Property - Appraisal

We are eliminating the project review type for 2- to 4-Unit Condominium Projects. Sellers will be able to choose from the following project review types for 2- to 4-Unit Condominium Projects: 

  • Streamlined reviews 
  • Established Condominium Projects 
  • New Condominium Projects, or 
  • Reciprocal project reviews 

We are revising the definitions of the Glossary terms “2- to 4-Unit Condominium Project,” “Established Condominium Project” and “New Condominium Project” in connection with eliminating the project review type for 2- to 4-Unit Condominium Projects.

With the elimination of the 2- to 4-Unit Condominium Project review type, we are modifying the project eligibility requirements for streamlined reviews, Established Condominium Projects and New Condominium Projects to be applicable to 2- to 4-Unit Condominium Projects. The requirements for reciprocal reviews remain unchanged.

We are adding new requirements for Established Condominium Projects and New Condominium Projects review types specific to 2- to 4-Unit Condominium Projects such as:

  • No units can be 60 or more days’ delinquent in the payment of the homeowners association assessments 
  • New owner-occupancy requirements if the property will be used as an investment property

Guide impacts: Sections 5701.2 through 5701.7, 5701.12, 6302.20, 8202.5 and 8202.6 and Glossaries A-I
and J-Q 

Freddie Mac Bulletin 2018-10 Condominium Projects

Effective: June 28, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Condominium Projects →
Tags: Underwriting, Property - Appraisal, Condominiums

CONDOMINIUM PROJECTS 

Detached Condominium Projects

Effective June 28, 2018

Previously, when a Condominium Unit Mortgage was secured by a Detached Condominium Unit in a Condominium Project with a mix of attached, detached and/or semi-detached units, Sellers were required to review the project under one of the following project review types for these Mortgages:

  • New Condominium Projects
  • Established Condominium Projects
  • Streamlined reviews
  • Reciprocal reviews

Expansion of Detached Condominium Projects review type

In response to Seller feedback, we are expanding the availability of the Detached Condominium Projects review type to Condominium Unit Mortgages secured by Detached Condominium Units in a project with a mix of attached, detached and/or semi-detached units. Sellers may use the Detached Condominium Projects review type for projects that are comprised solely of detached units and now may also use this project review type for Mortgages secured by Detached Condominium Units in projects with a mix of attached, detached
and/or semi-detached units.

As a reminder, under the Detached Condominium Projects review type, Sellers do not need to comply with the general Condominium Project eligibility requirements in Section 5701.2(b), and are not subject to the ineligible project requirements in Section 5701.3.

In connection with this change, we are updating the Glossary to add a definition for “Detached Condominium Unit” and revising the definitions of “2- to 4-Unit Condominium Project” and “Detached Condominium Project.” 

Delivery requirements

We are updating Section 6302.20 to:

  • Include the newly defined term “Detached Condominium Unit,” where applicable
  • Reflect the new flexibility to allow the valid value of “Full Review” for Detached Condominium Units for ULDD Data Point, Project Classification Identifier, (Sort ID 42), regardless of the attachment type of the project
  • Narrow the requirement of additional project data in Section 6302.20(b)(ii) to only those Mortgages secured by attached or semi-detached Condominium Units 

Sellers may deliver an appraisal of a Detached Condominium Unit using Guide Form 70, Uniform Residential Appraisal Report, or Form 2055, Exterior-Only Inspection Residential Appraisal Report, when applicable, regardless of whether the unit is in a project that consists solely of Detached Condominium Units or in a project that consists of attached, detached and semi-detached units.

Project insurance

Seller/Servicers are not required to determine the existence or adequacy of the project liability insurance and/or the fidelity or employee dishonesty insurance as required in Sections 8202.5 and 8202.6.for a Detached Condominium Unit reviewed under the Detached Condominium Projects review type.

2- to 4-Unit Condominium Projects

As announced in Bulletin 2018-5, effective June 28, 2018, we are eliminating the 2- to 4-Unit Condominium Projects review type and providing Sellers the flexibility to choose from the following review types for a Mortgage secured by a Condominium Unit in a 2- to 4-Unit Condominium Project:

  • Streamlined reviews
  • Established Condominium Projects
  • New Condominium Projects, or
  • Reciprocal project reviews

Due to the expanded availability of the Detached Condominium Projects review type, effective June 28, 2018, a Detached Condominium Unit in a 2- to 4-Unit Condominium Project will be eligible for review under the Detached Condominium Projects review type.

System and Guide updates

Loan Selling AdvisorSM will be updated by June 28, 2018 to only require ULDD Data Points, Project Design Type/Project Design Type Other Description, (Sort ID 43/33), Project Dwelling Unit Count, (Sort ID 45), and Project Dwelling Units Sold Count, (Sort ID 46) for Mortgages secured by attached or semi-detached Condominium Units. These changes, in addition to the updates in Section 6302.20, will be reflected in a future Uniform Loan Delivery Dataset (ULDD) specification addendum.

We are updating Sections 5601.2, 5601.5, 5601.7, 5601.10, 5701.1 through 5701.3, 5701.7, 5701.8, 5701.12, 6302.20, 8202.2, 8202.5, 8202.6, Guide Exhibit 19, Exhibit 34 and Glossary A-I to reflect these changes related to Detached Condominium Projects and Units.

Freddie Mac-owned “no cash-out” refinance Condominium Unit Mortgages In response to Seller inquiries, we will no longer require:

  • The transfer of any existing credit enhancement on the mortgage being refinanced to the refinance Mortgage
  • Delivery of the associated Freddie Mac loan number of the mortgage being refinanced

Although not required, Sellers should deliver with ULDD Data Point, Related Investor Loan Identifier, (Sort ID 221) the associated Freddie Mac loan number of the mortgage being refinanced, if available. To identify if Freddie Mac owns the Mortgage, the Borrower can look up the loan in Freddie Mac’s Loan Look-Up Tool or authorize the Seller to obtain this information on the Borrower’s behalf.

Loan Selling AdvisorSM will be updated by June 28, 2018 in support of these changes. Additionally, the update to ULDD Data Point, Related Investor Loan Identifier, (Sort ID 221) will be reflected in a future ULDD specification addendum.

Guide impacts: Sections 5701.2, 6302.16 and Exhibit 34

New Condominium Projects
In response to Seller feedback, we are updating the following requirements for New Condominium Projects.

Conversions

Previously, Sellers were required to review an engineer’s report to determine project eligibility for a Condominium Project that was created by a conversion involving a Non-Gut Rehabilitation of a prior use of a building that was legally created within the past five years.

We are updating the Guide to allow Sellers to review documentation that is functionally equivalent to an engineer’s report (instead of an engineer’s report), provided that certain conditions are met.

Limitations on ability to sell and right of first refusal

We are eliminating the requirement relating to how the right of first refusal could be exercised when the project documents allow the homeowners association (HOA) to retain that right.

Project budget and working capital fund

Previously, if a Condominium Project’s budget did not provide a replacement reserve of at least 10% of the budget for capital expenditures and deferred maintenance, a Seller could rely on a reserve study as long as the requirements in Section 5701.6(l) were met.

To provide an additional option, we are adding that a Seller may rely on a working capital fund as long as the requirements in Section 5701.6(m) are met. This is in consideration that not all budgets will meet the minimum reserve allocation requirement and not all projects will have a reserve study.

We are also clarifying that when a project is recently converted, the required working capital fund can be funded through contributions made by the developer and/or purchasers of the Condominium Units.

Guide update
We are updating Section 5701.6 to reflect these changes to our New Condominium Project requirements. 

Eligibility of Condominium Projects

We are updating the following requirements related to the eligibility and ineligibility of Condominium Projects.

Commercial space

Previously, a project was considered ineligible if more than 25% of the total above and below grade square footage of the project or building in which the project is located was used as commercial or non-residential space.

Considering the growing number of Condominium Projects with commercial or non-residential space that exceeds 25%, a project (or building in which the project is located) will be considered ineligible only if it includes more than 35% of the total above and below grade square footage as commercial or non-residential space.

As a reminder, if the subject Condominium Unit is located within a building in which all or part of the building is in a “Special Flood Hazard Area” as identified by the Federal Emergency Management Agency (FEMA) through the National Flood Insurance Program, the Seller must ensure that the flood insurance coverage meets our requirements in Section 8202.3.

Litigation
Previously, when the litigation amount was unknown, the attorney letter was required to include the upper and lower limits of any potential monetary judgment against the HOA.

In response to Seller inquiries, when the litigation amount is unknown, we are revising the information that must be included in the attorney letter relating to any potential monetary judgement against or settlement with the HOA, including punitive damages. The attorney letter must indicate that the potential monetary judgement or settlement, including punitive damages, will likely be covered by the HOA’s insurance policy, rather than the upper and lower limits as previously required.

Additionally, we are updating the Guide to specify that a project is eligible if the Seller determines that the reason for the pending litigation is that the HOA is the plaintiff in a foreclosure action or action for past due HOA assessments. 

Single investor concentration

Previously, for projects with 21 or more units, a Housing Finance Agency (HFA) (or similar entity based on State or local law or regulation) could own no more than 15% of the total number of units in a project without the ownership being considered as excessive single investor concentration.

We are increasing this maximum single investor concentration requirement to 25%. We are also allowing this maximum 25% single-investor concentration to be applicable to developer leased units used for low- or moderate income rental purposes (in accordance with State or local law or regulation). The same requirements that apply to the HFA-owned units apply to the developer leased units.

Guide updates
We are updating Sections 5701.3 and 5701.11 to reflect these changes to our Condominium Project eligibility requirements. 

Freddie Mac Bulletin 2018-10 Cash-Released XChangeSM, Additional Guide updates and reminders

Effective: June 28, 2018
Industry: Mortgage Lending
Source: Freddie Mac   Cash-Released XChangeSM, Additional Guide updates and reminders →
Tags: Underwriting, Secondary

CASH-RELEASED XCHANGESM

Servicing-released executions rebranding

Freddie Mac has rebranded its servicing-released executions under the umbrella of Servicing-Released XChangeSM. This rebranding supports new participants and technological enhancements planned for these executions over the next 18 to 24 months. Visit the Servicing Released Xchange web page for more information on our servicing-released executions.

The Servicing Released Sales Process is now Cash-Released XChangeSM. Under Cash-Released XChange, Sellers may sell one or more fixed-rate Mortgages to Freddie Mac for cash and transfer the Servicing on those Mortgages in a single transaction to a Transferee Servicer approved and selected by Freddie Mac.

We are revising the Guide to refer to Cash-Released XChange and to reflect the recent changes associated with the new Glossary definition of Servicing Contract Rights, which were announced in Bulletin 2018-6.

Although the Servicing Released Sales Process has been rebranded as Cash-Released XChange, there may be screens in Loan Selling Advisor that continue to refer to the Servicing Released Sales Process or to Servicing Released. These references are to be deemed to refer to Cash-Released XChange. Loan Selling Advisor screen updates will be made at a future date. 

Guide impacts: Sections 2202.3, 4302.3, 4303.4, 5203.2, 6101.2, 6101.6, 6101.7, 6301.8, 6302.6, 6302,18, 6302.26, 6302.40, 6303.1, 6304.1, 7101.2, 7101.9, 7101.15, Exhibits 6, 8, 28A, Glossaries A-I, R-Z and Directory 4 

Freddie Automated Servicing TransferSM (FASTSM)

Sellers and Transferee Servicers participating in Cash-Released XChange may begin using FAST on and after August 1, 2018 and must begin using FAST on and after October 1, 2018

After a Mortgage is sold through Cash-Released XChange, a Seller has three Business Days to deliver related loan files to the Transferee Servicer. Currently, each participating Transferee Servicer has its own requirements for the loan file delivery processes, including its own tools and a requisite document stacking order for paper and/or imaged documents.

Implementing FAST will streamline the servicing file transfer process for Sellers by offering a single unified process and tool for all loans sold through the execution. FAST will enable Sellers to save time, lower costs and make it easier to work with multiple Transferee Servicers. FAST will also help Transferee Servicers more efficiently onboard Seller Mortgage documents and records.

Information regarding access to FAST (including user IDs and passwords) will be sent directly to Sellers participating in Cash-Released XChange prior to August 1, 2018.

In addition, we are updating the Servicing Transfer Instructions for Cash-Released XChangeSM user guide effective August 1, 2018, with changes related to FAST. The updated instructions may be accessed via the “Settlement” menu in Loan Selling AdvisorSM. Click the “Servicing Transfer Instructions” link for the most up-to date  instructions. As provided in Exhibit 28A, Sellers must submit required information and complete applicable forms for the Transfer of Servicing for each loan in accordance with the Servicing Transfer Instructions for Cash-Released XChangeSM user guide.

ADDITIONAL GUIDE UPDATES AND REMINDERS

Special property insurance requirements for Condominium Projects and Planned Unit Developments

Effective June 13, 2018
As announced in Bulletin 2018-9, in response to Seller/Servicer inquiries, we have updated our property insurance requirements in Section 8202.2 to include additional detail on the requirements for special endorsements, as follows:

  • The inflation guard endorsement is required when it is applicable to the coverage and available in the insurance market
  • The building ordinance or law endorsement is not required if the building is legally conforming under current building, zoning or land use laws or is not available; however, it is required if the enforcement of any law or ordinance results in increased costs such as demolition or loss to the undamaged portions of the building and the coverage is available in the insurance market
  • The steam boiler and machinery or equipment breakdown endorsement is required if the building has a
  • central heating ventilation and cooling (HVAC) system and the coverage is available in the insurance
  • market
Transient housing
We are clarifying that transient housing that includes hotel type services and characteristics is an ineligible property.

Guide impact: Section 5601.2