Compliance Calendar

Modifies the Notaries Public Reform Act to allow a notarization to be performed remotely.

Fannie Mae assumes responsibility - without regard to the foreclosure sale or Mortgage Release date -  for the payment of co-op corporation fees and assessments for all acquired properties, effective November 1, 2019.

The servicer is not responsible for these expenses after Fannie Mae acquires the property, unless directed otherwise. This includes reverse mortgage loans.

With this Notice, Fannie Mae - without regard to the foreclosure sale or Mortgage Release date - as follows: 

• for the payment of HOA and condo association fees and assessments for all acquired properties, effective July 1, 2019; and 

• for the payment of co-op corporation fees and assessments for all acquired properties, effective November 1, 2019. 

As a result, we now assume the responsibility for the payment of all property taxes, ground rents, as well as fees and assessments invoiced by an HOA, condo association, or co-op corporation once the foreclosure sale or Mortgage Release occurs. As outlined in E-4.3-01, Managing the Property Post-Foreclosure Sale, the servicer is not responsible for these expenses after we acquire the property, unless we direct otherwise. This includes reverse mortgage loans.

• Revised Exhibit 28A to provide that a Seller must refund the Servicer 100% of the SRP if the Borrower fails to make any of the first four monthly payments following the Funding Date

New Jersey Assembly Bill 664 codifies the"New Jersey Foreclosure Mediation Act."

• Written notice of the option to participate in the Foreclosure Mediation Program must be provided to the borrower at the time the homeowner-borrower receives a notice of intention to foreclose, and again upon the filing of a mortgage foreclosure complaint against an eligible property 
• The notice of intention to foreclose must be provided at least 30 days in advance of initiating foreclosure, by registered or certified mail, return receipt requested, at the debtor's last known address, and, if different, to the address of the property which is the subject of the residential mortgage, or delivered in person
• [See the rule for specific content requirements of the notice of intention to foreclose]
• The notice of intention to foreclose shall not be required if the debtor has voluntarily surrendered the property which is the subject of the residential mortgage
• The written notice of the option to participate in the Foreclosure Mediation Program  shall be available in both English and Spanish
• A court may order mediation whenever a homeowner-borrower files an answer to a foreclosure complaint
• Alternatively, the homeowner-borrower may initiate the process for scheduling mediation by submitting a mediation request to the court, along with any other documents required by the Supreme Court
• The courts shall provide the homeowner-borrower no less than 60 days following receipt of the foreclosure complaint and summons to initiate mediation
• After requesting mediation, the homeowner-borrower may seek to stay the sheriff's sale in accordance with applicable court rules and procedures
• The homeowner-borrower may not participate in mediation unless the certification is submitted to the court and signed by a trained foreclosure prevention and default mitigation counselor, verifying that the homeowner-borrower is cooperating with the counselor and verifying that the trained foreclosure prevention and default mitigation counselor is counseling the homeowner-borrower
• Each party shall participate in foreclosure mediation
• The mortgage lender or servicer shall attend the mediation session in person or by telephone through a person with the authority to consider alternatives to foreclosure so that the parties may reach a mutually acceptable loan modification, loan workout, refinancing agreement, or other resolution
• If any party or attorney for a party fails to attend a mediation session or to make a good faith effort to mediate, the court, in addition to any sanction the court deems appropriate, may sanction a party or attorney for a violation of this subsection with a civil penalty of up to $1,000 or allow a party to recover reasonable attorney's fees or litigation expenses, or both
• In each action for foreclosure, the plaintiff shall pay $50 to the clerk of the court in addition to the fee associated with the filing of the first paper, to be deposited into the "Foreclosure Mediation Fund"
• All monies collected from each civil penalty imposed for violations shall be deposited into the "Foreclosure Mediation Fund"
• The duty of the lender under this section to serve notice of intention to foreclose is independent of any other duty to give notice under the common law, principles of equity, State or federal statute, or rule of court and of any other right or remedy the debtor may have as a result of the failure to give such notice
• Compliance with this section shall be set forth in the pleadings of any legal action referred to in this section

Previously, for single-premium lender-paid mortgage insurance, Freddie Mac required that the originating lender or the Seller pay the entire mortgage insurance premium prior to the Delivery Date.

To provide flexibility and better align with market standards, Sellers may now deliver Mortgages with single-premium lender-paid mortgage insurance regardless of whether the entire mortgage insurance premium is paid by the Seller prior to the Delivery Date, provided that the mortgage insurance for the Mortgage is in full force and effective on the Delivery Date of the Mortgage. The Seller must obtain and be able to produce evidence of any required mortgage insurance (including, but not limited to, a certificate of insurance).

Guide impact: Section 4701.2

Freddie Mac understands the challenges related to property eligibility and valuation that can result from unique market conditions or the lack of comparable sales, especially in rural markets. In response to Seller and industry stakeholder inquiries and as part of our Duty to Serve plan, we are providing additional guidance for:

• Appraisal adjustments, recognizing that large adjustments are common and acceptable in rural markets. Freddie Mac does not have limitations on gross or net adjustment percentages, and recognizes that the income approach, cost analysis and market surveys are appropriate for supporting adjustments.
• The acceptability of non-traditional types of properties (examples include “barndominiums” (barn conversions or barn-style buildings), “shouses” (living-space and work/storage combinations), berm homes, log homes and geodesic dome dwellings)

Guide impact: Section 5601.12

We are removing Form 1149 from the Guide. Since the Loan Prospector Property Inspection Alternative (PIA) option was retired in 2014 and the obsolete Form 2070, Loan Prospector Condition and Marketability Report, was removed from the Guide in 2016, Form 1149 is no longer necessary.

Guide impact: Form 1149

We are restructuring Section 1201.8 by separating it into two subsections:

• Revised subparagraph (a) provides greater specificity regarding requirements for receipt and treatment of Freddie Mac Confidential Information, and
• New subparagraph (b) clarifies Freddie Mac’s commitment to maintaining the confidentiality of certain nonpublic information provided by Seller/Servicers to Freddie Mac, such as financial information and audit reports

We are also retitling and revising Section 8101.8 to clarify the Servicer’s obligations concerning information it obtains regarding the Borrower and the Mortgaged Premises that is not publicly available or that is required to be protected under applicable laws.

Guide impacts: Sections 1201.8 and 8101.8

We are updating the Guide to address certain updates in State privacy and consumer protection laws, including the California Consumer Privacy Act that goes into effect on January 1, 2020.

Guide impact: Section 1301.2

Freddie Mac does not require Escrow accounts to be established except for Borrower-paid mortgage insurance paid on a monthly basis and when required by applicable law.

To support responsible lending and sustainable homeownership, we are introducing a requirement that Sellers that sell Mortgages without Escrow accounts must have a written policy for waiving Escrows. The policy must include a consideration of the Borrower’s ability to pay taxes, insurance and any other charges when they become due. In addition, although not a requirement, Freddie Mac encourages Sellers to require Escrows as a best practice for the following Mortgages:

• Mortgages to Borrowers that are First-Time Homebuyers
• Home Possible® Mortgages
• HomeOne℠ Mortgages
• Mortgages secured by 2- to 4-unit properties
• Mortgages secured by Manufactured Homes
• Second home Mortgages
• Investment Property Mortgages
• Mortgages where the Borrower has less than six months of reserves
• Refinance Mortgages where taxes were past due on the Mortgage being refinanced

Flood insurance:

This bulletin is updating the guide to highlight that servicers must have policies, procedures and controls in place to meet the requirements for continuous monitoring of the flood insurance policy and the flood zone of a property securing a mortgage owned by Freddie Mac.

Additional Guide updates and reminders:

Investor reporting requirements, Updates to Forms 1061, Certificate of Incumbency and Authority to Draft Against Custodial Accounts, and 1062, Sight Draft, Lead-based paint reporting requirements, Deed-in-lieu of foreclosure inspection requirements and more.

See bulletin for all details.

Announcing the availability of Freddie Mac Servicing Data Corrections to automates a Servicer’s data correction requests and replaces several manual form submission processes.

It is a centralized portal through which Servicers may electronically submit data correction requests related to:

• Adjustments to third-party foreclosure sales
• Short sales
• Charge-offs
• Mortgage modification settlements
• ARM rates
• Modifications to principal and interest payments
• Rollbacks

Sec. 3240 is amended to 

• provided that a purchaser's deed is void if the mortgagor, the mortgagor's heirs or personal representative, or any person that has a recorded interest in the property redeems the entire premises sold by paying the amount required within the applicable time limit 
• define the amount required to be paid is the amount that was bid for the entire premises sold, interest from the date of the sale at the interest rate provided for by the mortgage, the amount of the sheriff's fee paid by the purchaser, and an additional $5.00 as a fee for the care and custody of the redemption money if the payment is made to the register of deeds
• the redemption amount may include the amounts the purchaser, the purchaser's heirs or personal representative, or any person lawfully claiming under the purchaser or the purchaser's heirs or personal representative paid for taxes assessed against the property, amounts necessary to redeem senior liens from foreclosure, condominium assessments, homeowner association assessments, community association assessments, or premiums on an insurance policy covering any buildings located on the property, plus interest, providing specific requirements are met
• If the redemption payment includes an amount used to redeem a senior lien from a nonjudicial foreclosure, the mortgagor has the same defenses against the purchaser with respect to the amount used to redeem the senior lien as the mortgagor would have had against the senior lien

Section 3238 provides

• for a mortgage executed on or after January 1, 1965, of commercial or industrial property, or multifamily residential property in excess of 4 units, the redemption period is 6 months from the date of the sale
• for a mortgage executed on or after January 1, 1965, of residential property not exceeding 4 units, if the amount claimed to be due on the mortgage at the date of the notice of foreclosure is more than 66-2/3% of the original indebtedness secured by the mortgage, the redemption period is 6 months
• for a mortgage of residential property not exceeding 4 units, if the property is abandoned, the redemption period is 1 month
• for a mortgage of property that is used for agricultural purposes, the redemption period is 1 year from the date of the sale
• for all others, the redemption period is 1 year from the date of the sale
• the amount stated in any affidavits recorded under this section is the amount necessary to satisfy the requirements for redemption under this section
• the register of deeds of a county with a population of more than 750,000 and less than 1,500,000, at the request of a person entitled to redeem the property under this section, shall determine the amount necessary for redemption

Please see HB 4226 for complete details.

• Revises the minimum threshold for national banks and federal savings associations to conduct stress tests from $10 billion to $250 billion
• Revises the frequency by which certain national banks and federal savings associations are required to conduct stress tests 
• Reduces the number of required stress testing scenarios from three to two 
• Makes certain additional technical changes to the stress testing requirements

See CFPB FAQs here

Section 1518, Employment Transition of Loan Originators, was added to the S.A.F.E. Act to allow temporary authority to MLOs to originate loans when transitioning jobs.

Temporary Authority to Originate When Moving from Depository to Non-Depository Institution

Upon becoming employed by a State-licensed mortgage company, an individual who is a registered loan originator shall be deemed to have temporary authority to act as a loan originator in an application State for the period beginning on the date the individual submits the information required and ending on the earliest of the date

• (A) on which the individual withdraws the application to be a State-licensed loan originator in the application State; 
• (B) on which the application State denies, or issues a notice of intent to deny, the application; 
• (C) on which the application State grants a State license; or 
• (D) that is 120 days after the date on which the individual submits the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.

Temporary Authority to Originate When Moving Interstate

A State-licensed loan originator shall be deemed to have temporary authority to act as a loan originator in an application State for the period beginning on the date on which the State-licensed loan originator submits the information required and ending on the earliest of the date

• (A) on which the State-licensed loan originator withdraws the application to be a State-licensed loan originator in the application State;
• (B) on which the application State denies, or issues a notice of intent to deny, the application;
• (C) on which the application State grants a State license; or
• (D) that is 120 days after the date on which the State-licensed loan originator submits the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.

Definitions

• State-licensed mortgage company: an entity that is licensed or registered under the law of any State to engage in residential mortgage loan origination and processing activities.
• Application state: State in which a registered loan originator or a State-licensed loan originator seeks to be licensed.

The state of Texas enacted provisions relating to the temporary authority of certain individuals to engage in business as a residential mortgage loan originator (RMLO). 

• Incorporates federal changes to the federal SAFE Act, to establish the criteria by which a mortgage loan originator license applicant is eligible to operate as a mortgage loan originator in this state on temporary authority during pendency of the applicant's mortgage loan originator license application

Hawaii House Bill 988 provides a 120-day temporary authority to originate loans in Hawaii for loan originators moving from a depository institution to a non-depository institution and state-licensed loan originators moving interstate.

1. WAC 208-620-232, the requirement to apply for and obtain a license waiver for each transaction was added to make that requirement clear.

2. WAC 208-620-301(6), added more information to clarify what must be included in a supervisory plan.

3. WAC 208-620-490, subsection (1)(e) added the requirement that disclosure of new control people must be added at least ten days prior to the change. Subsection (1)(f) adds clarification about responses to disclosure questions and the uploading of explanatory information. Subsection (1)(g) adds clarification that any change from that provided in the original application requires notification to the director. Subsection (5) changed the time period within which to provide notice to the department of data breaches and actions by employees is shortened to thirty days.

4. WAC 208-620-520, subsection (3)(l) was amended to clarify that recorded communications, if made, must be kept as part of the file correspondence or log. Subsection (4)(c) was amended to clarify that the requirement to keep recorded telephone conversations only applies if you record telephone conversations. Licensees do not need to start recording telephone conversations if they otherwise don't record them.

5. WAC 208-620-555, this section was amended to reduce confusion around the fees that are allowed to be charged for the different types of loan products (junior lien mortgage, first lien mortgage, consumer loans, etc.).

6. WAC 208-620-560, the section was also amended to reduce confusion around the types of fees that are restricted or conditional for the different types of loan products.

7. WAC 208-620-563, this section was also amended to reduce confusion about prohibited fees for the different types of loan products.

8. WAC 208-620-622, language was moved and other changes were made to clarify existing requirements.

9. WAC 208-620-630(8), this subsection was amended to make it current with federal law.

10. WAC 208-620-700(10), technical changes were made to this subsection.

11. WAC 208-620-710, subsection (3)'s subsections were reordered with no changes to the language. Subsection (19) language about date received requirements were removed because the nationwide mortgage licensing system provides this functionality.

12. WAC 208-620-715, language was amended for accuracy and citation was provided.

13. Changes also include a new version of the model “Rate Lock Agreement” required by Ibid. § 19.146.030(2)(c) & (3) and Wash. Admin. Code §§ 208-620-510(3) & (4), 208-660-006, and 208-660-430(3)(c)

Rate Lock Agreement changes include:

• The title of the document has been changed from “Interest Rate Lock Agreement” to “Residential Mortgage Interest Rate Lock Agreement” 
• Citation references on the new document include only Wash. Rev. Code Ann. § 19.146.030(2)(a) and Wash. Admin. Code § 208-620-510(3)
• The first two paragraphs have been streamlined into two sentences
  
• The table on the form has had a caption change from “Describe Other Terms and Conditions [etc.]” to “Describe Other Terms and Conditions of the Interest Rate Lock:”

• Loan originators with temporary authority are loan originators who were previously registered or licensed, are employed by a state-licensed mortgage company, are applying for a new state loan originator license, and meet other criteria specified in the statute
• Under the interpretive rule, employers are not required to conduct the screening and ensure the training of loan originators with temporary authority 
• The state will perform the screening and training as part of its review of the individual’s application for a state loan originator license.

Effective November 30, 2019, but may be implemented immediately

• Loan Modification without a Financial Evaluation (section III.A.3.c.iv(C)) paragraph title has been changed to Disaster Loan Modification.
• Eligibility for Loan Modification without Financial Evaluation (section III.A.3.c.iv(C)(1)) has been modified to allow Mortgagees to confirm Borrower employment and income using a recent pay stub for Income, a W-2, a bank statement or other documentation reflecting the amount of income. As an alternative to providing income documentation, the borrower can complete a three month Trial Payment Plan (TPP) to confirm income has returned to pre-disaster levels. The TPP does not have to be signed by the borrower.  
• Terms of the Loan Modification (section III.A.3.c.iv(C)(2)) has been modified to delete the Trial Payment Plan requirement, allow the term of the modified mortgage to be less than 360 months from the modification effective date and allow the interest rate to be equal to or less than the Market Rate as defined by HUD.  
• Disaster Standalone Partial Claim (new section III.A.3.c.iv(D)) has been added to provide a streamlined alternative Loss Mitigation solution that Mortgagees may use with disaster-affected borrowers who do not qualify for a Disaster Loan Modification. As a Trial Payment Plan is not required, the requirement that the Borrower demonstrates the ability to resume total monthly mortgage payments of Principal and Interest (P&I) has been eliminated. A signed Trial Payment Plan is no longer required and the borrower can make three consecutive monthly mortgage payments as an alternative to income and employment documentation.
• For Disaster Loss Mitigation Permanent Retention Options (Disaster Loan Modification, Disaster Standalone Partial Claim and FHAHAMP) utilized to cure a delinquency associated with a PDMDA, the requirement that a borrower can only receive a Loan Modification and/or FHA-HAMP once within a 24-months period has been eliminated. Borrower(s) can only receive one Permanent Loss Mitigation Home Retention Option for a PDMDA.
  
• Required Financial Evaluation for other Loss Mitigation Home Retention Options (section III.A.3.c.iv(D)) has been redesignated as subparagraph (E) and modified to apply to Borrowers who do not qualify for either the Disaster Loan Modification or Disaster Standalone Partial Claim Options.
• Home Disposition Options (section III.A.3.c.iv(E)) has been redesignated as subparagraph (F).
• Suspension of Reporting to Consumer Reporting Agencies (section III.A.3.c.iv(F)) has been redesignated as subparagraph (G).
• Waiver of Late Charges (section III.A.3.c.iv(G)) has been redesignated as subparagraph (H).