Compliance Calendar

In response to servicer feedback and to provide greater clarity, we updated our requirements for managing loss draft proceeds and other unapplied funds being held in the taxes and insurance (T&I) custodial account by 

• removing ambiguous language regarding monthly monitoring activities, and
• requiring the servicer to have written policies and procedures in place to actively identify and monitor unapplied funds until resolution. 

Include new Fannie Mae corporate address in all assignment forms after March 31 

Fannie Mae has extended the effective date for mortgage assignment forms to April 1 to give lenders more time to update their assignments, and additional flexibility for document custodians to certify loans that still have the previous address. All loans with notes dated on or after April 1 must have the new Fannie Mae address on the associated assignment. 

In December 2018, we announced that our corporate address had changed and updated the following mortgage assignment forms with the new address: 

1100 15th Street, NW 

Washington, DC 20005 

• Form 3741
• Form 3742 
• Form 3743 
• Form 3744 
• Form 3745 
• Form 3746 

However, to avoid potential certification delays, lenders should begin using our new corporate address as soon as possible. 

NOTE: Document custodians have until March 31 to certify loans with assignments with the previous address. New assignments are mandatory for loans with notes dated on or after April 1. 

NOTE: Mortgage assignments are used for non-MERS loans

To provide flexibility to lenders delivering into Fannie Majors, any combination of seller/servicer numbers will now be accepted. This change will allow for the delivery of multiple servicer numbers per seller number.

Effective Date

Lenders can take advantage of this change for pools with issue dates beginning April 1, 2019.

Chapter 5 has been revised to reflect updates to VA systems, facilitate expeditious processing of VA-guaranteed loans and incorporate all appropriate Circulars. Key changes include:

• Chapter 5, Topic 3 has been updated to reflect the documents that must be submitted to VA for prior approval of loans. 
• Chapter 5, Topic 3 provides an updated list of the documents required to request a Loan Guaranty Certificate following the closing of a prior approval loan.
• Chapter 5, Topic 4 lists the documents that must be submitted when a loan is selected for Full File Loan Review.   

• Disclosures
• Limited liability and error resolution
• Periodic statements
• Posting of account agreements
• Overdraft credit features

Modified rule published January 2018.

On April 3, the Virginia governor signed SB 1737, which provides a 30-day stay of eviction and foreclosure proceedings for furloughed federal employees and contractors during a partial closure of the federal government. 

The law grants a tenant or homeowner who defaults on a housing payment after December 22, 2018, a 30-day stay on eviction or foreclosure proceedings. 

The tenant or homeowner must provide “written proof” that they were subject to a furlough, or were not otherwise receiving wages, as a result of the partial government shutdown that began on December 22, 2018. The tenant or homeowner must be an 

(i) employee of the federal government; 

(ii) a federal government contractor; or 

(iii) an employee of a contractor for the federal government. 

The law is effective immediately and expires on September 30 [2019].

We require lenders to self-report several matters to us, including breaches of selling warranties, suspected misrepresentation or fraud, loan data and eligibility issues, and issues related to the quality control function. Previously, all self-reporting was done via an email mailbox. With the transition to our new and improved loan quality management system, Loan Quality Connect^™, the process for self-reporting will now occur more efficiently within that system. The Guide has been updated to remove references to the mailbox and replace them with references to Loan Quality Connect.

HomeReady mortgage is our premier affordable lending product designed for creditworthy low- to moderate-income borrowers, offering expanded eligibility for financing homes in low-income communities. We have updated our HomeReady policies to include the following: 

• Multiple financed properties: We are imposing a maximum limit of two financed properties, including the subject property, for all HomeReady mortgage loans. Financed properties owned by a non-occupant borrower do not have to be included. The additional reserves required for multiple financed properties are not applicable to HomeReady loans.
• Boarder income: Our current policy states that a boarder may not be obligated on the mortgage loan. We are clarifying that the boarder may also not have an ownership interest in the property.
• Mortgage insurance coverage: We are clarifying that HomeReady loans combined with HomeStyle^® Renovation may be delivered with the lower level of mortgage insurance coverage permitted for HomeReady.

Effective Date

Lenders may implement these policies immediately. Desktop Underwriter^® (DU^®) will be updated to include the multiple financed property policy and boarder ownership policy in a future release, at which time these will be required for DU loan casefiles. For manually underwritten loans, lenders must apply these policies for loans with application dates or after June 15, 2019.

Evaluating Property Damage After a Disaster Event for Current Mortgage Loans

• We are updating the Servicing Guide D1-3-01 to authorize, but no longer require, servicers to make contact attempts and perform property inspections for a mortgage loan that is current at the time of the disaster event and remains current following the disaster event. 
• Servicers remain responsible for inspections and borrower outreach in accordance with existing Servicing Guide requirements if the mortgage loans subsequently become delinquent.

Allowable Foreclosure Fees for New Hampshire, Maine and Washington, and Fee Proration Related to Milestone Billing

• We are updating the Allowable Foreclosure Attorney Fees Exhibit to
  
  • increase the maximum allowable foreclosure attorney fees for New Hampshire and Maine, 
  • add an additional $200 allowable fee in Maine for processing a third-party foreclosure sale, and 
  • create a new allowable fee for Washington e-Note judicial foreclosure actions.
• E-5-05 is being updated to clarify that servicers must compensate the law firm for the amount of work actually performed if the foreclosure action is cancelled and not completed, regardless of whether the first or any subsequent milestone invoicing event has been reached. 
  • Servicers must ensure the fees are reasonably prorated to the services rendered.
• These policy changes are effective as follows:
  
  • The new allowable foreclosure fees apply to all matters referred to counsel for initiation of foreclosure proceedings, regardless of referral date, as long as the matter is still active as of April 10, 2019. 
  • The Maine third-party foreclosure sale fee applies to third-party sales that take place on or after April 10, 2019. 
  • The fee proration clarification applies to the law firm’s services invoiced on or after April 10, 2019. We are not requiring servicers to re-open and review compensation for matters in which a law firm’s invoice was previously denied because the next milestone invoicing event had not yet been reached.

Mortgage Electronic Registration Systems (MERS®) Policy Consolidation

• We have consolidated shared requirements for sellers and servicers related to the use of MERS in Part B of the Selling Guide.

Custodial Accounts Update

• As outlined in F-1-03, Establishing and Implementing Custodial Accounts, the following have been updated to align with the language for how custodial accounts must be titled: 
  • Letter of Authorization for P&I Custodial Account (Form 1013) 
  • Letter of Authorization for T&I Custodial Account (Form 1014)

QAS Transition to LQC

• In accordance with Announcement SEL-2019-01, the Servicing Guide has been updated to remove references to the Quality Assurance System (QAS) in anticipation of the upcoming transition to Loan Quality Connect (LQC).

Disaster-related requirements for current Mortgages

Previously, in the event of an Eligible Disaster, Servicers were required to ascertain the number of Mortgages impacted and the extent of damages caused to each Mortgaged Premises, which Servicers may determine through discussions with the Borrower and/or a property inspection. This requirement may be unnecessarily burdensome in situations where a Mortgage was current or no more than 30 days delinquent at the time of the Eligible Disaster and does not become more than 30 days delinquent following the event.

To provide flexibility for Servicers so they can focus their efforts on assisting Borrowers who are or become more than 30 days delinquent, Servicers may, but are no longer required to, determine the extent of damages caused to the Mortgaged Premises where the Mortgage was current or 30 or fewer days delinquent at the time of the Eligible Disaster. However, should such a Mortgage subsequently become more than 30 days delinquent, Servicers must initiate collection efforts in accordance with Guide Chapters 9101 and 9102 and order property inspections as required by Section 9202.12.

Guide impact: Section 8404.2

Exhibit 57 updates

In Bulletin 2018-26, we announced that Servicers could maintain and execute winterization and yard maintenance without seasonal time frame restrictions.

In response to Servicer inquiries, we are revising Exhibits 57 and 74 to simplify the winterization and yard maintenance expense amount descriptions.

Guide impacts: Exhibits 57 and 74

Single Security Initiative

In Bulletin 2019-7, we updated the Guide to reflect updated requirements to the Note Rate to Coupon spreads and a reduction in the maximum Servicing Spread for Mortgages serving as collateral for Uniform Mortgage-Backed Security and Mortgage-Backed Security (MBS), effective for Mortgages sold under Freddie Mac’s fixed-rate Guarantor or MultiLender Swap program with Settlement Dates on or after June 3, 2019.

Additionally, we revised Guide sections related to the sale of fixed-rate Mortgages with annual- and monthly-premium lender-paid mortgage insurance to reflect the 50 basis points maximum Minimum Contract Servicing Spread for Mortgages sold under the fixed-rate Guarantor and MultiLender Swap programs.

As a reminder, the FHFA has instructed Freddie Mac and Fannie Mae to monitor the Weighted Average Coupon (WAC) of MBS and take actions as appropriate such that MBS WAC would be generally consistent with historical WAC levels. The FHFA, Freddie Mac and Fannie Mae are working to determine an appropriate target MBS WAC, such as 80 basis points or slightly higher (given current guarantee fees and minimum servicing levels).

Document Custody Procedures Handbook

Based on comments and questions received and as part of our annual review, on March 13, 2019, we updated the Document Custody Procedures Handbook to add clarification around Note exceptions regarding affidavits, powers of attorney, and to make other revisions and clarifications.

• We’ve updated the Pro Rata Fees and Milestone Invoicing language across all AAA matrices and also updated the Maine, New Hampshire, and Washington (judicial e-Note) allowable foreclosure fees. 
• In addition, we removed the legal review requirement and note for New York settlement conferences.

Effective for reimbursement claims submitted in the Freddie Mac Reimbursement System on and after April 18, 2019

We are revising our attorney fee reimbursement amounts and certain Servicer requirements related to: 

• Uncontested foreclosures
• Bankruptcy services
• Other legal expense items

Uncontested foreclosures

We are increasing the approved Servicer reimbursement amounts for attorney fees associated with uncontested foreclosures in the States listed in Guide Exhibit 57A.

Bankruptcy services

In response to numerous changes made when Servicing Mortgages where the Borrower has filed for bankruptcy protection, we are increasing the approved Servicer reimbursement amounts for attorney fees associated with certain bankruptcy services as follows:

[See bulletin for table]

Other legal expense items

We are increasing the limit for expense code 600021 (Skip Trace/Investigative Report) from $90 to $160.

Reminder on reasonable and customary fees and costs

As a reminder, Servicers must verify that legal fees and costs incurred are reasonable and customary for the area in which the Mortgaged Premises is located. For reimbursement of expenses that exceed the current expense limits in Exhibit 57A, Servicers must request Freddie Mac's approval prior to incurring the expense.

Guide impacts

We are updating Exhibits 57A and 74 to reflect these changes.

The clarifying amendments in this final rule are largely technical in nature.

Section 701.20 Suretyship and guaranty.

(c) Requirements.

The final rule makes minor conforming amendments to § 701.20(c).

(c)(2).

The final rule makes conforming amendments to the section governing requirements for suretyship or guaranty agreements by removing outdated cross-citations to the loans to one borrower or group of associated borrowers limit in §§ 723.2 and 723.8 of the member business lending regulation and adding an updated cross-citation to § 723.4(c).

Section 701.21

(c) General rules.

(c)(4) Maturity.

The final rule divides § 701.21(c)(4) into two new paragraphs. One paragraph, § 701.21(c)(4)(i), states the general rule that loans carry a 15-year maturity. The other, § 701.21(c)(4)(ii), makes more explicit that there are exceptions to the general 15-year maturity limit in § 701.21(e) through (g) for various types of credit union loans.

(c)(4)(i) General rules.

The final rule maintains all of current § 701.21(c)(4) in § 701.21(c)(4)(i), which articulates the general 15-year maturity limit that exists on FCU loans. However, the final rule also adds language to clarify that the maturity for a new loan under GAAP is calculated from the new date of origination.

(c)(4)(ii) Exceptions.

Section 701.21(c)(4)(ii) of the final rule explicitly states, in three paragraphs ((c)(4)(ii)(A), (B), and (C)), that there are three exceptions to the general 15-year maturity limit and cross-cites to § 701.21(e) through (g) as follows:

(c)(4)(ii)(A).

Section 701.21(c)(4)(ii)(A) of the final rule cross-cites to the exception to the general 15-year maturity limit in § 701.21(e) regarding covered loans secured, in full or in part, by the insurance or guarantee of, or with an advance commitment to purchase the loan, in full or in part, by the Federal Government, a State Government or any agency of either.

(c)(4)(ii)(B).

Section 701.21(c)(4)(ii)(B) of the final rule cross-cites to the exception to the general 15-year maturity limit in § 701.21(f) regarding covered home improvement, mobile home, and second mortgage loans.

(c)(4)(ii)(C).

Section 701.21(c)(4)(ii)(C) of the final rule cross-cites to the exception to the general 15-year maturity limit in § 701.21(g) regarding covered 1-4 family real estate loans.

(c)(5) Ten percent limit.

The final rule revises § 701.21(c)(5) to add cross-citations to the specific requirements on loans to a single borrower or group of associated borrowers in the loan participation rule, § 701.22(b)(5)(iv), and member business lending rule, § 723.4(c).

(e) Insured, Guaranteed, and Advance Commitment Loans.

The final rule revises § 701.21(e) to make more explicit that the maturity limits applicable to loans covered by paragraph (e) are notwithstanding the general 15-year limit in paragraph (c)(4). The final rule also adds a cross-citation to paragraph (c)(4).

(f) 20-Year Loans.

The final rule retains almost all of current § 701.21(f), but inserts some additional language to improve clarity.

(f)(1).

The final rule revises § 701.21(f)(1) to make more explicit that the maturity limit applicable to loans covered by paragraph (f) is notwithstanding the general 15-year limit in paragraph (c)(4). The final rule also adds a cross-citation to paragraph (c)(4).

(g) Long-Term Mortgage Loans.

The final rule retains almost all of § 701.21(g), but inserts some additional language to improve clarity.

(g)(1).

The final rule revises § 701.21(g)(1) to make more explicit that the maturity limit applicable to loans covered by paragraph (g) is notwithstanding the general 15-year limit in paragraph (c)(4). The final rule also adds a cross-citation to paragraph (c)(4).

Section 701.22

(b).

As described in more detail below, the final rule makes minor conforming amendments to § 701.22(b) regarding loan participations.

(b)(1).

The final rule updates the cross-citation in § 701.22(b)(1), which provides that for a federally insured credit union to purchase a participation interest in a loan, the loan must comply with all regulatory requirements to the same extent as if the purchasing federally insured credit union had originated the loan. Specifically, the final rule changes the outdated cross-citation in § 701.22(b)(1) from § 723.8 to § 723.4(c).

On April 26, the South Carolina Servicemembers Civil Relief Act (the “Act”) was signed into law and went into immediate effect. The Act seeks to “expand and supplement” the federal Servicemembers Civil Relief Act (“SCRA”), and provides that an SCRA violation constitutes a violation under the Act. The Act expands servicemember protections in a few important ways:

1. the Act’s definition of “military service” covers members of the South Carolina National Guard who are on active duty (as defined by the statute) for a period of more than 30 days;
2. the Act’s protections extend to dependents of servicemembers engaged in military service; and
3. a servicemember may terminate certain types of contracts after receiving “military orders to relocate for a period of service of at least ninety days to a location that does not support the contract” without being subject to an early termination fee.

The Act includes a private cause of action and, in the event of an intentional violation, the Act provides for a civil penalty not to exceed $5,000 per violation that is to be retained by the state. The Act applies to contracts entered into on or after April 26, 2019.

Changes identified in Section II.A may be implemented immediately (March 27, 2019), but must be implemented for mortgages with case numbers assigned on or after April 29, 2019.

New Jersey Senate Bill 3416 is amended as follows:

• The New Jersey Residential Mortgage Lending Act "shall apply to residential mortgage lenders, residential mortgage brokers, mortgage loan originators, and any other persons or entities that are located out-of-State, provided that they are otherwise required to be licensed pursuant to the provisions of that act in the State"
• The Notice of Intent to Foreclose is amended to require new language: "that the lender is licensed in accordance with the "New Jersey Residential Mortgage Lending Act," sections 1 through 39 of P.L.2009, c.53 (C.17:11C-51 through C.17:11C-89)"

New Jersey Assembly Bill 5001 revises the statute of limitations for residential mortgage foreclosures. An action to foreclose a residential mortgage shall not be commenced following the earliest of:

• Six years from the date fixed for the making of the last payment or the maturity date set forth in the mortgage or the note, bond, or other obligation secured by the mortgage
• Thirty-six years from the date of recording of the mortgage, or, if the mortgage is not recorded, 36 years from the date of execution, so long as the mortgage itself does not provide for a period of repayment in excess of 30 years
• Six years from the date on which the debtor defaulted, which default has not been cured, as to any of the obligations or covenants contained in the mortgage or in the note, bond, or other obligation secured by the mortgage, except that if the date to perform any of the obligations or covenants has been extended by a written instrument or payment on account has been made, the action to foreclose shall not be commenced after six years from the date on which the default or payment on account thereof occurred under the terms of the written instrument

Effective immediately and applies to residential mortgages executed on or after the effective date.

New Jersey Assembly Bill 5002 permits certain planned real estate developments to file certain liens; concerns limited priority of certain liens.

• Associations shall have a lien on each unit for any unpaid assessments, including any late fees, fines, expenses, and reasonable attorney's fees imposed or incurred in the collection of the unpaid assessment
• Liens which are a result of customary assessments are limited to the six-month period prior to the recording of the lien. This limited priority shall be cumulatively renewed on an annual basis as necessary.
• A lien of an association shall not be granted priority over a prior recorded mortgage or mortgages under this subsection if a prior recorded lien of the association for unpaid assessments 1, not including the cumulative annual renewal of the limited priority provided in paragraph (1) of this subsection, has obtained priority over the same recorded mortgage or mortgages as provided in this subsection, for a period of 60 months from the date of recording of the lien granted priority.
• The provisions of this section shall not apply to cooperatives. 

New Jersey Senate Bill 3413 makes certain changes to summary action foreclosure process under "Fair Foreclosure Act."

• Adds "representatives of a common interest community association" as eligible parties to provide statements indicating that the residence is vacant and abandoned
• "A summary action to foreclose a mortgage debt secured by residential property that is vacant and abandoned shall be brought by a lender in the Superior Court"
• "In addition, a lender shall file with the court, in accordance with the Rules Governing the Courts of the State of New Jersey, an application to proceed in a summary manner because the residential property that is the subject of the foreclosure action is believed to be "vacant and abandoned"; provided, however, that this section shall not apply to a foreclosure of a timeshare interest secured by a mortgage"
• "the sheriff shall sell the property within 60 days of the sheriff's receipt of any writ of execution issued by the court if: (a)  the court makes a finding in the foreclosure judgment that the property is vacant and abandoned; or (b) the court issues an order directing the sheriff to sell the property within 60 days, pursuant to the provisions of subsection k. of this section
• If it becomes apparent that the sheriff cannot comply with the provisions of paragraph (1) of this subsection, the foreclosing plaintiff shall apply to the court for an order appointing a Special Master or judicial agent to hold the foreclosure sale , within 60 days of the date of application
• k.  (1)  Following issuance of a foreclosure judgment, in which the court did not make a finding that the property is vacant and abandoned, a foreclosing plaintiff may make application to the court for the property to be sold by the sheriff within 60 days of the date of application.  The application shall include a certification that the mortgaged real estate is vacant and abandoned.
        (2)  Upon application that meets the criteria set forth in paragraph (1) of this subsection, the court shall issue an order directing the sheriff to sell the property in accordance with the provisions of subsection j. of this section. A hearing shall not be required unless the application is contested.