Compliance Calendar

The five federal regulatory have modified the Volcker rule’s prohibition on banking entities investing in or sponsoring hedge funds or private equity funds by: 

• streamlining the covered funds portion of rule;
• addressing the extraterritorial treatment of certain foreign funds; and 
• permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address.

Reporting Mortgages impacted by COVID-19

We have converted default reason code 032 from “Contaminated Drywall” to “National Emergency Declaration”, as announced in Bulletin 2020-7. Exhibit 82, Electronic Default Reporting Transmission Code List has been updated to reflect this change.

Guide Impact: Exhibit 82

Current Mortgages

Effective October 1, 2020, but Servicers are encouraged to implement the changes immediately

In Bulletin 2020-25, we announced that Servicers are required to report all Mortgages that are approved for forbearance plans (including those that are not delinquent) via monthly EDR submissions.

We are clarifying that the Servicer must report the default reason code; default action code, and default action date in its EDR submission immediately following the date the Borrower was approved for a forbearance plan.

In the example provided in Bulletin 2020-25, where the Borrower who contacted his/her Servicer on June 24, 2020 and requested a forbearance plan beginning with his/her July 1, 2020 payment due to a COVID-19 related hardship, the Servicer would report the following in their July 2020 EDR reporting no later than the third Business Day of July 2020:

• Default reason code: 032 (National Emergency Declaration)
• Default action code: 09 (Forbearance)
• Default action date: 7/1/2020 (Due Date of the first payment due under the forbearance plan)

However, due to temporary system constraints, Servicers are currently unable to submit a future date when reporting the default action date. Therefore, if a Borrower has prepaid on future payments, or otherwise requests a forbearance plan with a future effective date that would begin later than the Servicers next EDR submission, the Servicer must delay reporting until the earlier of the month the forbearance plan begins (i.e. the expected first missed payment under the forbearance plan), or Freddie Mac’s system updates have been completed on October 1, 2020. For example, if a Borrower contacts his/her Servicer on June 24, 2020 to request a forbearance plan beginning with his/her August 1, 2020 payment due to a COVID-19 related hardship, the Servicer would report the following in its August 2020 EDR reporting no later than the third Business Day of August 2020:

• Default reason code: 032 (National Emergency Declaration)
• Default action code: 09 (Forbearance)
• Default action date: 8/1/2020 (Due Date of the first payment due under the forbearance plan)

Freddie Mac will update its system by October 1, 2020 to remove this constraint. Beginning with October 2020 EDR submissions, which reflect September 2020 activity, Servicers must report all forbearance plans to Freddie Mac in the EDR submission immediately following the date the Borrower was approved for a forbearance plan.

Guide Impact: Section 9102.7

Washington Senate Bill 5641 adopts the 2018 uniform law commission amendments to the uniform law on notarial acts that include acts performed by remotely located individuals.

Currently eligible HECM non-borrowing spouses currently have 90 days after the death of the last surviving HECM borrower to establish legal ownership or other ongoing legal right to remain in the property, with this announcement FHA has issued a temporary partial waiver superseding ML 2014-07 and subsequent ML 2015-02 in response to continued COVID-19 concerns.

FHA recognizes the National Emergency declaration and resulting closures of courthouses, government offices, and other businesses may make it difficult for an eligible NBS to obtain the needed documents to establish legal ownership or legal right to remain in the property securing the HECM. FHA issued this partial waiver — which allows an eligible NBS to enter into a deferral period and avoid foreclosure if they are unable to meet the 90-day requirement because of circumstances beyond their control that are related to the COVID-19 National Emergency. The temporary partial 90-day Right to Remain waiver is limited to a 12-month period from the date of issuance.

Updates to the Allowable Foreclosure Attorney Fees Allowable Foreclosure Attorney Exhibit to reflect a change to the maximum allowable foreclosure attorney fees for mortgage loans secured by properties in Hawaii.

Incorporation of disaster payment deferral. We have incorporated the disaster payment deferral workout option introduced on Jul. 15, 2020 in LL-2020-11, and subsequently updated on Aug. 27, 2020, into the Servicing Guide. In connection with this incorporation, we have also added references to payment deferral throughout the Guide as applicable.

Effective: As of Oct. 1, 2020, servicers must evaluate borrowers for a disaster payment deferral in lieu of Extend Modification for Disaster Relief and Cap and Extend Modification for Disaster Relief, which will be retired as of said date.

Forbearance without achieving QRPC in a disaster event. We have updated the authority to offer an initial forbearance plan of up to three months without achieving QRPC in connection with a disaster event.

Master Agreements. As a result of the simplification of our lender contract process, we no longer issue Master Agreements for the delivery or servicing of certain special mortgage loan products or other mortgage loans that are at variance with standard Fannie Mae policies. Therefore, we have removed all references to Master Agreements from our Selling and Servicing Guides.

Freddie Mac is introducing the Payment Deferral for Disaster Relief ("Disaster Payment Deferral") to assist Borrowers who have been impacted by an Eligible Disaster.

• Under the terms of a Disaster Payment Deferral an eligible Borrower will be brought current by deferring delinquent amounts to create a non-interest bearing balance that will become due at the earlier of the Mortgage maturity date, payoff date or upon transfer or sale of the Mortgaged Premises.
• The remaining Mortgage term, interest rate schedule (i.e., whether a fixed-rate Mortgage, an ARM or Step-Rate Mortgage) and maturity date of the Mortgage will remain unchanged.

Please see Bulletin 2020-28 for:

• Eligibility requirements and exclusions
• Determining the terms of the Disaster Payment Deferral
• Completing a Disaster Payment Deferral
• Evaluation hierarchy
• Extend Modification and Capitalization and Extension Modification
• Solicitation for a Disaster Payment Deferral
• Solicitation for a Flex Modification
• Flex Modification evaluations for failed Disaster Payment Deferral
• Reduced Flex Modification requirements
• Workout Prospector®
• Reporting requirements
• Other requirements

Fannie Mae is introduce a new retention workout option for borrowers with resolved financial hardships related to disasters, Disaster Payment Deferral.

Effective: As of Oct. 1, 2020, servicers must evaluate borrowers for a disaster payment deferral in accordance with this Lender Letter in lieu of Extend Modification for Disaster Relief and Cap and Extend Modification for Disaster Relief, which will be retired as of such date. 

This Lender Letter contains the following:

▪ Determining eligibility for a disaster payment deferral

▪ Determining eligibility for a disaster payment deferral for a Texas Section 50(a)(6) loan

▪ Performing an escrow analysis

▪ Determining the disaster payment deferral terms

▪ Completing a disaster payment deferral

▪ Soliciting the borrower for a post-forbearance disaster payment deferral

▪ Soliciting the borrower for a Fannie Mae Flex Modification

▪ Processing a disaster payment deferral for an MBS mortgage loan

▪ Reporting a delinquency status code for a disaster payment deferral

▪ Reporting a disaster payment deferral to Fannie Mae

▪ Processing a disaster payment deferral for a mortgage loan with mortgage insurance

▪ Handling fees and late charges in connection with a disaster payment deferral

▪ Incentive fees

▪ Servicing fees

▪ Paying expenses and requesting reimbursement related to a disaster payment deferral

▪ Default after completing a disaster payment deferral 

▪ Evaluation hierarchy for a borrower impacted by a disaster 

▪ Update to Fannie Mae Flex Modification eligibility criteria 

▪ Updates to the Investor Reporting Manual E

Please see the ML for complete details.

FHA issued a temporary partial waiver for eligible Home Equity Conversion Mortgage (HECM) Non-Borrowing Spouses (NBS) to enter into a deferral period and avoid foreclosure if they are unable to meet the 90-day requirement to obtain the needed documents to establish legal ownership or legal right to remain in the property securing the HECM as a result of the COVID-19 National Emergency.

Freddie Mac is clarifying that Guide Section 9102.7 requires Servicers to report all alternatives to foreclosures, which includes forbearance plans, via EDR, on all mortgages, including those that are not delinquent. 

• Updated reporting requirements to require Servicers to include the reason for default when reporting a forbearance via EDR, regardless of delinquency status or length 
  • These updated requirements apply to all mortgages regardless of the reason for default
• Within the first three Business Days each month, Servicers must report all status and event codes for mortgages that are on a forbearance plan in the prior month, including Mortgages that are not delinquent
  • Default reason code (see Guide Exhibit 82, Electronic Default Reporting Transmission Code List)
  • Default action code: 09 (Forbearance) 
  • Default action date - Servicers must report the due date of the first payment due under the forbearance plan. 
    • For mortgages with due dates other than the first day of the month, Servicers must report the default action date as the first day of the month in which the payment is due

Note: If the Servicer has previously reported Mortgages on forbearance plans that do not reflect the default action date as outlined above, the Servicer must update the default action date in their next EDR submission.

Servicers must continue to report this information each month until the forbearance plan has ended or until the Mortgage is current and no longer on a forbearance plan.

Servicers are encouraged to adopt these reporting requirements immediately, but must do so no later than their October 2020 EDR submission, which reflects September 2020 activity.

We will update Section 9102.7 and Exhibit 82 in a future Bulletin.

Technical effective date October 1, 2020; however, provides for at least a 27-month transition period for compliance based on a bank’s size and business model.

• 1/1/23 - Community Reinvestment Act (CRA) Final Rule - Large Banks, Wholesale and Limited Purpose Banks
• 1/1/24 - Community Reinvestment Act (CRA) Final Rule - Small and Intermediate Banks w/ Performance Standards

In the interim, a performance evaluation conducted after October 1, 2020, and before January 1, 2023 or 2024, as applicable, would permit banks to rely on the current performance standards and tests or on the final rule.

Effective October 1, 2020

Chapter 1302 requires that Seller/Servicers have and maintain an information security program and business continuity plan that ensures the Seller/Servicer's ongoing ability to conduct business operations with Freddie Mac. We are updating the Guide to make explicit that a Seller/Servicer's obligation to implement minimum information security program requirements includes requirements to reduce the impact and likelihood of unauthorized access to Freddie Mac proprietary information in the Seller/Servicers' files, records, storage facilities and systems of any Third party provider (TPP) or other Related Third Party. Specifically, a Seller/Servicer must obligate each TPP and any other Related Third Party to comply with certain requirements to safeguard and maintain the security, confidentiality and availability of systems, data and information.

Seller/Servicers have until October 1, 2020 to make sure that these minimum information security program requirements are met.

Capitalized terms used above that are not defined in the Glossary are defined in Section 1401.2 or 2401.1.

Guide impacts: Sections 1302.1, 1302.3 and 1401.2

See Circular 26-20-14 Change 1 for clarifications.

Purpose. The purpose of this Circular is to announce the Department of Veterans Affairs (VA) new automated Appraisal Management Service (AMS) for use in enhancing the appraisal review process prior to issuance of the Notice of Value (NOV). AMS will provide Lender Appraisal Processing Program (LAPP) and Servicer Appraisal Processing Program (SAPP) Staff Appraisal Reviewers (SARs) assistance in quickly assessing appraisal risk for property eligibility, VA policy compliance violation, over/under-valuation, and appraisal quality issues.

VA awarded the new AMS contract to Veros. Currently, CoreLogic is providing the AMS for purchases, refinances, Lender Appraisal Processing Program (LAPP) and Servicer Appraisal Processing Program (SAPP) appraisal orders. CoreLogic currently provides a scoring of all appraisals through an in-depth evaluation of the appraisal report by a robust analytic process. This process will be transitioned to Veros, with the same level of appraisal scoring and evaluation.

Action. Effective October 1, 2020, SARs will be held accountable for performing review work in accordance with this Circular. This will allow SARs a transition period from the date of this Circular through September 30, 2020, to obtain training and become proficient in the use of the VeroSCORE with their appraisal reviews.

Update: Bulletin 2020-13 provides that Freddie Mac is updating its underwriting requirements for SOFR-indexed ARMs to permit Sellers to submit SOFR-indexed ARMs to legacy Loan Product Advisor (v4.8.01) beginning October 1, 2020. Additional information and documentation related to this update will be provided to Loan Product Advisor software vendors and lenders in a subsequent communication.

Bulletin 2020-09

Updating the Guide to add a definition of “SOFR Index” to the Glossary and to reflect our eligibility, underwriting and delivery requirements for SOFR-indexed ARMs.

Sellers will be able to take out 30-day Average SOFR Cash Contracts in Loan Selling Advisor to deliver SOFR-indexed ARMs.

Sellers will be able to take out 30-day Average SOFR guarantor contracts in Loan Selling Advisor® to deliver Mortgages into a WAC ARM PC.

Announcing that the 30-day Average SOFR uniform ARM Notes and riders are now available on our Uniform Instruments web page for Sellers to use.

As a reminder, Seller/Servicers must not engage in a Transfer of Servicing involving 30-day Average SOFR-indexed ARMs with any Transferee Servicer that has not developed the operational capacity or capability to service 30-day Average SOFR-indexed ARMs.

As announced in Bulletin 2020-1, under FHFA guidance, Freddie Mac will cease purchasing CMT-indexed ARMs at some point in 2021. We are developing plans to execute that guidance and will publish definitive requirements in a future Bulletin under the guidance of the FHFA. We are informing Sellers so that they may take this into consideration when developing their business and operational LIBOR transition plans. We do not recommend that Sellers increase their CMT-indexed ARM deliveries to Freddie Mac to address the expiration of LIBOR ARM purchases.

As announced in Bulletin 2020-1, under FHFA guidance, Freddie Mac will cease purchasing CMT-indexed ARMs at some point in 2021. We are developing plans to execute that guidance and will publish definitive requirements in a future Bulletin under the guidance of the FHFA. We are informing Sellers so that they may take this into consideration when developing their business and operational LIBOR transition plans. We do not recommend that Sellers increase their CMT-indexed ARM deliveries to Freddie Mac to address the expiration of LIBOR ARM purchases.

Effective for Mortgages with Application Received Dates on and after October 1, 2020 and Settlement Dates on and after January 1, 2021

• Freddie Mac will not purchase any LIBOR-indexed ARM with an Application Received Date on and after October 1, 2020
• Freddie Mac will no longer purchase LIBOR-indexed ARMs on and after January 1, 2021, regardless of the Application Received Date or Note Date
• We will update the Guide in a future Bulletin to reflect these changes

Maryland Senate Bill 678 

• alters the qualifications an individual must have to be appointed as a notary public;
• authorizes certain persons to charge a certain fee for the performance of a certain notarial act; 
• authorizes a notarial officer to perform certain notarial acts except under certain circumstances; 
• prohibits certain individuals from charging a fee to perform a notarial act; 
• provides for the manner in which notarial acts for remotely located individuals are to be performed except under certain circumstances; etc.

HUD is enhancing FHA’s CWCOT procedures by: 

• providing for a second appraisal upon vacancy for a property that had an exterior-only appraisal, where an interior appraisal could not be obtained; 
• allowing Mortgagees to submit eviction costs and certain eligible property preservation expenses incurred during Post-Foreclosure sales opportunities; 
• updating the policy and allowable fee structure regarding independent third-party providers that conduct foreclosure sales or PostForeclosure Sales Efforts under CWCOT procedures; and 
• regularly updating discounts in FHA Connection and changing to tierbased pricing factors. After the property’s appraised value has been established, employees of a Mortgagee authorized to access the CAFMV link in FHA Connection should visit https://entp.hud.gov/clas/inde... to determine a property’s CAFMV.

Please see ML for complete details.

FHA published a temporary policy waiver that suspends the standard inspection requirement for “interior” photographs of the property when performing damage inspections on properties pending mortgage closing or endorsement in designated Presidentially-Declared Major Disaster Areas (PDMDAs).

Homeowners Association insurance verification

In response to Seller inquiries, we are updating our requirements for property insurance for Planned Unit Developments (PUDs) and leasehold lessees within a ground lease community. Sellers are no longer required to verify insurance for the Common Elements in a PUD and ground lease community or to verify if a master or blanket insurance policy provides insurance coverage for Common Elements. Sellers must continue to verify and maintain evidence of insurance as required by the Guide on any individual unit in a PUD and ground lease community, or a PUD master/blanket insurance policy as required in Section 4703.2.

Guide impact: Section 4703.2

PUD Guide chapter updates

For ease of use with respect to locating the requirements and characteristics that must be met for a project to be classified as a PUD, we are adding the existing Glossary definition for a PUD in Section 5702.1. We are also providing guidance that zoning is not the basis for a real estate project being classified as a PUD.

Additionally, other commonly used Glossary terms in Section 5702.1 are identified and linked to the Glossary.

Guide impacts: Sections 1301.11 and 5702.1

Currently, Mortgages for which the Borrower is a "trust of any type" are not eligible to be delivered as eMortgages. We are updating our requirements to indicate expressly that this includes any Mortgage for which the Borrower is a Living Trust, or any Mortgage where a non-individual entity is required to sign the loan documents including the eNote.

If the Borrower is a Living Trust in addition to the Underwritten Settlor, the Trustee must sign the Note on behalf of the Trust entity. Due to complications in authenticating the non-individual entity and inability to obtain consumer consent from that non-individual entity, these Mortgages are not eligible to be sold as eMortgages.

Additionally, we are also updating our requirements to indicate that Land Trust Mortgages, Community Land Trust Mortgages and Section 184 Native American Mortgages for which the Borrower is an individual can be sold as eMortgages since the borrowers on such Mortgages are individuals, provided the Seller is approved to sell such Mortgages to Freddie Mac.

Loan Selling Advisor has been updated to prohibit the delivery of the Mortgage types noted above as eMortgages

Guide impact: Section 1402.7

Currently, the Guide states that unless specifically permitted, the HomeReady mortgage may not be used in conjunction with variances in the Lender Contract. Recognizing that HomeReady is now a well-established product, we are simplifying our Guide requirements to remove this restriction.

Ask Poli is used to determine where the Selling Guide could be clarified. This month, the Guide has been updated to address common questions related to:

• Cash-out refinance transaction vesting requirements when there are multiple borrowers on a loan. Currently, the Guide states “the property must have been purchased (or acquired) by the borrower at least six months prior to the disbursement date of the new mortgage”, and it lists some exceptions. We clarified that this requirement applies to “at least one borrower” on the loan to address situations where there is more than one borrower.

• Use of gifts of equity. We clarified that gifts of equity may be used to fund all or part of the down payment and closing costs (including prepaid items) but may not be used towards financial reserves.

This mortgagee letter provides changes to HUD’s Loss Mitigation for Borrowers Affected by COVID19 (III.A.3.d) update existing COVID-19 Forbearance and COVID-19 Standalone Partial Claim options published in ML 2020-06, and introduce the following COVID-19 Home Retention and Disposition Options:

• COVID-19 Owner-Occupant Loan Modification

• COVID-19 Combination Partial Claim and Loan Modification

• COVID-19 FHA-HAMP Combination Loan Modification and Partial Claim with Reduced Documentation

• COVID-19 Non-Occupant Loan Modification

• COVID-19 Pre-Foreclosure Sale (PFS)

• COVID-19 Deed-in-Lieu (DIL) of Foreclosure

SFDMS Reporting Requirements are updated for the COVID-19 Loss Mitigation Options.

The update to section III.A.2.k.(B) states that a COVID-19 Home Retention Option does not count against a borrower’s limit of one FHA-HAMP agreement within 24 months.

The temporary allowance for the use of tri-merge credit reports with scores from third parties expired on September 30, 2020.

USDA has updated Handbook HB-1-3555 Chapter 18, Servicing Non-Performing Loans - Accounts with Repayment Problems, to correct discrepancies, clarify servicing guidelines and re-format for better flow.

Paragraph 18.1

• Provided a clearer description for Sections 3, 4 and 5 of the chapter.
  

Section 2: Loss Mitigation

• Added additional regulatory citation in the heading.
  
  

Paragraph 18.4

• Changed “will be denied” to “may be denied” under paragraph C.
  
  

Paragraph 18.15

• Revised introduction and replaced “eligible borrowers may be offered” to “servicers may offer eligible borrowers” and revised the bulleted format in the items following the introduction paragraph.
• Replaced PITIA with principal and interest in the 4th bullet under Capitalization of Delinquency and Term Extension.
• Removed first statement under Mortgage Recovery Advance.
  
  

Attachment 18-A: Loss Mitigation Guide

• Added “via USDA Lender Interactive Network Connection (USDA LINC) in first bullet under sub-item “A” under Loss Mitigation Overview.
• Removed last statement under sub-item “Q” under General.
• Removed “holders” in sub-item “E” under Special Forbearance.
• Additional guidance inserted in sub-item “K” regarding borrower eligibility for a Mortgage Recovery Advance due to Natural Disaster under Loan Modification.
• Added mailing address in sub-item “O” for Documentation submissions under Loan Modification.
• Revised the numbering format.
• Replaced “Settlement Statement” with “Closing Disclosure under sub-item “G” under Pre-Foreclosure Sale.
• Removed “Appendix 7” and replaced with “Attachment 18-B in sub-item E for Documentation under Deed in Lieu of Foreclosure.

Electronically recorded closing and post-closing documents

If the Seller/Servicer received an Electronic copy of the electronic recordation with recording information therein or a Recording Confirmation from the recorder’s office when paper closing or post-closing documents were sent for recording, the Seller/Servicer was required to deliver a paper copy of such document to the Document Custodian. Seller/Servicers can now deliver the Electronic copy returned from the recorder’s office to the Document Custodian.

If the closing or post-closing documents are created electronically and:

• The Seller/Servicer receives an Electronic copy of the recorded electronic document with recording information therein or a Recording Confirmation from the recorder’s office, the Seller/Servicer is required to deliver the original Electronic documents and Electronic copy of the recording information returned from the recorder’s office to the Document Custodian
• The Seller/Servicer receives a paper copy of the recorded electronic document with recording information therein or a Recording Confirmation from the recorder’s office, the Seller/Servicer is required to deliver an Electronic scanned copy of the original documents and Electronic copy of the recording information returned from the recorder’s office to the Document Custodian

Note: If the Document Custodian is not able to receive Electronic copies of the documents, the Seller/Servicer must deliver a paper copy of the document to the Document Custodian.

Guide impacts: Sections 1401.14 and 1401.15

Delivery requirements for modifications of eMortgages

As announced in Bulletin 2020-33, Seller/Servicers are required to deliver the recorded modification agreement to the eNote custodian. As Seller/Servicers can either receive a Modification Agreement with recording information therein and/or another form of the Recording Confirmation from the recorder’s office, we are allowing Seller/Servicers to deliver either a recorded Modification Agreement, with recording information therein, or a Recording Confirmation to the eNote custodian.

Guide impacts: Sections 1402.10 and 1402.11

NCUA is adopting as final an interim final rule previously published to defer the requirement to obtain an appraisal or written estimate of market value for up to 120 days following the closing of certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate, effective October 14, 2020, through December 31, 2020.

In response to servicer inquiries and in an effort to repair properties that experience an insured loss event as expeditiously as possible, we are updating our requirements for determining the mortgage loan status for disbursing insurance loss proceeds for a borrower impacted by COVID-19. The servicer must consider the loan to be current or less than 31 days delinquent for purposes of disbursing insurance loss proceeds if

▪ the borrower experienced a COVID-19 related hardship;

▪ the mortgage loan was current or less than two months delinquent as of Mar. 1, 2020, the effective date of the National
Emergency declaration related to COVID-19; and

▪ at the time of the loss event, the borrower is performing on a COVID-19 related forbearance plan, repayment plan, or Trial Period Plan.

The servicer must otherwise disburse the proceeds in accordance with Servicing Guide B-5-01, Insured Loss Events.

The servicer must document in the mortgage loan servicing file the date that the COVID-related hardship began and the date of the insured loss event.

The VMS Valuation Order Template has been updated to require the foreclosure sale date be completed when a servicer is requesting the property valuation for bidding instructions.

At the request of the Treasury Department, we have revised our Evaluation Notices and payment deferral agreement with regard to a borrower maintaining or losing HAMP “pay for performance” incentives to eliminate such action being tied to “good standing”. With the November Servicing Guide update, we will also be revising this language as it relates to D2-3.2-06, Disaster Payment Deferral.

Additionally, we have revised the Evaluation Notices in accordance with recent policy updates to remove references to disaster event policies.

As a reminder, all communications with borrowers must comply with applicable law

ELECTRONIC PAYMENT DEFERRAL AGREEMENTS

Following the announcement in Bulletin 2019-18 on e-modifications and Bulletin 2020-6 on the Freddie Mac Payment Deferral and as part of our continued commitment to Reimagine Servicing℠, we are updating our Mortgage relief requirements to allow Servicers to use an Electronic Payment Deferral Agreement to memorialize a Payment Deferral for paper Notes and eMortgages. We are making this change to further allow Servicers and Borrowers more flexibility.

Freddie Mac will not reimburse any costs resulting from a Servicer's decision to use an Electronic Payment Deferral Agreement, and the Borrower may not be charged for any associated costs.

Refer to Guide Sections 9203.27 and 1402.11 for Electronic Payment Deferral Agreement processing requirements.

Refer to Section 1401.2 for the definition of "Electronic" and "Electronic Signature" with respect to paper Notes when using an Electronic Payment Deferral Agreement and Section 1402.2 for the definition of "eMortgages."

Electronic Payment Deferral documents

As with eModification Agreements and other loss mitigation documents, in lieu of paper documents, a Servicer may prepare, sign and send Payment Deferral documents to the Borrower for the Borrower's Electronic signature and Electronic return to the Servicer, provided these transactions comply with the Guide, including the requirements in Sections 1401.17 and 9206.19.

All Electronic loss mitigation documents, including Payment Deferral documents and any other Electronic Mortgage file documents are considered Electronic Records and must be able to be retrieved and printed in a manner that accurately reflects the information they originally contained. Additionally, all Electronic Records must be accessible, either electronically or on paper, and made available to Freddie Mac upon request.

Refer to Section 1401.2 for the definitions of "Electronic," "Electronic Records" and "Electronic Payment Deferral Agreement" and Section 1401.17 for the definition of "loss mitigation documents."

General requirements for all Electronic Payment Deferral Agreements

Servicers must:

• Process, modify and store Electronic Payment Deferral Agreements for Freddie Mac Mortgages in accordance with all applicable industry standards, and in the same manner they do when processing, modifying and storing their own Electronic Payment Deferral Agreements for Mortgages they own or service for others
• Consult with their legal counsel to ensure that the use, processing, modification and storage of an Electronic Payment Deferral Agreement complies with all applicable federal, State and local laws
• Provide for Electronic notarization when applicable and required, subject to applicable law and the requirements set forth in Section 1401.16
• Comply with all requirements in the Servicing Contract to service the Mortgage, as modified by an Electronic Payment Deferral Agreement including, but not limited to, Servicing obligations related to a payoff or short sale (e.g., cancelation of the Mortgage, Note and Electronic Payment Deferral Agreement), grant of a deed-in-lieu of foreclosure, foreclosure, repurchase of an electronically modified Mortgage and litigation
• Notify the Freddie Mac Legal Division via email at Legal_eMortgage@freddiemac.com before initiating legal action, including foreclosure, on a Mortgage that has been completed using an Electronic Payment Deferral Agreement, and cooperate with Freddie Mac to determine appropriate actions and strategies to undertake in such legal proceedings. Additionally, the Servicer must use counsel that has the experience or demonstrated ability to enforce claims under Electronic Payment Deferral Agreements, electronically created Mortgages, Notes or other financial instruments.
• Ensure that the signing platform has a robust audit trail of all key events starting from the creation of the Electronic Payment Deferral Agreement through and including Servicer and Borrower execution (as applicable) that the Servicer can provide to Freddie Mac upon request

If the Servicer must have the payment deferral agreement recorded or in recordable format to comply with the requirements in Sections 9203.23(a) and 1402.10, the Servicer may use an Electronic Payment Deferral Agreement, provided the Servicer is able to comply with the recording jurisdiction's recordation and Electronic format requirements set forth in Section 1401.15.

Document custodial requirements

For paper Notes:

Note: If the Document Custodian is not able to accept Electronic documents, the Servicer must deliver a paper copy of the Electronic Payment Deferral Agreement explicitly designated as a copy and a paper copy of the recorded Electronic Payment Deferral Agreement to the Document Custodian.

For eMortgages:

If MERS eDelivery is not available for delivery of the Electronic documents, then delivery by Electronic means (e.g., email) to Freddie Mac or the Freddie Mac approved third-party eNote custodian is acceptable. If Freddie Mac is the eNote custodian, deliver the Electronic documents to loan_delivery_funding_ops@freddiemac.com.

Refer to Section 1402.2 for the definitions of "eNote," "eVault" and "MERS eDelivery."

Storage and safekeeping of Electronic Payment Deferral Agreement

Servicers must store Electronic Payment Deferral Agreements in an eVault or similar eStorage System (as defined in Section 1402.2) and must store copies of Electronic Payment Deferral Agreements (including printed paper copies or facsimiles thereof) in the Mortgage file in accordance with the Guide requirements for storing Mortgage file documents. Electronic Payment Deferral Agreements must be logically associated with all paper and Electronic Mortgage file documents so that all Servicing records (both paper and Electronic), which constitute the Mortgage file, are identified and associated with the affiliated Mortgage transaction.

Transfers of Servicing

Upon a Transfer of Servicing involving Mortgages with an Electronic Payment Deferral Agreement, the Transferor Servicer must comply with Section 7101.2(b)(ii) and inform the Transferee Servicer of the name of the eVault or eStorage System holding the Electronic Payment Deferral Agreement. The Transferor Servicer must ensure that its eVault or eStorage System provider transfers the Electronic Payment Deferral Agreement and all related data to the Transferee Servicer's eVault or eStorage System provider in a manner that ensures the ongoing validity and enforceability of the Electronic Payment Deferral Agreement and its associated Electronic Signature (as defined in Section 1401.2). A Transferor Servicer may not satisfy its obligations under this section by relying on Section 7101.8(a) by generating paper copies of payment deferral agreements for the Transferee Servicer.

Disaster Recovery/Business Continuity Plan

Refer to Section 1302.3 for Seller/Servicer business continuity planning requirements.

Guide impacts

We have updated Section 1402.11 and created new Section 9203.27 to outline our requirements for Electronic Payment Deferral Agreements.

TRANSFERS OF OWNERSHIP AND ASSUMPTIONS

Based on Servicer feedback, as well as feedback from Freddie Mac internal stakeholders, we are expanding requirements in Section 8406.4(b) that will provide more flexibility for Borrowers where certain Transfers of Ownership of the Mortgaged Premises may be appropriate.

Guide Chapter 8406 addresses permissible Transfers of Ownership with or without an assumption of liability, and also with or without a release of the transferor from liability. Servicers are now authorized to process Transfers of Ownership where Borrowers transfer title of the Mortgaged Premises to a limited liability company (LLC) or limited partnership (LP) under our permitted Transfers of Ownership requirements, provided the original borrower is a managing member or general partner of the entity to which the ownership is being transferred, and subject to other Guide requirements. Unless the previous Borrower, if applicable, requests a release of liability, the Servicer must process these exempt transactions without reviewing or approving the terms of the transfer.

If the transfer is pursued under Chapter 8406, Servicers are reminded to make any disclosures required by applicable law and take action necessary to continue any required insurance coverage, including mortgage insurance, where applicable.

Guide impact: Section 8406.4

ELIGIBLE DISASTERS

Disaster Payment Deferral

Effective October 1, 2020

As announced in Bulletin 2020-28, on October 1, 2020, we introduced Payment Deferral for Disaster Relief ("Disaster Payment Deferral") to assist Borrowers who have been impacted by an Eligible Disaster. We have added new Section 9203.26 and new Guide Exhibits 1101 and 1102 and updated Sections 9206.4 and 9206.5 and the Glossary to reflect these changes.

Guide impacts: Sections 9203.26 (new), 9206.4, 9206.5, Glossary, Exhibits 1101 (new) and 1102 (new)

Disaster forbearance

As announced in Bulletin 2020-34, Servicers may now place a Borrower who becomes 31 or more days delinquent after being impacted by an Eligible Disaster in a forbearance plan for up to 90 days. We have updated Section 8404.4 to reflect this change.

Guide impact: Section 8404.4

ADDITIONAL GUIDE UPDATES

COVID-19 Payment Deferral eligibility

In response to Servicer feedback, we are expanding eligibility for the COVID-19 Payment Deferral to include Mortgages originated after March 1, 2020. If a Mortgage was originated after March 1, 2020, the effective date of the National Emergency Declaration related to COVID-19, and otherwise meets all criteria to qualify for a COVID-19 Payment Deferral as described in Bulletin 2020-15, then the Servicer is delegated to approve and offer the COVID-19 Payment Deferral.

Clarification on Home Affordable Modification Program (HAMP) Pay for Performance incentives

Bulletin 2020-5 required Servicers to inform a Borrower with a Home Affordable Modification Program (HAMP) Mortgage that a Payment Deferral will result in the Mortgage's loss of good standing, and the Borrower will no longer be eligible for future HAMP incentives, including any Pay for Performance incentive that they might otherwise have received. With this Bulletin, we are amending the verbiage used in our previous announcement. A Borrower in good standing under HAMP who completes a Payment Deferral will be withdrawn from HAMP (as opposed to "loss of good standing"). Servicers must adhere to existing Making Home Affordable reporting requirements to reflect this status change, as applicable. In these instances, the Servicer continues to be responsible for communicating to the Borrower that completing a Payment Deferral will make them ineligible for any future pay for performance incentives.

Additionally, we are reminding Servicers that removal of a Mortgage from HAMP upon completion of a Payment Deferral does not apply to a COVID-19 Payment Deferral or a Disaster Payment Deferral, provided that the Borrower's has a COVID-19 related hardship or the hardship is the result of an Eligible Disaster, and:

• The Borrower was on a COVID-19 forbearance plan or a disaster related forbearance plan immediately preceding the COVID-19 Payment Deferral or Disaster Payment Deferral, or
• The Borrower has a COVID-19 related hardship or an Eligible Disaster hardship and the Mortgage is less than 90 days delinquent

Exhibits 93 and 1100 have been updated to reflect these edits. Servicers must amend the COVID-19 Payment Deferral Agreement, provided as Attachment A to Bulletin 2020-15, as applicable.

Guide impacts: Exhibits 93 and 1100

Updates to Exhibit 93

We have updated Exhibit 93 to incorporate the HAMP Pay for Performance clarification as well as remove references to the now retired Capitalization and Extension Modification for Disaster Relief and the Extend Modification for Disaster Relief. Additionally, some minor edits have been incorporated to accommodate updates to credit reporting requirements described in Bulletin 2020-28.

Guide impact: Exhibit 93

EDR reports

We have amended the EDR Loans Not Reported report described in Section 9102.7(b) so that it now identifies any Mortgage that was reported as 90 or more days delinquent during the prior month, but was omitted from the current month's EDR transmission and it was not reported as fully reinstated or paid off, that a foreclosure sale was held, or a workout option was completed. Previously, the EDR Loans Not Reported report included all such loans that were reported as 30 or more days delinquent during the prior month. The Servicer's responsibilities pertaining to Mortgages included on the report do not change, except that the report will no longer include Mortgages that are less than 90 days delinquent.

As a result of this change, the EDR Compliance Overview report is no longer relevant and has been eliminated. The Servicer is no longer responsible for any requirements pertaining to the EDR Compliance Overview report.

Guide impact: Section 9102.7

Servicing Gateway additions

Effective October 23, 2020

As part of our efforts to Reimagine Servicing℠, we are adding the following platforms to the Servicing Gateway, both of which have previously been made available on a standalone basis:

• eBill, a tool that brings increased efficiency to invoicing, invoice review and payments
• BPODirect^®, a tool for obtaining property valuations

Both tools are "Systems" within the meaning of Chapter 2401, and the Guide has been updated to reflect BPODirect's availability via the Servicing Gateway. Both tools will be available on the Servicing Gateway on October 23, 2020.

Guide impacts: Sections 2406.4, 9202.18 and 9206.8

Guide Form 99V, Certificate of Incumbency and Wire Transfer Authorization: Default Fees and Claims Vendor

Form 99V, Certificate of Incumbency and Wire Transfer Authorization: Default Fees and Claims Vendor, is being added to the Guide to be consistent with the Counterparty Authorization (CPA) existing processes and guidelines. This existing process is being adopted by the CPA team effective immediately. In addition, the information formerly found in Exhibit 98, Expense Reimbursement/Incentive Payment Authorization for ACH Credits, has been moved to Form 98, Vendor Authorization to Transfer Expense Reimbursement and Incentive Payments Through the Automated Clearing House (ACH), and Guide cross-references for Exhibit 98 have been updated to Form 98. These forms have been in effect for a number of years for Default Fees and Claims vendors (vendors providing services for REO). Some of the language has changed, but both forms remain the same in content, and there are no changes to Guide requirements. They will be subject to recertification every 24 months.

Guide impacts: Sections 2101.12, 2201.1, 2405.1, 9102.1, 9204.6, Exhibit 98, Forms 98 and 99V (new)

"Note" definition

The definition of "Note" will not change on November 1, 2020, as previously announced in Bulletin 2020-29. Instead, the definition of "Note" will remain unchanged.

Guide impact: Glossary

Guide updates from previous Bulletins

Concurrent Transfers of Servicing involving CHOICERenovation Mortgages

In Bulletin 2020-36, we updated Sections 7101.4 and 7101.15 regarding Concurrent Transfers of Servicing involving CHOICERenovation Mortgages with renovations not completed by the Settlement Date (as described in Section 4607.1(b)), which are now permitted, provided the special requirements in Section 4607.18(a) are met.

Additionally, Form 960, Agreement for Concurrent Transfer of Servicing of Single-Family Mortgages, has been updated to identify whether an agreement includes CHOICERenovation Mortgages with renovations not completed by the Settlement Date. An approved Seller (as Transferor Servicer) and Transferee Servicer must complete Form 960, select this type of Mortgage on the updated form and obtain Freddie Mac's approval (indicated by Freddie Mac executing and returning a copy of Form 960 to the Transferor Servicer and Transferee Servicer) before transferring Servicing for CHOICERenovation Mortgages with renovations not completed by the Settlement Date.

Electronically recorded closing and post-closing documents

In Bulletin 2020-38, we announced updates to Sections 1401.14 and 1401.15 regarding electronically recorded closing and post-closing documents. Previously, the Seller/Servicer received an Electronic copy of the Electronic recordation with recording information therein or a Recording Confirmation from the recorder's office when paper closing or post-closing documents were sent for recordation. The Seller/Servicer was then required to deliver a paper copy to the Document Custodian. Seller/Servicers can now deliver the Electronic copy returned from the recorder's office to the Document Custodian.

If the closing or post-closing documents are created electronically and:

• The Seller/Servicer receives an Electronic copy of the Electronic recordation with recording information therein or a Recording Confirmation from the recorder's office, then the Seller/Servicer is required to deliver an Electronic scanned copy of the documents and Electronic copy of the recordation returned from the recorder's office to the Document Custodian
• The Seller/Servicer receive a paper copy of the Electronic recordation with recording information therein or a Recording Confirmation from the recorder's office, then the Seller/Servicer is required to deliver the original Electronic documents and Electronic copy of the recordation returned from the recorder's office to the Document Custodian

Note: If the Document Custodian is not able to receive Electronic copies of the documents, the Seller/Servicer must deliver a paper copy of the document to the Document Custodian.

Delivery requirements for modifications of eMortgages

In Bulletin 2020-38, we announced updates to Sections 1402.10 and 1402.11 regarding electronically recorded closing and post-closing documents. Currently, Seller/Servicers are required to deliver the recorded modification agreement to the eNote custodian. As Seller/Servicers can either receive a Modification Agreement with recording information therein and/or another form of the Recording Confirmation from the recorder's office, we are now allowing Seller/Servicers to deliver either a recorded Modification Agreement, with recording information therein, or a Recording Confirmation to the eNote custodian.

Remote Online Notarization (RON)

Bulletin 2020-35 announced and updated our storage requirements of the notarial ceremony for documents notarized using a Remote Online Notarization (RON) process. In Bulletin 2020-38, we updated the existing storage requirements in Section 1401.16 to reflect that as announced in Bulletin 2020-35, Seller/Servicers must maintain the recording of the notarial ceremony for the greater of (a) 10 years or (b) the period specified in the RON law of the State in which the notary is licensed.

Fannie Mae has generated a DU Validation Service Q&A resource for loan origination controls.

Fannie Mae announces Desktop Underwriter® (DU®) validation service will discontinue validation of employment and income using manual verification reports received on or after Oct. 17, 2020. There are no changes to employment and income validation using automated verification reports.

Lenders may continue to use third-party employment verification vendors to obtain income and employment
information without validation from DU in accordance with the requirements contained in Section B3-3.1-02 of the Selling Guide.

Fannie Mae has updated the Selling Guide to align with the recent update to the DU validation service to discontinue validation of employment and income using manual verification reports.

Lenders may continue to use third-party employment verification vendors to obtain income and employment information in accordance with the requirements outlined in our Selling Guide.

Fannie Mae has updated LL-2020-03 to extend the verbal verifications of employment and power of attorney flexibilities to November 30, as well as move the remote online notarization policies into the Selling Guide.

Powers of attorney: providing flexibilities for use of a power of attorney UPDATED May 5, 2020, Jun. 11, 2020, Jul. 9,
2020, Aug. 27, 2020, Sep. 24 and Oct. 19, 2020 with new effective date

Remote online notarization: UPDATED May 5, 2020, Aug. 27, 2020, Oct. 19, 2020 The remote online notarization policies previously published in this Lender Letter have been moved into the Selling Guide. See A2-4.1-03, Electronic Records, Signatures, and Transactions and SEL-2020-06 for additional information.

Verbal verification of employment: offering flexibilities related to the lender’s process for obtaining the verbal verification of employment. UPDATED May 5, 2020 with new effective date and removed the reference to the DU
validation service UPDATED Jun. 11, 2020, Jul. 9, 2020, Aug. 27, 2020, Sep. 24, and Oct. 19, 2020 with new effective
date

Fannie Mae has updated LL-2020-04 to the application dates eligible for these temporary flexibilities to November 30, 2020, unless otherwise noted. The following temporary flexibilities are extended:

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

Freddie Mac Bulletin 2020-40 extends the effective date for the following temporary flexibilities for mortgages with application received dates through November 30, 2020: employed income 10-day preclosing verifications; appraisal and GreenCHOICE Mortgages®; condominium projects; and power of attorneys.

This ML updates ML 2020-06 by allowing Mortgagees to approve Borrowers to begin a COVID-19 Forbearance or HECM Extension Period no later than December 31, 2020.

Fannie Mae has updated LL-2020-06 to extend the flexibilities of selling loans in forbearance due to COVID-19 flexibilities of note dates to November 30 and delivery to January 31.

This bulletin announces extensions to the purchase of eligible mortgages in forbearance with note dates on or before November 30, 2020 and settlement dates on or before January 31, 2021.

Freddie Mac announces that electronic Billing (eBill) and BPODirect® will be added to Servicing Gateway On October 26, 2020, and access will start being managed through Access Manager.

Extension of Re-verification of Employment Guidance and Updated Appraisal Scope of Work Option

Extended to December 31, 2020

USDA has extended the temporary exceptions originally issued on March 27, 2020, pertaining to appraisals, repair inspections, and income verifications due to the COVID-19 pandemic until December 31, 2020.

Residential Appraisal Reports – Existing Dwelling

For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, an “Exterior-Only Inspection Residential Appraisal Report”, (FHLMC 2055/FNMA 2055) will be accepted. In such cases, appraisers are not required to certify that the property meets HUD HB 4000.1 standards. The appraisal must be completed in accordance with the Uniform Standards of Professional Practice (USPAP) and the Uniform Appraisal Dataset (UAD).

This exception is not applicable to existing manufactured housing pilot program, new construction properties, or construction to permanent loans. As a reminder, appraisals are not required for streamlined and streamlined-assist refinance transactions.

Repair Inspections – Existing Dwelling

Loans for which a completion certification is not available due to issues related to the COVID-19 pandemic, a letter signed by the borrower confirming that the work was completed is permitted. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the loan file.

This exception is not applicable to rehabilitation and repair loans noted in section 12.28 of HB-1-3555

Verbal Verification of Employment

Lenders should use due diligence in obtaining the most recent income documentation to verify the borrowers repayment ability prior to closing. When the lender is unable to obtain a Verbal Verification of Employment (VVOE) within 10 business days of loan closing due to a temporary closure of the borrower’s employment, alternatives should be explored. For example, email correspondence with the borrower’s employer is an acceptable alternative to a VVOE. If the lender is unable to obtain a VVOE or acceptable alternative, the requirement will be waived when the borrower has a minimum of 2 months cash reserves.

In the case of a reduction of income, the borrower’s reduced income must be sufficient to support the new loan payment and other non-housing obligations. Borrower’s with no income or those receiving unemployment benefits at the time of closing are not eligible for SFHGLP loans regardless of available cash reserves.

Pennsylvania House Bill 2370 amends Title 57 (Notaries Public) of the Pennsylvania Consolidated Statutes, in Revised Uniform Law on Notarial Acts, further providing for

• authority to perform a notarial act
• a notarial act performed by a remotely located individual
• notification regarding the performance of notarial act on electronic record and selection of technology

FHA issued two temporary partial waivers to its HECM policies effective through December 31, 2020:

Waiver of Borrower Signature Requirement for HECM Assignment Claims

This temporary partial waiver of HECM claim assignments policy from Mortgagee Letter (ML) 2017-05 allows
mortgagees to submit an Assignment Claim without having to obtain a signature from the HECM borrower on an
occupancy certification. Mortgagees are required, however, to continue to obtain annual occupancy certifications from
HECM borrowers.

The requirement to obtain a signed annual occupancy certification is being temporarily waived due to difficulties some
HECM borrowers may be experiencing in receiving and sending mail and other correspondence due to COVID-19-related difficulties. This temporary waiver is effective through December 31, 2020.

Waiver of Maximum Arrearage for Subsequent HECM Property Charge Repayment Plan

FHA also issued a temporary partial waiver of policy originally introduced in ML 2015-11. Today’s partial waiver builds on
the previous HECM COVID-19 repayment waiver, dated April 14, 2020, that expires on October 30, 2020.

It gives mortgagees authority to offer HECM borrowers a repayment plan for unpaid property charges — regardless of
the total outstanding arrearage — by waiving certain requirements outlined in ML 2015-11, and allowing them to repay
property tax arrearages of any amount if they are unable to make two consecutive payments during the COVID-19
National Emergency. This temporary partial waiver is also effective through December 31, 2020.

See also: https://www.hud.gov/program_of...