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

The lender letter addresses:

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

Please see LL-2020-08 for complete details.

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

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

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

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

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

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

Guide impacts: Sections 1501.4, 4401.4, 4401.5, 6102.1 through 6102.9, 6302.1, 6302.2, 6302.7, 6302.40, 6303.1, 6303.2, 8302.18, Exhibit 17S, Form 15 and the Glossary

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

Building sketch exhibit for appraisal reports

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

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

Subsequent appraisal report clarification

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

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

Representation and warranty framework relief for Mortgages subject to forbearance agreements

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

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

Document custody

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

Original Security Instrument requirements

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

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

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

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

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

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

Updates to Chapter 13 including minor grammatical corrections, added references, removal of paragraphs and modular home guidance.

Updates to Chapter 15 including policy clarifications for the use of electronic signatures, including eNotes and lender due diligence, grammatical changes and paragraph removals.

To provide relief to borrowers who experienced a financial hardship as a result of COVID-19, Title I Lenders may delay filing a claim for up to six months in order to engage in loss mitigation efforts and put in place alternative repayment arrangements to avoid a claim. This six-month extension may be added to the maximum claim period applicable to each of the Title I Loan programs. During this extension period, Title I Lenders are reminded that they must contact the borrower to discuss the reasons for default and explore a cure.

Title I Lenders may pursue modification agreements and repayment plans with borrowers affected by COVID-19 in lieu of sending a notice of default and acceleration.

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

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

• Modification to rental income requirements; and 

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

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

Third-party eNote custody and delivery

As announced in Bulletin 2020-20, Freddie Mac-approved third-party eNote Custodians are required to semi-annually revalidate the Tamper Evident Seal of the eNotes stored in their eNote Vault System against the MERS eRegistry System to ensure the integrity of the eNote.

We are updating the Guide to reflect that, similar to the process used for paper Notes, Document Custodians are no longer required to obtain written permission from Freddie Mac to perform an outgoing transfer of the eNotes on behalf of Freddie Mac.

If instructed by Freddie Mac or the Document Custodian during the on-boarding process, Seller/Servicers must add, or require their Warehouse Lender and Servicing buyer to add, the Document Custodian as the delegatee for transfer on the eNote before initiating the transfer of control to Freddie Mac.

Guide impacts: Section 1402.18 and Form 1035A

Endorsements

Endorsements are not required for eNotes because eNotes are Transferable Records under the Uniform Electronic Transactions Act (UETA) and Electronic Signatures in Global and National Commerce Act (E-SIGN) and not subject to the UCC endorsement requirements applicable to paper promissory notes and other negotiable instruments. The reference to this in Section 1402.4 is being moved to Section 1402.8 and we are adding a related reference in Section 6301.3 for clarity.

Guide impacts: Sections 1402.4, 1402.8, and 6301.3

eModification Agreements

When an eMortgage is modified and recordation is required, the Seller/Servicer must send the recorded modification agreement to the eNote custodian. We are updating the delivery requirements for modifications of eMortgages to detail the required steps based on how the modification is memorized and if and how the Modification Agreement is recorded.

If the modification of an eMortgage is memorialized in a paper modification agreement, the Seller/Servicer must comply with the requirements set forth in Section 9206.17.

If the modification of an eMortgage is memorialized in an eModification Agreement, the Seller/Servicer must meet the requirements outlined in the table.

Additionally, if the modification of an eMortgage is memorized in an eModification Agreement, the Seller/Service must assure that the signing platform has a robust audit trail of all key events, starting from the creation of the eModification Agreement through and including the Borrower and Servicer execution, that the Servicer can reproduce upon request by Freddie Mac.

Note: If MERS eDelivery is not available for delivery of the eModification Agreement and Electronic recordation of the eModification Agreement, delivery by Electronic means (e.g., e-mail) is acceptable. If Freddie Mac is the eNote custodian, deliver the Modification Agreement to loan_delivery_funding_ops@freddiemac.com.

Guide impacts: Sections 1402.10 and 1402.11

eMortgage payoffs

Previously, in States that require the return of a paper Note marked “paid-in-full” when an eMortgage is paid off, the Seller/Servicer was required to deliver a certified paper copy of the eNote to the Borrower. The certified paper copy of the eNote must be accompanied by a letter that explains that the Borrower is receiving a paper copy of the eNote, which was originally registered in the MERS eRegistry, and that the Seller/Servicer has caused the eNote to be de-activated on the MERS eRegistry due to the eMortgage having been paid in full.

The paper copy of the eNote is no longer required to be a certified paper copy. Instead, a paper copy of the eNote (marked “Copy” and “paid-in-full”) along with the letter described above is sufficient.

Guide impact: Section 1402.10

Transfer of Servicing and transfers of custody

In connection with Transfers of Servicing and transfers of custody involving eMortgages, the Servicer must complete Form 1034T, Document Custodial Certification Schedule for Transfer of Custody and Subsequent Transfers of Servicing. The form has been updated to include the MERS eRegistry organizational identifiers of the Transferor and Transferee Servicers and their Document Custodians, which are required to complete the transfer of the eNotes.

Guide impact: Form 1034T

Eligible eMortgage types and products

We are updating Section 1402.7 to eliminate redundant language.

Guide impact: Section 1402.7

D.C. Act 23-405, Coronavirus Support Second Congressional Review Emergency Amendment Act of 2020, amends The Revised Uniform Law on Notarial Acts Act of 2018 to add Sec. 807 Remote notarizations effective August 19, 2020 through November 16, 2020.

The VA extends the Foreclosure Moratorium for borrowers affected by COVID-19 through December 31, 2020.

The VA extends the Eviction Moratorium for borrowers affected by COVID-19 through December 31, 2020.

EXTENSION OF THE COVID-19 FORECLOSURE MORATORIUM

Freddie Mac announces the extension of the moratorium on all foreclosure actions, including foreclosure sales, through December 31, 2020. This includes initiation of any judicial or non-judicial foreclosure process, move for foreclosure judgment or order of sale. This foreclosure suspension does not apply to Mortgages on properties that have been determined to be vacant or abandoned.

DISASTER FORBEARANCE

In the event a disaster strikes, it is important that Servicers be considerate of the Borrower's circumstances and work to obtain quality right party contact (QRPC) with the Borrower as soon as possible. However, we are aware that achieving timely QRPC is not always possible in disaster situations; therefore, in circumstances where the Servicer has not yet achieved QRPC and believes that the Borrower’s hardship is the result of an Eligible Disaster, the Servicer may 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. Servicers must obtain QRPC to approve forbearance for a Borrower who was 31 or more days delinquent at the time of impact due to an Eligible Disaster. We will update Guide Section 8404.4 in a future Bulletin to reflect this change.

In Bulletin 2020-8, we provided requirements related to the use of Remote Online Notarization (RON). Freddie Mac currently requires Sellers to maintain the recording of the notarial ceremony for life of the loan. In response to Seller feedback, we are updating our requirements to provide that the recording of the notarial ceremony must be maintained for greater of (a) 10 years, or (b) the time period specified in the RON law(s) of the State in which the notary is licensed.

This change is effective immediately and aligns Freddie Mac requirements related to the storage of notarial ceremony video recording with the Mortgage Bankers Association-American Land Title Association Model Bill and also the longest storage period of the existing RON laws.

Section 1401.16 will be updated with a future Bulletin to reflect this change.

Extends the effective date temporary requirements for the purchase of Mortgages in forbearance announced in Bulletin 2020-12 and subsequently extended in Bulletins 2020-17, 2020-23 and 2020-30 for Mortgages with Note Dates on or after February 1, 2020 and on or before September 30, 2020, and Settlement Dates on or after May 1, 2020 and on or before November 30, 2020.

Extends the effective date of the following COVID-19 temporary flexibilities for mortgages with application received dates through September 30, 2020:

• Employed income – 10-day pre-closing verification flexibilities announced in Bulletin 2020-5
• Appraisal and GreenCHOICE Mortgage® flexibilities announced in Bulletins 2020-5, 2020-8 and 2020-11
• Condominium Project flexibilities announced in Bulletin 2020-11
• Power of attorney flexibilities announced in Bulletin 2020-8

Extends the temporary credit underwriting requirements and guidance related to the following until further notice, without expiration:

• Income continuance – additional due diligence related to accurate information and Borrower ability to repay announced in Bulletin 2020-5
• Age of income and asset documentation (i.e., 60 days maximum age of documentation) announced in Bulletin 2020-8
• Self-employed Borrowers: verification the business is open and operating announced in Bulletin 2020-8 and updated in 2020-27
• Requirements for stocks, stock options and mutual funds when used as funds for closing and/or reserves announced in Bulletin 2020-8

• Modifies 443.717 to provide that a mortgage loan originators prelicensing education course completed by an individual shall not satisfy the prelicensing education requirement if the course precedes an application by a certain period as established by the NMLSR 
• Imposes additional requirements for brokers doing business in the state under 443.825

USDA is providing additional COVID-19 specific guidance, including: an extension of the foreclosure and eviction moratorium through December 31, 2020; forbearance requirements; and post-forbearance options for borrowers impacted by COVID-19.

The purpose of this Mortgagee Letter (ML) is to inform mortgagees of an extension to the foreclosure and eviction moratorium originally issued in ML 2020-4, extended in ML 2020-13, and further extended in ML 2020-19 for borrowers with FHA-insured Single Family mortgages covered under the Coronavirus Aid, Relief, and Economic Security (CARES) Act for an additional period through December 31, 2020.

USDA announces the extension of temporary exceptions related to COVID-19 through November 30, 2020 for appraisals, repair inspections and income verifications.

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 pf 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.

FHA is re-extending the effective date of ML 2020-05 allowing the flexibilities for appraisals with an effective date on or before October 31, 2020 and verification of employment for cases closed on or before October 31, 2020.

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

The Tenant, Homeowner, and Small Landlord Relief and Stabilization Act of 2020 applies protections, until January 1, 2023, to a first lien mortgage or deed of trust that is secured by residential real property that is occupied by a tenant, contains no more than four dwelling units, and meets certain criteria, including that a tenant occupying the property is unable to pay rent due to a reduction in income resulting from the novel coronavirus.

COVID-19 Tenant Relief Act of 2020

Evictions Under the COVID-19 Tenant Relief Act

• Extends notice period from 3 to 15 days (not including weekends or holidays) to provide tenant additional time to either pay or provide declaration of hardship in response to landlord’s notice to pay rent or quit.
• Tenant cannot be evicted for nonpayment due to a COVID-19 related hardship for rent due between March 1 – August 31, 2020, if tenant returns declaration of hardship under penalty of perjury within 15-day notice period.
• Tenant cannot be evicted for nonpayment due to a COVID-19 related hardship for rent due between September 1, 2020 – January 31, 2021, if tenant returns declaration of hardship under penalty of perjury within 15-day notice period and pays 25% of the missed rent payments for that period by January 31, 2021.
• Higher income tenants (over $100K household income or over 130% of median household income) must provide some form of documentation, as specified in the bill.
• Tenants can be evicted beginning October 5, 2020 if they fail to return COVID-19 related hardship declaration to landlord.
• Applies to all residential rental tenants and mobile home residents, including single-family home and ADU rentals.
• Eviction cases for just causes other than non-payment (e.g., nuisance) can begin September 2, 2020.
• Just cause under AB 1482 (Tenant Protection Act of 2019) is extended to all tenants until February 1, 2021. Delays any eviction cases for non-payment (not due to COVID-19 hardship) until October 5, 2020.
• Amends existing retaliation law to prohibit landlord from evicting a tenant for a reason other than non-payment of rent in retaliation for having unpaid COVID-19 rental debt.

Tenants Still Responsible for Paying Unpaid Amounts to Landlords

• If the tenant complies with the above, any remaining unpaid rent due between March 1, 2020 – January 31, 2021, is not a ground/basis for eviction, but is still owed to the landlord as a form of consumer debt
• Small claims court jurisdiction is temporarily expanded to allow landlords to recover these amounts.
• Landlords may begin to recover this debt on March 1, 2021.

Other Protections for Tenants

• Requires landlords to provide hardship declaration forms in a different language if rental agreement was negotiated in a different language, consistent with existing law.
• Provides tenants a backstop in an eviction case if they have a good reason for failing to return the hardship declaration to the landlord within 15 days.
• Requires landlords to provide tenants a notice detailing their rights under the Act.
• Eviction judgments in non-payment of rent cases filed between March 4, 2020 – January 31, 2021, are subject to masking and are not publicly available, regardless of the outcome. Sunsets February 1, 2021.

Statewide Consistency and a Pause on Local Measures

• Existing local ordinances remain in place until they expire. Local actions that occur after August 19, 2020 cannot take effect before February 1.
• If an ordinance that establishes a time-period for repayment, that repayment period must begin (for unpaid rent due between March 1, 2020 and January 31, 2021) on March 1, 2021, unless the ordinance specifies an earlier date.
• Clarifies that nothing in the Act affects a local jurisdiction’s ability to adopt an ordinance that requires just cause, consistent with state law, provided it does not affect payments due between March 1, 2020 and January 31, 2021.

Penalties on Landlords Who Do Not Follow Court Eviction Process

• Adds a new penalty of between $1,000 and $2,500 against landlords who resort to self-help (i.e., locking the tenant out, throwing personal property out onto the curb, shutting off utilities) to evict a tenant, rather than going through the required court process. Sunsets February 1, 2021.

California Small Landlord and Homeowner Relief Act of 2020

Protections for Small Landlords

• Extends the Homeowners’ Bill of Rights’ anti-foreclosure protections to small landlords (1-4 units, non-owner occupied) if landlord is an individual, tenant moved in prior to March 4, and tenant fails to pay rent due to loss of income.
  • Requires mortgage servicers to provide a specified written notice to a borrower if the mortgage servicer denies forbearance during the effective time period that states the reasons for that denial if the borrower was both current on payments as of February 1, 2020, and is experiencing a financial hardship that prevents the borrower from making timely payments on the mortgage obligation due, directly or indirectly, to the COVID-19 emergency
  • Requires servicer's to comply with applicable federal guidance regarding borrower options following a COVID-19 related forbearance
• Provides accountability and transparency provisions to protect small landlord borrowers who request CARES-compliant forbearance; authorizes a borrower who is materially harmed to file a lawsuit.

Entire Act Sunsets February 1, 2025 (nothing in the bill applies to rent due after January 31, 2021)

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

Guide impact: Section 6301.3

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