Compliance Calendar

Fannie Mae is clarifying that, in addition to mortgage loans that are delinquent, it is the servicer’s responsibility to report status information for mortgage loans that are current or less than 30 days delinquent when an action was taken on that loan in the preceding month, such as granting forbearance, initiating a workout for a loan in imminent default, or reporting a bankruptcy.

Effective: Servicers that are not reporting as indicated are encouraged to do so immediately, but must do so by Sept. 1, 2020.

The New York State Department of Financial Services issued guidance on September 1 to mortgage lenders and servicers that registration fees are prohibited from being charged to the mortgagor, as a registration fee is neither an attorney fee, late or delinquency fee, property valuation fee, or fee for a service rendered to a mortgagor.

USDA Rural Development has taken a number of immediate actions to help rural residents, businesses and communities affected by the COVID-19 outbreak. Rural Development will keep our customers, partners and stakeholders continuously updated as more actions are taken to better serve rural America.

VA provides guidance to Servicers regarding determining the interest rate for loan modifications with a Trial Modification, also known as a Trial Payment Plan (TPP):

a. Servicers will consider the date the TPP has been approved as the date the Modification Agreement is approved.

b. Servicers will no longer use a Pre-Approval request to lock in the market interest rate for modifications with a TPP.

c. In cases where the interest rate has reduced by 1% or more between the time of the TPP approval and the final scheduled payment on the TPP, the servicer must recalculate the interest rate using the reduced rate at the time of the final scheduled payment.

d. There is no impact to modifications without a TPP. The interest rate will continue to be calculated based on modification agreement approval date.

FHA announces the availability of a new EAD pathway utilizing the FHA Catalyst module for FHA Single Family forward mortgages that supports the existing Acceptable Appraisal Reporting Forms and Protocols and allows Mortgagees to electronically submit appraisals that comply with FHA’s Appraisal Report and Data Delivery Guide on and after September 1, 2020.

The transition period is the time between the availability date of EAD module in FHA Catalyst until the mandatory use date, which will be announced at a later date. Mortgagees are encouraged to make all necessary adjustments to their systems and processes to accommodate the transition to the EAD module in FHA Catalyst as early as possible.

• Mortgagees may utilize the EAD legacy portal or the EAD module in FHA Catalyst for delivery of appraisal submissions for forward mortgages.

• During the transition period, once an initial appraisal submission for an assigned case has been received in the EAD legacy portal or the EAD module in FHA Catalyst, all subsequent appraisal submissions for this assigned case must be delivered through the same EAD pathway through the end of the transition period.

A user guide for the EAD module in FHA Catalyst and a webinar will be available on the https://fha.gov/fha-catalyst.html.

We have updated the Guide to instruct servicers that any escrow shortage currently included as part of the full monthly contractual payment should also be included as part of a borrower’s pre-modification monthly housing expense when calculating the housing expense-to-income ratio. This calculation must be used when: 

• Evaluating the borrower for imminent default for a conventional mortgage loan modification, Fannie Mae short sale, or Fannie Mae Mortgage Release; or 
• Determining a borrower’s ability to make a cash contribution towards a Fannie Mae short sale or Fannie Mae Mortgage Release. 

Effective: Servicers are encouraged to implement this change immediately, but must do so by Sept. 1, 2020.

We are updating the requirements for calculating a Borrower's monthly housing expense-to-income (HTI) ratio to clarify that projected monthly escrow shortages should not be included in that calculation when evaluating a Borrower for imminent default or when determining a Borrower's ability to make a cash contribution toward a short sale or deed-in-lieu of foreclosure. Servicers should continue to include any escrow shortage that is currently part of a Borrower's contractual monthly payment when assessing a Borrower for imminent default or the Borrower’s ability to make a cash contribution.

Guide impacts: Sections 9206.7, 9208.3, 9209.3 and Glossary

• A new Reason Code - Reason Code 055 – National Emergency for any COVID-19 - must be reported for borrowers impacted by COVID-19 beginning September 1 for August loan statuses
• For COVID-19 forbearances, the Status Code 06 - Formal Forbearance should continue to be used
  
  • If any other Status or Reason Code was previously used to report the forbearance status of borrowers affected by the COVID-19 national emergency, please discontinue using that Status Code and begin reporting with Status Code 06 – Formal Forbearance
  • The same default status date should be used as the date the borrower was approved for the forbearance if changing the Status Code
  • If the loan was not previously in default, the Status Code 42 – Delinquent must be reported first to open the default event and then Status Code 06 – Formal Forbearance should be reported in the following months

This Bulletin updates the CHOICERenovation offering to provide greater specificity and added flexibility, affordable lending and housing preservation options, updates to exempt social security income, wedding gift funds and post-funding QC reviews.

See bulletin for full details.

The Federal Housing Administration (FHA) is issuing this clarification to mortgagees about its guidance for originating and/or servicing FHA-insured forward mortgages in locations in the U.S. and its territories when the President declares a major disaster area during the COVID-19 pandemic. This declaration is made when natural disasters or other events are of such severity that it is beyond the combined capabilities of state and local governments to respond. FHA recognizes the difficulty facing many borrowers across the country in light of recent hurricanes, wildfires, and other extreme weather events in the midst of a pandemic. This guidance is intended to provide clarity to borrowers and industry partners.

Fannie Mae has updated the Selling Guide with one clarification and two updates to the accessory dwelling unit (ADU) policy to provide more specific information concerning ADU property eligibility, ADU definition, a new policy allowing the use of a multi-width manufactured home as an ADU, and a simplified comparable sales process for appraisals.

Fannie Mae has updated the Selling Guide to remove all references to refinanced or modified balloon loans.

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

▪ Allowable foreclosure attorney fees*: updates the allowable foreclosure attorney fees for Hawaii.

▪ Miscellaneous revisions**:

▪ incorporates disaster payment deferral policies as well as adds references to payment deferral throughout the

Servicing Guide,

▪ updates the authority to offer an initial forbearance plan of up to three months without achieving Quality Right Party

Contact (QRPC) in connection with a disaster event, and

▪ removes outdated references to Master Agreements from the Selling and Servicing Guides.

View the list of impacted topics.

*Policy change applies only to HomeKeeper® loans and is not applicable to Home Equity Conversion Mortgage

loans.

**Policy change not applicable to reverse mortgage loans.

VA is extending Circular 26-20-12, Extended Relief Under the CARES Act for those Affected by COVID-19, and Circular 26-20-8, through December 31, 2020.

VA also makes a few clarifications in the original Circular 26-20-12:

• Page 1, paragraph 1: Add “and Circular 26-20-8, Foreclosure Moratorium for Borrowers Affected by COVID-19” after “Special Relief for those Potentially impacted by COVID-19”
• Page 2, paragraph 5a.2: Add “Traditional” before “Loan modifications”
• Page 2, paragraph 5b: Remove “if it is paid back at the end of the loan or”
• Page 2, paragraph 5c: Add “potential” after “home has” and replace “loan refunding” and “refunding” with “VA Purchase.”
• Page 2, paragraph 6: Remove “for not less than the 60-day period beginning on March 18, 2020” and replace with “through December 31, 2020”

The Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2020-30, FHA UnderwritingGuidelines for Borrowers with Previous Mortgage Payment Forbearance. The ML informs mortgagees of underwriting guidelines for homeowners who were granted a mortgage forbearance due to the COVID-19 National Emergency. Additionally, this ML defines the requirements that borrowers must meet to request a new FHA-insured mortgage after successfully completing their mortgage payment forbearance period.

The Federal Housing Administration (FHA) announced software updates to the Home Equity Reverse Mortgage Information Technology (HERMIT) system, which allows servicers to submit extensions related to the Presidentially - Declared COVID-19 National Emergency for Home Equity Conversion Mortgages (HECM). The extension of the foreclosure and eviction moratorium were published in Mortgagee Letter 2020-27.

The Oklahoma Secretary of State has adopted permanent provisions relating to its Remote Online Notary Act, OAC 655:25-1.

Fiscal Year 2021 Conditional Commitment Notice

With the start of the Fiscal Year 2021 (FY) soon approaching, please take a few minutes to review the Single-Family Housing Guaranteed Loan Program (SFHGLP) Conditional Commitment process. We hope you find this information helpful.

FY 2021 will begin October 1, 2020, and ends at the close of business on September 30, 2021.

Fee Structures:

An upfront guarantee fee of 1.00 percent and an annual fee of .35 percent will apply to both purchase and refinance transactions for FY 2021.

Issuance of Conditional Commitments:

At the beginning of each fiscal year, funding for the guaranteed loan program is not available for a short period of time –approximately two weeks. USDA anticipates this brief lapse in funding to continue for FY 2021. During the temporary lapse in funding, Rural Development-Rural Housing Service (RHS) will issue Conditional Commitments (Form RD 3555-18/18E) “subject to the availability of commitment authority” for purchase and refinance transactions. The issued Conditional Commitment will include the following:

"Funds are not presently available for this Conditional Commitment. The Rural Development-Rural Housing Service (RHS) obligation under this Conditional Commitment is contingent upon the availability of an appropriation from which payment for contract purposes can be made. No legal liability on the part of RHS for any payment on this Conditional Commitment may arise until funds are made available to RHS for this Conditional Commitment and until the Lender receives notice of such availability, to be confirmed in writing by RHS. More specifically, this Conditional Commitment is subject to RHS receiving sufficient funds (in the Program Funds Control System for the Single-Family Housing Guaranteed Loan Program for the Type of Assistance and State of application submission) to fund this and all prior eligible outstanding applications in their entirety in the time and date order received. When such funds become available, RHS will notify the lender, and the guarantee process will continue subject to all applicable Agency regulations and conditions set forth in this Conditional Commitment. RHS will not reserve loan funds for applications in the process during this timeframe. Lenders may close the loan as scheduled. The lender will assume all risk of loss for the loan until RHS obligates funds and the Loan Note Guarantee is subsequently issued. When the lender requests the Loan Note Guarantee, the lender must certify to the Agency, using the process provided in this commitment, that there have been no adverse changes to the borrower's financial condition since the date the Conditional Commitment was issued by the Agency. The lender will submit the appropriate guarantee fee at the time they request the Loan Note Guarantee. The loan will be subject to an annual fee of 0.35 percent over the average scheduled unpaid principal balance of the loan. The Agency will not be able to issue the Loan Note Guarantee until these conditions are met and funding is obligated."

The application processing workflow is as follows:

• Rural Development will continue to accept complete guaranteed loan applications for purchase and refinance loan transactions from approved lenders;
• Rural Development will process, approve, and issue Conditional Commitments for those applications that are eligible “subject to the availability of commitment authority”;
• Lenders may close loans as scheduled;
• When funds become available, Rural Development will utilize the Electronic Customer File (ECF) system to advance the file to “Obligate Application” for Conditional Commitments that were issued for loans subject to the availability of commitment authority;
• Once loans are obligated, Rural Development may process lender’s Loan Note Guarantee requests when the loan closing is verified, and all conditions of the Conditional Commitment are satisfied;
• Lenders assume all loss default risk for the loan until Rural Development is able to obligate the loan and issue the Loan Note Guarantee.

Thank you for your participation in the USDA Single Family Housing Guaranteed Program. We look forward to serving you in FY 2021!

Questions regarding this announcement may be directed to sfhgld.program@usda.gov or (202) 720-1452

Thank you for your support of the Single-Family Housing Guaranteed Loan Program!

Links to websites:

SFHGLP Lending Partner Webpage: https://www.rd.usda.gov/page/sfh-guaranteed-lender

SFHGLP webpage: https://www.rd.usda.gov/programs-services/single-family-housing-guaranteed-loan-program

USDA LINC Training and Resource Library:

https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library

Procedure Notices: https://www.rd.usda.gov/resources/directives/procedures-notices

VA issued clarification for Servicers on when a deferment may be offered as a COVID-19 loss mitigation option.

• The deferment as a COVID-19 loss mitigation alternative may be used in cases when the veteran is able to resume making the monthly payment as scheduled under the loan contract
• The servicer does not need and should not enter into a modification agreement that alters the terms of the existing loan for the purpose of applying a deferment
• To ensure compliance with servicing laws more generally, servicers should seek specific advice from their legal counsel.
• Deferment is not allowed in cases where the veteran will need a post-forbearance payment reduction. Instead, the servicer must assess the suitability of other loss mitigation options.
• a. VA notes that, in general, deferment as a loss mitigation would not be permissible in light of the VA regulation found at 38 C.F.R. § 36.4310(a), which states, in relevant part, that the final installment on any loan shall not be in excess of two times the average of the preceding installments. However, in consideration of the COVID-19 national emergency, the CARES Act, Executive Order 13924, Regulatory Relief to Support Economic Recovery (85 FR 31353), and VA’s regulatory authority under 38 C.F.R. § 36.4338(a) to relieve undue prejudice to a debtor, holder, or other person, VA is temporarily waiving the requirement that the final installment on any loan shall not be in excess of two times the average of the preceding installments.
• b. This temporary waiver applies only in the case of a servicer offering a deferment as a COVID-19 loss mitigation option to a borrower who requested a CARES Act forbearance, as described above. Furthermore, VA notes that the servicer must ensure that deferment will not adversely affect the Government’s interests in the VA-guaranteed loan and/or impair the vested rights of any other person. See 38 C.F.R. § 36.4338(a). Similarly, any deferment that fails to comply with other servicing laws, such as the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA), would negatively affect the Government’s interest and therefore not be covered by this temporary suspension.
• c. A deferment described in this guidance is not a loss mitigation option for which VA has authorized an incentive payment under 38 C.F.R. § 36.4319.
• Removing Barriers to Property Retention. From a borrower’s perspective, a deferment may be desirable because it brings the loan current and enables the borrower to return to his or her regular mortgage payments without the added pressure of immediately repaying the forborne amount. The temporary suspension of this regulatory requirement, as applied to a particular loss mitigation option not generally available to borrowers with VA-guaranteed loans, will therefore assist in mitigating the negative economic effects of the COVID-19 national emergency. In temporarily lifting this regulatory burden, VA is enabling servicers to offer a loss mitigation option to borrowers that will minimize the financial burdens of exiting a CARES Act forbearance and promote home retention.

The FHA Catalyst: Case Binder Module now includes an “LRS” submission type to allow delivery of case binders for post-endorsement review in LRS.

Mortgagees not approved for eCB submission through FHA Connection must now use the FHA Catalyst: Case Binder Module to submit both Single Family Forward and HECM case binders requested for post-endorsement review in LRS.

To submit case binders through the FHA Catalyst: Case Binder Module, Mortgagees must request access and receive onboarding information by contacting the FHA Resource Center at answers@hud.gov or 1-800-CALL FHA (1-800-225-5342).

The FHA Catalyst: Case Binder Module User Guide provides information for navigating the platform and step-by-step instructions for electronic case binder submission. Access the FHA Catalyst: Case Binder Module webpage for additional resources, including a pre-recorded webinar and Q&A guidance for Mortgagees.

Fannie Mae provides a FAQ document to respond to common questions associated with Fannie Mae’s project review methods and policies for determining project eligibility for mortgages secured by units in condo, co-op, and planned unit development (PUD) projects.

Additional FAQs related to the origination of USDA Single Family Housing Guaranteed loans have been added to the previously posted FAQs. The revised document has been posted to the USDA LINC Training and Resource Library.

VA issues clarification that periods of forbearance under the CARES Act cannot count toward loan seasoning requirements for both Interest Rate Reduction Refinancing Loans (IRRRLs) and cash-out refinancing loans made to refinance a VA-guaranteed loan.

Therefore, Circular 26-20-25 is changed as follows:

Page 3, Paragraph 6 d. Loan Seasoning, Fee Recoupment, Discount Points and Net Tangible Benefit Standards, remove the first sentence:
“Lenders are reminded that all IRRRLs must meet loan seasoning, fee recoupment, discount points and net tangible benefit requirements, as prescribed by 38 U.S.C. § 3709 and VA policy guidance.”

And replace with;
“Lenders are reminded that all IRRRLs and cash-out refinance must meet loan seasoning, fee recoupment, discount points, and net tangible benefit requirements, as applicable, prescribed by 38 U.S.C. § 3709, 38 CFR § 36.4306, and VA policy guidance."

The purpose of this circular is to announce changes to processing Site Condominiums for VA loan purposes in the State of Michigan. A Site Condominium is defined as a single-family totally detached dwelling (no shared garages or any other attached buildings) encumbered by a declaration of condominium covenants or condominium form of ownership. This is a regional variance for the State of Michigan only. Lenders will process Site Condominium loans in a manner similar to a single-family detached home. All other geographical areas are unaffected by this change.

On September 19, 2020, the IRS formally published Form 4506-C (September 2020), specific for use by lenders utilizing IVES (Income Verification Express Service).

See also: https://www.irs.gov/individual...

The Texas Joint Financial Regulatory Agencies adopted a final rule regarding Payoff Statements effective September 20, 2020.

TITLE 7. BANKING AND SECURITIES
PART 8. JOINT FINANCIAL
REGULATORY AGENCIES
CHAPTER 155. PAYOFF STATEMENTS
SUBCHAPTER A. FORM AND DELIVERY
7 TAC §155.2

The revisions are based on comments submitted by the Texas Land Title Association requesting that the payoff statement form be revised to include additional information. The request includes ensuring the following is stated on the payoff statement form:

• state the loan number assigned for identification purposes, or if the loan number is not available, the original loan amount

Fannie Mae has updated Single-Family Sellers Impact of COVID-19 on Originations to extend application dates to Oct. 31, 2020 for verbal verifications of employment and power of attorney flexibilities.

Fannie Mae is updating the Notice of Accommodations form (Exhibit A) required on loans secured by a property located in Oregon with an origination date on or after August 20, 2020, as well as expanding the requirement to provide Exhibit A to the borrower at closing.

Fannie Mae has updated LL-2020-06 to extended eligible note dates for selling loans in forbearance to October 31, 2020, and extend delivery to December 31, 2020.

Fannie Mae has updated the COVID-19 Selling FAQs to answer questions about federal student loans and remote online notarization record retention policy.

Fannie Mae has updated the extension of the effective date, extending the application dates eligible for these temporary flexibilities to Oct. 31, 2020, unless otherwise noted.

This Guide Bulletin announces additional exclusions from the previously announced Market Condition Credit Fee in Price.

In addition, under the guidance and direction of the FHFA and in alignment with Fannie Mae, we are also announcing the following:

• The extension of the effective dates for previously announced temporary flexibilities
• The extension of the effective dates for the purchase of Mortgages in forbearance
• The extension of the effective date for Sellers' temporary postfunding quality control requirements