Compliance Calendar

Fannie Mae and Freddie Mac are changing the trigger for automatic reclassification from four consecutive months delinquent to 24 consecutive months delinquent (measured by the last paid installment (LPI) date), effective for mortgage loans that become greater than four consecutive months delinquent on or after February 2021 remittance activity (based on January 2021 reporting activity).

• Affects mortgage loans for which Fannie Mae has the entire foreclosure loss risk and those which Fannie Mae shares the foreclosure loss risk with the servicer, with Fannie Mae having the responsibility for marketing the acquired property
• Reclassifies an MBS mortgage loan that satisfies its selection criteria as an actual/actual remittance type portfolio mortgage loan (excluding PFP mortgage loans with an original scheduled/scheduled remittance type which will remain a scheduled/scheduled remittance type even after being removed from the pool)

All MBS mortgage loans removed from MBS pools that are subsequently held in Fannie Mae's portfolio will remain subject to repurchase requirements and recourse obligations.

To continue our support of responsible Servicing practices, we are updating certain Escrow-related requirements. In response to Servicer feedback, we have restructured Section 8201.1 for improved clarity and efficiency.

Additionally, in order to ensure consistent treatment for all Borrowers, we are requiring Servicers to maintain a written policy governing the circumstances under which an Escrow account may be waived. This will ensure all similarly situated Borrowers' requests are treated equally.

If the Borrower's request for waiver of an Escrow account is a result of a forced-place Escrow account due to underpayment of property taxes, lapse in the Borrower's preferred insurance coverage or other charges described in the Security Instrument, even after taking into consideration requirements in Section 8201.1(c), then the Servicer may submit an exception request via Workout Prospector^® to Freddie Mac for review subject to Servicing Guide requirements and applicable law.

Guide impact: Section 8201.1

Implementation Timeline

• DU Spec transition period end date: old 1003 forms and legacy formats (1003 v3.2 flat file and MISMO v2.3.1) no longer accepted 
• DU/DUG/EarlyCheck accepts only transactions based on DU Spec

In APM 20-07, Ginnie Mae established new pooling eligibility requirements for Re-Performing Loans bought out on or after July 1, 2020, and announced that it would introduce a new pool type to securitize the Re-Performing Loans restricted from securitization by APM 20-07. This memorandum implements the new C RG Pool type effective for MBS with an Issue Date of February 1, 2021, and after.

Effective for Mortgages with Settlement Dates on or after February 2, 2021

In response to Seller feedback, we are updating our requirements relating to the ineligibility of Condominium Hotels and similar types of transient housing as follows:

Specifying that a Condominium Project is considered to be a type of transient housing if the Condominium Project, the homeowners association (HOA) and/or the HOA's property management company or agent facilitates, receives revenue from, or pays expenses or taxes for hotel type services or the renting of Condominium Units on a transient basis

Adding more specificity about projects with certain characteristics that would be considered Condominium Hotels or transient housing

Emphasizing that the documentation used to support Seller's analysis that a project is not a Condominium Hotel or similar type of transient housing be retained and must be provided upon request

Guide impact: Section 5701.3

Updates to requirements for MH Advantage eligible properties to clarify that when gravel is used for the driveway it must be at least four inches deep.

The waivers build upon previous waivers and put in place the following provisions through December 31, 2021:

• Allowing alternative methods for servicers to conduct borrower interviews for FHA-insured forward and HECM mortgages when performing early default interventions for borrowers in danger of foreclosure;
• Waiving the $5,000 property charge payment arrearages cap on recalculated repayment plans, allowing servicers to help more HECM borrowers who are behind on their property charge payments; and
• Eliminating the requirement for servicers to obtain a signature on an occupancy certification from a HECM borrower.

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

▪ Seasonal and secondary income: simplified verification requirements related to these employment and income types

▪ Seller/Servicer-initiated post-purchase adjustment process: Use of the PPA Form to request post-purchase adjustments is now mandatory

▪ Miscellaneous update: removed references to authorizing release of data to Fannie Mae

Fannie Mae will no longer acquire ARM loans that use an index based on constant maturity treasury securities (CMT) and will retire all related CMT ARM plans.

The Chief Title Examiner in Massachusetts issued a memorandum addressing requirements concerning notary acknowledgments, and the Massachusetts forms of acknowledgment required by state law, as those requirements pertain to certain documents presented for registration, including powers of attorney.

LOAN PRODUCT ADVISOR RESUBMISSION TOLERANCE

Effective for Mortgages with Settlement Dates on and after February 4, 2021

We are providing additional flexibility by updating our Loan Product Advisor resubmission tolerances for refinance transactions with loan amount changes as follows:

The loan amount change must not impact mortgage insurance coverage, and the use of an appraisal waiver is not permitted.

Guide impact: Section 5101.6

New York Senate Bill 4188 requires financial institutions to notify a customer thirty days prior to charging a fee based on account inactivity and requires such notice to include a telephone number and the full contact information of a representative of the financial institution responsible for resolving any matter relating to the fee; effective February 9, 2021.

This Guide Bulletin announces:

• Duty to Serve - Exhibit 40 updates
• Escrow Requirements - Greater specificity on Escrow account requirement
• Community Land Trust Mortgages - Requirement flexibilities for Community Land Trust Mortgages
• Depository Accounts risk threshold - Updates to depository accounts risk threshold
• Electronic Payment Deferral Agreement - Updates to the delivery requirements of Electronic Payment Deferral Agreement
• Audit Confirmation request - Updates to Exhibit 65, Audit Confirmation Request
• IRS Form 4506-T - Updates to IRS Form 4506-T requirements

The CFPB is adopting a final rule that codifies the Interagency Statement Clarifying the Role of Supervisory Guidance issued by the OCC, FRS, FDIC, NCUA and CFPB on September 11, 2018 effective March 15, 2021.

The Seasoned QM Final Rule will apply to covered transactions for which creditors receive an application on or after the effective date. (Effective date of 2/15/21 estimated, pending publication)

The CFPB issued a final rule adding a Seasoned QM loan definition in Regulation Z; creating a new category of Seasoned QMs for first-lien, fixed-rate covered transactions that have met certain performance requirements, are held in portfolio by the originating creditor or first purchaser for a 36-month period, comply with general restrictions on product features and points and fees, and meet certain underwriting requirements.

Changes to Loss Mitigation for Borrowers Affected by the COVID-19

National Emergency include:

• extending the foreclosure and eviction moratorium to June 30, 2021, and the deadline for the first legal action and the Reasonable Diligence Time Frame to 180 days;

• extending the COVID-19 Forbearance start date and HECM extension period to June 30, 2021;

• providing up to two additional three-month COVID-19 Forbearance periods or HECM extension periods for certain Borrowers;

• allowing additional Borrowers, regardless of delinquency status or participation on a COVID-19 Forbearance, to utilize FHA’s COVID-19 Loss Mitigation Options; and

• removing the restriction on Borrowers receiving more than one COVID-19 Home Retention Option.

2. Action. a. Under this Circular, VA expects servicers to approve a Veteran’srequest for COVID-19 forbearance, or continued forbearance, if a Veteran is experiencing a financial hardship, directly or indirectly, due to COVID19, and the hardship negatively affects the Veteran’s ability to make on-time loan payments. Veterans with VA-guaranteed loans may be eligible for COVID-19 forbearance, regardless of the delinquency status of the VA-guaranteed loan. The Veteran’s initial request for COVID-19 forbearance may be granted for up to six months. If needed by the Veteran, the Veteran may request, and VA expects the servicer to approve, additional COVID-19 forbearance for up to six months. Servicers may approve a Veteran’s initial COVID-19 forbearance if the request is made on or before June 30, 2021. A COVID-19 forbearance period may extend through June 30, 2022.

b. For Veterans who requested their initial COVID-19 forbearance on or before June 30, 2020, VA expects that, if needed, the Veteran may request, and the servicer will approve, up to two additional three-month COVID-19 forbearance periods, after twelve months of COVID-19 forbearance. The Veteran must request each three-month extension individually. Neither of the two additional three-month COVID-19 forbearance periods may extend beyond December 31, 2021.

c. Any period of COVID-19 forbearance may be shortened at the Veteran’s request.

d. The servicer should waive all late charges, fees, and penalties, if any, that might otherwise accrue because of payments missed during a COVID-19 forbearance.

e. The COVID-19 forbearance described in this guidance does not supersede or otherwise eliminate the
special forbearance loss mitigation option defined in 38 C.F.R. § 36.4301.

2. Moratorium on Foreclosure and Eviction. Due to the ongoing COVID-19 national emergency and its impact on Veteran borrowers, all properties secured by VA-guaranteed loans, including those previously secured by VA-guaranteed loans but currently in VA’s REO portfolio, are subject to a moratorium on foreclosure and eviction through June 30, 2021. Except with respect to a vacant or abandoned property, the moratorium applies to the initiation of foreclosures, the completion of foreclosures in process, and evictions.

USDA is extending its moratorium on foreclosures and evictions through June 30, 2021, extending the date for initial forbearance requests through June 30, 2021, and providing for up to two additional three-month payment forbearances for borrowers who received an initial CARES Act forbearance before June 30, 2020.

The list of Approved Mortgage Insurance Forms has been updated to:

 Replace the Fund’s previously approved Forms with the following Forms:

• Loan Loss Reserve Agreement, LLRA F-2021 (02/21)

• Commitment/Certificate, LLRA G-2021 (02/21)

• Mortgage Payment Protection Endorsement, LLRA H-2021 (02/21)

 Add to Radian Guaranty Inc.:

• Signatory Change Endorsement, RAF719 (03/20)

 Add to Mortgage Guaranty Insurance Corporation:

• Maine Endorsement, 71-70389 (03/20)

 Delete from Arch Mortgage Insurance Company:

• Commitment and Certificate of Insurance ArchMI, ARCH 3800.07 (03/20)

• Commitment and Certificate of Insurance ArchMI, ARCH 3800.07.01 (03/20)
• Commitment and Certificate of Insurance ArchMI TX, ARCH 3800.07 (03/20)
• Commitment and Certificate of Insurance ArchMI PR, ARCH 3800.07 PR (03/20)
• Commitment and Certificate of Insurance UGRIC, ARCH 3800.08 (03/20)
• Commitment and Certificate of Insurance UGRIC TX, ARCH 3800.08 (03/20)
• Commitment and Certificate of Insurance UGRIC, ARCH 3800.08.01 (03/20)
• Commitment and Certificate of Insurance Combined, ARCH 3800.09 Combined (03/20)

 Delete all previously approved forms for use in connection with loans having application dates on or after October 1, 2014 and before March 1, 2020

Indiana House Bill 1056 amends the requirements for instruments and conveyances to be recorded, adds instances in which an instrument is considered validly recorded for purposes of providing constructive notice, and defines certain terms, effective February 17, 2020.

On February 18, 2021, the Texas Office of Consumer Credit Commissioner updated OCCC Advisory Bulletin B20-2 continues to encourage lenders to work with consumers impacted by COVID-19, provides a reminder of requirements for using electronic signatures, and provides guidance on conducting regulated lending activity from unlicensed locations; through March 31, 2021.

New Jersey Assembly Bill 2964 requires all creditors that acquire title to non-owner occupied residential property following foreclosure to notify the municipality and common interest community effective February 22, 2021.

This bulletin is to announce the extension of the re-verification of employment guidance in ML 2020-05 and extend the Exterior-Only Appraisal SOW option in ML 2020-37.

This Mortgagee Letter (ML) announces an extension of the effective period for ML 2020-24, published on July 29, 2020 and extended in ML 2020-46, dated December 17, 2020. This extension will allow industry partners additional opportunity to utilize flexible guidance related to verification of self-employment and verification of Rental Income for Single Family Title II Forward Mortgage and HECM Programs.

The USDA issued an extension of temporary exceptions pertaining to appraisals, repair inspections, and income verification for the Single-Family Housing Guaranteed Loan Program (SFHGLP) due to the COVID-19 pandemic until June 30, 2021.

Freddie Mac announces changes to Bulletin 2021-6 published on February 10, 2021, Temporary Servicing Guide Related to forbearance and Payment Deferrals for Borrowers experiencing a COVID-19 hardship.

This Lender Letter contains the policies previously published in LL-2020-07 on Nov. 18, 2020, with the changes noted below. For a consolidated description of previous updates to this Lender Letter and LL-2020-07, refer to the Change Control Log.

Effective Feb. 25, we are updating the eligibility criteria to:

▪ permit the mortgage loan to be less than or equal to 18 months delinquent as of the date of evaluation, and

▪ eliminate the limit of one COVID-19 payment deferral and instead limit the COVID-19 payment deferral to a cumulative deferral of 18 months of past-due principal and interest (P&I) payments.

The following requirements have been updated to reflect the amended eligibility requirements above:

▪ Determining the COVID-19 payment deferral terms

▪ Completing a COVID-19 payment deferral

▪ Soliciting the borrower for a post-forbearance COVID-19 payment deferral, including updates to the instructions in the Payment Deferral Post COVID-19 Forbearance Solicitation Cover Letter and the Payment Deferral Agreement

▪ Evaluation hierarchy for a borrower impacted by COVID-19

▪ Updates to the Investor Reporting Manual

This Lender Letter contains the policies previously published in LL-2020-02 on Dec. 9, 2020, with the changes noted below. As we continue to monitor the COVID-19 pandemic and collaborate with the FHFA and Freddie Mac (as applicable) on COVID-19 related servicing policies, we will update and republish this Lender Letter as necessary. The policies in this Lender Letter are effective until Fannie Mae provides further notice, unless otherwise stated.

Feb. 10, Feb. 25

▪ Extending the suspension of foreclosure-related activities

▪ Updating our requirements related to forbearance plans for borrowers impacted by COVID-19