Compliance Calendar

The purpose of this Circular is to clarify procedures related to The Department of Veterans Affairs (VA) funding fee exemption determinations and how refund requests should be submitted.

1. Purpose. The purpose of this Circular is to clarify how servicers should evaluate a borrower for a COVID-19 Refund Modification under Step B of the COVID-19 Home Retention Waterfall.

2. Therefore, Section 7(a)(2) of Circular 26-23-12 is changed to read as follows:

Page 4, paragraph 1, insert “To identify an affordable target, servicers may ask borrowers the amount of monthly mortgage payment they can afford.” after the sentence reading “In calculating the additional portion of principal to include in the COVID-19 Refund Payment, the servicer should work with the borrower to find an affordable target that meets the PI payment reduction target while minimizing the total amount of principal included in the COVID-19 Refund Payment.”

3. Rescission. This Circular is rescinded on December 31, 2023.

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

▪ Loan Modification Agreement*: updates the Loan Modification Agreement (Form 3179) with additional instructions in response to New York’s Foreclosure Prevention Act and includes a defense waiver provision
▪ Firm minimum requirements: updating Fannie Mae’s minimum requirements for all law firms selected and retained for default-related legal services for all conventional and government single-family mortgage loans held in Fannie Mae’s portfolio and MBS pool mortgage loans guaranteed by Fannie Mae
▪ Miscellaneous updates:
o Incorporation of LL-2023-04, removal of HAMP references, and other updates
o Reapplying principal payments to cure a delinquency

This Guide Bulletin announces updates to:

• Resolve®

➢ Additional functionality to allow Servicers to submit charge-off recommendations through the Resolve user interface (UI) – October 30, 2023

• Firm Minimum Requirements
➢ Updates to firm requirements to allow law firms greater flexibility to operate in post-pandemic environments – February 1, 2024

• Property valuations

➢ An update related to providing accurate and complete information when obtaining a property value

• Payment Deferrals

➢ A clarification on loans receiving ineligible findings in Resolve for the expanded Payment Deferral

• Privacy and data protection

➢ Updates to data retention post-termination

➢ Updates to the requirements for reporting Non-critical Privacy Events to Freddie Mac

The following updates were made to HB-1-3555, Chapter 8, to update the expiration date of the non-U.S. citizens waiver. Also, links to USDA sites were updated, and clarification as where to find some information was provided to our lending partners. Additionally, minor grammatical and formatting edits were made to be
consistent with other handbook chapter revisions. Throughout the chapter, the word “case” was added, and the word “loan” was removed when referencing the
lender’s permanent file; this change would create uniformity with other recent revisions in the handbook. Also, applicant has been changed throughout the
chapter to the plural, applicants so be consistent with other handbook chapters.

Paragraph 8.2– A. Owning a Dwelling:

• Clarified where training was located on the LINC Training and Resource Library for data input of rental income when applicants have additional properties.

Paragraph 8.2-B Obtaining Credit:

• Clarified if applicants own a business, close examination must be made to verify if assets are co-mingled between the business and personal account. If these two accounts are mixed, co-mingled accounts must be included in the test for obtaining credit.

Paragraph 8.2- E. Not Having A Suspension or Debarment:

• Clarified applicants that have been excluded from a non-housing federal program continue to be eligible to participate in the SFHGLP unless the individual becomes suspended or debarred pursuant to 3 CFR Part 180 and 417.

• Clarified applicants that are excluded from federal housing programs or excluded from all federal programs are ineligible to participate in SFHGLP.

• Revised the list of possible parties to be reviewed for debarment by the lender.

• Changed the website System for Award Management to provide the entire link.

• Clarified lenders must use due diligence in determining if the applicants are suspended or debarred and eligible for the program. Lenders must retain
documentation in their permanent case file to support their decision.

Paragraph 8.2-F Having Acceptable Citizenship or Immigration Status

• Updated the new expiration date of the non-U.S. citizen waiver to May 2,2025.

• Updated the SAVE information to explain a new coding for initial verifications that can bypass the second step process and automatically starts the third step verifications process once the lender completes the documentation upload process.

• Clarified where to locate guidance on the LINC Training and Resource Library
for data input for the eligibility of non-U.S. citizens.

The following updates were made to HB-1-3555, Chapter 14 to add guidance for lender-initiated withdrawals in GUS and to reflect the updated funding processes, while also making minor grammatical and formatting edits.

Paragraph 14.1 – Introduction

• Updated the allotment process when the Agency is under a Continuing Resolution.

Paragraph 14.2 - Program Funding Process

• Updated the funding process by removing references to pooling dates.

• Clarified that the funds are allotted and distributed by the budget staff through the SFHGLP.

Paragraph 14.4A - Agency Actions When Funds Are Not Available

• Clarified that funds will be allocated in accordance with the percentage obligated in the prior year under a Continuing Resolution, or based on the basic allocation formula in RD Instruction 1940-L for the current fiscal year.

• Removed references to before and after pooling dates.

Paragraph 14.4B – Agency Actions When Funds Are Not Available – Conditional Commitments Subject to Availability of Funds.

• Added additional information clarifying that the Conditional Commitment would be reissued once funds are obtained and obligated and the “subject to funding” condition will be removed from the Conditional Commitment.

Paragraph 14.5 - Lender Withdrawal of Application

• Added additional guidance for lenders to initiate the withdrawal process in GUS, if necessary.

Paragraph 14.6 – Agency Action – Requesting funds from the National Office Reserve

• Added a link to the Origination and Processing Division SharePoint page, identifying where to request additional funding.

Paragraph 14.7 – Request for Restoration of Funds

• Added a link to the Origination and Processing Division SharePoint page, identifying where to access the updated Restoration of Funds

The following updates were made to HB-1-3555, Appendix 3 to update links and correct names, as well as add color to the Appeals Process Flow Chart.

• Updated NAD Appeals website link.

• Updated the Agriculture Mediation Program Fact sheet link to connect to the FSA homepage.

• Update NFAOC to reflect the Servicing Office.

• Updated Review and Appeals Flow Chart with color for ease of reading.

The following updates were made to HB-1-3555, Appendix 5 to update the process of determining income eligibility through Rural Development’s Income and Property eligibility website.

• Updated screenshots from the income eligibility website to reflect the current view.

This Mortgagee Letter (ML) establishes guidelines for consideration of rental income in underwriting forward mortgages and performing the financial assessment for Home Equity Conversion Mortgages (HECM) and protocols for the Appraiser’s analysis and reporting of Accessory Dwelling Unit (ADU) market rent on appraisals.

At the direction of FHFA and in alignment with Freddie Mac, we are announcing that loans previously or currently in a COVID-19 forbearance may be eligible for relief from enforcement of representations and warranties using the criteria that apply to loans subject to a disaster-related forbearance in Selling Guide A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility (the “framework”). Effective: The policy in this Lender Letter is effective immediately.

At the direction of the FHFA and in alignment with Fannie Mae, we are announcing that, similar to our requirements for Mortgages subject to a disaster-related forbearance plan, Mortgages previously or currently in COVID-19 forbearance may be eligible for relief from enforcement of representations and warranties under the representations and warranties framework (“the framework”) as described in Guide Section 1301.11 and this Guide Bulletin.

The provisions of this Bulletin are effective immediately.