Compliance Calendar

Sellers must use the updated Uniform Instruments for ARMs with Note Dates on or after June 1, 2020 but may begin using immediately

ARRC recommended index fallback language

• Revised uniform ARM Notes and Riders are now available on Freddie Mac's Uniform Instruments web page for Sellers to use that includes the Alternate Reference Rates Committee (ARRC) recommended fallback language for new closed-end, residential adjustable rate mortgages

ULDD - New Investor Feature Identifier

• For tracking purposes, Sellers must enter the valid value of “J23” for ULDD Data Point Investor Feature Identifier (Sort ID 368) for Mortgages using the revised ARM Notes and Riders.

Lifetime Floor

• The Lifetime Floor language in ARM Notes and Riders is revised 
• Instead of stating that the interest rate will never be “less than the Margin,” the revised ARM Notes and Riders state that the interest rate will never be “less than ____.%” 
• Sellers will need to complete this new Lifetime Floor field in the revised ARM Notes and Riders 
• As a reminder, the Lifetime Floor must equal the Margin for ARMs sold to Freddie Mac
• There is no change to our ULDD delivery requirements with respect to related ULDD Data Points Floor Rate Percent (Sort ID 116) and Margin Rate Percent (Sort ID 119) announced in Bulletin 2016-12

Document Custodian information

• We will require that the Custodian verify, for ARM Notes with the revision date “(rev. 2/20),” the Lifetime Floor is equal to the ARM’s Margin, and that all ARMs with Note Dates on or after 6/1/2020 be originated using the revised ARM Notes and Riders (rev. 2/20)

Clarifies that the DTI ratio may need to account for a borrower’s rental housing payment when the subject transaction is a second home, investment property, or includes a non-occupant co-borrower and the rental payment represents the borrower’s principal residence.

• Fannie Mae has established a single standard non-judicial foreclosure milestone invoicing schedule and a single standard judicial foreclosure milestone invoicing schedule
• Fannie Mae has removed prorated foreclosure fee requirements
• The updated milestone invoicing schedules will ensure servicers
  compensate law firms according to the last milestone completed, and servicers need not compensate law firms for prorated attorney fees between milestones 
• Servicers must work with law firms as needed to apply the milestone invoicing schedule to the applicable state’s process in a way that best aligns local practices to the milestones when the jurisdiction’s process or terminology do not exactly match the milestone schedule

• We’ve revised certain Fannie Mae-only notes and riders to reinsert Maximum Rate in Section 4(D). See the “News & Updates Archive” on the Legal Documents page for a list of the revised documents. 
• These revised documents may be used immediately, but must be used by June 1. 
• We’ve also retired and removed all Multistate Biweekly Notes, Riders, and corresponding resources from the Legal Documents pages.

Purpose. The purpose of this Circular is to remind lenders of Department of Veterans Affairs (VA) regulations establishing the Constant Maturity Treasury (CMT) rate as the only approved index for Adjustable Rate Mortgage (ARM) products, as codified at 38 CFR 36.4312(d)(1), and to supplement the VA Lenders Handbook, M26-7, Chapter 7 to reflect this guidance. 

Action. Lenders must ensure that all ARMs submitted to VA for guaranty comply with 38 CFR 36.4312(d)(1) in the use of CMT. Alternative indexes are not authorized and ineligible for guaranty. 

a. VA incorporates the following guidance into section b, Interest Rate Adjustments, of Chapter 7, Topic 6, Adjustable Rate Mortgages, of VA Pamphlet M26-7: “Only ARM products indexing with CMT rate are eligible for guaranty. All other indexes are not approved for use with the VA Home Loan Guaranty program.” 

b. Lenders with ARM loans that do not comply with VA regulations must immediately report these loans by email to the Regional Loan Center (RLC) of jurisdiction, based upon the lender’s corporate address. The email addresses for each of the RLCs are available at: https://www.benefits.va.gov/HOMELOANS/contact_rlc_info.asp. The RLCs will work with lenders to determine requisite cure measures.

Effective: Lenders may implement this change immediately but must do so for applications dated on or after Jun. 1, 2020. 

• Fannie Mae removed the December 4, 2019 prior policy update that would have required the use of estimated property taxes for the establishment of the escrow account, and replaced it with a requirement that lenders comply with applicable law and regulations
• Fannie Mae retained the prior clarifications that a reasonable estimate of property taxes based on the value of the land and all new and existing improvements must be used for purchase and construction-related transactions, including jurisdictions where a transfer of ownership typically results in a reassessment of property taxes

The purpose of this Circular is to announce a new Reason for Default (RFD) to help the Department of Veterans Affairs (VA) identify borrowers affected by COVID-19.

1. When a borrower requests forbearance due to COVID-19, servicers should use the new reason for default when reporting the EDN and then report the Special Forbearance event.

2. Servicers reporting through a nightly file Secure File Transfer Protocol (SFTP) Connection will be required to change the description for code “ENE” to “National Emergency Declaration.”

3. Servicers must utilize the updated VALERI Events Bulk Upload Template version 21 to report events in VALERI.

4. Until the “National Emergency Declaration” reason for default is placed in VALERI, servicers should use the reason “Energy/Environmental Cost” when reporting an EDN for borrowers who were impacted by COVID-19.

Rural Housing Service 

Single-Family Housing 

Borrowers with USDA single-family housing Direct and Guaranteed loans are subject to a moratorium on foreclosure and eviction through June 30, 2020. This action applies to the initiation of foreclosures and evictions and to the completion of foreclosures and evictions in process. This action is not applicable in cases where the property is vacant or abandoned.

USDA is granting lenders 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. Effective immediately, these exceptions to Agency guidance found at HB-1-3555 are in effect until June 30, 2020.

 Expiration of Temporary Exceptions: These temporary exceptions are in effect until June 30, 2020.

Lease review requirements

Our current policy states that when documenting rental income, the lender must obtain documentation that is used to calculate the monthly rental income for qualifying purposes. If there is a lease on the property that is being transferred to the borrower, the lender must verify that it does not contain any provisions that could affect our first lien position on the property.

With this update, our policy will no longer prescribe action the lender must take at the loan level to ensure rental property leases do not adversely impact first lien position or enforceability. Instead, the method used is at the discretion of the lender (for example, obtain and review the lease agreement, and secure amendments or subordinations, as necessary). The lender continues to make all representations and warranties, including the life-of-loan representations and warranties related to title, marketability, and lien position under the Clear Title/First-Lien Enforceability provisions of the Selling Guide.

Late charge on the note

The Selling Guide previously stated that the note for a conventional first mortgage must provide for the borrower to pay a 5% late charge on any payment not received by the 15th day after it is due, unless a lower rate is required by state law. In addition, a note that provides for a late charge of more than 5% was acceptable if the amount assessed during the time we hold the loan does not exceed 5%.

We have updated this policy to provide further discretion to our lenders. Our requirements still reflect that the amount of the late charge must be permissible under applicable law. The late charge field on the note must still be completed, but with a percentage not to exceed 5%. We have also removed the statement that allowed for a late charge higher than 5%. As a reminder, the late charge should be calculated based on the principal and interest payment only, not including taxes, insurance, or other assessments.

Escrow waiver on limited cash-out refinance

Our current policy requires borrowers to establish an escrow account when non-delinquent real estate taxes are financed as part of a limited cash-out refinance transaction. With this update, we no longer require that an escrow account be established in order to close a limited cash-out refinance that includes non-delinquent subject property real estate taxes as part of the loan amount.

Project standards policy clarifications

In response to lender inquiries, we have clarified the following project standards policies:

Horizontal property regimes

We consider a development to be a condo project any time it is declared or filed as a horizontal property regime in accordance with local statues. Exception is made if the local statute provides for the horizontal property regime to be created as a PUD development and the project’s legal documents specifically state that the project is a PUD.

Environmental hazard assessments

An environmental hazard assessment is required for condo and co-op projects if an environmental problem is identified by the lender through performance of its project underwriting or due diligence. If environmental problems are identified, the problems must be determined to be acceptable or curable through remedial actions. We require lenders to confirm the completion and effectiveness of the remedial actions based on certain conditions described in the Selling Guide.

Some jurisdictions or government agencies will issue a “no further action” notice (or letter) to alert the public that all available remediation steps for an environment hazard have been completed. We have updated the Guide to address “no further action” notices and require lenders to determine if the specific condition in the notice renders the project eligible or ineligible based on our environmental standards.

HomeStyle® Energy debt pay-off clarification

Currently, there are several HomeStyle Energy financing options available to a borrower who wishes to improve the energy and/or water efficiency of an existing property and decrease related utility costs. With this Guide update, we are clarifying that when HomeStyle Energy financing is being used to pay off energy-related debt, such as PACE or solar debt, the entire debt must be paid off. Partial payoffs are not eligible.

Miscellaneous

Appraisal process alignments

We have updated our Guide to align with some of the current processes and systems related to performing appraisals. The following changes have been made:

• We have updated our policy to state that whole numbers are required for the Predominant Age and Predominant Price fields to align with UAD requirements and because the Uniform Collateral Data Portal (UCDP) will not accept an appraisal with anything other than whole numbers.
• To better align with our actual practice, we have updated the Selling Guide description of our process for referring an appraisal to a state agency.
• We have added clarification to policy concerning when an appraisal waiver is offered in DU for a recently constructed property that is 100% complete. An appraisal waiver may be offered on a recently constructed property when there is an existing “as is” prior appraisal for the subject property. As an example, an appraisal of the subject property may have been performed for a different lender or borrower, but that loan did not close. The lender may execute the appraisal waiver when the loan meets all other eligibility requirements for the transaction.

Form 1008 effective date

In Dec. 2018, Fannie Mae and Freddie Mac published an updated Uniform Underwriting and Transmittal Summary (Form 1008). In Apr. 2019, we communicated that the effective date for use of the updated form was aligned with the mandated use of the redesigned Uniform Residential Loan Application (Form 1003), which at the time was Feb. 2020. We also updated the Selling Guide to allow for the use of a similar document in lieu of Form 1008.

Considering the optional nature of the Form 1008, we are no longer requiring lenders to use or implement the updated Form 1008. Lenders may use the updated Form if they so choose for manually underwritten loans. (Note that this effective date change did not require an update to the Guide.)

Lender’s QC notification process

We updated the Guide with a minor clarification that lenders must notify their account team or QC Specialist if their QC cycle is in arrears for more than 30 days.

The Bureau has revised the CHARM Booklet to provide updates based on consumer testing and remove LIBOR-based rate examples.

• The Bureau consumer-tested draft versions of the handbook, finding that a fixed-rate and adjustable rate mortgage comparison table is an important feature for consumers, and that fewer pages and enhanced design elements make it more visually appealing.
• The number of pages was reduced from 41 to 21. 
• The updated booklet also removes references to the LIBOR benchmark index.

Property Inspection Requirements on CARES Act Forbearance Cases 

1. Purpose. The purpose of this Circular is to clarify inspection requirements for properties purchased with Department of Veterans Affairs (VA) guaranteed loans where the borrowers have been impacted by Coronavirus Disease 2019 (COVID-19).

 2. Background. On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), Public Law 116-136. Section 4022 of the CARES Act protects borrowers with Federally backed mortgage loans who are experiencing financial hardship due to the COVID-19 national emergency. In part, section 4022 states that no fees, penalties, or interest associated with a delinquent loan shall be charged to the borrower’s account while the borrower is on a CARES Act forbearance. A loan must be treated as current or maintain the current status of delinquency while on a CARES Act forbearance. 

3. Property Inspection Requirements. VA regulation at 38 CFR 36.4350(i)(1)(i) requires a mortgage servicer to complete a property inspection before the 60th day of delinquency unless a repayment plan is in place. In consideration of the COVID-19 national emergency, the CARES Act, and Executive Order 13924, Regulatory Relief to Support Economic Recovery (81 FR 31353), VA is temporarily suspending the requirement to perform a property inspection for loans before the 60th day of delinquency. This temporary suspension only applies to borrowers whose loans are currently in forbearance and were current or had not yet reached the 60th day of delinquency when borrowers requested a CARES Act forbearance. Inspections are still required for vacant and abandoned properties. 

4. Associated Costs for Property Inspections. In temporarily suspending the property inspection requirement at 38 CFR 36.4350(i)(1)(i), VA seeks to reduce costly inspections that it believes do not provide enough value to meet the challenges in the current environment. In general, borrowers that have requested a CARES Act forbearance are indicating interest in retaining homeownership and are not vacating or abandoning properties. A national foreclosure and eviction moratorium is in place, and borrowers cannot be removed from the property and are therefore more likely to take care of the dwelling in which they reside. Under normal circumstances, the cost of the property inspection would be charged to the borrower’s account. The borrower would pay the cost of the inspection if the loan became current subsequent to the property inspection, or VA would reimburse the cost of the inspection on a claim against guarantee on terminated loans. However, as noted above, servicers may not charge a borrower any fees associated with delinquency related to a CARES Act forbearance. The temporary suspension of property inspection requirements will therefore assist in mitigating the negative economic effects of the COVID-19 and lift a regulatory and costly burden upon industry. (LOCAL REPRODUCTION AUTHORIZED) Circular 26-20-21 June 4, 2020 

5. Rescission: This Circular is rescinded July 1, 2021

Increases fees that private nongovernment notary publics may charge for notarial acts,

PROPERTY INSURANCE REQUIREMENTS

Currently, the insurance requirements for Mortgages sold to and serviced for Freddie Mac are located in Guide Chapter 8202, Property Insurance, in the Guide Servicing segment. To make it easier for Sellers to locate and refer to the requirements applicable to Mortgages eligible for sale to Freddie Mac, we are moving these insurance requirements to new Chapter 4703. We are not changing any of the requirements at this time, but minor updates were included for clarification. Among other things, Chapter 4703 includes:

• Requirements for property insurance insurer licensing and ratings
• Property insurance types and amounts, and
• Flood insurance (including requirements for a flood zone determination for each property securing a Mortgage sold to Freddie Mac)

We are also updating Guide Sections 8202.1 through 8202.3, 8202.5 through 8202.8 and 8202.10 to reflect the movement of the insurance requirements to new Chapter 4703 located in the Selling segment. Additionally, applicable cross-references throughout the Guide will be updated to refer to the new location.

eMORTGAGES

Transfer of Control of eNotes

Transfer of Control of eNotes

A Servicer will be required to deliver Guide Form 1036, Request for Possession or Control of Documents, to its eNote custodian to request the Transfer of Control from Freddie Mac when the Servicer must be the holder of the eNote in a Legal Action as defined in Section 8107.1(b). If Freddie Mac is the eNote custodian, Form 1036 must be sent to Loan_Delivery_Funding_Ops@freddiemac.com at least three Business Days before the change of Control is needed.

As a result, Guide Exhibit 47, Sample FHLMC eNote Transfer of Control Request, is being deleted.

eNote Custodians

We are specifying that the Freddie Mac-approved eNote Custodian must perform periodic reviews of the eNotes in their eNote Vault system and notify Freddie Mac of any issues.

Property insurance requirements

• New Guide Selling segment chapter for certain property insurance requirements previously located in the Servicing segment; Servicing segment chapter revisions reflect movement of these requirements.

Consent Agreement contract language

• Addition of Consent Agreement language that is required when a Servicer wants Freddie Mac's consent in order to obtain financing with respect to advances required to be made by the Servicer under the Guide

Updates to Exhibit 33, Acknowledgment Agreement Incorporated Provisions

• Updates to Exhibit 33, Acknowledgment Agreement Incorporated Provisions, in connection with Servicing Contract Rights financings

Additional Guide updates and reminders

• Further updates and reminders as described in the Additional Guide updates and reminders section of this Bulletin

Fannie Mae has updated LL-2020-07 to: 

• communicate the incentive fee and reference the new incentive fee structure introduced in LL-2020-09,
• provide clarification on HAMP good standing,
• provide clarification on continued solicitation for a Fannie Mae Flex Modification, and 
• provide a revised COVID-19 payment deferral agreement in reference to the CARES Act.

Please see updated LL-2020-07 for complete details.

• The Borrower Certification and Agreement section of the Mortgage Assistance Application (Form 710) has been updated to accommodate the sharing of information covered by the Taxpayer First Act. 
• The revisions expand the borrower’s consent to use their collected personal information for additional purposes permitted by applicable law. 
• This includes the Taxpayer First Act, and covers providing mortgage assistance, verifying any data or information contained in the application, and performing audit and quality control reviews. 
• Also, the definition of personal information expressly includes the borrower’s tax return and the information it contains. 

Effective: Servicers must begin using the updated Form 710 immediately. 

Bulletins 2020-4, 2020-7, 2020-10, 2020-15 and 2020-16 provided temporary Servicer guidance in response to the National Emergency Declaration resulting from the outbreak and spread of COVID-19. As we continue to monitor and assess the situation, and in response to Servicer questions, with this Bulletin we are announcing:

• Updates to Servicer incentives
• Reminder on requirements for approving a forbearance plan for Borrowers with a COVID-19 related hardship
• Clarification on HAMP good standing for a COVID-19 impacted Borrower
• Clarification on continued solicitation for a Freddie Mac Flex Modification based on the reduced eligibility criteria
• Late notices/payment reminder letters
• Updates to Workout Prospector – delinquent interest
• Other topics

EFFECTIVE DATE: All of the changes announced in this Bulletin are effective immediately unless otherwise noted.

Underwriting Borrowers With Self-Employment Income

Due to the continued impact of the COVID-19 pandemic on economic conditions and businesses throughout the country, in addition to the requirements in Guide Chapters 5301 and 5304, Sellers must comply with the following temporary requirements when assessing income derived from self-employment in order to determine if the Borrower’s income is stable and there is a reasonable expectation of continuance. 

Temporary requirements include (see bulletin for complete details):

• Minimum additional documentation requirements
• Reviewing YTD profit & loss statements, business account statements and other relevant documentation
• Establishing stable monthly income
• Business review and analysis
• Business assets
• Reminder: verification of the current existence of the business
• AIM for self-employed

Effective date

Sellers are encouraged to apply these temporary requirements to existing Mortgages in process; however, they must be applied to Mortgages with Application Received Dates on or after June 11, 2020 and until further notice.

Extension of the effective dates for previously announced temporary requirements and flexibilities

We are further extending the effective date for the temporary requirements and flexibilities for Mortgages with Application Received Dates through July 31, 2020 for the following:

• Credit underwriting requirements announced in Bulletins 2020-5 and 2020-8
• 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

Extension of the effective dates for the purchase of Mortgages in forbearance

• These requirements are now effective for Mortgages with Note Dates on or after February 1, 2020 and on or before July 31, 2020, and Settlement Dates on or after May 1, 2020 and on or before September 30, 2020. 

Extension of the effective date for Sellers’ post-funding quality control requirements

• Temporary flexibilities for Sellers related to post-funding quality control reviews will remain in place for all Mortgages selected through July 2020

Automated income assessment with Loan Product Advisor®

• As announced in Bulletin 2020-19, Sellers are required to upload any income documentation obtained for analysis to the participating third-party service provider. 
  • For Mortgages with Application Received Dates on or after June 11, 2020, this includes the documentation used to meet the temporary requirements. 
  • If, after performing the required additional analysis, the Seller finds a discrepancy between the information reflected on the tax returns and other documentation collected (e.g., income reflected on the unaudited year-to-date (YTD) profit and loss statement and supporting business asset statements is not consistent with the income on the uploaded tax returns), the Seller must update the information in the Income Calculation Report and upload the updated report to the service provider. 
  • They must then update the information in Loan Product Advisor and (re)submit the Mortgage for assessment of representation and warranty relief eligibility.
• The Seller must use the Income Calculation Report and Loan Product Advisor to submit the stable monthly income supported by their analysis. (See Bulletin for complete details)
• All temporary requirements from Bulletin 2020-19 and all other previously announced applicable temporary requirements related to COVID-19 must be met, and documentation used in the required analysis must be uploaded to the service provider. If so, the representation and warranty eligibility decision returned by Loan Product Advisor remains valid.
• Loan Product Advisor feedback messages will not be updated to reflect temporary requirements. Current messaging specifies that all documentation uploaded to the service provider (e.g., audited YTD profit and loss statement) must be retained in the loan file.

Effective June 15th, 2020, the FHA Catalyst platform is available for mortgagees to submit loss mitigation home retention claims electronically. 

FHA-approved mortgagees may use FHA Catalyst to electronically transmit single or bulk loss mitigation home retention claims necessary to support the claim submission. HUD previously issued Mortgagee Letters 2020-07 and 2020-08, providing FHA Catalyst functionality for supplemental claims and for case binder electronic endorsement submission. These functionalities will be incorporated into a later update of HUD Single Family Housing Policy Handbook 4000.1. 

Submission of loss mitigation home retention claims through the FHA Catalyst platform is optional. Mortgagees remain responsible for proper submission of loss mitigation home retention claims and ensuring they meet FHA’s requirements and standards for such submissions. By transmitting a loss mitigation home retention claim, the Mortgagee is certifying that the statements and information submitted are true and correct.

(NEW) § 6327.  Abatement of nuisance and preservation of property by mortgage loan servicer

• 1.  Actions to abate nuisance and preserve property.   After the commencement of an action for foreclosure, a mortgage loan servicer may file an an affidavit attesting to the conditions [of the property] and any other facts evidencing abandonment with the court and served on the parties to the foreclosure action
  • The affidavit must be based on the personal knowledge of the affiant, must state the basis for that personal knowledge and must include a statement that a municipal, county or state official, code enforcement officer or law enforcement official was present on the date when any conditions of abandonment and included in the affidavit were observed by the affiant
  • Once the affidavit is filed with the court, the mortgage loan servicer or its designee may enter the property for the purpose of abating any identified nuisance, preserving property or preventing waste and may take steps to secure the property (see bill for complete list of actions)
• 2.  Defines "presumption of abandonment"
• 3.  Record of entry.   The mortgage loan servicer or its designee shall make a record of entry pursuant to this section by means of dated and time-stamped photographs showing the manner of entry and personal items visible within the residence upon entry
• 4.  Removal of personal items.   Neither the mortgage loan servicer nor its designee may remove personal items from the property unless the items are hazardous or perishable. The mortgage loan servicer or its designee shall create a written inventory of items removed
• 5.  Notice before entry.   Prior to each entry pursuant to this section, a mortgage loan servicer or its designee shall ensure that a notice is posted on the front door of each property that includes the following:
  • A.  A statement that until foreclosure and sale is complete the property owner or occupant authorized by the owner has the right to possession; 
  • B.  A statement that the property owner or occupant authorized by the owner has the right to request any locks installed by the mortgage loan servicer or its designee be removed within 24 hours and replaced with new locks accessible by only the property owner or the occupant authorized by the owner; 
  • C.  A toll-free, 24-hour telephone number that the property owner or occupant authorized by the owner may call in order to gain timely entry. Timely entry must be provided no later than the next business day; and 
  • D.  The telephone number of the Department of Professional and Financial Regulation, Bureau of Consumer Credit Protection's foreclosure hotline with a statement that the property owner may have the right to participate in foreclosure mediation.
• 6. Maintenance of records.   The mortgage loan servicer or its designee shall maintain records of entry onto the property pursuant to this section for at least 4 years from the date of entry
• 7.  Occupied property.   If, upon entry pursuant to this section, the property is found to be occupied or there exist other reasonable indicia of occupancy, the mortgage loan servicer or its designee shall leave the property immediately and notify the county or municipality. Neither the mortgage loan servicer nor its designee may enter the occupied property regardless of whether the property constitutes a nuisance or complies with local code enforcement standards. Upon determination that the property is occupied, the mortgage loan servicer shall post a notice advising that entry occurred, take all steps necessary to remedy any damage caused by the entry and secure the property for the occupants
• 8.  Notice that property not abandoned.   If a mortgage loan servicer is contacted by the mortgagor and notified that the property is not abandoned, the mortgage loan servicer shall notify the county or municipality and thereafter neither the mortgage loan servicer nor its designee may enter the property regardless of whether the property constitutes a nuisance or complies with local code enforcement standards

The provisions of this ML are effective for endorsements submitted on or after June 15, 2020. Mortgagees may utilize the guidance in the ML for eligible pending endorsements through November 30, 2020. 

These updates are temporary and will not be incorporated into Handbook 4000.1.

• HUD is providing Mortgagees the ability to endorse mortgages that have closed in accordance with FHA requirements and where the borrower is subsequently affected by a financial hardship due, directly or indirectly, to COVID-19. COVID-19 has had wide ranging impacts on many borrowers, including a combination of wage reductions, job losses or interruptions, and the inability to work for a variety of reasons—such as a lack of telework options or lack of child care—on top of potential impacts of contracting COVID-19.
• Such hardships may have subsequently resulted in forbearance of mortgage payments prior to insurance endorsement consistent with the CARES Act.
• This mortgagee letter addresses:
  • Eligibility for FHA insurance endorsement for a mortgage involving a borrower who has experienced a financial hardship as a result of COVID-19, subject to execution of a two-year partial indemnification agreement. 
  • Modified Mortgagee’s certification on form HUD 92900-A with respect to Mortgagee’s knowledge of changes in a borrower’s employment status and ability to make mortgage payments as a result of COVID-19. 
  • Servicing requirements for mortgages subject to forbearance at the time of endorsement. 

Please see the Mortgagee Letter for complete details.

The CFPB issued frequently asked questions (FAQs) addressing companies’ responsibilities under the CARES Act and the FCRA when they furnish information to consumer reporting agencies about consumers impacted by the crisis.

Condo Project Advisor®, which is accessible through the Freddie Mac Loan Advisor® portal, allows Sellers to request single-loan exceptions (referred to as Project Waiver Requests (PWR)) for Established Condominium Projects that do not meet certain project eligibility requirements.

We are adding a seventh Condominium Project eligibility category, Leased Amenities, to Condo Project Advisor:

Project in which the unit owners do not possess sole ownership of the Common Elements (referred to as “Leased Amenities” in Condo Project Advisor) – Section 5701.3(h)

Additionally, authorized Sellers continue to be able to request a PWR through Condo Project Advisor in one or more of the following eligibility categories:

• Delinquent assessments – Section 5701.5(e)
• Excessive commercial space – Section 5701.3(d)
• Pending litigation – Section 5701.3(i)
• Owner occupancy (referred to as “Project Unit Occupancy” in Condo Project Advisor) – Section 5701.5(c)
• Reserves for capital expenditures and deferred maintenance – Section 5701.5(d)
• Excessive single investor concentration (referred to as “Single Entity Ownership” in Condo Project Advisor) – Section 5701.3(j)

Freddie Mac is updating the liquidity requirements for Seller/Servicers that are not depository institutions in recognition of the reduced Servicing costs associated with Mortgages in COVID-19-related forbearance relative to Servicing costs of other non-performing loans.

In lieu of the liquidity requirement in Guide Section 2101.2(c), Seller/Servicers that are not depository institutions must at all times maintain liquidity according to the revised requirements shown in the Bulletin.

• Freddie Mac announces an extension to the COVID-19 foreclosure moratorium through August 31, 2020
• When a Servicer is evaluating or has sent a streamlined offer for a Flex Modification, the Servicer must report default action code HD (Modification in review) to notify Freddie Mac that the Borrower is being evaluated for a modification. Servicers must report this code along with the date they began reviewing the Borrower for the modification. Additionally, we are expanding this requirement so that Servicers must continue to report the “HD” code until the streamlined offer expires, or until the Borrower enters into a Trial Period Plan.

This Mortgagee Letter announces a re-extension of the effective date of Mortgagee Letter 2020-05, published on March 27, 2020. This second extension will allow industry partners additional opportunity to utilize flexible guidance related to reverification of employment and appraisal protocol for FHA Single Family Programs affected by COVID-19.

The VA circular 26-20-25 is for servicing and originations; is there a way to add both in the calendar? 

Moratorium on Foreclosures and Evictions and Extension of Deadlines

FHA-insured Single Family mortgages, excluding vacant or abandoned properties, are subject to an extension to the moratorium on foreclosure through June 30, 2020. The moratorium applies to the initiation of foreclosures and to foreclosures in process.

Servicing - SFDMS Reporting Requirements for all Endorsed Mortgages utilizing the Forbearance for Borrowers Affected by the COVID-19 National Emergency

Mortgagees must report the Default/Delinquency Reason Codes that apply to the Borrower at the end of each reporting cycle and must update the code as the Borrower’s circumstances change. 

• Establishes temporary limitations on lenders being able to enforce default remedies on obligations secured by mortgages, trust deeds, land sale contracts or other instruments. 
• Provides for certain exemptions. 
• Requires lenders to defer payments if lender and borrower do not otherwise agree on loan mitigation, deferral or other foreclosure avoidance measure and permits borrower to pay deferred amounts at end of loan term. 
• Provides that lender may adjust escrow impound payment and take into account deficiencies or shortages that result from deferring borrower's payments. 
• Requires borrower to provide notice to lenders if borrower cannot make periodic installment payment. 
• Specifies notice requirements for residential and commercial borrowers. 
• Prohibits lenders from collecting various fees, penalties and charges during emergency period and from undertaking specified practices. 
• Requires courts to dismiss foreclosure proceedings brought during emergency period without prejudice. 
• Permits borrower that suffers ascertainable loss of money or property because lender took prohibited action to bring action for actual damages. 
• Requires lender to provide written notice to borrower of borrower's rights for accommodation under Act. 
• Declares emergency, effective on passage.

Oregon House Bill 4212 temporarily allows notary publics to perform notarial acts using communication technology for remotely located individuals under certain circumstances, effective June 30, 2020 through June 30, 2021.

• Adds a new Article 4: Remote Online Notarization
• Defines procedures for remote online notarization

The extension of Appraisal guidance in Mortgagee Letter 2020-05 is effective immediately for appraisal inspections completed on or before June 30, 2020. 

The extension of re-verification of employment guidance in Mortgagee Letter 2020-05 is effective immediately for cases closed on or before June 30, 2020.