Compliance Calendar

Virginia Senate Bill 1327 provides for various protections for homeowners and tenants of manufactured home parks, among which includes prohibiting a trustee from selling a property in a foreclosure sale without sending notice of the sale to the owner and signing an affidavit attesting to such notification and increasing the notice period for a foreclosure sale from 14 to 60 days effective October 1, 2021.

We are updating Chapter 7101 to prohibit the Subsequent Transfer of Servicing (STOS) of Mortgages that are 90 days or more delinquent or that have been previously modified. Servicers that wish to transfer Mortgages that are 90 days or more delinquent or that have been previously modified must do so in accordance with the Voluntary Partial Cancellation process outlined in Chapter 7102.

Guide impacts: Sections 7101.2 and 7101.3

Maryland House Bill 1261 alters certain provisions of law related to the execution of wills, powers of attorney, and advance directives to authorize the electronic execution and remote witnessing of those documents under certain circumstances, provides that a will, a power of attorney, notarization of a power of attorney, or an advance directive executed in conformance with the provisions of certain executive orders shall be deemed to satisfy certain requirements under the Act, and applies the Act retroactively; effective October 1, 2021.

Connecticut Senate Bill 891 makes the Ezequiel Santiago Foreclosure Mediation Program permanent and requires that certain alternatives to foreclosure be made available to certain mortgagors; effective October 1, 2021.

Summary: The bill addresses the immediate housing crisis brought on by the COVID-19 pandemic by requiring lenders – for the next six years – to provide homeowners with options for assistance through Connecticut’s Emergency Mortgage Assistance Program (EMAP). If a homeowner is behind on their mortgage payments or has delinquent tax liens, water or sewer charges or even condominium charges, this program can now offer them help.

https://greenwichfreepress.com...

Effective for SOFR ARMs with Settlement Dates on or after October 1, 2021.

Updating Sections 4401.2 and 4401.5 to require 3/6-Month, 5/6-Month, 7/6-Month, and 10/6-Month SOFR ARMs to have initial fixed interest rate periods of 36, 60, 84 and 120 months, respectively.

Guide impacts: Sections 4401.2 and 4401.5

Connecticut Senate Bill 848 implements the Department of Banking's recommended changes to the banking statutes concerning financial institutions and consumer credit licenses effective October 1, 2021.

Mortgage insurance claims portal

To simplify the MI claims process for both us and servicers, and to improve claim recoveries for conventional mortgage loans for which we bear the risk of loss, we have updated the Servicing Guide to:

▪ introduce the new Fannie Mae MI Claims Portal (MICP);

▪ outline the process through which we will file MI claims via the MICP for applicable mortgage loans; and

▪ clarify the servicer’s new responsibilities related to initiating the MI claim submission, perfecting the claim, and ensuring timely claim settlement using MICP.

We have also created a new MI Claims Portal Participants Exhibit, which lists the mortgage insurers that are participating in MICP and each insurer’s applicable MICP participation effective date (based on the mortgage loan liquidation date). We will update this Exhibit and provide advance notice to servicers as additional mortgage insurers begin participating in MICP.

Effective: Servicers must implement these policy changes for MI claims filed on and after Oct. 1, 2021 with mortgage insurers in the MI Claims Portal Participants Exhibit and as updated with new mortgage insurers based on the applicable effective date and mortgage loan liquidation date.

New Jersey Assembly Bill 4250 Revises law concerning notaries and notarial acts and authorizes electronic signatures effective October 20, 2021.

Maryland House Bill 1213 is a supplement to Regulation B, ECOA requirements under 12 C.F.R. § 1002.6, requiring institutions to consider alternative credit in addition to traditional credit, where appropriate.

As announced on 06/16/2021, the state of Connecticut modified its provisions relating to its foreclosure mediation program as well as other alternatives to foreclosure effective on October 1, 2021. In summary, this bill makes the Ezequiel Santiago Foreclosure Mediation Program permanent and to require that certain alternatives to foreclosure be made available to certain mortgagors.

ARMs

Retirement of CMT-indexed ARMs

Effective October 1, 2021

In Bulletin 2020-1, under FHFA guidance, Freddie Mac announced that it would cease purchasing CMT-indexed ARMs in 2021. We are now announcing that Freddie Mac will not purchase any CMT-indexed ARM that has an Application Received Date of July 1, 2021 or later. In addition, Freddie Mac will no longer purchase CMT-indexed ARMs on and after October 1, 2021, regardless of the Application Received Date or Note Date.

Loan Product Advisor® will be updated to prevent the submission of CMT-indexed ARMs on or after October 1, 2021.

Loan Selling Advisor® will be updated to prevent delivery of CMT-indexed ARMs that have an Application Received Date of July 1, 2021 or later. In addition, Loan Selling Advisor will be updated to prevent delivery of CMT-indexed ARMs with a Settlement Date on or after October 1, 2021.

Guide impacts: Sections 4101.2, 4101.10, 4201.16, 4202.5, 4204.4, 4301.7, 4304.1, 4401.2 through 4401.5, 4401.8, 4501.3, 4601.1, 4603.3, 5703.3, 5703.9, 6102.3, 6201.3, 6202.4, 6302.7, Guide Exhibits 17S, 19, 25 and 34

The Maryland Commissioner of Financial Regulation adopted amendments to Regulation .04 under COMAR 09.03.06 Mortgage Lenders, relating to requirements that mortgage lender licensees obtain and maintain physical, paper licenses, effective October 4, 2021.

Fannie Mae Selling Guide Announcement SEL-2021-09 announces Selling Guide updates related to factory-built housing code, the removal of constant maturity treasury indexed ARMs, and the removal of references to the Software Subscription Agreement Master Terms and Conditions, which has been replaced with a new Consolidated Technology Licensing Guide.

Freddie Mac Selling Guide Bulletin 2021-31 announces Selling Guide updates related to recovery time periods for the reestablishment of credit following foreclosure (for manually underwritten mortgages), enhancements to the Servicing-Released XChange® program, delivery instructions for certain property value-related data points, Texas Equity Section 50(a)(6) and 50(a)(4) Mortgages, and confidentiality obligations.

Freddie Mac announces selling guide updates related to improvements to the Cash Specified Payup process.

This Lender Letter describes the RefiNow option originally published on May 5, 2021, with the changes noted below.

• Increase the borrower income limit to allow up to 100% of the applicable AMI limit.
• Eliminate the maximum loan seasoning requirement of 10 years.
• Remove the $5,000 cap on the financing of closing costs, prepaid items, and points.
• Allow any reduction to the monthly mortgage payment instead of requiring a minimum reduction of $50.

The Adverse Market Refinance Fee was removed to align with LL-2021-13 and added reference to LL-2021-14.

MODIFICATION LOSS AMOUNT CALCULATION

In Bulletin 2021-14, we announced adjustments to the Modification Loss Amount calculation for Mortgages subject to an indemnification agreement that are eligible for a modification.

In response to Servicer feedback on using this calculation for Payment Deferrals, we are providing a new calculation for Mortgages subject to an indemnification agreement where:

The Borrower is eligible for a Payment Deferral; and

The Borrower previously received a Modification with principal deferred; and

The modification with deferred principal was not previously billed as originally outlined in Bulletins 2016-5, 2017-1 and 2021-14

For completed Payment Deferrals that meet the conditions above, the methodology used to determine the Modification Loss Amount is described below:

Determine "Duration of Modification Loss"

Calculated from the effective date of the Payment Deferral to either Credit Enhancement Termination Date, Date Loan Payoff, subsequent Payment Deferral effective date or subsequent Modification effective date or

If none of the three dates referenced in step (a) is available, Duration of Modification Loss is calculated from effective date of the Payment Deferral to the end of last reported cycle for that year

Calculate the "Accrual Rate" - the lesser of post-modified Accounting Net Yield (ANY) or Post-modified note rate minus 0.35%

Calculate "Modification Shortfall"

Modification Loss Amount = Payment Deferral Amount under current Payment Deferral multiplied by One-twelfth of the Accrual Rate

As a reminder, Freddie Mac will calculate the Modification Loss Amounts owed to Freddie Mac monthly and will bill those amounts annually for the life of the modified Mortgage. If the Mortgage is subject to a partial indemnification, each year the Servicer will be billed the appropriate percentage of the Modification Loss Amount that corresponds with the partial indemnification agreement.

Guide impact: Section 9203.20

MORTGAGES SUBJECT TO ACTIVE NON-ROUTINE LITIGATION

To provide additional flexibility, we are updating the notification requirements for modifications of Mortgages subject to active non-routine litigation.

Currently, Servicers must contact Freddie Mac and the Servicer's counsel prior to sending Borrowers a Flex Modification offer and allow no less than five Business Days for Freddie Mac and the counsel to respond with comments.

We will no longer require Freddie Mac be notified. Instead, Servicers must review the Flex Modification offer through their counsels to ensure that the offer is appropriate per applicable law, does not undermine any active litigation and settlement negotiations and that Freddie Mac's interests are not adversely impacted before sending a Trial Period Plan offer to the Borrower or Borrower's counsel.

Guide impact: Section 9402.3

TAXING AUTHORITY NOTIFICATION

In response to Servicer feedback, we are clarifying requirements for the notification of taxing authorities, homeowners associations (HOAs) and other required organizations of the change of ownership at foreclosure sale to Freddie Mac for REO properties and the third-party purchaser for third-party sales.

This change provides greater clarity of the Servicer's closeout responsibilities when a property goes to foreclosure sale.

Guide impacts: Sections 9301.43 and 9603.10

THIRD-PARTY INCOME VERIFICATION

In response to industry feedback, we are updating the Borrower income documentation requirements for workout or relief options in Section 9202.3 to clarify that Servicers may use third-party vendors for verification of income per existing guidance on the use of an Outsourced Vendor as mentioned in Section 8101.2(f).

Guide impact: Section 9202.3

LOST NOTE AFFIDAVITS

In Bulletin 2020-29, we announced requirements for Servicers to deliver lost note affidavits (LNAs) to Freddie Mac. The new provisions required Servicers to make available to Freddie Mac upon request verification regarding the validity of the LNA form in any given state from a person licensed to practice law in that state. Based on Servicer feedback, we are revising the requirement to allow in-house counsel or outside counsel to perform this review and provide a legal analysis without the state licensing requirement.

Guide impact: Section 8107.1

LAND ACQUISITION

We are adding guidance to Section 8401.1 to specify that Freddie Mac does not object to the acquisition of land if the land to be added to the Mortgaged Premises has free and clear title and does not pose any risks that could devalue Freddie Mac's collateral.

Guide impact: Section 8401.1

ADDITIONAL GUIDE UPDATES AND REMINDERS

Seller/Servicer confidential information

As announced in Bulletin 2021-31, we have updated Section 1201.8(b) to clarify that Freddie Mac's confidentiality obligations do not apply to Seller/Servicer confidential information that was independently developed by Freddie Mac or another third party.

Guide impact: Section 1201.8

Additional permitted Transfers of Ownership

In response to Servicer feedback, we are updating the requirements for additional permitted Transfers of Ownership to clarify that a permitted Transfer of Ownership may be to a Limited Liability Company (LLC) or Limited Partnership (LP) (provided they meet the conditions as outlined in Section 8406.4(b)); however, it is not a requirement for the Transfer of Ownership to be to an LLC or LP as it is just one of the options as outlined in Section 8406.4.

Guide impact: Section 8406.4

Capitalization and Extend Modification for Disaster Relief

In Bulletin 2020-28, we announced the elimination of the Extend Modification for Disaster Relief and the Capitalization and Extend Modification for Disaster Relief as available loss mitigation options in our Guide and Bulletins and replacing those options with the Disaster Payment Deferral.

With this Bulletin, we are updating the Guide to remove all references to the Extend Modification and Capitalization and Extend Modification.

Guide impacts: Sections 8404.6, 9102.5, 9201.2, 9204.2, 9206.10 through 9206.13 and 9206.16

Form 960

We are updating Form 960, Agreement for Concurrent Transfer of Servicing of Single-Family Mortgages, to include e-mail submission instructions.

Guide impact: Form 960

The eligibility of the Refi Possible Mortgage offering is being expanded by:

• Removing the requirement that the monthly payment (i.e., the Borrower’s First Lien monthly principal, interest and mortgage insurance, if applicable) be reduced by at least $50; however, a reduction in the monthly payment, as described above, is still required (without the prescribed minimum amount) along with a reduction of at least 50 basis points in interest rate
• Removing the $5,000 limit on the amount of proceeds of the Refi Possible Mortgage that may be used to pay Closing Costs

The applicable Loan Product Advisor^® feedback messages will be updated at a future date. Until then, the Sellers may disregard the feedback messages that contradict the changes described above.

FHA has published updates to the Single Family Housing Policy Handbook 4000.1 to include enhancements and revisions to existing guidance as well as various other technical edits. This newly added language augments and enhances existing policy.

This update contains revisions and additions to Handbook 4000.1 Sections I, II, III, and IV, Appendix 7.0, and the Claim Filing Technical Guide. Handbook 4000.1 updates are effective as follows:

• The Handbook 4000.1 Transmittal reflects the incorporation of certain Mortgagee Letter (ML) guidance, which is effective as previously announced in the corresponding
ML.

• Changes identified in Section II.A of Handbook 4000.1 may be implemented immediately but must be implemented for mortgages with case numbers assigned on
or after January 24, 2022.

• All other changes may be implemented immediately but must be implemented no later than January 24, 2022.

Freddie Mac and Fannie Mae have published the optional Freddie Mac/Fannie Mae 1103, Supplemental Consumer Information Form as directed by the FHFA for use to those in the industry who may find value in collecting borrower homeownership education, housing counseling and language preference information.

The Utah Department of Commerce’s Division of Real Estate recently amended its Residential Mortgage Practices and Licensing Rules to update licensee application qualifications, eliminate certain misdemeanor convictions as a basis for disqualification, update timing requirements for background check components and make further technical edits effective October 26, 2021.

The VA published Circular 26-21-21 to update the concurrence process on refinancing loans submitted for statutory violations of seasoning and/or term requirements.