Compliance Calendar

As part of Reimagine Servicing^®, Freddie Mac is transforming loss mitigation by developing a default management solution leveraging client insights to better meet Servicers’ needs for speed to market Mortgage resolution. Resolve℠ uses automation and seamless integration to deliver rapid, rules-based workout decisions. The first available component of the Resolve user interface is Decision Insights – a centralized location with a comprehensive view of default activities such as decisions, responses, dashboards, default and status reporting to track towards timely resolution of workout solutions and will be accessible through the Servicing Gateway.

Effective March 1, 2021, all non-delegated short sales submitted through Workout Prospector^® will be available in Resolve through Decision Insights which will provide transparency into the exception review process.

Workout Prospector will be available until all the capabilities of Resolve are built. Guide Section 9208.2 and Directory 5 have been updated to reflect this change. For more information on future capabilities and product availability, visit the Resolve web page.

Servicers can register for the Introduction to Decision Insights in Resolve℠ webinar to learn how to leverage this new tool to track and manage non-delegated short sales.

Guide impacts: Section 9208.2 and Directory

USDA announces the New Guaranteed Underwriting System (New GUS) will be implemented on March 1, 2021, and that February 26, 2021 is the last day for the processing of existing loan applications in existing GUS (Legacy GUS).

GUS CONVERSION DATES:

• February 26, 2021 – At the close of business on this day, Legacy GUS will no longer be available for editing or processing applications. Legacy GUS will be made available to users in a view only capacity so that historical data is accessible for informational purposes for up to one year.
• February 27-28, 2021 – All Single Family Housing Guaranteed Loan Program (SFHGLP) systems will be unavailable as the transition to the New GUS is accomplished.

• March 1, 2021 – New GUS goes live. Existing applications in Legacy GUS that have not received a Conditional Commitment will require the application to be entered into New GUS. Note – users with access to Legacy GUS will automatically be granted the same access level to New GUS (no new login credential or user setup is required).

APPLICATION PROCESSING:

SFHGLP is receiving record volume and may not be able to review all applications submitted prior to the February 26^th closing of Legacy GUS. However, USDA is committed to issuing a conditional commitment for all complete applications received by February 1, 2021. It is important to monitor the posted turn-times on our website to make the safest determination of your ability to receive a Conditional Commitment before the February 26^th closing of Legacy GUS. (https://www.rd.usda.gov/page/sfh-guaranteed-lender)

If an application in Legacy GUS has not received a Conditional Commitment by the close of business on February 26, 2021, the application will need to be re-entered into New GUS. This can be accomplished by importing the FNMA DU MISMO 3.4 v1.8.1 XML file into New GUS or manually entering the application into New GUS.

THINGS TO KNOW:

• Applications entered in Legacy GUS will NOT migrate to New GUS.
• If on March 1, 2021 you still have USDA loans in process that were not originated utilizing the redesigned URLA, you can still submit those loans through New GUS by either importing in FNMA DU MISMO 3.4 v1.8.1 format; manually entering the application into New GUS; or, submit your application as a Manual Underwrite file.

• USDA Rural Development (RD) Single Family Housing (SFH) is already accepting the redesigned Uniform Residential Loan Application (URLA) FORM from all lenders that have begun production use of the new URLA form.

• Additional guidance on this conversion is available in the USDA LINC Training and Resources Library under the section entitled “New URLA Guarantee Underwriting System.” https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library

Federal Housing Administration (FHA) announced that FHA Connection (FHAC) will be updated to capture expanded borrower demographic information that aligns with the Home Mortgage Disclosure Act (HMDA) regulations.

The expanded demographic information that will be collected in FHAC includes ethnicity, race, and sex, and complies with the revised Regulation C of HMDA. This additional information also aligns with the options provided on the redesigned Uniform Residential Loan Application (URLA/Fannie Mae Form 1003) as well as the Demographic Information Addendum to the existing URLA for forward mortgages, and the Residential Loan Application for Reverse Mortgages (Fannie Mae Form 1009).

The changes in FHAC will be effective and available on March 1, 2021. Demographic data previously entered under fields which are replicated in the revised FHAC screens will rollover.

FHAC Revised Screens

• Insurance Application

• Home Equity Conversion Mortgage (HECM) Insurance Application

• Borrower/Address Change

• Mortgage Credit Reject

The Ethnicity, Race, and Sex fields will be optional selections and users may select all boxes that apply. The question regarding how demographic information was provided is a required field and, if the application was taken in person, additional questions are required to be answered.

USDA has updated Handbook HB-1-3555 to remove Attachment 2-A, Minimal Essential Documents Matrix, as well as make minor grammatical and formatting edits, including adding guidance added to align with the revision of Form RD 3555-21 in Chapter 2 (Record Retention), Chapter 5 (Origination and Underwriting Overview), Chapter 8 (Applicant Characteristics), Chapter 10 (Credit Analysis), Chapter 12 (Property and Appraisal Requirements), Chapter 15 (Submitting the Application Package), Chapter 16 (Closing the Loan and Requesting the Guarantee), and Appendix 7 (Caivrs Acces Instructions).

Freddie Mac is simplifying the property valuation reverification requirements for Seller in-house quality control reviews. These updates include reverifications involving Mortgages originated with either an appraisal or an automated collateral evaluation (ACE) appraisal waiver.

The following reflects the revised requirements:

• Freddie Mac currently provides Sellers with two options related to property valuation reviews. For all Mortgages selected for in-house quality control reviews, Option 1 requires a Seller to obtain a combination of desk and field reviews and Option 2 requires a Seller to obtain only field reviews on 30% of the Mortgages selected. With this update, we are replacing these options and requiring the Seller to obtain desk reviews on all Mortgages selected for in-house quality control reviews; however, if it is determined that the scope of the desk review is inadequate, a field review is required. The scope of the review is dependent on whether the appraisal received valuation representation and warranty relief through Loan Collateral Advisor^®.
• For Mortgages originated with an ACE appraisal waiver, a desk review is not required, but the Seller must ensure the data submitted to Loan Product Advisor was accurate and that ACE eligibility requirements were met

Review our FAQs related to these in-house quality control changes for appraisal reviews.

Guide impact: Section 3402.5

Effective March 2, 2021; however, Sellers may implement sooner if they are able to do so

When considering properties with solar panels, the Seller must evaluate ownership of the solar panels and any liens upon the property relating to debt or lease payments used to obtain the solar panels. We are updating the Guide to clarify requirements when solar panels are leased, financed or owned. Specifically, we are adding a table that provides guidance on:

• Instances when the Seller is not required to obtain a subordination agreement (when a UCC-1 Financing Statement or lease agreement is present)
• Appraisal requirements when solar panels are present
• Impacts to the debt payment-to-income ratio
• Impacts to the TLTV ratio

Additionally, we are:

• Specifying that title policy or attorney’s opinion of title exceptions for liens and leases, including UCC-1 Financing Statements, for solar panels are acceptable, provided the exception is for a lien or lease that lists only the solar panels as the collateral
• Adding “UCC-1 Financing Statement” to the Glossary for ease of reference

Guide impacts: Sections 4702.4, 5601.2 and Glossary

QUALITY CONTROL (QC)

Optional bifurcation of Seller’s in-house post-closing quality control (QC) sample

Previously, we required every Mortgage selected in the Seller’s in-house post-closing QC sample to be reviewed to:

• Ensure eligibility and underwriting requirements and guidelines have been met, and
• Confirm accuracy of the documentation required by applicable law

To provide Sellers with greater flexibility, Sellers now have the option of selecting a post-closing sample to review compliance with applicable law separately from their review of eligibility and underwriting requirements as long as the minimum number of loans selected meets the requirements of Guide Section 3402.4(a). Additionally, as part of the review of eligibility and underwriting requirements, the Seller must have a process to refer certain Mortgages for review of compliance with applicable law.

This change will allow for improved selection of Mortgages for review for compliance with applicable law by permitting selection based on different factors. For example, the location of the subject property may be more pertinent to the review for compliance with applicable law, versus eligibility and underwriting requirements, which are typically dependent on the mortgage product.

Guide impact: Section 3402.7

Electronic mortgage insurance certificates

We are providing additional flexibility in the required documentation to evidence mortgage insurance coverage in the Mortgage file provided to the Freddie Mac QC department. Sellers now have the option of including electronic evidence of mortgage insurance coverage instead of a copy of the mortgage insurance certificate.

Please note that our document checklist for QC loan file reviews will be updated at a later date.

Guide impact: Section 3401.15

Fannie Mae SEL-2021-02 announces updates to the Selling Guide, including updated eligibility and documentation requirements for Power of Attorneys; removal of servicing execution tool in anticipation of final commitment and delivery dates and transition to Servicing Marketplace®; changes to risk factors evaluated by DU® as noted in DU Version 11.0 Release Notes; and the updated definition of planned unit development.

USDA has updated Handbook 1-3555 Chapter 9 to provide guidance regarding the treatment of Mortgage Credit Certificates (MCC) in conjunction with the implementation of the new Guaranteed Underwriting System (GUS), which must be adhered to for all applications effective April 1, 2021.

Fannie Mae announces effective March 8, servicers will add or make updates to their drafting instructions for MBSPI & MBS Guaranty Fees related activity via the Cash Remittance System™ (CRS™), and will no longer submit Form 1072/1055 for this.

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

▪ Property valuation orders for charge-offs*: updates our requirements for submitting a charge-off request to us via our servicing solutions system.

▪ Reimbursement of recording costs for mortgage loan satisfactions*: reflects a recent procedural change for servicers when requesting reimbursement of recording costs associated with a mortgage loan satisfaction.

▪ Approval request to pay third parties out of insurance loss proceeds*: clarifies the approval process related to the payment to third parties from insurance loss proceeds.

▪ Miscellaneous updates*:

▪ replaces the Fannie Mae eNote Transfer of Control Request (Form 197) and

▪ updates the Allowable Foreclosure Attorney Fees Exhibit to reflect a change to judicial foreclosure fees for Texas Section 50(a)(6) mortgage loans

View the list of impacted topics.

*Policy change not applicable to reverse mortgage loans

Fannie Mae updated Impact of COVID-19 on Appraisals Lender Letter (LL-2021-04) to extend the application dates eligible for certain temporary flexibilities to April 30, 2021, and announces the temporary policies related to condominium project reviews and borrower-provided photos for completion draws for HomeStyle^® Renovation loans will not be extended beyond April 30, 2021.

Fannie Mae updated the Impact of COVID-19 on Originations Lender Letter (LL-2021-03) to extend the verbal verifications of employment and power of attorney flexibilities to April 30, 2021, and notes that this will be the final extension for these policies.

Freddie Mac Bulletin 2021-10 extends the effective date of the temporary underwriting flexibilities related to COVID-19 to apply to mortgages with application received dates through April 30, 2021, and that for the temporary flexibilities related to 10-day pre-closing verifications, condominium projects, and powers of attorney, this will be the final extension.

Fannie Mae announces the upcoming release of Desktop Underwriter^® (DU^®) Version 11.0, effective the weekend of March 13-14, which will include an updated risk assessment to fine-tune DU’s ability to identify risk while fostering homeownership sustainability.

The Washington Department of Licensing published a permanent rule to incorporate changes required by SB 5641 to establish rules for remote notarization being performed by licensed Washington notaries effective March 14, 2021.

The California attorney general announced the approval of additional regulations implementing the California Consumer Privacy Act (CCPA), including a requirement to notify consumers of their right to opt-out via offline communications; providing an opt-out icon for businesses to use in addition to posting a notice of right to opt-out; and require companies to use opt-out methods that are “easy” for consumers to execute and that require “minimal” steps to opt-out.

The CFPB issued an interpretive rule clarifying that the prohibition against sex discrimination under the Equal Credit Opportunity Act (ECOA) and Regulation B includes sexual orientation discrimination and gender identity discrimination.

The Illinois Department of Financial and Professional Regulation adopted provisions relating to its Real Estate License Act as reflected in Reg 68, Part 1450.100-1310.

3. Beginning on March 19, 2021, lenders are no longer expected to submit VA Form 26-8937 to VA when the COE already lists the information the lender is seeking to verify. If the COE already lists the information the lender is seeking to verify, VA will not process the VA Form 26-8937 if it is submitted by the lender.

VA expects that lenders will only submit VA Form 26-8937 to VA in cases where the lender needs additional information from VA. For instance--

a. An active duty Service member has received a proposed or memorandum rating or a predischarge claim for VA disability compensation is pending;

b. A COE condition expressly states that VA Form 26-8937 must be submitted to VA; or

c. System limitations cause anomalies on the COE and lenders are unable to resolve such anomalies after calling VA at 877-827-3702.

(NOTE: VA recognizes that there could be cases where a Veteran’s compensation award increases after the effective date of the COE. In such cases, lenders should rely on the Veteran’s award letter to verify the increase. Submitting VA Form 26-8937 would be unnecessary.)

4. How to Submit. In the limited circumstances where VA Form 26-8937 will still be submitted to VA, VA encourages lenders to upload the VA Form 26-8937 to WebLGY. This can be completed by selecting “New Application” under “Electronic Application” in WebLGY. Effective March 19, 2021, VA will be unable to process VA Form 26-8937 via fax.

a. Document Type. VA Form 26-8937 should be uploaded under correspondence in “E-Docs” as “Form 26-8937” document type.

b. Interest Rate Reduction Refinancing Loans (IRRRLs) for Surviving Spouse of a Veteran Who is Deceased. Under 38 U.S.C. § 3710(e)(3), if a surviving spouse of a deceased Veteran was a co-borrower of a VA-guaranteed loan, the surviving spouse is eligible for an IRRRL to refinance the VA-guaranteed loan. Lenders should utilize the “New Application” under the surviving spouse’s name, not the deceased Veteran’s name. Note: Information about the loan being refinanced will not appear on the COE.

c. VA Form 26-8937 Status Inquiries. Upon VA’s receipt of VA Form 26-8937 from the lender, the COE will be updated accordingly, and the lender should be able to obtain the COE in WebLGY. In rare instances of system limitations, VA may upload a completed VA Form 26-8937 to the eligibility record in WebLGY in lieu of updating the COE record. Lenders should allow five business days before calling 877-827-3702 for a status update.

This Mortgage Letter announces the publication of a revised Form HUD92900-A, (92900-A) HUD Addendum to Uniform Residential Loan Application (URLA). This Mortgagee Letter also announces the renewal of other FHA Insured Mortgage Application forms.

Mortgagees may use the revised and renewed forms immediately and must use the revised and renewed forms for case numbers assigned on or after March 22, 2021.

HUD welcomes feedback from interested parties for a period of 30 calendar days from the date of issuance of this Mortgagee Letter. To provide feedback on this policy document, please send feedback to the FHA Resource Center
at answers@hud.gov. HUD will consider the feedback in determining the need for future updates.

Ohio has amended its provisions relating to licensing restrictions and requirements effective on the 91st day after being filed with the Secretary of State.

The Illinois Predatory Loan Prevention Act, signed March 23, enacts a Predatory Loan Prevention Act (PLPA) APR rate cap of 36% calculated under the rules for the Military Lending Act Annual Percentage Rate (MAPR) and applies to consumer loans (including mortgages).

The VA provides an updated summary of the home retention option and alternative to foreclosure that servicers should utilize to help borrowers affected by the COVID-19 pandemic.

FHA announced the extension of interim procedures detailed in ML 20-15, which address site access issues related to Section 232 mortgage insurance applications during the COVID-19 pandemic, effective immediately.

POWERS OF ATTORNEY

Power of attorney (POA) eligibility and documentation

Effective for Application Received Dates on or after March 31, 2021, but Sellers may implement sooner if possible

In Bulletin 2020-47, Freddie Mac updated Guide Section 6301.4, Power of attorney, to provide Sellers with more flexibility when using powers of attorney (POAs). Due to client requests for more detail, we are revising those updates as follows:

• Expressly stating that events that justify the use of a POA include other hardships that prevent the Borrower from executing documents
• Adding specificity by clarifying that information about the hardship retained in the Mortgage file can include a written narrative describing why the Borrower was unable to execute documents in person or using an alternate method (e.g., remote online notarization)
• Extending the mandatory implementation date to Mortgages with Application Received Dates on or after March 31, 2021

Guide impact: Section 6301.4

Document Custodian receipt of recorded POA

In Bulletin 2020-48, we revised the time limit for delivery of the recorded POA to the Document Custodian from five Business Days to 30 days of receipt from the recorder’s office.

We are now updating the POA delivery requirements announced in Bulletin 2020-38 to provide more flexibility, as well as to simplify and improve readability. Updates include, but are not limited to:

• Providing Sellers with more flexibilities for the delivery of the POA to the Document Custodian, including delivery of a copy of the POA, unless an original POA is required by applicable law
• Removing the requirement that Sellers certify the copy of the POA (if they are delivering a copy of the POA to the Document Custodian)
• Consolidating separate requirements based on whether and how the POA is recorded to specify that if the POA is recorded, and the copy of the POA with recordation information is not delivered with the Note, it must be delivered to the Document Custodian within 30 days of receipt from the recording office

Guide impacts: Sections 1402.8 and 6301.4

Oregon amended the disclosure of consumer complaint submission requirements with modified language that must be included in each periodic mortgage statement and each notice sent to a borrower by a licensee or a person required to have a license under ORS 86A.303 to 86A.339 issued after March 31, 2021:

“Borrowers: The Oregon Division of Financial Regulation (DFR) oversees residential mortgage loan servicers who are responsible for servicing residential mortgage loans in connection with real property located in Oregon and persons required to have a license to service residential mortgage loans in this state. If you have questions regarding your residential mortgage loan, contact your servicer at (servicer’s toll-free phone number and email, if applicable). To file a complaint about unlawful conduct by an Oregon licensee or a person required to have an Oregon license, call DFR at 888-877-4894 or visit dfr.oregon.gov.”

Additionally, the contact information for the residential mortgage loan servicer and the contact information for the Oregon Division of Financial Regulation must be printed in at least the same point type and be printed in at least 10-point font.

Under the guidance of the FHFA and in alignment with Fannie Mae, Freddie Mac is updating the definition of acceptable liquidity for Seller/Servicers that are not depository institutions. Guide Section 2101.2(a) states that liquidity for Seller/Servicers that are not depository institutions is defined as “Cash and cash equivalents (unrestricted), certain investment grade securities that are available for sale or held for trade (including single-family mortgage-backed securities backed solely by Agency Mortgage Servicing, obligations of Government Sponsored Enterprises, and Treasury obligations), unused/available portion of committed Servicing advance lines.”

Effective March 31, 2021, the “unused/available portion of committed Servicing advance lines” will no longer be an acceptable component of the Seller/Servicer’s liquidity.

Excluding unused committed advanced lines of credit as allowable liquidity assets further strengthens the minimum liquidity requirement. Seller/Servicers should have the balance sheet liquidity to meet the minimum eligibility requirements rather than relying on liquidity through lenders, especially during adverse market conditions when the lenders may be unavailable.

Please note that the relaxed liquidity requirement for loans that were current when they entered COVID-19-related forbearance that we announced in Bulletin 2020-24 remains in effect.

USDA announces edits to Handbook HB-1-3555, Chapter 9 Income Analysis:

HB-1-3555 Table of Contents:
- To reflect the changes made to HB-1-3555 and to remove references to Appendix 9: Unnumbered Letters and State Supplements, to align with the National Integration of the program.

Chapter 9:

Paragraph 9.2:
- Clarified that documentation of income calculations should be provided on Attachment 9-B, the Uniform Transmittal Summary, or equivalent.

Paragraph 9.3 B:
- Removed reference to Form RD 3555-21.
- Clarified that lenders are responsible for accurate income calculations.
- Revised the USDA LINC Training and Resource Library link.

Paragraph 9.3 C:
- Removed reference to Form RD 3555-21.

Paragraph 9.3 E:
- Under the “Self-employed”, clarified that evidence provided to support closure of a business must be satisfactory to lender.
- Under “IRS Transcripts”, clarified that borrowers are required to file tax returns by the due date.
- Added Form IRS 4506-C as an option for authorization to obtain IRS Tax Transcripts.

Paragraph 9.6:
- Rephrased verbiage regarding when Agency staff is required to recalculate annual income.

Paragraph 9.8:
- Clarified that repayment income must continue for at least three years into the mortgage as provided under 3555.152(a).
- Clarified that non-taxable income may be grossed up 25 percent for repayment income.

Paragraph 9.9:
- Rephrased verbiage regarding when Agency staff is required to recalculate repayment income.

Attachment 9-A:
- Added statement to refer to the regulation 3555.152(b)(5) and Attachment 9-D for income exclusions.
- Removed verbiage throughout the matrix that repayment income must continue for a minimum of three years and relocated to the top of the first page.
- Removed verbiage throughout the matrix that repayment income may be grossed up 25 percent and relocated to the top of the first page.
- Clarified “Boarder Income” by adding a statement that all household member income, including boarders, is included in annual income and any rent paid by the boarder that is reported on tax returns is also included in annual income.
- Removed “Business Loss” and relocated as “Self-Employment Income and Independent Contractors (1099)”.
- Updated source options to required documentation for “Capital Gains”, “Depreciation/Depletion”, “Dividends”, “Employment Related Account”, “Government Benefits”, “Interest”, “Mortgage Differential Payment”, “Notes Receivable”, “Rental Income”, “Restricted Stock Units”, “Royalty Payments”, “Schedule K-1”, “Scholarships”, “Section 8 Housing Vouchers”, “Separate Maintenance/Alimony”, “Trust Income”, and “Workman’s Compensation”.
- “Commission” added history in same or similar line of work.
- Added “GI Bill”
- “Military” included terminology for BAH/BAS.

- “Mortgage Credit Certificate” relocated GUS instructions and changed source options to required documentation which is now consistent with the verbiage on the Conditional Commitment Attachment.
- “Per Diem” added that only taxable income can be used in Repayment Income.
- “Rental Income” relocated GUS instructions.
- “Scholarships” removed statement that benefits without expiration will be presumed to continue.
-“Seasonal Employment” added in the same line of work.
-“Section 8 Housing Vouchers” relocated GUS instructions.
- “Social Security” clarified documentation source options.
- “Temporary Leave” replaced income must be received at time of application with time of closing and replaced Form 3555-21 with Attachment 9-B.
- “Unemployment” changed required history from one year to two years to align with requirement for seasonal workers.
- “Dependent Deduction” added applicable GUS screens or lender’s underwriting analysis.
- Under the Assets and Reserves section; updated the applicable GUS screens where assets are entered.
- Clarified how to enter “Business Accounts’ in GUS.
- Added additional guidance for documenting “Cash on Hand” and changed guidance to indicate it is not eligible to be considered for reserves.
- Updated GUS screens for entering Earnest Money.
- Revised documentation requirements for Gift Funds which also aligns with HUD requirements and updated GUS screens.
- Removed “Lump Sum Additions”.
- Updated GUS screens for Sales Proceeds of Real Estate Owned property.

Attachment 9-B:
- Updated to reflect current version as a result of the changes to Form RD 3555-21.

Attachment 9-C:
- Updated format of sample Income Calculation Worksheet to correspond with Attachment 9-B.

Attachment 9-F:
- Updated reference to income worksheet to lender’s income calculations.
- Updated link for Regulation/Handbook website.