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Compliance Calendar for April 2021

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Home Possible® Mortgages - Maximum LTV Ratio

Effective: April 1, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2020-45 →
Tag: Underwriting
Details

Freddie Mac is reducing the maximum LTV ratio to 85% for certain Home Possible® Mortgages secured by 2- to 4-unit properties. The maximum TLTV and Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratios for these Mortgages will remain at 95%.

Please see the Bulletin for the revised chart.

Fair Access to Financial Services

Effective: April 1, 2021
Industry: Consumer Lending
Source: Other   OCC Final Rule →
Tag: Banking
Details

The OCC issued a final rule to ensure fair access to banking services provided by large national banks, federal savings associations, and federal branches and agencies of foreign bank organizations; effective April 1, 2021.

  • The rule codifies more than a decade of OCC guidance stating that banks should conduct risk assessment of individual customers, rather than make broad-based decisions affecting whole categories or classes of customers, when provisioning access to services, capital, and credit.
  • The rule implements language included in Title III of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, which charged the OCC with "assuring the safety and soundness of, and compliance with laws and regulations, fair access to financial services, and fair treatment of customers by, the institutions and other persons subject to its jurisdiction."
  • The rule applies to the largest banks with more than $100 billion in assets that may exert significant pricing power or influence over sectors of the national economy.
  • Under the rule, banks still determine their product lines and geographic markets and are free to make legitimate business decisions about what and whom to serve.
  • The rule requires covered banks to make those products and services they choose to offer available to all customers in the communities they serve, based on consideration of quantitative, impartial, risk-based standards established by the bank.
  • Under the rule, a covered bank's decision to deny services based on such objective assessment would not violate the bank's obligation to provide fair access. A covered bank's decision not to offer a specific kind of financial product or service or not to compete in a geographic market is unaffected.

Unsafe and Unsound Banking Practices: Brokered Deposits and Interest Rate Restrictions

Effective: April 1, 2021
Industry: Consumer Lending
Source: Other   FDIC Final Rule →
Tag: Banking
Details

The FDIC finalized revisions to its regulations relating to the brokered deposits and interest rate restrictions that apply to less than well capitalized insured depository institutions, including establishing a new framework for analyzing certain provisions of the “deposit broker” definition, including “facilitating” and “primary purpose” and amended methodology for calculating the national rate, the national rate cap, and the local market rate cap; effective April 1, 2021, with an extended compliance date of January 1, 2022.

MassHousing Mortgage Insurance Fund

Effective: April 1, 2021
Industry: Mortgage Lending
Source: Fannie Mae   View Source →
Tag: MIP-PMI

Recently, Fannie Mae and Freddie Mac, under the direction of the FHFA, worked with the MassHousing Mortgage Insurance Fund (Fund) to update the Fund’s Loan Loss Reserve Agreement, Commitment/Certificate, and Mortgage Payment Protection Endorsement Forms (Forms). These Forms describe the Fund’s terms of loss coverage on individual loans sold to or securitized by Fannie Mae, as well as other investors and guarantors.

As a reminder, lenders are prohibited from entering into any agreement that modifies the terms of any approved mortgage insurance master policy on loans delivered to us. See the Selling Guide, B7-1-01, Provision of Mortgage Insurance for additional information. The Fund’s Forms are the equivalent of a private mortgage insurer’s mortgage insurance master policy and are subject to this prohibition.

Effective: The updated Forms are required for loans with application dates on or after April 1, 2021 that are covered by the Fund. Loans with incorrect Forms are not eligible for sale to us.

Massachusetts Housing Loan Loss Reserve Agreement Updates

Effective: April 1, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Selling Bulletin 2021-9 →
Tags: Massachusetts, Insurance, Underwriting
Details
Background

Freddie Mac, under the direction of the FHFA and in conjunction with Fannie Mae, has worked closely with the Massachusetts Housing Finance Agency Mortgage Insurance Fund (“MassHousing MIF”) to update and approve its Loan Loss Reserve Agreement, related endorsements and other forms (collectively, the “LLRA”), which were each last updated in 2016.

The LLRA provides mortgage guaranty insurance coverage to Seller/Servicers for individual Mortgages sold to Freddie Mac. Freddie Mac is the beneficiary of the LLRA, and in the event of a Borrower default, Freddie Mac has coverage for certain Mortgage-related losses. The new LLRA was updated to incorporate, as applicable, the enhancements contained in the private mortgage insurance master policies that were effective in March 2020.

Effective date

Any Massachusetts Housing Finance Agency Mortgage sold to Freddie Mac that requires mortgage insurance and has an Application Received Date on or after April 1, 2021 must be insured under the new LLRA. If such Mortgage is insured under any pre-existing LLRA, the Mortgage will not be eligible for sale to Freddie Mac.

Any Massachusetts Housing Finance Agency Mortgage sold to Freddie Mac that requires mortgage insurance and has an Application Received Date prior to April 1, 2021 may be insured under either:

  • The new LLRA, or
  • The existing LLRA dated October 1, 2016 between Seller/Servicers and the MassHousing MIF, as long as the Seller/Servicer first confirms with the MassHousing MIF that such policies were approved by Freddie Mac for use at the time of the Application Received Date

As a reminder, in addition to requiring mortgage insurance to be issued by a Freddie Mac-approved MI, Section 4701.1 requires Seller/Servicers to ensure that the insurance coverage is also issued under a Freddie Mac-approved master policy.

Exception for Enhanced Relief Refinance® Mortgages

Enhanced Relief Refinance Mortgages that are Massachusetts Housing Finance Agency Mortgages may continue to be insured under their original master policies regardless of the new Mortgage’s Application Received Date subject to the following conditions:

  • The new Mortgage must be insured in connection with a modification of the existing mortgage insurance certificate, which may or may not involve the assignment of a new certificate number by the MI
  • The MI did not issue an entirely new mortgage insurance certificate
Guide impact

Guide Exhibit 10 has been updated to include the new MassHousing MIF LLRA form number.

Eligibility of Loans Secured by Second Home and Investment Properties

Effective: April 1, 2021
Industry: Mortgage Lending
Source: Fannie Mae   Fannie Mae Lender Letter (LL-2021-08) →
Tags: Underwriting, Property - Appraisal
Details

Other than the exception noted below, all second home and investment property loans must meet the following requirements to be eligible for purchase:

▪ be underwritten with Desktop Underwriter (DU®),

▪ receive an Approve/Eligible recommendation, and

▪ be delivered as a DU loan in Loan Delivery

o Automated Underwriting System Type = Desktop Underwriter

o Automated Underwriting Case Identifier must include the DU casefile ID

o Automated Underwriting Recommendation Description = Approve Eligible

The above policies apply to all lenders and include loans delivered under negotiated terms (such as variances or special requirements). The only exception that will be permitted for second home and investment properties loans is for high LTV refinance loans that are manually underwritten in accordance with the Alternative Qualification Path and delivered with Special Feature Code 840.

Condominium Projects - Delivery Requirements and Glossary Definitions

Effective: April 3, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2020-43 →
Tags: Condominiums, Underwriting, Certification, Endorsement, and Delivery
Details

Delivery requirements for 2-4 Unit Condominium Projects and Detached Condominium Units

Effective for Mortgages with Settlement Dates on or after April 3, 2021, but Sellers can implement the changes immediately

Currently, a Condominium Unit Mortgage secured by an attached unit in a 2- to 4-Unit Condominium Project can be delivered as "Streamlined Review," "Full Review," or "Exempt From Review." A Condominium Unit Mortgage secured by a Detached Condominium Unit, in any type of project, can be delivered as "Full Review" or "Exempt From Review."

We are updating the delivery requirements to specify that a Condominium Unit Mortgage secured by a Condominium Unit in a 2- to 4-Unit Condominium Project and a Detached Condominium Unit that is located in any type of Condominium Project must be delivered as ULDD Data Point Project Classification Identifier (Sort ID 42) of "Exempt From Review." These changes will also be reflected in a future Uniform Loan Delivery Dataset (ULDD) specification addendum.

Sellers must meet the requirements in Section 5701.7.

Guide impacts: Sections 5701.1 through 5701.3, 5701.5, 5701.6, 5701.7, 5701.12, 6302.20 and Glossary

2- to 4-Unit Condominium Project definition

Effective for Mortgages with Settlement Dates on or after April 3, 2021, but Sellers can implement the changes immediately

We are revising the Glossary definition of a 2- to 4-Unit Condominium Project to clarify that the Condominium Project cannot have more than four units. Those units can be a mix of residential units and not more than one commercial unit.

Guide impacts: Section 5701.1 and Glossary

Fannie Mae Selling Guide Updates

Effective: April 7, 2021
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2021-03 →
Tags: Property - Appraisal, Assets, Underwriting
Details

Fannie Mae SEL-2021-03 includes new forms for Fannie Mae review of co-op projects; revised Master Terms and Conditions to the Software Subscription Agreement; clarification of lender responsibilities related to gift funds identified in the Desktop Underwriter® validation service; eligibility of loans secured by second home and investment properties, incorporating the requirements announced in a prior Lender Letter; and a miscellaneous process change.

Selling Guide Updates

Effective: April 7, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2021-12 →
Tags: Underwriting, Income, Assets
Details

Freddie Mac's Selling Guide updates include affordable lending initiatives in the Home Possible® Mortgages and Community Land Trust Mortgages; income and assets requirements; as well as additional guide updates.

Automated Collateral Evaluation (ACE) Appraisal Waiver Offers and Collateral Representation and Warranty Relief

Effective: April 11, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2021-12 →
Tags: Underwriting, Property - Appraisal
Details

Updates to eligibility for properties impacted by Hurricanes Florence and Michael.

New York Enacts Provisions Regarding Foreclosure of Reverse Mortgage

Effective: April 14, 2021
Industry: Mortgage Servicing
Source: New York   New York Senate Bill 4408 →
Tags: New York, Foreclosure, HECM
Details

New York Senate Bill 4408

  • requires an authorized lender which seeks to foreclose upon a reverse mortgage to provide notice to the department of financial services and to the mortgagor;
  • directs the department of financial services to provide notice to the mortgagor of legal service organizations which may assist them with the default or foreclosure; and
  • prohibits authorized lenders from making advance payment of debts upon the mortgaged real property

New York Provisions Regarding Reverse Mortgage Foreclosure Filings

Effective: April 14, 2021
Industry: Mortgage Servicing
Source:   New York Senate Bill 884 →
Tags: New York, Reverse Mortgages, HECM, Foreclosure, Loss Mitigation
Details

New York Senate Bill 884

  • amends the Reverse Mortgage Pre-Foreclosure Notice requirements to include additional information necessary to explain the mortgagor's rights in a foreclosure process;
  • amends the information to be filed with the Superintendent to include an affirmative statement that final approval from the HUD was received to accelerate the reverse mortgage loan or that no such approval from HUD is required; and
  • provides that authorized lenders shall comply with all applicable laws, regulations, and any guidelines issued by HUD on loss mitigation for reverse mortgages, including record retention of specified loan-level data and loss mitigation data.

Servicing Guide Updates

Effective: April 14, 2021
Industry: Mortgage Servicing
Source: Freddie Mac   Freddie Mac Guide Bulletin 2021-14 →
Tags: eMortgages, Loss Mitigation, Loan Documents
Details

Freddie Mac Bulletin 2021-14 announces guide updates to servicing of Community Land Trust Mortgages; eMortgage legal referral requirements; adjustments to the Modification Loss Amount calculation used for the modifications of a mortgage subject to an indemnification agreement; and clarification on the scope of required legal review for Lost Note Affidavits.

VA Circular 26-21-8 Expanded Home Loan Eligibility Based on Certain National Guard Service

Effective: April 15, 2021
Industry: Mortgage Lending
Source: VA   Circular 26-21-08 →
Tags: Application, Underwriting, Loan Documents
Details

The VA announces expanding eligibility for the home loan benefits for certain members of the National Guard and provides guidance on the process for obtaining a Certificate of Eligibility (COE).

Desktop Underwriter Validation Service Release Notes

Effective: April 17, 2021
Industry: Mortgage Lending
Source: Fannie Mae   Release Notes →
Tags: Underwriting, Assets
Details

During the weekend of April 17, 2021, Fannie Mae will implement an update to the Desktop Underwriter® (DU®) validation service, which will include asset validation updates and message changes.

New York COVID-19 Forbearance Extension Period

Effective: April 19, 2021
Industry: Mortgage Servicing
Source: New York   New York Senate Bill 2508 PART LL →
Tags: New York, COVID-19, Loss Mitigation
Details

New York Senate Bill 2508 PART LL extends the "covered period" for forbearance of residential mortgage payments from March 7, 2020, until the latter of December 31, 2021, or the date on which COVID-19 Executive Orders continue to apply in the county of the qualified mortgagor's residence.

COVID-19 Appraisal Flexibility Extensions and Final Expiration

Effective: April 21, 2021
Industry: Mortgage Lending
Source: Fannie Mae   Lender Letter (LL-2021-04) →
Tags: COVID-19, Underwriting, Property - Appraisal
Details

Fannie Mae has updated LL-2021-04 to extend the effective date of appraisal flexibilities through May 31, 2021, which will be the final extension for these flexibilities.

COVID-19 Appraisal Flexibility Extensions and Final Expiration

Effective: April 21, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Freddie Mac Bulletin 2021-15 →
Tags: COVID-19, Underwriting, Property - Appraisal
Details

Freddie Mac Bulletin 2021-15 extends the effective date through May 31, 2021, for appraisal flexibilities; completion report flexibilities, including builder certification and GreenCHOICE® Mortgage flexibilities; and CHOICERenovation® Mortgage flexibilities. This will be the final extension for these flexibilities.

Retirement of Home Possible Advantage

Effective: April 26, 2021
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2020-43 →
Tags: Underwriting, Certification, Endorsement, and Delivery
Details

Effective April 26, 2021

As announced in Bulletin 2018-13, requirements for Home Possible® and Home Possible Advantage programs were consolidated, eliminating Home Possible Advantage as a separate offering. Since then, Sellers have been able to submit or deliver Home Possible Mortgages as Home Possible Advantage through Loan Product Advisor and Loan Selling Advisor® with the same experience and requirements.

Effective April 26, 2021, users will no longer be able to submit or deliver Home Possible Mortgages as Home Possible Advantage through Loan Product Advisor or Loan Selling Advisor.

Loan Product Advisor will be updated to prevent the submission of the valid value "Home Possible Advantage" Offering Identifier 250 for ULAD Data Point Loan Program Identifier (Unique ID 178.00). Originators must only use the valid value "Home Possible" Offering Identifier 241 when originating Home Possible Mortgages.

Loan Selling Advisor will be updated to prevent the delivery of the valid value "Home Possible Advantage" for ULDD Data Point Loan Program Identifier (Sort ID 404). Sellers must only use the valid value "Home Possible Mortgage" when delivering Home Possible Mortgages.

We revised Section 6302.14 to reflect the retirement of the valid value "Home Possible Advantage."

These changes will also be reflected in future ULDD specification addendum and Loan Product Advisor® Specification Bulletin.

Guide impacts: Section 6302.14 and Exhibit 19

Loan Document Update

Effective: April 26, 2021
Industry: Mortgage Lending
Source: Fannie Mae   Multifamily Mortgage Business LL-2021-02 →
Tags: Underwriting, Closing, Application
Details

Fannie Mae Multifamily Mortgage Business LL-2021-02 announcing updates to the Loan Documents that may be used immediately and must be used for all Mortgage Loans with a confirmed Commitment Date or after April 26, 2021.

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