Compliance Calendar

• Effective for Mortgages with Settlement Dates on and after May 1, 2021, Freddie Mac will no longer purchase Manually Underwritten Mortgages secured by Investment Properties or second homes. The Guide will be updated with a future Bulletin to reflect this change.
• Effective April 15, 2021, all non-Loan Product Advisor Mortgages secured by Investment Properties or second homes submitted to Loan Quality Advisor^® will receive a Risk Assessment result of “Yellow – High Likelihood of Caution”. Investment Property and second home Mortgages that are resubmitted to Loan Quality Advisor’s Risk Assessment service on or after April 15, 2021 will receive a “Yellow” Risk Assessment result regardless of the result of the previous submission and will be ineligible for sale to Freddie Mac.

Loan Quality Advisor feedback message updates will be provided at a later date.

Loan Selling Advisor^® will be updated to prevent delivery of Mortgages that do not meet the above purchase eligibility requirements.

Enhanced Relief Refinance^® Mortgages secured by second homes and Investment Properties are not impacted by these changes. Mortgages subject to requirements of Guide Section 4304.5, Additional underwriting requirements for certain Enhanced Relief Refinance^® Mortgages, must continue to be manually underwritten in accordance with the requirements of that section.

Second home and Investment Property Mortgage eligibility – effective for Mortgages with Settlement Dates on or after May 1, 2021

• Guide updates to reflect requirement changes for Mortgages secured by Investment Properties and second homes announced in Bulletin 2021-11

FHA ML 2021-08 announces that the Home Equity Conversion Mortgage (HECM) program is moving on from the London Interbank Offered Rate (LIBOR) index for adjustable-rate HECMs, and will instead adopt the Secured Overnight Financing Rate (SOFR), primarily for HECMs closed on or after May 3, 2021.

Washington House Bill 1108 extends the mediation and certain other pre-foreclosure requirements under the Deeds of Trust Act and the Foreclosure Fairness Act (FFA) to residential real property of up to four
units and removes the requirement that a property be owner-occupied.

The CFPB issued an interim final rule in support of the Centers for Disease Control and Prevention (CDC)’s eviction moratorium, requires debt collectors to provide written notice to tenants of their rights under the eviction moratorium and prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium effective May 3, 2021.

QC collateral risk assessment requirements

With this update, we are enhancing the collateral risk assessment requirement for lender Quality Control (QC) reviews. Currently, a lender must obtain an appraisal field review to evaluate the appraisal for 10% of the loans selected for QC review in the random sample. A desk review must be completed for the remaining 90% of the sample.

We are updating this policy to better align QC processes with available collateral data and industry-leading collateral tools. The combination of standardized data and Collateral Underwriter® allows for a more robust QC process, which reduces or eliminates the need for a field review in most circumstances. Therefore, the new policy replaces the current appraisal QC requirements with a new collateral risk assessment for all loans selected for a QC review in the random sample. If the lender is unable to complete an adequate assessment or appropriately determine the quality of the origination appraisal, it may order either a desk review or field review from a licensed appraiser.

To assist lenders in performing the required post-closing appraisal review, we are providing a new, optional Post-Closing QC Collateral Risk Assessment Analysis review framework and checklist. Lenders must ensure that all property eligibility requirements in the Selling Guide are met; use of the optional checklist alone does not indicate complete compliance with the Guide.

Miscellaneous update
B1-1-03, Allowable Age of Credit Documents and Federal Income Tax Returns: updated a footnote to address tax filing extensions published by the IRS.

Credit underwriting and Mortgage eligibility

• Updated requirements related to refinance transactions, including a 30-day seasoning requirement for “no cash-out” refinance Mortgages and flexibility for cash-out refinance Mortgages when none of the Borrowers have been on the title for at least six months
• Extensions for certain key dates regarding age of tax return requirements
• Updated requirements permitting the use of future long-term disability income to qualify the Borrower
• Revised requirements related to prorated real estate tax credits

Fannie Mae issues frequently asked Questions for its enhanced collateral assessment requirement for lender post-closing (QC) reviews.

The specific updates in this mortgagee letter include the following:

• expands criteria which will begin a deferral period for HECMs with case numbers assigned on or after August 4, 2014;

• expands assignment criteria for Mortgagee Optional Election (MOE) Assignments for HECMs with case numbers assigned before August 4, 2014; and

• eliminates the requirement for an Eligible Non-Borrowing Spouse to establish marketable title or other legal right to remain in the property following the death of the HECM borrower.

Vermont Senate Bill 88 amends multiple provisions, including § 2102 Application for Licensing, § 2105 Contents of License, § 2122 Use of Other Names or Business Places, and § 2201 Licenses Required; effective May 12, 2021.

Announcement of Revised Form HUD-9991, FHA Condominium Loan Level/Single-Unit Approval Questionnaire and Revised Form HUD-9992, FHA Condominium Project Approval Questionnaire

This Mortgagee Letter announces the publication of revised Form HUD9991, FHA Condominium Loan Level/Single-Unit Approval Questionnaire (HUD-9991), and revised Form HUD-9992, FHA Condominium Project Approval Questionnaire (HUD-9992).

Mortgagees may utilize the revised forms immediately and must use the revised Form HUD-9991 for case numbers assigned on or after May 17, 2021, and must use the revised Form HUD-9992 for initial project approval and recertifications submitted on or after May 17, 2021.

South Carolina Senate Bill 631 enacts the South Carolina Electronic Notary Public Act, providing procedures and training requirements to become an electronic notary; effective May 18, 2021.

Weiner Brodsky Kider PC

Governor Andrew Cuomo extends both the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020 and the COVID-19 Emergency Protect Our Small Businesses Act of 2021until August 31, 2021.

West Virginia amended their existing Standards and Guidelines for Electronic Notarization effective May 21, 2021, through August 1, 2026.

USDA announced a new user functionality that will become available to the user of the Guaranteed Underwriting System (GUS) beginning on May 27, 2021, allowing users to import an update to an existing loan application