Compliance Calendar

• Lenders must comply with the CARES Act credit reporting provisions
• Lenders must report to credit bureaus that consumers are current on their loans if consumers have sought relief from their lenders due to the pandemic
• The Bureau’s statement also encourages lenders to continue to voluntarily provide payment relief to consumers and to report accurate information to credit bureaus relating to this relief
• The Bureau’s statement also provides flexibility for lenders and credit bureaus in the time they take to investigate disputes; specifically stating that it does not intend to cite in an examination or bring an enforcement action against firms who exceed the deadlines to investigate such disputes as long as they make good faith efforts during the pandemic to do so as quickly as possible

Handbook 4000.1 III.A.3.d. Presidentially-Declared COVID-19 National Emergency

• (A) Forbearance for Borrowers Affected by the COVID-19 National Emergency 
  
  • If a Borrower is experiencing a financial hardship negatively
    impacting their ability to make on-time Mortgage Payments due to the COVID-19 National Emergency and makes a request for a forbearance, the Mortgagee must offer the Borrower a forbearance, which allows for one or more periods of reduced or suspended payments without specific terms of repayment. 
  • The initial forbearance period may be up to 6 months. If needed, an
    additional forbearance period of up to 6 months may be requested by the Borrower and must be approved by the Mortgagee. 
  • The term of either the initial or the extended forbearance may be shortened at the Borrower’s request. 
  • The Mortgagee must waive all Late Charges, fees, and penalties, if any, as long as the Borrower is on a Forbearance Plan.
• (B) COVID-19 National Emergency Standalone Partial Claim
  • For any Owner-Occupant Borrower who receives a Forbearance for
    Borrowers Affected by the COVID-19 National Emergency, the Mortgagee must evaluate the Borrower for the COVID-19 National Emergency Standalone Partial Claim no later than the end of the forbearance period(s).
    • See Mortgagee letter for complete details
• (C) Single Family Default Monitoring System (SFDMS)
  Reporting Requirements for Borrowers Affected by the COVID19 National Emergency in Loss Mitigation
  • Servicers 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
• (D) Required Financial Evaluation for other Loss Mitigation
  Home Retention Options
  • The Mortgagee must evaluate any Borrower not brought current
    through a “COVID-19 National Emergency Standalone Partial Claim” Option for other Loss Mitigation Home Retention Options (III.A.2.k) and Home Disposition Options (III.A.2.l). 
  • Borrowers who are Delinquent due to a forbearance received
    following a COVID-19 National Emergency Declaration are deemed to satisfy the eligibility requirements for FHA Loss Mitigation Home Retention and Home Disposition Options. 
• (E) Terms of the Mortgage are Unaffected
  
  • See Mortgagee letter for complete details
• (F) Reporting to Consumer Reporting Agencies of Borrowers
  Impacted by COVID-19 National Emergency
  • Any Borrower who is granted a “Forbearance for Borrowers Affected
    by the COVID-19 National Emergency” and is otherwise performing as agreed is not considered to be delinquent for purposes of credit reporting
• (G) Exclusion of COVID-19 from FHA’s Presidentially-Declared
  Major Disaster Areas (PDMDA) (III.A.3.c) Guidance in Handbook 4000.1 
  • See Mortgagee letter for complete details

Extension Period for Home Equity Conversion Mortgages Affected by the COVID-19 National Emergency 

Pursuant to the COVID-19 National Emergency, upon request of the Borrower, the Mortgagee must delay submitting a request to call a loan due and payable. The initial extension period may be up to 6 months. If needed, an additional period of up to 6 months may be approved by HUD. The term of either the initial or the extended extension period may be shortened at the Borrower’s request. The Mortgagee must waive all Late Charges, fees, and penalties, if any, as long as the Borrower is in an extension period.

For loans that have become automatically due and payable, entered into a deferral period, or became due and payable with HUD approval, the Mortgagee may also take an automatic extension for any deadline relating to foreclosure and claim submission for a period of up to 6 months. If needed, an additional period of up to 6 months may be approved by HUD.

The Texas Joint Financial Regulatory Agencies issued guidance pertaining to HELOCs including: 

• existing HELOCs
  • A homeowner with an existing home equity line of credit (HELOC) may be able to obtain an additional advance on the HELOC, based upon the maximum amount and terms of the HELOC at the time the loan was originally closed. The minimum draw on an existing HELOC may not be less than $4,000, as provided by Section 50(t)(2). 
• Refinance of Home Equity Loans
  • An existing home equity loan may be refinanced without regard to the one-year seasoning requirement if the homestead is located within an area that has been declared a “disaster” by the Governor or the President of the United States, and if the homeowner on oath requests the closing less than one year from the original closing due to the disaster. This disaster exception is described in Section 50(a)(6)(M)(iii).
• Modification of Existing Home Equity Loans
  • An existing home equity loan may be modified at the request of the homeowner without violating the Texas Constitution if the modification is consistent with the opinion of the Texas Supreme Court in Sims v. Carrington Mortg. Services, L.L.C. 440 S.W.3d 10 (2014). 
    • In the context of an existing home equity loan in default, the court held that a new agreement with the borrower that capitalizes past-due interest, fees (late charges), property taxes, and insurance premiums into the principal of the loan (all past-due amounts owed under the terms of the initial loan) and a lowering of the interest rate and the amount of installment payments, but does not involve the satisfaction or replacement of the original note, an advancement of new funds, or an increase in the obligations created by the original note, is not a new extension of credit for purposes of Section 50(a)(6).
    • Further, the court held that the capitalization of past-due interest, taxes, insurance premiums, and fees was not an “advance of additional funds” within the meaning of Section 50(a)(6) if those amounts were among the obligations assumed by the borrower under the terms of the original loan. 
  • As noted in 7 Texas Admin. Code §153.14(2), a home equity loan and a subsequent modification are considered a single transaction for purposes of the home equity lending requirements of Section 50(a)(6), including the percentage cap on loan fees. 
    • Although the Sims case did not explicitly involve traditional payment deferrals or an extension of the term of the original note, we believe these to be permissible under the Court’s holding that “[t]he Constitution does not prohibit the restructuring of a home equity loan that already meets its requirements in order to avoid foreclosure while maintaining the terms of the original extension of credit.” 
  • The agencies recommend that lenders consult with qualified legal counsel before engaging in home equity loan modifications.
• Authorized Closing Locations

  
  

  • Section 50(a)(6)(N) requires a home equity loan to be “closed only at the office of the lender, an attorney at law, or a title company.” Section 50(a)(5)(D) contains a similar requirement for home improvement loans. These two provisions do not include an exception for disasters or emergencies. 
  • The agencies recognize that businesses are taking action to protect public safety and minimize the spread of COVID-19. This may include implementing social-distancing recommendations or requirements from local jurisdictions. 
  • For lenders that keep their offices open and choose to continue closing home equity loans at authorized locations, the agencies encourage lenders to consider ways to close loans in accordance with social-distancing recommendations, such as the following: 
    • Physical separation between the borrower and any employees (which may include physical barriers, partitions, or separate rooms). 
    • Use of video or audio conference to communicate with the borrower and verify the borrower’s identity. 
    • Use of electronic systems for the borrower to view documents, as well as electronic signatures (in accordance with Texas law and the federal E-Sign Act).  
    • Use of an online notary (in accordance with Texas law). 
    • Minimizing the use of paper documents, and limiting the handling of paper documents after execution. 
    • Implementing enhanced sanitization protocol for areas occupied by the borrower (in accordance with recommendations of health authorities). 
  • Lenders working with consumers on home equity loans must remain cognizant of the requirements in Section 50(a)(5)(D) and 50(a)(6)(N) and work with a qualified attorney to develop a plan to ensure loans are closed appropriately. The agencies agree that a reasonable option may include closing in any area located at the permanent physical address of the office or branch office of the  lender, attorney, or title company, as described by the interpretation at 7 Texas Administrative Code §153.15 (e.g., a parking lot). 
  • This guidance is not an interpretation of the Texas Constitution and is not being issued under Texas Finance Code §11.308 and §15.413. This guidance does not provide any safe harbor to avoid potential civil litigation against a lender 

The one-year seasoning period for refinancing an existing loan made under Article XVI, Section 50(a)(6) of the Texas Constitution as either a new Texas Home Equity Loan or as a no cash-out rate/term refinance ("F2 Conversion”, is currently waived as a result of the Coronavirus pandemic: 

1. if the homestead is located within an area that has been declared a ‘disaster’ by the Governor or the President of the United States, and 
2. if the homeowner on oath requests the closing less than one year from the original closing due to the disaster.

Ohio Executive Order 2020-08D requests landlords to provide for a moratorium of evictions of small business commercial tenants for a term of at least 90 consecutive days; lenders are requested to provide commercial real estate borrowers with a commercial mortgage loan for a property located in Ohio with an opportunity for a "forbearance" of a term of at least 90 consecutive days for the mortgage as a result of a financial hardship due to the COVID-19 pandemic.

To implement and align with the provisions of the CARES Act:

• Upon receiving a request for a forbearance from a borrower who attests to financial hardship directly or indirectly caused by COVID-19, lenders shall provide immediate forbearance of the borrower’s guaranteed loan payment for a period of up to 180 days. 
  • In addition, the initial forbearance period may be extended up to an additional 180 days at the borrower’s request.
• During the forbearance options outlined above, no accrual of fees, penalties or interest may be charged to the borrower beyond the amounts calculated as if the borrower had made all contractual payments in a timely fashion.
• Upon completion of the forbearance, the lender shall communicate with the borrower and determine if the borrower is able to resume making regular contractual payments. If so, the lender shall offer the borrower a written re-payment plan to resolve any amount due or at the borrower’s request, extend the loan term for a period that is at least the length of the forbearance.
• If the lender determines the borrower is financially unable to resume making contractual payments at the end of the forbearance, the borrower shall be evaluated for all available options presented in the Loss Mitigation Guide which is found at Attachment 18-A in Chapter 18 of our 3555 Technical Handbook.

Note: The 60-day foreclosure and eviction moratorium announced by USDA, Single Family Housing Guaranteed Loan Program (SFHGLP) on March 19^th, remains unchanged and in effect.

Effective period: Lenders may approve the initial 180 day COVID-19 Forbearance no later than October 30, 2020.

Florida Executive Order 20-94:

• suspends and tolls any statute providing for a mortgage foreclosure cause of action under Florida law for 45 days from the date of this Executive Order, including any extensions; 
• suspends and tolls any statute providing for an eviction cause of action under Florida law solely as it relates to non-payment of rent by residential tenants due to the COVID-19 emergency for 45 days from the date of this Executive Order, including any extensions; and 
• clarifies that nothing in this Executive Order shall be construed as relieving an individual from their obligation to make mortgage payments or rent payments.

Florida Executive Order 20-137 extends this order until July 1, 2020.

On April 3, 2020, Governor Larry Hogan issued an order providing guidance on evictions and failure to pay rent actions and, until the state of emergency and health emergency are over, prohibiting: repossession of cars, trucks, and mobile homes by self-help, and the initiation of residential mortgage foreclosures. The order also revises lending limits for certain financial institutions. However, borrowers are not relieved from paying their mortgage. 

The order also allows for the suspension of certain lending limits. Currently, Maryland law provides a limit for the amount of loans that state-chartered banks and credit unions may lend to their customers. The order gives Maryland’s Commissioner of Financial Regulation the authority to allow these institutions to engage in lending that exceeds that amount, within reason. The order does affect commercial foreclosures.

On April 3, 2020, Governor Larry Hogan issued an order providing guidance on evictions, until the state of emergency and health emergency are over, prohibiting the initiation of residential mortgage foreclosures. However, borrowers are not relieved from paying their mortgage.

Compliance with BSA Obligations

Compliance with the Bank Secrecy Act (BSA) remains crucial to protecting our national security by combating money laundering and related crimes, including terrorism and its financing.  FinCEN expects financial institutions to continue following a risk-based approach, and to diligently adhere to their BSA obligations.  FinCEN also appreciates that financial institutions are taking actions to protect employees, their families, and others in response to the COVID-19 pandemic, which has created challenges in meeting certain BSA obligations, including the timing requirements for certain BSA report filings.  FinCEN will continue outreach to regulatory partners and financial institutions to ensure risk-based compliance with the BSA, and FinCEN will issue additional new information as appropriate.

Beneficial Ownership Information Collection Requirements for Existing Customers

One of the primary components of the CARES Act is the Paycheck Protection Program (PPP).  For eligible federally insured depository institutions and federally insured credit unions, PPP loans for existing customers will not require re-verification under applicable BSA requirements, unless otherwise indicated by the institution’s risk-based approach to BSA compliance.

For non-PPP loans, FinCEN reminds financial institutions of FinCEN’s September 7, 2018 ruling (FIN-2018-R004) offering certain exceptive relief to beneficial ownership requirements.  To the extent that renewal, modification, restructuring, or extension for existing legal entity customers falls outside of the scope of that ruling, FinCEN recognizes that a risk-based approach taken by financial institutions may result in reasonable delays in compliance.

FinCEN will continue to assess reasonable risk-based approaches to BSA obligations and will issue further information, as appropriate, particularly as the CARES Act is implemented. 

BSA Reporting Obligations & Updates to Currency Transaction Report (CTR) Filing Obligations

FinCEN has heard from certain financial institutions and trade associations for financial institutions about difficulties in meeting certain BSA obligations, including the timing requirements for certain BSA report filings.  In response to concerns regarding certain timing requirements of BSA filings, FinCEN recognizes that certain regulatory timing requirements with regard to BSA filings may be challenging during the COVID-19 pandemic and that there may be some reasonable delays in compliance. 

FinCEN hereby suspends implementation of the February 6, 2020 ruling (FIN-2020-R001) on CTR filing obligations when reporting transactions involving sole proprietorships and entities operating under a “doing business as” (DBA) name (the “2020 Ruling”) until further notice.  FinCEN will issue further information on these types of CTR filings at an appropriate time with reasonable implementation periods.  Until such issuance, financial institutions should continue to report transactions involving sole proprietorships and DBAs under prior practice.  Those financial institutions that have already made the necessary changes to comply with the 2020 Ruling need not revert to prior practice, and may report CTRs in accordance with the now-suspended ruling.

New FinCEN COVID-19 Online Contact Mechanism

FinCEN has created a COVID-19-specific online contact mechanism, via a specific drop-down category, for financial institutions to communicate to FinCEN COVID-19-related concerns while adhering to their BSA obligations.  Financial institutions that wish to communicate such COVID-19-related concerns to FinCEN must go to www.FinCEN.gov, click on “Need Assistance,” and select “COVID19” in the subject drop-down list. Such COVID-19-related communications are strongly encouraged but not required.  FinCEN will review COVID-19-related communications.  Depending on the volume of such communications, however, FinCEN may only respond via an automated message confirming receipt to communications regarding delays in filing of BSA reports due to COVID-19.  FinCEN also encourages financial institutions to contact their functional regulator(s) or other BSA examining authority as soon as practicable if a financial institution has BSA compliance concerns because of the COVID-19 pandemic. Financial institutions are encouraged to keep FinCEN and their functional regulator(s) or other BSA examining authority informed as their circumstances change. 

Encouragement of Innovative Efforts and Other Reminders

FinCEN encourages financial institutions to consider, evaluate, and, where appropriate, responsibly implement innovative approaches to meet their BSA/anti-money laundering compliance obligations, in order to further strengthen the financial system against illicit financial activity and other related fraud.  Furthermore, FinCEN reminds financial institutions of the December 3, 2018 Joint Statement on Innovative Efforts to Combat Money Laundering and Terrorist Financing issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, FinCEN, the National Credit Union Administration, and the Office of the Comptroller of the Currency.

As noted in its March 16 COVID-19 Notice, FinCEN reminds financial institutions to review information from other relevant functional regulators as updates become available.  FinCEN’s March 16 COVID-19 Notice alerted financial institutions to imposter scams, investment scams, product scams, and insider trading.  FinCEN also advised financial institutions to remain alert for malicious or fraudulent transactions similar to those that occur in the wake of natural disasters, such as those described in FinCEN’s advisory, FIN-2017-A007, “Advisory to Financial Institutions Regarding Disaster-Related Fraud” (October 31, 2017), including benefits fraud, charities fraud, and cyber-related fraud. FinCEN will continue to monitor the COVID-19 National Emergency and will release updated information for financial institutions as appropriate.

The Alabama Governor issued a stay-at-home order, along with a supplemental Proclamation that orders all state, county, and local law enforcement officers are hereby directed to cease enforcement of any [eviction] order that would result in the displacement of a person from his or her place of residence, reiterating that nothing in this section shall be construed as relieving any individual of the obligation to pay rent, to make mortgage payments, or to comply with any other obligation that an individual may have under a rental agreement or mortgage. 

The Iowa Division of Credit Unions issued a regulatory advisory bulletin pertaining to small business lending during the Covid-19 crisis including: 

• details on the new Paycheck Protection Program offered through the Small Business Administration as part of the CARES Act; and
• Application details for credit unions seeking to participate in the Program

The Alaska commissioner of Commerce, Community, and Economic Development released a memorandum to community leaders and small business owners in the state promoting the CARES Act’s Paycheck Protection Program for small businesses and encouraging interested borrowers to participate in the program.

The Massachusetts Division of Banks issued guidance to state-chartered banks and credit unions indicating that it will not make adverse regulatory findings or take enforcement action if a loan made under the Small Business Administration’s Payment Protection Program (PPP) causes the institution to violate legal limits on loans to one borrower or the institution’s internal policy. The division also encouraged institutions to work collaboratively to meet demand for PPP loans, such as instituting referral systems. 

Sec. 202. Mortgage relief 

(a)(1) Grants at least a 90-day deferment period of mortgage payments for borrowers; 

(2) Waives any late fee, processing fee, or any other fees accrued during the pendency of the public health emergency; and 

(3) Does not report to a credit bureau any delinquency or other derogatory information that occurs as a result of the deferral. 

(c) The mortgage servicer shall approve each application in which a borrower: (1) Demonstrates to the mortgage servicer evidence of a financial hardship resulting directly or indirectly from the public health emergency, including an existing delinquency or future ability to make payments; and 

(2) Agrees in writing to pay the deferred payments within: 

(A) A reasonable time agreed to in writing by the applicant and the mortgage servicer; or 

(B) If no reasonable time can be agreed to pursuant to subparagraph (A) of this paragraph, 5 years from the end of the deferment period, or the end of the original term of the mortgage loan, whichever is earlier. 

(d)(1) A mortgage servicer who receives an application for deferment pursuant to this section shall retain the application, whether approved or denied, for at least 3 years after final payment is made on the mortgage or the mortgage is sold, whichever occurs first 

(2) Upon request, a mortgage servicer shall make an application for deferment available to the Commissioner 

(e) A mortgage servicer is shall be prohibited from requiring a lump sum payment from any borrower making payments under a deferred payment program pursuant to subsection (c)(2)(A) of this section, subject to investor guidelines 

(f) A person or business whose application for deferment is denied may file a written complaint with the Commissioner. 

(k) This section shall not apply to a property for which, as of March 11, 2020, a mortgage servicer initiated a foreclosure action or exercised its right to accelerate the balance and maturity date of the loan, on or before March 11, 2020.

The District of Columbia's COVID-19 Response Supplemental Emergency Amendment Act of 2020, Sec. 207. Debt collection, provides that during a public health emergency and for 60 days after its conclusion, no creditor or debt collector shall, with respect to any debt: "(C) Initiate, threaten to initiate, or act upon any statutory remedy for the repossession of any vehicle, provided that creditors or debt collectors may accept collateral that is voluntarily surrendered".

The New York Department of Finanical Services is issuing guidance to urge all regulated student loan servicers to do their part to alleviate the hardship caused by COVID-19 on borrowers; including:

• Providing at least 90 days of forbearance or similar repayment accommodation for all borrowers whose student loans are privately held and who have been impacted by COVID-19;
• For at least 90 days, reporting any missed payment that is subject to a forbearance or other repayment accommodation as “current” to credit reporting agencies;
• For at least 90 days, refraining from sending defaulted loan accounts to third-party debt collectors and refraining from filing any new or proceeding with any existing collections actions against borrowers;
• For at least 90 days, waiving late payment fees for all borrowers who have obtained a forbearance or similar repayment accommodation;
• Proactively contacting borrowers to inform them of relief that is available if the borrower has been impacted by COVID-19, such as by alerting borrowers via email or any other manner in which a borrower has agreed to receive communications, that borrowers may contact the student loan servicer to discuss potential options and/or visit the servicer’s website for information on the relief available in response to COVID-19;
• Prominently posting, on the student loan servicer’s website, clear and complete information, written in easily-understandable language, about any available repayment options related to COVID-19;
• Ensuring customer representatives are aware of and capable of informing and discussing with borrowers impacted by COVID-19 all currently-available repayment options related to COVID-19, as well as any other alternative repayment plans (including income-driven repayment), hardship programs, and relief opportunities provided by the federal government;
• If a borrower contacts a student loan servicer to express financial hardship related to COVID-19, informing and discussing with the borrower any available repayment options related to COVID-19, as well as any other alternative repayment plans (including income-driven repayment), loan forgiveness, cancellation, and discharge benefits;
• Contacting borrowers who recently missed or who in the coming weeks miss a payment to determine their status and the best options for them, and implementing any automatic relief for these borrowers where available or required by the U.S. Department of Education or private lenders;
• Reducing wherever possible any administrative procedures or document verification associated with enrolling a borrower in an income-driven repayment plan, deferment, forbearance, rehabilitation, consolidation, or equivalent relief offered by private loan holders;
• Relaxing wherever possible any recertification requirements associated with income-driven repayment plans or any hardship status already in place and granting automatic extensions on such statuses to ensure that any borrower who does not recertify by a given deadline or who lacks certain paperwork is not removed from the plan or hardship status;
• Ensuring staffing plans are sufficient to meet borrowers’ needs and requests for assistance, and if staffing capacity is impaired by COVID-19, developing additional means of meeting borrowers’ needs as permissible, such as allowing borrowers to request a deferment or forbearance, change payment plans, or certify income via a telephone touch-tone menu, email, or online;
• Posting, processing, and crediting student loan payments in a timely manner, and ensuring borrowers are held harmless for any payment that is not timely posted, processed, or credited as a result of the student loan servicer’s inability to do so;
• Ensuring borrowers are held harmless for any disruption in required paper processing, such as inbound and outbound mail, and hard copy relief or repayment plan applications, and that borrowers without internet or telephone access are adequately served;
• Monitoring changes in the number and frequency of inbound borrower calls, including the call abandon rate, and application submission rates and review periods, and adjusting staffing plans or other policies and procedures accordingly to ensure borrowers’ needs are reasonably met; and
• Providing any customer service representatives and other staff working remotely with safe and secure access to borrowers’ information.

Where regulated student loan servicers are limited in their ability to take these actions due to investor restrictions or contractual obligations, servicers should proactively work with loan holders or the U.S. Department of Education whenever possible to relax those restrictions or obligations. The Department will exercise its examination and reporting authority, pursuant to 3 NYCRR 409.10-11, as necessary to ensure that regulated student loan servicers meet essential servicing standards and demonstrate the institutional fitness required to further the public interest.

The Department also welcomes any actions by regulated student loan servicers to support these goals and believes reasonable and prudent actions to assist borrowers under these unusual and extreme circumstances, such as those outlined in this guidance, are consistent with safe and sound industry practices as well as in the public interest and will not be subject to examiner criticism.

• Encourages financial institutions to work constructively with borrowers affected by COVID-19; 
• Will not criticize institutions for prudent loan modifications; 
• Views prudent loan modification programs to financial institution customers affected by COVID-19 as positive actions that can effectively manage or mitigate adverse impacts on borrowers due to COVID-19, and lead to improved loan performance and reduced credit risk;
• Clarifies the interaction between the interagency statement and the optional temporary relief provided in Section 4013 of the CARES Act;
  
• Provides supervisory views on past due and nonaccrual reporting of loan modification programs; and
• Provides supervisory views on consumer protection considerations.

The Iowa Division of Credit Unions published guidance for credit unions to respond to COVID-19.  Guidance includes: 

• Credit Union COV1D-19 Credit Union Operational Guidance
• Small Business Administration Lending- Paycheck Protection Program
• Annual Meeting Voting
• Foreclosure Moratorium Remote Notarization
• Member Assistance
• Guidance on CU staff working from home
• Fraud Awareness
• Moneys & Credit Tax Filing Deadline Extended
• UPDATED Loan Deferment Programs or Skip-a-pay
• UPDATED-CASH Activity Limitation of Services/Branch Closures
• Annual Meeting Requirements

Updated 4/8/20:

Complying with law: 

In response to the recent enactment of the Coronavirus Aid, Relief, and Economic Security Act on Mar. 27, 2020 (“CARES Act”), we are updating certain servicing requirements and reminding servicers of their responsibility to comply with law. 

Attempting to establish QRPC UPDATED Apr. 8, 2020 

As described in Servicing Guide D2-2-01, Achieving Quality Right Party Contact with a Borrower, QRPC is a uniform standard for communicating with the borrower, co-borrower, or a trusted advisor (collectively referred to as “borrower”) about resolution of the mortgage loan delinquency. We reaffirm the applicability of QRPC when working with a borrower impacted by COVID-19 to ensure the servicer understands the borrower’s circumstances and determines the best possible workout option for resolving the borrower’s delinquency. In the event that the servicer is unable to achieve full QRPC and offers a forbearance plan to a borrower impacted by COVID-19 in compliance with the CARES Act, the servicer is considered to be in compliance with our Servicing Guide. 

In response to servicer inquiries and in accordance with Servicing Guide A4-2.1-04, Establishing Contact with the Borrower, among other requirements, the servicer is authorized to use various outreach methods to contact the borrower as permitted by applicable law, including, but not limited to: 

▪ mail, 

▪ email, 

▪ texting, and 

▪ voice response unit technology.

Forbearance plan terms UPDATED Apr. 8, 2020 

With the Mar. 18, 2020 Lender Letter, we communicated that servicers must achieve QRPC with the borrower prior to offering a forbearance plan, that the property securing the mortgage loan may be either a principal residence, a second home, or an investment property, and that the servicer must otherwise follow the requirements in Servicing Guide D2-3.2-01, Forbearance Plan. In response to the CARES Act, the servicer must approve forbearance plans for borrowers impacted by COVID-19 in accordance with the CARES Act. 

The CARES Act states that a forbearance plan must be provided to any borrower who requests a forbearance with an attestation of the financial hardship caused by the COVID-19 emergency; and no additional documentation other than the borrower’s attestation to a financial hardship caused by the COVID-19 emergency is required. Such a borrower must be provided an initial forbearance plan for a period up to 180 days, and that forbearance period may be extended for up to an additional 180 days at the request of the borrower. In accordance with the Servicing Guide D2-3.2-01, Forbearance Plan, the servicer may provide an initial forbearance period, and any extended forbearance period, in separate, shorter increments. If the borrower’s COVID-19 related hardship has not been resolved during an incremental forbearance period, the servicer must extend the borrower’s forbearance period, not to exceed 12 months total. For a borrower impacted by COVID-19, we are temporarily eliminating the requirement that the servicer must receive our prior written approval for a forbearance plan that would result in the mortgage loan becoming greater than 12 months delinquent.

As a reminder, servicers must inform the borrower that the payments which are the subject of a forbearance plan have only been delayed or reduced, not forgiven, and that once the forbearance plan is complete, one of the following must occur: 

▪ the mortgage loan must be brought current through a reinstatement, 

▪ the borrower is approved for another workout option, 

▪ the mortgage loan is paid in full, or 

▪ the servicer refers the mortgage loan to foreclosure in accordance with applicable law. 

The servicer must also inform the borrower that he or she may shorten a forbearance plan term at any time to reduce the amount of payments which are being delayed or reduced. 

As stated in the Servicing Guide D2-3.2-01, Forbearance Plan, the forbearance plan terms must be provided to the borrower using the appropriate Evaluation Notice, which must be revised in accordance with applicable law. In addition, the servicer must document in the individual mortgage loan file the borrower’s request for forbearance and attestation as to a financial hardship caused by the COVID-19 emergency, and the terms of the initial and any extended forbearance, including the duration of the forbearance period. 

For borrowers who have received a forbearance plan in response to COVID-19, the servicer must begin attempts to contact the borrower no later than 30 days prior to the expiration of the forbearance plan term, must continue outreach attempts until either QRPC is achieved or the forbearance plan term has expired. When evaluating the borrower for a workout option prior to expiration of the forbearance plan, we are providing flexibility with regard to achieving QRPC. We are eliminating the requirement that the servicer determine the occupancy status of the property and will consider the servicer obtaining the following as achieving QRPC for purposes of evaluating a borrower who has experienced a hardship resulting from COVID-19: 

▪ determining the reason for the delinquency and whether it is temporary or permanent in nature; 

▪ determining whether or not the borrower has the ability to repay the mortgage loan debt; 

▪ educating the borrower on the availability of workout options, as appropriate; and 

▪ obtaining a commitment from the borrower to resolve the delinquency. 

With LL-2017-09R we introduced the Fannie Mae Extend Modification for Disaster Relief (Extend Mod), a temporary post- disaster forbearance mortgage loan modification, as well as the order of evaluation for Extend Mod and other post-forbearance mortgage loan modifications when the property securing the mortgage loan or the borrower’s place of employment is located in a FEMA-Declared Disaster Area eligible for Individual Assistance. While COVID-19 is not a disaster as defined in the Servicing Guide, with this Lender Letter, we are extending the availability of these post-disaster forbearance mortgage loan modifications to borrowers impacted by COVID-19. The servicer must analyze each case carefully in accordance with the requirements in the following table before determining which mortgage loan modification is most appropriate for the borrower. [See Lender Letter for complete details]

In Lender Letter LL-2020-05, Payment Deferral we introduced payment deferral, a new home retention workout option jointly developed with Freddie Mac at the direction of FHFA. Once the servicer implements payment deferral, it must evaluate borrowers impacted by COVID-19 for a payment deferral in accordance with the eligibility requirements and workout option hierarchy described in Lender Letter LL-2020-05, Payment Deferral; and if the borrower is not eligible for a payment deferral, the servicer must then evaluate the borrower for a post-forbearance mortgage loan modification as described above.

Credit bureau reporting UPDATED Apr. 8, 2020 

In response to the CARES Act, we are acknowledging that the servicer must report the status of the mortgage loan to the credit bureaus in accordance with the FCRA, including as amended by the CARES Act, for borrowers affected by the COVID-19 emergency. This supersedes our guidance on Mar. 18, 2020, which instructed servicers to suspend reporting the status of a mortgage loan to credit bureaus during an active forbearance plan, or a repayment plan or Trial Period Plan where the borrower is making the required payments as agreed, even though payments are past due, as long as the delinquency is related to a hardship resulting from COVID-19. 

Suspension of foreclosure activities and certain bankruptcy requirements UPDATED Apr. 8, 2020 

On Mar. 18, 2020, we instructed servicers that they must suspend all foreclosure sales for the next 60 days, unless the property securing the mortgage loan had been determined to be vacant or abandoned. 

In response to the CARES Act, we are acknowledging that the servicer must now suspend foreclosure-related activities in accordance with the requirements of the CARES Act , which provides: “Except with respect to a vacant or abandoned property, a servicer of a Federally backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on Mar. 18, 2020.” 

Fannie Mae generally requires servicers to file motions for relief from the automatic stay in bankruptcy cases upon certain milestones. In light of the CARES Act and other impacts resulting from the COVID 19 National Emergency, Fannie Mae is temporarily relieving servicers of the obligation to meet these timelines. This temporary suspension shall be in effect for not less than the 60-day period beginning on Mar. 18, 2020. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such motions.

Credit reporting requirements

For any Borrower impacted by COVID-19, the Servicer must report activity to the credit bureaus in accordance with applicable law, including the Fair Credit Reporting Act and the CARES Act.

Foreclosure moratorium

As provided in the CARES Act, Servicers must suspend all foreclosure actions, including foreclosure sales, through May 17, 2020. This includes initiation of any judicial or non-judicial foreclosure process, move for foreclosure judgment or order of sale. This foreclosure suspension does not apply to Mortgages on properties that have been determined to be vacant or abandoned.

Bankruptcy – Filing motions for relief from automatic stay

Freddie Mac generally requires Servicers to file a motion for relief from automatic stay upon certain milestones based on the length of delinquency or post-petition payments per Guide Sections 9401.6 and 9401.7. In light of the CARES Act and other impacts resulting from the COVID-19 National Emergency, we are notifying Servicers that we are temporarily relieving them of their responsibility to meet these timelines. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such a motion.

Forbearance plans

In addition to the forbearance plan requirements described in Guide Chapter 9203, and the temporary measures announced in Bulletin 2020-4, we are temporarily making the following adjustments to our requirements for forbearance plan evaluations for Borrowers with a COVID-19 related hardship:

• Waiving the requirement that a forbearance plan may not extend beyond a date that would cause the Delinquency to exceed a cumulative total of 12 months of the Borrower’s contractual monthly Mortgage payment, as described in Sections 9203.12 and 9203.13(a)
• Affirming that an eligible Borrower may be given an initial forbearance plan for up to 180 days, and thereafter one or more forbearance plan term extensions, provided the total forbearance terms do not exceed 12 months
• Affirming that after the terms of the forbearance plan have been determined, Servicers must send the Borrower the forbearance plan agreement to the Borrower, in accordance with Section 9203.13(c), and may use the template provided in Guide Exhibit 93, appropriately modified to reflect the terms of the COVID-19 forbearance

As required by the Guide, Bulletin 2020-4 and this Bulletin, the Servicer must make good faith efforts to establish QRPC with the Borrower in order to evaluate the Borrower for a forbearance plan, and the length of each forbearance plan term must be for an appropriate length, based on the Borrower’s individual circumstances and nature of the hardship, and must be agreed upon with or requested by the Borrower. In the event the Servicer and Borrower cannot agree on an appropriate forbearance length, or further communication with the Borrower is not possible under the circumstances, the Servicer must provide the term requested by the Borrower, not to exceed 180 days.

QRPC

As described in Section 9102.3(b), QRPC occurs when a Servicer establishes contact with the Borrower and discusses with the Borrower, co-Borrower or trusted advisor, such as a housing counselor, the most appropriate options for Delinquency resolution. Freddie Mac maintains these principles and reaffirms their applicability when working with COVID-19 impacted Borrowers to ensure the Servicer understands the Borrower’s circumstances and determines the best possible outcome for resolving the Borrower’s Delinquency. In the event the Servicer is unable to achieve full QRPC and offers a forbearance plan to a COVID-19 impacted Borrower in compliance with applicable law, the Servicer is considered to be in compliance with the Guide.

Outside of the forbearance requirements above, the Servicer must make good faith efforts to establish limited QRPC, in lieu of the full requirements of Section 9102.3(b), as described below for the purpose of determining the best loss mitigation strategy for the Borrower and answering the Borrower’s questions relating to repayment of forborne amounts when the forbearance period has ended:

• Determining the reason for the Delinquency and whether the reason is temporary or permanent in nature
• Determining the Borrower's ability to repay the debt
• Setting payment expectations and educating the Borrower on the availability of alternatives to foreclosure as appropriate
• Obtaining a commitment from the Borrower to either resolve the Delinquency through traditional methods (paying the total delinquent amount) or engaging in an alternative to foreclosure solution

ADDITIONAL RESOURCES

We encourage Servicers to review the following resources:

• Our Single-Family web page on COVID-19 resources, which will include Servicing FAQs in the future
• Joint guidance and FAQs for Servicers during the COVID-19 crisis issued by federal and State regulators, including the Consumer Financial Protection Bureau

2. Eligibility. A borrower with a VA-guaranteed or VA-held loan, including a Native American Direct Loan or a vendee loan, who is experiencing a financial hardship due, directly or indirectly, to the COVID–19 emergency may request a loan forbearance, regardless of delinquency status, by:

• attesting that the borrower is experiencing a financial hardship due to the COVID–19 emergency. 
• submitting a request to the borrower’s servicer; and

3. Forbearance. The borrower may request an initial forbearance period of up to 180-days, regardless of the borrower’s delinquency status. If the borrower makes the attestation discussed above, the servicer must grant the forbearance request, with no additional documentation. This forbearance must be extended, at the borrower’s request, for an additional period of up to 180 days. When a borrower contacts the servicer, VA expects the servicer to inform the borrower of the borrower’s forbearance rights. The borrower, not the servicer, is entitled to determine the period of the forbearance, subject to the statutory limit of up to 360 days.

4. Accrual of Fees, Penalties, and Interest / Credit Reporting. During a period of forbearance described above, servicers shall not charge fees, penalties, or interest beyond the amounts scheduled or calculated as if the borrower made all contractual payments on time and in full under the terms of the mortgage contract. When reporting credit information to credit bureaus, servicers must follow the CARES Act requirements for reporting a borrower’s account as current or delinquent.

5. Exiting Forbearance.

a. Servicers should consider all the loss mitigation options described by Chapter 5 of the VA Servicer Handbook M26-4 (including those related to disasters) in determining how to account for payments that were subject to a CARES Act forbearance. Such loss mitigation options include, but are not limited to:

• (1)  Repayment plans,
  (2)  Loan modifications, 
• (3)  Streamline modifications, 
• (4)  VA Affordable modifications, 
• (5)  VA Disaster modifications, and 
• (6)  Disaster Extend modifications.

b. Servicers are not to require a borrower who receives a CARES Act forbearance to make a lump sum payment, equating to what would have been due if a forbearance was not in effect, after the forbearance period ends. However, a lump sum is acceptable if it is to be paid back at the end of the loan or if a borrower opts to make a lump sum payment instead of pursuing the options discussed above.

c. Servicers should review loan files for all possible loss mitigation options no later than 30 days before the forbearance period is scheduled to end. Servicers should document such reviews in their loan servicing systems. If no loss mitigation options are possible, in cases where the home has equity, servicers must refer the file to the relevant Regional Loan Center for VA’s consideration of a loan refunding. Where a such a refunding is not possible, servicers should consider alternatives to foreclosure including compromise sales (short sales) and deeds in lieu of foreclosure.

6. Foreclosure Moratorium. Except with respect to a vacant or abandoned property, a servicer of a Federally-backed mortgage loan may not initiate any judicial or non-judicial foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for not less than the 60-day period beginning on March 18, 2020.

7. Rescission: This Circular is rescinded April 1, 2021. 

VA has rescinded Circular 26-20-11, published March 27, 2020, and provides updated guidance and instructions for valuation and appraising for all VA home loan purposes.

4. Action. VA will change the long-standing practice of requiring access to the interior of the home for certain types of loans and characteristics of those loans. Appraisers will still follow the same procedures of the VA appraisal process and are still required to meet USPAP and state requirements for delivering an appraisal that meets those qualifications but are allowed the broader use of exterior inspection. Considering the health and safety of Veterans and VA Appraiser Fee Panel members during this national emergency, valuations may come in a form of an Exterior-Only appraisal with enhanced assignment conditions or in limited instances, a Desktop appraisal. On page 1 of the Uniform Residential Appraisal Report (URAR), Subject section, “Map Reference” appraisers are to state “Exterior-Only” or “Desktop.” These procedures are temporary in nature and VA will return to normal operations after the national emergency. 

5. Notice. USPAP Standards Rule 1-2, Standards Rule 2-2, and Advisory Opinion 2 does not require an inspection unless necessary to produce credible assignment results. Although an interior inspection would customarily be part of the scope of work for a VA appraisal assignment, health or other emergency conditions may require an appraiser to make an Extraordinary Assumption (EA) about the interior of a property. This is permitted by USPAP if the appraiser has a reasonable basis for the EA and still results in a credible analysis. The appraisers will always determine the scope of work for the assignment. All EAs will be boldly noted in the Reconciliation section of the report. The report will be competed “AS IS” unless there are MPR requirements the appraiser observed in the review of the property. Without an interior review of the property, the appraiser can make an EA concerning MPRs with the information available.

a. The appraiser will continue to gain access to view the interior property for a Purchase Transaction (vacant property). The interior inspection is allowed, when the appraiser poses no harm to themselves or others. 

6. Exterior-Only Appraisal. This report option with enhanced assignment conditions will be completed on the FNMA 2055/1075 form. For manufactured homes and multi-unit (2- to-4 unit) properties, appraisers will use the 1004C or 1025 form. Appraisers are to boldly state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19.” Exterior-Only Appraisal with enhanced assignment conditions will be limited to one and a half times the maximum 2020 Freddie Mac Conforming Loan Limit (CCL) for a one-unit limit for the county or county-equivalent area. The lender should not request an Exterior-Only appraisal if the loan amount will be more than one and a half times the maximum 2020 CCL limit. The appraiser is in control of the Scope of Work and they type of report will be used based upon safety. The 2020 CCL limits are posted at: https://www.fhfa.gov/DataTools...

a. Purchase or Refinance transactions. The appraiser is to provide an Exterior Only appraisal with enhanced assignment conditions when the appraiser’s assigned geographic jurisdiction does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine. Appraisers should refer to their state or local authorities to determine if they are deemed an essential part of the financial transaction for mortgage lending. The appraiser must make every effort to complete the enhanced assignment conditions listed below or document in the narrative why one or more conditions could not be met: 

(1) The appraiser will review the full exterior of the property and provide photos of all sides of the property with detailed notes of the exterior and any visible MPRs. In instances of obstructed or restricted view and access is unable to be granted or allowed, Multiple Listing Service (MLS) photos of these areas may be utilized. If MLS photos are utilized, it must be explained in the appraisal report.

(2) A measurement of the footprint of the home should be provided if accessible. This is not to determine the gross living area (GLA) but for the appraiser to reconcile with public records.

(3) The appraiser will conduct a detailed interview over the phone with the occupant, Veteran, or real estate professional regarding the property. It is the appraiser’s responsibility to obtain sufficient information to provide a creditable report. Interview questions should be noted and kept in the appraisers work file. Key items that may impact market value should be noted in the appraisal report with details about what was provided and by whom.

(4) The appraiser may utilize any and all photos available from MLS, provided by the occupant, Veteran, or real estate professional. Comparables will still be viewed and photos provided when possible.

b. Liquidation and Servicer Appraisal Processing Program (LGI/SAPP). Effective immediately, all liquidation reports will be completed on a Freddie Mac Form 2055, Exterior Only Inspection Residential Appraisal Report. The appraiser can complete the exterior appraisal as they have historically without the need for enhanced assignment conditions outlined above.

7. Desktop Appraisal Valuations. This report option will be completed on the FNMA 1004, 1073, 1004C, 2025 and the appraiser will be required to attach a copy of the provided Scope of Work (SOW) Exhibit A, certifications, and assumptions in all reports. Appraisers are to boldly and inconspicuously state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19”.

a. Desktop valuations will be limited to the maximum 2020 Freddie Mac Conforming Loan Limit for a one-unit limit for the county or county-equivalent area. The lender should not request a Desktop Appraisal if the loan amount will be more than the maximum 2020 CCL limit.

b. Desktop appraisals will only be conducted when the appraiser’s assigned geographic jurisdiction has restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or not deemed an essential part of the financial transaction for mortgage lending. Lenders must state in both in “public” notes in WebLGY and by e-mail to the appraiser if they will accept a Desktop appraisal. If the lender will not accept a Desktop appraisal, the appraiser will advise the Regional Loan Center (RLC) to place the assignment on hold for 30 days and then subsequently cancel, if the status has not changed. The appraiser will annotate “public” notes in WebLGY updates on all communication between parties. 

(1) Purchase transactions. The appraiser defines the scope of the work and will annotate in the appraisal report concerning the source of information provided. 

(2) Cash-Out Refinance Transactions. The appraiser will prioritize assignments based on purchase transactions first and determine if sufficient information is publicly available and verifiable. Appraisers are not required to proceed on the assignment if information is not available to provide a credible report. In the event the appraiser is not able to complete the assignment, the lender may choose to cancel the request or have the RLC suspend the assignment until the national emergency is lifted and a more detailed report can be produced.

c. VA understands that there may be insufficient data available to produce a creditable report. Appraisers are not required to accept a Desktop valuation order. In addition, the use of Assisted Appraisal Processing Program (AAPP) is not authorized for Desktop appraisals. When an appraiser believes the scope of work required to develop a credible report is not capable in a Desktop appraisal, the appraiser must contact the RLC to place the assignment on hold.

8. Reconsideration of Value. In times of uncertainty, the housing market strengths may be less predictable to report. Appraisers will have comparable sales that took place prior to the President declaring a national emergency and active and pending sales can be less predictable. During this time, it is important to ensure that Veterans continue to be able to purchase a home. VA, the lender, and the appraiser will work together during this time to assist in the best possible outcome for the Veteran.

a. Purchase Transactions. Reconsideration of Values (ROV) for purchase transactions will be restricted to no greater than 7 percent from the appraiser’s opinion of value or $10,000 whichever is greater. An ROV may be requested when the value requested is greater than stated but the ROV amount must fall within the range of adjusted values in the sales grid of the appraisal or overwhelming evidence of appraisal error that impacts value. The same criteria is required as outlined in VA Pamphlet 26-7, Chapter 10 Appraisal Process (NEW), Section 22. In addition, a field review by VA RLC staff will not be a completed in conjunction with the ROV request.

b. Cash-Out Refinance Transactions. VA will suspend ROV requests for cash-out refinance loans until further notice. 

c. Liquidation Transactions. VA will suspend ROV requests for liquidation loans until further notice. 

9. Memorandum of Values. In extreme cases when an appraiser is not available to complete an appraisal assignment for a purchase, VA has the authority and ability to issue a Memorandum of Value (MOV). This will be completed on a case-by-case basis. 

10. Alteration and Repair Loans. Appraisers are to suspend any alteration and repair assignments until further notice. 

11. Repair Inspections. Due to the lack of verification of completion by the appraiser or inspector that repair items have been completed, lenders have one of the two following options to supply to VA. This section applies to any and all loans regardless of the loan application date.

a. Lenders have the authority and are encouraged to certify repairs, especially repairs performed by licensed personnel, instead of an appraiser certification as outlined in the VA Pamphlet 26-7, Chapter 10 Appraisal Process (NEW), Section 23, Topic b. Repair certifications which may involve lead-based paint must still be completed by a fee appraiser; however, the lender can escrow for future inspection and costs with a third-party. Lenders may hold funds in escrow for repairs to be completed after closing.

b. All repairs must be completed and escrowed funds distributed before the loan may be guaranteed by VA as outlined in the VA Pamphlet 26-7, Chapter 12 Minimum Property Requirements (NEW), Section 44, Topic e. In addition, there must be adequate assurance that the work will be completed timely and satisfactorily (up to 180 days). 

c. When a purchase transaction appraisal has found repairs, the lender has the option to close the loan when the Veteran accepts responsibility to complete the repairs within 180 days of the closing of the loan. This time may be extended if warranted. The home must be habitable by conventional standards. Reinspection will be required at that time at the posted fees.

a. Purchase Transactions: If there is no known or visible evidence of termite infestation present, the seller and realtor must provide a certification to that fact and the Veteran must acknowledge that no inspection was completed. VA recommends the Veteran to complete an inspection once the national emergency has ended. If there is known or visible evidence of termite infestation, a clear termite report must be provided within one year of close of escrow. 

b. Cash-Out Refinance Transactions: The Veteran can provide a certificate of fact if there is no known or visible evidence of termite infestation present. If there is known or visible evidence of termite infestation, a clear termite report must be provided within one year of close of escrow.

13. Any additional NOV conditions. Any additional items that need to be met on the NOV to comply with VA requirements will have to be met in 180 days from the date of the NOV issuance. All conditions must be completed before the loan will be guaranteed by VA. Any clear and obvious minimum property requirement (MPR) related issues that would render the home uninhabitable will not be able to be issued a guaranty till all repairs are completed. The Veteran must acknowledge and accept any and all conditions not met prior to closing. 

14. Appraiser Information. The appraiser defines the scope of the work and they must have enough information to provide a creditable report. The appraiser will need to rely upon all publicly discoverable records, MLS photos and commentary, real estate professionals and homeowners. It is imperative this information is documented and retained. Key items that may impact market value should be noted in the appraisal report with details about what was provided and by whom. When relying upon photos provided by another party or from the MLS, it should be noted in the report. When the appraiser believes that the assignment is too complex to be completed by a Desktop or Exterior-Only appraisal, the appraiser is to contact the RLC and the lender to place the assignment on hold.

15. Communication. To keep Veterans and appraisers safe while continuing the mission of the VA Home Loan program, communication between the Veteran, lender, appraiser and other stakeholders is key during this time. Below is the guidance being provided.

a. Veteran. (1) If the appraiser is scheduled to complete an interior review of the property and you or another occupant of the home is experiencing flu like symptoms, such as fever, cough or shortness of breath, or have tested positive for COVID-19, you must notify the lender immediately. (2) If you are initiating the ROV process, please notify and provide your lender any evidence/justification in support of the request.

b. Lender. 

(1) If the appraiser is scheduled to complete an interior review of the property and the Veteran notifies you of a change in his/her or another occupant of the home’s health, please notify the appraiser immediately. 

(2) Ensure the appraiser has the necessary interior or exterior access to the property. 

(3) Provide any MLS photos or other supporting evidence so the appraiser can provide a creditable report. 

(4) Communicate with the appraiser, Veteran and VA throughout this process both by e-mail, phone and “public” notes in WebLGY 

c. Appraiser. VA understands that appraisers may experience operational delays as a result of COVID-19; however, every effort should be made to complete the appraisal within state defined timeframes outlined at: https://www.benefits.va.gov/HOMELOANS/appraiser_fee_schedule.asp. 

(1) Please contact the RLC of jurisdiction or the point of contact for the scheduled appointment if you have tested positive for COVID-19 or have a change in your health status that would prevent you from completing an assignment. The RLC will temporarily take you out of rotation for new appraisal assignments. 

(2) Communicate with lender, clients and VA throughout this process both by e-mail, phone and “public” notes in WebLGY. 

(3) In circumstances where timelines may be extended, the appraiser must clearly document WebLGY in the “public” notes and communicate directly with the lender.

17. For additional questions, please contact your VA RLC by calling 1-877-827-3702, option #6 within the hours of operation between 8am to 6pm EST. 

18. Rescission: This Circular is rescinded April 1, 2021. Circular 26-20-11 is rescinded effective immediately.

Senate Bill 0241Z 

• Extends a moratorium on foreclosures, evictions, and repossessions 
• Calls for forbearance plans pertaining to specific state loans 
• Extends the governor’s March 11 executive order declaring a state of emergency and imposed temporary changes to state laws and regulations in response to the Covid-19 crisis

The effective date of the bill is retroactive to March 11 and April 10, by defined sections of the bill. 

Additions to Lender Letter on Apr. 14, 2020

Flexibilities for condominium project reviews

Waiver of project review

We are extending project review waiver flexibilities for loans with LTV ratios greater than 80% and up to 90%. This flexibility applies to Fannie Mae-owned, limited cash-out refinance transactions for owner-occupied condo units only. Second homes and investment transactions are excluded. When applying this flexibility, lenders must confirm the project meets the following, existing requirements:

• the litigation requirements described in Selling Guide B4-2.1-03, Ineligible Projects, and
• all policies in Selling Guide B4-2.1-02, Waiver of Project Review, for all loans with LTV ratios greater than 80% using the waiver of review for Fannie Mae-owned limited cash-out refinance transactions.

Lenders must provide Project Type Code V in the loan delivery data file for these transactions. The use of other Project Type Codes may result in fatal edits at loan delivery.

Project documents used in project reviews

Lenders have reported some HOAs are experiencing a delay in ratifying their 2020 budgets. When a budget review is required on an established project, we will accept the budget from the 2019 fiscal year if the current year’s budget has not yet been ratified due to issues related to COVID-19. To utilize this flexibility, the lender must confirm the project currently meets the HOA dues delinquency requirements in Selling Guide B4-2.2-02, Full Review Process. All other project standards requirements in Selling Guide B4-2, Project Standards, continue to apply.

NOTE: New projects are excluded from this flexibility. 

Due to the impact of the COVID-19 pandemic on many businesses, we understand that lenders are having increased difficulties in obtaining project documents from some HOAs and property managers. Lenders may use other sources of condo project data to complete their project reviews including, but not limited to, appraisals, MLS records, plat map and site surveys, public records, state laws or local ordinances, and tax searches. Additionally, there are various vendor products available that provide project documents or information regarding project eligibility. 

Some information and documents, such as the project’s current budget, may only be available from the HOA or property manager. We recognize the lender may be unable to obtain this information immediately while the operations are closed for extended periods. We are reminding our lenders that if they previously completed a project review for an established condo project, that project review may be used for additional condo unit loans in the same condo project for up to one year (measured to the note date of the subsequent loans). For new condo projects, the timeframe is 180 days prior to the note date. Additionally, some lenders have found it helpful to use Fannie Mae’s Condo Project Manager™ (CPM™) to help track and communicate project review status and review dates within their organizations. 

NOTE: Lenders are responsible for obtaining mortgage insurance for all loans using these flexibilities when the loan’s LTV ratio is above 80%.

Appraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only appraisal. All traditional appraisals require the appraiser to perform a complete onsite interior and exterior inspection of the property. A virtual inspection cannot be used as a substitute for the onsite interior and exterior inspection for a traditional appraisal. Additionally, an onsite interior and exterior inspection is required for the Appraisal Update and/or Completion Report (Form 1004D) used to confirm completion of renovation for HomeStyle Renovation loans. Virtual inspections using video and photographs provided by the borrower or contractor can be used to evidence renovation progress to disburse additional renovation funds as described below. [See Lender Letter for complete details]

PROPERTY ELIGIBILITY

Condominium Project reviews

These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.

Freddie Mac is offering temporary flexibilities and guidance to assist Sellers in Condominium Project reviews during the COVID-19 pandemic

Exempt From Review: LTV/TLTV/HTLTV ratios

We are temporarily extending Exempt from Review eligibility for maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC)TLTV (HTLTV) ratios from 80% to a maximum ratio of 90% for Freddie Mac owned “no cash-out” refinance Condominium Unit Mortgages secured by Primary Residences only. When using this new flexibility, Sellers must ensure that the Condominium Project meets the exempt from review requirements in Section 5701.7 and the project in litigation requirements in Section Section 5701.3(i) (now applicable to higher LTV ratios). Second Homes and Investment Properties are ineligible.

For each Condominium Unit Mortgage, Sellers must deliver ULDD Data Point, Project Classification Identifier (Sort ID 42) as “Exempt From Review.”

Project Documents used in Condominium Project reviews

Sellers have reported that some Homeowners Associations are experiencing a delay in ratifying their 2020 budgets because they are unable to meet in person to vote on a new budget. When an Established Condominium Project review is used, we will accept the budget from the 2019 fiscal year when the current year’s budget has not yet been ratified due to issues related to COVID-19. This flexibility may not be used for New Condominium Project reviews. Sellers are reminded that all other applicable requirements must be met, including requirements relating to delinquent Homeowners Association assessments.

Due to the impact of the COVID-19 pandemic on many businesses, we understand that Sellers are having increased difficulties in obtaining Project Documents from Homeowners Associations and property managers. Sellers may use other sources of Condominium Project data to complete project reviews including, but not limited to, appraisals, MLS records, plat map/site surveys, public records, State laws or local ordinances, and tax searches. Additionally, there are various vendor products available that provide Project Documents and/or information regarding Condominium Project eligibility.

Some information and/or documents, such as the Condominium Project’s current budget, may be available only from the Homeowners Association or property manager so Seller may be unable to obtain them if these operations are closed for extended periods. Sellers are reminded that, if they completed a project review for an Established Condominium Project during the one year period prior to the Note Date of the particular Mortgage, that project review may be used for multiple Condominium Unit Mortgages in the same Condominium Project for up to one year prior to the Note Date of the particular Mortgages. For New Condominium Projects, the time frame is 180 days prior to the Note Date.

Note that:

• For all Mortgages with LTV ratios greater than 80%, we require mortgage insurance in accordance with Guide requirements
• Capitalized terms in this Condominium Project reviews section that are not defined in the Glossary are defined in Chapter 5701
• We are not updating the Guide to reflect these temporary flexibilities

Appraisal flexibilities

Map reference field for desktop and exterior-only appraisals

Freddie Mac is clarifying that the map reference field on the appraisal report may only contain the word “desktop” or “exterior.” No other words or phrases may be used or included. The map reference field should reflect the appraisal type agreed to with the acceptance of the assignment and the minimum scope of work required for the assignment. The appraiser is responsible for determining what is the adequate scope of work for any assignment and may choose to expand the scope of work beyond the minimum requirements.

Property valuations – appraisal flexibilities for new construction properties (purchase transactions)

In response to Seller inquiries, Freddie Mac is clarifying that the “permissible appraisal requirements” eligibility chart described in Bulletin 2020-5 apply to the appraisal flexibilities for new construction properties including the requirement that second homes with LTV ratios above 85% require an interior and exterior inspection appraisal.

Loan Product Advisor® – update to identify Freddie Mac-owned Mortgages

Loan Product Advisor® will be enhanced at a future date to assist Sellers with identifying if a mortgage being refinanced is owned by Freddie Mac. This enhancement supports our COVID-19 related appraisal flexibilities for Freddie Mac owned no cash-out refinance Mortgages announced in Bulletin 2020-5. If a match is found based on property address and the Social Security number of one or more Borrowers on an existing loan, then informational feedback messages will be returned on both submissions and resubmissions indicating the Mortgage is Freddie Mac-owned.

Loan Product Advisor feedback messages will be updated to reflect these changes.

Delivery instructions

Beginning on April 13, 2020, for Mortgages with property valuations completed in accordance with the appraisal flexibilities in Bulletin 2020-5, Loan Selling Advisor® will be updated to accept “Desktop Appraisal” and “Drive By” as valid values for ULDD Data Point, Property Valuation Method Type (Sort ID 89). Starting on this date, Sellers should use their best efforts to provide “Drive By” or “Desktop Appraisal,” as applicable, in lieu of “Full Appraisal” for Sort ID 89. However, we recognize a Seller’s systems may not be updated to accommodate this change and in these cases, the Seller may continue to deliver “Full Appraisal.”

The table below provides the appropriate delivery instructions when either an exterior-only inspection appraisal report or a desktop appraisal report was used in accordance with the flexibilities in Bulletin 2020-5. [See Bulletin]

Negotiated provisions related to appraisal flexibilities

The appraisal flexibilities announced in Bulletins 2020-5 and 2020-8 may be used in conjunction with negotiated provisions in the Seller’s Purchase Documents unless the Seller is otherwise notified by Freddie Mac. For refinance Mortgages, only “no cash-out” refinances of Freddie Mac-owned Mortgages being sold to Freddie Mac are eligible for the appraisal flexibility shown below: [See Bulletin]

Interior and exterior inspection appraisals are required for:

• Second home purchase transactions with LTV ratios > 85%
• “No cash-out” refinances when the Mortgage being refinanced is not owned by Freddie Mac
• Cash-out refinances

All other requirements for the use of temporary flexibilities apply. Refer to Bulletins 2020-5 and 2020-8 for complete requirements.

Virtual inspections for appraisals

Appraisers may use virtual inspection methods to augment the data and imagery that is used for either a desktop appraisal or an exterior-only inspection appraisal. All interior and exterior inspection appraisals require the appraiser to perform a complete onsite interior and exterior inspection of the property. A virtual inspection is not a substitute for an on-site interior and exterior inspection.

CHOICERenovation® Mortgages

In connection with CHOICERenovation® Mortgages with Borrowers who enter into forbearance plans after the Freddie Mac Settlement Date but prior to completion of the renovations, continuation of draw distributions is permitted during the forbearance period. All other program requirements continue to apply.

Additionally, when an appraiser is confirming completion of renovations for a CHOICERenovation Mortgage, an on-site interior and exterior inspection is required for Form 442, Completion Report. Although virtual inspections using video and photographs provided by the Borrower or contractor may be used to evidence renovation progress to disburse additional renovation funds, a virtual inspection may not be used to complete Form 442.

TEMPORARY FLEXIBILITIES REGARDING SELLER’S POST-FUNDING QUALITY CONTROL REQUIREMENTS – TARGETED SAMPLING

Freddie Mac recognizes the unique challenges in the market today related to COVID-19 and will allow the following additional temporary flexibility with respect to Seller’s post-funding quality control review.

Effective Term: The QC Flexibilities announced in this Bulletin are effective immediately for all Mortgages currently in the process of a post-closing Seller in-house quality control review and will remain in place for all Mortgages selected through June 2020 for post-closing Seller in-house quality control reviews.

The requirement in Section 3402.4(b) for a Seller to select all Mortgages sold to Freddie Mac that become 60 days or more past due in the first six months following the Note Date for a targeted sample is amended to allow flexibility with respect to the sample size. In lieu of selecting all such Mortgages for its targeted sample, a Seller may select an appropriate risk-based sample. The risk-based sample population must include Mortgages that are past due as a result of COVID-19 hardships.

There is no change to the scope of review. The selected Mortgages must be carefully evaluated to determine the presence of any fraud or other deficiency.

Because quality control processes are especially important in times of significant stress, we encourage Sellers to adopt the QC Flexibilities only as they feel necessary.

MANDATORY CASH CONTRACTS AND WAC ARM CASH CONTRACTS

We are updating the requirements applicable to offer amounts and procedures for fixed-rate Mandatory Cash Contracts as stated in Section 6101.3(a) and WAC ARM Cash Contracts as stated in Section 6102.4(a) to include the following:

• Freddie Mac may, at its discretion and at any time, impose a maximum contract amount for individual Mandatory Cash Contracts
• Sellers may enter into multiple mandatory cash commitments but may not exceed $200 million in aggregate fixed-rate and WAC ARM commitment volume per day. Sellers may seek an exception to this amount by contacting the Cash Desk (cash_ex@freddiemac.com or 571-382-5960). If this limit is exceeded without prior Freddie Mac approval, Freddie Mac may pair off the Seller’s contract(s) or may require the Seller to pair off the contract(s) at the Seller’s expense.

The Guide will be updated at a later date to reflect these changes.

REMOTE ONLINE NOTARIZATION

In Bulletin 2020-8, we announced that Electronic notarization may involve a remote process (“Remote Online Notarization”) in the States listed in Attachment C to Bulletin 2020-8 (see Download dropdown above), Permitted States for Remote Online Notarization, provided that the system used for the remote notarization meets the minimum standards provided in the Bulletin.

With this Bulletin, we are adding Arkansas, Georgia and Hawaii to our list of permitted States for Remote Online Notarization (provided in Attachment C to Bulletin 2020-8 in Download dropdown above) and clarifying that in the event the Seller wishes to include the seller of the Mortgaged Premises in the Electronic Closing process:

• The Borrower and the seller of the Mortgaged Premises must give their individual, specific and express Electronic consent to their respective Electronic Signatures on an Electronic warranty deed and other purchase and sale documents
• The Electronic warranty deed must be recorded in the local recorder’s office in the State in which the Mortgaged Premises is located, in compliance with the requirements of the Guide

We are also reminding Sellers that if they are interested in including an Electronic Note (eNote) in the electronic closing package containing other documents that are notarized through a Remote Online Notary process, they must obtain Freddie Mac approval to deliver such Mortgages. (See Chapter 1402 on eMortgages.)

Note that capitalized terms in this Remote Online Notarization section that are not defined in the Glossary are defined in Chapter 1401 or Chapter 1402.

SYSTEM AND GUIDE UPDATES

We are not updating the Guide at this time to reflect any of the changes noted in this Bulletin.

The Illinois Department of Financial and Professional Regulation issued guidance for consumer credit licensees, noting that: 

• it expects licensees to work with consumers during the crisis and be flexible with repayment of debt; and 
• recommends following a number of best practices, including: 
  • increasing communication with consumers, 
  • waiving late charges and insufficient fund fees, 
  • suspending debt collection efforts, 
  • recommending that the creditor utilize the natural disaster code when reporting a consumer’s credit wherever permissible, and 
  • ensuring sufficient staffing of customer service phone lines, among other things

The Louisiana Office of Financial Institutions issued guidance to non-depository licensees regarding Covid-19 relief. 

• Although sections 4021 and 4022 of the CARES Act are specific to federally-backed mortgage loans, the OFI encourages all lenders to follow the terms of the provisions for all non-federally-backed mortgage loans as if they were federally-backed 
• Licensed lenders that offer deferred presentment transactions, small loans, or consumer loans are encouraged to provide certain relief options to borrowers, such as: 
  • accepting partial payments, 
  • waiving fees, 
  • deferring payments, and 
  • suspending negative credit reporting
• Check cashers are also encouraged to offer discounted fees to customers during the crisis. 
• Non-depository licensees that temporarily close their locations are urged to post a notice at the location containing their contact information to assist customers with any questions

Rhode Island’s Superintendent of Banking issued a bulletin to clarify how mortgagors should implement CARES Act forbearances to accord with the state’s foreclosure mediation statute, which requires certain notices be mailed within 120 days of default. 

• During the pendency of the Covid-19 pandemic, mortgagors must mail the required notice within 120 days after the termination of the forbearance agreement, subject to certain conditions. 

This Interim Final Rule published by the FDIC, OCC, and FRS:

• Defers the requirement to obtain an appraisal or evaluation for up to 120 days following the closing of a transaction for certain residential and commercial real estate transactions, excluding transactions for acquisition, development, and construction of real estate
• States that the agencies are providing this relief to allow regulated institutions to expeditiously extend liquidity to creditworthy households and businesses in light of recent strains on the U.S. economy as a result of COVID-19.
• Indicates regulated institutions should make best efforts to obtain a credible valuation of real property collateral before the loan closing, and otherwise underwrite loans consistent with the principles in the agencies' Standards for Safety and Soundness and Real Estate Lending Standards.
• States that this temporary change to the appraisal rules expires on December 31, 2020.

The Statement issued by the FDIC, OCC, FRS, NCUA, and CFPB:

• Outlines existing flexibilities in the Uniform Standards of Professional Appraisal Practice and the agencies' appraisal regulations.
• Advises that there are temporary changes to Fannie Mae and Freddie Mac appraisal standards that can assist lenders during this challenging time.

Massachusetts House Bill H4647 

• Imposes a moratorium on certain eviction and foreclosure proceedings for the earlier of 120 days from the enactment of the legislation or 45 days after the state of emergency 
• Requires a creditor to grant a forbearance to a mortgagor that submits a request and affirms that the mortgagor has experienced a financial impact from Covid-19 
• Any payment subject to the forbearance must be added to the end of the term, unless otherwise agreed to 
• Prohibits a mortgagee or landlord from furnishing negative mortgage payment information or rental payment data to a consumer reporting agency related to payments subject to the act

• New Default Reason Code 055 – Related to National Emergency Declaration is now available for reporting and should be used as soon as possible
• If the mortgage is newly defaulted (i.e., no open default episode), mortgagees are reminded to report Status Code 42 – Delinquent, and then Status Code 06 – Formal Forbearance