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  • Federal agencies issue disaster relief guidance for North Carolina, Indiana, and Hawaii

    Federal Issues

    Department of Veterans Affairs (VA)

    On May 16, the Department of Veterans affairs released Circular 26-18-10, requesting relief for veterans impacted by Hawaii’s volcanic eruptions and earthquakes. Among other things, the Circular (i) encourages loan holders to extend forbearance to borrowers in distress because of the storms; (ii) requests that loan holders establish a 90-day moratorium on initiating new foreclosures on loans affected by the major disaster; and (iii) waives late charges on affected loans. Previously on May 14, the VA released Circular 26-18-08 and Circular 26-18-09, which provide for similar relief in areas affected by severe storms flooding in Hawaii and North Carolina. 

    FDIC

    On May 16, the FDIC issued FIL-28-2018 to provide regulatory relief to financial institutions and facilitate recovery in areas of Indiana affected by severe storms and flooding from February 14 through March 4. The FDIC is encouraging institutions to consider, among other things, extending repayment terms and restructuring existing loans that may be affected by the natural disasters. Additionally, the FDIC notes that institutions may receive favorable Community Reinvestment Act (CRA) consideration for certain development loans, investments, and services in support of disaster recovery. The FDIC also issued FIL-29-2018, which provides similar guidance for financial institutions for areas of North Carolina affected by tornadoes and severe storms on April 15.

    Find more InfoBytes disaster relief coverage here.

    Federal Issues FDIC Department of Veterans Affairs Disaster Relief CRA Mortgages

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  • VA updates Disaster Loan Modification guidance regarding re-amortization

    Federal Issues

    On May 8, the Department of Veterans Affairs (VA) released clarification of its Disaster Loan Modification guidance in circular 26-17-39. (Previously covered by InfoBytes here.) The revised circular now allows a servicer to re-amortize if necessary to meet investor guidelines, so long as the new monthly payment is the same or less than the current.

    Find more InfoBytes disaster relief coverage here.

    Federal Issues Disaster Relief Department of Veterans Affairs Mortgages Mortgage Modification

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  • Department of Education, Veterans Affairs team up to simplify student loan discharge process for disabled veterans

    Lending

    On April 16, the U.S. Department of Education announced a partnership with the U.S. Department of Veterans Affairs (VA) to identify disabled student loan borrowers who qualify for debt forgiveness. Eligible veterans with federal student loans or aid through the Teacher Education Assistance for College and Higher Education Grant Program that are identified as a match on the National Student Loan Data System and the VA database will be notified of their potential eligibility in the mail and will receive a Total and Permanent Disability Discharge application.

    Lending Student Lending Department of Education Department of Veterans Affairs Debt Cancellation

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  • VA releases FAQs on IRRRL policy guidance

    Agency Rule-Making & Guidance

    On April 5, the Department of Veterans Affairs released FAQs regarding policy guidance for VA Interest Rate Reduction Refinance Loans (IRRRL). The FAQs address a range of questions regarding the IRRRL policy guidance issued in February (previously covered by InfoBytes here), including noting that the requirement to provide the Lender Certification disclosure with initial disclosure documents has been removed. If a Lender Certification is necessary, the lender will be required to provide the document at closing. Additionally, the FAQs clarify that, while the lender will need to be able to demonstrate that the Veteran’s Statement was sent to and received by the veteran in the initial disclosure package, the VA will not require the veteran’s signature until the final statement given with the closing documents.

    Agency Rule-Making & Guidance Department of Veterans Affairs Mortgages Refinance IRRRL

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  • FHA and VA extend foreclosure moratoriums on certain disaster areas

    Federal Issues

    On March 1, the Federal Housing Administration (FHA) released Mortgagee Letter ML 2018-02 (ML 2018-02), which extends the 180-day foreclosure moratorium on FHA-insured properties in Puerto Rico & the U.S. Virgin Islands affected by Hurricane Maria for an additional 60-days. The foreclosure moratorium is now in effect until May 18.

    The Department of Veterans Affairs (VA) also released updates to VA circulars 26-17-23, 26-17-27, and 26-17-28, extending the foreclosure moratorium on VA-insured properties affected by Hurricanes Harvey, Irma, and Maria from 180 days to 270 days.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Disaster Relief Foreclosure Mortgages Department of Veterans Affairs FHA

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  • VA clarifies policy regarding the use of lender payment or credit of certain borrower costs

    Lending

    On February 23, the Department of Veterans Affairs (VA) issued Circular 26-18-4 in response to reports that lenders may be funding temporary “buydown” or escrow accounts in order to subsidize a borrower’s payment through an above market interest rate, which the VA views as a “cash-advance on principal.” The circular reminds lenders that cash-advances on principal are prohibited, and lenders may not pay temporary buydown fees and charges. The circular notes that sellers are not prohibited from paying buydown fees and charges for the borrower and that lenders are allowed to charge a maximum of one percent of the loan amount as a flat charge in lieu of all other charges related to the costs of origination not expressly allowed by 38 C.F.R. 36.4313. The circular is effective until January 1, 2020.

    Previously, on February 1, the VA updated multiple chapters of the VA Servicer Handbook M26-4, which, among other things, added the definition of delinquency, corrected the bankruptcy reporting timeframe, and added information on the new VA Affordable Modification.

    Lending Mortgages Department of Veterans Affairs

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  • Ginnie Mae tells companies to address VA refi churning

    Federal Issues

    On February 8, Ginnie Mae announced that it had sent notices to a small number of issuers in the Ginnie Mae multi-issuer mortgage-backed security (MBS) program warning them about their VA mortgage loan prepayment speeds, which deviated from the norm and put the veteran benefit at risk. According to Ginnie Mae, the notices require the issuers to create a “corrective action plan that identifies immediate strategies to bring prepayment speeds in line with market peers.” Issuers unable to correct their performance risk losing access to Ginnie Mae multi-issuer pools. The warnings are a result of a task force formed between Ginnie Mae and the Department of Veterans Affairs (VA), to address refinance speeds and aggressive marketing in the VA loan space.

    As previously covered by InfoBytes, Ginnie Mae also issued APM 17-06 which imposes tougher pooling standards on certain refinance loans. Additionally, the VA issued new policy guidance for its Interest Rate Reduction Refinance Loans (IRRRL) disclosures in an effort to assist borrowers in deciding whether the IRRRL is in their best interest, previously covered by InfoBytes here.

    Federal Issues Ginnie Mae Department of Veterans Affairs Mortgages Refinance

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  • VA issues guidance for IRRRL loans

    Agency Rule-Making & Guidance

    On February 1, the Department of Veterans Affairs released Circular 26-18-1, which informs lenders about new policy guidance for Interest Rate Reduction Refinance Loans (IRRRL) disclosures. Effective April 1, lenders are required to provide the Veteran’s Statement disclosure and the Lender Certification disclosure (if applicable) with the initial disclosure documents, which should be no later than three business days after receiving an application, and should confirm delivery in the Loan Guaranty Certificate process. According to the circular, the early disclosure of the Veteran’s Statement will assist the borrower in making informed decisions about whether the IRRRL is in their best interest. The circular also provides details for lenders about what specific information needs to be included in the Veteran’s Statement throughout the loan process.

    Agency Rule-Making & Guidance Department of Veterans Affairs Mortgages Refinance IRRRL

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  • Special Inspector General for TARP highlights MHA threat

    Federal Issues

    On January 30, the Office of the Special Inspector General (SIG) for the Troubled Asset Relief Program (TARP) delivered a report to Congress, which identified unlawful conduct by certain of the 130 financial institutions in TARP’s Making Home Affordable Program (MHA) as the top threat to TARP and, thus, the SIG’s top investigative priority. The SIG explained that “significant oversight [of MHA] is required because of the risk of waste, fraud, and abuse” that occurs by participants. Indeed, the report highlights specific instances of mismanagement of MHA by a select number of large financial institutions. Close to one million homeowners still participate in MHA initiatives. Accordingly, the risk of unlawful conduct by financial institutions in this area can destabilize the market and jeopardize other participants in MHA such as Fannie Mae, Freddie Mac, FHFA, and the VA.

    Federal Issues TARP Mortgages MHA Fannie Mae Freddie Mac FHFA Department of Veterans Affairs

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  • VA Clarifies Third-Party Verification Requirements

    Agency Rule-Making & Guidance

    On December 29, the Department of Veterans Affairs (VA) issued Circular 26-17-43 to clarify its policy that lenders may use third-party vendors to verify borrower income, employment, and asset information subject to the following caveats: (i) lenders must retain full responsibility for verifying the accuracy of information provided in the borrower’s loan application; (ii) lenders must initiate and receive all verifications related to employment and deposits, credit report requests, and credit information; (iii) lenders must assume responsibility for the quality and accuracy of information provided to the VA collected from third-parties; (iv) lenders must disclose the third party vendor relationships on VA form 26-1820, Report and Certification of Loan Disbursement, and (v) lenders must not charge veterans for the cost of obtaining third-party verification of borrower income, employment, or asset information. Where a real estate broker/agent or any other party requests borrower income, employment, or asset information, lenders must (i) identify the parties as their agents, (ii) ensure that report(s) are returned directly to them, and (iii) ensure completion of the required certification on the loan application. 

    Agency Rule-Making & Guidance Department of Veterans Affairs Third-Party Underwriting

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