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  • HUD publishes interpretive rule on Ginnie Mae loan-seasoning requirement

    Federal Issues

    On July 3, the Department of Housing and Urban Development (HUD) published in the Federal Register an interpretive rule regarding the loan-seasoning requirement for Ginnie Mae mortgage-backed securities from the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), S.2155/ P.L. 115-174. The interpretive rule establishes that (i) any VA refinance mortgage that does not meet the requirements of the Act is not eligible to serve as collateral for Ginnie Mae mortgage-backed securities; (ii) any VA refinance mortgage that does not meet the Act’s requirements, but was guaranteed before the Act’s enactment are unaffected; and (iii) the Act does not prohibit Ginnie Mae from guaranteeing Multiclass Securities where the trust assets consist of certificates previously lawfully guaranteed with underlying VA refinance loans that may not meet the requirements of the Act. Comments on the interpretive rule must be submitted by August 2.

    As previously covered by InfoBytes, Ginnie Mae issued All Participants Memorandum APM 18-04, which establishes (in accordance with the Act) that in order to be eligible for Ginnie Mae securities, the date of the VA refinance loan must be on or after the later of (i) 210 days after the date of the first payment made on the loan being refinanced; and (ii) the date of the sixth monthly payment made on the loan being refinanced. 

    Federal Issues Ginnie Mae MBS Department of Veterans Affairs IRRRL S. 2155 HUD

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  • Agencies issue disaster relief guidance for volcanic activity in Hawaii and severe storm in Maine

    Federal Issues

    On June 19, the FDIC issued Financial Institution Letter FIL-33-2018 to provide regulatory relief to financial institutions and facilitate recovery in areas of Hawaii affected by volcanic eruption and earthquakes. 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.

    On June 14, the Department of Veterans Affairs issued Circular 26-18-16, requesting relief for veterans impacted by Maine’s severe storm and flooding. 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. The Circular is effective until July 1, 2019.

    Find more InfoBytes disaster relief coverage here.

    Federal Issues Department of Veterans Affairs Disaster Relief Mortgages FDIC

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  • VA reminds lenders that certification is required for all loans, including IRRRLs

    Federal Issues

    On May 31, the Department of Veterans Affairs (VA) issued Circular 26-18-14 to clarify requirements regarding lender certifications for VA-guaranteed loans. The circular reminds lenders originating VA loans that the lender must certify to the VA that the loans “were made in full compliance with the law and loan guaranty regulations” regardless of the type of VA-guaranteed loan being initiated. The circular highlights that the lender certification is required on the Interest Rate Reduction Refinance Loans (IRRRL). The circular is effective through July 1, 2020.

    Federal Issues Department of Veterans Affairs Refinance IRRRL Lender Certification

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  • Ginnie Mae announces new VA refinance loan eligibility requirements

    Federal Issues

    On May 30, Ginnie Mae issued All Participants Memorandum APM 18-04 announcing changes to pooling eligibility requirements for Department of Veterans Affairs (VA) loans. The changes are in response to the “Loan Seasoning for Ginnie Mae Mortgage-Backed Securities” provision of the regulatory relief bill, Economic Growth, Regulatory Relief, and Consumer Protection Act, S.2155/ P.L. 115-174. (See previous InfoBytes coverage here.) APM 18-04 requires that, in order to be eligible for Ginnie Mae securities, the date of the VA refinance loan must be on or after the later of (i) 210 days after the date of the first payment made on the loan being refinanced; and (ii) the date of the sixth monthly payment made on the loan being refinanced. The new eligibility criteria is effective with mortgage-backed securities guaranteed on or after June 1.

    Ginnie Mae also announced June 1 that it has temporarily restricted VA single family-guaranteed loans pooled by three mortgage lenders. Upon conclusion of the temporary restriction, each of the three lenders must demonstrate that (i) prepayment speeds are more consistent with equivalent lenders, and (ii) improved performance is sustainable.

    As previously covered by InfoBytes, the VA recently released policy guidance in response to the regulatory relief bill, which includes a similar loan seasoning requirement as Ginnie Mae.

    Federal Issues Department of Veterans Affairs Refinance MBS S. 2155 Ginnie Mae Securities

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  • VA issues policy guidance on VA refinance loans in response to the Economic Growth, Regulatory Relief and Consumer Protection Act

    Federal Issues

    On May 25, the Department of Veterans Affairs (VA) issued Circular 26-18-13 discussing the impact of “The Protecting Veterans from Predatory Lending Act of 2018” (the Act), which was included in the recently enacted bipartisan regulatory relief bill, Economic Growth, Regulatory Relief and Consumer Protection Act, S. 2155, previously covered by InfoBytes here. The Act addresses “loan churning” of VA-guaranteed refinance loans and sets out new requirements for VA eligibility. As of May 25, a lender (broker or agent included), a servicer, or issuer of an Interest Rate Reduction Refinance Loan (IRRRL) must, among other things:

    • Recoup Fees. Certify that certain fees and costs of the loan will be recouped on or before 36 months after the loan note date;
    • Establish a Net Tangible Benefit. Establish that when the previous loan had a fixed interest rate (i) the new fixed interest rate is at least 0.5 percent lower or (ii) if the new loan has an adjustable rate, that the rate is at least 2 percent lower than the previous loan. In each instance, the lower rate cannot be produced solely from discount points except in certain circumstances; and
    • Apply a Seasoning Period. Follow a seasoning requirement for all VA-guaranteed loans. A loan cannot be refinanced by an IRRRL or a VA cash-out refinance (if the new principle amount is less than the loan being refinanced) until (i) 210 days after the date of the first payment made on the loan and (ii) the date of the sixth monthly payment is made on the loan.

    The circular is rescinded on January 1, 2020.

    Federal Issues Department of Veterans Affairs Refinance IRRRL S. 2155 Bank Regulatory Predatory Lending

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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 and 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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