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  • Fannie Mae updates Servicing Guide with streamlined mortgage insurance claims processing

    Federal Issues

    On August 15, Fannie Mae issued SVC-2018-05, which updates the Servicing Guide to include, among other things, a streamlined mortgage insurance (MI) claims process with certain mortgage insurers to “reduce the operational burden and cost associated with the process for servicers.” While servicers will continue to submit claims in accordance with the MI policy, participating mortgage insurers will now process all claims using an algorithm named the “MI Factor.” Effective October 1, claims settled using the MI Factor will not be subject to the curtailment billing process and servicers will not be required to submit supplemental claim submissions and claim appeals to the mortgage insurer. Fannie Mae also updated its Servicing Guide to include (i) clarification of the servicer’s responsibilities for addressing urgent property conditions; (ii) policy reminders regarding insured loss repay inspection reimbursements; and (iii) notification thresholds and timing requirements regarding the transfer of default-related matters between law firms within a single state.

    Federal Issues Fannie Mae Servicing Guide Mortgage Insurance Mortgage Servicing

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  • Fannie Mae updates borrower-initiated mortgage insurance termination requirements

    Federal Issues

    On July 18, Fannie Mae released Lender Letter LL-2018-03 (Letter) to provide updates to requirements for single-family servicers related to borrower-initiated conventional mortgage insurance (MI) termination requests. The Letter covers requirements for borrower-initiated MI terminations and outlines various processes for verifying current property values. Among other things, the Letter also incorporates into the Servicing Guide changes previously announced in LL-2017-09 (see previous InfoBytes coverage here), which allows for temporary forbearance mortgage loan modification for servicers with mortgage loans affected by recent disasters. Fannie Mae encourages servicers to implement the new requirements on January 1, 2019, but will not require them to do so until March 1, 2019, unless otherwise noted.

    Federal Issues Fannie Mae Mortgage Insurance Servicing Guide Disaster Relief

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  • Freddie Mac and Fannie Mae release updates to servicing guides

    Federal Issues

    On June 13, Freddie Mac released Guide Bulletin 2018-9, which among other things, updates servicer requirements for short-term, long-term, and unemployment forbearance plans and consolidates the offerings into a single plan. Effective December 1, the streamlined plan will allow servicers to approve forbearance plans lasting up to six months without requiring eligible borrowers to submit a Borrower Response Package. Servicers may also offer consecutive forbearance plans that do not exceed 12 months in total to qualifying borrowers. Separately, the Bulletin includes the introduction of Freddie Mac’s NextJob re-employment services company designed to serve high-needs areas and provide job search skills and training for unemployed or underemployed borrowers who have requested loss mitigation assistance.

    On the same day, Fannie Mae updated its Servicing Guide to consolidate and simplify its forbearance policies into a single plan, and encouraged servicers to implement the changes immediately, but no later than December 1. Fannie Mae clarified, however, that forbearance plans “entered into prior to the servicer’s implementation would adhere to existing policy until the expiration of such forbearance plan.” Additional changes to the Servicing Guide include: (i) clarifications to the escrow advances reimbursement policy for real estate taxes and flood/property insurance premiums; and (ii) updates to be implemented by August 1 for when servicers are required to notify Fannie Mae that a mortgage loan has been placed under military indulgence.

     

    Federal Issues Freddie Mac Fannie Mae Servicing Guide Mortgages Loss Mitigation Flood Insurance Escrow

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  • Fannie Mae and Freddie Mac release updates to servicing guides

    Federal Issues

    On April 11, Fannie Mae updated its Servicing Guide, regarding servicing transfer welcome calls. Pursuant to Fannie Mae SVC-2018-03, transferee servicers are no longer required to, among other things, initiate welcome calls within five days of the transfer of servicing. Transferee servicers may now implement their own processes for borrower contact as long as the servicer remains in compliance with applicable laws. Fannie Mae also updated the Servicing Guide to add flexibility in connection with the collection of escrow shortages during a mortgage modification.  Under the amendment to the Servicing Guide, servicers may spread repayment of the shortage amount over a term of up to 60 months, unless the borrower decides to pay up-front. Additionally, Fannie Mae released a revised Reverse Mortgage Loan Servicing Manual, which includes updates to expense reimbursement claim submissions and mortgage loan status codes.

    On the same day, Freddie Mac released Guide Bulletin 2018-6, which, among other things, updates servicer requirements on Subsequent Transfers of Servicing (STOS) and borrower-paid mortgage insurance. Effective July 23, transferor servicers must use the automated STOS request system and new transfer requests must be submitted at least 45 days and no more than 60 days prior to the effective date of the transfer. The Bulletin also provides additional details on initiating the electronic STOS and executing the STOS agreement. There will be a temporary moratorium on STOS requests and modifications to existing requests from July 9 through July 20, in order for Freddie Mac to implement the new process.

    Separately, the Bulletin includes various changes to streamline servicer responsibilities in canceling borrower-paid mortgage insurance, such as now allowing servicers to process a borrower’s verbal request to cancel mortgage insurance and simplifying the process to determine current value.  

    Consistent with the Fannie updates, Freddie Mac also modified its escrow shortage collection requirements to allow repayment to be spread over up to 60 months.

    Federal Issues Fannie Mae Freddie Mac Servicing Guide Mortgages Mortgage Modification Mortgage Servicing Reverse Mortgages Mortgage Insurance

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  • Fannie Mae updates Servicing Guide with HomeStyle Renovation policy changes

    Federal Issues

    On March 14, Fannie Mae updated its Servicing Guide to include industry best practices for servicing HomeStyle Renovation Mortgage Loans (Renovation Loans). According to Fannie Mae SVC-2018-02, the updates to the Servicing Guide include, among other changes, new requirements to: (i) conduct property inspections for all Renovation Loans before escrow draw requests may be approved; (ii) ensure that all subcontractors are licensed in jurisdictions where licensing applies; (iii) perform updated appraisals when repairs deviate materially from the original plan; and (iv) provide a certificate of occupancy upon completion. Additional changes to the requirements for Renovation Loans may also be found in Fannie Mae’s recently updated Selling Guide, covered by InfoBytes here.

    The updates to the Servicing Guide also include an update to the Allowable Foreclosure Attorney Fees Exhibit, which changes the maximum allowable fees for loans secured by properties in certain states. The Servicing Guide requirements for determining the modified terms under the Fannie Mae Cap and Extend Modification for Disaster Relief have also been updated.

    Federal Issues Fannie Mae Servicing Guide Mortgages Disaster Relief

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  • FHFA proposes changes to the Affordable Housing Program requirements

    Agency Rule-Making & Guidance

    On March 6, the Federal Housing Finance Agency (FHFA) announced a proposed rule to modify the Federal Home Loan Banks’ (FHLBanks) Affordable Housing Program (AHP). Under the Federal Home Loan Bank Act, FHLBanks are required to establish an AHP that provides subsidies to low-income consumers to purchase a home; for long-term, low- and moderate-income rental housing; and for the purchase, construction or rehabilitation of qualifying rental housing. According to the FHFA, the proposed amendments are intended to assist FHLBanks in better aligning their AHP funds with the affordable housing needs of their districts. Among other things, the proposed amendments would (i) provide FHLBanks additional authority to allocate their AHP funds; (ii) authorize FHLBanks to establish “special competitive funds” for specific district needs; (iii) allow FHLBanks to create their own project selection criteria; and (iv) align the AHP project monitoring requirements with other federal funding programs. Comments on the proposed rule will be due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Fannie Mae Freddie Mac Servicing Guide FHFA Federal Register

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  • FFIEC releases 2018 HMDA reporting guide

    Agency Rule-Making & Guidance

    On February 21, the Federal Financial Institutions Examination Council (FFIEC) issued the 2018 edition of the “A Guide to HMDA Reporting: Getting it Right!” which reflects updates to the Home Mortgage Disclosure Act (HMDA) rule, effective January 1, 2018. The HMDA reporting guide is updated annually to assist institutions with their reporting requirements for the specified calendar year. Additionally, the CFPB recently launched their 2018 Loan/Application Register (LAR) Formatting Tool to assist small volume lenders in creating an electronic file to submit to the FFIEC HMDA platform, previously covered by InfoBytes here.

    Agency Rule-Making & Guidance Fannie Mae Freddie Mac Servicing Guide HMDA Mortgages FFIEC

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  • Fannie and Freddie update charge-off recommendations in servicing guides

    Agency Rule-Making & Guidance

    On February 14, Fannie Mae issued Servicing Guide Announcement SVC-2018-01 which, in addition to other items, updates the requirements for servicer charge-off recommendations, as directed by the Federal Housing Finance Agency (FHFA). According to Fannie Mae’s announcement, effective August 1, a servicer may submit a request to cease collection efforts and charge off a delinquent loan when either (i) a servicer deems the debt uncollectable and all appropriate measures to collect on the debt have been exhausted; or (ii) for certain mortgage loans, a foreclosure sale cannot be completed and at least one situation outlined in section D1-1-02 of the Servicing Guide applies. Freddie Mac also issued Bulletin 2018-2, which covers similar policy changes. According to both announcements, the change in charge-off policies reflects FHFA’s desire to avoid “neighborhood blight” for vacant properties.

    Agency Rule-Making & Guidance Fannie Mae Freddie Mac Mortgage Servicing Servicing Guide

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  • Fannie Mae Updates Selling Guide with Underwriting Information on Borrower Credit Freezes

    Lending

    On December 19, Fannie Mae announced updates to its Selling Guide, including guidance related to underwriting a loan for borrowers who have frozen their credit files at one or more of the three national credit repositories. The Selling Guide now states that a credit report is acceptable for manual underwriting or “Desktop Underwriter” when a borrower’s credit information is frozen at only one of the credit repositories as long as credit data is available from two repositories, a credit score is obtained from at least one of those two repositories, and the lender requested a three in-file merged report. If the borrower’s credit file is frozen at two or more of the credit repositories, the loan will not be eligible for either form of underwriting. Other notable updates to the Selling Guide include, (i) adding requirements on premium pricing to the mortgage eligibility policy; (ii) relief from the enforcement of selling representations and warranties for mortgages that are subject to a disaster-related forbearance plan, where the disaster impacting the loan occurred on or after August 25, 2017 and other requirements are met; (iii) additional details about minimum requirements for internal audit and management controls for all seller/servicers; and (iv) consolidation in the Selling Guide of individual mortgage loan file records retention provisions from the Servicing Guide (as previously covered by InfoBytes here).

    Lending Fannie Mae Mortgage Lenders Underwriting Selling Guide Servicing Guide

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  • Freddie Mac Issues Guidance on Reporting Imminent Default Data; Fannie Mae Updates Servicing Guide

    Lending

    On December 13, Freddie Mac issued Guide Bulletin 2017-27, providing updates and reminders to servicers regarding the imminent default evaluation requirements. The bulletin includes specifics on how servicers should process and report imminent default data using the “Workout Prospector” web-based application. According to the bulletin, servicers are must implement the new requirements by July 1, 2018. The bulletin also incorporates the additional non-discrimination guide language announced for sellers in Guide Bulletin 2017-26 (previously covered by InfoBytes here).

    On December 13, Fannie Mae announced that it has updated its Servicing Guide. One such update includes the removal of requirements related to individual mortgage loan file records retention. Instead, the information will be available solely in Fannie Mae’s Selling Guide, which it expects to be updated on December 19. Another notable update is the Servicing Guide’s extension of the $30 maximum expense reimbursement “for each insured loss repair inspection required on a current or delinquent mortgage loan” to all mortgages, and not just those affected by disasters.

    Lending Freddie Mac Fannie Mae Mortgage Servicing Servicing Guide Selling Guide

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