Skip to main content
Menu Icon Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations
Section Content

Upcoming Events

Filter

Subscribe to our InfoBytes Blog weekly newsletter for news affecting the financial services industry.

  • 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

    Share page with AddThis
  • FHFA proposes rule on capital requirements for Freddie and Fannie

    Federal Issues

    On June 12, the Federal Housing Finance Agency (FHFA) announced a proposed rulemaking, which implements a regulatory capital framework for Freddie Mac and Fannie Mae (the Enterprises) including (i) a new framework for risk-based capital requirements; and (ii) two alternative approaches to setting minimum leverage capital requirements. Regulatory capital requirements for the Enterprises have been suspended since the Enterprises were placed in conservatorship in September 2008, and these new requirements would continue to be suspended while the Enterprises remain under conservatorship. FHFA stated that the purpose of the rulemaking effort is to develop a risk measurement framework to better evaluate each Enterprise’s business decisions while in conservatorship. As a result, the proposed risk-based capital requirements would “provide a granular assessment of credit risk specific to different mortgage loan categories, as well as market risk, operational risk, and going-concern buffer components.” The two options for minimal leverage capital requirements include (i) requiring the Enterprises to hold capital equal to 2.5 percent of total assets and off-balance sheet guarantees related to securitization activities; and (ii) requiring the Enterprises to hold capital equal to 1.5 percent of trust assets and 4 percent of non-trust assets. Comments on the proposed rulemaking must be submitted within 60 days of publication in the Federal Register.

    Federal Issues FHFA Fannie Mae Freddie Mac GSE Capital Requirements

    Share page with AddThis
  • Fannie Mae and Freddie Mac update high LTV refinance ratio for one-unit, principal residences

    Federal Issues

    On May 22, Fannie Mae issued Lender Letter LL-2018-02, which updates options related to the high loan-to-value (LTV) refinance option released in September 2017 (LL-2017-05). Fannie Mae, at the direction of the Federal Housing Finance Authority and in conjunction with Freddie Mac, increased the minimum refinance LTV ratio from 95.01 percent to 97.01 percent for one-unit, principal residences. Additionally, there are no minimum credit score requirements or a maximum debt-to-income ratio for most high LTV refinances. The Lender Letter also notes that the Loan-Level Price Adjustment Matrix on Fannie Mae’s website is updated to include the high LTV refinances and provides specific loan delivery requirements.

    Freddie Mac announced the same LTV ratio change in Guide Bulletin 2018-8. The bulletin also announced, among other things, a “Credit Fee in Price” cap structure, effective on January 1, 2019, for applicable refinance mortgages. According to the bulletin, the pricing cap is designed to balance affordability to the consumer and risk to the lender. The pricing cap structure is related to the LTV ratio of the refinance and occupancy type of the property. Other updates include, (i) clarification of income stability and credit inquiries; (ii) concurrent transfers of servicing; and (iii) investor reporting change initiative.

    Federal Issues Fannie Mae Freddie Mac Refinance LTV Ratio FHFA Mortgages

    Share page with AddThis
  • FHFA and the Enterprises release Language Access Plan

    Federal Issues

    On May 10, Fannie Mae and Freddie Mac (the Enterprises), in conjunction with the Federal Housing Finance Authority (FHFA), released a Language Access Multi-Year Plan (Plan), which identifies potential solutions for the obstacles faced by limited English proficiency (LEP) borrowers in accessing mortgage credit. The Plan was developed based on research and testing conducted in 2016 and 2017 to assist the Enterprises and FHFA in identifying the issues faced by LEP borrowers throughout the mortgage cycle. Key milestones for the Enterprises and FHFA for 2018 and beyond include (i) creating a clearinghouse with centralized resources, such as translated mortgage documents; (ii) establishing a language access working group; (iii) developing a disclosure that accompanies the Preferred Language Question on the Uniform Residential Loan Application (URLA) (previously covered by InfoBytes here); (iv) developing glossaries that include mortgage and real estate terms; (v) in addition to Spanish, translating the URLA into additional languages; and (vi) creating a language access line to provide consumers with assistance expeditiously.

    Federal Issues FHFA Fannie Mae Freddie Mac Mortgages URLA Language Access

    Share page with AddThis
  • 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

    Share page with AddThis
  • FHFA announces new Uniform Mortgage-Backed Security

    Federal Issues

    On March 28, the Federal Housing Finance Authority (FHFA) announced Fannie Mae and Freddie Mac (the Enterprises) will issue a new security, the Uniform Mortgage-Backed Security (UMBS), on June 3, 2019. The UMBS will replace all current offerings of mortgage-backed securities that occur in the to-be-announced (TBA) forward market. According to the announcement, the new UMBS will be issued using the Common Securitization Platform (CSP) through the Enterprises’ joint venture, Common Securitization Solutions (CSS). See previous InfoBytes coverage here

    Federal Issues FHFA Fannie Mae Freddie Mac MBS

    Share page with AddThis
  • Fannie and Freddie extend temporary suspension of foreclosure sales

    Federal Issues

    On March 7, Fannie Mae, in Lender Letter LL-2018-01, and Freddie Mac, in Guide Bulletin 2018-04, extended the suspension of foreclosure sales through May 31 of mortgaged properties in FEMA-declared disaster areas in Puerto Rico and the U.S. Virgin Islands due to Hurricanes Irma and Maria.

    Find continuing InfoBytes coverage on Disaster Relief here.

    Federal Issues Disaster Relief Fannie Mae Freddie Mac Foreclosure Mortgages

    Share page with AddThis
  • 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

    Share page with AddThis
  • 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

    Share page with AddThis
  • 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

    Share page with AddThis

Pages