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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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  • 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

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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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  • Fannie Mae updates Selling Guide with HomeStyle Renovation policy changes

    Federal Issues

    On February 27, Fannie Mae updated its Selling Guide including changes to its HomeStyle Renovation (Renovation) policy. According to Fannie Mae SEL-2018-02, the updates to the Selling Guide include, among other changes, the following: (i) sellers/servicers no longer need to be approved for the Renovation loan through Fannie Mae if they choose to wait to deliver all Renovation loans until after renovations are complete; (ii) fixed-rate mortgages for one-unit, principle residences now have a maximum allowable LTV ratio of 97% if the loan is underwritten through Desktop Underwriter; (iii) manufactured homes that do not require structural changes are eligible for Renovation loans; and (iv) removal of the requirement that the renovation must add value to the property. Lenders are required to be in compliance with the Renovation policy changes by September 1, 2018.

    The Selling Guide also (i) added flexibilities in the HomeStyle Energy policy to allow for increased utilization of the program; (ii) added definitions and requirements for business continuity and disaster recovery procedures; and (iii) updated age of document requirements for loans securing properties impacted by a natural disaster. 

    Federal Issues Fannie Mae Selling Guide Disaster Relief Mortgages

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  • 5th Circuit affirms dismissal of claims against bank but not Fannie Mae in foreclosure suit


    On February 26, the U.S. Court of Appeals for the 5th Circuit issued an opinion in a foreclosure dispute ruling that a lower court wrongly dismissed a breach of contract claim against Fannie Mae but was correct in dismissing the claim against a national bank that serviced the loan (bank). According to the opinion, a group of companies and investors (plaintiffs/appellants) constructed a low-income housing program (earning low income housing tax credits) through the financing of a loan by one of the companies secured by a deed of trust later assigned to Fannie Mae and serviced by the bank. When the plaintiffs/appellants defaulted on the loan, Fannie Mae accelerated the note and instituted non-judicial foreclosure proceedings pursuant to the deed; however, the plaintiffs/appellants alleged that some of the notices of acceleration and foreclosure were not received, and when the foreclosure sale proceeded and the IRS “recaptured” the tax credits earned on the project, the plaintiffs/appellants brought suit against Fannie Mae and the bank for, among other things, breach of contract based on the deed of trust and wrongful foreclosure. After granting a motion for rehearing, the lower court granted the bank’s motion for summary judgment, stating it did not breach a contract because it was not a party to the deed of trust. The lower court also dismissed the breach of contract claims against Fannie Mae and the bank, holding that because the plaintiffs/appellants defaulted on the deed of trust, they had no standing to sue based on a breach of that agreement.

    In affirming in part and reversing in part, the three-judge panel determined that although the bank was the loan servicer at the time of default, “once Fannie Mae was notified of default, Fannie Mae became the loan servicer” and therefore the “primary point of contact.” Therefore, “[b]ecause the only claim on appeal is for breach of contract based on the [d]eed of [t]rust, and [the bank] was never a party to the [d]eed of [t]rust, [the bank] has no liability.” However, concerning the breach of contract against Fannie Mae for failing to serve notice of foreclosure to appellants, the panel reversed the lower court’s decision, stating that this particular breach “exists as a stand-alone cause of action,” separate from a claim of wrongful foreclosure. Further, the “obligation to give notice of foreclosure would not even arise unless and until the [plaintiffs/appellants] were in default under the note.” The 5th Circuit remanded the case back to the lower court for review.

    Courts Appellate Fifth Circuit Foreclosure Fannie Mae Mortgages Mortgage Servicing

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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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  • FHFA extends deadline to March 30 for credit score input

    Federal Issues

    On February 2, the Federal Housing Finance Agency (FHFA) announced that it is extending the deadline for input on how Fannie Mae and Freddie Mac (the GSEs) should update their current credit score requirements. Interested parties now have until March 30 to respond to the 22 questions outlined in the Request for Input (RFI) issued by FHFA on December 20, 2017. As previously covered by InfoBytes, the RFI sought input on four options for replacement of the Classic FICO credit score model currently used by the GSEs. The four options include (i) requiring the use of either the FICO 9 credit score model or the VantageScore 3.0 credit score model; (ii) requiring the use of both the FICO 9 and the VantageScore 3.0 credit score models; (iii) allowing lenders to choose between either the FICO 9 or the VantageScore 3.0 credit score models; or (iv) allowing lenders to deliver multiple scores through a waterfall approach that would establish a primary and a secondary score.

    Federal Issues Mortgages Fannie Mae Freddie Mac Credit Scores FHFA RFI

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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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  • FHFA releases 2018-2022 strategic plan

    Federal Issues

    On January 29, the Federal Housing Finance Agency (FHFA) released its strategic plan for 2018-2022, which sets three strategic goals and discusses multiple factors associated with achieving each goal. FHFA’s three strategic goals for 2018-2022 are:

    • Ensure safe and sound regulated entities. FHFA intends to, among other things, use a risk based system to identify supervisory concerns and monitor entities for timely remediation. Additionally, FHFA intends to monitor industry trends and market conditions for emerging risks and issue supervisory guidance and policies related to expectations for safety and soundness.
    • Ensure liquidity, stability, and access in housing finance. FHFA intends to, among other things, promote ongoing liquidity in the marketplace for new and refinanced mortgages. FHA will monitor access to mortgage credit and collaborate with other regulators to identify emerging issues. FHA will support multifamily housing needs of the underserved market and promote policies that support fair access to financial services for qualified borrowers.
    • Manage Fannie Mae and Freddie Mac’s ongoing conservatorships. FHFA will continue, among other things, to oversee Fannie Mae and Freddie Mac staffing, will address outstanding claims involving Fannie Mae and Freddie Mac, and will oversee the implementation of the Uniform Mortgage Data Program.

    The strategic plan also identifies critical factors that may affect achievement of the above goals, including (i) economic conditions and government policies of foreign markets; (ii) market developments and legislative reform affecting the U.S. housing market; (iii) financial performance of Fannie Mae and Freddie Mac; (iv) the status of the Fannie Mae and Freddie Mac conservatorship; and (v) management of FHFA resources.

    Federal Issues FHA Risk Management Fannie Mae Freddie Mac Mortgages

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