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West Virginia enacts act to prevent unfair real estate service agreements
Recently, West Virginia passed a new law, HB 5346, titled the Unfair Real Estate Services Agreements Act (the “Act”). This new Act will amend the Code of West Virginia with respect to real estate service agreements. The Act would make the entering into of an “Unfair Real Estate Services Agreement” a deceptive act, including any real estate services agreement between a licensed real estate service provider and a consumer that included terms that would purport to run with the land or be binding to future owners of interest, purport to create a property lien, allow for assignment of the contract without timely notification to the owner of the property, or create a listing agreement for a property that has been listed for over a year past its listing date. Under the law, any unfair real estate service agreement created after the bill’s effective date would be void, and parties may bring a civil action against a real estate service provider. The Act will go into effect on June 6.
VA announces updates to loan repayment relief for borrowers affected by Covid-19
On February 9, the Department of Veterans Affairs (VA) issued a circular to consolidate updates related to VA’s disaster modification and loan deferment options. Effective February 9, the circular reiterates the options for disaster modifications and loan deferment and extends the options available for borrowers affected by Covid-19 through May 31, 2024. According to the circular, a servicer can provide a VA disaster modification without VA preapproval until May 31 regardless of the borrower’s enrollment in a Covid-19 forbearance plan, or Covid-19’s impact on the default. Additionally, the VA is allowing for disaster extend modifications to extend the loan’s original maturity date by up to 18 months, instead of the standard 12 months, if the loan is modified not later than May 31. Further, subject to certain requirements and restrictions, the circular also granted servicers flexibility to offer loan deferment when borrowers have missed payments due to the pandemic, regardless of CARES Act forbearance.
New York regulator issues guidance to regulated mortgage lenders and servicers regarding fees
On September 1, the New York Department of Financial Services issued industry guidance instructing regulated mortgage lenders and servicers not to charge (or pass through to) consumers for mortgage default registration fees. The press release announcing the guidance notes that certain counties, cities, and municipalities in New York require mortgagees to pay a fee to register mortgages declared to be in default. Noting that consumers are facing financial hardship arising from the Covid-19 pandemic, the DFS guidance provides that these fees may not be passed on to consumers. Moreover, lenders and servicers who have charged consumers such fees must provide refunds, and must create a log of all borrowers who were charged such fees.
New York Superintendent of Financial Services issues order to assist servicers affected by Covid-19
On June 11, the New York Superintendent of Financial Services issued an order extending the deadline for servicers to meet certain obligations under the updated Servicing Mortgage Loans: Business Conduct Rules (N.Y. Comp. Codes R. & Regs. tit. 3, § 419 et seq.). Specifically, for servicers unable to provide a periodic statement that is compliant with the revised regulations, the order extends the compliance date for a period of 60 days from June 15 to August 14 (extension period). Servicers that cannot comply by June 15 must provide a notice on their website advising consumers that they will be entitled to receive the periodic statement on or shortly after August 14. However, the order notes that servicers that are able to comply with the periodic statement requirements by June 15 should do so as required. The order does not relieve servicers from any obligation to issue a periodic statement under TILA or from ensuring that borrowers receive an accurate accounting of their mortgage loan during the extension eriod.
New Jersey regulator extends license application deadlines
On April 23, the New Jersey Department of Banking and Insurance extended the deadline for license and registration applications under New Jersey’s Mortgage Servicers Licensing Act to June 12, 2020. Persons required to seek licensure under the act include entities that are in the business of servicing residential mortgage loans, and which are not already licensed as residential mortgage lenders and entities licensed as residential mortgage lenders or correspondent residential mortgage lenders conducting business in New Jersey.
Freddie Mac announces paperless billing for seller/servicers
On April 23, Freddie Mac announced that it will no longer produce paper bills for seller/servicers with respect to performing loans and non-performing loans, starting with May 2020 invoices. Beginning May 2020, customers can access Fannie Mae’s electronic billing platform (eBill) to view the information previously provided via paper bills.
Freddie Mac issues guidance to seller/servicers on business continuity plans, borrower relief
On April 3, Freddie Mac issued guidance reminding seller/servicers to maintain a business continuity plan in accordance with the requirements of the Freddie Mac Single Family Seller/Servicer Guide. Sellers and servicers are expected to maintain the business continuity plan and to follow the plan during the Covid-19 pandemic. The guidance noted that Freddie Mac communicated with document custodians at four banks to confirm their business continuity plans are in place, and urged sellers using other document custodians to inquire with those custodians about their business continuity plans. Finally, the guidance summarized the relief that servicers should provide to borrowers impacted by Covid-19, including mortgage forbearance, waiving penalties and fees, halting foreclosure sales and evictions, suspending credit bureau reporting for delinquency related to forbearance, and offering loan modifications after the forbearance period.
Washington state enacts student education loan bill of rights, outlines servicer requirements
On March 15, the Washington governor signed Senate Bill 6029, which establishes the “Washington student education loan bill of rights” and outlines licensing requirements and responsibilities for student loan servicers. The act, among other things, requires that the council designate a “student loan advocate” whose responsibilities include providing timely assistance to borrowers, reviewing borrower complaints, referring servicing-related complaints to the state’s Department of Financial Institutions (DFI) or the Attorney General’s office, compiling and disseminating data regarding borrower complaints, and establishing a student education loan borrower education course by October 1, 2020. The act also requires that student loan servicers be licensed through the state (certain entities that are exempt from the licensing requirement must still comply with the act’s other requirements). Under the act, student loan servicers—in addition to complying with applicable federal program requirements—must also (i) provide information to borrowers concerning repayment options, account history, and assessed fees; (ii) notify borrowers when acquiring or transferring servicing rights; and (iii) provide disclosures concerning the possible effects of refinancing student loans. The act further provides that third-parties offering student education loan modification services may not charge or receive money “prior to full and complete performance of the [agreed upon] services,” may not charge fees that are in excess of what is customary or reasonable, and must immediately inform a borrower in writing if the owner or servicer of a loan requires additional documentation or if “modification, refinancing, consolidation, or change in repayment plans . . . is not possible.”
Furthermore, the act exempts from the outlined requirements “any person doing business under, and as permitted by, any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan or building and loan associations, or credit unions.”