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  • Fannie Mae, Freddie Mac issue forbearance relief to homeowners affected by California wildfires

    Federal Issues

    On August 8, Freddie Mac extended its disaster relief options to homeowners affected by ongoing California wildfires who have access to federal individual assistance programs in FEMA-declared disaster areas. The relief suspends foreclosures by providing forbearance for up to 12 months. Penalties and late fees will also be waived. Freddie Mac also reminded servicers to consider borrowers who work in eligible disaster areas but have homes outside the affected area for standard relief policies. Moreover, servicers may leverage Freddie Mac forbearance programs to provide immediate mortgage relief to those affected by the wildfires in areas where FEMA has not made individual assistance available.

    On August 7, Fannie Mae issued a notice to mortgage servicers reminding them that homeowners impacted by the California wildfires are eligible to stop making mortgage payments for up to 12 months, during which time late fees will not be incurred nor delinquencies reported to the credit bureaus. Furthermore, servicers may immediately suspend or reduce mortgage payments for up to 90 days without any contact with homeowners believed to have been affected by the wildfires. Additionally, foreclosures and other legal proceedings must be suspended for impacted homeowners.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Fannie Mae Mortgages Mortgage Servicing Disaster Relief

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  • Washington state updates mortgage provisions of Consumer Loan Act

    State Issues

    On July 24, the Washington Department of Financial Institutions adopted new mortgage-related provisions of the state’s Consumer Loan Act (CLA). In addition to technical changes and certain definition modifications, the rulemaking, among other things, (i) adds a requirement that if electronic records are stored using a closed service, the service must be located in the U.S. or its territories; (ii) prohibits certain servicing activities, such as receiving payments and collection activities, from being conducted outside the U.S. or its territories; and (iii) requires servicers to maintain a compliance management system with the functionalities that are described in the CFPB’s Supervision and Examination Manual. The rulemaking is effective September 1.

    State Issues State Regulators Mortgages Mortgage Servicing Compliance Examination CFPB

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  • Fannie Mae and Freddie Mac issue disaster relief policy reminders and updates

    Federal Issues

    On July 18, Fannie Mae, in Lender Letter LL-2018-04, and Freddie Mac, in an industry letter released the same day, reminded servicers of requirements that continue to be in effect for servicing mortgages impacted by eligible disasters. Specifically, Fannie Mae provides information on (i) reimbursements related to insured loss repair inspection costs; (ii) disaster-impacted inspections; (iii) the Extend Modification for Disaster Relief policy—developed in conjunction with Freddie Mac for post-disaster forbearance mortgage loan modifications; and (iv) the disbursement of hazard loss draft proceeds. Freddie Mac also reminds servicers of property inspection reimbursement requirements and changes to insurance loss settlement distributions.

    Find continuing InfoBytes coverage on disaster relief here.

    Federal Issues Fannie Mae Freddie Mac Disaster Relief Mortgage Servicing

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  • Fannie Mae updates Reverse Mortgage Loan Servicing Manual

    Federal Issues

    On July 11, Fannie Mae issued RVS-2018-02, which updates the Reverse Mortgage Loan Servicing Manual to include changes related to REO Hazard Insurance Coverage Requirements for Home Equity Conversion Mortgage (HECM) mortgages. Specifically, the update requires a servicer to place a property insurance policy on acquired property up to the HUD foreclosure appraisal amount or deed-in-lieu property valuation amount, in accordance with HUD guidelines. If the servicer is unable to obtain either of these valuation amounts, the servicer must place coverage up to the unpaid principal balance amount. Servicers are required to implement the changes no later than October 1 for new and existing HECM properties in REO inventory.

    Federal Issues Fannie Mae Mortgages Reverse Mortgages Mortgage Servicing HECM

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  • Freddie Mac delays implementation of automated subsequent transfers of servicing

    Federal Issues

    On July 6, Freddie Mac released Guide Bulletin 2018-11, which announces a delay in the implementation of the automated Requests for Subsequent Transfers of Servicing (STOS) and intra-servicer portfolio moves. As previously covered by InfoBytes, Freddie Mac Guide Bulletin 2018-6 announced the automation of STOS and intra-servicer portfolio moves, which were originally scheduled to be effective on July 23. Freddie Mac has delayed the implementation date until August 13 and pushed the temporary STOS moratorium period from mid-July to July 30 through August 12.

    Federal Issues Freddie Mac Mortgage Servicing Servicing Transfers

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  • 11th Circuit: No FCRA violation for reporting as delinquent during forbearance plan

    Courts

    On June 27, the U.S. Court of Appeals for the 11th Circuit affirmed summary judgment for a mortgage servicer, concluding that reporting the consumer as delinquent to credit bureaus during a forbearance plan is neither inaccurate nor materially misleading under the Fair Credit Reporting Act (FCRA). According to the opinion, a borrower enrolled in a forbearance plan with her mortgage servicer, which allowed for a “monthly forbearance plan payment” of $25 while the remaining payment balance accrued and became due at the end of the plan. Before the borrower agreed to the plan, a representative for the servicer explained to the borrower that because she was not paying the actual contractual payment under the note, the monthly payments would still be considered late. The mortgage servicer reported the borrower past due for the duration of the plan, and the borrower subsequently filed suit alleging violations of the FCRA. In affirming the lower court’s decision, the appeals court found that while the borrower made timely payments under the forbearance plan, the payments were not the ones she was contractually bound to make under the mortgage note. Additionally, the appeals court found that the borrower did not establish that the forbearance plan legally modified the original note and, therefore, the information the servicer reported to the credit bureaus was not inaccurate and was also not materially misleading “particularly in light of [the servicer’s] additional affirmative statement that [the borrower] was paying under a partial payment agreement.”

    Courts Appellate Eleventh Circuit Mortgage Servicing Credit Reporting Agency

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  • Maryland announces settlement with mortgage servicer over property inspection fees

    State Issues

    On May 14, the Maryland Attorney General announced a settlement with a mortgage loan servicer to resolve allegations that it charged homeowners illegal inspection fees. According to the announcement, the servicer allegedly charged borrowers for property inspections that were done when the borrower was in default on their payments, in violation of a Maryland law, which prohibits passing on such inspection costs. The mortgage servicer ceased the practice in 2014  for forward mortgages and in 2016 for reverse mortgages, according to the Attorney General’s office. The settlement requires the mortgage servicer to (i) refrain from engaging in the same practice in the future; (ii) complete the return of almost $1 million in collected inspection fees; and (iii) pay nearly $500,000 in penalties and costs.

    State Issues Mortgage Servicing Settlement Home Inspection State Attorney General

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  • Pennsylvania adopts CFPB mortgage servicing regulations

    State Issues

    On April 28, the Pennsylvania Department of Banking and Securities adopted regulations to effectively incorporate Subpart C of the CFPB’s RESPA mortgage servicing regulations (Regulation X), which were amended effective as of April 19. The adopted regulations address, among other things, (i) disclosure requirements; (ii) mortgage servicing transfers; (iii) escrow payments and account balances; (iv) forced-place insurance; and (v) loss mitigation procedures. The adopted regulations were effective on April 28.

     

    State Issues CFPB Regulation X RESPA Mortgage Servicing

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  • Federal Reserve releases updates to interagency examination procedures for Regulations X and Z

    Agency Rule-Making & Guidance

    On April 19, the Federal Reserve Board (Fed) issued a consumer affairs letter (CA 18-3) announcing revised interagency examination procedures for Regulation X (RESPA) and Regulation Z (TILA) that supersede procedures previously issued in September 2015. The updated procedures account for amendments to mortgage servicing rules under Regulations X and Z that took effect October 19, 2017 (see previous InfoBytes coverage here), as well as amendments to Regulation Z published by the CFPB through April 2016, including rules concerning small creditors’ mortgage lending to rural and underserved areas. However, the Fed stated in its letter that, at this time, the updated procedures do not incorporate Regulation Z amendments concerning the CFPB’s TILA-RESPA integrated disclosure rule or those regarding prepaid accounts. These amendments will be addressed in a future update.

    Agency Rule-Making & Guidance Federal Reserve CFPB Regulation X Regulation Z RESPA TILA Mortgages Mortgage Servicing

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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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