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Fannie Mae issues Covid-19-related selling updates
On August 12, Fannie Mae updated its Covid-19 frequently asked questions regarding the underwriting and loan eligibility for sellers. Fannie Mae’s FAQs (previously discussed here) were updated to address questions on selling loans in forbearance. The FAQs cite to Lender Letter 2020-06 (covered by InfoBytes here), stating that Fannie Mae will purchase loans that go into forbearance after loan closing before sale that became eligible for sale beginning May 1 and have note dates on or before August 31 and are delivered by October 31. Additionally, the FAQs state there are no plans to further extend the August 31 date.
FHFA announces that multifamily property owners in forbearance must inform tenants of tenant protections
On August 6, the Federal Housing Finance Agency (FHFA) announced that multifamily property owners with mortgages backed by Fannie Mae or Freddie Mac (the Enterprises) who enter into a new or modified forbearance agreement must inform tenants in writing about tenant protections during the multifamily property owner's forbearance and repayment periods. Landlords with Enterprise-backed mortgages can enter new, or if qualified, modified forbearance if they experienced or continue to experience a financial hardship due to the Covid-19 emergency. While in forbearance, the property owners must agree not to evict tenants solely for the nonpayment of rent. The announcement notes that the Enterprises are modifying online multifamily property loan look-up tools to make it easier for tenants to find the tenant protections and to find out if the multifamily property in which they reside has an Enterprise-backed mortgage.
FHFA extends policy allowing GSEs to buy mortgages in forbearance
On July 31, the Federal Housing Finance Agency (FHFA) announced an extension of a temporary policy that allows Fannie Mae and Freddie Mac (GSEs) to purchase “certain single-family mortgages in forbearance that meet specific eligibility criteria” due to the Covid-19 pandemic. The temporary policy is extended for loans originated through August 31 from the original deadline of May 31. As previously covered by InfoBytes, standard policies dictate that the GSEs do not purchase loans that are in forbearance; however, due to the economic effects of Covid-19, and in an effort to provide liquidity to ensure continued lending, FHFA allowed the GSEs to buy certain mortgages that enter forbearance within the first month after loan closing, prior to delivery to the GSEs. The extension of the policy is reflected in Fannie Mae’s updated Lender Letter 2020-06 and Freddie Mac’s Guide Bulletin 2020-30.
FHFA postpones duty to serve adjustments
Recently, FHFA announced a postponement of Fannie Mae and Freddie Mac’s Duty to Serve (DTS) Underserved Markets Plan submissions for 2021-2023, due to the uncertainty caused by the Covid-19 pandemic. Specifically, FHFA is allowing unlimited modifications for the 2020 plan year, and is requiring the Enterprises to submit both 2020 modification requests and proposed 2021 activities and objectives by September 15. The 2021 activities and objectives will be structured as a one-year extension to the previous 2018-2020 plans. FHFA also released (i) a summary table indicating Evaluation Guidance provisions that apply in 2021; (ii) revised Evaluation Guidance 2020-4a, which includes special exceptions that will apply in 2020 and 2021; and (iii) special procedures the Enterprises will follow to submit their 2020 modifications and 2021 plans.
FHFA notes it will seek feedback on the proposed 2021 activities and select proposed 2020 modifications during a consolidated public comment period beginning in September.
Supreme Court to review FHFA structure, FTC restitution, and TCPA autodialing
On July 9, the U.S. Supreme Court agreed to review the following cases:
- FHFA Constitutionality. The Court agreed to review the U.S. Court of Appeals for the Fifth Circuit’s en banc decision in Collins. v. Mnuchin (covered by InfoBytes here), which concluded that the FHFA’s structure—which provides the director with “for cause” removal protection—violates the Constitution’s separation of powers requirements. As previously covered by a Buckley Special Alert last month, the Court held that a similar clause in the Dodd-Frank Act that requires cause to remove the director of the CFPB violates the constitutional separation of powers. The Court further held that the removal provision could—and should—be severed from the statute establishing the CFPB, rather than invalidating the entire statute.
- FTC Restitution Authority. The Court granted review in two cases: (i) the 9th Circuit’s decision in FTC V. AMG Capital Management (covered by InfoBytes here), which upheld a $1.3 billion judgment against the petitioners for allegedly operating a deceptive payday lending scheme and concluded that a district court may grant any ancillary relief under the FTC Act, including restitution; and (ii) the 7th Circuit’s FTC v. Credit Bureau Center (covered by InfoBytes here), which held that Section 13(b) of the FTC Act does not give the FTC power to order restitution. The Court consolidated the two cases and will decide whether the FTC can demand equitable monetary relief in civil enforcement actions under Section 13(b) of the FTC Act.
- TCPA Autodialer Definition. The Court agreed to review the U.S. Court of Appeals for the Ninth Circuit’s decision in Duguid v. Facebook, Inc. (covered by InfoBytes here), which concluded the plaintiff plausibly alleged the social media company’s text message system fell within the definition of autodialer under the TCPA. The 9th Circuit applied the definition from their 2018 decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here), which broadened the definition of an autodialer to cover all devices with the capacity to automatically dial numbers that are stored in a list. The 2nd Circuit has since agreed with the 9th Circuit’s holding in Marks. However, these two opinions conflict with holdings by the 3rd, 7th, and 11th Circuits, which have held that autodialers require the use of randomly or sequentially generated phone numbers, consistent with the D.C. Circuit’s holding that struck down the FCC’s definition of an autodialer in ACA International v. FCC (covered by a Buckley Special Alert).
FHFA extends Covid-19 origination flexibilities to August 31
On July 9, the Federal Housing Finance Agency (FHFA) announced the extension of several loan origination flexibilities put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA has extended until August 31, the following provisions: “(i) alternative appraisals on purchase and rate term refinance loans; (ii) alternative methods for documenting income and verifying employment before loan closing; and (iii) expanding the use of power of attorney and remote online notarizations to assist with loan closings.” The extensions are reflected in updates to Fannie Mae Lender Letters LL-2020-03 and LL 2020-04 and Freddie Mac Guide Bulletin 2020-27.
Lawmakers urge HUD and FHFA to amend forbearance policies that reduce access to mortgage credit
On June 25, Chairwoman of the House Financial Services Committee, Maxine Waters (D-CA), Chairman of the Subcommittee on Housing, Community Development and Insurance, Wm. Lacy Clay (D-MO), and Congressman Juan Vargas (D-CA) sent a letter to HUD and FHFA calling for amendments to policies which penalize loans that go into forbearance prior to being insured by the Federal Housing Administration (FHA) or purchased by Fannie Mae or Freddie Mac (GSEs). According to the lawmakers, policies put into place prior to the Covid-19 pandemic by HUD and FHFA prohibited loans in forbearance from FHA endorsement or from being purchased by the GSEs. While the agencies amended the policies to allow for FHA insurance and GSE purchases due to the current economic crisis (covered by InfoBytes here and here), the lawmakers claim that lenders are required to pay “significant fees” and “increased costs” for these loans, which results in lenders (i) retaining mortgages that they had no intention, or may not have the capacity to maintain; (ii) paying a steep penalty to the GSEs; or (iii) agreeing to retain additional risk in the case of FHA. As a result, lenders have started limiting loans and access to credit or requiring “credit overlays” that are “disproportionately affecting borrowers of color and other underserved borrowers.” The lawmakers also assert that if a lender retains a loan to avoid a penalty, the loan does not become federally-backed and is consequently ineligible for protections afforded by the CARES Act and other federal regulations. The lawmakers ask that the agencies amend their policies to instead “spread the costs associated with those risks across a broader single-family portfolio,” which will lead to “near-negligible costs” on individual loans and “appropriately balance the need to manage risks to the taxpayer while serving [the] agencies’ missions of promoting access to credit.”
FHFA adds new translated Covid-19 resources on LEP site
On June 16, FHFA added new translated versions of its Covid-19 resources to its Mortgage Translations website. The website now includes English, Spanish, traditional Chinese, Vietnamese, Korean, and Tagalog translations of scripts that servicers may use when discussing Covid-19 forbearance with borrowers. The revised Mortgage Assistance Application also is available in the same six languages.
FHFA: Fannie Mae and Freddie Mac will extend foreclosure and eviction moratorium
On June 17, FHFA announced that Fannie Mae and Freddie Mac will extend their single-family moratorium on foreclosures and evictions until at least August 31, which is currently set to expire on June 30 (previously discussed here). The foreclosure moratorium applies to homeowners with an Enterprise-backed, single-family mortgage.
FHFA extends Covid-19 origination flexibilities to July 31
On June 11, the Federal Housing Finance Agency (FHFA) announced the extension of several temporary origination flexibilities put in place to assist borrowers during the Covid-19 pandemic. Specifically, FHFA has extended until at least July 31, the following flexibilities: “(i) alternative appraisals on purchase and rate term refinance loans; (ii) alternative methods for verifying employment before loan closing; (iii) expanding the use of power of attorney and remote online notarizations to assist with loan closings; and (iv) authority to purchase mortgages in forbearance.” The extensions are reflected in updates to the following Fannie Mae Lender Letters LL-2020-03, LL 2020-04, LL-2020-06, and Covid-19 selling FAQs. Similar updates include Freddie Mac’s Guide Bulletin 2020-23 and Covid-19 selling-related FAQs.