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  • Freddie Mac issues bulletin on servicing requirements and relief related to Covid-19

    Federal Issues

    On March 25, Freddie Mac released Bulletin 2020-7, which sets forth servicing requirements and relief related to Covid-19 for Freddie Mac servicers. The bulletin does the following: (i) requires servicers to report to Freddie Mac any borrower who has a Covid-19 related hardship using a specific default reason code; (ii) provides temporary relief from certain property inspection and property preservation requirements; (iii) clarifies requirements for streamlined Flex Modification evaluations for borrowers with a Covid-19-related hardship, including outreach techniques; (iv) extends the current reporting deadline for annual certifications and delivery of financials from March 31, 2020, to April 30, 2020; (v) provides guidance on the use of electronic records and signatures in connection with the origination and closing process; and (vi) sets forth expectations regarding seller and servicer business continuity plans.

    Federal Issues Covid-19 GSE Freddie Mac Mortgages

  • Fannie, Freddie develop payment deferral program

    Federal Issues

    On March 25, Fannie Mae announced the release of a new payment deferral program developed with Freddie Mac at the direction of the FHFA. Fannie Mae issued Lender Letter LL-2020-05 and Freddie Mac issued Bulletin 2020-6 to introduce the new workout option which “enables servicers to assist eligible borrowers who have resolved a temporary hardship and resumed their monthly contractual payments but cannot afford either a full reinstatement or repayment plan to bring the loan current.” The lender letter and the bulletin cover, among other things: (i) criteria necessary to be eligible for a payment deferral; (ii) terms of payment deferral; (iii) steps to complete a payment deferral; (iv) applicable fees; (v) reimbursement for expenses; and (iv) servicer incentive fees. Servicers may begin to evaluate borrowers for the deferral payment program on July 1, but no later than January 1, 2021.

    Federal Issues Fannie Mae Freddie Mac FHFA Mortgages Covid-19 GSE

  • Ginnie Mae extends audited financial statement deadline

    Federal Issues

    On March 25, Ginnie Mae announced that it will extend the deadline for the submission of Annual Audited Financial Statements to April 30 for lenders with a fiscal year end of December. Ginnie Mae encourages lenders to complete their Audited Annual Financial Statements—if they are able—within 90 days of the end of the lender’s fiscal year.

    Federal Issues Ginnie Mae Mortgages Mortgage Lenders Covid-19

  • Department of Education provides Covid-19 relief by pausing loan collections, issuing refunds

    Federal Issues

    On March 25, U.S. Secretary of Education Betsy DeVos announced that in order to provide additional relief for student loan borrowers, the Department will take a number of actions which include the following:

    • Stop collection activities and wage garnishments for at least 60 days, effective March 13;
    • Stop requests to the Department of Treasury to withhold funds from “defaulted borrowers' federal income tax refunds, Social Security payments, and other federal payments”;
    • Refund almost $2 billion to over 830,000 borrowers from funds previously withheld as of March 13;
    • Direct private collection agencies to “halt all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements,” however, “[p]rivate collection agencies are permitted to provide assistance upon the borrower's request”;
    • Begin to “monitor employers' compliance with the request to stop wage garnishment.” Those “[b]orrowers whose wages continue to be garnished after March 13 should contact their employers' human resources department.”

    Borrowers with defaulted loans who would like to “continu[e] a prior payment arrangement, consolidat[e] their loans, or begin[] a loan rehabilitation arrangement with their private collection agency, should contact the Department's Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).”

    For more information, borrowers may visit StudentAid.gov/coronavirus.

    Federal Issues Department of Education Student Lending Student Loan Servicer Debt Collection Covid-19

  • UK FCA discusses impact of Covid-19 on firms’ LIBOR transition plans

    Federal Issues

    On March 25, the United Kingdom’s Financial Conduct Authority (FCA) issued a statement addressing the potential impact of Covid-19 on firms’ LIBOR transition plans. While the FCA states that the assumption that firms cannot rely on LIBOR being published after the end of 2021 is unchanged, it acknowledges that Covid-19 has impacted the timing of some aspects of the transition programs for many firms. The FCA states that it will continue to assess the impact on transition timelines and will update the market as soon as possible.

    Find continuing InfoBytes coverage on LIBOR here.

    Federal Issues LIBOR Financial Conduct Authority Of Interest to Non-US Persons Covid-19

  • SEC broadens and extends relief for businesses affected by Covid-19

    Federal Issues

    On March 25, the SEC announced that publicly traded companies have an additional 45 days, subject to certain conditions, to file annual and quarterly reports in an effort to help businesses whose operations may be affected by Covid-19. Disclosure reports due between March 1 and July 1 will be eligible for extensions if companies can justify the need, the SEC stated in the announcement, which supersedes and extends a previously issued order on March 4. To qualify for an extension, “companies must continue to convey through a current report a summary of why the relief is needed in their particular circumstances for each periodic report that is delayed.” In addition, the SEC issued orders (see here and here) that will give certain investment funds and investment advisors more time to meet filing and delivery requirements and more flexibility to avoid in-person meetings. These orders broaden and extend relief that the SEC announced earlier this month (covered by InfoBytes here). The announcement also provides public company disclosure guidance as well as additional information with respect to certain obligations under various securities laws.

     

    Federal Issues SEC Agency Rule-Making & Guidance Compliance Covid-19 Securities

  • CSBS asks Fed and Treasury to create liquidity facility to support mortgage servicers

    Federal Issues

    On March 25, CSBS President and CEO John W. Ryan sent a letter to Federal Reserve Board Governor Jerome Powell and Treasury Secretary Steven Mnuchin encouraging the agencies to create a liquidity facility under Section 13(3) of the Federal Reserve Act to support mortgage servicers “in anticipation of widespread borrower payment forbearance.” According to the letter, CSBS members—state regulatory agencies responsible for regulating bank and nonbank financial companies—have expressed concerns regarding liquidity and solvency in the mortgage servicing sector, and are particularly focused on monitoring the financial condition of nonbank mortgage servicers. Without a liquidity facility, CSBS warned that “mortgage servicers will experience a severe liquidity shortage that may threaten their continued viability, and by extension, the health of the nation’s housing finance market.”

    Federal Issues CSBS State Regulators State Issues Nonbank Federal Reserve Department of Treasury Covid-19 Mortgages

  • Federal Reserve announces new measures to support the economy

    Federal Issues

    On March 23, the Federal Reserve announced various new measures to support the economy during the Covid-19 crisis. The actions include: 

    • Purchasing Treasury securities and commercial and agency mortgage-backed securities to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.
    • Establishing a new program that will provide up to $300 billion in new financing to support the flow of credit to employers, consumers, and businesses. The Treasury Department will provide $30 billion in equity to these facilities by using the Exchange Stabilization Fund (ESF).
    • Establishing two facilities to support credit to large employers: (i) the Primary Market Corporate Credit Facility (PMCCF) for new bond and loan issuance; and (ii) the Secondary Market Corporate Credit Facility (SMCCF) to provide liquidity for outstanding corporate bonds.
    • Establishing a third facility, the Term Asset-Backed Securities Loan Facility (TALF), to support the flow of credit to consumers and businesses. The TALF will enable the issuance of asset-backed securities (ABS) backed by student loans, auto loans, credit card loans, loans guaranteed by the Small Business Administration (SBA), and certain other assets.
    • Facilitating the flow of credit to municipalities by expanding the Money Market Mutual Fund Liquidity Facility (MMLF) to include a wider range of securities, including municipal variable rate demand notes (VRDNs) and bank certificates of deposit. 
    • Facilitating the flow of credit to municipalities by expanding the Commercial Paper Funding Facility (CPFF) to include high-quality, tax-exempt commercial paper as eligible securities. In addition, the pricing of the facility has been reduced.

    Federal Issues Covid-19 Federal Reserve Securities Mortgages

  • Federal Reserve announces technical change to total loss absorbing capacity buffer requirements

    Federal Issues

    On March 23, the Federal Reserve Board announced a technical change to support the U.S. economy and permit banks to continue lending to creditworthy households and businesses. The interim rule will phase in gradually the automatic restrictions associated with a firm's "total loss absorbing capacity” (TLAC) buffer requirements, if the levels decline, and is intended to facilitate the use of firms’ buffers to promote lending activity.

    Federal Issues Covid-19 Federal Reserve

  • Treasury Department expands existing facilities, establishes three more facilities

    Federal Issues

    On March 23, the Department of Treasury authorized the expansion of the Money Market Mutual Fund Liquidity Facility (MMLF) and the Commercial Paper Funding Facility (CPFF), and established three new facilities under section 13(3) of the Federal Reserve Act to provide liquidity to the financial system.

    • The MMLF was expanded to include a wider range of securities, including municipal variable rate demand notes and bank certificates of deposit.
    • The CPFF was expanded to included high-quality, tax-exempt commercial paper and its pricing was reduced.
    • The following three new facilities were created: (i) the Term Asset-Backed Securities Loan Facility (TALF), under which the Federal Reserve Bank of New York will provide loans to U.S. companies that are secured by certain eligible consumer and small business asset-backed securities, such as student loans, auto and credit card loans, loans guaranteed by the Small Business Administration, and certain other assets; (ii) the Primary Market Corporate Credit Facility (PMCCF), under which the Federal Reserve Bank of New York will provide liquidity to U.S. financial and nonfinancial businesses by providing loan and bond financing to U.S. companies with investment grade debt ratings; and (iii) the Secondary Market Corporate Credit Facility (SMCCF), under which the Federal Reserve Bank of New York will purchase in the secondary market bonds issued by U.S. companies with investment-grade debt ratings. According to the Treasury, the three new programs comprise up to $300 billion in new financing.

    Federal Issues Covid-19 Department of Treasury

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