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  • Massachusetts issues FAQs regarding recently passed law imposing moratoriums on foreclosures and evictions

    State Issues

    Massachusetts issued responses to frequently asked questions regarding An Act Providing for a Moratorium on Evictions and Foreclosures During the Covid-19 Emergency, which was signed into law and effective on April 20, 2020. The FAQs provide guidance to borrowers on the foreclosure moratorium and forbearance period under the act and includes a section addressing reverse mortgages. The FAQs also provide guidance to lenders and servicers with respect to implementation of the act.

    State Issues Covid-19 Massachusetts Foreclosure Evictions Mortgages Mortgage Lenders Mortgage Servicing

  • Fannie and Freddie extend URLA implementation timeline

    Federal Issues

    On April 14, Fannie Mae and Freddie Mac issued a joint statement to announce that—due to the Covid-19 pandemic—the effective date of the revised Uniform Residential Loan Application (URLA) and Automated Underwriting Systems—is extended to January 1, 2021. Lenders must begin use of the redesigned URLA by March 1, 2021, and the current URLA will be retired on March 1, 2022. The revised URLA implementation timeline may be found here. Additional URLA information may be found on Fannie Mae’s URLA FAQs web page here, and on Freddie Mac’s URLA web page here.

    Additional InfoBytes coverage on URLA can be found here.

    Federal Issues GSE Fannie Mae Freddie Mac URLA Mortgage Lenders Mortgages Covid-19

  • VA, FHA issue valuation and appraisal guidance

    Federal Issues

    On March 27, the Department of Veterans Affairs (VA) issued guidance on valuation and appraisal practices during the Covid-19 crisis. Effective on March 27 and until modified or rescinded, VA home loan appraisers may utilize exterior-only appraisals and, in certain limited situations, desktop appraisals, for purchase and refinance transactions. When the appraiser does not inspect the interior of the property, additional sources may be used to inform the appraisal, including public records, MLS listing information, and other reliable third-party sources. The VA also issued Exhibit A to the valuation and appraisal practices circular. This document provides a statement of assumptions and limiting conditions and certifications for Desktop-only appraisals, in addition to instructions and a scope of work to be used by the appraiser.

    On the same day, the FHA issued similar guidance in Mortgagee Letter 2020-05 regarding appraisals and employment reverifications. Modifications to FHA single-family employment reverifications requirements include allowing verbal employment reverifications. The modifications also remove employment reverification requirements in certain situations, such as when certain criteria are met in forward purchase transactions, including, among other things: (i) where the mortgagee is not aware of loss of employment by the borrower; (ii) the mortgagee has year-to-date paystubs or electronic income verification for the borrower; (iii) the mortgagee has the borrower’s bank statement from immediately prior to the note date showing a direct deposit from an employer; and (iv) the mortgagee has evidence that the borrower has the equivalent of at least two months of the new payment amount, inclusive of principal, interest, taxes, and insurance. Modifications to appraisal protocols allow for exterior or desktop-only appraisals, and appraisers may utilize additional reliable information. Also, the FHA will require appraisals to include a signed certification that no interior appraisal was performed. FHA model certification forms can be found here and here.

    Federal Issues Covid-19 FHA Department of Veterans Affairs Appraisal Refinance Mortgage Lenders Mortgages

  • Indiana amends certain financial institution and consumer credit provisions

    State Issues

    On March 18, the Indiana governor signed House Enrolled Act No. 1353, which amends various provisions concerning financial institutions and consumer credit, including those related to first lien mortgage lenders, credit unions, and surety bond requirements for licensed mortgage loans originators, pawnbrokers, and money transmitters, among others. Among other things, the act also amends a provision in the state statute governing credit unions, which provides that loans made by a credit union to the credit union’s individual officers (and to the immediate family members of an officer, director, or supervisory committee member) must be made in accordance with Regulation O of the Federal Reserve Board. The act also stipulates that required appraisals connected to mortgage loans made to credit union members must be “consistent with the appraisal standards and transaction value limitations” outlined in the National Credit Union Administration’s appraisal regulations. The amendments take effect July 1.

    State Issues State Legislation Consumer Credit Mortgage Lenders Federal Reserve NCUA Regulation O Appraisal

  • Kentucky governor orders closing of all non-life-sustaining businesses

    State Issues

    On March 25, Kentucky Governor Andy Beshear issued an executive order mandating that only “life-sustaining businesses” may remain open and encouraged citizens to remain “healthy at home.” The list of life-sustaining businesses includes banks, credit unions, mortgage companies, payday lenders, check cashers, money transmitters, and securities institutions.

    State Issues Governors Credit Union Mortgages Payday Lending Mortgage Lenders Kentucky Covid-19 Executive Order

  • Massachusetts DOB issues expectations for relief to mortgage borrowers

    State Issues

    On March 25, the Massachusetts Division of Banks (DOB) issued a memorandum to financial institutions, mortgage lenders, and mortgage loan servicers outlining the actions the DOB “fully expects” institutions will take to alleviate the impact of Covid-19 on mortgage borrowers. The actions include (i) postponing foreclosures for 60 days; (ii) forbearing payments for 60 or more days; (iii) waiving fees for late payments and online payments for at least 60 days; (iv) refraining from reporting late payments to credit rating agencies for 60 days; (v) offering an additional 60-day grace period for borrowers to complete trial loan modifications; (vi) ensuring borrowers do not experience a disruption of service if a mortgage servicer closes its office; and (vii) proactively reaching out to borrowers to explain the assistance being offered. The memorandum also emphasizes that reasonable and prudent efforts to assist borrowers are consistent with safe and sound banking practices and will not be subject to examiner criticism.

    State Issues State Regulation Massachusetts Financial Institutions Mortgage Lenders Mortgage Servicing Mortgages Consumer Lending | Consumer Finance Examination Covid-19

  • 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

  • California Department of Business Oversight issues guidance to permit licensees to work from home

    State Issues

    On March 22, the California Department of Business Oversight (Department) issued guidance to escrow agents, finance lenders and servicers, student loan servicers, residential mortgage lenders and servicers, and mortgage loan originators in light of Covid-19 permitting employees of licensees to conduct activities from home that normally would require a branch license, provided that appropriate measures are taken to protect consumers and their data. Further, the Department will not criticize student loan servicers or licensees sponsoring MLOs who permit their respective employees to work from home, provided that certain data security and other conditions are met. Escrow Law licensees may also follow this guidance, however the licensees must still comply with the Fidelity Corporation or the licensee’s surety bond. Additionally, licensees are encouraged to assist consumers including through, among other things, offering payment accommodations.

    State Issues California Licensing Escrow Student Loan Servicer Mortgage Lenders Covid-19 MLO Bond

  • Idaho regulator issues “Work from Home” guidance

    State Issues

    On March 12, the Idaho Department of Finance issued guidance to its licensees and registrants—including mortgage brokers/lenders, mortgage loan originators, regulated lenders, title lenders, payday lenders and collection agencies—permitting employees to work from home even where the residence is not a licensed branch. The Department stated it will not take action against a licensee or registrant so long as the licensable activities meet specified data security and privacy requirements, and the licensee or registrant avoids advertising the unlicensed address or phone number, meeting consumers at the residence, or otherwise holding out or suggesting that the residence is a licensed location. The guidance is effective until June 30.

    State Issues Covid-19 Idaho Licensing Payday Lending MLO Debt Collection Mortgage Broker Mortgage Lenders Title Loans

  • CFPB releases TRID FAQs

    Agency Rule-Making & Guidance

    On February 26, the CFPB released 10 new lender credit FAQs to assist with TILA-RESPA Integrated Disclosure Rule (TRID Rule) compliance. Highlights from the FAQs are listed below:

    • “[L]ender credits include [(i)] payments, such as credits, rebates, and reimbursements, that a creditor provides to a consumer to offset” a consumer’s closing costs paid “as part of the mortgage loan transaction”; and (ii) “premiums in the form of cash” provided by a creditor “to a consumer in exchange for specific acts, such as for accepting a specific interest rate, or as an incentive, such as to attract consumers away from competing creditors.”
    • Lender credits can be specific or non-specific. Non-specific lender credits are also known as “general lender credits.” The FAQs provide examples of both types of lender credit, and note that the distinction is important, as the two types of lender credits are disclosed differently on the Closing Disclosure.
    • Creditors are not required to disclose “a closing cost and a related lender credit on the Loan Estimate if the creditor” absorbs the cost, but will be required to disclose these costs if they are “offsetting a cost charged to the consumer.”
    • Creditors are required to disclose a closing cost and a related lender credit on a Closing Disclosure if they absorb the cost, “even if the consumer will not be charged for the closing cost.”
    • To disclose lender credits on a Loan Estimate, creditors must calculate the sum “of all general and specific lender credits.”
    • The nature of how lender credits are disclosed on a Closing Disclosure varies based on whether it is a general lender credit or a specific lender credit.
    • The nature of how lender credits for a “no-cost loan” are disclosed varies based “on whether [a] creditor is absorbing closing costs as well as whether [it] is offsetting costs for specific settlement services.”
    • When disclosing all of the closing costs charged to consumers, creditors must include a corresponding total amount of lender credits.
    • Creditors that provide “a lender credit to offset a certain dollar amount of closing costs” without specifying which costs are providing a general lender credit. The FAQs outlines the disclosure process.
    • Lender credits can only change in certain circumstances. Regulation Z does not limit increases in lender credits on a Loan Estimate, but a decrease in “lender credits disclosed on [a] Loan Estimate” may “lead to a violation of the good faith disclosure standard” if it is not tied to a triggering event outlined in Regulation Z.

    Agency Rule-Making & Guidance TRID TILA RESPA Regulation Z CFPB Disclosures Mortgage Lenders Mortgages

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