InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
FDIC issues regulatory relief guidance for financial institutions in areas of Alabama affected by severe storms
On May 4, the FDIC issued a Financial Institution Letter, FIL-24-2018, to provide regulatory relief to financial institutions and facilitate recovery in areas of Alabama affected by severe storms and tornados. The FDIC is encouraging institutions to consider, among other things, extending repayment terms and restructure existing loans that may be affected by the natural disasters. Additionally, the FDIC notes that institutions may receive favorable Community Reinvestment Act (CRA) consideration for certain development loans, investments, and services in support of disaster recovery. The FDIC letter also contemplates regulatory relief for banks located in the affected areas.
Find continuing InfoBytes coverage on Disaster Relief here.
Fannie Mae updates Servicing Guide with HomeStyle Renovation policy changes
On March 14, Fannie Mae updated its Servicing Guide to include industry best practices for servicing HomeStyle Renovation Mortgage Loans (Renovation Loans). According to Fannie Mae SVC-2018-02, the updates to the Servicing Guide include, among other changes, new requirements to: (i) conduct property inspections for all Renovation Loans before escrow draw requests may be approved; (ii) ensure that all subcontractors are licensed in jurisdictions where licensing applies; (iii) perform updated appraisals when repairs deviate materially from the original plan; and (iv) provide a certificate of occupancy upon completion. Additional changes to the requirements for Renovation Loans may also be found in Fannie Mae’s recently updated Selling Guide, covered by InfoBytes here.
The updates to the Servicing Guide also include an update to the Allowable Foreclosure Attorney Fees Exhibit, which changes the maximum allowable fees for loans secured by properties in certain states. The Servicing Guide requirements for determining the modified terms under the Fannie Mae Cap and Extend Modification for Disaster Relief have also been updated.
Fannie and Freddie extend temporary suspension of foreclosure sales
On March 7, Fannie Mae, in Lender Letter LL-2018-01, and Freddie Mac, in Guide Bulletin 2018-04, extended the suspension of foreclosure sales through May 31 of mortgaged properties in FEMA-declared disaster areas in Puerto Rico and the U.S. Virgin Islands due to Hurricanes Irma and Maria.
Find continuing InfoBytes coverage on Disaster Relief here.
FHA and VA extend foreclosure moratoriums on certain disaster areas
On March 1, the Federal Housing Administration (FHA) released Mortgagee Letter ML 2018-02 (ML 2018-02), which extends the 180-day foreclosure moratorium on FHA-insured properties in Puerto Rico & the U.S. Virgin Islands affected by Hurricane Maria for an additional 60-days. The foreclosure moratorium is now in effect until May 18.
The Department of Veterans Affairs (VA) also released updates to VA circulars 26-17-23, 26-17-27, and 26-17-28, extending the foreclosure moratorium on VA-insured properties affected by Hurricanes Harvey, Irma, and Maria from 180 days to 270 days.
Find continuing InfoBytes coverage on disaster relief here.
Fannie Mae updates Selling Guide with HomeStyle Renovation policy changes
On February 27, Fannie Mae updated its Selling Guide including changes to its HomeStyle Renovation (Renovation) policy. According to Fannie Mae SEL-2018-02, the updates to the Selling Guide include, among other changes, the following: (i) sellers/servicers no longer need to be approved for the Renovation loan through Fannie Mae if they choose to wait to deliver all Renovation loans until after renovations are complete; (ii) fixed-rate mortgages for one-unit, principle residences now have a maximum allowable LTV ratio of 97% if the loan is underwritten through Desktop Underwriter; (iii) manufactured homes that do not require structural changes are eligible for Renovation loans; and (iv) removal of the requirement that the renovation must add value to the property. Lenders are required to be in compliance with the Renovation policy changes by September 1, 2018.
The Selling Guide also (i) added flexibilities in the HomeStyle Energy policy to allow for increased utilization of the program; (ii) added definitions and requirements for business continuity and disaster recovery procedures; and (iii) updated age of document requirements for loans securing properties impacted by a natural disaster.
FHA offers further relief to eligible borrowers in disaster areas
On February 22, the Federal Housing Administration (FHA) announced it will extend its foreclosure relief for borrowers with FHA-insured mortgages whose homes were affected by presidentially-declared natural disasters in 2017. Under Mortgagee Letter ML 2018-01 (ML 2018-01), the new “Disaster Standalone Partial Claim” loss mitigation option will allow borrowers whose property or employment is located in designated disaster areas to cover up to 12 months of missed mortgage payments through an interest-free second loan on the mortgage without a required trial payment plan. The second loan will become payable only when the borrower sells the home or refinances. Additionally, the loss mitigation option will streamline income documentation and other requirements to expedite relief to eligible borrowers struggling to pay their mortgages. ML 2018-01 instructs mortgagees to implement the policies set forth no later than May 1.
Find more InfoBytes disaster relief coverage here.
Agencies offer CRA credit for certain disaster relief efforts
On January 25, the FDIC, OCC, and the Fed (collectively “Agencies”) issued an interagency statement on the availability of Community Reinvestment Act (CRA) credit for financial institution activities that “help revitalize or stabilize the U.S. Virgin Islands and Puerto Rico, which were designated as major disaster areas by the President because of Hurricane Maria.” Provided financial institutions continue to be responsive to the community needs of their own CRA assessment areas, the Agencies will now give “favorable consideration” to community development activities, such as assistance to displaced people, in the areas impacted by Hurricane Maria. The Agencies state that they may give higher consideration to activities aimed at assisting the low- and moderate-income affected areas but that general consideration will be given regardless of median or personal income.
Fannie and Freddie Extend Foreclosure Suspension for Puerto Rico and U.S. Virgin Islands
On December 20, Fannie Mae, in Lender Letter LL-2017-11, and Freddie Mac, in Guide Bulletin 2017-29, extended the suspension of foreclosure sales through March 31, 2018 of mortgaged properties in FEMA-declared disaster areas in Puerto Rico and the U.S. Virgin Islands due to Hurricanes Irma and Maria. The extension does not apply to any other jurisdictions similarly designated.
Find continuing InfoBytes coverage on Disaster Relief here.
Freddie Mac Issues New Guidance on Borrowers Qualifying Income
On December 14, Freddie Mac issued Guide Bulletin 2017-28, providing updates and reminders to sellers regarding income used for qualifying borrowers and other matters. The bulletin expands the options for sellers when qualifying a borrower with income that starts after the date of the mortgage note, including increasing the allowable gap from 60 days to 90 days between the note date and the commencement of income, allowing for a “no-cash-out” refinance as a potential transaction type, and permitting fully approved future salary increases from a current employer as income. It also relaxes certain requirements in the event the income commences prior to the delivery date. In addressing other topics, the bulletin allows for relief from the enforcement of selling representations and warranties for mortgages that are subject to a disaster-related forbearance plan. The relief extends through the later of the applicable payment history period end date or the date the mortgage transitions out of the disaster-related forbearance plan and is brought current. Among other issues, the updates and reminders cover the eligibility of Land Trust Mortgages and “Texas Equity Mortgages” for sale to Freddie Mac, and incorporation of the new 2018 FHFA base conforming and super conforming loan limits (previously covered by InfoBytes here).
Financial Regulators Issue Joint Supervisory Guidance for Disaster Areas; VA Announces Wildfire Relief
On December 15, the FDIC, Fed, OCC, and NCUA issued Interagency Supervisory Examiner Guidance for Institutions Affect by a Major Disaster (Guidance). The Guidance provides information on assessing the financial condition of institutions affected by a “major disaster with individual assistance” as declared by the President. The Guidance also encourages institutions affected by such disasters to discuss relevant issues with their examiners and notes that the supervisory agencies will consider extending report filing deadlines and rescheduling exams. Additionally, the Guidance states that examiners should consider factors related to the disaster, such as asset losses and staffing issues, when assessing capital adequacy and management capability requirements. And when considering the supervisory response to an institution that receives a lower component or composite rating, the Guidance provides that examiners should recognize the extent to which any weaknesses are related to the major disaster.
The Department of Veterans Affairs (VA), on December 12, announced additional special relief following the California wildfires in Circular 26-17-42. The Circular encourages VA loan holders to extend forbearance to borrowers affected by the wildfires and VA loan servicers to continue solicitation of the VA Disaster Loan Modification program (as previously covered by InfoBytes here). Additionally, for affected borrowers and loans, the Circular suggests that loan holders follow the 90-day foreclosure moratorium and that servicers consider waiving late charges and suspending credit reporting. The Circular is effective until January 1, 2019.
Find continuing InfoBytes coverage on Disaster Relief here.