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VA encourages loan holders to extend relief to borrowers impacted by California wildfires
On November 15, the Department of Veterans Affairs (VA) issued Circular 26-18-26, requesting relief for homeowners impacted by the California wildfires. Among other things, the Circular encourages loan holders to (i) extend forbearance to borrowers in distress because of the wildfires; (ii) establish a 90-day moratorium from the date of the disaster on initiating new foreclosures on affected loans; (iii) waive late charges on affected loans; and (iv) suspend reporting affected loans to credit bureaus. The Circular is effective until October 1, 2019. Mortgage servicers and veteran borrowers are also encouraged to review the VA’s Guidance on Natural Disasters.
Find continuing InfoBytes coverage on disaster relief here.
VA clarifies effect of guarantee claim payments on home loan entitlement
On October 30, the Department of Veterans Affairs (VA) released Circular 26-18-25, which clarifies the effect on a veteran’s home loan entitlement when the VA pays a guaranty on a home loan terminated by foreclosure, short sale, or deed-in-lieu of foreclosure. Specifically, for loans originated on or after January 1, 1990, the circular clarifies that the VA no longer establishes debts against veterans after the VA pays a guaranty to reimburse a servicer for its loss. However, if the veteran wants to reuse the VA home loan benefit, then he or she is required to reimburse the VA for the loss amount. The loss only affects the veteran’s entitlement under the VA Home Loan Guaranty program and does not impact any other VA benefits. The veteran may choose to repay the loss to restore the full entitlement or use any of the remaining entitlement amount that may be available to the veteran. The circular is effective until October 1, 2020.
VA encourages loan holders to extend relief to borrowers impacted by Hurricane Michael
On October 15, the Department of Veterans Affairs (VA) issued Circular 26-18-23, requesting relief for homeowners impacted by Hurricane Michael. Among other things, the Circular encourages loan holders to (i) extend forbearance to borrowers in distress because of the storms; (ii) establish a 90-day moratorium from the date of the disaster on initiating new foreclosures on affected loans; (iii) waive late charges on affected loans; and (iv) suspend reporting affected loans to credit bureaus. The Circular is effective until October 1, 2019. Mortgage servicers and veteran borrowers are also encouraged to review the VA’s Guidance on Natural Disasters.
Find continuing InfoBytes coverage on disaster relief here.
VA provides status update to address 2014 loan guaranty interim final rule
On October 9, the Department of Veterans Affairs (VA) published a status update in the Federal Register to inform the public that it will not publish a final rule to adopt provisions outlined in its May 2014 interim final rule (IFR). The IFR was issued to implement provisions of Dodd-Frank concerning ability-to-repay standards and qualified mortgages (QM) as defined under TILA. According to the status update, section 309 of Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) superseded certain elements of the IFR. Specifically, the EGRRCPA’s “seasoning and recoupment requirements for [Interest Rate Reduction Refinance Loans] effectively eliminated the category of rebuttable presumption QM.” The VA reminded program participates to refer to Circular 26-18-13, previously issued in May and covered by InfoBytes, which addressed “loan churning” of VA-guaranteed refinance loans and set out new requirements for VA eligibility as addressed by EGRRCPA. The VA commented that it will publish future rulemaking to supersede the IFR, but that in the meantime, the IFR remains in effect to the extent the provisions do not conflict, or are not superseded by, EGRRCPA.
Agencies offer relief following Hurricane Florence
On September 19, the SEC announced regulatory relief to publicly traded companies, investment companies, accountants, transfer agents, municipal advisors, and others impacted by Hurricane Florence. The SEC order conditionally exempts affected persons not able to meet a filing deadline due to the weather event and its aftermath from certain reporting and filing requirements of the federal securities laws, for the period from and including September 14 to October 26, with all reports, schedules or forms to be filed on or before October 29. Additionally, the SEC adopted interim final temporary rules that extend the filing deadlines for certain reports and forms that companies must file under Regulation Crowdfunding and Regulation A.
On September 18, the Department of Veterans Affairs issued Circular 26-18-18, requesting relief for homeowners impacted by Hurricane Florence. Among other things, the Circular encourages loan holders to (i) extend forbearance to borrowers in distress because of the storms; (ii) establish a 90-day moratorium from the date of the disaster on initiating new foreclosures on affected loans; and (iii) waive late charges on affected loans. The Circular is effective until October 1, 2019.
Find continuing InfoBytes coverage on disaster relief here.
Agencies issue guidance to institutions affected by storms in Gulf Coast and Hurricane Lane in Hawaii
On September 5, the OCC issued a proclamation permitting OCC-regulated institutions to close their offices affected by Tropical Storm Gordon in the Gulf Coast Region. OCC Bulletin 2012-28 provides further guidance on natural disasters and other emergency conditions.
On August 30, the Department of Veterans Affairs issued Circular 26-18-17, requesting relief for homeowners impacted by Hurricane Lane in Hawaii. Among other things, the Circular (i) encourages loan holders to extend forbearance to borrowers in distress because of the storms; (ii) requests that loan holders establish a 90-day moratorium on initiating new foreclosures on loans affected by the major disaster; and (iii) waives late charges on affected loans. The Circular is effective until October 1, 2019.
Find continuing InfoBytes coverage on disaster relief here.
HUD publishes interpretive rule on Ginnie Mae loan-seasoning requirement
On July 3, the Department of Housing and Urban Development (HUD) published in the Federal Register an interpretive rule regarding the loan-seasoning requirement for Ginnie Mae mortgage-backed securities from the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), S.2155/ P.L. 115-174. The interpretive rule establishes that (i) any VA refinance mortgage that does not meet the requirements of the Act is not eligible to serve as collateral for Ginnie Mae mortgage-backed securities; (ii) any VA refinance mortgage that does not meet the Act’s requirements, but was guaranteed before the Act’s enactment are unaffected; and (iii) the Act does not prohibit Ginnie Mae from guaranteeing Multiclass Securities where the trust assets consist of certificates previously lawfully guaranteed with underlying VA refinance loans that may not meet the requirements of the Act. Comments on the interpretive rule must be submitted by August 2.
As previously covered by InfoBytes, Ginnie Mae issued All Participants Memorandum APM 18-04, which establishes (in accordance with the Act) that in order to be eligible for Ginnie Mae securities, the date of the VA refinance loan must be on or after the later of (i) 210 days after the date of the first payment made on the loan being refinanced; and (ii) the date of the sixth monthly payment made on the loan being refinanced.
Agencies issue disaster relief guidance for volcanic activity in Hawaii and severe storm in Maine
On June 19, the FDIC issued Financial Institution Letter FIL-33-2018 to provide regulatory relief to financial institutions and facilitate recovery in areas of Hawaii affected by volcanic eruption and earthquakes. The FDIC is encouraging institutions to consider, among other things, extending repayment terms and restructuring 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.
On June 14, the Department of Veterans Affairs issued Circular 26-18-16, requesting relief for veterans impacted by Maine’s severe storm and flooding. Among other things, the Circular (i) encourages loan holders to extend forbearance to borrowers in distress because of the storms; (ii) requests that loan holders establish a 90-day moratorium on initiating new foreclosures on loans affected by the major disaster; and (iii) waives late charges on affected loans. The Circular is effective until July 1, 2019.
Find more InfoBytes disaster relief coverage here.
VA reminds lenders that certification is required for all loans, including IRRRLs
On May 31, the Department of Veterans Affairs (VA) issued Circular 26-18-14 to clarify requirements regarding lender certifications for VA-guaranteed loans. The circular reminds lenders originating VA loans that the lender must certify to the VA that the loans “were made in full compliance with the law and loan guaranty regulations” regardless of the type of VA-guaranteed loan being initiated. The circular highlights that the lender certification is required on the Interest Rate Reduction Refinance Loans (IRRRL). The circular is effective through July 1, 2020.
Ginnie Mae announces new VA refinance loan eligibility requirements
On May 30, Ginnie Mae issued All Participants Memorandum APM 18-04 announcing changes to pooling eligibility requirements for Department of Veterans Affairs (VA) loans. The changes are in response to the “Loan Seasoning for Ginnie Mae Mortgage-Backed Securities” provision of the regulatory relief bill, Economic Growth, Regulatory Relief, and Consumer Protection Act, S.2155/ P.L. 115-174. (See previous InfoBytes coverage here.) APM 18-04 requires that, in order to be eligible for Ginnie Mae securities, the date of the VA refinance loan must be on or after the later of (i) 210 days after the date of the first payment made on the loan being refinanced; and (ii) the date of the sixth monthly payment made on the loan being refinanced. The new eligibility criteria is effective with mortgage-backed securities guaranteed on or after June 1.
Ginnie Mae also announced June 1 that it has temporarily restricted VA single family-guaranteed loans pooled by three mortgage lenders. Upon conclusion of the temporary restriction, each of the three lenders must demonstrate that (i) prepayment speeds are more consistent with equivalent lenders, and (ii) improved performance is sustainable.
As previously covered by InfoBytes, the VA recently released policy guidance in response to the regulatory relief bill, which includes a similar loan seasoning requirement as Ginnie Mae.