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NCUA to seek information about emerging credit risks
On April 29, the National Credit Union Administration announced that it expanded its Covid-19 outreach to federally-insured credit unions to identify emerging credit risks. The NCUA notified regulated entities that examiners will contact them between May 4 and May 18 to discuss a list of questions concerning operating status, status of cash reserves and withdrawals, liquidity status, loans in forbearance, and balance of loans with outstanding balances.
HUD OIG issues Covid-19 guidance to homeowners
On April 28, the Department of Housing and Urban Development’s Office of Inspector General issued a bulletin outlining Federal Housing Administration guidance to servicers and borrowers regarding implementing the forbearance requirements of the CARES Act. The office issued the bulletin based on a review of information that the top 30 FHA mortgage servicers provide on their websites, which the office found to be incomplete, outdated, inconsistent, or unclear.
Fannie Mae issues a multifamily investor update regarding Covid-19
On April 23, Fannie Mae announced that it has published a list on DUS Disclose (MBS Reports section) that identifies MBS for which an underlying loan is in a Covid-19-related forbearance period. Fannie Mae will update the Multifamily MBS Covid-19 Forbearance List, which includes the pool number, CUSIP, and loan number, on a weekly basis. Investors are advised that the list will not include loans in a forbearance period for reasons other than Covid-19.
FHFA: Fannie, Freddie to temporarily buy mortgages in forbearance due to Covid-19
On April 22, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (GSEs) will purchase “certain single-family mortgages in forbearance that meet specific eligibility criteria” for a limited period in an effort to provide liquidity to ensure continued lending. Current policies dictate that the GSEs do not purchase loans that are in forbearance; however, due to the economic effects of Covid-19, FHFA will begin allowing the GSEs to buy certain mortgages that enter forbearance within the first month after loan closing, prior to delivery to the GSEs. The temporary selling requirements in Freddie Mac Bulletin 2020-12 allow lenders to sell to the GSE mortgages in forbearance only on mortgages for home purchases or “no cash-out” mortgage refinances. Further, the mortgages must have note dates between February 1, 2020 and May 31, 2020, the dates of settlement must be after May 1, and the mortgages must not be more than 30 days delinquent. Fannie Mae Lender Letter 2020-06 follows most of the same guidelines provided in the Freddie Mac bulletin, but Fannie Mae will also buy mortgages for limited cash-out refinances. To limit losses, the GSEs will charge sellers loan-level price adjustments of 5 percent for loans to first-time homebuyers, and 7 percent for all others.
FHFA: Servicers obligated to advance only four months of payments on loans in forbearance
On April 21, the Federal Housing Finance Agency (FHFA) announced it has aligned Fannie Mae’s and Freddie Mac’s (GSEs) “policies regarding servicer obligations to advance scheduled monthly principal and interest payments for single-family mortgage loans.” The plan, which is applicable to all GSE servicers regardless of type or size, limits servicers’ obligations to advance scheduled principal and interest payments to mortgage-backed securities (MBS) investors after a servicer has advanced four months of missed borrower payments on a loan. FHFA further clarifies that loans in forbearance due to Covid-19 will not be purchased out of MBS pools by the GSEs, but will instead “be treated like a natural disaster event and will remain in the MBS pool,” reducing potential liquidity demands on the GSEs. FHFA notes that both the agency and the GSEs will continue to monitor Covid-19’s impact on the housing finance market and will make policy updates as necessary.
Massachusetts enacts legislation imposing moratorium on certain evictions and foreclosures and requiring forbearance upon request
On April 20, the governor of Massachusetts signed legislation imposing a moratorium on certain eviction and foreclosure proceedings for the earlier of 120 days from the enactment of the legislation or 45 days after the state of emergency. In addition, the bill requires a creditor to grant a forbearance to a mortgagor that submits a request and affirms that the mortgagor has experienced a financial impact from Covid-19. Any payment subject to the forbearance must be added to the end of the term, unless otherwise agreed to. The legislation also prohibits a mortgagee or landlord from furnishing negative mortgage payment information or rental payment data to a consumer reporting agency related to payments subject to the act.
Fannie Mae and Freddie Mac release Covid-19 forbearance scripts for servicers to use with homeowners
On April 15, Fannie Mae and Freddie Mac released Covid-19 scripts that servicers may use with homeowners impacted by Covid-19 when discussing forbearance options. The scripts are intended to assist servicers with, among other things, determining the nature of the borrower’s hardship and appropriately describing forbearance options to borrowers.
Rhode Island clarifies timing requirements for foreclosure mediation notices with CARES Act forbearances
On April 15, Rhode Island’s Superintendent of Banking issued a bulletin to clarify how mortgagors should implement CARES Act forbearances to accord with the state’s foreclosure mediation statute, which requires certain notices be mailed within 120 days of default. During the pendency of the Covid-19 pandemic, mortgagors must mail the required notice within 120 days after the termination of the forbearance agreement, subject to certain conditions.
Freddie Mac announces changes to forbearance program to align with CARES Act
On April 15, Freddie Mac announced revisions to its multifamily Covid-19 forbearance program to align with CARES Act provisions related to multifamily borrowers and tenants. The program now (i) no longer requires tenants to demonstrate that nonpayment is due to a Covid-19 related hardship in order to avoid eviction during the forbearance period, (ii) explicitly provides that borrowers may not charge late fees, penalties, or other charges related to nonpayment of rent during the forbearance period, and (iii) extends the last day to enter forbearance under the program to the end of the federally declared emergency period or December 31, 2020, whichever comes first.
CFPB and FHFA announce Borrower Protection Program
On April 15, the CFPB and the Federal Housing Finance Agency (FHFA) announced the launch of the joint Borrower Protection Program to address mortgage servicer performance during the Covid-19 emergency. The two regulators will share information about how responsive mortgage servicers are to requests for assistance from consumers who are not able to keep current on monthly mortgage payments. Under the program the CFPB will provide complaint and analytical tool information to the FHFA, which in turn will share loss mitigation data on mortgage servicers with the CFPB. Through the Borrower Protection Program, the CFPB and FHFA hope to combat confusing or misleading information from loan servicers to borrowers about their options, including forbearance, as prescribed in the CARES Act.
For more InfoBytes coverage on loan forbearance under the CARES Act, click here.