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On September 21, Ginnie Mae issued All Participant Memorandum 20-12, which states that Ginnie Mae will stop accepting the delivery of single-family forward adjustable rate mortgage (ARM) loans, dated on or after January 1, 2021, with any interest term based on LIBOR, for securitization in any pool. Additionally, any adjustable rate reverse mortgages (HECMs) will be ineligible for securitization into any HMBS pool that relies on LIBOR if not securitized as of January 1, 2021, “without regard to their date of origination or the date in which the corresponding FHA case number was assigned.” Participations associated with HECM loans backing HMBS will continue to be eligible without restriction, so long as the issuance date is on or before December 1.
On September 18, the FDIC issued FIL-91-2020 to provide regulatory relief to financial institutions and help facilitate recovery in areas of Oregon affected by wildfires that began on September 7. In the guidance, the FDIC writes that, in supervising institutions affected by the wildfires, it will consider the unusual circumstances those institutions face. The guidance suggests that institutions work with impacted borrowers to, among other things, (i) extend repayment terms; (ii) restructure existing loans; or (iii) ease terms for new loans to those affected by the severe weather, provided the measures are “done in a manner consistent with sound banking practices.” Additionally, the FDIC notes that institutions may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The FDIC will also consider relief from certain reporting and publishing requirements.
Separately, on September 17, HUD announced disaster assistance available to certain counties impacted by the Oregon wildfires, providing foreclosure relief and other assistance to affected homeowners. Specifically, HUD is providing an automatic 90-day moratorium on foreclosures of FHA-insured home mortgages for covered properties and is making FHA insurance available to those victims whose homes were destroyed or severely damaged. Additionally, HUD’s Section 203(k) loan program will allow individuals who have lost homes to finance the purchase of a house, or refinance an existing house and the costs of repair, through a single mortgage. The program will also allow homeowners with damaged property to finance the rehabilitation of existing single-family homes.
On September 21, the Virginia governor announced the expansion of the Rebuild VA, the $70 million economic recovery fund for small businesses and nonprofits impacted by Covid-19. As a result of the expanded eligibility requirements, businesses that received funding from the federal CARES Act and supply chain partners of businesses whose normal operations were impacted by the Covid-19 pandemic will be eligible to receive grants of up to $10,000. The Rebuild VA funding may be used for, among other things, payroll support, employee salaries, and mortgage payments, rent, and utilities. The announcement provides additional information regarding eligibility for the grants.
On September 21, the New York governor issued Executive Order 202.64, which extends the moratorium on Covid-19-related commercial evictions until October 20. The eviction moratorium, which was first issued on March 20, has been extended several times. For our previous coverage, see here.
On September 17, Fannie Mae updated its Covid-19 FAQs for sellers to include a new question about whether federal student loan payments that are placed in a Covid-related forbearance should count towards a borrower’s debt-to-income ratio. Additionally, Fannie Mae updated previous questions covering the purchase of loans that are in forbearance, including whether a lender owes the loan level pricing adjustment (LLPA). Specifically, the FAQs state that if a forbearance begins any time on the sale date of the loan, lenders owe the LLPA to Fannie Mae.
On September 14, the CFPB announced a settlement with an eighth mortgage lender for mailing consumers advertisements for Department of Veterans Affairs (VA) mortgages that allegedly contained misleading statements or lacked required disclosures. According to the Bureau, the lender offers and provides VA guaranteed mortgage loans, and allegedly sent false, misleading, and inaccurate direct-mail advertisements to servicemembers and veterans in violation of the CFPA, the Mortgage Acts and Practices – Advertising Rule (MAP Rule), and Regulation Z. Among other things, the Bureau alleged the advertisements (i) failed to include required disclosures; (ii) stated credit terms that the lenders were not actually prepared to offer; (iii) made “misrepresentations about the existence, nature, or amount of cash available to the consumer in connection with the mortgage credit product”; (iv) gave the false impression the lenders were affiliated with the government; and (v) used the name of the consumer’s current lender in a misleading way.
The settlement imposes a civil money penalty of $625,000 and bans the lender from future advertising misrepresentations similar to those identified by the Bureau. Additionally, the settlement requires the lender to use a compliance official to review mortgage advertisements for compliance with consumer protection laws.
The latest enforcement action is part of the Bureau’s “sweep of investigations” related to deceptive VA-mortgage advertisements. Previously, the Bureau issued consent orders against seven other mortgage lenders for similar violations, covered by InfoBytes here, here and here.
On August 21, the Nevada Department of Business of Industry, Division of Mortgage Lending extended its provisional guidance allowing licensed mortgage loan originators to work from home (previously covered here and here) until December 31, 2020.
On August 13, the Judicial Council of California voted to end two temporary emergency rules governing evictions and judicial foreclosures. The first rule prohibited the issuance of summons or entering of defaults in eviction actions unless the case involved public health and safety issues, and required that trials be set at least 60 days after a request for a trial. The second emergency rule stayed all pending judicial foreclosure actions other than those involving issues of public health and safety, tolled the statute of limitations on filing such actions, and extended the deadlines for election or exercise of rights relating to such actions. Pursuant to the vote, the rules end on September 1, 2020. The Judicial Council previously approved the temporary emergency rules staying eviction and foreclosure proceedings on April 6, 2020.
On September 4, the Department of Veterans Affairs (VA) issued Circular 26-20-34 to encourage mortgagees to provide relief for VA borrowers affected by Hurricane Laura. The Circular encourages loan holders and servicers to (i) extend forbearance to distressed borrowers and to members of the National Guard assisting in the recovery efforts; (ii) establish a 90-day moratorium on initiating new foreclosures; (iii) waive late charges; and (iv) suspend credit reporting on affected loans. The Circular will be rescinded October 1, 2021. Mortgage servicers and veteran borrowers are also encouraged to review the VA’s Guidance on Natural Disasters.
On September 1, NYDFS issued guidance to regulated mortgage lenders and servicers clarifying that mortgagees cannot charge registration fees imposed by municipalities when a mortgage defaults to mortgagors’ accounts. The guidance reminds mortgagees that the state’s mortgage servicing regulation, 3 NYCRR Part 419, allows mortgagees to collect only certain types of fees from a mortgagor, consisting of “attorney’s fees, late and delinquency fees, property valuation fees, and fees for services actually rendered to a mortgagor when such fees are reasonably related to the cost of rendering the service to the borrower.” NYDFS asserts that municipality-required default registration fees do not fall under the specified list and therefore cannot be charged to a mortgagor. The guidance instructs mortgagees to refund any such fees that have been collected, or to reverse any such fees that have been charged to accounts. Moreover, the guidance directs mortgagees to create a log of any registration fee charges and their subsequent corrections for inspection during their next NYDFS examination.
- Daniel P. Stipano to discuss "Making customers whole: Trends in remediation and restitution expectations" at the American Bar Association Business Law Virtual Section Meeting
- Jonice Gray Tucker to discuss "Fairness gone viral: Fair lending considerations for financial institutions amid Covid-19" at the American Bar Association Business Law Virtual Section Meeting
- Daniel P. Stipano to discuss "High standards: Best practices for banking marijuana-related businesses" at the ACAMS AML & Anti-Financial Crime Conference
- Daniel P. Stipano to discuss "Wait wait ... do tell me! Where the panelists answer to you" at the ACAMS AML & Anti-Financial Crime Conference
- Matthew P. Previn and Walter E. Zalenski to discuss "Is valid when made ... valid?" at the Women in Housing & Finance Partner Series webinar
- Warren W. Traiger and Caroline K. Eisner to discuss "CRA modernization and the OCC final rule" at CBA Live
- Daniel R. Alonso to discuss "Transnational corruption: A chat with former U.S. federal prosecutors in New York" at Marval Live Talks
- Sherry-Maria Safchuk and Lauren Frank to discuss "New CFPB interpretation on UDAAP" at a California Mortgage Bankers Association Mortgage Quality and Compliance Committee webinar
- Thomas A. Sporkin to discuss "Managing internal investigations and advanced government defense" at the Securities Enforcement Forum
- Daniel R. Alonso to discuss "Independent monitoring in the United States" at the World Compliance Association Peru Chapter IV International Conference on Compliance and the Fight Against Corruption
- Jonice Gray Tucker to discuss "The future of fair lending" at the Mortgage Bankers Association Regulatory Compliance Conference
- Michelle L. Rogers to discuss "Major litigation" at the Mortgage Bankers Association Regulatory Compliance Conference
- Kathryn L. Ryan to discuss "Pandemic fallout – Navigating practical operational challenges" at the Mortgage Bankers Association Regulatory Compliance Conference
- Jonice Gray Tucker to discuss "Consumer financial services" at the Practising Law Institute Banking Law Institute