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Fannie Mae updates Lender Letter 2020-04 to extend relief relating to appraisals
On May 5, Fannie Mae updated Lender Letter 2020-04, extending certain previously issued flexibilities until June 30, 2020. The extended flexibilities relate to, among other things, condominium project reviews, new construction loans, HomeStyle Renovation loans, and appraisal requirements.
FHFA extends loan processing flexibilities offered by Fannie Mae and Freddie Mac
On May 5, FHFA announced that it extended several loan processing flexibilities offered by Fannie Mae and Freddie Mac to assist borrowers during the Covid-19 emergency. The flexibilities include permitting alternative appraisals for certain loans, alternative methods for verifying employment before loan closing, flexibilities for providing documentation related to renovation draws, and expanding the use of power of attorney and remote online notarization. The flexibilities are extended until at least June 30.
District of Columbia amends emergency Covid-19 response legislation to add reporting obligations for mortgage deferments
On May 4, the District of Columbia amended the Covid-19 Response Supplemental Emergency Amendment Act (previously covered here) to, among other things, include mortgage lenders as covered entities and require lenders to provide the commissioner of the Department of Insurance, Securities and Banking with lists of all approved mortgage deferments in 15-day intervals.
Louisiana Office of Financial Institutions issues emergency declarations to non-depository entities
On May 1, the Louisiana Office of Financial Institutions issued emergency declarations for residential mortgage lenders, brokers and originators, check cashers, lenders or brokers licensed pursuant to the Louisiana Consumer Credit Law and the Louisiana Deferred Presentment and Small Loan Act, pawnbrokers, and repossession agents and bond for deed escrow agents. Such entities are granted the authority to temporarily close licensed locations within Louisiana or to temporarily close and/or relocate to another location within the state. Mortgage loan originators are permitted to work from home, whether located in Louisiana or another state, even if the home is not registered with the LOFI. The declarations also provide instructions for notifying the LOFI of a temporary location change. The declarations expire on May 15, 2020, unless renewed by further declaration of the commissioner.
Massachusetts regulator updates foreclosure moratorium FAQs
On May 1, the Massachusetts Division of Banks issued updated FAQs regarding Chapter 65 of the Acts of 2020, an April 20 state law establishing a temporary moratorium on certain residential foreclosures. The updated FAQs restate that, until the end of the moratorium, which is currently set to expire on August 18, 2020, lenders cannot charge fees other than those contractually scheduled and calculated as if the borrower made all payments in full and on time. The updates also clarify that the foreclosure and forbearance provisions of Chapter 65 do not apply to residential investment properties, residential properties that are not owner-occupied, and residential properties taken in whole or in part as collateral for a commercial loan.
GSEs to cover servicer advances on mortgages in forbearance
On May 1, Fannie Mae and Freddie Mac filed their first quarter 10-Qs, which included statements clarifying that in the coming months Fannie Mae and Freddie Mac, not loan servicers, will assume responsibility for advances on loans in forbearance that meet certain criteria. Fannie Mae’s 10-Q states that effective August 2020 “after four months of missed borrower payments on a loan…we will make the missed scheduled principal and interest payments…so long as the loan remains in the MBS trust.” As previously covered by InfoBytes, FHFA announced on April 21 that servicers are only obligated to advance principal and interest payments for up to four months on single-family loans. Likewise, Freddie Mac’s 10-Q similarly stated, “we expect to advance significant amounts to cover principal and interest payments to security holders for loans in forbearance in the coming months.”
CFPB: Substantial decline in credit applications in March
On May 1, the CFPB released a report examining the early effects of the Covid-19 pandemic on credit applications in March, concluding there was a substantial decline compared to previous years. Specifically, the report compared “hard inquiry” volume from credit checks for auto loans, mortgages, and credit cards by lenders during the month of March with the same data from previous years. Among other things, the report notes that auto loan inquiries dropped by 52 percent, new mortgage inquiries dropped by 27 percent, and credit card inquiries declined by 40 percent, as compared to usual data patterns from previous years. The report noted variations based on credit score and geography. The drops in inquiries were more pronounced for consumers with higher credit scores, and in states in the Northeast and California. The report noted a strong correlation between states with a higher Covid-19 case rate and the significance of the drop in auto loan and new mortgage inquiries. A similar correlation was also found between states with a larger share of workers entering unemployment and a drop in the same credit inquires.
Massachusetts issues FAQs regarding recently passed law imposing moratoriums on foreclosures and evictions
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.
Kansas issues executive order extending certain orders relating to the Covid-19 pandemic
On April 30, the Kansas governor issued an executive order delaying the sunset date of several existing executive orders relating to Covid-19 to May 31, 2020, or until the statewide state of disaster emergency relating to Covid-19 expires, whichever is earlier, with some exceptions. Among others, the executive order delays the sunset date for the order halting certain foreclosures and evictions (previously covered here) as well as the order temporarily allowing notaries and witnesses to act via audio-visual technology (previously covered here).
Texas governor permits remote notarization of real estate instruments
On April 29, the governor of Texas temporarily permitted persons to appear before a notary public via videoconference when executing real estate instruments such as mortgages. The Office of the Attorney General issued a set of conditions that must be met when using remote methods of notarization. These include the use of two-way video and audio communication permitting contemporaneous interaction, verification of identity, recordkeeping requirements, and attestations of the signatory and notary that they are physically located in Texas.