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Louisiana Office of Financial Institutions declares emergency for residential mortgage entities
On April 9, Louisiana Office of Financial Institutions (OFI) Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-licensed residential mortgage brokers, lenders, and originators in response to the Covid-19 crisis. The order: (i) granted the authority to temporarily close or relocate operations, services, and products; (ii) permitted mortgage loan originators to work remotely from home, even if their home isn’t registered with OFI; (iii) waived the standard prior notification requirements pertaining to closures or relocations of operations, services, and products; and (iv) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.
Department of Veterans Affairs issues Circular on CARES Act requirements
On April 9, the Department of Veterans Affairs issued Circular 26-20-12 regarding extending relief for VA loans pursuant to the Coronavirus Aid, Relief, and Economic Safety Act (CARES Act). The circular provides information regarding borrower eligibility, offering borrowers forbearance, the accrual of fees, penalties, and interest, credit reporting of a borrower’s account, exiting forbearance, and the foreclosure moratorium. The circular is effective until April 1, 2021, and preempts section 3 of Circular 26-20-7 (“Special Relief for Those Potentially Impacted by COVID-19”).
Southern District of New York Bankruptcy Court issues general order addressing certain filings, documentation requirements, and deadlines
On April 9, the U.S. Bankruptcy Court for the Southern District of New York issued General Order M-545 regarding court operations under the exigent circumstances created by Covid-19. Effective immediately, with respect to cases filed by an individual under chapters 7, 11, 12, and 13 of the U.S. Bankruptcy Code, the general order:
- Suspends the requirement that a CM/ECF user secure the signer’s original signature prior to electronically filing a document bearing the signature, provided certain requirements are met.
- Provides guidance on documentation that creditors (mortgage holders or servicers) must file in connection with a temporary suspension of mortgage payments.
- Extends any deadline under the Loss Mitigation Program Procedures or Student Loan Mediation Program Procedures that has not expired as of March 16, 2020, to July 1, 2020.
- Provides an alternate standard for establishing a debtor’s identification for purposes of a meeting of creditors under section 341 of the bankruptcy code.
The order expires on July 1, 2020 unless modified by further order.
Alabama Bureau of Loans issues guidance on annual report submission
The supervisor for the Alabama State Banking Department Bureau of Loans issued a statement to licensees extending the annual report, mortgage call report, and financial statement deadlines to July 15.
Iowa Division of Credit Unions publishes comprehensive resource for Covid-19 updates
The Iowa Division of Credit Unions published a comprehensive resource containing information on Covid-19 regulatory updates. The document covers a range of regulatory changes applicable to credit unions, including: (i) the SBA-Paycheck Protection Program; (ii) Annual Meeting requirements; (iii) foreclosure moratoriums; (iv) remote notarizations; (v) member assistance; (vi) fraud awareness; (vii) moneys and credits tax filing deadline extensions (viii) loan deferments; and (ix) limitations of services/branch closures.
Fannie Mae revises multifamily loan documents requiring escrow reserves
On April 8, Fannie Mae announced updates to certain loan documents for multifamily lenders in response to Covid-19. Form 6102.25—Modifications to Multifamily Loan and Security Agreement—Addenda to Schedule 2, and Form 6268—Modifications to Multifamily Loan and Security Agreement (Additional Reserve Escrows) are both updated to provide clarity in the drafting notes for calculating the replace reserve deposit when closing a supplemental mortgage loan. In addition, as a condition to closing a supplemental mortgage loan with required reserve escrows, the guidance clarifies that an additional principal and interest reserve escrow is required on the pre-existing mortgage loan. Loan documents may be modified to include a higher amount of reserves (not greater than 10% of the unpaid principal balance of the loan), or hold the escrows in a non-interest bearing account to the extent permitted by law.
Colorado banking regulator will not criticize “any” efforts to adjust loan terms
On April 8, the Colorado Division of Banking issued guidance to state-chartered banks encouraging them to take measures to assist borrowers impacted by Covid-19, including halting foreclosures and providing a 90 day deferment on payment for all consumer loans. The division noted that while state-chartered banks are not required to comply with these requests, any efforts to modify existing loan terms will not be subject to examiner criticism.
Fannie Mae provides Covid-19 forbearance guidance for multifamily lenders and servicers
On April 7, Fannie Mae issued a letter providing Covid-19 forbearance process guidance for multifamily lenders and servicers. In particular, multifamily lenders and servicers are required to use the Multifamily Asset Management Portal (MAMP) to submit delegated forbearance notifications and supporting documentation, and complete and submit reporting on delegated forbearance notifications using the Delegated Forbearance Tracking spreadsheet on the first business day of each week. Non-delegated forbearance requests must also be submitted through MAMP.
Agencies revise reporting guidance during Covid-19 pandemic
On April 7, the Federal Reserve (Fed), FDIC, OCC, CFPB, and NCUA (agencies) issued a revised interagency statement for financial institutions regarding loan modifications for customers affected by Covid-19. As previously covered by InfoBytes, the agencies issued the initial interagency statement on March 22, which stated that the agencies would not require loan modifications made as a result of Covid-19 to be categorized as troubled debt restructurings (TDRs), and additionally that the agencies would not criticize implementation by financial institutions of credit risk mitigation procedures.
Among other things, the revised interagency statement encourages financial institutions to continue to adhere to consumer protection laws, such as fair lending laws, as they assist borrowers who have been negatively impacted by Covid-19. The agencies take a favorable view of loan modification programs intended to assist borrowers affected by Covid-19 and note that financial institutions will not be criticized “for working with borrowers in a safe and sound manner.” In addition, with respect to credit risks, examiners will refrain from issuing automatic adverse risk ratings when reviewing loan modifications impacted by Covid-19. The revised statement explains that the CARES Act created a forbearance program for borrowers affected by Covid-19, and that under Section 4013 of the Act, financial institutions are not required to “report section 4013 loans as TDRs in regulatory reports.” Furthermore, deferrals granted to borrowers affected by Covid-19 do not need to be classified as “past due because of the deferral.”
Maryland commissioner of Financial Regulation announces suspension of Notice of Intent to Foreclose Electronic System
On April 6, the Maryland commissioner of Financial Regulation issued an industry advisory announcing the temporary suspension of the Notice of Intent (NOI) to Foreclose Electronic System. The suspension takes effect on April 10, and the system will not accept new NOIs during the state of emergency period, effectively preventing the initiation of residential foreclosures. The announcement noted that the system will remain functional until the April 10 suspension deadline to accommodate NOIs submitted prior to Governor Hogan’s April 3 executive order calling for a moratorium on residential foreclosures in response to the Covid-19 crisis.