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Freddie Mac releases various selling updates in Guide Bulletin 2018-15
On September 19, Freddie Mac released Guide Bulletin 2018-15, which announces selling updates, including revisions to requirements for authorized user accounts and super conforming mortgages. Specifically, when reviewing a borrower’s credit report for tradelines where a borrower is listed as an authorized user but is not the primary account holder, sellers only have to meet additional documentation requirements if they receive a feedback message containing further instructions. These changes are effective for submissions and resubmissions made on or after October 4. The Bulletin also states that effective for mortgages settled on or after December 19, Freddie Mac will no longer require the manual underwriting of super conforming mortgages with original loan amounts greater than $1 million.
Additionally, starting October 15, enhancements to the automated cash specified payups process will take effect, which will, among other things, “include cash payups for fixed-rate [m]ortgages with certain specified loan attributes.” The Bulletin also eliminates the requirement for sellers to obtain additional documentation or evaluate the income or loss from secondary self-employment when none of this income is used for mortgage qualification purposes. Furthermore, as of September 9, as previously covered in InfoBytes, Bulletin 2018-13 updated the required time frame for evaluating credit report inquiries; it has been reduced from 120 days to 90 days.
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.
Fannie Mae, Freddie Mac update servicing guides
On September 18, Fannie Mae issued SVC-2018-06, which updates the Servicing Guide to include, among other things, changes to reduce servicer costs and risks and simplify certain loan modification options. Updates include: (i) relieving servicers of the responsibility for paying property taxes and ground rents on acquired properties, effective October 1, and co-op fees on properties acquired on or after October 1; (ii) effective immediately, removing the requirement for servicers to receive Fannie Mae approval when modifying a Texas Constitution Section 50(a)(6) loan under the Cap and Extend Modification for Disaster Relief policy (does not apply to reverse mortgages); (iii) clarifying servicing and subservicing transfer requirements, effectively immediately (iv) revising evaluation notices and solicitation letters, in alignment with Freddie Mac (described below), that take effect immediately but must be implemented by January 1, 2019; (v) adjusting maximum allowable foreclosure attorney fees for certain loans secured by properties in New Mexico and Hawaii for matters active as of September 18; and (vi) consolidating and aligning policies related to project liability and fidelity insurance to be implemented no later than January 1, 2019.
On the same day, Freddie Mac released Guide Bulletin 2018-14 announcing, among other things, servicing updates concerning (i) revised borrower evaluation notices and solicitation letters that take effect immediately but must be implemented by January 1, 2019; (ii) a new temporary servicer reimbursement process effective for property inspections related to insurance loss settlements conducted on or after September 1; (iii) changes to the Servicer Success Scorecard, effective July 1, 2019; and (iv) reporting requirements for third-party foreclosure sale redemptions, effective December 1.
Fannie Mae updates Reverse Mortgage Loan Servicing Manual
On September 18, Fannie Mae updated the Reverse Mortgage Loan Servicing Manual with changes related to a servicer’s responsibilities for paying escrow-related expenses for certain properties in Fannie Mae’s REO inventory. According to RVS-2018-03, Fannie Mae will now pay property taxes for all acquired proprieties in REO inventory and servicers are no longer required, except when directed by Fannie Mae, to pay co-op fees and assessments or ground rents for certain properties in REO inventory. The update applies to all property taxes and ground rents for all acquired properties effective on October 1, and applies to co-op fees and assessments for all acquired properties with a foreclosure sale or mortgage release date occurring on or after October 1.
Federal and state financial regulatory agencies issue interagency disaster relief guidance for institutions affected by Hurricane Florence
On September 14, the OCC, Federal Reserve Board, FDIC, NCUA, and the Conference of State Bank Supervisors (collectively, the “agencies”) issued a joint statement providing guidance to financial institutions impacted by Hurricane Florence. The agencies encouraged lenders to work with borrowers in impacted communities and to consider, among other things, (i) whether to modify loans based on the facts and circumstances, and (ii) requesting to operate temporary bank facilities if faced with operational difficulties. On the same day, the FDIC also provided guidance for depository institutions assisting affected customers (see FIL-48-2018), which may include “waiving fees, increasing ATM cash limits, easing credit card limits, allowing loan customers to defer or skip payments, and delaying the submission of delinquency notices to credit bureaus.” Furthermore, the FDIC encouraged depository institutions to use Bank Secrecy Act-permitted “non-documentary verification methods” for customers unable to provide standard identification documents.
The agencies also reminded institutions to contact their appropriate federal and/or state regulator should they experience disaster-related difficulties when complying with publishing and regulatory reporting requirements, and further noted that institutions may receive favorable Community Reinvestment Act consideration for community development loans, investments, and services in support of disaster recovery. The statement also provides links to previously issued examiner guidance for institutions affected by major disasters.
Find continuing InfoBytes coverage on disaster relief here.
Federal Reserve Board approves final amendments to Regulation CC
On September 12, the Federal Reserve Board (Board) announced the final amendments to the liability provisions of Regulation CC. The final amendments, which were proposed in June 2017, update Regulation CC’s existing liability provisions to include a presumption that a substitute or electronic check was altered in the event of disputes over whether a check has been altered or was issued with an unauthorized signature when the original check is not available. The presumption is only applicable to disputes between banks when one bank has transferred an electronic or substitute check to the other bank. The amendments are effective January 1, 2019.
CFPB argues structure is constitutional under current precedent
On September 10, the CFPB rejected the arguments made by two Mississippi-based payday loan and check cashing companies (appellants) challenging the constitutionality of the CFPB’s single director structure. The challenge results from a May 2016 complaint filed by the CFPB against the appellants alleging violations of the Consumer Financial Protection Act (CFPA) for practices related to the companies’ check cashing and payday lending services, previously covered by InfoBytes here. The district court denied the companies’ motion for judgment on the pleadings in March 2018, declining the argument that the structure of the CFPB is unconstitutional and that the CFPB’s claims violate due process. The following April, the 5th Circuit agreed to hear an interlocutory appeal on the constitutionality question and subsequently, the appellants filed an unopposed petition requesting for initial hearing en banc, citing to a July decision by the 5th Circuit ruling the FHFA’s single director structure violates Article II of the Constitution (previously covered by InfoBytes here).
In its September response to the appellants’ arguments, which are similar to previous challenges to the Bureau’s structure—specifically that the Bureau is unconstitutional because the president can only remove the director for cause—the Bureau argues that the agency’s structure is consistent with precedent set by the U.S. Supreme Court, which has held that for-cause removal is not an unconstitutional restriction on the president’s authority. The brief also cited to the recent 5th Circuit decision holding the FHFA structure unconstitutional and noted that the court acknowledged the Bureau’s structure as different from FHFA in that it “allows the President more ‘direct[] control.’” The Bureau also argues that the appellants are not entitled to judgment on the pleadings because the Bureau’s complaint— which was filed under the previous Director, Richard Cordray— has been ratified by acting Director, Mick Mulvaney, who is currently removable at will under his Federal Vacancies Reform Act appointment and therefore, any potential constitutional defect in the filing is cured. Additionally, the Bureau argues that even if the single-director structure were deemed unconstitutional, the provision is severable from the rest of the CFPA based on an express severability clause in the Dodd-Frank Act.
CFPB issues updated FCRA model disclosures to implement Economic Growth, Regulatory Relief, and Consumer Protection Act amendments
On September 12, the CFPB issued an interim final rule to comply with the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Act”) (previously Senate bill S. 2155). Section 301(a)(1) of the Act amends the FCRA to add section 605A(i), which requires consumer reporting agencies to provide national security freezes free of charge to consumers. Additionally, the new section requires that whenever a consumer is provided a “summary of rights” under section 609, the summary must include a notice regarding the right to obtain a free security freeze. The Act also amends FCRA section 605A(a)(1)(A) to extend from 90 days to one year the minimum time that a credit reporting agency must include an initial fraud alert on a consumer’s file.
The interim final rule, which is effective on September 21, amends the model forms in Regulation V to comply with the Act. The interim file rule also permits various compliance alternatives to mitigate the impact of the changes to these forms, including allowing the use of the 2012 model forms so long as a separate page provided in the same transmittal contains the new information required.
Comments on the interim final rule will be due 60 days after publication in the Federal Register. Links to the English and Spanish versions of the revised Summary of Consumer Rights and revised Summary Consumer Identity Theft Rights, covered by Section 609 of the FCRA, are available here.
OCC provides guidance to institutions affected by Hurricane Florence
On September 11, the OCC issued a proclamation permitting OCC-regulated institutions to close their offices affected by Hurricane Florence in the Southeast and Mid-Atlantic. The OCC noted that only institutions directly impacted by potentially unsafe conditions should close, and that those offices should attempt to reopen as soon as possible to serve their customers’ banking needs. OCC Bulletin 2012-28 provides further guidance on natural disasters and other emergency conditions.
Find continuing InfoBytes coverage on disaster relief here.
CFPB announces all new advisory committee members
On September 7, the CFPB released the new membership details of the Consumer Advisory Board, the Community Bank Advisory Council, and the Credit Union Advisory Council. As previously covered by InfoBytes, in June, acting Director, Mick Mulvaney, removed all the current members of the advisory committees in an effort to right-size its advisory councils and ramp up outreach to external groups, as explained in a blog post by the Bureau’s policy associate director for external affairs. The Consumer Advisory Board now consists of nine members, down from 28, and the Community Bank Advisory Council and the Credit Union Advisory Council each consist of seven members, down from 19 and 18 respectively. Previously, Consumer Advisory Board members served three year terms and Advisory Council members served two year terms. All committee members will now serve a one-year term.