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Fannie Mae, Freddie Mac Provide Additional Information Regarding QM Requirements
On July 2, Fannie Mae and Freddie Mac provided lenders additional information about eligibility criteria for mortgages with application dates on or after January 10, 2014. Recently, the FHFA directed Fannie Mae and Freddie Mac to limit future mortgage acquisitions to loans that meet the requirements for qualified mortgages under the CFPB’s ability-to-repay/qualified mortgage rule. The letters state that, effective January 10, 2014, mortgages will be eligible for sale to either entity only if they (i) are fully amortizing, (ii) have terms no longer than 30 years, and (iii) have points and fees of 3% or less of the total loan amount. In addition, both entities will continue to purchase mortgage loans that are exempt from the ability-to-repay rule. Fannie Mae and Freddie Mac anticipate updating policies regarding representations and warranties, as well as certain policies related to loan eligibility in August 2013, and plan to provide information about how they will test for compliance with the new eligibility criteria in September 2013.
Fannie Mae Updates Hardest Hit Fund Requirements
On July 1, Fannie Mae issued Servicing Guide Announcement SVC-2013-14 to notify servicers that they must accept modification assistance received from a state housing finance agency for a mortgage loan in connection with any Fannie Mae modification, without regard to whether principal forbearance is required. In doing so, servicers must also comply with certain delinquency management and default prevention requirements outlined in Announcement SVC-2011-18. Servicers are required to implement the policy changes no later than October 1, 2013, and are encouraged to do so immediately.
Fannie Mae Updates Short Sale Requirements, Issues Servicing Clarifications and Reminders
On June 19, Fannie Mae issued Servicing Guide Announcement SVC-2013-13, which describes policy changes related to its standard short sale requirements, including (i) the multiple listing service requirements, (ii) credit report seasoning, and (iii) streamlined documentation requirements for transition from standard short sale to standard deed-in-lieu of foreclosure. With regard to standard deeds-in-lieu of foreclosure, the announcement addresses (i) property inspection requirements, (ii) REOgram® and subordinate lien release submission requirements, and (iii) title insurance requirements. In a Servicing Notice issued the same day, Fannie Mae clarified its policies related to (i) “full file” reporting to credit repositories, (ii) certain income documentation requirements, and (iii) liquidation reporting requirements for standard short sales and deeds-in-lieu of foreclosure.
Fannie Mae Amends Bifurcated Mortgage Loan Obligations, Announces Miscellaneous Servicing Guide Updates
On June 12, Fannie Mae issued two Servicing Guide Announcements relating to bifurcated mortgages, mortgage payments, valuations, and processing IRS forms. Announcement SVC 2013-12 clarifies and adds numerous obligations for servicers and responsible parties in connection with bifurcated mortgage loans – loans or properties for which the current servicer is not the responsible party for the selling representations and warranties and/or for the prior servicing responsibilities or liabilities. The announcement addresses, among other topics, (i) issuance of repurchase requests and statements, requests for a make whole payment, or requests for indemnification, (ii) remittance of bifurcated repurchase price and appeal process, (iii) hiring of a servicer and a servicer’s failure to comply, (iv) mortgage loan files, record retention, and release of records, and (v) disputes between responsible parties and servicers. All of the policy changes in 2013-12 take effect on September 1, 2013. Announcement SVC 2013-11 describes policy changes regarding (i) processing and applying mortgage loan payments, (ii) obtaining a property valuation for Fannie Mae conventional mortgage loan modifications, and (iii) processing IRS Form 4506-T and Form 4506T-EZ. While servicers are encouraged to implement the changes noted in 2013-11 immediately, servicers are not required to do so until October 1, 2013.
Federal Agencies Announce Two-Year HAMP Extension
On May 30, the FHFA announced that Fannie Mae and Freddie Mac will extend the Home Affordable Modification Program (HAMP) through December 31, 2015. Concurrently, the Treasury Department and HUD announced an extension of the HAMP deadline for non-Fannie Mae and Freddie Mac loans to harmonize with the FHFA extension. The programs were set to expire at the end of 2013. In addition, the FHFA extended from August 2015 through the end of 2015 its streamlined modification initiative.
Fannie Mae Updates Selling Guide
On May 28, Fannie Mae issued Selling Guide Announcement SEL-2013-04 to identify numerous updates to the Selling Guide. With regard to income and documentation requirements, the announcement (i) extends the maximum age of credit documents; (ii) requires documentation of continuance for Social Security benefits other than those of the borrower (e.g., a dependent’s benefits); and (iii) clarifies documentation requirements for “other” income types. Fannie Mae also updated the Selling Guide with regard to, among other things, single-entity ownership in a project, calculation of real estate taxes for housing expense, and measurement of waiting periods.
Banking Agencies, Fannie Mae, Freddie Mac Offer Guidance Regarding Oklahoma Tornadoes
Last week, the FDIC, the OCC, Fannie Mae, and Freddie Mac issued guidance and information for banks, lenders, and servicers operating in areas impacted by recent tornadoes. The FDIC and the OCC encouraged banks to work with borrowers, extend repayment terms, restructure existing loans, or ease terms for new loans, provided such actions are consistent with sound banking practices, and to take other steps such as waiving ATM fees and late payment penalties. Fannie Mae and Freddie Mac reminded servicers of the range of borrower relief options available in the wake of a natural disaster.
Sixth Circuit Holds Fannie Mae, Freddie Mac Exempt from Local Taxes
On May 20, the U.S. Court of Appeals for the Sixth Circuit overturned a district court decision and held that Fannie Mae and Freddie Mac are exempt from state and local real estate transfer taxes. Oakland v. Fed. Hous. Fin. Agency, No.12-2135/2136, 2013 WL 2149964 (6th Cir. May 20, 2013). In this case, as in other similar cases pending around the country, Michigan counties and the state of Michigan sued to recover state and local real estate transfer taxes from Fannie Mae, Freddie Mac, and the FHFA for property transfers made by those entities. The appeals court held that Congress expressly exempted Fannie Mae and Freddie Mac from “all taxation,” including all state and local taxation, when it chartered those institutions and that it applied the same exemption to the FHFA as conservator in the 2008 Housing and Economic Recovery Act. The court rejected the state and local entities' argument that the phrase "all taxation" applies only to direct taxes and not excise taxes. The court added that Congress specifically carved out real property taxes from the "all taxation" exemption, but did not carve out the types of transfer taxes at issue in this case. The court vacated the district court's order and remanded with direction that the district court enter summary judgment for the FHFA, Fannie Mae, and Freddie Mac. In a statement issued after the decision, one Michigan county stated that it plans to seek Supreme Court review.
Fannie Mae, Freddie Mac Directed to Purchase Only QM Loans
On May 6, the FHFA announced that Fannie Mae and Freddie Mac must limit their future mortgage acquisitions to loans that meet the requirements for qualified mortgages under the CFPB’s January 2013 ability-to-repay/qualified mortgage rule (ATR/QM rule), including special or temporary qualified mortgage requirements, and loans that are exempt from the “ability-to-repay” requirements. After the ATR/QM rule takes effect on January 10, 2014, Fannie Mae and Freddie Mac will no longer purchase a loan subject to the ability-to-repay requirements if the loan (i) is not fully amortizing, (ii) has a term of longer than 30 years, or (iii) includes points and fees in excess of 3% of the total loan amount, or such other limits for low balance loans as set forth in the rule. The announcement, together with announcements made by Fannie Mae and Freddie Mac, confirms that the enterprises will continue to purchase loans that meet the underwriting and delivery eligibility requirements stated in their respective selling guides, including those that are processed through their automated underwriting systems.
Fannie Mae Releases Loan Performance Data
On April 30, Fannie Mae released loan performance data on a portion of its single-family mortgage loans, which includes a subset of Fannie Mae’s 30-year, fully amortizing, full documentation, single-family, conventional fixed-rate mortgages. The initial population is comprised of loans acquired between January 1, 2000 and March 31, 2012 with corresponding monthly performance data as of December 31, 2012. The loan performance data is divided into two files for each acquisition quarter: (i) the “Acquisition file” includes static data at the time of a mortgage loan’s origination and delivery to Fannie Mae; and (ii) the “Performance” file contains monthly performance data of each mortgage loan from the time of Fannie Mae’s acquisition up until its current status as of the previous quarter, until the mortgage loan has been liquidated, or until it has become 180 days or more delinquent. Fannie Mae expects to update the acquisitions data each quarter to include a new quarter of acquired mortgage loans as of the prior year in addition to updated performance data as of the previous quarter. Certain data attributes also will be updated to reflect new terms, if applicable, as a result of a modification.