Frequently Asked Questions
(And Answers)

These FAQs are meant to answer general questions for consumers and industry stakeholders who are directly impacted by COVID-19.

HUD: “No. FHA is unable to remove any loans in default or claim status from Neighborhood Watch Compare Ratio calculations, including loans in forbearance for borrowers affected by the COVID-19 National Emergency. FHA uses Compare Ratios to determine whether termination or suspension of certain Mortgagee authorities is warranted under the Credit Watch Termination and Lender Insurance (LI) Program monitoring processes. FHA will consider the impact of the COVID-19 National Emergency when a lender’s Compare Ratio is above the designated threshold for either process.”

Source | HUD

HUD: “Mortgagees must review Borrowers that are impacted, directly or indirectly, by COVID-19, that do not qualify for a COVID-19 Home Retention Option or indicate that they cannot resume making the monthly or modified monthly Mortgage Payment, for the COVID-19 Home Disposition Options. The COVID-19 Home Disposition Options are available to Owner-Occupant and Non-Occupant Borrowers.

COVID-19 Pre-Foreclosure Sale (COVID-19 PFS)

A COVID-19 PFS option is available for Borrowers who are experiencing a hardship affecting their ability to sustain the Mortgage due to COVID-19.

To evaluate Borrowers for the COVID-19 PFS option, Mortgagees must follow the Streamlined PFS requirements (III.A.2.l.ii), except as noted below. 

COVID-19 PFS Eligibility

The Mortgagee must ensure that Borrowers and FHA-insured Mortgages meet the following requirements for a COVID-19 PFS.

For a Borrower to qualify for a COVID-19 PFS, the Mortgagee must ensure that:

  • The Mortgage was current or less than 30 Days past due as of March 1, 2020; 
  • The Borrower indicates a financial hardship affecting their ability to sustain the Mortgage due, directly or indirectly, to the COVID-19 National Emergency; 
  • The Borrower does not qualify for any COVID-19 Home Retention Options; and
  • The Borrower and Mortgage must meet all PFS eligibility requirements except the Mortgagee is not required to review the Borrower for Borrower Eligibility (III.A.2.l.ii(B)(3)
  • COVID-19 PFS Program Requirements

The Mortgagee must ensure the COVID-19 PFS meets all other Streamlined PFS program requirements outlined in Pre-Foreclosure Sales (III.A.2.l.ii), with the following exceptions:

  • Under PFS Outreach Requirements (III.A.2.l.ii(C)), Mortgagees may utilize any available means of communication to provide the Borrower with form HUD-90035.
  • Mortgagee PFS Incentive (III.A.2.l.ii(P)) does not apply to COVID-19 PFS.

COVID-19 Deed-in-Lieu of Foreclosure (COVID-19 DIL)

A COVID-19 DIL is a COVID-19 Home Disposition Option in which a Borrower voluntarily offers the deed as collateral Property to HUD in exchange for a release from all obligations under the Mortgage.

A COVID-19 DIL option is available for Borrowers who are experiencing a hardship affecting their ability to sustain the Mortgage due to the COVID-19 pandemic, and who were unable to complete a COVID-19 PFS transaction at the expiration of the PFS marketing period.

The Mortgagee must ensure that the Borrower and the eligible FHA-insured Mortgage meet the following eligibility and program requirements. To evaluate Borrowers for the COVID-19 DIL, Mortgagees must follow the Streamlined DIL requirements in DIL of Foreclosure (III.A.2.l.iii), except as noted below.

COVID-19 DIL Eligibility

The Mortgagee must ensure that the Borrower and the FHA-insured Mortgage:

  • Meet the requirements for COVID-19 PFS transactions; 
  • Was unable to complete a COVID-19 PFS transaction by the expiration of the PFS marketing period; and
  • Must meet all Streamlined DIL eligibility requirements except: 
    • the Borrower Eligibility Streamlined DIL Standards (III.A.2.l.iii(B)(2)(a)(ii)), which are not required for the COVID-19 DIL; and
    • for COVID-19 DIL, Mortgagees are not required to submit a request for National Servicing Center (NSC) approval via Extensions and Variances Automated Requests System (EVARS) for approval to offer a COVID-19 DIL Option to a Borrower who owns more than one FHA-insured Property as outlined in DIL Exceptions for Borrowers with More than One FHA-Insured Mortgage (III.A.2.l.iii.(B)(2)(d)).

COVID-19 DIL Program Requirements

The Mortgagee must ensure the COVID-19 DIL meets all other Streamlined DIL program requirements outlined in DIL of Foreclosure (III.A.2.l.iii), with the following exceptions:

  • Mortgagee DIL Compensation (III.A.2.l.iii(H)) does not apply to COVID-19 DIL.
  • Extensions for Foreclosure Time Frames (III.A.2.l.iii(I)): if the DIL follows a failed COVID-19 PFS, it must be completed, or foreclosure must be initiated within 90 days of the end of the COVID-19 Forbearance period.

Mortgagees must offer eligible Borrowers the COVID-19 Loss Mitigation Options and procedures set forth in Mortgage Letter 2020-22 no later than 90 days from July 8, 2020, but may begin offering the new options immediately.”

Source | HUD

HUD: “Yes, however, this guidance only applies to the following COVID-19 Loss Mitigation options: 

  • COVID-19 Owner-Occupant Loan Modification; 
  • COVID-19 Non-Occupant Loan Modification; 
  • COVID-19 Combination Partial Claim and Loan Modification; or
  • COVID-19 FHA-HAMP Combination Loan Modification and Partial Claim with Reduced Documentation.

The Mortgagee may include an escrow shortage that falls below the target balance, calculated during an escrow analysis, that exceeds the amount of the Mortgagee’s advances already capitalized in the modified mortgage. 

The Mortgagee must document in the Servicing File, all Mortgagee advances, including the total amount paid out of the escrow account during the same period for taxes, insurance premiums, and other charges (as separately identified) that were capitalized into the mortgage modification. The Mortgagee must document the escrow shortage and the balance in the escrow account at the end of the same period.”

Source | HUD

HUD: “In addition to the requirements in SF Handbook 4000.1 Sections II.A.4.c.xii(I) and II.A.5.b.xii.(I) Rental Income (TOTAL and Manual) and Section 3.50 through Section 3.55 of the HECM Financial Assessment and Property Charge Guide; where a borrower is qualifying utilizing rental income, for each property generating rental income the Mortgagee must either:

  • Reduce the effective income associated with the calculation of rental income by 25%, or
  • Verify 6 months PITI reserves (this option is applicable for Forward Mortgages only), or
  • Verify the borrower has received the previous 2 months rental payments as evidenced by borrower’s bank statements showing the deposit.  (This option is applicable only for borrowers with a history of rental income from the property).” 
Source | HUD

COVID Help for Home: “The mortgage industry is concerned about our customers who have missed one or more payments and may be eligible for CARES Act assistance. Sometimes customers don’t call their mortgage company because they don’t have the funds to make a payment so they just don’t engage. But for almost all loan types, we have payment relief programs where mortgage companies could provide instant relief to struggling homeowners – but a conversation is needed. This campaign is supplemental to a company’s regular outreach efforts. The goal is to create more conversation in this space so that customers know that there are tools to help them.”

Freddie Mac: “The mortgage may be eligible for sale to Freddie Mac through February 28, 2021, if it meets the temporary requirements announced in Bulletin 2020-12 and last extended in Bulletin 2020-44. Otherwise, once the Seller/Servicer approves a forbearance plan the terms of the mortgage have been waived or changed and the mortgage would be ineligible under Guide Section 4201.2.”

Source | Freddie Mac

Freddie Mac: “The mortgage may be eligible for sale to Freddie Mac through February 28, 2021, if it meets the temporary requirements announced in Bulletin 2020-12, and last extended in Bulletin 2020-44. Otherwise, once the Seller/Servicer approves a forbearance plan the terms of the mortgage have been waived or changed and the mortgage would be ineligible under Guide Section 4201.2.” 

Source | Freddie Mac

Freddie Mac: “The mortgage may be eligible for sale to Freddie Mac through February 28, 2021, if it meets the temporary requirements announced in Bulletin 2020-12, and last extended in Bulletin 2020-44. Otherwise, it is not eligible for sale regardless of whether the Seller/Servicer approves or the borrower accepts the forbearance plan offer.”

Source | Freddie Mac

Fannie Mae: “No. When completing an exterior-only or a desktop appraisal the appraiser must have a data source for all relevant characteristics, including interior condition, and reference the source used in the report. For example, it is unacceptable to assume the condition of the property is “average” or “similar to the exterior of the home.”

The Appraiser’s Certifications, approved for use with desktop and exterior-only appraisals prepared using the COVID-19 flexibilities, require the appraiser to report the condition of the improvements in factual, specific terms. The appraiser may rely on subject property information from third-party data sources. 

As previously communicated in LL-2020-04 and COVID-19 FAQs, if there is insufficient information about the property to complete the appraisal assignment, the mortgage is not eligible for sale to Fannie Mae.” 

Freddie Mac: “No. When completing an exterior-only or a desktop appraisal the appraiser must have a data source for all relevant characteristics, including interior condition, and reference the source used in the report. For example, it is unacceptable to assume the condition of the property is “average” or “similar to the exterior of the home”. 

The Appraiser’s Certifications, approved for use with desktop and exterior-only appraisals prepared using the COVID-19 flexibilities, require the appraiser to report the condition of the improvement in factual, specific terms. The appraiser may rely on subject property information from third-party data sources. 

As previously communicated in Bulletin 2020-05 and COVID-19 FAQs, if there is insufficient information about the property to complete the appraisal assignment, the mortgage is not eligible for sale to Freddie Mac.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “For states without an express and currently effective RON statute, we assessed the overall likelihood of that state’s recognition of valid RON acts performed out of state, and looked at a number of factors, including governors’ executive orders, applicable state laws, and applicability of the Full Faith and Credit clause of the U.S. Constitution (and any exceptions to its application). The state list was aligned with Freddie Mac. The passage of a federal law is also contemplated in the language and would potentially supersede the need for state-by-state analysis.”

Freddie Mac: “In determining the states to be included in Exhibit C of Guide Bulletin 2020-8, a state that has not enacted an express Remote Online Notarization statute is analyzed based on the likelihood that its overall legal structure will recognize RON. The issuance of a governor’s emergency executive order is one of several factors in such analysis.”

Source | Fannie Mae
Source | Freddie Mac

Freddie Mac: “Yes. However, for the exterior-only appraisal to be eligible for reuse for a subsequent transaction, the existing mortgage (i.e., the mortgage being refinanced) must be owned by Freddie Mac. Additionally, the requirements of Guide Section 5601.8 must be met, including age of appraisal reports, appraisal update requirement and reuse of an appraisal report. The subsequent transaction must have an application received date that is prior to expiration of the flexibilities for appraisals allowed for COVID-19.”

Fannie Mae: “A credit report supplement may be acceptable to meet the requirements in LL-2020-03, depending on the information provided in the document, if it demonstrates that the borrower has made all mortgage payments due in the month prior to the note date of the new loan transaction no later than the last business day of the month. For example, a supplement that provides confirmation of the date of the last payment made by the borrower and the due date of the next payment would be acceptable. Credit report supplements that only provide the current status of the mortgage, such as “current” or “paid as agreed,” or are only reflective of the information that otherwise appears on the credit report, would not be sufficient to verify that the borrower meets the terms of LL-2020-03.” 

Source | Freddie Mac
Source | Fannie Mae

Freddie Mac: “Yes. However, for the exterior-only appraisal to be eligible for reuse for a subsequent transaction, the existing mortgage (i.e., the mortgage being refinanced) must be owned by Freddie Mac. Additionally, the requirements of Guide Section 5601.8 must be met, including age of appraisal reports, appraisal update requirement and reuse of an appraisal report. The subsequent transaction must have an application received date that is prior to expiration of the flexibilities for appraisals allowed for COVID-19.”

Fannie Mae: “No. The temporary COVID-19 appraisal flexibilities only permit a desktop appraisal to be used for a purchase transaction, and Selling Guide B4-1.2-02, Appraisal Age and Use Requirements requires that to be able to reuse an appraisal for a subsequent transaction, the new transaction must be a no-cash out refinance.”

Source | Freddie Mac
Source | Fannie Mae

Freddie Mac: “No. The temporary COVID-19 appraisal flexibilities only permit a desktop appraisal to be used for a purchase transaction and Guide Section 5601.8 requires that to be able to reuse an appraisal for a subsequent transaction, the new transaction must be a no-cash out refinance.”

Fannie Mae: “No. Although the 1004 Desktop (70D) and 1004 Hybrid (70H) are now available, they will only be used in a few instances for testing purposes and are not acceptable for use with the COVID-19 appraisal flexibilities. Appraisers should continue using the eligible forms for desktop appraisals using COVID-19 appraisal flexibilities as provided in LL-2020-04 (Forms 1004/70, 1073/465, 2090, 1025/72, and 1004C/70B).” 

Source | Freddie Mac
Source | Fannie Mae

Fannie Mae: “The update to record retention requirements applies to all loans delivered with remote online notarizations in accordance with the requirements set forth in LL-2020-03. For loans delivered prior to Aug. 27, 2020, lenders will not be required to store the notarial ceremony for the life of the loan and instead must maintain the notarial ceremony per the updated requirements of LL-2020-03.”

Freddie Mac: “The update to record retention requirements applies to all mortgages delivered with remote online notarizations in accordance with the requirements in Bulletin 2020-8.  For mortgages delivered prior to August 27, 2020, Sellers will not be required to store the notarial ceremony for the life of loan and instead must maintain the notarial ceremony in compliance with the updated requirements of Bulletin 2020-35.”

 

Source | Fannie Mae
Source | Freddie Mac

Freddie Mac: “As announced in Guide Bulletin 2020-12, starting May 1, Freddie Mac began purchasing new loans that entered forbearance – as a result of Borrower hardship caused by COVID-19 – after origination and prior to our purchase. 

This is a temporary measure to support the market and is not meant as a change to our long-standing definition of what constitutes an investment quality mortgage. These temporary requirements, extended in Guide Bulletin 2020-17 and further extended in Guide Bulletins 2020-23, 2020-30 and 2020- 35, are effective for Mortgages with Note Dates on or after February 1, 2020 and on or before September 30, 2020. Additionally: 

  •       Mortgages with Note Dates on or after February 1, 2020 and on or before March 31, 2020 must have Settlement Dates on or before May 31, 2020, and 
  •       Mortgages with Note Dates on or after April 1, 2020 and on or before September 30, 2020 must have Settlement Dates on or before November 30, 2020.” 

Fannie Mae: “Yes, certain loans that go into forbearance after loan closing and before sale to us became eligible for sale beginning May 1, 2020. Refer to Lender Letter LL-2020-06, Selling Loans in Forbearance Due to COVID-19 for eligible note and delivery dates, and all eligibility and delivery requirements.”

Source | Freddie Mac
Source | Fannie Mae

Fannie Mae: “In accordance with Selling Guide, B3-6-05, Monthly Debt Obligations, non-mortgage debts paid by others can be excluded from the borrower’s DTI ratio with documented evidence that the other party has been making the payments for at least 12 months and the payment history indicates there are no delinquencies. 

Given that many student loans were placed into an automatic forbearance status and the other party may have missed payments due to the forbearance, we will allow exclusion of the monthly student loan payment if: 

  • the missed payments are resolved by the responsible party (not the borrower) prior to closing of the new mortgage loan; 
  • the responsible party had been making payments on the student loan for at least nine months prior to the automatic forbearance; 
  • the lender provides borrower documentation evidencing the student loan is in a COVID-related automatic forbearance, and any missed payments have been paid; and 
  • all other Selling Guide requirements have been met (for example, evidence of 12 total payments, either monthly or in aggregate, on the omitted debt).”
Source | Fannie Mae

ICBA: “Large volume lenders are relieved from new quarterly reporting; however, all entities should continue collecting and recording HMDA data in anticipation of making annual submissions in March 2021. On March 26, The Consumer Financial Protection Bureau (Bureau) issued a statement that it will not expect quarterly information reporting by certain mortgage lenders as required under the HMDA and Regulation C (generally financial institutions that report for the preceding calendar year at least 60,000 covered loans and applications (excluding purchased loans) must report their HMDA data quarterly (except for the fourth quarter) in addition to annually).”

 

Source | ICBA

Fannie Mae: “Hourly workers are covered under our variable income policy. The year-to-date income amount being used will account for a decline in income when determining the amount of income to be used for the trending analysis and when determining the amount to be used for qualifying purposes.” 

Freddie Mac: “The 2020 YTD earnings average used for qualifying, in accordance with Guide Section 5303.4(b), accounts for the decline in income experienced during the pandemic related income interruption(s).”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “A gap in employment or a reduction in income due to COVID-19 cannot be excluded from the calculation, and the year to date income must continue to be calculated over the entire time period. Refer to B3-3.1-01, General Income Information.”

Freddie Mac: “No.  For fluctuating employment earnings (e.g., fluctuating hourly employment earnings, overtime, bonus, commission, tips), and regardless of the earnings trend, all 2020 YTD income must be included in the calculation, in accordance with the requirements in Guide Section 5303.4(b) Employed income calculation guidance and requirements.  As the pandemic is ongoing, the income interruption/gap is not yet considered a one-time occurrence, such as an isolated injury may be; therefore, the period of income interruption must be considered in the overall YTD calculation.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “The lender can continue to deliver loans with loan application dates prior to Jun. 11, 2020, without the additional level of documentation provided the lender determines the income amount used for qualifying purposes is stable and likely to continue by performing a self-employment income analysis in compliance with Selling Guide requirements. Lenders are encouraged to apply these temporary requirements to existing loans in process.”

Freddie Mac: “The additional documentation specified in Bulletin 2020-19 is not required for mortgages with application received dates before June 11, 2020, however the seller must determine when additional analysis and documentation is needed establish that the income amount used for qualifying purposes is stable and likely to continue in accordance with requirements of Chapters 5301 and 5304. Sellers are encouraged to apply these temporary requirements to existing Mortgages in process.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “No. As reflected in LL-2020-03, self-employed borrowers must provide either a 2020 audited year to date Profit and Loss Statement OR a 2020 unaudited year to date Profit and Loss Statement along with two months business depository account statements. Lenders must utilize these additional documents along with the standard documentation required in the Selling Guide (B3-3.2-01, Underwriting Factors and Documentation for a Self-Employed Borrower) when calculating the income used to qualify the borrower.” 

Freddie Mac: “No, for the purposes of Bulletin 2020-19, a 2019 P&L is not required; however, a 2019 business financial statement may be used to assist in evaluating income stability when tax returns are on extension, as stated in Section 5304.1.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “Yes. Lenders can continue to waive business income tax returns when the requirements of the Selling Guide are met.” 

Freddie Mac: “Yes; however, the seller may choose to obtain an additional year(s) of individual and/or business tax returns to support their underwriting decision.”

Source | Fannie Mae
Source | Freddie Mac

Is it acceptable to only use year-to-date income to calculate qualifying variable income? (added July 2 by Hollis Daniels)

Freddie Mac: “According to Guide Section 5303.4(b), if the income is consistent or the trend is increasing, the Seller must average the most recent year(s) and YTD income over the applicable number of months documented.”

“When the income trend is declining, the seller must use the YTD income and must not include the previous higher level unless there is documentation of a one-time occurrence (e.g., injury) that prevented the Borrower from working or earning full income for a period of time and evidence that the Borrower is back to the income amount that was previously earned. As the COVID-19 pandemic is ongoing, the income interruption/gap is not yet considered a one-time occurrence, such as an isolated injury may be.”

Fannie Mae: “When variable income is the source of income used in qualifying the borrower(s), lenders must follow the requirements as outlined in B3-3.1-01, General Income Information and perform a trending analysis. This includes determining the monthly year-to-date income amount and comparing that to prior years’ earnings to determine the appropriate amount of qualifying income for the loan transaction.

If the trend in the amount of income is stable or increasing, the income amount should be averaged. 

If the trend was declining but has since stabilized and there is no reason to believe that the borrower will not continue to be employed at the current level, the current, lower amount of variable income must be used (i.e., the monthly year to date income amount). 

If the trend is declining, the income may not be stable. Additional analysis must be conducted to determine if any variable income should be used.” 

 

Source | Fannie Mae
Source | Freddie Mac

FDIC: “No. Mortgage originations are typically subject to the CFPB’s Ability to Repay and Qualified Mortgage Rule (ATR/QM). The ATR/QM rule does not apply when you alter the terms of an existing loan without refinancing it. A loan modification that does not meet the definition of a refinancing in Regulation Z at § 1026.20(a) is not subject to the ATR/QM rule, and, accordingly, would not alter the QM status of a loan that was a QM at origination. As the CFPB notes in its Small Entity Compliance Guide: “The Truth in Lending Act applies to a loan modification only if it is considered a refinancing under Regulation Z. If a loan modification is not subject to the Truth in Lending Act, it is not subject to the ATR/QM rule. Therefore, you should determine if a loan modification is a refinancing to see if the ATR/QM rule applies. You will find the rules for determining whether a loan workout is a modification or a refinance in Regulation Z at § 1026.20(a) and accompanying Commentary.” 

 

Source | FDIC

HUD: “FHA has observed a significant increase in Early Payment Default (EPD) nationwide.  Most are likely caused by loss of employment and/or income due to the COVID-19 National Emergency, not the result of non-compliance with FHA Single Family origination and underwriting requirements.  Therefore, FHA is providing Mortgagees with flexibility by temporarily waiving its requirements found in Handbook 4000.1, Sections V.A.3.a.i(C) and V.A.3.a.iv(B)(2).  With this waiver, Mortgagees are not required to conduct QC reviews of EPDs that would have been selected as part of a Mortgagee’s May, June or July 2020 QC selections. Mortgagees must continue to meet all other loan-level QC requirements in Section V.A.3. For example, Mortgagees must select FHA-insured loans for review via random and discretionary sampling methods that meet the conditions described in Section V.A.3.a.iv. These random and discretionary samples may include EPDs.”

Source | HUD

Fannie Mae: “There is no pre-defined criteria or calculation for a claim amount from an investor. Investors can evaluate several factors on which they believe that they have been financially harmed due to an event, like a loan repurchase. You may contact your Fannie Mae account team to discuss.”

Freddie Mac: “In the event investors in Freddie Mac securities pay a premium that exceeds any premium paid to the Seller, the Seller will be responsible to pay the excess amount apportioned based on loan UPB and impacted investors that choose to make claims.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “No. Other than the specific instances where an LLPA is identified as a remedy, there will be no repurchase alternatives offered.” 

Freddie Mac: “No.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “Lenders should contact their Fannie Mae account team to make their respective election. Your account team will provide guidance on formalizing your remedy election.”

Freddie Mac: “Seller/Servicers should contact their Freddie Mac representative or call their Customer Support Contact Center at 800-FREDDIE how to make their election or if they have questions.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “Lenders must self-report any loan that did not meet the requirements for the sale of loan in forbearance set forth in LL-2020-06 in accordance with self-reporting provisions set forth in Selling Guide D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit. 

Fannie Mae will require the responsible party (“lender”) to remedy the loan as described here.”

Freddie Mac: “Sellers must self-report any mortgage in forbearance that did not meet the requirements in Bulletin 2020-12 for the sale of a mortgage in forbearance following the QC reporting provisions set forth in Guide Section 3402.10 or through Quality Control Advisor®, and Freddie Mac will require the Seller to remedy the mortgage as described here.”

Source | Fannie Mae
Source | Freddie Mac

National Association of Realtors: “Yes. When an infectious disease, such as COVID-19, is associated with a specific population or nationality, fear and anxiety may lead to social stigma and discrimination.” Housing professionals “may not discriminate against individuals on the basis of their national origin, even if they are from other countries that have also been hit particularly hard by the COVID-19 pandemic.”

National Association of Realtors: “Federal and state fair housing laws remain intact during the COVID-19 pandemic. Those laws make it unlawful to discriminate on several protected bases, including disability and national origin. The pandemic provides a unique set of circumstances for navigating federal antidiscrimination provisions. First, each real estate professional must determine whether they will provide services during this time. To the extent they continue to make services available, the Fair Housing Act applies. Such services should be provided on an equal basis while recognizing that no one is required to engage in any transactions that put their health or safety, or the health and safety of others, at risk. If reasonable accommodations can be made to provide housing or services to individuals with COVID-19, without threatening the health or safety of others, the federal Fair Housing Act calls for such accommodations to be made.”

CFPB: “Yes. The ECOA Valuations Rule already includes flexibility that allows an applicant to waive certain timing requirements of the Rule. For valuations developed in connection with an application that are subject to the ECOA Valuations Rule, creditors must generally provide applicants with copies of all valuations promptly upon completion, or three business days prior to consummation of the transaction (for closed-end credit) or account opening (for open-end credit), whichever is earlier. However, as noted in a September 14, 2018 Statement on Supervisory Practices Regarding Financial Institutions and Consumers Affected by a Major Disaster or Emergency, the ECOA Valuations Rule permits an applicant to waive the timing requirement through an affirmative oral or written statement and agree to receive any copy at or before consummation or account opening, except where otherwise prohibited by law. This regulatory flexibility available under the ECOA Valuations Rule can expedite access to credit secured by a first lien on a dwelling for consumers affected by the COVID-19 pandemic.” 

Source | CFPB

Freddie Mac: “When a borrower refinances a mortgage that with a payment deferral and the amount of the deferred payments is included in the new mortgage, the new mortgage is eligible for sale to Freddie Mac as a “no cash-out” refinance if it otherwise meets all of the requirements for an “no cash-out” refinance in the Single-Family Seller/Servicer Guide. Funds applied to paying off the deferred portion are not considered cash out.” 

Fannie Mae: “When a borrower refinances a loan that has a payment deferral and the amount of the deferred payments is included in the new loan, the new loan is eligible to be sold as an LCOR if it otherwise meets all of the requirements for an LCOR in the Selling Guide. Funds applied to pay off the prior loan, including the deferred portion, are not considered cash out.” 

Source | Fannie Mae
Source | Freddie Mac

Freddie Mac: “No. Missed payments during a forbearance may not be refinanced into the new loan amount in a no cash-out or cash-out refinance transaction. However, per the temporary requirements in Bulletin 2020-17, if the existing mortgage is in a repayment plan, Payment Deferral, trial period plan or other loss mitigation program and the borrower has either successfully completed the loss mitigation program or made at least three consecutive timely payments, as applicable, the proceeds may be used to pay off the existing mortgage.” 

Fannie Mae: “No. Missed payments during a forbearance may not be refinanced into the new loan amount in a limited cash-out or cash-out refinance transaction. However, if a borrower has initiated a repayment plan or accepted a loss mitigation solution (e.g., payment deferral, modification, etc.) and has made three timely payments, the entire existing loan amount, including any remaining outstanding payments under a repayment plan or deferred amounts, may be refinanced into the new loan. See Lender Letter LL-2020-03 for details.” 

Source | Fannie Mae
Source | Freddie Mac

Freddie Mac: “If a borrower was not employed on the note date, the loan would be ineligible for sale to Freddie Mac regardless of the temporary flexibilities set forth in Bulletin 2020-12. The loss of employment would constitute a significant defect and the mortgage would be subject to repurchase unless there is other eligible documented income that would satisfy our qualification requirements. Freddie Mac’s standard QC process, including a seller’s opportunity to provide additional information or documentation in the rebuttal process, would apply.” 

Fannie Mae: “If a borrower was not employed on the note date, the loan would be ineligible regardless of the temporary flexibilities in LL-2020-06. We would cite a significant defect and the loan would be subject to repurchase unless there was other eligible income documented and the loan satisfies our qualification requirements. Our standard QC process includes an opportunity for lenders to provide additional information or documentation in the rebuttal process.”

Source | Fannie Mae
Source | Freddie Mac

Freddie Mac: “If the forbearance begins on the settlement date of the loan, the Credit Fee in Price will be assessed. Please refer to the Post Fund Data Correction instructions to add the IFI.” 

Fannie Mae: “If the forbearance begins any time on the sale date of the loan, the LLPA is due to Fannie Mae. For whole loans, the sale date is the date that Fannie Mae sends funds via wire transfer to the lender. For MBS, the sale date is the date that Fannie Mae issues MBS securities to the lender or to the investor designated by lender (also known as the settlement date) and takes ownership of, and title to, the loan. See Receiving Sale Proceeds or Securities in the C1-2-01, General Information on Delivering Loan Data and Documents.”

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “When the mortgage loan has an escrow account, the servicer must ensure the timely payment of all escrow and related charges in accordance with applicable law. 

However, without regard to whether the mortgage loan has an escrow account, the servicer must protect Fannie Mae’s mortgage lien and the property securing the mortgage loan by monitoring the status of all escrow and related charges; this includes advancing escrow to protect Fannie Mae’s mortgage lien.  See Servicing Guide B-1-01, Administering an Escrow Account and Paying Expenses for additional information.”

Freddie Mac: “When the mortgage loan has an escrow account, the servicer must ensure the timely payment of all escrow and related charges in accordance with applicable law. 

However, regardless of whether the mortgage has an escrow account, the servicer must protect Freddie Mac’s first lien position and the property securing the mortgage by monitoring the status of all escrow and related charges; this includes advancing escrow to protect Freddie Mac’s first lien position.” 

Source | Freddie Mac
Source | Fannie Mae

Fannie Mae: “Yes. Specifically for COVID-impacted borrowers, the CARES Act states that a forbearance plan must be provided to any borrower who requests a forbearance with an attestation of the financial hardship caused by the COVID-19 emergency; and no additional documentation other than the borrower’s attestation to a financial hardship caused by the COVID-19 emergency is required. In the event that the servicer is unable to achieve full QRPC and offers a forbearance plan to a borrower impacted by COVID-19 in compliance with the CARES Act, the servicer is considered to be in compliance with Fannie Mae’s Servicing Guide.  The servicer must approve forbearance plans for borrowers impacted by COVID-19 in accordance with the CARES Act. 

If the servicer determines the borrower is not eligible for a forbearance plan per the requirements in the Servicing Guide or in Lender Letter LL-2020-02, Impact of COVID-19 on Servicing, but there are acceptable mitigating circumstances, it must request our prior written approval following the existing process. This process requires completion of the Forbearance Exception Request Template and submission to loss_mitigation@fanniemae.com. The subject line must Include “Forbearance.” See Servicing Guide D2-3.2-01, Forbearance Plan for additional information.”

Freddie Mac: “Yes, Borrowers impacted by COVID-19 must be offered forbearance under the information required by the CARES Act and Bulletin 2020-10, which do not require a borrower response package.”

Source | Freddie Mac
Source | Fannie Mae

Fannie Mae: “At the request of a borrower impacted by COVID-19, the servicer must provide an initial forbearance plan for a period up to 180 days, and that forbearance period may be extended for up to an additional 180 days at the request of the borrower.  In accordance with Servicing Guide D2-3.2-01, Forbearance Plan, the servicer may provide an initial forbearance period, and any extended forbearance period, in separate, shorter increments.  If the borrower’s COVID-19 related hardship has not been resolved during an incremental forbearance period, the servicer must extend the borrower’s forbearance period, not to exceed 12 months total.  For a borrower impacted by COVID-19, Fannie Mae is temporarily eliminating the requirement that the servicer must receive Fannie Mae’s prior written approval for a forbearance plan that would result in the mortgage loan becoming greater than 12 months delinquent.”

Freddie Mac: “Freddie Mac’s COVID-19 forbearance is available for up to six months initially (in increments if needed), and up to 12 months in total. The Servicer should discuss with the borrower the nature of the hardship and let that inform the decision of how long the forbearance should last, to the extent possible under applicable law. In the event that either a six-month term is what is agreed upon by the Servicer and borrower, or the borrower directly requests a six-month term, then the Servicer must offer a six-month term.”

Source | Fannie Mae
Source | Freddie Mac

HUD: “Mortgagees should report Status Code 06 – Formal Forbearance for the COVID-19 Forbearance and Status Code 10 – Partial Claim Started for the COVID-19 National Emergency Standalone Partial Claim, in the Single Family Default Monitoring System (SFDMS).

FHA continues to revise its FHA Single Family COVID-19 Q&A as needed to keep stakeholders updated with the latest information about FHA’s response to the Presidentially-declared COVID-19 national emergency. Refer to the Single Family main page on hud.gov for updates.”

Source | HUD

HUD: “Mortgagees should also use the Single Family Default Monitoring System (SFDMS) existing Delinquency/Default Reason Codes available to report the Reason for Default accurately. For example: 002 Illness of Principal Borrower or 003 Illness of Borrower’s Family Member if the default is due to a primary borrower or family member that is ill; 001 Death of Principal Borrower or 004 Death of a Borrower’s Family Member if the illness results in death; 016 Unemployment if the borrower is laid off and has no job to go back to; or 006 Curtailment of Income if the borrower’s income is otherwise affected, including furlough. For further reporting questions, please contact sfdatarequests@hud.gov.

FHA continues to revise its FHA Single Family COVID-19 Q&A as needed to keep stakeholders updated with the latest information about FHA’s response to the Presidentially-declared COVID-19 national emergency. Refer to the Single Family main page on hud.gov for updates.”

Source | HUD

HUD: “Yes. The FHA lender approval process is electronic, so lenders may continue to submit these requests.”

Source | HUD

HUD: “For borrowers included in the COVID-19 Moratorium published in Mortgagee Letter 2020-04, mortgagees should report the existing Delinquency/Default Status Code HUD Issued Moratorium (AS) for the applicable reporting cycle(s). Please do not report Natural Disaster (34). Borrowers otherwise affected by COVID-19 that require Loss Mitigation assistance should be reported as initially as Delinquent (42).

FHA continues to revise its FHA Single Family COVID-19 Q&A as needed to keep stakeholders updated with the latest information about FHA’s response to the Presidentially-declared COVID-19 national emergency. Refer to the Single Family main page on hud.gov for updates.”

 

Source | HUD

HUD: “HUD encourages servicers to consider the impacts of COVID-19 on borrowers’ financial situations and any flexibilities a servicer may have under the Fair Credit Reporting Act (FCRA) and CARES Act § 4021.d.(F) when taking any negative credit reporting actions. Borrowers with FHA-insured mortgages who are performing as agreed under FHA’s COVID-19 Forbearance option are not considered to be delinquent for purposes of credit reporting.”

Source | HUD

HUD: “Only one COVID-19 Standalone Partial Claim is available to each borrower.  If the borrower requires additional assistance, Mortgagees must evaluate the borrower for HUD’s Loss Mitigation Options.”

Source | HUD

HUD: “FHA permits a Borrower to designate an attorney-in-fact to use a POA to sign documents on their behalf at closing, including page 4 of the final Form HUD-92900-A, HUD/VA Addendum to Uniform Residential Loan Application, and the final Fannie Mae Form 1003/Freddie Mac Form 65, URLA.  Detailed requirements on the use of a POA to execute closing documents can be found in Handbook 4000.1 Section II.A.6.a(xiii).  Included in this section are specific requirements for use of a POA, which has a connection to the transaction.”

Source | HUD

HUD: “FHA does not regulate the use or format of the notarization of documents. The Mortgagee must ensure that the Mortgage and Note comply with all applicable state and local requirements for creating a recordable and enforceable Mortgage, and an enforceable Note, including the requirements for notarization of these documents. Generally, the state law governs what requirements are applicable for proper notarization of a document.”

Source | HUD

Fannie Mae: “If a lender discovers a loan was in forbearance after the loan data was submitted to Loan Delivery but prior to the sale date (the date funds or the security is swapped), the lender must self-report the loan. These situations include: 

  • The loan was sold before Lender Letter LL-2020-06 was published or prior to May 1. 
  • The loan data was delivered after May 1 but did not include the SFC 919 because the borrower went into forbearance while the loan was in Fannie Mae acquisitions processing. 
  • The loan data was delivered after May 1 and the sale was consummated, but the loan data did not include the SFC 919. 

All self-reporting takes place in Loan Quality ConnectTM. This includes creating and submitting the self-report,  uploading all supporting documentation, and tracking a loan’s status as we make a decision as to how to  proceed. To facilitate the self-reporting process for COVID-19 loans, we added “COVID forbearance” to the self- reporting process for COVID-19 loans, we added “COVID forbearance” to the self-report reason menu in Loan Quality Connect. 

As a reminder, the lender must notify us within 30 days of identifying loans not eligible for delivery. Refer to D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit, for all our self-reporting requirements.

A Job Aid on how to self-report is available to assist lenders with this process.”

Freddie Mac: “A Seller must self-report the mortgage through the post-fund data correction process or, alternatively, through the QC reporting process, within thirty days of discovery, as set forth in Bulletin 2020-14.” 

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “The PPP is a loan issued by Small Business Administration lenders under the CARES Act. These loans are designed to provide a direct incentive for small businesses to keep their workers on the payroll. The existence of a PPP loan could be helpful information in analyzing the borrower’s business. Lenders should apply due diligence and review the actions of the business and any impact the current situation has taken on the flow of income.” 

Freddie Mac: “If a self-employed Borrower has taken out an SBA PPP loan under the CARES Act, no payment, estimated or otherwise, need be included in the DTI or considered in the income calculation (e.g., as a deduction from income) at this time. This guidance may change as more information about the PPP loans becomes available, including the amount of loan forgiveness (e.g., full, reduced or none) which will be determined at a later date.” 

Source | Fannie Mae
Source | Freddie Mac

Fannie Mae: “Certain types of temporary leave may be eligible for qualifying. See B3-3.1-09, Other Sources of Income; Temporary Leave Income. However, please note that furloughed borrowers are currently ineligible under the temporary leave policy. See Lender Letter LL-2020-03.”

Furloughed income being received for a specified period of time, such as four weeks,is not stable, predictable, or likely to continue and therefore does not meet the requirements in Selling Guide B3-3.1-01, General Income Information; Continuity of Income.”

Freddie Mac: “The requirements for Income while on temporary leave do not extend to employer-initiated actions, such as furloughs and layoffs regardless of whether there is an expected return to work date.”

Source | Fannie Mae
Source | Freddie Mac

Freddie Mac: “Yes. Temporary alternative methods of verifying the borrower’s employment were introduced in Bulletin 2020-5.”

Fannie Mae: “Yes, reference the guidelines and flexibilities announced in Lender Letter LL-2020-03, Impact of COVID-19 on Originations.”

Source | Freddie Mac
Source | Fannie Mae

FHFA: On April 21, the Federal Housing Finance Agency (FHFA) announced:

“The alignment of Fannie Mae’s and Freddie Mac’s (the Enterprises) policies regarding servicer obligations to advance scheduled monthly principal and interest payments for single-family mortgage loans. Once a servicer has advanced four months of missed payments on a loan, it will have no further obligation to advance scheduled payments. This applies to all Enterprise servicers regardless of type or size…

When a mortgage loan is in a Mortgage-Backed Security (MBS), Fannie Mae servicers with a scheduled payment remittance are responsible for advancing the principal and interest payment regardless of borrower payments. Freddie Mac servicers, who are generally responsible for advancing scheduled interest, are only obligated to advance four months of missed borrower interest payments. Today’s instruction establishes a four-month advance obligation limit for Fannie Mae scheduled servicing for loans and servicers which is consistent with the current policy at Freddie Mac.

FHFA is also instructing the Enterprises to maintain loans in COVID-19 payment forbearance plans in Mortgage Backed Security (MBS) pools for at least the duration of the forbearance plan.”

Source | FHFA

CFPB: “Yes, the CARES Act forbearance qualifies as a “short-term repayment forbearance program” under Regulation X. The mortgage servicing rules already include an exception from certain loss mitigation procedural requirements for short-term payment forbearance programs, such as the CARES Act forbearance. This existing regulatory flexibility permits servicers to quickly offer borrowers CARES Act forbearances. FAQs # 2 through 4 under “Short-term Loss Mitigation Options” below describe this flexibility.” 

Source | CFPB

Fannie Mae: “No, Fannie Mae’s existing policies related to disasters do not apply to loans impacted by COVID-19. Instead, lenders and servicers can follow the guidance in Lender Letters LL-2020-02, Impact of COVID-19 on Servicing, LL- 2020-03, Impact of COVID-19 on Originations and LL-2020-04, Impact of COVID-19 on Appraisals. All guidance specific to COVID-19 will be communicated through Lender Letters and FAQ documents such as this. Also, note that loans in forbearance due to COVID-19 are not subject to the disaster-related forbearance policies in A2-3.2-02, Enforcement Relief for Breaches of Certain Representations and Warranties Related to Underwriting and Eligibility.” 

Freddie Mac: “No. While we are aware the Federal Emergency Management Agency (FEMA) has made certain declarations that would potentially lead this national emergency to also be considered an “Eligible Disaster’ in certain areas, we have created specific requirements related to servicing mortgages impacted by COVID-19. Servicers must follow those specific requirements in Guide Bulletins 2020-4, 2020-6, 2020-7, 2020-10, 2020-15 and 2020-16.”

 

Source | Fannie Mae
Source | Freddie Mac

OCC: “The OCC and other federal banking regulators recognize the potential for COVID-19 to adversely affect customers and bank operations. In addition to the various regulators’ individual announcements, the federal banking regulators and the Consumer Financial Protection Bureau continue to collaborate with the state regulators on COVID-19 and other issues.”

Source | OCC

CFPB: “Not immediately. In general, if a borrower submits an incomplete loss mitigation application 45 days or more before a foreclosure sale, servicers generally must exercise reasonable diligence to obtain documents and information to complete the borrower’s loss mitigation application. Regulation X, 12 CFR 1024.41. However, servicers may suspend reasonable diligence efforts to complete a borrower’s loss mitigation application while the borrower is performing under a short-term payment forbearance program until near the end of the program, unless the borrower requests additional assistance (e.g., longer term relief, such as a loan modification). Regulation X, Comment 41(b)(1)-4.iii. In the case of a 180-day CARES Act forbearance, for example, a servicer could suspend these efforts until near the end of the 180 days. If, for example a servicer extended the CARES Act forbearance an additional 180 days, the servicer could suspend these efforts until near the end of the second 180 days. 

For more information about the loss mitigation requirements, see section 13 of the Bureau’s Real Estate Settlement Procedures Act (Regulation X) and Truth in Lending Act (Regulation Z) Mortgage Servicing Rules Small Entity Compliance Guide.” 

Source | CFPB

HUD: “FHA will continue to process claims during the COVID-19 National Emergency; however, servicers may experience slightly longer processing timeframes if there are office closures, particularly for any claims submitted manually and Title I claim submissions and Title I manufactured housing endorsements.”

Source | HUD

OCC: “On April 3, 2020, the OCC, along with the other federal financial institution regulatory agencies and the state banking regulators, issued an interagency statement on mortgage servicing that provides needed regulatory flexibility to enable mortgage servicers to work with struggling consumers affected by COVID-19. The statement clarifies the application of the Regulation X mortgage servicing rules to Coronavirus Aid, Relief, and Economic Security (CARES) Act forbearance and describes the agencies’ flexible approach to supervision and enforcement with respect to certain Regulation X provisions that require consumer notices and loss mitigation provisions.”

Source | OCC

HUD: “If a borrower does not qualify for the COVID-19 Standalone Partial Claim at the end of the forbearance period, mortgagees must review the borrower for the standard FHA Loss Mitigation Options as outlined in the Single Family Housing Policy Handbook 4000.1, Section III.A.2.k HUD’s Loss Mitigation Options.”

Source | HUD

HUD: “Mortgagees must offer the COVID-19 Forbearance to all borrowers who experience a financial hardship adversely impacting their ability to make on-time mortgage payments due, directly or indirectly, to the COVID-19 National Emergency, if requested by the borrower.”

Source | HUD

HUD: “Yes. FHA published Mortgagee Letter (ML) 2020-04, “Foreclosure and Eviction Moratorium in connection with the Presidentially-Declared COVID-19 National Emergency,” on March 18, 2020. This ML announced an immediate foreclosure and eviction moratorium for all FHA-insured single family mortgages for a 60-day period.”

“FHA-insured Single Family mortgages, excluding vacant or abandoned properties, are subject to an extension to the moratorium on foreclosure through June 30, 2020. The moratorium applies to the initiation of foreclosures and to foreclosures in process.

Separate from any eviction moratorium applicable to lessors provided under the CARES Act, evictions of persons from properties securing FHA-insured Single Family mortgages, excluding actions to evict occupants of legally vacant or abandoned properties, are also suspended through June 30, 2020.

Deadlines for the first legal action and reasonable diligence timelines are extended by 90 days from the date of expiration of this moratorium for FHA- insured Single Family mortgages, except for FHA-insured mortgages secured by vacant or abandoned properties.”

HUD: “The Federal Housing Administration (FHA) announced the third extension of its foreclosure and eviction moratorium through December 31, 2020, for homeowners with FHA-insured single family mortgages covered under the Coronavirus Relief and Economic Security (CARES) Act.”

Source | HUD
Source | HUD
Source | HUD
Source | HUD

HUD: “Yes. On March 27, 2020, FHA published Mortgagee Letter 2020-05, which announced alternatives that mortgagees can use to re-verify borrowers’ employment for all FHA Single Family Title II forward mortgages prior to settlement, where required, so long as certain conditions are met. Refer to ML 2020-05 for details.” 

Source | HUD

HUD: “The exterior-only appraisal and the desktop- only appraisal options are permitted when circumstances warrant. The FHA roster appraiser must complete all required appraisals in accordance with acceptable Appraisal Reporting Forms and Protocols.”

Source | HUD

HUD: “No. The mortgagee must obtain the borrower’s signature on the appropriate IRS form to obtain tax returns directly from the IRS for all credit-qualifying mortgages at the time the final Uniform Residential Loan Application (URLA) is executed. If FHA requires tax returns as required documentation for any type of effective income, in lieu of signed individual or business tax returns from the borrower, the mortgagee may obtain a signed IRS Form 4506, Request for Copy of Tax Return, IRS Form 4506-T, Request for Transcript of Tax Return, or IRS Form 8821, Tax Information Authorization, and tax transcripts directly from the IRS.”

Fannie Mae: “If verbal or electronic reverifications cannot be completed, lenders can complete the file review without the reverification. However, lenders must: 

  • internally track all loans that did not have a successful reverification attempt during this time, and 
  • conduct a special discretionary sample of such mortgages and perform the required reverifications on the sample population upon the expiration of the flexibilities contained in Lender Letter LL-2020-03, Impact of COVID-19 on Originations 

As a reminder, the reporting requirements of D1-3-06, Lender Post-Closing Quality Control Reporting, Record Retention, and Audit continue to apply with respect to this special discretionary sample(s). 

Reminder: Lenders should prioritize execution of IRS Form 4506-T in the special discretionary sample(s) based on the expiration date of the IRS Form 4506-T.” 

Freddie Mac: “Freddie Mac does not require IRS transcripts to be obtained in connection with origination of the Mortgage.”

Source | HUD
Source | Fannie Mae
Source | Freddie Mac

HUD: “Yes. The FHA TOTAL Scorecard will be available.”

Source | HUD

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