On May 15, 2020, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions Act (H.R. 6800, or the “HEROES Act”). The legislation is a controversial behemoth. It would provide another round of stimulus checks and student loan forgiveness, impose a 12-month eviction moratorium, expand mortgage forbearance relief, provide a

Against the backdrop of the COVID-19 pandemic and the economic stress it is imposing on residential mortgage borrowers, lenders and servicers, the Consumer Financial Protection Bureau recently released a compliance bulletin and policy guidance regarding the handling of information and documents in mortgage servicing transfers. While not specifically motivated by the COVID-19 crisis, Bulletin 2020-02

The COVID-19 national emergency has caused unprecedented economic disruption. The federal government was quick to enact relief measures for federal student loan borrowers who may be experiencing financial hardship as a result of the pandemic. Last week, nine states announced a coordinated effort to partner with private student loan servicers and offer relief for private

All participants in the housing industry are grappling with the effects of COVID-19, from borrowers to originators to servicers.  The emergency has influenced all facets of the mortgage origination and servicing business, prompting additional restrictions in some instances while triggering flexibilities and relaxed requirements in others.  Flood insurance requirements, which are usually strict and inflexible, have not been immune.

On March 28, 2020, the Assistant Administrator for the Federal Insurance and Mitigation Administration of the Federal Emergency Management Agency (“FEMA”) released a memorandum notifying National Flood Insurance Program (“NFIP”) insurers of an extension of the NFIP premium payment grace period.  Under normal circumstances, an insurer must receive the payment to renew an NFIP policy within 30 days of expiration.  However, recognizing the difficulties experienced by many policyholders (including loss of income and potential disruptions in employment), the administrator has extended the 30-day grace period to 120 days for all policies with expiration dates between February 13, 2020 and June 15, 2020.
Continue Reading Flood Insurance Policy Renewal Grace Period Extended by FEMA, and One Regulator Applies this Grace Period to Force Placement Notices

Today, the Federal Housing Finance Agency (“FHFA”) announced an eagerly awaited policy allowing Fannie Mae and Freddie Mac (the “Agencies”) to address one aspect of the liquidity crisis for mortgage servicers facing mounting advance obligations due to forbearances. Going forward, once a servicer of single-family mortgage loans pooled into an Agency mortgage-backed security has advanced four months of missed payments on a loan in forbearance, it will have no further obligation to advance scheduled payments of principal and interest.[1] The FHFA reports that this applies to all Agency servicers.

This answers one of the four main questions that servicers have asked about forbearance required under the CARES Act in the context of Agency servicing advances.
Continue Reading Fannie and Freddie to Relax Servicer Advance Requirements for Loans in Forbearance

Since Mayer Brown issued a Legal Update describing guidance issued by Fannie Mae, Freddie Mac (together with Fannie Mae, the “GSEs”), the Federal Housing Administration and the Veterans Administration (“VA”) relaxing requirements with respect to appraisals and income/employment verification during the COVID-19 emergency, the agencies have continued to revise their guidance as the market adjusts to the challenges encountered by mortgage lenders. The GSEs and the VA have all issued revised letters, and the US Department of Agriculture (“USDA”) issued new guidance to provide relief in connection with guaranteed single-family loans. Below we describe the USDA’s guidance regarding appraisals and employment verifications performed in connection with RHS loans and provide updates on the changes made by the GSEs and the VA to their appraisal guidance.
Continue Reading The GSEs and Other US Federal Agencies Issue New and Revised Guidance for Appraisals and Verifications of Employment

Residential mortgage loan servicers, trade associations and various members of Congress have been urging the Department of Treasury and the Federal Reserve Board to provide a dedicated servicing advance facility.  On April 10, 2020, Ginnie Mae did just that, announcing the terms of its much-anticipated Pass-Through Assist Program for Issuers of mortgage-backed securities that are

As the residential mortgage community is aware, loan servicers are facing significant financial burdens from the servicing advance obligations associated with the loan forbearance mandates of the CARES Act. Over the past few days, there has been considerable reporting and reaction to the statements by the Director of the Federal Housing Finance Agency that Fannie Mae and Freddie Mac will not provide financial assistance to servicers facing these burdens. On the heels of those statements, the Federal Reserve has unfortunately eliminated another potential source of support for those servicers.

Continue Reading Federal Reserve’s Updated TALF Program Excludes Support for Mortgage Servicing Advance Financing

Nevada requires nonexempt persons making unsecured or other non-real estate secured commercial or business loans, or non-real estate-secured consumer loans, to obtain a license under the state’s Installment Loan and Finance Act (the “Nevada Act”), administered by the state’s Division of Financial Institutions (the “Division”). Shortly after enactment of the federal Coronavirus Aid, Relief, and