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StoneHill, FHA, VA and USDA Updates Related to COVID-19

Posted on by Vinod

Additional Directives from The Stonehill Group

Tax Transcripts

To date, we have not had any communication from the Agencies concerning Tax Transcripts.  According to our Vendor and as per the IRS communication, the IRS is currently not processing the requests.  We are still submitting the orders for clients who have us order tax transcripts, which will be processed once the IRS reopens their centers.  At that time, we will make them available to our clients as evidence they were obtained. For clients that order the tax transcripts themselves we suggest you send in your files without them since the agencies have not extended timing requirements for your audits.

We are not delaying any reviews currently due to tax transcript impediments.  The Stonehill Group will make notes on your QC audit reports in instances where we are unable to review.

We are continuing to monitor daily all updates and will notify our Clients once we have more information.

Alternative COVID-19 guidelines

Please keep in mind although the Agencies are providing alternative guidelines they should not be used if you are able to obtain the document, reverification, or field review as outlined in the agency guidelines. These are meant to be alternatives in the event you cannot obtain them due to the COVID-19 Pandemic.

FHA, VA, and USDA Temporary Guidelines

As a result of the COVID-19 pandemic, FHA, VA and USDA have issued temporary guidelines around certain areas as reflected below. At the end of the section, there are links directly to the Circulars issued by the Agencies for further review. In addition, you can always refer to AllRegs, or directly to the Agency’s websites to see updated information.

FHA:

As a result of the Presidentially declared COVID-19 national emergency, the Federal Housing Administration (FHA) is announcing the following policy changes:

  • Re-verification of Employment, and Exterior-Only and Desktop-Only Appraisal Scope of Work Options for FHA Single Family Programs Impacted By COVID-19
  • Temporary Waiver Provides Mailing Alternative for Condominium Project Approval Application Packages
  • Temporary Waiver of Damage Inspection Reports in Presidentially Declared Major Disaster Areas due to COVID-19
  • Updated Single Family COVID-19 Q&A

 

Re-Verification of Employment and Exterior-only and Desktop-only Appraisal Property Inspection Protocols:

Today, the Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2020-05, “Re-verification of Employment and Exterior-Only and Desktop-Only Appraisal Scope of Work Options for FHA Single Family Programs Impacted By COVID-19.”

This ML announced alternatives that mortgagees can use to re-verify borrower’s employment for all FHA Single Family Title II forward mortgages and Home Equity Conversion Mortgages (HECMs) prior to settlement, where required, so long as certain other conditions are met.

Mortgagees can use the following alternatives to re-verify borrower’s employment:

  • Year-to-date paystub or direct electronic verification of income dated immediately prior to the note date; or
  • Bank statement showing a direct deposit from the borrower’s employer for the pay period that immediately precedes the settlement date.

For forward purchase transactions, the mortgagee must also provide documentation of a borrower’s cash reserves equaling a minimum of two months of principal, interest, taxes, and insurance (PITI).

Additionally, this ML provides guidance that permits FHA roster appraisers to use exterior-only or desktop-only appraisal inspections as a substitute for interior inspections for most forward mortgage and Home Equity Conversion Mortgage (HECM) purchase transactions and exterior-only appraisal inspections for most forward refinance and HECM traditional and refinance transactions.

This amended guidance, which affects both origination and servicing, is effective until May 17, 2020, as detailed in ML 2020-05.

Quick Links

 

Updated Single Family COVID-19 Q&A Posted:

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.

Quick Links

 

Veterans Administration (VA)

Loan Origination, Closing and Guaranty

The policies outlined below and further outlined within VA Circular are effective for all loans closed on or after March 27, 2020 and will remain in effect until further notice or rescission of the Circular.

Income Verification Guidelines. Lenders should continue to use good judgment and flexibility when verifying stable and reliable income. Lenders should make every effort to satisfy VA’s longstanding requirements concerning Verification of Employment (VOE) as outlined in the VA Pamphlet 26-7, Chapter 4 Credit Underwriting.

If their propriety method is impacted due to temporary business closures, the lender should use the guidelines below:

  1. The lender may utilize employment and income verification third party services. Additional fees associated with these services cannot be charged to the Veteran
  2. If the lender is not able to utilize a third-party service to verify employment and income a VOE can be met with evidence of direct deposit from a bank statement and paystubs covering at least one full month of employment within 30 days of the closing date. Lenders should reconcile payment amounts between the paystubs and direct deposit listed on the bank statement.
  3. If the required VOE documentation cannot be obtained by evidence of bank statements and paystubs, and the borrowers have cash reserves totaling at least 2 months mortgage payments (PITI) post-closing, the loan is eligible for guaranty. The lender’s efforts to obtain the VOE must be documented.

In the event lenders utilize option 2 or 3 as verification, they must document in box 47 of the remarks section on VA Form 26-6393, Loan Analysis, the option they selected and the supporting documentation.

Underwriting Loans:

For income analysis purposes, as outlined in VA Pamphlet 26-7, Chapter 4 Credit Underwriting, VA guidelines generally require income to be stable and reliable for 2 years

If the applicant was impacted by COVID-19 (i.e. furlough, curtailment of income, etc.),that period should not be considered a break in employment or income provided they have returned, or are anticipated to return, to work in the same capacity and income levels. In addition to standard verification documentation, applicants should provide furlough letters where applicable.

VA continues to encourage lenders to take proactive measures in documenting and uploading evidence of their analysis and justifications for all borrowers, especially for “borderline” cases. This may proactively address questions that VA may otherwise ask and prevent a loan level audit of that loan.

Electronic Mortgages (eMortgages), Electronic Notes and the use of Allonges:

VA anticipates an increase in eMortgages consistent with VA’s longstanding policy, established in VA Pamphlet 26-7, Chapter 9, Legal Instruments, Liens, Escrows, and Related Issues. VA is actively working with other federal housing agencies and Government National Mortgage Association (GNMA) to increase the accessibility of eMortgages. Lenders are reminded to comply with investor and/or GNMA guidance. It is important to clarify that an eMortgage package may or may not include an electronic note (eNote). VA loans for which the promissory note is an eNote are eligible for guaranty.

Promissory Note Requirements:

eClosing transactions, for all closings executed as of the date of this Circular may not include the use of an allonge. Any eClosing transaction including the use of an allonge is ineligible for guaranty and subject to the removal of the guaranty. While VA does not publish a standard Note or eNote as a template, VA encourages industry and technology partners alike, to review eNote templates to remove clauses referencing the possible inclusion of allonge.

Closing transactions including allonge(s) that would otherwise modify the terms of an eNote, are required to be closed using traditional, paper-based closing procedures. eClosings transactions are permissible for both, mortgages where the resulting promissory is an eNote and mortgage where the resulting promissory note is a paper note bearing a wet signature.

Valuation Practices:

VA will change the long-standing practice of requiring access to the interior of the home for certain types of loans and characteristics of those loans. Appraisers will still follow the same procedures of the VA appraisal process and are still required to meet USPAP and state requirements for delivering an appraisal that meets those qualifications but are allowed the broader use of exterior inspection. Considering the health and safety of Veterans and VA Appraiser Fee Panel members during this national emergency, valuations may come in a form of an Exterior-Only appraisal with enhanced assignment conditions or in limited instances, a Desktop appraisal. On page 1 of the Uniform Residential Appraisal Report (URAR), Subject section, “Map Reference” appraisers are to state “Exterior-Only” or “Desktop.” These procedures are temporary in nature and VA will return to normal operations after the national emergency.

USPAP Standards Rule 1-2, Standards Rule 2-2, and Advisory Opinion 2 does not require an inspection unless necessary to produce credible assignment results. Although an interior inspection would customarily be part of the scope of work for a VA appraisal assignment, health or other emergency conditions may require an appraiser to make an Extraordinary Assumption (EA) about the interior of a property. This is permitted by USPAP if the appraiser has a reasonable basis for the EA and still results in a credible analysis. The appraisers will always determine the scope of work for the assignment. All EA will be boldly noted in the Reconciliation section of the report. The report will be competed “AS IS” unless there are MPR requirements the appraiser observed in the review of the property. Without an interior review of the property, the appraiser can make an EA concerning MPRs with the information available.

The appraiser will continue to gain access to view the interior property in the instances outlined below.

Purchase Transaction (vacant property). When the appraiser’s assigned geographic jurisdiction does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place.

Purchase or Refinance Transaction (property occupied). When the appraiser’s assigned geographic jurisdiction does not have restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place. In addition, all parties must agree to the interior inspection and meet the following:

  1. Either party has not been instructed by health authorities to stay home or practice social distancing; or
  2. Does not have flu-like symptoms (such as fever, cough, or shortness of breath); or
  3. Has not been quarantined under direction of public health authorities; and
  4. No parties are within the CDC guidance of high risk found at https://www.cdc.gov/coronavirus/2019-ncov/specific-groups/high-risk-complications.html.

If either party does not wish to move forward with the interior inspection or do not meet the criteria listed above, the appraiser may move forward with an Exterior Only appraisal with enhanced assignment conditions. Lenders may not direct the appraiser to conduct an interior inspection.

Exterior-Only Appraisal. This report option with enhanced assignment conditions will be completed on the FNMA 2055/1075 URAR form. For manufactured homes and multi-unit (2- to-4 unit) properties, appraisers will use the 1004C or 1025 form. Appraisers are to boldly and inconspicuously state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19.” Exterior-Only Appraisal with enhanced assignment conditions will be limited to the maximum 2020 Freddie Mac Conforming Loan Limit for a one-unit limit for the county or county-equivalent area.

Purchase or Refinance transactions. When an area may be restricting personal contact or when either party are in or have others that reside with them that are categorized as high risk according to the CDC, the appraiser must make every effort to complete the enhanced assignment conditions listed below.

  1. The appraiser will review the full exterior of the property and provide photos of all sides of the property with detailed notes of the exterior and any visible MPRs. In instances of obstructed or restricted view and access is unable to be granted or allowed, Multiple Listing Service (MLS) photos of these areas may be utilized. If MLS photos are utilized, it must be explained in the appraisal report.
  2. A measurement of the footprint of the home should be provided if accessible. This is not to determine the gross living area (GLA) but for the appraiser to reconcile with public records.
  3. The appraiser will conduct a detailed interview over the phone with the occupant, Veteran, or real estate professional regarding the property. It is the appraiser’s responsibility to obtain sufficient information to provide a creditable report. Interview questions should be noted and kept in the appraiser’s work file. Key items that may impact market value should be noted in the appraisal report with details about what was provided and by whom.
  4. The appraiser may utilize any and all photos available from MLS, provided by the occupant, Veteran, or real estate professional.

Desktop Appraisal Valuations. This report option will be completed on the FNMA 1004, 1073, 1004C, 2025 and the appraiser will be required to attach a copy of the provided Scope of Work (SOW) Exhibit A, certifications, and assumptions in all reports. Appraisers are to boldly and inconspicuously state “Per Department of Veterans Affairs, no interior inspection was provided due to COVID-19”.

Desktop valuations will be limited to the maximum 2020 Freddie Mac Conforming Loan Limit for a one-unit limit for the county or county-equivalent area. The lender will address this at the time of the assignment.

Desktop appraisals will be conducted when the appraiser’s assigned geographic jurisdiction has restrictions imposed by authorities prohibiting individuals leaving their domicile, such as mandatory quarantine or shelter-in-place. Lenders must state in both in “public” notes in WebLGY and by e-mail to the appraiser if they will accept a Desktop appraisal. If the lender will not accept a Desktop appraisal, the appraiser will place the assignment on hold for 30 days and then subsequently cancel, if the status has not changed. The appraiser will annotate “public” notes in WebLGY updates on a weekly basis.

    1. Purchase transactions. The appraiser defines the scope of the work and will annotate in the appraisal report concerning the source of information provided.
  • Cash-Out Refinance Transactions. The appraiser will prioritize assignments based on purchase transactions first and determine if sufficient information is publicly available and verifiable. Appraisers are not required to proceed on the assignment if information is not available to provide a credible report. In the event the appraiser is not able to complete the assignment, the lender may choose to cancel the request or have the RLC suspend the assignment until the national emergency is lifted and a more detailed report can be produced.
  • Liquidation Transactions. Desktop valuations will not be utilized for liquidation purposes.

 

VA understands that there may be insufficient data available to produce a creditable report. Appraisers are not required to accept a Desktop valuation order. In addition, the use of Assisted Appraisal Processing Program (AAPP) is not authorized for Desktop appraisals. When an appraiser believes the scope of work required to develop a credible report is not capable in a Desktop appraisal, the appraiser must contact the RLC to place the assignment on hold.

Reconsideration of Value

Purchase Transactions. Reconsideration of Values (ROV) for purchase transactions will be restricted to no greater than 5 percent from the appraiser’s opinion of value. The same criteria is required as outlined in VA Pamphlet 26-7, Chapter 10 Appraisal Process (NEW), Section 22. In addition, a field review by VA Regional Loan Center (RLC) staff will not be a completed in conjunction with the ROV request.

Cash-Out Refinance Transactions. VA will suspend ROV requests for cash-out refinance loans until further notice

Memorandum of Values. In extreme cases when an appraiser is not available to complete an appraisal assignment for a purchase, VA has the authority and ability to issue a Memorandum of Value (MOV). This will be completed on a case-by-case basis.

Renovation and Repair Loans. Appraisers are to suspend any renovation and repair assignments until further notice.

Repair Inspections. Due to the lack of verification of completion by the appraiser or inspector that repair items have been completed, lenders have one of the two following options to supply to VA.

Lenders have the authority and are encouraged to certify repairs, especially repairs performed by licensed personnel, instead of an appraiser certification as outlined in the VA Pamphlet 26-7, Chapter 10 Appraisal Process (NEW), Section 23, Topic b. Repair certifications which may involve lead-based paint must still be completed by a fee appraiser; however, the lender can escrow for future inspection and costs with a third-party. Lenders may hold funds in escrow for repairs to be completed after closing.

All repairs must be completed and escrowed funds distributed before the loan may be guaranteed by VA as outlined in the VA Pamphlet 26-7, Chapter 12 Minimum Property Requirements (NEW), Section 44, Topic e. In addition, there must be adequate assurance that the work will be completed timely and satisfactorily (up to 180 days).

Termite Inspections. VA Pamphlet 26-7, Chapter 12 Minimum Property Requirements (NEW), Section 33, Topic b, requires a wood inspection report if the property is located in an area on the Termite Infestation Probability Map where the probability of termite infestation is “very heavy” or “moderate to heavy”. If there is no known or visible evidence of termite infestation present, the seller and realtor must provide a certification to that fact. If there is known or visible evidence of termite infestation, a clear termite report must be provided within one year of close of escrow.

Any additional NOV conditions. Any additional items that need to be met on the NOV to comply with VA requirements will have to be met in 180 days from the date of the NOV issuance. All conditions must be completed before the loan will be guaranteed by VA. The Veteran must acknowledge and accept any and all conditions not met prior to closing.

Appraiser Information. The appraiser defines the scope of the work and they must have enough information to provide a creditable report. The appraiser will need to rely upon all publicly discoverable records, MLS photos and commentary, real estate professionals and homeowners. It is imperative this information is documented and retained. Key items that may impact market value should be noted in the appraisal report with details about what was provided and by whom. When relying upon photos provided by another party or from the MLS, it should be noted in the report. When the appraiser believes that the assignment is too complex to be completed by a Desktop or Exterior-Only appraisal, the appraiser is to contact the RLC and the lender to place the assignment on hold.

 

USDA:

SFHGLP – Temporary Exceptions to Interior Inspection Appraisals and Verbal Verification of Employment:

The purpose of this announcement is to inform lenders of temporary exceptions pertaining to appraisals, repair inspections, and income verification for the Single-Family Housing Guaranteed Loan Program (SFHGLP) due to the COVID-19 pandemic. Effective immediately, the following exceptions to Agency guidance found at HB-1-3555 are in effect for a period of 60-days.

Residential Appraisal Reports – Existing Dwelling

For purchase and non-streamlined refinance transactions, when an appraiser is unable to complete an interior inspection of an existing dwelling due to concerns associated with the COVID-19 pandemic, an “Exterior-Only Inspection Residential Appraisal Report”, (FHLMC 2055/FNMA 2055) will be accepted. In such cases, appraisers are not required to certify that the property meets HUD HB 4000.1 standards. The appraisal must be completed in accordance with the Uniform Standards of Professional Practice (USPAP) and the Uniform Appraisal Dataset (UAD).

This exception is not applicable to new construction properties or construction to permanent loans. As a reminder, appraisals are not required for streamlined and streamlined-assist refinance transactions.

Repair Inspections – Existing Dwelling

Loans for which a completion certification is not available due to issues related to the COVID-19 pandemic, a letter signed by the borrower confirming that the work was completed is permitted. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the loan file.

This exception is not applicable to rehabilitation and repair loans noted in section 12.28 of HB-1-3555.

Verbal Verification of Employment

Lenders must document and verify the borrowers annual and repayment income in accordance with Agency regulations. Lenders should use due diligence in obtaining the most recent income documentation to reverify the borrowers repayment ability prior to closing. When the lender is unable to obtain a Verbal Verification of Employment (VVOE) within 10 business days of loan closing due to a temporary closure of the borrower’s employment, alternatives should be explored. For example, email correspondence with the borrower’s employer is an acceptable alternative to a VVOE. If the lender is unable to obtain a VVOE or acceptable alternative, the requirement will be waived when the borrower has a minimum of 2 months cash reserves.

In the case of a reduction of income, the borrower’s reduced income must be sufficient to support the new loan payment and other non-housing obligations. Borrower’s with no income at the time of closing are not eligible for SFHGLP loans regardless of available cash reserves.

Expiration of Temporary Exceptions

These temporary exceptions will expire 60 days from the date of this notice.

Questions regarding program policy and this announcement may be directed to the National Office Division at sfhgld.program@usda.gov or (202) 720-1452.

SFHGLP Lending Partner Webpage: https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDEsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMDAzMjcuMTk0MjUwMTEiLCJ1cmwiOiJodHRwczovL3d3dy5yZC51c2RhLmdvdi9wYWdlL3NmaC1ndWFyYW50ZWVkLWxlbmRlciJ9.CAcqNqhGx0SZTB5KKEschH9hOBkSAkv1WV2q1AZjbcQ/br/76743471871-l

SFHGLP webpage: https://lnks.gd/l/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMDIsInVyaSI6ImJwMjpjbGljayIsImJ1bGxldGluX2lkIjoiMjAyMDAzMjcuMTk0MjUwMTEiLCJ1cmwiOiJodHRwczovL3d3dy5yZC51c2RhLmdvdi9wcm9ncmFtcy1zZXJ2aWNlcy9zaW5nbGUtZmFtaWx5LWhvdXNpbmctZ3VhcmFudGVlZC1sb2FuLXByb2dyYW0ifQ.1fmK0XQy48-cFwVMR5EhL49gxgQ6HmNoiNTSPGpebmY/br/76743471871-l

 

 

StoneHill and Agency Updates Related to COVID-19

Posted on by Vinod

StoneHill is continuously monitoring the COVID-19 pandemic to anticipate any adverse impact to our clients, employees, or business processes. We have proactively migrated our team to remote work to ensure their safety and to adhere with various public health directives. We are currently operating at FULL STRENGTH and are prepared to serve our client’s current and future needs across all our lines of business. Please let us know if we can assist your organization as you navigate these unprecedented times.

As a result of the COVID-19 pandemic, Fannie and Freddie have issued temporary flexibilities around certain items noted below. At the end of this information there are links directly to the Lender Letters issued by the Agencies for further review.

Fannie Mae and Freddie Mac Guidance:

Effective Date:

These temporary flexibilities are effective immediately for all loans in process and remain in place for loans with application dates on or before May 17, 2020

Verbal Verification of Employment:

Many lenders are reporting difficulty in obtaining the verbal verification of employment (VOE) due to disruption to operations of the borrower’s employer. We expect lenders to attempt to obtain the verbal VOE in accordance with our existing requirements guidance. However, we will allow the following flexibilities:

  • Written VOE: The Selling Guide permits the lender to obtain a written VOE confirming the borrower’s current employment status within the same timeframe as the verbal VOE requirements. An email directly from the employer’s work email address that identifies the name and title of the verifier and the borrower’s name and current employment status may be used in lieu of a verbal VOE. In addition, the lender may obtain the VOE after loan closing, up to the time of loan delivery (though we strongly encourage getting the verbal VOE before the note date).
  • Paystub: The lender may obtain a year-to-date paystub from the pay period that immediately precedes the note date.
  • Bank statements: The lender can provide bank statements (or other alternative documentation as permitted by Selling Guide B3-4.2-01) evidencing the payroll deposit from the pay period that immediately precedes the note date.

NOTE: If employment has been validated by the Desktop Underwriter® (DU®) validation service, the validation will remain eligible for representation and warranty relief on employment provided the lender complies with the “close by” date in the DU message. Otherwise, the guidance provided above applies.

Continuity of Income:

Given the current economic climate associated with COVID-19 and its impact on employment and income, we recommend that lenders practice additional due diligence to ensure the most recent information is obtained. Lenders are strongly encouraged to help ensure any disruption to borrowers’ employment (or self-employment) and/or income due to COVID-19 is not expected to negatively impact their ability to repay the loan. During these uncertain times, it is our goal to partner with you to help ensure sustainable homeownership for the borrower.

As an example of additional due diligence for a self-employed borrower, lenders are encouraged to attempt to verify that the borrower’s business is operational closer to the note date rather than rely on our current Guide requirements (e.g., within 15 days instead of 120 days).

Temporary Appraisal Requirements Flexibility:

Effective immediately, we are allowing temporary flexibilities to our appraisal inspection and reporting requirements. As described below, we will accept an alternative to the traditional appraisal required under Selling Guide Chapter B4-1, Appraisal Requirements, when an interior inspection is not feasible because of COVID-19 concerns. We will allow either a desktop appraisal or an exterior-only inspection appraisal in lieu of the interior and exterior inspection appraisal (i.e., traditional appraisal).

If a traditional appraisal is not obtained and there is insufficient information about the property for an appraiser to be able to complete an appraisal assignment with a desktop or exterior-only inspection appraisal, the loan will not be eligible for delivery to us.

Desktop Appraisals:

For purchase money transactions when an interior and exterior appraisal is not available, lenders are encouraged to obtain a desktop appraisal rather than an exterior-only appraisal.

The minimum scope of work for a desktop appraisal does not include an inspection of the subject property or comparable sales. The appraiser relies on public records, multiple listing service (MLS) information, and other third-party data sources to identify the property characteristics.

When a desktop appraisal is performed, reported on Form 1004 or Form 1073, and submitted to us through the Uniform Collateral Data Portal® (UCDP®), the appraisal will be scored by Collateral Underwriter® (CU®). All loans with a CU risk score of 2.5 or less will receive value representation and warranty relief under Day 1 Certainty. With desktop appraisals, lenders will have the added risk management and efficiency benefit of being able to use CU to aid in the appraisal review process.

Each desktop appraisal report must include the following exhibits:  a location map indicating the location of the subject and comparables, and  photographs of the subject property. We recognize that it may be challenging in some instances to obtain photographs; however, it is expected that the appraiser utilizes available means to obtain relevant pictures of the subject property.

Exterior Only Inspection Appraisals:

An exterior-only inspection appraisal may be obtained in lieu of an interior and exterior inspection appraisal for the following transactions:  Purchase money loans Limited cash-out refinances where the loan being refinanced is owned by Fannie Mae Lenders will not receive value representation and warranty relief under Day 1 Certainty® for loans with exterior-only appraisals

Lenders are reminded that the following exhibits to the appraisal report are required for an exterior-only inspection appraisal:

  • A street map that shows the location of the subject property and of all comparable sales that the appraiser used,
  • clear, descriptive photographs (either in black and white or color) that show the front of the subject property, and that are appropriately identified (photographs must be originals that are produced either by photography or electronic imaging); and
  • any other data−as an attachment or addendum to the appraisal report form−that are necessary to provide an adequately supported opinion of market value.

We recognize that the existing appraisal report forms do not accommodate the revised scope of work, statement of assumptions and limiting conditions, and certifications for some of the scenarios presented. To accommodate the temporary flexibilities in this Lender Letter, Freddie Mac and Fannie Mae have jointly developed the following documents that include modified language to be used with desktop appraisal reports and exterior-only appraisal reports:

  • Modified Set of Instructions, Scope of Work, Statement of Assumptions and Limiting Conditions and Certification for Desktop Appraisals
  • Modified Set of Instructions, Scope of Work, Statement of Assumptions and Limiting Conditions and Certification for Appraisals with Exterior-only Inspection

These documents include modified language for the scope of work, statement of assumptions and limiting conditions, and certifications. It is important to note that certification #10 has been removed in recognition that the appraiser may have relied on information from an interested party to the transaction (borrower, realtor, property contact, etc.) and additional verification may not have been feasible. Appraisal reports submitted to us using the flexibilities provided in this Lender Letter must include these documents with the modified language for scope of work, statement of assumptions and limiting conditions, and certifications

Completion Reports:

We require the Appraisal Update and/or Completion Report (Form 1004D) to evidence completion when the appraisal report has been completed “subject to.” For all loans for which a completion certification is not available due to issues related to COVID-19, with the exception of HomeStyle® Renovation and HomeStyle Energy loans, we will permit a letter signed by the borrower confirming that the work was completed. Lenders must also provide further evidence of completion, which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the loan file.

As per a recent communication by the IRS, Clients should expect to see delays in receiving Tax Transcripts. The IRS has closed one of its locations and have routed requests to other locations. As a result, the IRS has communicated that it is expecting delays relating to Tax Transcript’s.

Links related to updates:

https://singlefamily.fanniemae.com/media/22316/display

https://singlefamily.fanniemae.com/media/22321/display

https://guide.freddiemac.com/app/guide/content/a_id/1003723

 

Freddie Mac Temporary Servicing Guidance Related to COVID-19

Effective Date:

The credit reporting, forbearance plan, and loan modification guidance announced in this Bulletin is effective immediately.

Freddie Mac will continue to monitor the situation and may revise or revoke this temporary guidance at any time, as appropriate.

In response to the challenges resulting from the outbreak and spread of the coronavirus disease (COVID-19), under FHFA direction and in alignment with Fannie Mae, Freddie Mac is announcing guidance with respect to the following items to assist impacted Borrowers:

  • Credit reporting requirements
  • Forbearance plans
  • Loan modifications
  • Foreclosure sale moratorium

These temporary measures will support Servicers’ efforts to assist Borrowers who experience a hardship resulting from COVID-19. This includes both Borrowers who have and have not contracted COVID-19, provided their ability to make timely Mortgage payments has been negatively affected as a result of COVID-19 (“COVID-19 related hardship”). The Servicer will determine what constitutes a COVID-19 related hardship and must treat all Borrowers equally when making this determination.

Credit Reporting Requirements:

The Servicer must not report to the credit repositories a Borrower who is on an active forbearance plan, repayment plan or Trial Period Plan as a result of a COVID-19 related hardship.

Forbearance Plans

In response to industry inquiries, we are clarifying that a COVID-19 related hardship is an eligible hardship under existing Guide requirements. Impacted Borrowers meet Freddie Mac’s forbearance hardship requirements as described in Guide Section 9202.2. This may include long-term or permanent disability/serious illness of a Borrower/co-Borrower or dependent family member, reduction in income, death or other eligible hardship reasons. The Servicer must achieve quality right party contact with the Borrower to verify the hardship, and once verified must work with the Borrower to apply the appropriate solution, including the application of a forbearance plan, if applicable. In accordance with existing Freddie Mac forbearance plan requirements described in Section 9203.13, no documentation is required from the Borrower in order to verify the hardship.

As part of our temporary guidance announced in this Bulletin, we are further authorizing Servicers to approve forbearance plans for all Borrowers who have a COVID-19 related hardship, regardless of property type. While the Guide currently provides that only Mortgages secured by Primary Residences are eligible for a forbearance plan, until further notice the Mortgaged Premises may be a Primary Residence, second home or Investment Property.

Loan Modifications

Guide Bulletin 2017-25 announced the Freddie Mac Extend Modification for Disaster Relief (“Extend Modification”). Section 9206.4 provides the requirements for the Freddie Mac Capitalization and Extension Modification for Disaster Relief (referred to in the Bulletin as the “Disaster Relief Modification,” but referred to herein as the “Cap and Extend Modification”). These modifications were developed as tools for Servicers to assist Borrowers who were impacted by an Eligible Disaster.

With this Bulletin, we are requiring Servicers to evaluate Borrowers with a COVID-19 related hardship for the Extend Modification and the Cap and Extend Modification in accordance with the requirements described in Bulletin 2017-25 and Section 9206.4 (and all additional Guide sections referenced therein), including the order of evaluation provided in the “Borrower contact requirements and disaster loss mitigation hierarchy” section of Bulletin 2017-25. For Servicer convenience, we have reproduced this guidance in this Bulletin, in the below section, titled “Borrower contact requirements and COVID-19 loss mitigation hierarchy.” Servicers must conduct Extend Modification and Cap and Extend Modification evaluations in accordance with all existing requirements, with the following adjustments:

Current requirement Requirement for Borrowers impacted by COVID-19
The Borrower’s Mortgaged Premises or place of employment must be located in an Eligible Disaster Area.

Note: For Extend Modifications only, the Eligible Disaster Area designation must have been made on or after August 25, 2017.

 The Borrower must have a COVID-19 related hardship (e.g., unemployment or reduction in regular work hours).

Note: The Servicer is not required to obtain documentation to verify the borrower’s hardship.
The Borrower must have been current or less than 31 days delinquent (i.e., must not have missed more than one monthly payment) at the time of the disaster and the Borrower’s hardship must have been caused by an Eligible Disaster The Borrower must have been current or less than 31 days delinquent (i.e., must not have missed more than one monthly payment) as of the date of the National Emergency declaration related to COVID-19, March 13, 2020
Processing and reporting
Processing and reporting requirements for the Extend Modification are described in Bulletin 2017-25, and for the Cap and Extend Modification in the Workout Prospector Users’ Guide and Freddie Mac’s Disaster Relief Reference Guide. Servicers must continue to follow existing processes, with the following exception:

When instructed to provide program title information in the Workout Prospector or Guide Form 1128, Loss Mitigation Transmittal Worksheet, as applicable, the Servicer must label the modifications as “Extend Modification for COVID-19” and “Cap and Extend Modification for COVID-19,” respectively.

 

BORROWER CONTACT REQUIREMENTS AND COVID-19 LOSS MITIGATION HIERARCHY

The Servicer must initiate outreach attempts no later than 30 days prior to the end of the Borrower’s COVID-19 related forbearance. The Servicer must attempt to contact the Borrower until quality right party contact (QRPC) has been established or until the forbearance plan has expired.

If QRPC is established with a Borrower who was 31 days or more delinquent (i.e., had missed more than one monthly payment) prior to the National Emergency declaration, then the Borrower is not eligible for the Extend Modification (or Cap and Extend Modification), and the Servicer must evaluate the Borrower in accordance with the standard evaluation hierarchy.

If QRPC is established with a Borrower who was current or less than 31 days delinquent (i.e., the Borrower had not missed more than one monthly payment) prior to the National Emergency declaration, and the Borrower is unable to resolve the Delinquency through a reinstatement or repayment plan, the Servicer then must evaluate the Borrower for the loss mitigation options set forth in the following COVID-19 related evaluation hierarchy:

  1. Extend Modification
  2. Cap and Extend Modification
  3. Freddie Mac Flex Modification®
  4. Short sale
  5. Deed-in-lieu of foreclosure

If QRPC is not established at the end of the COVID-19 related forbearance, and the Borrower is eligible for a streamlined offer for a Flex Modification, the Servicer must send the Borrower an offer for a Flex Modification.

Foreclosure sale moratorium

Servicers must suspend all foreclosure sales for the next 60 days. This foreclosure suspension does not apply to Mortgages on properties that have been determined to be vacant or abandoned.

Links to related updates:

https://guide.freddiemac.com/app/guide/content/a_id/1003722

 

Fannie Mae Temporary Servicing Guidance Related to COVID-19

Effective Date:

The policies in this Lender Letter are effective immediately and are effective until Fannie Mae provides further notice.

Forbearance Plan Eligibility:

To assist borrowers who have experienced a hardship resulting from COVID-19 (for example, unemployment, reduction in regular work hours, or illness of a borrower/co-borrower or dependent family member) which has impacted their ability to make their monthly mortgage loan payment, the servicer should evaluate the borrower for a forbearance plan in accordance with Servicing Guide D2-3.2-01, Forbearance Plan. The servicer must achieve quality right party contact (QRPC) with the borrower prior to offering a forbearance plan. With this Lender Letter, when determining eligibility for a forbearance plan for a borrower impacted by COVID-19, the property securing the mortgage loan may be a principal residence, a second home, or an investment property. The servicer must otherwise follow the requirements in D2-3.2-01, Forbearance Plan.

NOTE: The servicer is not required to obtain documentation of the borrower’s hardship.

For borrowers who have received a forbearance plan in response to COVID-19, the servicer must begin attempts to contact the borrower no later than 30 days prior to the expiration of the forbearance plan term, must continue outreach attempts until either QRPC is achieved or the forbearance plan term has expired, and analyze each case carefully in accordance with the requirements in the table below before determining which mortgage loan modification is most appropriate for the borrower.

With LL-2017-09R Fannie Mae introduced the Fannie Mae Extend Modification for Disaster Relief (Extend Mod), a temporary post-disaster forbearance mortgage loan modification, as well as the order of evaluation for Extend Mod and other post forbearance mortgage loan modifications when the property securing the mortgage loan or the borrower’s place of employment is located in a FEMA-Declared Disaster Area eligible for Individual Assistance. With this Lender Letter, we are extending the availability of these post-forbearance mortgage loan modifications to borrowers impacted by COVID-19. The following table provides guidance and the order of evaluation for the mortgage loan modification.

Utilize this link: https://singlefamily.fanniemae.com/media/22261/display to access the tables that more fully define the guidance and the order of evaluation for the mortgage loan modification.

Credit Bureau Reporting:

The servicer must suspend reporting the status of a mortgage loan to credit bureaus during an active forbearance plan, or a repayment plan or Trial Period Plan where the borrower is making the required payments as agreed, even though payments are past due, as long as the delinquency is related to a hardship resulting from COVID-19.

Suspension of Foreclosure Sales:

Servicers must suspend all foreclosure sales for the next 60 days. This foreclosure suspension does not apply to mortgage loans on properties that have been determined to be vacant or abandoned.

Link to the related updates:

https://singlefamily.fanniemae.com/media/22261/display

 

 

 

 

 

FHFA Directs Enterprises to Grant Flexibilities for Appraisal and Employment Verifications

Posted on by Vinod

Washington, D.C. – Today, to facilitate liquidity in the mortgage market during the coronavirus national emergency, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac (the Enterprises) to provide alternative flexibilities to satisfy appraisal requirements and employment verification requirements through May 17, 2020.​

To allow for homes to be bought, sold, and refinanced as our nation deals with the challenges of the coronavirus, the Enterprises will leverage appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages.

In addition, in the event lenders cannot obtain verbal verification of the borrower’s employment before loan closing, the Enterprises will allow lenders to obtain verification via an e-mail from the employer, a recent year-to-date paystub from the borrower, or a bank statement showing a recent payroll deposit. Lenders should continue to utilize sound underwriting judgment to ensure these alternatives are appropriate to the borrower’s circumstances.

Today’s announcement is the latest action that FHFA has taken to ensure the Enterprises fulfill their mission of providing market liquidity during the coronavirus national emergency. Other actions include a suspension of foreclosures and evictions for at least 60 days and offering forbearance for borrowers facing hardship due to coronavirus.

FHFA and the Enterprises are monitoring the coronavirus national emergency’s effect on the housing market and will continue to update our policies when necessary.

Link to FHFA Webpage on Coronavirus Actions

Links to Agency Announcements

https://singlefamily.fanniemae.com/media/22316/display 

https://singlefamily.fanniemae.com/media/22321/display 

https://guide.freddiemac.com/app/guide/content/a_id/1003722 

https://guide.freddiemac.com/app/guide/content/a_id/1003723

 

StoneHill Group: Message to our Clients about COVID-19

Posted on by Vinod

At The Stonehill Group the health and well-being of our clients and employees are top priority. We understand the concern and uncertainty you may be experiencing surrounding the coronavirus (COVID-19) and we are committed to being responsive to the needs of our clients and employees as the situation evolves.

Please know that as a part of our continuing commitment to our employees and clients, The StoneHill Group has in place a robust Disaster Recovery Plan that contains provisions for action in a pandemic.

We have also taken steps and created a plan specifically for the Coronavirus Disease 2019. The Stonehill Group is adhering to the guidelines established by the CDC. This includes additional sanitization, hand cleaners at every door and other prudent measures including but not limited to: all new hires will work remote; and we are providing every employee that has direct involvement with QC, UW, Processing, or Fulfillment processes with the ability to work remotely. We anticipate self- quarantines and are determined to continue serving our clients through this challenging period.

At this moment we are business as usual, but we are taking unprecedented precaution to ensure the safety of our employees and the ability to continue to provide our clients with the exceptional service you are accustomed to. We will keep you apprised of any changes.

For additional information about COVID-19, visit the following sites:

The Centers for Disease Control and Prevention: cdc.gov

The World Health Organization: who.int

Should you have any questions related to the above information, please feel free to reach out to Donna Rowe at drowe@stonehillgroup.com.

Thank you for continued business and partnership.

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