At the direction of the Federal Housing Finance Agency (FHFA) and in alignment with Freddie Mac, Fannie Mae (FNMA) published multiple Lender Letters to enable servicers to better assist borrowers impacted by COVID-19. Doeren Mayhew’s Financial Institutions Group has summarized the letters impacting servicing, originations and appraisals below.

Servicing

In this Lender Letter (LL-2020-02), FNMA provides guidance to servicers regarding expanded eligibility for forbearance plans to borrowers impacted by the virus. It indicates the servicer should evaluate borrowers requesting assistance in accordance with the Servicing Guide Section D2-3.2-01. However, the servicer is not required to obtain documentation of the borrower’s hardship.

Servicers must suspend reporting status of mortgage loans to the credit bureaus during an active forbearance plan, repayment plan or trial period of a modification. In addition, it states there is a suspension of foreclosure sales for the next 60 days, which is not applicable to mortgage loans on properties determined to be vacant or abandoned.

Originations

Lender Letter (LL-2020-03) offers information on originations related to the below:

  • Verification of employment – Some flexibility is being given for obtaining verification of employment. Written verification of employment, a paystub that immediately precedes the note date or a bank statement with evidence of a payroll direct deposit will be accepted forms of verification.
  • Continuity of income – Lenders are recommended to perform additional due diligence to verify the borrower’s employer (in particular with self-employed business owners) is operational closer to the note date rather than current guide requirements.
  • Title insurance – Reminds lenders policies of title insurance written on the 2006 ALTA loan title insurance form or local equivalent is accepted, including gap coverage.
  • Financial statements and reports – Those required within 90 days after the end of their fiscal year of December 31st have been extended to April 30th.
  • Original promissory notes – These must be in the seller’s possession prior to the purchase of the loan unless originated in accordance with Selling Guide Section A2-5.1-03.
  • Business continuity plans – Reminds all seller/servicers they are required to have a business continuity plan and disaster recovery plan in place. FNMA expects them to follow their own business plans, which must include the ability to regain critical business operations in the event of a disruption or disaster.

Appraisals

Provided by Lender Letter (LL-2020-04) is temporary flexibilities to the appraisal inspection and reporting requirements effective immediately. In the event an interior/exterior inspection is typically required, FNMA is allowing either a desktop or an exterior-only inspection to be performed in lieu of an interior inspection appraisal. View the letter for a complete matrix referencing requirements along with guidelines to these exception appraisals.

Each of these new policies are effective immediately and will remain in effect until Fannie Mae provides further notice. Doeren Mayhew stands ready to help you navigate these new policies. Should you have any questions in how this will impact your lending operations, contact one of our specialists in our Financial Institutions Group below:

Heather Feltner | Lending and Compliance Specialist | feltner@doeren.com 

Lindsey Becker | Internal Audit and Compliance Manager | becker@doeren.com

Jeni Butler | Senior Compliance Specialist | butler@doeren.com

Marcia Baker | Senior Compliance Specialist | baker3@doeren.com

Debbie Rodriguez | Senior Compliance Specialist | drodriguez@doeren.com

Joe Zito | Shareholder | zito@doeren.com

Author

Heather Feltner, Lending and Compliance Specialist