Monthly Regulatory Compliance Change Management Summary

Below you’ll find our Regulatory Compliance Change Management summary as of September 30, 2022.

To provide you more information, as well as an opportunity to ask questions, we also host a monthly conference call. The next call will take place on Thursday, October 27, 2022 at 3 p.m. ET. To register or send a question to be addressed on the call, please email compliancechgmngt@cenlar.com. If you have registered for a previous call, you do not need to request registration again. This call will be recorded and posted to CenAccess as well, so that you may listen at your convenience.

Any questions not for the call but related to the monthly summary, overview process or specific regulatory change items also can be sent to compliancechgmngt@cenlar.com. Our compliance department will respond to you within two business days of receipt (excluding weekends and holidays).

We’re currently working to reestablish compliance with our regulatory change management program on the following items. Each item outlines what we are doing to achieve this, as well as the risk rating for each. Most have been deemed low or medium risk.

Q10222 FHLMC Bulletin 2022-8 (Effective 4/6/2022)

What it is: Freddie Mac is providing additional temporary guidance for Servicers assisting Borrowers applying for HAF. Servicers must suspend all foreclosure actions, including foreclosure sales, the initiation of any judicial or non-judicial foreclosure process, move for foreclosure judgment or orders of sale, for up to 60 days if: The Servicer has been notified that the Borrower has applied for assistance under HAF; and Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action; and The Servicer has sufficient time to suspend initiation of the foreclosure process or moving for a foreclosure judgment or order of sale; and In the case of a foreclosure sale, the Servicer is notified at least 7 days before the sale. This change item has been deemed to be high risk because of the number of potentially impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential regulatory scrutiny.

What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10228 FNMA LL 2021-02 (Effective 4/6/2022)
What it is: To allow a borrower that has experienced a COVID-19 related hardship time to obtain assistance offered through the HAF, the servicer must delay initiating any judicial or non-judicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure sale up to 60 days if: The Servicer has been notified that the Borrower has applied for assistance under HAF; and Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action; and The Servicer has sufficient time to suspend initiation of the foreclosure process or moving for a foreclosure judgment or order of sale; and In the case of a foreclosure sale, the Servicer is notified at least 7 days before the sale, and any foreclosure trial or execution of a foreclosure sale can be delayed without dismissal of the action. This change item has been deemed to be high risk because of the number of potentially impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10306 MPF Announcement 2022-17 (XTRA) (Effective 4/21/2022)
What it is: MPF XTRA loans must follow FNMA LL 2021-02. To allow a borrower that has experienced a COVID-19 related hardship time to obtain assistance offered through the HAF, the servicer must delay initiating any judicial or non-judicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure sale up to 60 days if: The Servicer has been notified that the Borrower has applied for assistance under HAF; and Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action; and The Servicer has sufficient time to suspend initiation of the foreclosure process or moving for a foreclosure judgment or order of sale; and In the case of a foreclosure sale, the Servicer is notified at least 7 days before the sale, and any foreclosure trial or execution of a foreclosure sale can be delayed without dismissal of the action. In addition, for ease of submitting an MPF Xtra COVID-19 Deferral, the MPF Program has created an MPF Xtra COVID-19 Deferral Appendix in eMAQCSplus. This change item has been deemed to be low risk because of the low number of impacted accounts, the complexity of the change in which four business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10307 MPF Announcement 2022-18 (Traditional) (Effective 4/21/2022)
What it is: MPF has published Announcement 2022-18 to update its COVID-related servicing guidance. The update incorporates guidance requiring servicers to suspend foreclosure activities for up to 60 days if the servicer has been notified that a borrower has applied for HAF assistance. Also, the update removes all reference to the July 2021 foreclosure extension, and September 2021 eviction moratorium on REO properties. Finally, the guidance strikes all reference to the RESPA temporary procedural safeguards. This change item has been deemed to be low risk because of the low number of impacted accounts, the complexity of the change in which four business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10407 USDA FAQ about HAF (Effective 5/12/2022)
What it is: The USDA has provided a list of frequently asked questions (FAQs) pertaining to how a servicer should handle Homeowners Assistance Fund (HAF) related monies. These FAQs indicate the servicer may use the HAF to bring their loan current, however if the borrower cannot resume payments then the servicer must review the borrower for available loss mitigation options in conjunction with HAF funds. If there is a partial claim, then the servicer must calculate the borrower’s maximum partial claim before the HAF is applied. Servicers are required to report the receipt of HAF approvals via the Electronic Status Reporting. Servicers are encouraged to place the foreclosure action on hold if servicer receives notification that the borrower has applied for HAF (I Record) from the state HAF program; if servicer is notified that the borrower has received final approval for HAF funds (A Record); or if a state HAF program requires a foreclosure action be suspended.  This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10410 FHA INFO 2022-46 HAF FAQs (Effective 5/6/2022)
What it is: FHA has released updated frequently asked questions (FAQs) pertaining to how a servicer should handle borrowers who have applied for Homeowners Assistance Fund (HAF) programs. The FAQs clarify when a mortgagee may place a foreclosure action on hold when a borrower has applied for or will be utilizing HAF funds. This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10434 VA HAF FAQs (Effective 5/6/2022)
What it is: VA is providing guidance for the handling of their loans when an application for HAF assistance is received on one of their loans. With these FAQs, VA indicates that a servicer should place VA guaranteed loans in a 60 day forbearance status when a borrower applies for HAF. Loan servicers are to submit a Special Forbearance Event via VALERI. Servicers should use HAF funds to reduce the amount the borrower would owe VA for a partial claim or refund modification, then the servicer should work with the borrower to implement the option. This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10764 Rhode Island HB 7781 (Effective 6/29/2022)
What it is: This act would amend a number of provisions in the general laws relative to financial institutions by eliminating unnecessary requirements and/or clarifying language in order to reduce certain burdens on businesses operating in Rhode Island. Section 19-4-19 requires that Cenlar, as a federal savings bank, maintain a resident agent in the state of Rhode Island who has authority to endorse insurance claim check on behalf of Cenlar. This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory penalties.
What we’re doing: Escrow Hazard and Escrow Flood are updating procedures.

Q10744 FHA ML 2022-09 (Effective 9/05/2022)
What it is: FHA has issued Mortgagee Letter 2022-09 to instruct mortgagees how to calculate effective income for borrowers who were affected by gaps in employment, which led to reductions or loss of income due to COVID-19-related economic events. This policy will allow industry partners additional opportunity to utilize flexible underwriting guidance to help borrowers qualify for homeownership. This change item has been deemed to be low risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Special Products is finalizing updates to procedures.

Q10696 FHA SF Handbook 4000.1 (Effective 9/26/2022)
What it is: This update contains revisions and reflects the incorporation of certain Mortgagee Letters (MLs) with the effective dates as announced in those MLs and to Handbook 4000.1 Sections I, II, III, and IV, Appendix 4.0, Glossary, and the Claim Filing Technical Guide. The update includes enhancements and revisions to existing guidance as well as various technical edits. This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Claims and Mortgage Insurance have processes in place and are finalizing procedures.