December Regulatory Compliance Change Management Summary
As part of our ongoing effort to keep you informed, each month we send to you a summary of the work we’re doing to ensure compliance with the ever-changing regulatory landscape.
Please note, our monthly conference call has been canceled for the remainder of the year due to the holiday season. As a reminder, questions related to the regulatory compliance change management program may be submitted at any time to compliancechgmngt@cenlar.com. Our compliance department will respond within two business days of receipt (excluding weekends and holidays).
For the month of November, we’re currently working to reestablish compliance with our regulatory change management program on the following items. We have outlined what we are doing to achieve this.
• Q14082.1 FHLMC Bulletin 2024-11: Servicing (08/14/24) (Effective 8/14/2024)
What it is: Freddie has made several clarifications to their disaster policy by updating the Glossary definition of “Eligible Disaster” to remove the requirement that the impacted property or place of employment be in an Eligible Disaster Area. So long as the impacted property has an insured loss, the Borrower is eligible for disaster relief. Servicers are reminded that they must use Default Reason Code 034 to report all Mortgages that are 31 or more days delinquent and affected by a disaster. Additionally, they have updated Guide Section 9206.5(e) to clarify that the section requirements apply to Borrowers who were current or less than 60 days delinquent as of the date the Eligible Disaster occurred and removed the reference to Eligible Disaster Areas in this context. This Change Impact Assessment for this item is rated Medium due to the complexity of the changes and number of business units involved. As of today, there are seventeen (17) action items, of which eight (8) action items are complete. Default Call Center to update smart button, distribute floor communication, update procedures, and guided flow. Loss Mitigation to update letters. Risk Mitigation: Business units will identify potentially impacted loans to determine if additional loss mitigation assistance is necessary.
What we’re doing: All borrowers expressing a financial hardship regardless of an insured loss being the primary driver affecting the ability to repay are evaluated and offered all available loss mitigation options. In the absence of the disaster forbearance option currently unavailable due to systemic programming, borrowers are still able to be considered for the non-disaster forbearance or non-disaster workouts. Borrowers will continue to be evaluated, and assistance will be provided following our standard processing for any available loss mitigation option. As borrowers are still being offered and evaluated for all available loss mitigation options, there is a very low risk of borrower harm. The risk of non-compliance is also low as borrowers may be eligible for a more favorable and beneficial non-disaster loss mitigation option depending on their specific needs and circumstances. All action items have been completed except for remediation efforts that are currently underway. We are looking to have this completed by EOM December or early January.
• Q12509.2 FNMA LL 2023-07 – COVID-19 Payment Deferral and Fannie Mae Flex Modification for COVID-19 Impacted Borrowers (Effective 11/1/2024)
What it is: This Lender Letter reissues the policies previously published in LL-2023-07 and retires certain COVID-19 related policies. Specifically, Fannie Mae is retiring/amending the following:- For evaluations on and after Nov. 1, 2023, removing the flexibility with regard to achieving Quality Right Party Contact (QRPC) and requiring QRPC as defined in D2-2-01, Achieving Quality Right Party Contact with a Borrower when evaluating a borrower for a COVID-19 payment deferral or a Fannie Mae Flex Modification for COVID-19 impacted borrowers.- This lender letter updates the eligibility criteria for a COVID-19 payment deferral or a Fannie Mae Flex Modification for COVID-19 impacted borrowers to indicate that to be eligible, then a mortgage loan must be reported with reason for delinquency code 022 in the Nov. 2023 delinquency reporting period (which is for Oct. 2023 activity) for a COVID-19 hardship identified prior to Nov. 1, 2023 and continue to be reported with code 022 until the date of evaluation; and the evaluation must occur before Nov. 1, 2024. Additionally, it requires that the modification effective date for a Fannie Mae Flex Modification for COVID-19 impacted borrowers be on or before May 1, 2025.- For evaluations on and after Nov. 1, 2024, the servicer must evaluate borrowers for a workout option in accordance with the workout hierarchy as described in the Servicing Guide. This Q captures the BAU processes through 10/31/2023. This Change Impact Assessment for this item is rated Medium due to the complexity of the changes and number of business units involved and the status of this item as of November 30, 2024, is Implementation Validation. This regulatory change encompasses twenty-nine (29) action items, of which twenty-eight (28) action items are complete. Loss Mitigation to update BITB. Risk Mitigation: Impacted business unit has processes in place and RCM is just pending validation documents from the business.
What we’re doing: All action item deliverables were completed by November 1, 2024, and RCM was just pending validation documents from the business. RCM has since received validation documents for the remaining outstanding deliverable and the implementation validation of this item is now complete.
• Q12603.3 MPF Announcement 2023-72: MPF Xtra Servicing – Lender Letter LL (Effective 11/1/2024)
What it is: This MPF announcement refers to Fannie Mae LL-2023-07 (see also Q12509), which updated the following COVID-19 Payment Deferral and Fannie Mae Flex Modification temporary policies that were previously announced: Effective November 1, 2023, the QRPC flexibility will be removed when evaluating borrowers for a COVID-19 payment deferral or flex modification. This announcement updated the eligibility criteria for a COVID-19 payment deferral or a Fannie Mae Flex Modification for COVID-19 impacted Borrowers to indicate that to be eligible a mortgage loan must be reported with reason for delinquency code 22 in the November 2023 delinquency reporting period (which is for October 2023 activity) for a COVID-19 hardship identified prior to November 1, 2023, and continue to be reported with code 22 until the date of evaluation; and the evaluation must occur before Nov. 1, 2024. Also requires the modification effective date for a Fannie Mae Flex Modification for COVID-19 impacted borrowers be on or before May 1, 2025. In addition, for evaluations on and after November 1, 2024, the Servicers must evaluate borrowers for a workout option in accordance with the workout hierarchy as described in the Servicing Guide. This Q captures the changes pertaining to COVID-19 Flex Mod and COVID-19 Deferrals effective 11/1/24. This Change Impact Assessment for this item is rated Medium due to the complexity of the changes and number of business units involved and the status of this item as of November 30, 2024, is Implementation Validation. This regulatory change encompasses eight (8) action items, of which twenty-eight (7) action items are complete. Loss Mitigation to update BITB. Risk Mitigation: Impacted business unit has processes in place and RCM is just pending validation documents from the business.
What we’re doing: All action item deliverables were completed by November 1, 2024, and RCM was just pending validation documents from the business. RCM has since received validation documents for the remaining outstanding deliverable and the implementation validation of this item is now complete.
A Look Ahead:
• December Outlook: There are 41 items due in December. Of those, 20 were completed as of the end of November and six remain to be completed.
Coming Soon:
Our monthly Client Compliance Change Management Report is changing. Beginning in early January, we will be issuing two new monthly reports to replace the Monthly Client Compliance Change Management Report which is currently published to CenAccess around the 20th of each month.
• Regulatory_Alerts_Inventory.YYYYMMDD – This cumulative excel report will identify all items received through Regulatory Change Management’s intake as of February 14, 2024. It includes the Title, QNumber, Effective Date, Summary, Implementation Target Date and Cenlar Impact.
• Regulatory_Alerts_Due_Last_Mo_Current_Mo.YYYYMMDD – This PDF report will identify all items due for the prior month and coming due within the current month. The report is grouped by Implementation Target Date and provides the Title, Impact Rating, Entity, Short Description, State, Completed and Count. The Entity replaces the Business Unit Function Impacted. The Short Description is the detail of the action item for what the business needs to do to comply. The State will indicate, as applicable, whether the action item is in Draft, Ready, In Progress, or Completed. For more information, please refer to the Regulatory Change Management Program.
This reporting will provide a greater line of sight into the status and detailed activities associated with regulatory change items. Providing more up-to-date and detailed information to better support your needs.