Monthly Regulatory Compliance Change Management Summary

The January Regulatory Compliance Change Management Summary is linked for your reference.

This month’s Regulatory Compliance Change Management conference call will take place on Thursday, February 27th at 3pm EST.

To register for the monthly call, please email compliancechgmngt@cenlar.com. For your convenience, the session will be recorded and made available to clients who are unable to attend.  If you registered for a call in the past, you will be automatically registered for this call and do not need to register again.

Any questions related to the monthly summary, overview process, or specific regulatory change items can be sent directly to compliancechgmngt@cenlar.com.

The Compliance Department will respond within two business days of receipt (excluding weekends and holidays).

There are currently no items showing as ‘Out of Compliance’ (effective date has passed and we are beyond our standard implementation timeframe) on our January report.

Noteworthy Items:

• Q5420 LIBOR – Sunsetting 2021 & Q5660 FNMA Selling Notice – SOFR ARM Whitepaper (Effective 10/1/2021) – The LIBOR (London Interbank Offered Rate) is set to be discontinued at the end of 2021. LIBOR has been the base index for most variable-rate loans, notes, interest-rate swaps and other instruments for many years.
  • The LIBOR Sunset Client Summary deck that was provided to clients the first week of February is linked.  Included within are action items needed to implement this change. We’re requesting assistance from you, our Client partners,  to review your existing asset portfolio and to determine the replacement index for LIBOR for both new originations and legacy loans/lines. 
  • The goal is for clients to make a decision on their new originations and legacy loans by 12/31/2020 and provide Cenlar with critical data points, including: Full Index Type, Calculation for look back days, (Current Index), Interest rate change frequency, Payment change frequency (interest only and principal and interest), Interest rate calculation method (Index plus margin and rounding), Ceiling and Floor Interest Rates. Clients need to provide notes, riders for new originations and amended data for legacy loans. Communication on how to deliver these data points will be relayed at a future time.
  • These change items will be a standing agenda item on our monthly RCM Client calls and Cenlar will provide periodic updates on the progression of LIBOR Sunsetting.
• Q5236.2 FHLBank San Francisco to Cease Certain COFI for 2021 (Effective 1/29/2021) –  The Federal Home Loan Bank of San Francisco announced that it will stop publishing all cost of funds indices early in 2021 because of the significant decline in the number of financial institutions eligible to report the data used to calculate the indices. The Bank will no longer calculate and publish the 11th District Monthly Weighted Average Cost of Funds Index (COFI) after the publication of the December 2020 COFI on January 29, 2021.  In addition, the Bank will no longer calculate and publish the Semiannual Weighted Average Cost of Funds Indices for the 11th District and for California after the publication of the indices for the July-December 2020 period on February 16, 2021.
  • We’re requesting assistance and asking that you review your existing asset portfolio for determination of replacement index for both new originations and legacy loans/lines. 
  • The goal is for clients to make a decision on their new originations and legacy loans by 6/30/2020 and provide Cenlar with critical data points, including: Full Index Type, Calculation for look back days, (Current Index), Interest rate change frequency, Payment change frequency (interest only and principal and interest), Interest rate calculation method (Index plus margin and rounding), Ceiling and Floor Interest Rates. Clients need to provide notes, riders for new originations and amended data for legacy loans. Communication on how to deliver these data points will be relayed at a future time.
• Queue 5985-3 NYCRR Part 419 – Effective Date 3/17/2020 – This regulation provides standards and procedures for servicers to follow in their course of dealings with borrowers, including certain reporting and recordkeeping requirements to enable the Superintendent to determine the servicer’s compliance with applicable laws, its financial condition and the status of its servicing portfolio.
  • While Cenlar is not required to report to the Superintendent, you may be.  Within 30 days of the end of each calendar quarter, you may be required to submit a report to the Superintendent, including the number and type of loans services, as well as information regarding loss mitigation, foreclosure, REO, and any other data the Superintendent requires. You may also be required to keep books and records in a manner that will allow the Superintendent to determine whether the loans are serviced in compliance with applicable laws and regulations, and preserve those books and records for at least 3 years after the loan is serviced.