Monthly Regulatory Compliance Change Management Summary

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

This month’s Regulatory Compliance Change Management conference call will take place on Thursday, July 23th 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 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. Please submit any questions related to the regulatory change management mailbox prior to the call.

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).

On our June report, the three items,  listed below, are indicated as “Out of Compliance” (effective date has passed and we are beyond our standard implementation timeframe), have been deemed low risk. The rationale for the risk rating is included, and these items continue to be implemented.

• Q6598 VA VALERI Servicer Newsflash (Effective 4/16/2020):  – VA issued a bulletin to communicate the following updates to servicers:
  • Reporting Forbearance under the CARES Act – VA considers a loan to be a reportable default when it becomes 61 days delinquent, at which time an Electronic Default Notice (EDN) event is required to be reported in VALERI. If the forbearance is approved before the loan becomes a reportable default, the “Special Forbearance Approved” event should not be reported in VALERI because the event will reject. VA is creating a new Reason for Default selection in the EDN event to identify defaults associated to COVID19.
  • Adjustable Interest Rates – To ensure a claim with multiple interest rate changes is accurately calculated, servicers must report all interest rate changes that have occurred on the loan since origination. The reporting of only the most recent rate change may result in an incorrect claim amount and/or delays in receiving payment.
  • D-Record – After either the Loan Paid in Full or the Servicing Transfer Transferring event has been submitted successfully in the nightly file, a subsequent D (Delete) record must be submitted to prevent any further loan data from being transmitted and reported in VALERI. This has been deemed to be a medium risk due to the required system updates for D (Delete) record reporting. The EDR code will be provided by VA at a later date (this is being tracked under Q6704). Claims process and controls to report all interest rate changes is business as usual; they are finalizing the minor update to procedures to include the new VA contact information. Default Reporting is working with BKFS to create the MSP Delete Record Field and have that field added to nightly reporting.

• Q6500 Michigan SB 125 (Effective 4/07/2020):  – The bill would amend the Uniform Unclaimed Property Act to do the following:
  • Specify that the provisions that modified the dormancy periods in a previous Public Act would not apply if the property owner were on active duty military service instead of an active duty military service outside of the United States.
  • Modify the date by which a report pertaining to unclaimed property would have to be filed. The bill would require the report to be filed on or before July 1 of each year for the 12-month period ending on the immediately preceding March 31.   
  • Modify the process by which a filing date of a report pertaining to unclaimed property could be extended. The bill would delete this provision and, instead, would allow the Administrator to extend the filing date for up to 60 days on written request. This change item has been deemed to be a low risk since the Michigan properties have reached the 5-year dormancy period and are out of scope for this change. Unclaimed properties is finalizing procedure and then this item can move to testing.

• Q6656 Virginia SB 890 (Effective 4/22/2020): – This legislation updates the regional transportation improvement fee and creates the regional congestion fee imposed during the recordation of conveyance of a deed. Both fees are to be imposed at a rate of $0.10 per $100. This change item has been deemed to be low risk because the business units and vendors are already compliant and we are just finalizing validation documentation of confirmation of compliance. Default Invoicing procedures are under review for confirmation of compliance; REO and Loss Mitigation sent vendor blasts and we’re pending confirmation of compliance and then this item can move to testing.

NOTEWORTHY ITEMS FOR THOSE OF YOU DOING BUSINESS IN NEW YORK:

• Q7001 New York SB 8428 (Effective 6/17/2020): This legislation provides edits to the newly created section 9-x of Article 1 of the New York Banking Law. Section 9-x was created by New York SB 8243, Q7000.

The New York Banking law was further amended to specify:

§9-x – Mortgage Forbearance

• §9-x(1)(b) – a Qualified Mortgagor is an individual whose primary residence is located in New York and is encumbered by a home loan or whose primary residence is located in New York and is a co-operative unit whose shares are encumbered by a loan and who demonstrates financial hardship as a result of COVID-19 during the covered period
  • §9-x(2)(b) – New York regulated institution shall grant a forbearance of all monthly payments due with respect to the mortgage secured by the qualified mortgagor’s primary residence in New York for a period of up to 180 days to any such qualified mortgagor with the option to extend the forbearance of such monthly payments for up to an additional 180 days, so long as the mortgagor demonstrates a continued financial hardship. If any qualified mortgagor has already received a forbearance pursuant to Executive Order 202.9 of 2020, then the time of the forbearance shall be considered as part of the requirement of this section.
  • §9-x(2)(c) – This forbearance may be backdated to March 7th, 2020 so long as the maximum length of the forbearance may be no longer than 180 days and any extension thereof pursuant to this section.
  • §9-x(3)(a) – The mortgagor shall have the option to extend the term of the loan for the length of the period of forbearance.  The regulated institution shall not charge any additional interest or any late fees or penalties on the forborne payments.
  • §9-x(3)(c) – The mortgagor shall have the option to negotiate a loan modification or any other option that meets the mortgagor’s changed circumstances.
  • §9-x(3)(d) – If the mortgagor and regulated institution cannot reasonably agree on mutually acceptable loan modification and the regulated institution shall offer to defer arrears accumulated during the forbearance period as a non-interest bearing balloon loan payable at the maturity of the loan or at the time the loan is satisfied through a refinance or sale of the property.
  • §9-x(5) – This section does not apply to any mortgage loans made, insured, purchased or securitized by any agency or instrumentality of the US, any government sponsored enterprise, or a federal home loan bank, or corporate government agency of the state constituted as a political subdivision and public benefit corporation, or servicers of the Government National Mortgage Association.
  • §9-x(6) – The obligation to grant the forbearance relief required by this section is subject to the regulated institution having sufficient capital and liquidity to meet its obligation.  If a regulated institution determines that it is not able to offer relief to any qualified mortgagor, then it must notify the department within 5 business days of making that determination.

Cenlar is aware of this legislation from New York and its requirements. While Cenlar is not responsible for the above reporting to the Department, Clients who do report this data should be aware that failure to comply may result in regulatory sanctions, fines, penalties, litigation, and reputational harm.