Monthly Regulatory Compliance Change Management Summary

Please find below our monthly Regulatory Compliance Change Management Summary as of March 31, 2022. A more complete document is available in the “Regulatory Change Management” section of www.CenAccess.com. If you are unable to log in to CenAccess, please contact your client manager for assistance.

The May Regulatory Compliance Change Management conference call will take place on
Thursday, May 5 at 3 p.m. ET. To register for the monthly call, please email compliancechgmngt@cenlar.com.
For your convenience, the call will be recorded should you be unable to attend.  If you have already registered for a previous call there is no need to request registration again. Please submit any questions 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 and the Compliance Department will respond within 2 business days of receipt (excluding weekends and holidays). 

The items listed below, while showing as “Out of Compliance” (effective date has passed and we are beyond our standard implementation timeframe) on our March report, have mostly been deemed medium or low risk. The rationale for the risk rating is included and the items continue to be implemented.

• Q6323 West Virginia HB 4411 (Effective 05/27/2020): West Virginia amended the limitations regarding the amount of a final payment of an installment loan to include that the final installment may also be no more than $5 greater than any previous payment installment. This change item has been deemed to be medium risk because of the low number of impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential penalties associated with non-compliance. Loss Mitigation is updating procedures as well as determining remediation efforts.
• Q9178 USDA New COVID-19 Special Relief Measures and Existing Guidance for Servicing Impacted Borrowers (Effective 7/23/2021): The technical Handbook-1-3555 will be expanded to include COVID-19 Special Relief Alternatives. The COVID-19 Special Relief Alternatives include an option that target a 20% reduction in the borrower’s monthly principal and interest payments by offering a combination of interest rate reduction, term extension and mortgage recovery advance. The COVID-19 Special Relief Measures were made available in July with the advanced notice and servicers should continue their efforts to incorporate these updated relief measures as soon as possible. A moratorium on foreclosures and evictions is effective through July 31, 2021 and servicers are authorized to approve initial payment forbearances upon request through September 30, 2021. Servicers are expected to grant payment forbearance based on a borrower’s verbal or written attestation to financial hardship caused by COVID. Eligibility requirement are outlined further in the notice. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which five or more business units are impacted, and the potential regulatory scrutiny. Loss Mitigation to provide BITB updates and updated procedures. Default Reporting has processes in place and is finalizing procedures.
• Q9177 VA CIRCULAR 26-21-13 COVID-19 Home Retention Waterfall and COVID-19 Refund Modification (Effective 7/27/2021): VA has issued a circular providing a waterfall of home retention options for helping borrowers financially impacted by the COVID-19 pandemic. The circular also announces the COVID-19 Refund Modification, which is a type of loan modification specific to those borrowers in need of payment reductions when exiting COVID-19 forbearance. This change item has been deemed to be medium risk because of the high number of impacted accounts, the complexity of the change in which five or more business units are impacted, and the potential regulatory scrutiny. Loss Mitigation will provide BITB updates and they are finalizing procedures.
• Q9826 Alaska Housing COVID Memo (Effective 8/26/2021): Alaska Housing has provided additional guidance regarding allowable post forbearance options. Due to the status of AHFC loans, bond restrictions prohibit certain options. 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 3-5 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating procedures and the plan code matrix. Loss Mitigation and Default Call Center are finalizing procedures and updates to the COVID Plan Code Matrix. Loss Mitigation to provide BITB updates and updated procedures. Default Call Center and Customer Interactions are updating scripting.
• Q9373.1 FNMA SVC-2021-06 (Effective 10/01/2021): As was previously indicated in the FNMA SEL-2021-08 (Q9346- Applicable), Fannie Mae servicers are advised that they have updated the Lender Record Information (Form 582). They specify that servicers must have written procedures that comply with their current policy for disaster recovery and business continuity when the seller, servicer, or any subservicer contracts with a vendor or third party service provider for any critical business functions or services which could affect their ability to comply with the Lender Contract or the requirements of the guides. A servicer must provide a copy of their business continuity procedures upon receipt of a written request from Fannie Mae. This change item has been deemed to be moderate risk because of the moderate number of impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential regulatory scrutiny. Investor Accounting & Reporting and Vendor Management are finalizing procedures. Vendor Management will send a vendor blast.
• Q9604 New York S737 Debt Collection (Effective 11/07/2021): New York has passed a bill to amend its general business law concerning written communications from debt collectors and creditors. This bill would require debt collectors and creditors to notify debtors of the availability of alternate formats, such as large print, braille, audio compact disc, or other means selected by the debt collector or creditor. The disclosure must also include a business phone number the consumer may call to request an alternate format. This bill is designed to offer protection to debtors who suffer from vision problems by informing them that the communications they are receiving can be provided in alternate formats. This change item has been deemed to be high risk because of the moderate number of impacted accounts, the complexity of the change in which 5 or more business units are impacted, and the potential penalties associated with non-compliance. Portfolio Transfers, Default Call Center, and Borrower Communications are working on identifying a vendor to send communications in an alternate format and will also update procedure and letters.
• Q9689 GNMA APM 21-07 (Effective 11/15/2021): GNMA will allow the use of electronic signatures and remote online notarization for loan modification agreements on paper mortgages. This change item has been deemed to be low risk because of the limited number of impacted accounts, complexity of the change in which one business unit is impacted, and potential regulatory scrutiny. Loss Mitigation has processes in place and is finalizing procedures.
• Q9779.1 FHLMC Bulletin 2021-37 (Effective 12/08/2021): FHLMC has published Bulletin 2021-37 to announce Servicing Updates. The updates address modification agreements, hardest hit funds, as well as, additional guide updates including: Borrower canceled PMI, eMortgage Delivery Requirements, Remote Online Storage, and Foreclosure/Bankruptcy/Legal proceedings for eMortgages. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which five business units are impacted, and potential regulatory scrutiny. Loss Mitigation is updating procedures.
• Q7001.2 SUNSET New York SB 8428 (Effective 1/01/2022): This legislation provides edits to section 9-x of Article 1 of the New York Banking Law created by New York SB 8243. This NY SB 8428 updated NY AB 8243 by including all the same citations and adding to the repayment options the ability to offer a loan modification and if their isn’t agreement on those repayment terms to only then offer the balloon deferment, and it was amended to add a reporting requirement. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which five or more business units are impacted, and the potential penalties associated with non-compliance. Loss Mitigation is updating procedures.
• Q9526.2 FHLMC Bulletin 2021-31 (Effective 1/13/2022): FHLMC has issued updates to its Selling Guide. The updates address third-party risk mitigation, credit underwriting, and delivery requirement updates. This change item has been deemed to be high risk because of the high number of accounts with potential impact, the complexity of the change in that 3 business units are impacted, and potential regulatory scrutiny. IT Disaster Recovery, IT Operations, and Legal are updating procedures. Third-party risk management will distribute a vendor blast.
• Q9947 HUD DLL 2022-01 (Effective 3/20/2022): This DLL provides updated loss mitigation options for Section 184 Indian Home Loan Guarantee and Section 184A Native Hawaiian Home Loan Guarantee programs. HUD is creating three new loss mitigation programs: COVID-19 Native Advance Loan Modification; COVID-19 Recovery Loss Mitigation Advance; and COVID-19 Recovery Native Loan Modification. 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 five business units are impacted, and the potential regulatory scrutiny. Loss Mitigation, Default Call Center, Customer Interactions, Marketing, and Default Reporting are updating procedures, letters, and systems to implement the new loss mitigation options.
• Q9796 MPF Announcement 2021-87 (Traditional) (Effective 3/01/2022): The MPF has updated the requirements related to performing an escrow analysis to require servicers to: perform an escrow analysis when evaluating a borrower for a COVID-19 payment deferral; Inform the borrower of the full monthly contractual payment based on repayment of any escrow shortage amount over a term of 60 months before the borrower can accept the COVID-19 payment deferral offer; and spread any escrow shortage repayment amount in equal monthly payments over a period of 60 months, unless the borrower decides to pay the escrow shortage amount in a lump sum up-front or over a shorter period (not less than 12 months). These changes apply to a Flex Modification and a Disaster Payment Deferral. 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 3 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating procedures, letters and BITB. DCC is updating scripting. Loss Mitigation and Escrow are providing testing of escrow proforma calculations.
• Q9699 FNMA LL 2021-07 (Effective 3/01/2022): FNMA has updated the requirements related to performing an escrow analysis to require servicers to: perform an escrow analysis when evaluating a borrower for a COVID-19 payment deferral; Inform the borrower of the full monthly contractual payment based on repayment of any escrow shortage amount over a term of 60 months before the borrower can accept the COVID-19 payment deferral offer; and spread any escrow shortage repayment amount in equal monthly payments over a period of 60 months, unless the borrower decides to pay the escrow shortage amount in a lump sum up-front or over a shorter period (not less than 12 months). These changes apply to a Flex Modification and a Disaster Payment Deferral. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which 3 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating procedures, letters and BITB. DCC is updating scripting. Loss Mitigation and Escrow are providing testing of escrow proforma calculations.
• Q9697.3 FHLMC Bulletin 2021-35 (Effective 3/01/2022): FHLMC has updated the requirements related to performing an escrow analysis to require servicers to: perform an escrow analysis when evaluating a borrower for a COVID-19 payment deferral; Inform the borrower of the full monthly contractual payment based on repayment of any escrow shortage amount over a term of 60 months before the borrower can accept the COVID-19 payment deferral offer; and spread any escrow shortage repayment amount in equal monthly payments over a period of 60 months, unless the borrower decides to pay the escrow shortage amount in a lump sum up-front or over a shorter period (not less than 12 months). These changes apply to a Flex Modification and a Disaster Payment Deferral. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which 3 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating procedures, letters and BITB. DCC is updating scripting. Loss Mitigation and Escrow are providing testing of escrow proforma calculations.
• Q9744 MPF Announcement 2021-82 (Xtra) (Effective 3/00/2022) : The MPF have provided guidance to follow FNMA LL 2021-07 for MPF Xtra loans. FNMA has updated the requirements related to performing an escrow analysis to require servicers to: perform an escrow analysis when evaluating a borrower for a COVID-19 payment deferral; Inform the borrower of the full monthly contractual payment based on repayment of any escrow shortage amount over a term of 60 months before the borrower can accept the COVID-19 payment deferral offer; and spread any escrow shortage repayment amount in equal monthly payments over a period of 60 months, unless the borrower decides to pay the escrow shortage amount in a lump sum up-front or over a shorter period (not less than 12 months). These changes apply to a Flex Modification and a Disaster Payment Deferral. 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 3 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating procedures, letters and BITB. DCC is updating scripting. Loss Mitigation and Escrow are providing testing of escrow proforma calculations.
• Q9779.3 FHLMC Bulletin 2021-37 (Effective 3/01/2021): FHLMC is updating the Guide to reflect the June 30, 2021 expiration of the mortgage assistance programs under the HHF programs. Updates to Guide Exhibit 93, Evaluation Notices, Exhibit 1100, Payment Deferral Agreements, Exhibit 1101, Disaster Payment Deferral Agreement, Exhibit 1145, Borrower Solicitation Letter, and Guide Form 710, Mortgage Assistance Application, to reflect the removal of HHF references and to add general references to mortgage assistance programs. FHLMC is requiring that seller/servicers have an oversight process to ensure their document custodians maintain all eligibility requirements. Seller/servicers must notify FHLMC within one (1) business day if a document custodian no longer meets one of our requirements. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which 1-3 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating letters, forms, and procedures.
• Q9790.2 FNMA SVC 2021-09 (Effective 3/01/2021): FNMA is making updates to borrower-facing Guide documents to: Remove servicer instructions associated with Hardest Hit Funds since the program has expired; Inform the borrower that mortgage assistance programs may be available; Ensure consistent reference to borrower resources such as CFPB, HUD, and Fannie Mae Know Your Options website; Clarify the forbearance plan term associated with a Suspended Payment Forbearance Plan Offer; and Reduce the number of loan modification agreements to be executed and returned by the borrower. This change item has been deemed to be medium risk because of the moderate number of impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating letters, forms, and procedures.
• Q9928.2 MPF Announcement 2022-01 (Xtra) (Effective 3/01/2021): The MPF have provided guidance to follow FNMA SVC 2021-09 for MPF Xtra loans. FNMA is making updates to borrower-facing Guide documents to: Remove servicer instructions associated with Hardest Hit Funds since the program has expired; Inform the borrower that mortgage assistance programs may be available; Ensure consistent reference to borrower resources such as CFPB, HUD, and Fannie Mae Know Your Options website; Clarify the forbearance plan term associated with a Suspended Payment Forbearance Plan Offer; and Reduce the number of loan modification agreements to be executed and returned by the borrower. 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 two business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating letters, forms, and procedures.

Noteworthy Items 

• Q10012 – Understanding and Mitigating Russian State-Sponsored Cyber Threats to U.S. Critical Infrastructure: A joint Cybersecurity Advisory was re-released by Cybersecurity and Infrastructure Security Agency (CISA), Federal Bureau of Investigation (FBI), and National Security Agency (NSA) as part of their continuing mission to warn organizations of cyber threats and help the cybersecurity community. The advisory details commonly observed tactics, techniques, and procedures; detection actions; incident response guidance; and mitigation methods. This guidance provides recommendations to assist organizations in reducing risk. These recommendations include:
  • Be prepared. Create, maintain, and exercise a cyber incident response plan, resilience plan, and business continuity.
  • Enhance an organization’s cyber posture by following best practices for identity and access management.
  • Increase organizational vigilance.

The joint advisory suggests organizations should enhance their cyber posture to apply best practices to identify and access management; protective controls and architecture; and vulnerability and configuration management.

Cenlar is aware of the updated guidance.  As it relates to the joint release, Cenlar continuously monitors for threats and ensures our defense in depth matches potential attack vectors. Cenlar has reviewed the seven tactics and fourteen techniques provided by CISA and believes our countermeasures address those methods of attack. The Cenlar Corporate Security Office will continue to monitor for changes in the cybersecurity ecosphere and adjust our program and responses accordingly to mitigate risk.