A more complete copy of the Regulatory Compliance Change Management Summary as of April 30, 2022 can be found in the Regulatory Change Management section of www.CenAccess.com.

The next monthly Regulatory Compliance Change Management conference call will take place on Thursday May 26, 2022 at 3pm EST. To register for the monthly call, please email compliancechgmngt@cenlar.com. For your convenience, the call will be recorded and made available to clients who are unable to attend. If you have already registered for a previous call, there is no need to request registration again. Please submit any questions related to the regulatory change management summary to the 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 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 April report, have mostly been deemed medium or low risk. The rational for the risk rating is included and the items continue to be implemented.

• Q9341 New Mexico Supreme Court – New Rules to Prevent Foreclosure (Effective 9/07/2021): The New Mexico Supreme Court has issued an order adopting new rules to help New Mexico residents facing the loss of their homes after the end of the federal foreclosure moratorium due to the Covid-19 pandemic. Under the new court rules, the foreclosing creditor must send a notice to borrowers about loan modification and loss mitigation options before a foreclosure action can be filed in the district court, and certify to facts related to the loss mitigation efforts before judgment will be entered by the court. 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 3 business units are impacted, and the potential penalties associated with non-compliance. This item was moved back from testing because Default Compliance determined they needed to update the NM Demand Letters to further address two requirements. Letters have been updated and we are pending validation documents to move the item back to testing.
• 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. The Default Call Center and Customer Interaction are updating scripting. Loss Mitigation to provide BITB updates and updated procedures.
• 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 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. Third Party Risk Management has sent a vendor blast and we’re pending confirmation of compliance.
• 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 these borrowers 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. Borrower Communications is working on identifying a vendor to utilize for sending communications in an alternate format. Borrower Communications is updating statements and coupon books to include the NY Disclosure. New Loans and Portfolio Transfers are updating the Welcome Letter and VOD to include the NY Disclosure. The Default Call Center and Customer Interaction are updating 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 5 business units are impacted, and potential regulatory scrutiny. Loss Mitigation is updating letters.
• 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 Security is updating procedures and Third Party Risk Management has distributed a vendor blast for confirmation of compliance.
• Q10001 New York S1566-A (Effective 2/01/2022): This bill requires New York State chartered banks and trust companies to provide a notice to customers that acceptance of an alternative payment schedule on a loan may have a negative impact on the customer’s credit score or rating. 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 2 business units are impacted, and the potential regulatory scrutiny. Due to the CARES Act, borrowers in forbearance are protected from adverse credit reporting information. All other alternative payment arrangement letters include the necessary disclosure and the forbearance letters are being updated to provide additional resource information regarding credit scores. Loss Mitigation is finalizing updates to forbearance letters.
• 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 3 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 5 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating the pandemic dashboard, BITB, letters, and procedures. Default Call Center is updating scripting. Default Reporting is updating procedures.
• 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, as well as  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 forms and letters.
• 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 forms and letters.
• 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 2 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating forms and letters.
• Q8501 FHA SF Handbook 4000.1 (Effective 3/31/2021): This revision to the FHA Single Family Housing Policy Handbook, or Handbook 4000.1 (Handbook), is being published to update existing sections. Updates are to: Section III – Servicing and Loss Mitigation Changes have been made throughout this section. 614-894; Section IV – Claims and Disposition; Appendix 4.0 – FHA-Home Affordable Modification Program (FHA-HAMP) Calculations; and Appendix 5.0 – HUD Schedule of Standard Possessory Action and Deed-In-Lieu of Foreclosure Attorney Fees (Applies to Servicing Only). 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 more than 5 business units are impacted, and the potential regulatory scrutiny. Loss Mitigation is updating procedures, letters, and BITB, as well as sending a vendor blast. Mortgage Insurance is updating procedures and letters. Foreclosure and Property Preservation are updating procedures.

Noteworthy Items: 

May 2nd Client Advisory – Boarding New Loans and LIBOR:
LIBOR (London Interbank Offered Rate) is set to expire in June 2023. In preparation for the date, please do not board any new lines or loans using the LIBOR index effective June 1, 2022.

Why is Cenlar discontinuing the LIBOR index?
The index, once widely used to set rates for a wide range of adjustable-rate consumer credit products, is being phased out by the financial industry and federal government agencies as it is perceived as vulnerable to manipulation.
What will Cenlar use in place of LIBOR?

Cenlar is continuing to monitor industry and government agencies to identify an appropriate replacement index. In keeping with government-sponsored enterprises (GSEs) and most other financial institutions and regulators, Cenlar is closely watching the potential use of the Secured Overnight Financing Rate (SOFR) for HELOCs and ARMs. Unlike LIBOR, which relies on the subjective judgment of a panel of banks, SOFR is based on objective market data – the cost of transactions in the market for overnight Treasury repurchase agreements.

Next Steps for Loans We Currently Service
Unless you notify Cenlar about specific direction on a replacement index for loans tied to the LIBOR index, we will make a formal decision to use the SOFR index as a replacement for all ARM loans that we currently service before Q4 2022.