Monthly Regulatory Compliance Change Management Summary

Below you’ll find our Regulatory Compliance Change Management summary as of August 30, 2022.

To provide you more information, as well as an opportunity to ask questions, we also host a monthly conference call. The next call will take place on Thursday, September 29, 2022 at 3 p.m. ET. To register or send a question to be addressed on the call, please email compliancechgmngt@cenlar.com. If you have registered for a previous call, you do not need to request registration again. This call will be recorded and posted to CenAccess as well, so that you may listen at your convenience.

Any questions not for the call but related to the monthly summary, overview process or specific regulatory change items also can be sent to compliancechgmngt@cenlar.com. Our compliance department will respond to you within two business days of receipt (excluding weekends and holidays).

We’re currently working to reestablish compliance with our regulatory change management program on the following items. Each item outlines what we are doing to achieve this, as well as the risk rating for each. Most have been deemed low or medium risk.

Q8501 FHA SF Handbook 4000.1 (Effective 3/31/2022) 
What it is: 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.
What we’re doing: 28 Action Items are now complete; Mortgage Insurance is finalizing procedures and then the item can move to testing.

Q9664 FHA INFO 21-97 (Effective 5/9/2022)
What it is: FHA is releasing an updating to the Handbook 4000.1 to develop the Title I Property Improvement and Manufactured Home Loans Programs sections. These sections are being added to facilitate the financing for manufactured homes that are titled as personal property. These new sections replace the existing guidance for Title I Manufactured Home Loans within Sections III (Servicing and Loss Mitigation) and IV (Claims and Disposition). This change item has been deemed to be low risk because of the low number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: 13 Action Items are now complete; Default Compliance is finalizing the memo and then the item can move to testing.

Q10222 FHLMC Bulletin 2022-8 (Effective 4/6/2022)
What it is: Freddie Mac is providing additional temporary guidance for Servicers assisting Borrowers applying for HAF. Servicers must suspend all foreclosure actions, including foreclosure sales, the initiation of any judicial or non-judicial foreclosure process, move for foreclosure judgment or orders of sale, for up to 60 days if: The Servicer has been notified that the Borrower has applied for assistance under HAF; and Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action; and The Servicer has sufficient time to suspend initiation of the foreclosure process or moving for a foreclosure judgment or order of sale; and In the case of a foreclosure sale, the Servicer is notified at least 7 days before the sale. This change item has been deemed to be high risk because of the number of potentially impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10228 FNMA LL 2021-02 (Effective 4/6/2022)
What it is: To allow a borrower that has experienced a COVID-19 related hardship time to obtain assistance offered through the HAF, the servicer must delay initiating any judicial or non-judicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure sale up to 60 days if: The Servicer has been notified that the Borrower has applied for assistance under HAF; and Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action; and The Servicer has sufficient time to suspend initiation of the foreclosure process or moving for a foreclosure judgment or order of sale; and In the case of a foreclosure sale, the Servicer is notified at least 7 days before the sale, and any foreclosure trial or execution of a foreclosure sale can be delayed without dismissal of the action. This change item has been deemed to be high risk because of the number of potentially impacted accounts, the complexity of the change in which 3-5 business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10306 MPF Announcement 2022-17 (XTRA) (Effective 4/21/2022)
What it is: MPF XTRA loans must follow FNMA LL 2021-02. To allow a borrower that has experienced a COVID-19 related hardship time to obtain assistance offered through the HAF, the servicer must delay initiating any judicial or non-judicial foreclosure process, moving for a foreclosure judgment or order of sale, or executing a foreclosure sale up to 60 days if: The Servicer has been notified that the Borrower has applied for assistance under HAF; and Any foreclosure proceeding or execution of a foreclosure sale can be delayed without dismissal of the action; and The Servicer has sufficient time to suspend initiation of the foreclosure process or moving for a foreclosure judgment or order of sale; and In the case of a foreclosure sale, the Servicer is notified at least 7 days before the sale, and any foreclosure trial or execution of a foreclosure sale can be delayed without dismissal of the action. In addition, for ease of submitting an MPF Xtra COVID-19 Deferral, the MPF Program has created an MPF Xtra COVID-19 Deferral Appendix in eMAQCSplus. 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 four business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10307 MPF Announcement 2022-18 (Traditional) (Effective 4/21/2022)
What it is: MPF has published Announcement 2022-18 to update its COVID-related servicing guidance. The update incorporates guidance requiring servicers to suspend foreclosure activities for up to 60 days if the servicer has been notified that a borrower has applied for HAF assistance. Also, the update removes all reference to the July 2021 foreclosure extension, and September 2021 eviction moratorium on REO properties. Finally, the guidance strikes all reference to the RESPA temporary procedural safeguards. 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 four business units are impacted, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10407 USDA FAQ about HAF (Effective 5/12/2022)
What it is: The USDA has provided a list of frequently asked questions (FAQs) pertaining to how a servicer should handle Homeowners Assistance Fund (HAF) related monies. These FAQs indicate the servicer may use the HAF to bring their loan current, however if the borrower cannot resume payments then the servicer must review the borrower for available loss mitigation options in conjunction with HAF funds. If there is a partial claim, then the servicer must calculate the borrower’s maximum partial claim before the HAF is applied. Servicers are required to report the receipt of HAF approvals via the Electronic Status Reporting. Servicers are encouraged to place the foreclosure action on hold if servicer receives notification that the borrower has applied for HAF (I Record) from the state HAF program; if servicer is notified that the borrower has received final approval for HAF funds (A Record); or if a state HAF program requires a foreclosure action be suspended.  This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10410 FHA INFO 2022-46 HAF FAQs (Effective 5/6/2022)
What it is: FHA has released updated frequently asked questions (FAQs) pertaining to how a servicer should handle borrowers who have applied for Homeowners Assistance Fund (HAF) programs. The FAQs clarify when a mortgagee may place a foreclosure action on hold when a borrower has applied for or will be utilizing HAF funds. This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10434 VA HAF FAQs (Effective 5/6/2022)
What it is: VA is providing guidance for the handling of their loans when an application for HAF assistance is received on one of their loans. With these FAQs, VA indicates that a servicer should place VA guaranteed loans in a 60 day forbearance status when a borrower applies for HAF. Loan servicers are to submit a Special Forbearance Event via VALERI. Servicers should use HAF funds to reduce the amount the borrower would owe VA for a partial claim or refund modification, then the servicer should work with the borrower to implement the option. This change item has been deemed to be medium risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory scrutiny.
What we’re doing: Default Accounting and Loss Mitigation are updating procedures. As of February 2022, the process has been that once notified by the state that the borrower has requested HAF assistance all foreclosures are placed on hold for 60 days.

Q10498 OCC Bulletin 2022-16 (Effective 5/11/2022)
What it is: The OCC, the Federal Reserve, the FDIC, the Farm Credit Administration, and the National Credit Union Administration have issued “Loans in Areas Having Special Flood Hazards; Interagency Questions and Answers Regarding Flood Insurance.” The interagency questions and answers issued replace the ones originally published in 2009 and 2011 and consolidate questions and answers proposed by the agencies in July 2020 and in March 2021. This change item has been deemed to be high risk because of the number of impacted accounts, the complexity of the change, and the potential regulatory penalties.
What we’re doing: Escrow Flood is providing procedures to confirm compliance.

Q10562 VA VALERI Servicer Newsflash (Effective 5/26/2022)
What it is: VA has issued a VALERI Servicer Newsflash announcing updates to Reason for Default Changes, Loan Termination in Connecticut, Loss Mitigation Letter, Servicer Department Contacts, and Technician Contact Information. VA has issued a VALERI Servicer Newsflash announcing updates to Reason for Default Changes, Loan Termination in Connecticut, Loss Mitigation Letter, Servicer Department Contacts, and Technician Contact Information.
What we’re doing: Foreclosure has made updates to LoanSphere. Foreclosure, Claims, and Default Reporting have processes in place and are finalizing procedures.