Important MPF Xtra Seller/Servicer Information on Impacts of COVID-19
Effective Date: Immediately (unless otherwise noted)
On April 14, 2020, Fannie Mae issued an update to Lender Letter LL-2020-04, communicating temporary policies previously announced, to enable servicers to better assist borrowers impacted by COVID-19. The policies in this Lender Letter are effective immediately and are effective until Fannie Mae provides further notice, unless otherwise stated.
Temporary Appraisal Policies
- Flexibilities for project eligibility reviews on condo projects.
- Clarified when it is acceptable to utilize virtual inspections for appraisals.
- Flexibilities for new construction loans, including documentation requirements, completion reports for new construction properties, and builder certifications.
- Additional form instructions for a desktop appraisal or an appraisal with an exterior-only inspection that is completed on a form for an interior and exterior inspection (e.g., Form 2055) as permitted above, the appraisal report must include, in the “Map Reference” field.
- Temporary appraisal requirement flexibilities including:
- Desktop appraisals-for purchase money transactions when an interior and exterior appraisal is not available, PFIs are encouraged to obtain a desktop appraisal rather than an exterior only appraisal.
- Exterior only appraisals- may be obtained in lieu of an interior and exterior inspection appraisal for the following transactions: Purchase money loans and Term and rate refinances.
- To accommodate the temporary appraisal policies in place, Fannie Mae developed appraisal documents that include modified language to be used with desktop appraisal reports and exterior only appraisal reports.
- Reminder that PFIs are encouraged to accept appraisal waiver offers when eligible and provided through DU.
- Additional accommodations for loans which require an Appraisal Update and/or Completion Report (1004D) but are unable to obtain due to issues related to COVID-19.
PFIs and Servicers of MPF XTRA must follow the relief policies and guidance issued by Fannie Mae, including the announcements below and by visiting Fannie Mae’s COVID-19 webpage.
Fannie Mae Lender Letter (LL-2020-02), Impact of COVID-19 on Servicing including the following policies:
- Complying with the law: including the Coronavirus Aid, Relief, and Economic Security Act (CARES) including:
- Suspending foreclosure-related activities and certain bankruptcy requirements in accordance with the requirements of the CARES Act.
- Complying with the credit reporting requirements of the Fair Credit Reporting Act (“FCRA”), as amended by the CARES Act for borrowers affected by the COVID-19.
- Reminding Servicers of acceptable methods in attempting to achieve quality right party contact (QRPC) for borrowers impacted by COVID-19 for a forbearance plan.
- Servicer’s responsibilities when reporting a reason for delinquency.
- Providing flexibility with regards to property inspections and preservation in light of COVID-19 concerns.
- Extended deadline for submission of financial statements and reports.
- Forbearance plan terms for borrowers impacted by COVID-19.
- Guidance for Servicers when evaluating the borrower for a payment deferral or mortgage loan modification after a forbearance plan.
Fannie Mae Lender Letter (LL-2020-03), Impact of COVID-19 on Originations providing the following temporary policies:
- Modified age of income and asset documentation requirements from four months to two months.
- Reduced the requirement to verify the existence of self-employed borrower from within 120 calendar days prior to the note date to 10 business days of the note date (or after closing but prior to delivery).
- Guidance provided for market based assets when used as down payment or closing costs, and for reserves.
- Additional flexibilities with regard to Powers of Attorneys.
- Expansion of the use of remote online notarization.
- Accommodations to existing quality control requirements.
- Providing relief for obtaining verbal verification of employments by permitting allowing bank statements or emails form employer in lieu of verbal verification.
- Reminding PFIs of the importance of ensuring sustainable homeownership for borrowers.
- Extended the deadline for submission of financial statements and reports.
- Reminder of the policies for notes, electronic records, and signatures.
- Reminder to PFIs of the acceptable title insurance policy forms and coverage requirements.
- Reminder to PFIs/Servicers of obligation to have business continuity/disaster recovery programs.
In addition, PFIs and Servicers originating, delivering or servicing:
- MPF Traditional (Conventional) loans must follow the policies and guidance recently issued by the MPF Program. Please visit the MPF Website to view recently published MPF Announcements.
- MPF Government loans and MPF Government MBS loans, must follow policies and guidance issued by the applicable Government Agencies.
- MPF Direct loans, must follow policies and guidance issued by the product’s investor, Redwood Trust.
To gain a full understanding of these topics, PFIs and Servicers should review the entire Fannie Mae Lender Letter plus any applicable Fannie Mae Guide chapters, forms, or exhibits noted in the announcement.
- MPF Announcement 2020-20