Ginnie Mae, FHA Update Servicer Policies in Coronavirus Wake
Ginnie Mae and FHA on Friday issued updates addressing mortgage servicer liquidity issues that could result from the coronavirus pandemic.
In a Brief issued Friday, Ginnie Mae issued notice of its intention to establish a liquidity facility to support servicers in a period of widespread borrower forbearance due to the effects of the coronavirus. Ginnie Mae Acting President Seth Appleton said the facility – to be established under Ginnie Mae’s Pass-Through Assistance Program – should be fully implemented within the next two weeks.
MBA President and CEO Bob Broeksmit, CMB, praised the announcement. “MBA commends Ginnie Mae for its intention to create this program, which will allow many servicers to better help consumers affected by the coronavirus via mortgage payment forbearance,” he said. “MBA looks forward to continuing to work with Ginnie Mae and other policymakers and stakeholders on ways to best protect consumers during this pandemic.”
Dan Fichtler, MBA Associate Vice President of Housing Finance Policy, said creation of one or more liquidity facilities to support the mortgage servicing sector is a top priority for MBA, noting In the expected event of large-scale borrower forbearance due to the outbreak of COVID-19, Ginnie Mae servicers must continue to advance payments to MBS investors, even if they do not receive those monthly payments from the borrowers.
“Given the unprecedented and nationwide scale of forbearance that is anticipated, many servicers will need enhanced access to liquidity to advance payments until the point at which they are later reimbursed,” Fichtler said.
Meanwhile, FHA on Friday issued a new Mortgagee Letter, which includes information on temporary policies related to re-verification of employment and appraisals, enacted in response to COVID-19. Separately, FHA also released two waivers – one that provides a mailing alternative for condo project approval application packages and another which addresses damage inspection reports in Presidentially-Declared Major Disaster Areas.
Mortgagee Letter 20-05 exempts lenders from obtaining re-verification of employment within 10 days of the Note date on single-family forward transactions if the lender is not aware of any loss of employment by the borrower and the lender has obtained (1) evidence of a minimum of two months of PITI in reserves; and (2) a year-to-date paystub or direct electronic verification of income for the pay period that immediately precedes the Note date or a bank statement showing direct deposit from the borrower’s employment for the pay period that immediately precedes the Note date.
Mortgagee Letter 20-05 also allows single-family forward purchase transactions to use an optional exterior-only or desktop-only appraisal. These options are not available for new construction, construction to permanent, building on own lands and 203(k) purchases.
With respect to mailing alternatives for condo project approval application packages, FHA employees working remotely now will be able to access packages for processing. This alternative method does not affect lenders that currently upload their packages through FHA Connection.
With respect to the waiver for damage inspection reports, FHA temporarily suspended the requirement that appraisers complete damage inspection reports for properties pending sale or endorsement in Presidentially-Declared Major Disaster Areas associated with COVID-19.
Additionally, FHA further updated its COVID-19 Questions and Answers document, which provides more details on a number of coronavirus-related issues.