Financial Institution Regulatory

FHFA Extends COVID-19 Forbearance Period and Foreclosure and REO Eviction Moratoriums

 

On February 25, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the Enterprises) are extending moratoriums on single-family foreclosures and real-estate-owned (REO) evictions until June 30, 2021. Moratoriums on single-family foreclosures apply to Enterprise-backed, single-family mortgages only, while moratoriums on REO evictions apply to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu-of-foreclosure transactions. The FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional forbearance extension for three additional months for up to 18 months. Further, COVID-19 Payment Deferral for borrowers with an Enterprise-backed mortgage can now cover up to 18 months of missed payments. Release.

Board of the Federal Reserve Announces Final Rule Amending Regulation EE

 

On February 18, the Board of the Federal Reserve announced a final rule amending Regulation EE, which is intended to reduce risk and increase efficiency in the financial system. The final rule applies netting protections to a broader range of financial institutions. The expanded definition of financial institutions now includes swap dealers and security-based swap dealers, nonbank systemically important financial institutions, foreign banks and qualifying central counterparties, among other new additions. The final rule also made minor clarifications to the existing activities-based test in Regulation EE, which clarify the application of the test following a consolidation of legal entities. Release.

FHFA Further Extends COVID-Related Loan Flexibilities

 

On February 10, Fannie Mae and Freddie Mac will extend several loan origination flexibilities until March 31, 2021, including (1) alternative appraisals on purchase and rate term refinance loans; (2) alternative methods for documenting income and verifying employment before loan closing; and (3) expanding the use of power of attorney to assist with loan closings. These flexibilities aim to support borrowers impacted by the COVID-19 pandemic. Release.

FHFA Extends Foreclosure and REO Eviction Moratoriums and COVID Forbearance Period

 

On February 9, The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the “Enterprises”) are extending moratoriums on single-family foreclosures for Enterprise-backed, single-family mortgages. Moratoriums on REO eviction for properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu-of-foreclosure transactions are also extended. These moratoriums are extended until March 31, 2021. Further, borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional forbearance extension of up to three months, and COVID-19 Payment Deferral for borrowers with an Enterprise-backed mortgage can now cover up to 15 months of missed payments. Release.

OCC Halts Publication of Fair Access Rule

 

On January 28, the Office of the Comptroller of the Currency (OCC) announced that it would halt publication of its “fair access” rule, which would have prevented national banks from denying services to any individual customer unless justified by that customer’s documented failure to meet quantitative, impartial risk-based standards established by the bank. The rule, which was finalized by the OCC on January 14 and would have gone into effect on April 1, will be set aside for review by the next confirmed Comptroller of the Currency under the current administration. Release.

CFPB Issues Final Rule on Higher-Priced Mortgage Loan Escrow Exemption

 

On January 19, the CFPB issued a final rule exempting certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs). The final rule exempts from the HPML escrow requirement any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer if (1) the institution has assets of $10 billion or less; (2) the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and (3) certain of the existing HPML escrow exemption criteria are met. Final Rule.

CFTC Approves NFA’s Swap Dealer Capital Model Review Program

 

On January 13, the Commodity Futures Trading Commission’s (CFTC) Market Participation Division determined that the National Futures Association’s (NFA) swap dealer capital model requirements and review program is comparable to the CFTC’s swap dealer capital model requirements and review program and is an acceptable means of compliance with CFTC Regulation 23.102. Release.

OCC Reports Decline in Mortgage Performance

 

On December 16, the Office of the Comptroller of the Currency (OCC) reported that the performance of first-lien mortgages in the federal banking system declined during the third quarter of 2020, which accounts for 27% of all residential mortgage debt outstanding in the United States. The percentage of seriously delinquent mortgages was 5.8% in the third quarter of 2020, compared to 6.8% in the prior quarter and 1.5% a year ago. In the third quarter of 2020, servicers initiated 48.2% more foreclosures than in the previous quarter and completed 14,097 mortgage modifications. Release.

CFTC Approves Final Rule Exempting Certain Swaps from Swap-Clearing Requirements

 

On November 2, the Commodity Futures Trading Commission (CFTC) approved a final rule exempting swaps entered into by certain financial institutions from the CFTC’s swap-clearing requirement under the Commodity Exchange Act (CEA). The exemption applies to swaps entered into by certain central banks, sovereign entities, international financial institutions, bank holding companies, savings and loan holding companies and community development financial institutions. Release.

Temporary Policy Allowing Purchase of Qualified Loans in Forbearance is Extended

 

On October 21, the Federal Housing Finance Agency (FHFA) extended a policy allowing certain single-family mortgages in forbearance to be delivered to Fannie Mae and Freddie Mac for borrowers who sought payment forbearance due to the impact of COVID-19 shortly after closing on their single-family loan. Normally, mortgage loans in either forbearance or delinquency are ineligible for delivery. The policy was extended for loans originated through November 30, 2020. Release.