COVID-19

CFPB Proposes Mortgage Servicing Changes to Prevent Wave of COVID-19 Foreclosures

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On April 5, the Consumer Financial Protection Bureau (CFPB) proposed rule changes intended to prevent avoidable foreclosures as emergency federal foreclosure protections put in place due to the global pandemic expire. The rules aim to assist both borrowers and servicers to navigate an expected surge of borrowers exiting forbearance. The proposed rules (1) provide a pre-foreclosure review period that generally prohibits servicers from starting foreclosure until after December 31, 2021; (2) permit servicers to offer certain streamlined loan modification options to borrowers with COVID-19-related hardships based on the evaluation of an incomplete application; and (3) update required servicer communications to keep borrowers informed of their options. Release.

Federal Bank Regulators Issue Rule Supporting Treasury’s Investments in Minority Depository Institutions and Community-Development Financial Institutions

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On March 9, federal bank regulatory agencies announced an interim final rule that supports the Treasury Department’s implementation of a program established by Congress to make capital investments in minority depository institutions and community-development financial institutions. The Treasury Department’s Emergency Capital Investment Program (ECIP) will support the efforts of these financial institutions to provide loans, grants and forbearance to small businesses, minority-owned businesses and consumers, especially in low-income and underserved communities, which may be disproportionately affected by COVID-19. Release.

FHFA Further Extends COVID-Related Loan Flexibilities

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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

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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.

FHFA Extends COVID-19 Multifamily Mortgage Forbearance through March 31, 2021

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On December 23, the Federal Housing Finance Authority (FHFA) announced an extension of the COVID-19 relief mortgage forbearance to qualifying multifamily property owners through March 31, 2020, which was previously set to expire on December 31, 2020. The relief program also extends certain protections to related tenants. Release.

Federal Reserve Announces the Extension of its Temporary U.S. Dollar Liquidity Swap Lines and the Temporary Repurchase Agreement Facility

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On December 16, the Federal Reserve announced an extension through September 30, 2021, of its temporary U.S. dollar liquidity swap lines and the temporary repurchase agreement facility for foreign and international monetary authorities (FIMA repo facility). In March 2020, these facilities were temporarily established with the goal to ease strains in global dollar funding markets created by the COVID-19 pandemic and to support the supply of credit to households and businesses. These facilities were previously extended as of July 29, 2020. Release.

Temporary Policy Allowing Purchase of Qualified Loans in Forbearance is Extended

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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.

Federal Reserve Board Releases Hypothetical Scenarios for Second Round of Bank Stress Tests

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On September 17, the Federal Reserve Board released its hypothetical scenarios for a second round of bank stress tests. Earlier this year, the Board’s first round of stress tests found that large banks were well capitalized under a range of hypothetical events. An additional round of stress tests is being performed due to the continued uncertainty from the COVID event. Release.

Banking Regulatory Agencies Finalize Rules on Real Estate Appraisals and Regulatory Treatment of Emergency Capital Facilities

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On September 29, the Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC), together with the OCC and the Federal Reserve (the “Agencies”), published final rules temporarily deferring real estate appraisal requirements for financial institutions and mitigating the regulatory capital and liquidity effects for banks that participate in certain COVID-related Federal Reserve liquidity facilities. The final rules are identical or substantially similar to interim final rules currently in effect that were issued earlier this year. The final rule on real estate appraisals temporarily allows financial institutions to defer completion of appraisals and evaluations on certain residential and commercial real estate transactions for up to 120 days after closing. The final rule on the Federal Reserve liquidity facilities provides that banking organizations that participate in the Federal Reserve’s Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility are permitted to exclude exposures acquired through their participation in such programs when determining their compliance with the Agencies’ regulatory capital rule and/or liquidity coverage ratio rule. OCC Release. Federal Reserve Release. FDIC Release. 

CFTC Further Extends Certain No-Action Relief to Market Participants in Response to COVID-19

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On September 11, the Commodity Futures Trading Commission (CFTC) announced the Division of Swap Dealer Intermediary Oversight (DSIO) and the Division of Market Oversight (DMO) are further extending certain elements of the temporary no-action relief issued in response to the COVID-19 pandemic that are set to expire on September 30. The extended relief expires January 15. Such relief includes relief for affected firms from CFTC regulations related to voice trading and other telephonic communications, as well as time-stamping requirements when located in remote, socially-distanced locations. No-action relief will also be extended for SEFs and DCMs from certain CFTC regulations regarding audit trails, recording of oral communications, and related requirements as a result of the displacement of trading personnel from their normal business sites. Release.