On September 29, the CFPB published an Approval Action in the Federal Register that provides a safe harbor under the Equal Credit Opportunity Act (ECOA) and Regulation B for lenders who use the revised Uniform Residential Loan Application (URLA) form issued by Fannie Mae and Freddie Mac in August 2016. The Bureau’s Approval Action states that it has “determined that the relevant language in the 2016 URLA is in compliance with” Regulation B’s requirements for whether, and how, a creditor may seek information about an applicant’s race, color, religion, national origin, sex, marital status, and income sources, and information about an applicant’s spouse or former spouse. Read more…
On November 22, FHFA announced that Fannie Mae and Freddie Mac’s caps for multifamily lending will remain at $36.5 billion for 2017. The determination was based on the agency’s projection that the overall size of the multifamily finance market will remain roughly the same as it was in 2016. Multifamily loans in designated affordable and underserved segments will remain excluded from the caps.
On August 23, Fannie Mae and Freddie Mac (GSEs) published a redesigned Uniform Residential Loan Application (URLA), the first substantial update to the standardized form used by borrowers applying for a residential loan in more than 20 years. The GSEs also released a redesigned Uniform Loan Application Dataset (ULAD) Mapping Document, used to “ensure consistency of data delivery.” The GSEs revised the URLA and ULAD by (i) redesigning the format to support better efficiency and more accurate data collection; (ii) including new and updated fields intended to “[c]apture loan application details that reflect today’s mortgage lending business and support both the GSEs’ and government requirements”; (iii) simplifying instructions; and (iv) incorporating revised HMDA demographic questions. The GSEs released FAQs about the redesigned URLA and ULAD, which will be available for lender use beginning January 1, 2018. Among other things, the FAQs note that (i) the GSEs will continue to support the URLA in paper form; and (ii) updates to the published documents may be required as a result of the CFPB’s review of the redesigned URLA in connection with the Regulation B safe harbor.
On August 25, FHFA announced that the GSEs will implement a new refinancing offering for borrowers having high LTVs who meet certain criteria. The new offering contains a number of similarities to the Home Affordable Refinance Program (HARP), including not subjecting eligible borrowers to a minimum credit score, not establishing a maximum debt-to-income ratio or maximum LTV, and often not requiring an appraisal. Dissimilarities from HARP include not imposing eligibility cut-off dates and allowing borrowers to use the offering more than once to refinance their mortgage. Borrowers will not have access to the new offering until October 2017. As such, the FHFA directed the GSEs to extend HARP through September 30, 2017, ensuring that “high LTV borrowers who are eligible for HARP will not be without a refinance option while the new refinance offering is being implemented.”
On July 7, the FHFA released an update entitled An Update: An Implementation of the Single Security and the Common Securitization Platform (the Update) regarding Fannie Mae’s and Freddie Mac’s (collectively, the GSEs) joint venture – Common Securitization Solutions (CSS) – to develop and implement a Common Securitization Platform (CSP). As part of a multi-year initiative beginning as early as February 2012, the FHFA has been developing and reporting on the principles and functions for a new securitization platform that supports single-family residential mortgage-backed securitization activities guaranteed by the GSEs. FHFA’s recently issued Update outlines the CSS’s progress made to date, describes expected upcoming milestones, and summarizes the various phases of required testing for Release 1 and Release 2 of the CSP. Importantly, Release 1 will allow Freddie Mac to use the CSP and its Data Acceptance, Issuance Support, and Bond Administration modules to “perform activities related to its current single-class, fixed-rate securities—Participation Certifications (PCs) and Giant PCs—and certain activities related to the underlying mortgage loans (such as tracking unpaid principal balances).” Release 2 will allow both GSEs to use the CSP’s Data Acceptance, Issuance Support, Disclosure, and Bond Administration modules to “perform activities related to their current fixed-rate securities, both single- and multi-class; to issue Single Securities, including commingled resecuritizations; and to perform activities related to the underlying loans,” as well as to allow the GSEs to use the CSP “to issue and administer certain non-TBA mortgage securities, including Fannie Mae securities backed by adjustable rate mortgages.” According to the Update, the Single Security features of the CSP described in the FHFA’s May 2015 update have not been altered and are final. The Single Security features are fundamentally the same as those of the current Fannie Mae MBS and include: (i) payment delay of 55 days; (ii) certain pooling prefixes; (iii) mortgage coupon pooling requirements; (iv) minimum pool submission amounts; (v) general loan requirements such as first lien position, good title, and non-delinquent status; and (vi) seasoning requirements. As outlined in FHFA’s December 2015 publication of the 2016 Scorecard for Fannie Mae, Freddie Mac, and Common Securitization Solutions, the GSEs are expected to implement Release 1 in 2016 and Release 2 in 2018.