Safeguard Properties

Fannie Mae: SVC-2019-08: Servicing Guide Announcements

Posted on by Safeguard

Investor Update
December 11, 2019

Source: Fannie Mae

The Servicing Guide has been updated to include changes or clarifications related to the following:

• Payment Shortage Tolerance*
• Fidelity Bond and Errors and Omissions Mailbox
• Miscellaneous Revisions*

*Policy change not applicable to reverse mortgage loans.

Payment Shortage Tolerance
To help reduce the number of deficient monthly mortgage loan payments that need to be returned to borrowers, we are introducing a $50 payment shortage tolerance in Servicing Guide C-1.1-02, Processing Payment Shortages or Funds Received When a Mortgage Loan Modification Is Pending. The servicer is now authorized to accept a payment that is deficient by $50 or less for up to three monthly payments during a 12-month period.

Effective Date
This policy change is effective immediately; however, servicers are authorized to implement this change at their discretion and at a time of their choosing.

Fidelity Bond and Errors and Omissions Mailbox
Sellers/servicers are reminded that they must report fidelity bond and errors and omissions events to us

• within 30 days after discovery of the occurrence of a single fidelity bond or errors and omissions policy loss that is mortgage related and the amount exceeds the lesser of $250,000 or the policy’s deductible, even when no claim will be filed or when our interest will not be affected; and

• within 10 business days of receipt of a notice from the insurer regarding the intended cancellation, reduction, nonrenewal, or restrictive modification of the seller/servicer’s fidelity bond or errors and omissions policy.

The Selling Guide has been updated to include the following mailbox for reporting these events to us: fidelity_bond_and_errors_and_omissions_claims@fanniemae.com.

Updated Selling Guide Topics
• A3-5-04, Reporting Fidelity Bond and Errors and Omissions Events
• E-1-03, List of Contacts

Effective Date
Sellers/servicers are encouraged to implement this change immediately, but must do so by February 1, 2020.

Miscellaneous Revisions
Maximum Late Charge for Conventional Mortgage Loans. We have updated Servicing Guide A2-3-04, Late Charges as Compensation to provide a reference to the applicable content in the Selling Guide, which limits the late charge amount to 5%.

Effective Date
Servicers assessing a late charge on a conventional mortgage loan owned or securitized by us in an amount other than 5% of the monthly principal and interest, unless state law doesn’t permit collecting a late charge as high as 5%, must comply with the policy in the Selling Guide by April 1, 2020.

Effective Date of Fannie Mae-Initiated Drafting of Certain Remittances. We are notifying servicers that we
will begin initiating drafts of principal and interest for scheduled/scheduled and scheduled/actual portfolio mortgage loans as announced in LL-2019-07 in August 2020 based off of the prior month’s (July 2020) Loan Activity Record. Also, servicers must make all funds due to us available for drafting by the calendar day of the first month and every subsequent month as specified in LL-2019-07.

Contact your Fannie Mae account team, Portfolio Manager, or Fannie Mae’s Single-Family Servicer Support Center at 1-800-2FANNIE (1-800-232-6643) with any questions regarding this Announcement.

Malloy Evans
Senior Vice President and
Chief Credit Officer for Single-Family

The Importance of Cybersecurity in Risk Management

Posted on by Safeguard

Safeguard in the News
December 6, 2019

Source: DS News

This week, Safeguard Properties hosted a webinar to discuss the challenges facing cybersecurity in 2019. Security, Safeguard notes, should be one of the primary focuses when implementing and developing systems and applications.

Cybersecurity remains a top concern at a majority of lending institutions, according to the 2019 Regulatory & Risk Management Indicator released by Wolters Kluwer, and 78% of lenders reported it as a top risk that will receive “escalated priority” in the next year. While cybersecurity outranks all other risks in the survey, the level is down from 81% last year.

During Safeguard’s webinar, Steve Roesing President and CEO of ASMGi, 2019 stated that the majority of data breaches from malicious attacks, with 69% of data breaches stemming from outside sources, as 51% of breaches are caused by malicious or criminal attacks.

Meanwhile, just 24% of breaches are caused by human error, while another 25% are caused by system glitches.

“It’s almost a 50-50 split,” said Roesing.

Malware attacks made up 34.4% of attacks in 2019, the largest share of any other attack type. Meanwhile, account hijacking made up 18.2% of attacks. Among financial services institutions, there were 927 reported incidents, 207 of which included confirmed data disclosure. We applications, privilege misuse, and other miscellaneous errors made up 72% of breaches.

Most malicious breaches, 88%, were reportedly done for financial reasons, while espionage made up another 10%.

Cybersecurity, Safeguard notes, requires a “holistic approach,” involving both policy and systematic controls at all levels.

Some of the trends noted in the webinar included the changing landscape of “phishing,” the increased use of mobile technology for attacks, and increased investments in cybersecurity. Going into 2020, Safeguard expects to see increased spending and a growing impact from AI and machine learning (ML) on cybersecurity.

FEMA Declared Disaster Tennessee

Posted on by Safeguard

FEMA Alert
December 6, 2019

FEMA issued a Presidential Major Disaster Declaration for areas in Tennessee affected by severe storms and straight-line winds that took place October 26, 2019.

The following counties are eligible for assistance:

Public Assistance

  • Benton
  • Decatur
  • Hardin
  • Henderson
  • Houston
  • Humphreys
  • McNairy
  • Montgomery
  • Perry
  • Wayne

Tennessee Severe Storms and Straight-line Winds (DR-4471)

FEMA Declared Disaster Tennessee: ZIP Code List

 

Additional Resources

FEMA’s web site

FEMA’s Disaster Declaration Process

Safeguard Properties Industry Alerts

HUD Moratorium on Foreclosure

VA’s Policy Regarding Natural Disasters

Freddie Mac Disaster Relief Policies

Fannie Mae’s Natural Disaster Relief Policies

FEMA Declared Disaster Mississippi

Posted on by Safeguard

FEMA Alert Update
January 8, 2020

FEMA issued an update to a Presidential Major Disaster Declaration for areas in Mississippi affected by a severe storm, straight-line winds and flooding that took place October 26, 2019.

The following counties are eligible for assistance:

Public Assistance

  • Chickasaw
  • Choctaw
  • Oktibbeha

Mississippi Severe Storm, Straight-line Winds And Flooding (DR-4470 Amendment 1)

FEMA Declared Disaster Mississippi: ZIP Code List

 

FEMA Alert
December 6, 2019

FEMA issued a Presidential Major Disaster Declaration for areas in Mississippi affected by a severe storm, straight-line winds and flooding that took place October 26, 2019.

The following counties are eligible for assistance:

Public Assistance

  • Alcorn
  • Covington
  • Itawamba
  • Jasper
  • Jefferson Davis
  • Leake
  • Marion
  • Neshoba
  • Newton
  • Pontotoc
  • Prentiss
  • Scott
  • Simpson
  • Smith
  • Tippah

Mississippi Severe Storm, Straight-line Winds And Flooding (DR-4470)

FEMA Declared Disaster Mississippi: ZIP Code List

 

Additional Resources

FEMA’s web site

FEMA’s Disaster Declaration Process

Safeguard Properties Industry Alerts

HUD Moratorium on Foreclosure

VA’s Policy Regarding Natural Disasters

Freddie Mac Disaster Relief Policies

Fannie Mae’s Natural Disaster Relief Policies

Northern California Storm Causes Rockslide and Flooding

Posted on by Safeguard

Disaster Alert
December 8, 2019

Source: The Weather Channel

Approximate locations sustaining home flooding

California

– West Portal, San Franciso (San Francisco County, 94127)

NOTE: This has not yet been declared a FEMA Major Disaster.

At a Glance

  • Flooding closed Highway 101 for hours.
  • Homes in San Francisco’s West Portal neighborhood were flooded.
  • A rockslide partially closed Highway 1 near Big Sur.

A winter storm caused a rockslide and flooding Saturday that closed highways across Northern California and damaged several homes.

Two people were hurt when a tree fell on them on a sidewalk in San Francisco.

Northbound Highway 101 was closed by floodwaters for hours Saturday evening, the San Francisco Chronicle reported. At least three cars were stalled, and traffic inched along until after 8 p.m. when the freeway reopened.

Thigh-high water washed into homes in San Francisco’s West Portal neighborhood, KPIX reported.

“The storm hit, and the sewers backed up, literally and water just came cascading out of the drains, cascading down, and nothing could handle it,” Sarah Glover told the TV station.

For full report, please click the source link above.

USDA: Single Family Housing Guaranteed Loan Program Integration Update

Posted on by Safeguard

Investor Update
December 6, 2019

Source: USDA

As previously communicated on November 27th, we are transitioning the Single Family Housing Guaranteed Loan Program (SFHGLP) to an integrated, National model. Effective December 8, 2019, the SFHGLP loan processing and activity for the following states will be transferred into the SFHGLP Origination and Processing Division (OPD) as part of the Wave 1 implementation of the new integrated model:

Wave 1 States (December 8th, 2019)*

AZ, DE/MD, HI/WP, KS, LA, ME, NE, NH/VT, NM, NY, OR, PA, SD, VA, WY

*States included in each wave are based on the property location for loan files submitted, not lender location

Loans in all the above states except HI/WP and LA are already being processed by the Auxiliary Processing Unit (APU), and there will be no changes for lenders. For loans in HI/WP and LA, please refer to the below guidance and contact information.

Guidance for Loan Submissions

Files in Process: For loan files in Wave 1 states (listed above), all files received and reviewed by state staff prior to December 8, 2019 will be completed by state staff.

New Submissions: You can continue to use GUS as you have in the past; this integration will have no impact on your access to USDA systems. For loan files in Wave 1 states (listed above), manual file submissions should be sent to: SFHG-APU@usda.gov.

Contact Information

Beginning on December 8th, lenders should send all inquiries for loan files in Wave 1 states (listed above) to SFHG-APU@usda.gov. If you have a question about a specific loan file, please include the following information:

  • Identify the state the application is located;
  • Include your contact information; and
  • Indicate if you want a call back (otherwise you will receive an email reply)

Looking Ahead

Beginning in Wave 2 (projected January 19th, 2020), all states that have been integrated in Waves 1 and 2 will be aligned to one of four production teams, and each production team will have their own email inbox. Additional information will be shared in January.

Wave 2 States (Future – January 19th, 2020)*

AK, AR, CO, FL, GA, IA, ID, IL, KY, MI, MN, MO, MT, NV, PR, SC, TN, TX, WA

*States included in each wave are based on the property location for loan files submitted, not lender location

Remaining states will be integrated in Wave 3 (projected February 16th, 2020). Until states are integrated into the new unit, lenders should continue to contact their state office staff.

Wave 3 States (Future – February 16th, 2020)*

AL, CA, CT/MA/RI, IN, MS, NC, ND, NJ, OH, OK, UT, WI, WV

*States included in each wave are based on the property location for loan files submitted, not lender location

Additional Information

1. Infographic: For more information on the SFHGLP Integration, please reference the attached infographic.

2. Handbooks: The Guaranteed Loan Program regulation (7 CFR 3555) and technical handbook (HB-1-3555) are available online to assist you with questions:

• https://www.rd.usda.gov/publications/regulations-guidelines/handbooks#hb13555

• Additional training, documentation, and resources are also available on USDA LINC: https://www.rd.usda.gov/programs-services/lenders/usda-linc-training-resource-library

1. Technical Issues: If you are experiencing technical issues with the Guaranteed Underwriting System (GUS), e-Authentication passwords, GUS User roles, etc., you may contact the Rural Development Help Desk at 1-800-457-3642.

2. Please Note: The SFHGLP Integration does not impact servicing (loss claims and electronic status reporting), Help Desk, access to USDA systems, or e-Authentication protocols.

DRAFT_Wave 1 Infographic_6Dec2019.pptx

Help Resources

USDA ITS Service Desk Support Center
For e-Authentication assistance
Email: eAuthHelpDesk@ftc.usda.gov
Phone: 800-457-3642, option 1 (USDA e-Authentication Issues)

Rural Development Help Desk
For GUS system, outage or functionality assistance
Email: RD.HD@STL.USDA.GOV

Phone: 800-457-3642, option 2 (USDA Applications); then option 2 (Rural Development)

Freddie Mac: Reining in Reverse Occupancy

Posted on by Safeguard

Investor Update
December 3, 2019

Source: Freddie Mac

Reining in Reverse Occupancy

Reverse occupancy misrepresentation occurs when a borrower claims to be purchasing an investment property or non-owner occupied home so he or she can use the rental income from the property to help them qualify for the loan.

The borrower instead occupies the home or one of the units as his or her primary residence, eliminating rental income without which the borrower may not have qualified.

Potential Indicators of Owner Occupancy

There are many potential indicators that a borrower intends to occupy a property and not use it as a rental.

One indicator is the use of tax credits intended to provide qualified homeowners with a tax exemption on a primary residence. Through our investigations, we’ve found that some borrowers who obtained investment property loans also applied for those tax credits, implying that they would occupy the properties securing those loans.

Another potential indicator is the type of insurance coverage obtained for these properties. Freddie Mac’s Single-Family Fraud Risk (SFFR) team confirmed with insurance agents and Servicers that, for many of these loans, the coverage in place at origination was owner-occupied, not rental.

Servicers of these loans further confirmed that these borrowers maintained that same type of homeowner’s insurance coverage for their purported investment properties since origination.

In other instances, the borrowers changed insurance coverage shortly after closing. In fact, one borrower changed coverage from rental to owner-occupied within 10 days of closing.

We’ve also seen an additional alert to possible occupancy misrepresentation when many borrowers called their servicers shortly after closing and requested a change of their billing/mailing address to the subject investment properties.

Borrowers Seeking Primary Residences

SFFR investigators have interviewed borrowers in connection with potential reverse occupancy misrepresentations.

While some borrowers recounted detailed conversations with their loan officers about the type of loan for which they were applying, others were not aware they had applied for investment loans.

Borrowers frequently stated that they had always intended to occupy the properties and reiterated that their loan officers knew it. One borrower even indicated that her loan officer encouraged her to apply for an investment loan to get her loan approved.

While reverse occupancy isn’t a new scheme, it still occurs − as recent SFFR investigations attest. Any time borrowers are qualified for loans they aren’t truly eligible for, whether through misrepresented income, occupancy, insurance or something else, they create substantial risk to Freddie Mac and our lenders.

If you spot or suspect fraud, let us know by contacting the Freddie Mac Fraud Hotline at 800-4FRAUD8.

For press inquiries, contact Jeanne Hamrick, Single-Family Public Relations Manager, at 571-382-5065.

New York City to Combat the Problem of ‘Zombie Homes’

Posted on by Safeguard

Industry Update
November 25, 2019

Source: Curbed

There are at least 2,000 abandoned and deteriorated homes on the brink of foreclosure in NYC

Back in 2007, the foreclosure crisis first hit New York City neighborhoods: That year, there were around 18,000 foreclosure filings, accounting for more than half of the state’s total filings. Though that was over a decade ago, the city hasn’t fully recovered from the crisis: In 2016, there was a significant spike in home foreclosures, particularly in Brooklyn and Queens.

As a result of the crisis, as Fox 5 New York reported, there are at least 2,000 abandoned and deteriorated homes in the foreclosure process across New York City—particularly in neighborhoods in Central Brooklyn, Southeast Queens, northern Staten Island, and parts of the Bronx—according to the city’s Department of Housing Preservation & Development (HPD). These properties, which HPD calls “zombie homes,” often fall into disrepair when owners fall behind on mortgage payments. Aside from being neighborhood “eyesores,” these properties often attract squatters, and can become overrun with rodents and trash. (Last week, three men died in a fire in an abandoned property in Queens.)

To prevent these homes’s foreclosures and crack down on “zombie properties” the state legislature passed a package of laws in 2016 requiring lenders to inspect, maintain, and report zombie homes to the state. In order to help the state, in the fall of 2017, HPD launched a “Zombie Homes Initiative” to track and identify these properties, conduct exterior surveys, provide resources to homeowners at risk of foreclosure, and create new approaches to “return zombie homes to productive use.”

One of those possible productive uses is affordable housing—which New York City is in dire need of as it faces a homelessness and affordability crisis.

For full article, please click the source link above.

Better Predicting Mortgage Default

Posted on by Safeguard

Industry Update
December 2, 2019

Source: DS News

Credit scores alone are not enough to determine the likelihood of default, Fitch Ratings notes, as a variety of factors can complicate the default risk process. In a report, Fitch discusses how consistency is needed in this process.

“Assessing downside risk of U.S. consumer credit can be more difficult if different versions of credit scores are used when lending, underwriting standards are relaxed amid a supportive economy, or when lenders are reaching for growth,” Fitch Ratings says. “As these dynamics can be exacerbated during an economic downturn, it is essential to view credit scores in combination with other key risk variables to most accurately assess default risk.”

According to Fitch, higher FICO scores are indicative of a more solid repayment history of debt obligations, with a lower probability of default. However, different versions of credit scores have been introduced post-crisis that are not used consistently across asset classes and providers, which complicates comparing these scores and has prevented their widespread use in credit analysis.

Current higher FICO score trends in mortgages are partly attributable to a higher percentage of originations from the prime segment following the financial crisis amid the benign economic environment. Borrowers are paying their bills, as is to be expected given strong labor markets, rising wages, and low unemployment and interest rates. FICO scores are also improving as a result of the extended duration of the favorable economic environment, as past payment history with higher delinquency levels falls off.

Much of the market is reliant on older FICO versions. Fitch notes that the mortgage industry uses older versions like FICO 2, 4, and 5 when assessing creditworthiness for new mortgages and deciding interest rates, while the newer FICO versions are currently not used by the mortgage market. Newer versions, such as FICO 8, which is commonly used in other industries, factors in on-time payments, account balances, and length of credit experience when calculating scores. FICO 9 differs when it comes to collections, factoring in rental payment history while putting less weight on delinquent medical collections.

For full article, please click the source link above.

HUD: Major Disaster Recovery Support Announcement

Posted on by Ashley Shepherd

Investor Update
December 3, 2019 

Source: HUD

WASHINGTON – The U.S. Department of Housing and Urban Development (HUD) today allocated over $2.3 billion to support the long-term disaster recovery process in hard-hit areas in fifteen states, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, American Samoa and the Commonwealth of the Northern Mariana Islands.

This allocation today is supported through HUD’s Community Development Block Grant – Disaster Recovery (CDBG-DR) Program and will address seriously damaged housing, businesses and infrastructure from disasters that occurred since 2017. The CDBG-DR Program requires grantees to develop thoughtful recovery plans informed by local residents. Learn more about CDBG-DR and the State’s role in long-term disaster recovery (en español).

“Today, we take another important step to ensure those hardest-hit by recent disasters can fully recover,” said HUD Secretary Ben Carson. “The grants awarded today will help these local communities continue the recovery process of rebuilding their homes, restoring their businesses and repairing their critical infrastructure.”

CDBG-DR grants support a variety of disaster recovery activities including housing redevelopment and rebuilding, business assistance, economic revitalization, and infrastructure repair. Grantees are required to spend the majority of these recovery funds in “most impacted” areas as identified by HUD. HUD will issue administrative guidelines shortly for use of the funds to address grantees’ long-term recovery needs, particularly in the area of housing recovery.

On October 5, 2018, President Trump signed Public Law 115-254, which provides $1.68 billion in CDBG-DR funding for “disaster relief, long-term recovery, restoration of infrastructure and housing, and economic revitalization in the most impacted and distressed areas resulting from a major disaster declared in 2018.” HUD allocated all but $205 million of those funds in an announcement on May 14, 2019.  This announcement allocates that $205 million between the American Samoa and Northern Marianas as well as providing additional funding for those communities and the other disasters of 2018 through Public Law 116-20.

On June 6, 2019, President Trump signed Public Law 116-20, which provides $2.431 billion, including $431 million to address additional unmet infrastructure needs for 2017 disasters and $2 billion “related to disaster relief, long-term recovery, restoration of infrastructure and housing, economic revitalization, and mitigation in the most impacted and distressed areas resulting from a major disaster that occurred in 2018 or 2019.” HUD is announcing allocations for all but $272,072,000 of the funds appropriated under 116-20. After information on all disasters in calendar year 2019 have been taken into consideration, those remaining funds will be allocated.

For full announcement, please click the source link above.