The impact of COVID-19 pandemic has resulted in financial institutions and regulators across the globe operating in an entirely new environment. The Financial Action Task Force (“FATF”) has identified the potential risk of criminals exploiting the unprecedented situation through cybercrime, fundraising for fake charities and medical scams, and emphasized the importance of financial institutions’ robust

On May 5, 2020, the US federal banking regulators adopted an interim final rule to modify the liquidity coverage ratio (“LCR”) requirement to support banking organizations’ participation in the Federal Reserve Board’s Money Market Mutual Fund Liquidity Facility (“MMLF”) and the Paycheck Protection Program Liquidity Facility (“PPPLF”).[1] The modification is effective immediately, but the regulators have requested comment on whether the modification should be expanded to other types of COVID-19-related stimulus facilities.

Continue Reading US Banking Regulators Modify Liquidity Coverage Ratio for COVID-19 Stimulus Effects

All participants in the housing industry are grappling with the effects of COVID-19, from borrowers to originators to servicers.  The emergency has influenced all facets of the mortgage origination and servicing business, prompting additional restrictions in some instances while triggering flexibilities and relaxed requirements in others.  Flood insurance requirements, which are usually strict and inflexible,

Today, the Federal Housing Finance Agency (“FHFA”) announced an eagerly awaited policy allowing Fannie Mae and Freddie Mac (the “Agencies”) to address one aspect of the liquidity crisis for mortgage servicers facing mounting advance obligations due to forbearances. Going forward, once a servicer of single-family mortgage loans pooled into an Agency mortgage-backed security has advanced

Since Mayer Brown issued a Legal Update describing guidance issued by Fannie Mae, Freddie Mac (together with Fannie Mae, the “GSEs”), the Federal Housing Administration and the Veterans Administration (“VA”) relaxing requirements with respect to appraisals and income/employment verification during the COVID-19 emergency, the agencies have continued to revise their guidance as the market adjusts to the challenges encountered by mortgage lenders. The GSEs and the VA have all issued revised letters, and the US Department of Agriculture (“USDA”) issued new guidance to provide relief in connection with guaranteed single-family loans. Below we describe the USDA’s guidance regarding appraisals and employment verifications performed in connection with RHS loans and provide updates on the changes made by the GSEs and the VA to their appraisal guidance.

Continue Reading The GSEs and Other US Federal Agencies Issue New and Revised Guidance for Appraisals and Verifications of Employment

A hike in coronavirus-related financial crime is presenting new challenges for banks, which could face significant reputational and regulatory repercussions if they are found to have acted unethically during the crisis, regulation and compliance experts warn.

There is a confluence right now of an increased risk of fraud, money laundering, bribery and corruption — schemes

Residential mortgage loan servicers, trade associations and various members of Congress have been urging the Department of Treasury and the Federal Reserve Board to provide a dedicated servicing advance facility. On April 10, 2020, Ginnie Mae did just that, announcing the terms of its much-anticipated Pass-Through Assist Program for Issuers of mortgage-backed securities that are

Today, a federal judge in Maryland denied an emergency motion seeking to block Bank of America from applying eligibility restrictions to its lending under the $349 billion Paycheck Protection Program (“PPP”). The motion for a temporary restraining order and preliminary injunction was filed by four small businesses, which had alleged that Bank of America only accepted applications for PPP loans from small business checking customers that were already borrowers at the bank or that were not also borrowers at any other bank. The businesses alleged that these limitations violated the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which established the PPP, and the Small Business Act (“SBA”).

Continue Reading Maryland Federal Court Denies Attempt to Block Bank of America’s Eligibility Restrictions for Paycheck Protection Program Loans

As the residential mortgage community is aware, loan servicers are facing significant financial burdens from the servicing advance obligations associated with the loan forbearance mandates of the CARES Act. Over the past few days, there has been considerable reporting and reaction to the statements by the Director of the Federal Housing Finance Agency that Fannie

For many of us who have been around for a while, it seems as if we have seen this movie before.  An economic downturn leads to increased borrower delinquencies on mortgage loans with a progressively increasing obligation for the servicers of those mortgage loans to make principal and interest advances to cover the delinquencies.

But