The devastating impact of Hurricanes Harvey, Irma, Maria and now Nate has prompted government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac to strengthen and enhance guidelines to mortgage lenders and servicers as they assist impacted borrowers.
For example, Fannie Mae is reimbursing lenders and servicers for costs associated with inspecting impacted properties, whether it be for loans currently being serviced or for loans in the origination pipeline. Fannie Mae is also requiring servicers to suspend foreclosure sales on impacted properties as of the date of the disaster (in the case of Hurricanes Harvey and Irma) until Dec. 31, 2017 unless the property was identified as vacant or abandoned prior to the hurricane and a property inspection confirms no damage to the property or, if damaged, the property is not covered by insurance or is ineligible for any state or federal disaster relief.
Freddie Mac is authorizing mortgage companies to suspend mortgage payments for up to 12 months, waive assessments of penalties or late fees and suspend reporting mortgage loan delinquencies to the credit bureaus.
As lenders and servicers respond in the aftermath of a storm, they should be mindful of the potential impact payment relief efforts may have on their compliance management systems. It can be easy for your professionals to overlook documentation requirements during times when large volumes of borrowers need assistance. The full impact of these response programs may not be realized until months later when a compliance audit is required.
Below are specific items for lenders and servicers to consider as they respond to borrower needs while staying compliant with internal and external policies:
Incorporating these tips now as your organization provides disaster relief to borrowers will help you remain in compliance. Up-to-date disaster relief guidance is also available on the websites of Fannie Mae and Freddie Mac.
For more information, or to learn how Baker Tilly’s disaster recovery and mortgage lending specialists can help your organization, contact our team.