April 8th, 2020
https://guide.freddiemac.com/app/guide/bulletin/2020-8
We continue to work closely with Fannie Mae under the guidance of the FHFA to address the ongoing economic implications and uncertainty related to the coronavirus disease (COVID-19) pandemic and its impacts on Borrowers and the Mortgage origination process.
This Bulletin provides:
We are also reminding Sellers of additional resources, including our Selling FAQs related to COVID-19, which we continue to update.
The temporary credit underwriting requirements below are effective for Mortgages with Application Received Dates on or after April 14, 2020, and remain in place for Mortgages with Application Received Dates on or before May 17, 2020; however, Sellers are encouraged to apply these updates to existing loans in process.
We are implementing the following temporary requirements for age of income and assets documentation.
All income and asset documentation must be dated no more than 60 days prior to the Note Date, except as follows:
Currently, when a Borrower is using self-employment income to qualify, the Seller must verify the existence of the Borrower's business no more than 120 days prior to the Note Date. Due to the impact the COVID-19 pandemic and the various social distancing measures implemented by different jurisdictions are having on many businesses across the country, Sellers must now take additional steps to confirm that the Borrower's business is open and operating within 10 Business Days prior to the Note Date.
Below are examples of methods the Seller may use to confirm the Borrower's business is currently operating:
Due to the continuing market volatility of certain asset types, we are implementing the following temporary requirements applicable to accounts with stocks, stock options and mutual funds:
These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.
For new construction properties, where the appraisal was completed "subject to completion per plans and specifications," including properties that were fully completed after the effective date of the appraisal, and an interior and exterior inspection appraisal cannot be completed, Freddie Mac will permit a desktop appraisal on the forms identified in the following table:
| Property type | Acceptable appraisal form |
|---|---|
| 1-unit property, including a unit in a Planned Unit Development (PUD) or a Detached Condominium Unit | Guide Form 70, Uniform Residential Appraisal Report |
| Condominium Unit | Form 465, Individual Condominium Unit Appraisal Report |
| Cooperative Unit | Fannie Mae Form 2090, Individual Cooperative Interest Appraisal Report |
| 2- to 4-unit property | Form 72, Small Residential Income Property Appraisal Report |
| Manufactured Home | Form 70B, Manufactured Home Appraisal Report |
To accommodate the desktop appraisal using the existing Freddie Mac forms, the revised scope of work, statements of assumptions and limiting conditions provided as Attachment A to Bulletin 2020-5 must accompany the form. Additionally, as stated in Bulletin 2020-5, the appraiser must identify that a desktop appraisal was performed by populating the Map Reference field on the appraisal with "desktop."
If construction of the property has not yet begun or is partially completed, and as a result the appraisal report will be completed "subject to completion per plans and specifications," the Seller must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:
If the property is fully completed, and as a result the appraisal report will be completed "as is," the Seller must provide the appraiser with, or ensure that the builder has provided the appraiser with the following:
The Seller must obtain a builder signed certification, which is provided as Attachment A to this Bulletin (see Download dropdown above), Builder/Contractor Certification, attesting that the information provided is true and correct. This certification must be included in the Mortgage file.
For new construction properties where the appraisal report was completed "subject to completion per plans and specifications," if the Seller is unable to obtain a completion report on Form 442, Appraisal Update and/or Completion Report, as a result of COVID-19 related issues, Freddie Mac will accept the warranty of completion form, which is provided as Attachment B to this Bulletin, Completion of Construction Certification.
In the event a Seller has determined the construction cannot be completed in the required time frame due to COVID-19 concerns or a completion report cannot be obtained, the Seller may e-mail Freddie Mac at CHOICERenovation@freddiemac.com to discuss an extension.
Sellers are reminded that CHOICERenovationSM Mortgages require an interior and exterior inspection appraisal and a completion report on Form 442. The Seller may not use the appraisal flexibilities provided in Bulletin 2020-5 or in this Bulletin with CHOICERenovation Mortgages.
These temporary flexibilities are effective immediately for all Mortgages in process and remain in place for Mortgages with Application Received Dates on or before May 17, 2020.
In connection with GREENChoice MortgagesSM, Freddie Mac will permit the following flexibilities provided in
Bulletin 2020-5:
In lieu of Form 442, Freddie Mac will permit a signed letter from the Borrower confirming that the work was completed. Sellers must also provide further evidence of completion which may include photographs of the completed work, paid invoices indicating completion, occupancy permits, or other substantially similar documentation. All completion documentation must be retained in the Mortgage file.
Effective immediately for Application Received Dates on or before May 17, 2020
Section 6301.4 currently permits use of a power of attorney (POA) to execute the Initial Loan Documents and Closing Documents on the Borrower's behalf when there is a hardship or emergency. With this Bulletin Freddie Mac confirms that the COVID-19 pandemic constitutes an emergency for purposes of Section 6301.4. Sellers may allow use of a POA to close a Mortgage or eMortgage, except for cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages, in accordance with the temporary flexibilities listed in the following chart:
| Previous Guide requirement (prior to this Bulletin) | Temporary flexibilities related to Powers of Attorney | |
|---|---|---|
| POA may be used to execute Initial Loan Documents and Closing Documents | If the Borrower is unable to sign documents personally or by electronic signature (including by using the mail or delivery service) a POA may be used to execute any of the Initial Loan Documents and Closing Documents related to the origination of the Mortgage, including the initial Form 65, except that the Borrower must personally sign the initial Form 65 (including by means of an Electronic Signature) if at all possible. If an ink or electronic signature is not possible, then signature by an attorney-in-fact is permissible. | |
| Only a person who has a familial, personal or fiduciary relationship with the Borrower may be the attorney-in-fact for the Borrower in a POA |
In addition to those persons permitted by Section 6301.4 to be the attorney-in-fact, the following are also allowed:
Neither the property seller of the property in a purchase transaction nor an employee of the originating lender is eligible to become an attorney-in-fact under a POA unless he or she otherwise meets an eligibility requirement herein. |
|
| No cash-out refinance Mortgages | Purchase transaction Mortgages | |
| POA must be notarized | POA does not have to be notarized unless required by applicable law, e.g., to record it with the Security Instrument. If a POA must be notarized, it may be remotely notarized in all jurisdictions, even if not expressly permitted by this Bulletin, as long as the power of attorney is not required to be recorded. | POA must be notarized. |
| Discussion with Borrower not needed | Discussion with Borrower not needed. |
For Mortgages with Note Dates on and after April 7, 2020: After the Closing Disclosure has been delivered to the Borrower but prior to closing, an employee of the originating lender or settlement agent must explain and discuss the terms of the loan and use of the POA with the Borrower to confirm that the Borrower understands them. This discussion must take place in person, telephonically or using a video conference system and must be memorialized by an acknowledgment by the Borrower of his or her understanding of the terms of the loan. The acknowledgment may be in writing or in a recording of the telephonic or video discussion. |
| However, whenever the attorney-in-fact under the POA is an individual employed by the title insurer or the title agent, then the discussion described above is always required, regardless of loan type. | ||
These temporary requirements do not apply to cash-out refinance Mortgages and Texas Equity Section 50(a)(6) Mortgages.
Effective immediately, Section 1401.16 provides that a Seller may sell Mortgages to Freddie Mac in which Electronic Notarization is used to notarize Electronic Security Instrument(s), other Electronic closing documents ("Electronic Closing Documents") and/or assignments and other post-closing documents ("Post-Closing Documents"). As of the effective date of this Bulletin, such Electronic notarization otherwise meeting the requirements of this section may involve a remote process ("Remote Online Notarization") in the States listed in Attachment C to this Bulletin, Permitted States for Remote Online Notarization (see Download dropdown above), provided that the system used for the remote notarization meets the following minimum standards:
In addition, Mortgages closed using the Remote Online Notarization process must meet the following requirements:
If, after the effective date of this Bulletin, a State not listed on Attachment C to this Bulletin expressly adopts a law that expressly permits the use of Remote Online Notarization or expressly accepts (either through State law or through the application of an express federal law) Remote Online Notarizations performed out-of-state in accordance with the laws of the State in which the notarial act is performed, Remote Online Notarized loan documents meeting the requirements above will be permitted. Freddie Mac may change the list of States in Attachment C to this Bulletin (see Download dropdown above) based upon subsequent legal developments.
Given the rapid upsurge in remote working arrangements, in response to requests from Seller/Servicers that have not yet implemented electronic signing platforms, we are implementing a temporary solution that involves signing certain contracts and amendments between Freddie Mac and a Seller/Servicer by means of an e-mail exchange. For more information on how to leverage this interim accommodation, contact your Freddie Mac representative or call the Customer Support Contact Center at 800-FREDDIE.
Sellers are reminded that only a "wet" signature is permitted on a Note related to a typical closing. Except for eMortgage transactions conducted in accordance with Chapter 1402, a Note cannot be executed using an Electronic Signature.
Freddie Mac recognizes the unique challenges in the market today related to COVID-19 and will allow temporary flexibilities with respect to the Seller's post-funding quality control reviews ("QC Flexibilities") in the following areas, as set forth more fully below:
Because quality control processes are especially important in times of significant stress, we encourage Sellers to adopt the QC Flexibilities only as they feel necessary.
Effective Term: The QC Flexibilities announced in this Bulletin are effective immediately for all Mortgages currently in the process of a post-closing Seller in-house quality control review and will remain in place for all Mortgages selected through June 2020 for post-closing Seller in-house quality control reviews.
Reverifications required in accordance with Section 3402.5 that are typically mailed can be done verbally or electronically. If a verbal or electronic reverification cannot be completed, the Seller can complete the file review without the reverification. However, to take advantage of this QC Flexibility, the Seller must:
As reminders:
Sellers may continue to select either of the two options set forth in Section 3402.5(e) for reverifications of property value. However, in place of the field reviews under either Option 1 or Option 2, Sellers may obtain a quality control review using Loan Collateral Advisor® or other third-party tools to validate that the data and information provided in the appraisal is accurate and supports the value of the Mortgages Premises. If the reviewer reaches a different opinion regarding the value of the Mortgaged Premises through the use of Loan Collateral Advisor and/or the third-party tools, then the Seller may obtain a field review to determine whether the original property value can be supported. In either case, if the review results in a different conclusion regarding the value of the Mortgaged Premises, the Seller must report the difference as a finding in accordance with Section 3402.10.
As a reminder, a desk review would still be required on the remaining nine Mortgages under Option 1.
The requirements regarding a Seller's pre-closing quality control reviews set forth in Section 3402.8 provide a great deal of flexibility regarding both sample size and scope of review. There is no change to the pre-closing quality control requirements at this time.
We are not updating Loan Product Advisor feedback messages or the Guide at this time to reflect any of the changes noted in this Bulletin.