GSE Responses to the CARES Act / COVID-19

In a continuing effort to keep our clients abreast of the constantly shifting default landscape, we are providing a summary of recently issued bulletins from Fannie Mae and Freddie Mac. Today, Freddie Mac issued Bulletin 2020-10 to provide servicers with guidance around the continuing COVID-19 pandemic. Fannie Mae also issued a statement, and the text of both follows:

Freddie Mac: Freddie Mac generally requires Servicers to file a motion for relief from automatic stay upon certain milestones, based on the length of delinquency or post-petition payments per Guide Sections 9401.6 and 9401.7. Considering the CARES Act and other impacts resulting from the COVID-19 National Emergency, we are notifying Servicers that we are temporarily relieving them of their responsibility to meet these timelines. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such a motion. (Emphasis added)

FNMA: Fannie Mae generally requires servicers to file motion for relief from automatic stay upon certain milestones. In light of the CARES Act and other impacts resulting from the COVID-19 National Emergency, Fannie Mae is temporarily relieving servicers of their obligation to meet these timelines. This temporary suspension shall be in effect for not less than the 60-day period beginning on Mar. 18, 2020. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such motions. (Emphasis added)It is important to note the similarity in both statements, and that neither entity is specifically barring the filing of motions for relief from the automatic stay.

Rather, both entities are requesting servicers work with their counsel to determine the right timing. Clearly, if a forbearance has been requested under the terms of the CARES Act, it should be honored. If a request has not yet been received, there is no bar to referring and filing a motion for relief from automatic stay.

We encourage our clients to remain in close contact with BPC. BPC is ready to assist its clients in determining the right strategy to both serve their customers and comply with the constantly updated legal and regulatory environment. In the meantime, BPC remains fully operational and ready to support the default servicing industry.

COVID-19 03.23.20

The Bonial & Associates, P.C. (BPC) leadership team is meeting daily to keep our entire operations as up to date as possible as circumstances continue to change. BPC is aware of the announced Shelter-in-Place Order for Dallas City and County, as well as the forthcoming similar orders for surrounding counties. Under the orders as issued, BPC qualifies as an “Essential Business” providing essential services necessary to maintain critical operations such as legal services to assist in compliance with legally mandated activities. Therefore, we are already in compliance with the terms of the Dallas County Order, and can continue to operate with the compensating measures already in place such as remote working and social distancing.

Most BPC team members are, and continue to have, the option of working remotely for the duration of the orders beginning Tuesday, March 24, 2020. The Dallas and St. Louis offices will remain open and fully operational, and we continue to expect no impact to any of our services for our valued customers. We have previously referenced all of the precautions taken in the office as well as the social distancing of staff still coming into our facilities. Please know everyone’s safety and well-being are of the utmost importance. We thank you for your understanding as we all work together through these unprecedented events.

We hope all of you are well as possible during these extreme times. Please feel free to reach out to our Compliance Department at with any questions and thank you all for the partnership.

Hilary Bonial
Managing Director | Bonial & Associates, P.C.
14841 Dallas Parkway, Suite 425 | Dallas, TX 75254

Lowest mortgage rates since 2012 spur refinancing wave - CBS

CBS - Concerns that the coronavirus could slam the U.S. economy are pushing down mortgage rates to their lowest level since 2012. That's spurring a growing number of homeowners to refinance their loans as well as enticing house-hunters to apply for mortgages. A Mortgage Bankers Association survey of lenders released Wednesday shows that refinancing activity is up 224% from a year ago, while applications for home loans have risen 10% compared with the same period last year. <a href="">CBS</a>

Bank-Friendly Regulator Troubles Lenders with Redlining Law Rewrite - ABI

American Bankruptcy Institute (ABI) - Comptroller of the Currency Joseph Otting is an unusually pro-bank regulator who once ran a California lender and understands the business. But his proposed overhaul of landmark anti-redlining rules is causing the industry a lot of angst, Politico reported. The reform of the 1977 Community Reinvestment Act, jointly put forward by Otting’s agency and the FDIC, aims to address a slew of long-standing complaints from banks about the law, which encourages them to lend to lower-income borrowers in the neighborhoods where they do business. But industry representatives warn that the proposal would hike their costs and in some cases actually dim their incentive to lend to people who don’t already have access to credit. Especially concerning to bankers: They don’t have time to crunch the numbers on what the new regime would mean for their bottom line since Otting is moving ahead with what amounts to sprint speed for a rule change. According to interviews with a dozen bank representatives, the companies are supportive of Otting’s attempt to improve and modernize CRA, an effort that is his top priority. But they say the proposal could cost billions for financial institutions that will now have to do much more intensive recordkeeping of certain data, such as where their depositors live.

Small Dairy Farms Continue to Disappear Amid Shift to Large-Scale Operations - ABI

American Bankruptcy Institute (ABI) - As small farms fold, the balance of production tilts further toward huge, efficient, industrial dairy operations that can more easily weather price downturns and manage a razor-thin profit margin through the power of scale, Bloomberg BusinessWeek reported. In Wisconsin alone, between two and three family dairy farms go out of business every single day. (Some of these farms still operate, but no longer as dairies.) In the early 1970s, the state had more than 75,000 dairies. Today it has about 7,400. Across the western border in Minnesota, officials recently reported that the median household income rose last year to about $68,000, roughly 10 percent higher than the national average. Dairy farmers had nothing to do with it. In 2017, the median income for a dairy farm dipped just shy of $44,000 in the state. In 2018, it plunged all the way down to $14,697. Half of Minnesota’s dairy farmers failed to break even for the year. There, too, thousands of dairy farms have simply vanished. In the midst of this mass extinction, a counterintuitive fact remains true: Americans are consuming more dairy products than ever before, primarily because yogurt and cheese have compensated for a steady drop in fluid milk consumption. Americans consumed 646 pounds of dairy per person in 2018 — the highest consumption rate in 56 years.

Zombie debt: CFPB proposal could trick consumers into bringing dead debts back to life

The Washington Post - A new proposal from the Consumer Financial Protection Bureau could spark a fight about what should happen to consumers’ old debt. Debt collectors lose the right in many states to sue consumers after their debt reaches their statute of limitations, typically three or more years. But there’s a loophole: If the consumer makes a payment or acknowledges the debt in writing, that can be used to try to revive the life of the debt, creating what some consumer advocates call “zombie debt.”

Gen Z is Leading the Way to Alternative Payment Options - Payments Journal

Millennials are often seen as the most digitally savvy generation, but they were actually raised during a time when the internet was still nascent technology. In contrast, Generation Z, or those who were born between 1995 and 2015, grew up with smartphones for toys — and it is for this reason that they’re nicknamed the iGeneration. And when it comes to payments, it’s this population of young digital natives that are demanding newer and more technologically advanced options. In 2018, CO-OP Chief Product Officer Bruce Dragt covered the basics of alternative payment methods (APMs), which are helping us transition to a cashless society. As the name suggests, APMs offer payment options other than the traditional cash-based or credit card systems already in place. While different APMs target different age brackets and types of consumers, a significantly wider adoption is observed among Gen Zers.

Millennial debt is rising in these U.S. cities - Yahoo Money

Millennials living in certain U.S. metro areas are seeing increases in non-mortgage debt, according to a study by LendingTree, at a time when Americans’ debt is hitting record highs. Auto debt and student loans account for the biggest portion of non-housing debt for millennials, the generation born between 1981 and 1996. A 2019 report by the New York Fed found that millennials have the worst delinquency rates when it comes to auto loans, and outstanding student debt currently stands at $1.6 trillion spread across 44 million borrowers.

Capping interest rates on payday loans leads to more debt and defaults - The Economist

TO THE CASUAL observer, the business of lending to poor, financially unsophisticated people at sky-high interest rates seems inherently predatory. But payday loans, as they are commonly known, are more complicated than they might at first appear. On the one hand, such loans are rarely paid off all at once. Most are rolled over into new loans, sometimes many times over, leaving cash-strapped borrowers caught in a cycle of debt. On the other hand, laws aimed at restricting payday loans can prevent risky borrowers from gaining access to credit. Some may be forced to seek even costlier alternatives.

A New Law Is Changing How Veterans and Service Members Pay for Homes - ABI

In January, a new law governing mortgages guaranteed by the Department of Veterans Affairs took effect, the Wall Street Journal reported. Now borrowers using VA loans can borrow any amount of money — as long as they qualify — with no down payment. Previously, zero down payment loans were capped at the same level as conforming loans. The new rules also affect refinances. In 2019, about 10 percent of all loans written for home purchases were VA loans — up from about 2 percent before the recession, said John Bell III, deputy director of the home loan program for the Department of Veterans Affairs. The increase in usage is partly due to improvements in the way the program works. Loans take only a day or two longer to close than conventional loans, Bell said.