Special Announcements

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PPDocs Collection of COVID-19 Resources

Below is recent information we at PPDocs have gathered regarding the COVID-19 as it relates to real estate lending. Most of the descriptions below just hit the high points; please click on the links provided for more topics and details in each issuance. Some of these issuances address servicing and/or foreclosure. Here at PPDocs, our expertise is not servicing or foreclosure--please direct servicing and foreclosure questions to your institution’s counsel or the responsible agency.

Federal COVID-19 webpages

Click a link below to go directly to the COVID-19 resource page.

Latest News

PPDocs Express Loan Modification Services

  1. Forbearance Letter - Usage: Can be used for all loan types. Uses Docusign to accommodate “at home” signings.

  2. Simple Non-Recordable Loan Modification Agreement - Usage: Not for Fannie/Freddie serviced loans or any significant maturity extension. Can be used for Texas home equity loans ONLY if no prohibited terms are added e.g. interest only or balloon feature. Texas home equity loan modifications must result in substantially equal payments. Uses Docusign to accommodate “at home” signings.

  3. PPDocs Recordable Flex Modification – Usage: Can extend maturity date. Can be used for Texas home equity loans ONLY if no prohibited terms are added e.g. interest only or balloon feature. Texas home equity loan modifications must result in substantially equal payments. Requires “wet signatures”. Not for: Fannie/Freddie serviced loans. (Under construction. ETA 3/28/2020)

  4. Fannie/Freddie 3179 Loan Modification Agreements - Usage: For Fannie/Freddie serviced loan modifications re Impact of COVID-19 on servicing per Lender Letter LL-2020-0 (3-18-2020) Extend Modification, Cap and Extend Modification and Flex Modification. Requires “wet signatures”. (Under construction ETA 3/28/2020)

Other loan modifications are available on our regular full service platform.

Texas Department of Banking Provides Informal Guidance on Place of Closing Home Equity Loans

March 23, 2020. IBAT sent a request to the Texas Department of Banking (DOB) asking for clarification regarding the place of closing of a home equity loan. The DOB provided an “informal opinion” that they believe it is permissible during this time of social distancing to execute closing documents in a part of the premises other than inside the structure, such as the parking area of the office

Texas Constitution, Article XVI, Section 50(a)(6)(N), requires closing home equity loans and lines of credit at the permanent office of the lender, an attorney, or a title company. Although this opinion does not a safe harbor, it does provide some comfort if, for the safety of its staff and customers, a lender chooses to close a home equity loan or line of credit in a part of the premises other than inside the structure until the COVID-19 crises is over.

20-12 PennyMac COVID-19 Response

March 23, 2020. Effective immediately, for conventional loans delivered on or after April 2, 2020 PennyMac will require all VVOEs (Verbal Verification of Employment and Income) to be completed within 3 business days of the note date. In cases where a traditional VVOE cannot be completed, PennyMac will only accept an email as an alternate VVOE. When an email is used, it must:

  • be from the borrower’s direct supervisor/manager or the employer’s HR department, an

  • be from the employer’s email address, such as name@company.com, and

  • contain all the standard information required on a verbal verification of employment, including the name, title, and phone number of the person providing the verification.

  • Paystubs and bank statements will not be an eligible alternative VVOEs.

In addition, PennyMac urges Correspondents to closely review all income sources and to carefully qualify borrowers. As borrowers are being impacted by temporary shutdowns and reductions in income, PennyMac recommends Correspondents obtain the most recent paystub.

FHFA Directs Enterprises to Grant Flexibilities for Appraisal and Employment Verifications

March 23, 2020. To allow for homes to be bought, sold, and refinanced as our nation deals with the challenges of the coronavirus, the Enterprises will leverage appraisal alternatives to reduce the need for appraisers to inspect the interior of a home for eligible mortgages. In addition, in the event lenders cannot obtain verbal verification of the borrower's employment before loan closing, the Enterprises will allow lenders to obtain verification via an e-mail from the employer, a recent year-to-date paystub from the borrower, or a bank statement showing a recent payroll deposit. Lenders should continue to utilize sound underwriting judgment to ensure these alternatives are appropriate to the borrower's circumstances.

Federal Reserve announces extensive new measures to support the economy

March 23, 2020. The announced measures include MBS purchases and establishing liquidity facilities.

Joint Federal Agencies Provide Additional Information to Encourage Financial Institutions to Work with Borrowers Affected by COVID-19

March 22, 2020. The federal financial institution regulatory agencies and the state banking regulators issued an interagency statement encouraging financial institutions to work constructively with borrowers affected by COVID-19 and providing additional information regarding loan modifications. The agencies encourage financial institutions to work with borrowers, will not criticize institutions for doing so in a safe and sound manner, and will not direct supervised institutions to automatically categorize loan modifications as troubled debt restructurings (TDRs). The joint statement also provides supervisory views on past-due and nonaccrual regulatory reporting of loan modification programs.

From the release: “Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term -- for example, six months -- modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant.”

Please not that this information was also issued by the Conference of State Bank Supervisors. The CSBS is the nationwide organization of financial regulators from all 50 U.S. states, the District of Columbia, Guam, Puerto Rico, American Samoa, and the U.S. Virgin Islands. This means, if you are a state chartered financial institution, it is almost guaranteed your regulator is on board with this.

FHFA Suspends Foreclosures and Evictions for Enterprise-Backed Mortgages

March 18, 2020. The Federal Housing Finance Agency (FHFA) has directed Fannie Mae and Freddie Mac (the Enterprises) to suspend foreclosures and evictions for at least 60 days due to the coronavirus national emergency. The foreclosure and eviction suspension applies to homeowners with an Enterprise-backed single-family mortgage.

HUD Issues Foreclosure and Eviction Moratorium in connection with the Presidentially-Declared COVID-19 National Emergency

March 18, 2020. The purpose of HUD’s Mortgagee Letter (ML) is to inform mortgagees of a foreclosure and eviction moratorium for all FHA-insured Single Family mortgages for a period of 60 days.

Special Relief for those Potentially Impacted by COVID-19

March 16, 2020. VA encourages holders of guaranteed loans to extend forbearance to borrowers in distress as a result of COVID-19. VA believes that many servicers plan to waive late charges on affected loans and encourages all servicers to adopt such a policy for any loans that may have been affected.

An Important Message From Mike Patterson Regarding The Coronavirus Disease (COVID-19)

Clients and Friends,

The acceleration of the Coronavirus pandemic has caused us to move forward our plans for our employees to work remote. Effective immediately, our production staff is working from home on PPDocs-owned laptops, giving them secured access to the same systems they use everyday to service our clients. We don’t expect any effect on the quality or timeliness of our services and actually feel these measures will provide better redundancy and reliability during these times.

Legal, Compliance, and Accounting will continue to be fully available to our clients during this period. The following are the email groups that you can use to contact us:

Type of Inquiries Email Address
Document preparation questions and status updates on document orders DocPrep@ppdocs.com
Questions for fulfillment orders Fulfillment@ppdocs.com
Compliance specific questions (e.g. TRID, federal reg., state reg.) Compliance@ppdocs.com
Technical support, bug reporting Support@ppdocs.com
Legal specific questions (e.g. title, survey, state law) Legal@ppdocs.com
New clients, registering, pricing quotes CR@ppdocs.com
Accounting, billing issues Accounting@ppdocs.com

During this time, you may not be able to reach us by phone directly. Emailing us is the fastest way to get a response. If you need to speak to someone on the phone, please email the appropriate department and someone will contact you as soon as they are able to.

Thanks.
God bless us all!
Mike Patterson

Relief Modification Services for Customers of Clients Affected by the COVID-19 Pandemic

In light of the significant economic and social dislocation occurring throughout the United States as a result of the COVID-19 pandemic, we have available two forms to assist lenders in helping borrowers who are unable to meet their obligations. The forms are available to our clients for electronic signature using our E-Sign service:

  • Simple Non-Recordable Loan Modification Agreement

  • Forbearance Letter

A comprehensive memo discussing these forms, their use, and their limitations, is available here. An Executive Summary of this memo has been created for your management and/or board members and is available here.

Lenders may prepare these documents using the PPDocs, Inc. system for $75.00 per transaction. Lenders may use our system to prepare these documents even if the original loan documents were not prepared through PPDocs, and even if the lender is not a regular client of the firm.

The only requirement for preparing these documents through our system for those who are not current clients is that they register with PPDocs at www.ppdocs.com. Registration is very simple. . . taking less than 5 minutes, and there is no cost to register.

Because it is likely that customers may be unwilling or unable to attend a physical signing outside the home, these documents are offered together with our electronic signature services, which we provide through DocuSign. When prepared through our system, the documents can be electronically delivered to the customer for electronic signature in the comfort and safety of their own home.

eRecording Service Can Help During This Challenging Time

As a result of the spread of COVID-19, there is a growing possibility that county recorders will halt the recording of physical documents affecting title to real property, including warranty deeds, deeds of trust, releases, etc. Based on preliminary information we have received, these county recorder offices may still continue to accept and record documentation electronically.

PPDocs, Inc. offers a robust eRecording platform for such instruments and is connected to over 600 counties around the country. Further information regarding our eRecording platform and how it works can be found at the link below.
https://www.ppdocs.com/Products/eRecording.aspx

Please be aware that our eRecording platform is only available for current, active clients. If you would like to request access to our eRecording platform or have any questions about eRecording, please contact our Support Group at support@ppdocs.com.

Texas Title Insurance "Gap" Coverage

Clients and Friends,
Re: Texas Title Insurance “Gap” Coverage

In the past couple of days, we have had several clients ask about a new exception that may be appearing in title commitments as a result of the COVID-19 crisis. The exception some lenders may see in Schedule B or C of the title commitment is the following (or something with similar wording):

The Company reserves the right to make exceptions and requirements prior to and following closing for issuance of a title policy(ies) based upon the specifics of the transaction, the review of the closing documents, and changes in recording and title searching capabilities resulting from the consequences of the COVID-19 pandemic and business and government office closures.

This exception relates to “gap” coverage, which is typically covered by the mortgage title policy. The period between the time when the borrower(s) sign their loan documents and the actual filing of the deed of trust is commonly referred to as the “gap” period. Even though Texas title insurance rules require the mortgagee title policy to be dated no earlier than the date of the deed of trust, rather than the date of recording or funding (see TDI Bulletin No. 152-July 01, 1980: https://www.tdi.texas.gov/bulletins/1995earlier/152.html), our current Texas title insurance policy (Form T-2: https://www.tdi.texas.gov/title/documents/form_t-02.pdf) provides coverage for that “gap” period in Paragraph 14 (emphasis added):

Form T-2

14. Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1-13 that has been created or attached or has been filed of recorded in the Public Records subsequent to Date of Policy and prior to the recording of the insured Mortgage in the Public Records.
The Title Company will also pay the costs, attorney fees and expenses incurred in the defense of any matter insured against by this Policy, but only to the extent provided in the Conditions.

Although not contained in the actual policy itself the Texas Short Form Residential Loan Policy of Title Insurance (Form T-2R: https://www.tdi.texas.gov/title/documents/form_t-02r.pdf) has the same gap coverage protections because it incorporates the provisions of the longer T2 mortgagee title policy:

Form T-2R

…HEREBY INSURES THE INSURED IN ACCORDANCE WITH AND SUBJECT TO THE TERMS, EXCLUSIONS, AND CONDITIONS SET FORTH IN THE LOAN POLICY OF TITLE INSURANCE (FORM T-2) PRESCRIBED BY THE TEXAS COMMISSIONER OF INSURANCE AND IN EFFECT AT DATE OF POLICY, ALL OF WHICH ARE INCORPORATED HEREIN.

Typically, the “gap” period the title company is insuring is only a few days. Accordingly, the risk is considered acceptable and insurable. If recording offices start closing due to the Coronavirus pandemic, however, that previous relatively short period of exposure may become longer and the associated risk not acceptable to title insurers. In an effort to shift that risk from the title company to the lender, title companies may request to start adding the above-exception to lender coverage in their mortgagee commitments/policies.

It will be a business decision for the lender whether to accept this exception in the mortgagee title policy, but the risk could be considerable. The above exception is very broad. In our view, the FNMA and FHMLC Selling Guides do not permit this type of exception in the mortgagee title policy. Although we do not yet know, we doubt it would be acceptable to most other investors either.

Accordingly, we recommend our clients carefully review title commitments they receive going forward to ensure that the above exception or something similar is not included in Schedule B or C. If a client does see this exception in their title commitment on a secondary market loan, we strongly recommend obtaining investor approval before proceeding. For portfolio loans, it will be a business/risk decision whether to accept this exception in the mortgagee title policy.

Sincerely,
Mike