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

SBA PPP: Complimentary Use of Our Platform to Assemble Your Notes

April 10, 2020 The Paycheck Protection Program (PPP) recently rolled out by the Small Business Administration (SBA) pursuant to the CARES Act requires the use of the SBA Form 147 (06/03/02) Version 4.1 promissory note or another note that has all the required SBA and PPP provisions. PPDocs has developed a SBA 147 note and ability to deliver via DocuSign. Click the button below to see our full memo and instructions.

SBA PPP

Follow-up Regarding PPDocs’ Loan Modification Services

Dear Clients and Friends of PeirsonPatterson, LLP, and PPDocs, Inc.,

In recent weeks, many of our clients have received requests for payment relief from their customers. Lenders who have not yet received such requests from their customers are very likely to soon. We want all our valued clients to know that PPDocs is here to help!

Over the past few weeks we have announced our relief modification product and our dynamic recordable modification product, both for portfolio loans (not to be used with secondary market loans). Here is a link to our COVID-19 information page, which includes a summary of all the express and full-service modification products we offer:

https://www.ppdocs.com/covid

We have received many questions about “best practices” in offering modifications to consumers who seek relief during this difficult time. These questions generally fall into three categories:

  1. What are the TILA (TRID) disclosure requirements when modifying loans?
  2. What are best practices for the timing of the forbearance letter and subsequent modification for all loan types, including Texas home equity loans?
  3. When should I use a non-recordable DocuSigned modification versus a wet-signed recordable modification?

We address these frequently asked questions below:

TILA (TRID) Disclosure Requirements for Modifications

Using our relief modification product to re-cast payments following a forbearance period does not require TRID disclosures.

Generally, loan modifications are not subject to the “refinancing” disclosure requirements of Regulation Z, Section 1026.20(a). To constitute a “refinancing” requiring new TRID disclosures, Section 20(a) states that “. . .an existing obligation. . . is satisfied and replaced by a new obligation undertaken by the same consumer.” Since a modification does not satisfy and replace the note, it generally does not require disclosures under Reg. Z.

The main exception to this general rule is if the modification adds a variable rate feature to the loan or increases the interest rate based on a variable rate feature that was not previously disclosed to the consumer. If either event occurs, then the modification is subject to TRID disclosure requirements, as well as the ARM disclosure requirements of Section 19(b). See Reg. Z, Section 1026.20(a) – 3(ii).

Best Practices for Timing of the Forbearance Letter and Subsequent Loan Modification

“Best practices” for all loan types is to offer a period of forbearance to the borrower via a forbearance letter, and then, at the end of the forbearance period, to offer the borrower the option of: (1) paying the loan current and re-starting regular periodic payments as before the forbearance period; or (2) entering into a modification agreement to capitalize amounts accrued during the forbearance period and re-cast payments accordingly.

If the loan is a 50(a)(6) Texas home equity, the lender should always follow the process outlined above. On a Texas home equity loan the forbearance letter and the modification should be offered to the borrower separately and at different times. This is because home equity loans require that periodic installments are: (1) substantially equal; (2) scheduled not more often than every 14 days or less often than monthly; and (3) equal or exceed accrued interest. A modification agreement that defers payments does not comply with the installment frequency requirement and might not comply with the other two requirements. Forbearing from foreclosure and then offering the borrower the options outlined above allows the borrower to skip payments during the forbearance period and then modify without violating Texas home equity law.

For other loan types, the process outlined above is “best practices”, but a lender does have more flexibility regarding timing of the forbearance letter and the modification.

Our relief modification product includes both a forbearance letter and a modification agreement. The forbearance letter provides that the lender will forbear from foreclosing for a particular period of time. At the end of the forbearance period, the borrower can either pay the loan current, or the lender and borrower may execute a modification agreement to capitalize amounts due and re-cast payments. The modification agreement should always be dated to the end of the forbearance period.

Using the Non-Recordable Relief Modification Vs. the Recordable Dynamic Modification

Our simple relief modification is designed to be DocuSigned and not recorded. Our dynamic modification is designed to be wet-signed, notarized, and recorded. We have received many questions about when one should be used over the other.

  1. Our non-recordable relief modification is appropriate for deferring payments, changing installment amounts, decreasing interest rates, and/or decreasing loan amounts. It is not appropriate for any modification that increases the interest rate, changes the maturity date or increases the amount of the loan, other than capitalization of payments and other obligations as detailed below. Such modifications must be recorded to avoid prejudicing subordinate lienholders.
  2. Our recordable dynamic modification is appropriate for any modification that increases the interest rate or increases the loan amount, other than the capitalization of delinquent payments and other obligations. It should be also used for any modification that lengthens the maturity date. The Texas Civil Practices and Remedies Code provides that:
    • A person must bring suit for the recovery of real property under a real property lien or the foreclosure of a real property lien not later than four years after the day the cause of action accrues (limitations period). See TCPRC, §16.035.
    • If an extension agreement is signed, acknowledged, and recorded, that four-year limitations period is suspended, and the lien remains in effect for four years after the extended maturity date of the debt or obligation. See TCPRC, §16.036.

Accordingly, a modification to increase maturity requires wet-signing, notarization, and recording, which are supported by our recordable dynamic modification.

Here is a link to our Firm memo which provides detailed information and an in-depth analysis of the legal issues associated with using our relief modification product: Firm Memo

Loan Modification Services

Forbearence Letter

This letter can be used for all portfolio loan types. It is an optional document designed to be used before a loan modification. Should always be used when deferring payments on a Texas home equity loan (see below).

Simple Non-Recordable Loan Modification Agreement

Can be used for all portfolio loan types. It is not for Fannie/Freddie serviced loans or any significant maturity extension. Uses Docusign to accommodate “at home” signings.

PPDocs Recordable Dynamic Modification

We have designed a dynamic loan modification agreement for use with all portfolio loan types. Simply enter information about the existing loan and how you want to modify it. The system automatically builds the required language and correctly selects supplemental documents for the closing package. This agreement requires “wet signatures” (not currently available for eSign) and requires notarization for recording. It can be used to extend maturity dates. Eligible for PPDocs e-recording by approved client for counties with e-recording capabilities. Can be used for loan modification workouts for portfolio residential (TRID and non-TRID), commercial, improved and/or unimproved properties). Not approved for investor-held or Fannie-Freddie serviced loans.

Fannie/Freddie 3179 Loan Modification Agreements

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”. Can be used to modify uniform documents.

Loss Mitigation

Let us handle your back-office loss prevention. We have an API ready to integrate with your processing system. We can process one at a time via XML web service, or we can generate them in bulk - the choice is yours.

*Before using these or any other loan modification product, the lender/servicer should first ensure that: (a) the servicing system being used can properly manage the servicing of the loan as modified; and (b) the modification meets all applicable regulator and accounting standards to which the lender/servicer is subject.

Special Notes Regarding Modification Of Texas Home Equity Loans:
  • requires forbearance letter to allow interest accrual prior to modification
  • no prohibited terms may be added e.g. interest only or balloon feature
  • must result in substantially equal payments

Comparison

Product / Usage Express Full Custom
Simple Loan Modification PPDocs Dynamic Modification PPDocs Dynamic Modification Fannie/Freddie 3179 Modification Loss Mitigation
Fannie/Freddie
Service Loans
X X
Portfolio Loans X X X X
Recordable X X X X
Residental Purpose X X X X X
Commercial Purpose X X X X
Unimproved Properties X X X X
Extended Loan Term Maturity X X X
DocuSign at Home X
Price $75 $150 $250 $250 Call
How to order How to order How to order How to order Learn more

COVID-19: Texas Agencies Issue Home Equity Guidance

April 22, 2020. The joint financial regulatory agencies of Texas (Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and Credit Union Department) updated the guidance on emergency measures for Texas home equity lender to consider in response to the novel coronavirus and the resulting disease, COVID-19. The updated guidance simply adds this sentence to the original guidance document:
"However, lenders are cautioned that the refinance of an existing home equity loan into a loan other than a home equity loan or a reverse mortgage is subject to the requirements of Section 50(f)(2)(A), which also imposes a one-year seasoning requirement but does not include a similar disaster exception."

Federal Banking Agencies to Defer Appraisals and Evaluations for Real Estate Transactions Affected by COVID-19

April 14, 2020. The federal banking agencies issued an interim final rule to temporarily defer real estate-related appraisals and evaluations under the agencies' interagency appraisal regulations. The Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are providing this temporary relief to allow regulated institutions to extend financing to creditworthy households and businesses quickly in the wake of the national emergency declared in connection with COVID-19. Interim Final Rule Interagency Statement

Revised Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus

April 7, 2020. Federal regulators, in consultation with state financial regulators, issued a revision to the Interagency Statement on Loan Modifications by Financial Institutions Working with Customers Affected by the Coronavirus issued on March 22, 2020. The revised interagency statement encourages financial institutions to work constructively with borrowers impacted by the Coronavirus Disease 2019 (referred to as COVID-19), provides additional information regarding loan modifications, and clarifies the interaction between the interagency statement and related relief provided by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

CFPB Statement on Supervisory and Enforcement Practices Regarding the FCRA and Regulation V in Light of the CARES Act

April 1, 2020. The Consumer Financial Protection Bureau (Bureau) today released a policy statement outlining the responsibility of credit reporting companies and furnishers during the COVID-19 pandemic. In response to the pandemic, many lenders are being flexible when it comes to consumers’ making payments. The Bureau’s statement underscores that consumers benefit if lenders report accurate information about these arrangements to credit bureaus so that the credit reports of consumers are accurate.

eNotary and Remote Online Notaries Can Help During COVID-19

We have been in communication with various providers of eNotary and Remote Online Notaries (RON).

To get setup with a free account and quickly find a Notary that is certified in both eNotary/RON you can use DocVerify https://www.docverify.com/Products/E-Notaries/Electronic-Notary-Locator

Other providers that allow for quick setup are the following:
https://www.notarize.com
https://www.notarycam.com

With the vendors above, you would simply need to provide the notary with our documents (or any document) and they will take care of the rest.

  • NON-ENDORSEMENT. This announcement is for informational purposes only. PPDocs does not directly or indirectly endorse any product or service that is or will be provided by the vendors listed above. Nothing contained in this announcement shall constitute a partnership between, or joint venture by, PPDocs, Inc. and any of the above-referenced vendors.
  • INVESTOR APPROVAL. PPDocs, Inc. does not warrant or represent the acceptability of eNotary/RON to any particular title insurer or secondary market investor. Before using eNotary/RON for any mortgage loan closing, the Lender should verify it’s acceptability, and any other requirements or conditions that may be imposed on the use of such services by the title insurer and secondary market investor for the transaction.
  • DISCLAIMER. PPDocs, Inc. has no control of the content of any services linked above. If the Lender decides to access the services or products listed above, Lender does so entirely at its own risk.

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