Yesterday, the governor of New York announced steps to help those affected by COVID-19. He said banks would waive mortgage payments for 90 days and adjust the loan to include those payments on the back end. We're trying to operationally think through this process. For real estate loans, we cannot skip payments as easily as we do for non-real estate loans. Wouldn't this involve new flood certs, modification of the deed of trust, etc.?

Fannie Mae also released a Lender Letter instructing servicers to "suspend" credit reporting for affected loans during an active forbearance plan. According to CDIA guidelines, we should not suspend credit reporting altogether, we should code the loan as forbearance and continue to report. I contacted Fannie Mae for clarification and was unable to find someone knowledgeable about this subject.

While I absolutely appreciate the relief extended to borrowers, I'm struggling with how to accomplish this operationally. Thoughts?

I am in NY and also looking for some clarity on what to do with the P & I that is deferred. Do we place it at the end? Do we modify and extend all of the maturity dates? Any guru that can opine it would be appreciated.

The FDIC just released this: https://www.fdic.gov/coronavirus/faq-fi.pdf

This what I received from the NYSDFS when I was looking for clarification on the directive .

"DFS understanding is that there are no separate directives from the governor’s office regarding “Support for Consumers and Businesses and Support for Borrowers” except for the DFS industry guidance letters, both dated March 19, 2020. The dates of the industry letters are the effective dates. Regarding mortgage relief standards, banks are to come up with their own policies and procedures (taking into consideration adequate safety and soundness practices and public interest."

Also the FDIC as noted above issued an FAQ and this Sunday an FIL and Interagency statement regarding. I spoke with a representative from the FDIC and what is listed in the FAQ is just a suggestion. I am under the assumption that the Bank has the option on how it work out the loan payments.

How is everyone handling this? Are you creating a separate program specifically for Covid-19? What documentation are you requiring? With respect to mortgages are you only offering to borrowers with loans secured by a primary residence?

The CDIA recently offered a webinar on disaster reporting, and mentioned the guidance issued by Fannie Mae and others that instruct lenders to "suspend" credit reporting on affected loans. The CDIA advises lenders NOT to do this, as they have the appropriate codes in place to reflect a declared disaster situation (code AW) or forbearance situation (code CP). Suspending or stopping the reporting will cause the loan to become stale dated and cause further issues. The CDIA advised lenders to use the appropriate coding already available in Metro 2, and have reached out to Fannie Mae to advise them that suspension of reporting is not preferred.

As far as reported a deferred loan or a loan w/ forebearance (as CDIA stated), is this a requirement to use these reporting codes? If you have simply modified or extended a note to a future due payment and changed it in your core, it would not show past due on the credit report anyway. So, is it REQUIRED to use these special codes? Hope that's not too confusing. Thanks.

No, its not required. If you are simply deferring a payment by extending the maturity date, a change in credit reporting is not necessary because there is nothing negative to report. But if you have a borrower who will skip multiple payments under forbearance, it is recommended to report the forbearance to the bureaus so that the missed payments will not affect the borrower's credit score. It puts a "D" (deferred) in the payment history to reflect those skipped payments under the forbearance plan.

If your deferred payment program is skipping 3 payments and extending the maturity date, should we still enter "D" (deferred) in the payment history? In other words, how many payments do you need to "skip" for a deferred loan to become a forbearance?

Forbearance is a period of time during repayment in which a borrower is permitted to temporarily postpone making regular monthly payments. The debt is not forgiven, but regular payments are suspended until a later time.

Payment History Profile = appropriate code that specifies the previous month’s Account Status for each month the account is in forbearance, plus prior history (Increment the Payment History Profile with value D if no payments are due during the forbearance period.)

Special Comment Code = CP (Account in forbearance)

We are a portfolio lender. I am curious to know if offering any of these modifications will affect the QM status on the loans. It seems to me that any type of modification that can be offered would create loan not permitted as a QM, unless you just extend the mortgage out and completely defer the payments without making the customer paying the interest owed on the skipped payments. I have an email into the FDIC and they are researching this but because NY created an emergency regulation, the Bank only has until 4/7 to resolve exactly how we are going to handle this. Any thoughts?

QM is determined at origination - not what happens during the term of the loan.

I suggest everyone read Section 4013 of the CAREs Act that says TDR and GAAP rules are suspended for Covid-19 deferrals.

and that: The appropriate Federal banking agency of the financial institution shall defer to the determination of the financial institution to make a suspension under this section.

Thanks again as always. While I know it is established at origination I just wanted to make sure we didn't lose the protections. FDIC responded and advised as I thought:

"The ATR/QM rule does not apply when you alter the terms of an existing loan without refinancing it. A loan modification that does not meet the definition of a refinancing in Regulation Z at § 1026.20(a) is not subject to the ATR/QM rule, and, accordingly, would not alter the status of a loan that was a QM at origination."

Now I have peace of mind. Thanks again.