Hi, I realize this may be an investor question but I'm curious how others are handling the following.
For GSE loans coming out of a CARES Act forbearance transitioning to the GSE COVID-19 deferral product, we are combining the missed payments, previously outstanding fees (no new fees as a result of forbearance), and escrow advances and adding them to the loan as a non-interest bearing portion of the UPB. Upon completion of the workout, these amounts are no longer considered interest or fees, but rather principal.
Our servicing vendor stated we may want to segregate the portions of that non-interest bearing UPB to allow us to eventually report the "interest" portion on the 1098 once the deferred UPB is paid. This is not, however, how other GSE modifications are treated. To my knowledge the GSEs have not provided direction on 1098 reporting in these scenarios.
Are others operating as we are? Or should we be segregating the non-interest bearing UPB so we can eventually reporting the "interest"?
Thank you.