MPF Announcement 2020-09

Updates on the Impacts of COVID-19

Effective Date: Immediately 

The MPF Program is actively monitoring reports about the potential impact of COVID-19 (coronavirus) on borrowers, PFIs and Servicers. We are communicating temporary policies in this MPF Announcement to enable Servicers to better assist borrowers impacted by COVID-19. The policies in this Announcement are effective immediately and are effective until further notice.

PFIs and Servicers are expected to abide by any/all federal or state laws or proclamations that may affect borrowers or loans affected by COVID-19. 

In addition, PFIs and Servicers originating, delivering or serv icing:

• MPF Government loans and MPF Government MBS loans must follow the disaster relief policies and guidance issued by the applicable Government Agencies. (including: HUD Mortgagee Letter 2020-04 and USDA Rural Development Bulletin)

• MPF Xtra loans must follow the disaster relief policies and guidance issued by Fannie Mae. (including: Fannie Mae Lender Letter 2020-02 or by visiting Fannie Mae’s COVID-19 webpage.

• MPF Direct loans must follow the disaster relief policies and guidance issued by the product’s investor, Redwood Trust.

The MPF Program will continue to evaluate the situation to determine whether this Announcement or MPF Guide provisions should be modified to provide additional relief.

Forbearance plan eligibility

To assist borrowers who have experienced a hardship resulting from COVID-19 (for example, unemployment, reduction in regular work hours, or illness of a borrower/co-borrower or dependent family member) which has impacted their ability to make their monthly mortgage loan payment, the Servicer should evaluate the borrower for a forbearance plan in accordance with MPF Traditional Servicing Guide 8.7. The Servicer must achieve quality right party contact (QRPC) with the borrower prior to offering a forbearance plan.  In evaluating borrowers, Servicers are not required to obtain documentation of borrowers’ hardship.

Servicers must obtain prior approval through the MPF Provider before granting relief that exceeds the timeframes provided for in the MPF Guides.

Servicers under the Scheduled/Scheduled remittance option are expected to continue to make advances as required.

Post-forbearance plan

Servicers are expected to begin attempts to contact the borrowers who have received a forbearance plan in response to COVID-19 no later than 30 days prior to the expiration of the forbearance plan term, to complete an assessment of each Mortgage Loan to determine the appropriate workout alternative that best fits the Borrower’s circumstances and determine whether a loan modification is appropriate.  These efforts must continue until either QRPC is achieved or the forbearance plan term has expired. 

Credit bureau reporting

Servicers must suspend reporting the status of a mortgage loan to credit bureaus during an active forbearance plan, or a repayment plan or Trial Period Plan where the borrower is making the required payments as agreed, even though payments are past due, as long as the delinquency is related to a hardship resulting from COVID-19.

Suspension of foreclosure sales and evictions

Servicers must suspend all foreclosure sales and evictions for the next 60 days, unless the property has been determined to be vacant or abandoned.

General Guidance

Given the nature of the situation, PFIs and Servicers are permitted to rely on applicable MPF Guide sections related to delivery and servicing of mortgage loans affected by major disasters, that are included in the product specific MPF Selling/Servicing Guides.  Servicers are encouraged to contact the MPF Service Center with any questions or concerns about applying these provisions to COVID-19 affected borrowers and loans. 

In addition, Servicers should consider waiving late fees for 90 days and provide guidance to borrowers with respect to available relief provisions and/or loss mitigation alternatives.

Additional Resources

MPF Program Guide

• Chapter 9 - MPF Program Major Disaster Related Policy

MPF Traditional Servicing Guide:

• Chapter 8.7 Major Disaster Assistance

MPF Xtra Servicing Guide:

• Chapter 8.5 Natural Disasters

MPF Government MBS Servicing Guide:

• Chapter 4.6.7 Major Disasters
• Chapter 8.7 Major Disaster Assistance