The forbearance guidelines for government-backed loans established as part of the CARES Act do not include a provision for claim filing. Upon forbearance expiration the borrower should be evaluated for a loss mitigation option to cure the default. Currently, FHA is the only agency that has provided a claim alternative beyond the standard available options, namely the Standalone Partial claim.

Below is a summary of the latest available information on how the agencies are handling forbearance-related claim filing.

FHA:

• The COVID-19 Standalone Partial claim is the new option. If the borrower doesn’t qualify for that, the standard loss mitigation options should be pursued.
• Claims will be filed for the Standalone partial claim, or other standard loss mitigation options that may be approved including disposition options. (HAMP Modification, HAMP Partial Claim, Pre-foreclosure/Short Sale, Deed in Lieu)

FHLMC and FNMA:

• After the forbearance, review the borrower for loss mitigation options provided in the servicing guides
• Claims will be filed for the completed loss mitigation options, including modifications and disposition options

VA:

• After the forbearance, servicers should consider all loss mitigation options described by Chapter 5 of VA Servicer Handbook M26-4
• Modifications do not require claims, the VA automatically reimburses the incentive based on reporting in VALERI
• Claims will be filed after disposition loss mitigation options

USDA:

• Upon completion of the forbearance, determine if the borrower is able to resume making payments. If so, offer a written re-payment plan or extend the loan term for a period that is at least the length of the forbearance.
• If unable to resume payments, evaluate for available options in the loss mitigation guide
• Claims will be filed for MRA/Mortgage Recovery Advance (similar to partial claim) and disposition options

CRFS will continue to provide updates and information as we learn them.  Please contact us at 585.589.0800 or sales@crfservices.com if you have any questions or would like to learn how CRFS can support your default services operations.

As you may know, HUD has been developing a new Gateway portal for Supplemental claim submissions. At HUD’s request, CRFS has been closely involved for several months now in testing the new portal. We were recently notified by HUD that the single submission portal is now being rolled out to servicers. Below are several points that we want to ensure the servicer community is aware of:

• HUD has established a new Gateway portal for Supplemental submissions.  Although it is currently set up for single submission only, bulk submission will be available in the near future.

• The supplemental claims can be submitted directly into Gateway, and the applicable documentation can be uploaded as well

• This new submission process with HUD will avoid the cost of mailing supplementals to HUD as well as mitigate the lack of control surrounding the receipt of supplemental and supporting documentation

• The information is real time and we have seen an improved turnaround time with claim payment

• According to HUD, “Additional servicers will be onboarded to the new technology in the future through a phased migration approach. Eventually, all servicers will use the new technology for Single Family forward mortgage supplemental claim submissions.”  For additional information on HUD’s plan, visit here… https://www.hud.gov/program_offices/housing/fhatechmod001

• CRFS has been involved in the testing of the new portal and has been working with HUD on improvements to the process, so we are very familiar with the new site

• If you would like additional information on how to partner with CRFS on your supplemental claim filing, please contact us at Sales@crfservices.com or 585.589.0800

CRFS had a great time last week at the MBA Servicing show managing the exhibit booth,

networking with our clients and partners,

and participating in industry panels.

We left with a slew of takeaways that we’ll be working on over the coming days and weeks including proposed changes to FHA’s CWCOT program and possible updates to how the FHA determines reimbursement eligibility for certain P&P expenses.  Stay tuned for follow-up information on these and other critical topics for mortgage servicers and investors, and don’t hesitate to contact us directly for assistance.

CRFS once again has booked a full slate of industry events that it will be part of in 2020, we hope to see you at these and future shows throughout the course of a very busy 2020…

IMN NPL Notes and Default Servicing Forum East, February 10-11 – Ft. Lauderdale, FL

https://www.imn.org/real-estate/conference/NPL-Notes-Default-Servicing-East/

MBA National Mortgage Servicing Solutions Conference & Expo, February 23-26 – Orlando, FL  

https://www.mba.org/conferences-and-education/event-mini-sites/servicing-solutions-conference-and-expo

Five Star Government Forum, April 1 – Washington, DC

https://www.fivestargovernmentforum.com/

MBA National Secondary Market Conference and Expo, May 17-20 – New York, NY

https://www.mba.org/store/events/conferences-and-conventions/secondary-and-capital-markets-conference-and-expo

Five Star Conference and Expo, September 13-15 – Dallas, TX

https://www.fivestarconference.com/2020/422549

MBA Annual Conference & Expo, October 18-21 – Chicago, IL

https://www.mba.org/store/events/conferences-and-conventions/annual-convention-and-expo-x260984

Safeguard National P&P Conference, October 25-27 – Washington, DC

https://www.nppconf.com/

On 12/26/19, the proposed update to the USDA loss claim process released on August 23, 2018 was finalized and published in the Federal Register, and will become effective on 4/24/20.  The new process will eliminate the need for REO disposition plans and implements a streamlined approach in processing timely loss claim payments to lenders, and goes into effect for all loans where acquisition or possession is on or after 4/24/20.  As described below, per the rule change the loss claim due date will be driven by the acquisition of title and possession. As a result, CRFS recommends that all USDA claims should be referred immediately following the possession of the property.   Full details on the rule change follow:

CFR §3555.354   Loss claim procedures

All lenders must use a web-based automated system designated by the Agency to submit all loss claim requests.

(b) REO. If at liquidation, the title to the property is conveyed to the lender, the lender will submit a loss claim package, including a market value appraisal, within 60 days of the foreclosure sale date or the date the lender acquires title. If eviction action is required in order to obtain a market value appraisal, the lender must submit the loss claim package within 60 days of the date the occupants clear the premises. The lender must order a market value appraisal and include the market value appraisal with the loss claim package. The Agency will use the market value appraisal, along with other Agency required documentation, to determine the property value for the basis of the loss claim. The Agency will apply an acquisition and management resale factor to estimate holding and disposition costs, based on the most current VA Management and Acquisition Factor found at https://www.benefits.va.gov/homeloans/servicers_valeri.asp

In advance of what is expected to be a significant year of growth in 2020 for the company, CRFS president Steve Mowers is pleased to announce the following changes to CRFS’ senior leadership structure. Effective January 1st, 2020, Sean Snook (currently SVP of Compliance) will be appointed Chief Operating Officer and Jeffrey Clark (currently VP of Sales & Marketing) will be appointed Chief Revenue Officer.

In his new role, Sean will have executive responsibility for the Operation and Production areas of the company, and he will also assume leadership of the Business Analysis team. Sean will continue in his current role as executive leader of the Compliance and Training teams. Sean has been with the company since 2007, and has worked in the financial services industry since 1999.

Jeff will assume executive responsibility for the Client Engagement team, and will continue in his role as executive leader of the Business Development and Marketing areas of the company. Jeff joined CRFS in 2017 after fourteen years as a Senior Vice President in Bank of America’s Global Commercial Bank, and has worked in the financial services industry for over 25 years.

The CRFS Board of Directors and management team wish Sean and Jeff best wishes in their new roles.

On August 23, 2018, the USDA Rural Housing Service published a Proposed Rule for the Single Family Housing Guaranteed Loan Program to the Federal Register.  In a recent update, the agency has advised that this rule is in its final state and expects the rule to be published by the end of this month. The final rule has minimal variation from the proposed version. The changes will then become effective within 90-120 days of publication. The majority of the changes are related to the Loss Claims and Loss Mitigation sections of the regulation. Below is a summary of the changes which affect the Loss Claims process. These items are listed as shown in the proposed rule.

• Under the current regulation, the agency provides two opportunities for the lender to file a loss claim on REO property: When the property sells during the permissible marketing period, or after the permissible marketing period  if the REO property does not sell.
• Under the proposed framework, lenders who acquire title must order a market value appraisal for the REO property within 15 days of acquiring title. The loss claim must be submitted within 45 days upon receipt of the appraisal.
• Because loss claims will be paid after acquisition and prior to marketing the property REO, this will eliminate the need for REO property disposition plans, different loss claim calculations based on whether the property has sold or remains in the lenders REO portfolio, and claim adjustments based on future recovery.
• The agency will employ a loss claim model that takes into consideration various factors including the market value appraisal as well as property preservation and disposition costs based on the VA Management and Acquisition factor costs.

These changes significantly impact the timing for filing the loss claim. CRFS will be partnering closely with our clients to adjust the referral and claim filing deadlines, including the date the market value appraisal is received. Once the final rule is published along with the Handbook updates (HB -1-3555), CRFS will review and provide additional information through a subsequent communication.

On October 24, the FHA published an update to its Single Family Housing Policy Handbook 4000.1 (SF Handbook). The Transmittal provides the Handbook Sections and a brief description of the updates. The updates to these sections may be implemented immediately, and must be implemented no later than January 2, 2020.

CRFS has conducted a thorough review of all of the updates made to the Servicing and Loss Mitigation Section III as well as the Claims Section IV. Below are the revisions we have identified that directly impact the claim process.

1. A.2.l.ii(B)(2) Home Disposition Options – Pre-Foreclosure Sales – Eligibility – Property Maintenance
   • A section for property maintenance requirements has been added to this section that clarifies the borrower responsibility to maintain the property in ready to show condition, make all basic property repairs and perform all normal property maintenance activities.

2. A.2.p.iii(C) Property Valuation and CAFMV – Damage to the Property after Appraisal
   • The Mortgagee must submit a variance via EVARS if it becomes aware of any damage that occurs to the Property after the appraisal has been completed. The Mortgagee will be provided with additional instructions as appropriate.

3. A.2.t.iv Conveyance of Acquired Properties – Notice of Property Transfer
   • The Mortgagee must prepare conveyance deeds to the Secretary of HUD. Deeds must be recorded in the name of the “Secretary of Housing and Urban Development, his/her successors and assigns,” hereinafter referred to as “Grantee,” whose address is HUD’s MCM.

4. A.4.b.ii(B)(2) Reacquisition by HUD and Resubmission of Claim – Reacquisition Package – Required Documentation
   • For Properties reconveyed due to title issues, the Mortgagee must include in its reacquisition package:
     documentation demonstrating that all title issues are fully remediated; and
     for Manufactured Housing, evidence that the Manufactured Home is affixed to the land, is classified and taxed as real estate, and the title to the Manufactured Home has been surrendered or purged in accordance with the jurisdictional requirements.

5. A.2.p.ii(B) Qualification Criteria for Use of Commissioner’s Adjusted Fair Market Value – Standard
   • The requirement that the mortgage is not subject to indemnification in order to proceed with CAFMV bidding has been removed.

6. A.2.t.ii(C)(7)(a) Mortgagee Property Preservation and Protection Action – Securing and Maintaining the Property – Standard
   • Securing should take place as soon as reasonably practicable, but no more than five Days following the determination that the Property is vacant and/or abandoned post-foreclosure, or 15 business days following the determination that the Property is vacant and/or abandoned pre-foreclosure

7. A.2.c.vii(A)(2) Claims for Additional Funds – Supplemental Claims for Correction of Dates in Part A – Required Supporting Documentation
   • Updated guidance for required supporting documentations for supplemental claims for correction of dates in Part A.

8. A.2.d.iii(B) Computation of Claim Amount – Eviction and P&P Costs when Property is Sold to a Third Party
   • When filing a CWCOT claim where a third party is the successful bidder at the foreclosure sale, the Mortgagee may not claim eviction costs as part of the CWCOT claim. Mortgagees may only be reimbursed for Cash for Keys on CWCOT claims resulting from post-foreclosure sales efforts.
   • When a third party is the successful bidder at the foreclosure sale or the Mortgagee elects to retain the Property and file a CWCOT claim, the Mortgagee may claim reimbursement for Property P&P costs incurred before the foreclosure sale. If the Property is sold as part of a post-foreclosure sales effort, the Mortgagee may claim reimbursement for Property P&P costs incurred before the Closing Date.

9. A.2.e.ii(A)(7) Computation of Claim Amount – Allowable Costs – Borrower Consideration
   • The Mortgagee may not claim reimbursement for the amount of the PFS Borrower Consideration, which is to be included on the Closing Disclosure.

The CRFS team has been very active in recent weeks participating in industry events, including the MBA Annual Conference and Expo in Austin and the National Property Preservation Conference in Washington, DC.  We were proud to serve as the Technology Sponsor at NPPC 2019,

and our own Director of Compliance Sean Snook was part of the Vendor Management: Business Processes, Technology and Legal Requirements panel on Day One and offered his insights into that critical topic.

We’ll be active again in 2020 so look for us at the upcoming trade shows and industry conferences.

CRFS, the mortgage industry’s premier provider of claim filing and recovery services, is pleased to announce the successful launch of a new organizational design strategy that allows it to attract and retain experienced claims professionals from around the country.  The innovation lies in the fact that rather than building and maintaining multiple physical work sites to domicile these employees, CRFS is utilizing a remote staffing model that allows them to work in the location of their choice.

Said Sean Casher, CRFS’ Director of Human Resources, “Coupled with ongoing investments in workflow technology, this remote workforce concept allows us to tap into a pool of highly qualified candidates that is much larger than what we access through brick-and-mortar office locations.  And the customizable work schedules of the remote teams provide the company with both the scale to support large client relationships and the flexibility to manage smaller project work.”

Coinciding with the roll out of the remote staffing model is the announcement that CRFS has hired industry veteran Laura McNeilly.  McNeilly joins CRFS as the Remote Workforce Director and brings with her over 13 years of experience in leading and managing remote teams and over 16 years handling all aspects of mortgage servicing, property preservation, and claims management.  Prior to CRFS McNeilly held key management positions at ResCap Liquidating Trust, Ocwen Loan Servicing, and GMAC Mortgage.

As CRFS president Steve Mowers notes, “CRFS is growing at a rapid pace and we remain dedicated to the success of our clients.  Our growth trajectory is a result of our personal approach to client relationships and our team’s adaptability, professionalism, and unmatched expertise.  Bringing a top talent like Laura on board to lead our remote work team positions us and our clients for continued success.”

CRFS has fueled its growth through expanded service offerings and a thriving client base. Considered the largest non-bank processor of government claims in the United States, the Company continues to set the standard in the claims management industry by recovering, on average, an additional $2,500 per file for their clients. Clients also turn to CRFS for expertise in FHA, VA, and USDA claims recovery, HUD audit support and consulting services, loss analysis review, portfolio acquisition due diligence, and more.