COVID-19 Impact on Originations and Appraisals Lender Letters

COVID-19 Impact on Originations and Appraisals Lender Letters

March 23, 2020

Today, we announced flexibilities for lenders when originating and closing loans and we remind lenders of certain business continuity obligations. These temporary alternatives – which are effective immediately for all loans in process and will remain in place for loans with application dates on or before May 17, 2020 – are available to support lenders and help ensure continued liquidity in the mortgage market during this COVID-19 national emergency.

The flexibilities announced in today’s Lender Letters include the following:

• To ease possible disruptions in the loan underwriting and closing process, lenders may use designated alternative methods to verify borrower employment. We also remind lenders to practice additional due diligence during these uncertain economic times to help ensure homeownership is sustainable for the borrower despite potential impacts on their employment and income.
• To address concerns regarding interaction between appraisers and homeowners, we are offering flexibilities to our appraisal inspection and report requirements. We also encourage lenders to accept appraisal waiver offers when presented by Desktop Underwriter®.
• We also remind lenders about the requirements for original mortgage note processing and electronic signatures if the lender uses a closing process that doesn’t require face-to-face interaction, as well as existing ability to deliver the 2006 ALTA loan title insurance form or a local equivalent providing gap coverage.
• To help ease lenders’ internal operations, we are extending the deadline for submission of lender quarterly financial statements to April 30, 2020, and we remind sellers and servicers to follow their own business continuity and resiliency plans.

For full details on these temporary flexibilities, read Lender Letter (LL-2020-03) – Impact of COVID-19 on Originations and Lender Letter (LL-2020-04) – Impact of COVID-19 on Appraisals. We are releasing information to our customers as quickly as possible and will update and republish these letters as new guidance becomes available.