June 4, 2020
What the New COVID-19 GSE Guidelines Mean for You
As we navigate the impact that COVID-19 has had on our industry, Radian remains dedicated to providing the tools and resources you need to serve borrowers. We have updated our mortgage insurance (MI), title insurance, and real estate services processes to align with COVID-19 GSE announcements and temporary guidelines, and we broadly support borrowers through this hardship through our policies. Here’s a closer look at the changes.
We have implemented temporary flexibilities related to loan origination and closings to support the health and wellbeing of employees, borrowers, and their families. These measures ensure compliance with government safety guidelines and satisfy GSE underwriting documentation requirements.
- Alternatives to traditional property appraisals and interior inspections like exterior-only and desktop appraisals
- Alternatives to verbal verification of employment (VVOE) such as leveraging a year-to-date paystub evidencing a recent payroll deposit
- Powers of attorney flexibilities
- Remote online notarization flexibilities
Many borrowers’ employment and income are being impacted by the economic shutdown, and we strongly encourage lenders to apply thoughtful due diligence for new loan applications.
- Ensure employment, income, and asset verification documentation is dated no more than sixty (60) days from the Note Date.
- If possible, require more recent income documentation and validate employment as close to the loan closing as possible.
- Watch for income and employment documentation that shows that the borrower is furloughed or there is a curtailment in income.
- Confirm that a self-employed borrower’s business is currently operating such as obtaining executed contracts or signed invoices that indicate the business is operating on the day the lender verifies self-employment or current receipts for services performed within 10 days of the Note Date.
- Follow GSE down-payment requirements to liquidate the equity-based asset or discount the value if used for reserves.
- Remember that unemployment benefits can only be used as qualifying income if associated with seasonal employment and that the income of a furloughed borrower is not eligible under the temporary leave income policy.
Don’t forget: Servicers must continue monthly Default and Loss Mitigation reporting to Radian, including loans that miss payments under a COVID-19 related workout.
Use Default Reason Code 12 for all defaults caused by COVID-19-related hardships.
Use the Loss Mitigation Workout codes below for loans in a forbearance plan due to a COVID-19-related hardship.
Radian is here to help as you assist new and existing borrowers during these unprecedented times. For more information, which will be updated as needed, please visit www.radian.com/covid-19 or contact your Radian Account Manager.
- Interim Servicing Guidance (pdf)
- COVID-19 Frequently Asked Questions (pdf)
- Interim Underwriting Guidance (pdf)
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