June 4, 2020

Loan Officer, Sales Tools, Industry News

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.

Increased Remote Support for Origination & Closing

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.

What You Can Expect
  • 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
These flexibilities extend to non-GSE loans, with the exception of exterior-only and desktop appraisals, which are permitted up to a $765,600 loan amount maximum.

Enhanced Due Diligence on Loan Applications

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.

What To Look For
  • 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.
Protection for Borrowers with Loans in Forbearance
For borrowers requesting forbearance plans through the CARES Act, Radian will activate MI coverage for their loans after their closing date and prior to the first mortgage payment. All underwriting and closing requirements apply, including compliance with applicable law and underwriting guidelines and satisfaction of closing conditions. The borrower must be employed at the time of loan closing.
 
We also offer flexibilities for rescission relief eligibility. When assessing the payment history requirements, we will not count missed payments during forbearance toward or against the payment history test. 
 
Continuance of Monthly Reporting

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.

Codes to Know

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.

 
Loss Mitigation Workout Codes

 

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.

Additional Resources

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