GSE Responses to the CARES Act / COVID-19
In a continuing effort to keep our clients abreast of the constantly shifting default landscape, we are providing a summary of recently issued bulletins from Fannie Mae and Freddie Mac. Today, Freddie Mac issued Bulletin 2020-10 to provide servicers with guidance around the continuing COVID-19 pandemic. Fannie Mae also issued a statement, and the text of both follows:
Freddie Mac: Freddie Mac generally requires Servicers to file a motion for relief from automatic stay upon certain milestones, based on the length of delinquency or post-petition payments per Guide Sections 9401.6 and 9401.7. Considering the CARES Act and other impacts resulting from the COVID-19 National Emergency, we are notifying Servicers that we are temporarily relieving them of their responsibility to meet these timelines. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such a motion. (Emphasis added)
FNMA: Fannie Mae generally requires servicers to file motion for relief from automatic stay upon certain milestones. In light of the CARES Act and other impacts resulting from the COVID-19 National Emergency, Fannie Mae is temporarily relieving servicers of their obligation to meet these timelines. This temporary suspension shall be in effect for not less than the 60-day period beginning on Mar. 18, 2020. Servicers must continue to work with their bankruptcy counsel to determine the appropriate time to file such motions. (Emphasis added)It is important to note the similarity in both statements, and that neither entity is specifically barring the filing of motions for relief from the automatic stay.
Rather, both entities are requesting servicers work with their counsel to determine the right timing. Clearly, if a forbearance has been requested under the terms of the CARES Act, it should be honored. If a request has not yet been received, there is no bar to referring and filing a motion for relief from automatic stay.
We encourage our clients to remain in close contact with BPC. BPC is ready to assist its clients in determining the right strategy to both serve their customers and comply with the constantly updated legal and regulatory environment. In the meantime, BPC remains fully operational and ready to support the default servicing industry.