Reporting and Pledging Loans in Forbearance
last updated on Friday, January 15, 2021 in Member Services
Commencing with the December 31, 2020 reporting period, members have been asked to report the Unpaid Principal Balance (UPB) of loans in Forbearance for collateral reported on Borrowing Base Certificates (BBC).
Forbearance is a documented, partial or full reduction in loan payments for a temporary period.
Members need to verify the inclusion of pledged loans in forbearance on their quarterly Borrowing Base Certificate (BBC) in eAdvantage. This will prompt an expanded BBC form to identify the Unpaid Principal Balance (UPB) for collateral types with loans in forbearance.
When submitting your quarterly BBC, you will be prompted with the following message:
In order to continue, it is necessary to select “Yes” or “No” for each question*.
Selecting “Yes” to pledging loans currently in forbearance will create an additional column on your BBC to report the UPB for loans in forbearance. Report your total pledge for the quarter in the left (first) column and the subset of the total that represents the UPB for loans in forbearance in the corresponding column. Amounts entered in Forbearance UPB Pledged cannot be larger than Total Pledged.
Forbearance and BBC reporting of forbearance ends with one of the following events, refer to the Eligibility of Pledged Loan Collateral FAQs:
- Reinstatement: Forborne funds are collected and scheduled payments under the Note resume.
- Repayment Plan: Forborne funds collected in installments to bring the loan current over a period not to exceed 12 months beyond the expiration of the forbearance period. A Repayment Plan is a modification.
- Payment Deferral: Forborne funds collected at the end of the loan term, with no other change in terms. A Payment Deferral is a modification.
- Loan Modification: A change in terms to the original note and requires borrower signature.
For loans reported at individual loan level on the General File or the Expanded File formats, forbearance is identified by several fields. The below assists in reporting of forbearance information:
- Modified_Loan: Forbearance is a modification (select Y). The Modified_Loan_Amount and Modified_Loan_Date fields should reflect the UPB and date at forbearance execution.
- Next_Payment_Date: Reflects the next payment due date under the forbearance agreement.
- Paid_Through_Date: Reflects the last date the loan has been paid thru under the original note terms. For example, if the last payment under the original terms was December 1, that is the proper entry for all subsequent periods until the forbearance ends.
- Delinquency_Code: If the loan is paying as agreed per the forbearance agreement you have executed with your borrower; the loan is not delinquent.
Any modification, including a modification described above that ends the forbearance should be reported as a Modified Loan including Modified Amount and Date. Next Payment Date, Paid through Date and Delinquency Code are reported based on terms of the modification.
Loan forbearance or loan modification
- Forbearance Agreement
A Forbearance Agreement is a suspension or reduction in principal and/or interest payments for a period of time, which result in no changes to the original wet-inked promissory note. If no changes to the original wet-inked promissory note take place, no signature is required to witness acknowledgment and consent to the forbearance.
- Modification Agreement
A Modification Agreement is a suspension or reduction in principal and/or interest payments for which repayment changes the original terms and conditions of the original wet-inked promissory note. If changes to the original wet-inked promissory note take place, signatures from all borrowers are required; please see FHLB Des Moines Covid-19 modification.
For questions, contact our Collateral Department.
*The question related to LIBOR-linked collateral was implemented in July 2020. Details on what is required for reporting loans tied to the LIBOR index can be found here.