Monthly Compliance Newsletter | June 2025

In this edition:

• Note from Matt

• Regulatory Change Management Dashboard

Sagent clients:

Welcome to the June edition of Sagent’s Compliance Compass newsletter. With this issue we mark the half-way point of 2025…and what an active year it has been. As discussed in our recent quarterly compliance call for customers, there is a lot of policy activity stacked up over the coming months. As we look forward to the second half of 2025, I provide some additional analysis (see below) on how I think policy changes will evolve over the balance of the year.

Perhaps the biggest change we are currently anticipating is the publication of Advanced Notices of Proposed Rulemaking (ANPRs) on Reg X and Reg Z. We have participated in several conversations with policymakers as well as with the MBA and HPC on this topic; the expectation is that the ANPRs will look to repeal / remove those areas of Reg X and Reg Z that were not statutorily authorized in Dodd-Frank. Given the amount of time and effort spent by the industry to build compliance infrastructure around these rules during the last 10 years, we should expect that proposed changes will have a far-reaching impact on the industry. Once these notices are published we will begin our process of analysis to understand the implications for our software solutions.

Additionally, Fannie Mae recently published Lender Letter 2025-02, Advance Notice of Changes to Servicing Processes and Systems; Sagent has been involved in conversations with Fannie Mae regarding the Loan Management Future State (LMFS) changes outlined in the lender letter for the last 12 plus months. Please know that Sagent is not only aware of this announcement, but has also been actively providing Fannie Mae with feedback around how our systems can help facilitate the reporting changes they are contemplating.

As always, should you have any questions, please do not hesitate to reach out to your Customer Success Manager to schedule time with our team.

Take care,

Matt Tully

Chief Compliance Officer

Sagent

Near Term (next 3 months):

• Implementation of the FHA permanent waterfall: as our customers hopefully are aware by now, Sagent will deliver the permanent waterfall changes in September in anticipation of the October 1 deadline for the new FHA permanent waterfall.
  
  
• USDA’s electronic status reporting (ESR) changes: On May 22 USDA announced new ESR changes effective immediately. Sagent will be updating these USDA codes in the October release; we have received confirmation from the USDA that this schedule is acceptable to them. The new RFD 34 is the biggest change, however USDA is expecting low utilization of the code. USDA is also deactivating code 39; servicers are required to report code 08 going forward. If code 39 is sent after June and an error is received, servicers can make the change on the correction page in USDA LINC. Finally, the reporting requirements for codes 36 and 41 do not have system impact as USDA is simply making changes to the definition of the codes.
  
  
• Freddie Mac Business Day 1 reporting changes: currently when a borrower makes a payment on the last day of the month (especially when the last day of the month is on a Sunday) and the payment is not processed by the servicer until the first business day of the following month, these loans are reported to Freddie Mac using the date the payment was processed (Monday) instead of the effective date of the payment (Sunday). Freddie Mac wants to begin to receive the effective date of the payment versus the processing date to more accurately reflect the monthly activity for these loans. Please note that this change was not announced via a Freddie Guide Bulletin but rather was requested by the agency to all the service bureaus. Should you have any questions please reach out to your Freddie Mac account representative. Sagent will make changes in the August release to address this request; the changes will be reflected in the August activity reported to Freddie Mac in September 2025.

Medium Term (3 to 6 months):

• ANPR on Reg X and Reg Z: as noted above, we anticipate publication of the ANPR in the coming weeks and will closely analyze once published.
  
• Partial Claim legislation for the Veteran’s Administration (VA): legislation to provide the VA with partial claim authority is working its way through the House and Senate; we are closely monitoring progress on Capitol Hill and will make updates to our systems if / when legislation is signed into law.

Long Term (6 plus months):

• Payment Supplement Partial Claim Rollback: we expect the new administration to examine the impact of the payment supplement partial claim on the health of the FHA mortgage insurance fund. This examination may result in a roll back or cancellation of the program.
  
  
• Fannie Mae Loan Management Future State: as mentioned above, we have been closely engaged with Fannie Mae LMFS efforts and will remain in close coordination as they provide additional timing on the rollout schedule for this initiative later this year.
  
  
• GSE Reform / Release from Conservatorship: there has been much discussion about the possible release of Fannie Mae and Freddie Mac from conservatorship. While this conversation is still evolving, the end of the conservatorship could have significant impacts on the operations of the primary, secondary, and servicing markets.

Items Reviewed During June with Impact to LoanServ

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