Reg D Reserve Requirements; FHFA Pandemic Relief Extension


On Feb. 10, the Federal Reserve adopted as a final rule, without change, its March 24, 2020 interim final rule amending its Regulation D (Reserve Requirements of Depository Institutions) to lower reserve requirement ratios on transaction accounts maintained at depository institutions to zero percent.

The final rule is effective March 12, 2021.

On March 15, 2020, the Fed announced an interim final rule amending Regulation D to lower all transaction account reserve requirement ratios to zero percent, thereby eliminating all reserve requirements. At the time when the interim final rule was published, the Fed stated that for many years, reserve requirements played a central role in the implementation of monetary policy by creating a stable demand for reserves. In January 2019, the Federal Open Market Committee (FOMC) announced its intention to implement monetary policy in an ample reserves regime. Reserve requirements do not play a significant role in this operating framework.

In light of the shift to an ample reserves regime, the Fed has reduced reserve requirement ratios to zero percent effective on March 26, 2020, the beginning of the next reserve maintenance period. This action eliminates reserve requirements for thousands of depository institutions and will help to support lending to households and businesses.

Click here to view the final rule.

FHFA Extends COVID-19 Moratorium & Forbearance Relief
The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac are extending the moratoriums on single-family foreclosures and real estate owned (REO) evictions until March 31. The foreclosure moratorium applies to GSE-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by a GSE through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on Feb. 28.

FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional forbearance extension of up to three months. Eligibility for the extension is limited to borrowers who are on a COVID-19 forbearance plan as of Feb. 28, and other limits may apply. Further, COVID-19 Payment Deferral for borrowers with a GSE-backed mortgage can now cover up to 15 months of missed payments. COVID-19 Payment Deferral allows those borrowers to repay their missed payments at the time the home is sold, refinanced, or at mortgage maturity.

 “To keep families in their home during the pandemic, FHFA is allowing borrowers to be in COVID-19 forbearance for up to 15 months and extending the Enterprises' foreclosure and eviction extension," said FHFA Director Mark Calabria.

Currently, FHFA projects expenses of $1.5 to $2 billion will be borne by the GSEs due to the existing COVID-19 foreclosure moratorium and its extension. FHFA continues to monitor the effect of the COVID-19 servicing policies on borrowers, the GSEs and their counterparties, and the mortgage market.  FHFA may extend or sunset its policies based on the data and the health risk.

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