Blog

Our updated blog is full of useful tips and articles to help you comply and improve the quality of your loans. You can also find a copy of each month's newsletter, which contains updates and tips.

Mar
09
2010

Join us for a free monthly webinar: “Continuing to make sense of the new GFE: A more in depth look”

MCA Logo
Continuing to make sense of the new GFE: A more in depth look

Join us for a free Webinar on March 18


Register Now
Space is limited.

Reserve your Webinar Seat Now at:
https://www1.gotomeeting.com/register/689424280

(If you have already registered for the webinar, you can disregard this email.)

MCA offers free monthly webinars in an effort to help you stay current and in compliance with the changes in the mortgage industry. After last month’s webinar that gave a basic overview of the 2010 Good Faith Estimate,  we received requests for a more interactive and in-depth training. This month’s webinar will consist of a brief, yet comprehensive, presentation on fee disclosure and changed circumstance as they relate to the Good Faith Estimate, followed by a panel discussion featuring several experienced mortgage professionals.

*Please don’t forget to send us your questions about the GFE.

We are always happy to hear from you and encourage you to submit your questions to info@mortgagecomplianceadvisors.com.

Title: Continuing to make sense of the new GFE: A more in depth look

Date: Thursday, February 18, 2010

Time: 12:00 PM – 1:00 PM MST

After registering, you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer

Continuing to make sense of the new GFE: A more in depth look
Mortgage Compliance Advisors
5505 South 900 East
Salt Lake City, Utah 84117

Safe Unsubscribe

This email was sent to sarah@mcagroupmail.com by sarah@mcagroupmail.com.


Mortgage Compliance Advisors | 5505 South 900 East | Suite 110 | Salt Lake City | UT | 84117

No Comments »
Mar
04
2010

MCA Monthly Update – March 2010

MCA Logo

MCA Monthly Update
March 2010

In This Issue
Underwriting & Processing Tips
FHA Update
Fannie Mae Update
Freddie Mac Update
VA Update
Quick Links

Lending Manuals

Stay Updated
Join Our Mailing List!

Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, our newsletters contain underwriting tips, processing tips, and compliance updates. We hope that you find the content informative and useful. As always, your feedback is appreciated.

MCA now offers compliance services to help you verify income, compliance, and identity.

  • 4506-T Income Verification – Order your 1, 2, 3, or 4 year tax transcripts through MCA, and you will receive them in 1-2 business days.
  • Focus Reviews – Get quick pre- or post-closing compliance checks, which include our professionals’ advice on how to correct any issues.
  • Identity Verification – Comply with Fannie Mae’s new announcement SEL-2010-01 and the Patriot Act, which reqiure financial institutions to verify the identity of borrowers.

Join our free monthly webinar “Continuing to make sense of the new GFE: A more in depth look.”

We want to thank those who attended our first webinar: Making Sense of the New GFE. We have posted the slides from February’s webinar on our website. March’s webinar will be a more in depth look at the new Good Faith Estimate.

Continuing to make sense of the new GFE: A more in depth lookGet more detail about fee disclosure and changed circumstance as they relate to the GFE.

Join our webinar on Thursday, March 18 at 12:00 pm MST.


Reserve your webinar seat now at:

Register Now

After last month’s webinar that gave a basic overview of the 2010 Good Faith Estimate,  we received requests for a more interactive and in-depth training. This month’s webinar will consist of a brief, yet comprehensive, presentation on fee disclosure and changed circumstance as they relate to the Good Faith Estimate, followed by a panel discussion featuring several experienced mortgage professionals.

We are always happy to hear from you and encourage you to submit your questions to info@mortgagecomplianceadvisors.com.

- – - – - – - – - – - – - – - – - – - – - – - – - – - – - -
If you have any questions, simply reply to this email or call us at 877-226-3216.

For real time compliance news, you can now follow us on Twitter and Facebook.

www.MortgageComplianceAdvisors.com

Underwriting & Processing Tips

We received many excellent and challenging questions during our webinar “Making Sense of the New GFE,” hosted in the month of February. As promised, we have posted the slides from the webinar on our website, as well as answers to all 33 questions we received about the new GFE. We have included the first four questions below.

*Please visit our website to read all 33 questions and answers.

Question 1 - We understand two circumstances in which the compensation to the originator can change: the loan amount changes and a portion of the origination charges are dependent on the loan amount; the loan program changes.  If a loan is floating and is later locked, we understand that the credit or charge to the borrower may change, but “Our Origination Charges” may not change and the originator’s comp (even if the YSP or rebate changes) will not change.  Correct?

  • Answer: According to our interpretation of the resources we have utilized, that is correct.   HUD FAQ’s #19, page 8, states the following- If a borrower locks the interest rate after the GFE has been issued, a revised GFE must be issued within 3 days of the interest rate lock reflecting the date that the rate lock is good through.  Any interest rate-dependent charges (specifically Block 2, Line A and Block 10 on the GFE) and terms that changed must also be updated on the revised GFE.
Question 2 – We have seen several large lenders consider a change in pricing to be a changed circumstance that permits redisclosure and a change to Our Origination Charges and the broker’s comp.  Is this permitted?  If so, what is the rationale under the rule?

  • Answer: This is not permitted once a rate has been locked.  HUD FAQ’s 1/28/10 states market fluctuations do not constitute a changed circumstance and a GFE may not be revised to reflect market fluctuations.
Question 3 – If I change the loan amount, does a new 1003, TIL and GFE need to be signed?

  • Answer: These documents will need to be re-disclosed to the borrower within 3 days and evidence of re-disclosure or re-issue will need to be maintained in the file.
Question 4 – If the Buyer is paying a 1% commission of the contract amount to the seller (in this case a bank).  The transaction is a short sale.  Should this be disclosed as a closing cost on the GFE for the buyer?

  • Answer: No.This charge is considered real estate commission and will not need to be disclosed on the GFE. [...Q&A continued on our website.]

FHA Update

- Extends deadline to February 17, 2011 for temporary authority from ML 2009-22 (Revised Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f) Apartments).

View the entire letter

- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
To view all HUD Mortgagee Letters for the year, visit HUD’s website.

- – - – - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - -

*We offer FHA, VA, and HECM reference manuals with regulations and policies updated quarterly. For more information, visit our website or call 877-226-3216.

Fannie Mae Update


- Announces four new mortgage insurers.  View the entire letter

- – - – - – - – - - – - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
- Introduces Loan Quality Initiative (LQI), which makes several changes to be announced over the next few months. LQI focuses on several areas, including:

  • Policies that confirm the identity and occupancy of the borrower, validation of qualified parties to the transaction, and policies that address the borrower’s credit profile
  • Updated quality control requirements
  • Delivery of additional information about property and appraisal
  • Loan delivery enhancements
  • Reporting and validation of mortgage insurance coverage data  
Loan Quality Initiative Resources (FAQs, summary with key dates, live web seminars, etc.)
- – - – - – - – - – - - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
- Describes some changes impacting Selling Guide as result of Loan Quality Initiative (LQI).

- “The change to the Potential Red Flag messages will be effective the weekend of April 17, 2010.”
- Policies effective June 1, 2010:

  • “Lenders will be required to confirm the identity of each borrower whose credit is used for the purpose of determining ability to meet Fannie Mae’s underwriting and eligibility standards prior to the extension of credit.”
  • All borrowers are required to have a Social Security number or ITIN.
  • Lenders must confirm that companies involved in origination, underwriting, or servicing are not on GSA Excluded Party List or HUD LDP List prior to delivery of loan.
  • “Lenders [must] determine that all debts of the borrower incurred or closed up to and concurrent with the closing of the subject mortgage are disclosed on the final loan application and included in the qualification for the subject mortgage loan.”
  • “If the subject property is a condo or other property type that is identified by a unit number, the unit number must be included in the property address on the note.”
- Effective January 3, 2011, “LTV ratio calculation [must] be truncated (shortened) to two decimal places, then rounded up to the next whole percent.”  View the entire announcement

- – - – - – - – - – - - - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -


- Announces that the Selling Guide has been updated to incorporate several miscellaneous clarifications or omissions. View the entire announcement
- – - – - – - – - – - - - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
- FHFA extends Home Affordable Refinance Program (HARP) to June 30, 2011.

- “Accordingly, lenders may continue to apply the HARP flexibilities to loans originated under Refi Plus™ and DU Refi Plus™ provided the note date is on or before June 30, 2011 and the loans are delivered to Fannie Mae no later than October 31, 2011.”

View the entire notice

- – - – - – - – - – - - - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

- Describes the following:

  • Reclassifying HAMP Program MBS Mortgage Loans
  • Expedited Reimbursements of Servicer Advances for Reclassified MBS Mortgage Loans
  • Executing Modification Agreements

View the entire announcement

- – - – - – - – - – - - - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
To view all Fannie Mae Announcements and Letters for the year, visit

Fannie Mae’s website.

Freddie Mac Update

- Provides guidance on HAMP, including requirement for full verification of borrower eligibility after servicer receives “Initial Package.”  View the entire bulletin
- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

  • Requires Sellers to take out separate fixed-rate Cash contracts for Relief Refis with specified higher LTVs (effective February 22, 2010)
  • Corrects deadline for submission of Guide Form 996E
  • Provides guidance on Form 16SF

- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

Bulletin 2010-5: Selling and Servicing

- Announces enhancing Loan Prospector to provide a point value estimate from HVE for a property address. Also announces changes to Guide related to this enhancement:

  • Sellers must have copy of entire Note in file
  • Sellers may not delegate endorsement of Notes via power of attorney
  • Guide reflects a few updates for various states (IL, NH, RI, CA, GA, NC)
- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

Bulletin 2010-6: Freddie Mac Relief Refinance Mortgage Offering Extended

- Extends offering of Relief Refinance Mortgages–must have Note Dates on or before June 30, 2011.

View the entire bulletin

- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
To view Recent Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.
VA Update

[No new circulars]
- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
To view VA Circular/News for 2010, visit the VA website.
Feel free to call us with any questions at 877-226-3216.

Safe Unsubscribe

This email was sent to sarah@mcagroupmail.com by sarah@mcagroupmail.com.


Mortgage Compliance Advisors | 5505 South 900 East | Suite 110 | Salt Lake City | UT | 84117

No Comments »
Feb
26
2010

Answers to Questions about New GFE

We received many excellent and challenging questions during our webinar “Making Sense of the New GFE,” hosted in the month of February. As promised, below you will find answers to all of the questions asked. The answers come from our best available resources, and we will all continue to learn more as HUD posts new information.

Question 1 - We understand two circumstances in which the compensation to the originator can change: the loan amount changes and a portion of the origination charges are dependent on the loan amount; the loan program changes.  If a loan is floating and is later locked, we understand that the credit or charge to the borrower may change, but “Our Origination Charges” may not change and the originator’s comp (even if the YSP or rebate changes) will not change.  Correct?

  • Answer: According to our interpretation of the resources we have utilized, that is correct.   HUD FAQ’s #19, page 8, states the following- If a borrower locks the interest rate after the GFE has been issued, a revised GFE must be issued within 3 days of the interest rate lock reflecting the date that the rate lock is good through.  Any interest rate-dependent charges (specifically Block 2, Line A and Block 10 on the GFE) and terms that changed must also be updated on the revised GFE.

Question 2 – We have seen several large lenders consider a change in pricing to be a changed circumstance that permits redisclosure and a change to Our Origination Charges and the broker’s comp.  Is this permitted?  If so, what is the rationale under the rule?

  • Answer: This is not permitted once a rate has been locked.  HUD FAQ’s 1/28/10 states market fluctuations do not constitute a changed circumstance and a GFE may not be revised to reflect market fluctuations.

Question 3 – If I change the loan amount, does a new 1003, TIL and GFE need to be signed?

  • Answer: These documents will need to be re-disclosed to the borrower within 3 days and evidence of re-disclosure or re-issue will need to be maintained in the file.

Question 4 – If the Buyer is paying a 1% commission of the contract amount to the seller (in this case a bank).  The transaction is a short sale.  Should this be disclosed as a closing cost on the GFE for the buyer?

  • Answer: No. This charge is considered real estate commission and will not need to be disclosed on the GFE.

Question 5 – If a GFE is issued for a purchase of a property and the transaction falls out of escrow, and the buyer finds another home to purchase… is this considered a “changed circumstance”? I read in  the guideline  that “address” is not considered a “changed circumstance”.

  • Answer: A change in property address does constitute a changed circumstance and a GFE may be reissued.  For clarification, if the legal description is maintained when a property address changes, for example with a new construction, this does not constitute a changed circumstance and the GFE may not be reissued.  A loan originator may issue a revised GFE reflecting only the increased charges resulting from the changed circumstance.

Question 6 – If a buyer applies to borrow $50,000 on a first mortgage and I issue a GFE based on that loan amount, and then the buyer decides to revise the loan amount to $250,000 (to possibly save on the origination fee), is this considered a “changed circumstance” allowing for an increased to my 801 compensation?

  • Answer: Yes.  A requested change by the borrower, such as a requested increase in loan amount, is considered a changed circumstance and the GFE may be reissued.

Question 7 – A title rep told me we have to include state deed taxes on the GFE for purchases, even though the seller normally pays those in MN. Any other odd items we must add to the GFE?  Some brokers are using a ‘Cost Estimate Worksheet’ in lieu of the GFE, until all ‘6 pieces of required info’ are obtained.  do you have any comments/recommendations on that? Going over valid ‘changed circumstances’ would be helpful too.

  • Answer: All fees related to the transaction must be disclosed on the GFE, regardless of whether those fees will be paid in part, or in whole, by the seller, buyer or other party.   Regarding Changed Circumstances, HUD FAQ 1/28/10 page 19 provides an abbreviated list of acceptable changed circumstances allowing for reissue of the GFE; acts of god, war, disaster or other emergency, information deemed inaccurate particular to the transaction, borrower requested change in terms, expiration of the GFE itself, interest rate change before the loan is locked and parties added to, or removed, from title.

Question 8 – If the Provider of Services lists ABC TITLE COMPANY, the GFE2010/Initial fees worksheet reflects attorney fees and title insurance paid to DBA TITLE COMPANY (company not on Provider of Services list) and then the borrower chooses DBA TITLE COMPANY, is the broker/loan officer responsible for the charges on the HUD-1 by DBA TITLE COMPANY?   It is our understanding once a SPECIFIC name is reflected on the GFE2010/Initial fees worksheet then it is no longer considered “Borrower select” and must fall into the 10% variance.  Is this correct?

  • Answer: According to the resources we have available, that is correct.  The originator should not be responsible for fees equal to, or less than, those initially disclosed if the service provider itself changes.  These charges will be subject to the 10% tolerance limitation.   A change in settlement service providers would not constitute a changed circumstance (HUD FAQ 1/28/10 pg 19 # 13).

Question 9 – What do you consider as legitimate changed circumstances that would allow “Our Origination Charges” to increase after initial GFE disclosure.  For example:
• Loan is locked, pricing to the originator increases, no other changes, originator timely discloses.
• Appraisal comes in higher than expected and at the same time (within 3 days of getting the value information) pricing to the originator increases, no other changes, originator timely discloses.
• Originator works for a bank and provides an initial disclosure that does not contain compensation from the lender or a corresponding credit to the borrower.  The loan is declined because the bank has a minimum credit score of 650 and the borrower’s score was lower.  Originator finds a lender who will accept borrowers with a credit score of 620 and the borrower’s score is higher.  The other lender will also pay the originator a .25% in a YSP for the same rate as applied for at the bank.  Originator discloses a new GFE which shows the same origination fee, and the YSP (for a higher “Our Compensation Charges”)

  • Answer: Pricing to the originator may not increase. Block 1 , Your Adjusted Originator Charges, is subject to 0% tolerance, meaning, charges may not increase at settlement.  Information deemed inaccurate particular to the borrower or transaction that was not relied upon for issuing the GFE, such as estimated value or FICO change, should allow for a changed circumstance and a GFE may be reissued.  HUD is very specific in what fees can change and will only allow affected charges OR loan terms to be changed.  HUD FAQ page 18 #8 xv states the following would NOT constitute a changed circumstance:   a mortgage broker issues a GFE based on one lender’s loan products and origination fees, but places the loan with a different lender.

Question 10 – If we are showing 3% Origination Fee, this is to account for 1% Origination and 2% Potential YSP, to offset what we receive from the investor, Calyx Point (our origination system) has indicated to put the 2% figure in section 1302 as a negative figure.  Is this correct?  Most lenders are taking it this way but I have one saying it is wrong.  The problem that I see is the “interpretation” of the RESPA reform by each investor.

  • Answer: We are unable to provide instruction on use of a particular LOS system.  Our recommendation is to consult your LOS administrator, or lender, to determine what is acceptable (or common) practice.

Question 11 - If a survey is more complicated than originally thought (e.g., the property has water features and/or multiple structures), would this be a change in circumstance?

  • Answer: According to RESPA FAQ 1/28/10 page 15 #1 and page 16 #2  “Changed Circumstance” , this would constitute a changed circumstance.

Question 12 - If clearing title is more complicated (e.g., unknown recorded items), is this a change in circumstance?

  • Answer: According to RESPA FAQ 1/28/10 page 15 #1 and page 16 #2 “Changed Circumstance”, this would constitute a changed circumstance.

Question 13 - If the borrower has locked a loan, then lowers the loan amount per the borrower’s request:
• The loan amount will affect the YSP – Is the Borrower Credit allowed to change lower in proportion to the YSP or does the mortgage originator need to absorb?
• This would also apply to if the broker has any responsibility to change Our Origination Charge lower or may that remain the same?

  • Answer: Interest rate dependent charges in Block 2, as a result of a borrower requested change, can be a changed circumstance and a reissued GFE may be provided.  The revised GFE may only reflect the increased charges resulting from the changed circumstance.
    We are also able to provide the following information-GFE-Block 1, Pg 26:
    8.) Q: When the interest rate goes from float to rate lock, may Block 1 on the GFE change?

    A: No. However, Block 1 can increase due to a changed circumstance if the change affects the loan amount and all or a portion of the Origination Charges were calculated as a percentage of the loan amount. Block 1 may also increase if the borrower either requests a different loan product or the borrower is no longer eligible for the loan product contained in the initial GFE, but is eligible for a different loan product.

Question 14 - We have been getting a lot of questions about Block 6 and what exactly is required by RESPA law.

Some lenders seem to think that if the purchase contract requires a pest inspection, home inspection, or home warranty, then the GFE 2010 must include those items.

I cannot find anything in the RESPA Rule or RESPA FAQs that reference the purchase contract anywhere.

What I have found indicates that if the loan originator requires those items, then they must be included in Block 6. We are a mortgage broker and our loan originators do not require those items so they do not feel that they should be forced to include them. What are you finding is the precedent?

  • Answer: Typically, items required as part of the purchase contract, and only by the purchase contract, do not have to be disclosed on the GFE.  However, if at any time, the charge is required by the lender,  the requirement to disclose that fee is applicable.

Question 15 – We still have lenders sending GFE’s back to the loan officers for “do-overs” when they don’t like the way the GFE was put together. (Some think the Important Questions section can have NA in Question 1, some think it has to have an actual date. Some think Question 4 should have a certain minimum number of days in it to match their company policy while the loan is in a float status, some let the loan officer choose. Etcetera.)

We understand each lender has their own interpretation of RESPA, and that we are in the 180-day period of leniency granted by HUD (through April 30th) while everyone gets used to the new forms, however, there seems to be too much interpretation going on. What happens after the 180 days are over? Has anyone heard anything about what to expect then? Lenders won’t be able to just ask for a “do-over” then, will they? As a broker, it is almost impossible for our loan officers to have perfect GFE’s because every lender has their own hoops to jump through.

We end up with more than one version of GFE’s in our files, and have asked our LO’s to write letter of explanations indicating that the lenders required them to revise and re-issue the disclosure document to meet the lender’s needs. This seems to be the best “audit-proofing” we can do under the circumstances. These are not “changed circumstances” and fall outside of RESPA guidelines and yet lenders are doing this every single day.

I realize this is a very general question, more of a concern, but anything you do have to address this would be greatly appreciated.

  • Answer: We would like to be able to assist you with your question, however, we cannot comment on what lenders and investors are doing to accommodate specific transactions.  We can suggest you verify with your lender or investor when you have specific questions regarding your loan scenario.

Question 16 - If an investor will table fund a loan and immediately pay a servicing release premium (SRP) to the originating lender, must the lender disclose the SRP to the borrower?  If yes, where, included in Box 1?

  • Answer: For transactions without a mortgage broker, the lender may choose not to separately disclose in Block 2 any credit or charge for the interest rate chosen on the loan.  If this block does not include any positive or negative figure, the lender must check the first box to indicate that the credit or charge for the interest rate you have chosen is included in our origination charge.  Box 1 of Block 2 will be completed with only the interest rate chosen.  Part 3500 RESPA Sect. Appendix C Instructions for Completing GFE.

Question 17 - My very top question is what we should be doing with the owners title insurance policy fee.  It is common practice in our area for the seller to pay 50% of the owners policy.  According to HUD’s FAQ’s, it still needs to be listed on the initial GFE that the borrower will be responsible for 100% of the fee–even though at closing the borrower will be credited back for 50% of it.

When it is time to do docs, with our software, the only way we can make our Itemization of Amount Financed correct is to go into our HUD page 2 and input the actual 50% amount there.  Most of the title companies handle it this way, and we match up correctly with them on HUD page 3.  However, a couple title companies are following the rule that they must credit the 50% amount back on HUD page 1, rather than correcting it on HUD page 2.  If they do that, it is difficult to make everything match for us.  If we input the actual 50% amount on HUD page 2, our Itemization will be correct–which is foremost in our minds, but the Itemization does not match the title company’s HUD page 3 since they still show the 100% amount there.  If we just leave it at the 100% amount on  HUD page 2, and credit the extra 50% off our HUD page 1 or the 1003, we match the title company, but the Itemization is incorrect.

This problem will only be magnified when there are other seller paids.  What is the best solution?

  • Answer: The owner’s title insurance policy does need to be disclosed on the GFE if it will be a charge at settlement.  Keep in mind, all fees (in whole), regardless of who will pay those fees at settlement, must be disclosed on the GFE.  In answer to the second part of your question, we are unable to comment on the use of a specific LOS system and the input of fees.  We recommend contacting your LOS support for direction.  Your lender and title companies may also be of assistance.

Question 18 - I do have a couple of very important questions I was hoping to get answered.  See below and let me know what you can do?  We mainly do correspondent lending and warehouse our loans (have our own line) so none of the following situations are as a broker.

We have a closing company that we hire when our closer is out and they company is a group of attorneys, but not the closing attorney.  They are stating their fees should be included in the origination fees.  We sometimes may not know if we need to hire them upfront and have not disclosed the doc prep fees.  How can we address this and is it possible to have a changed circumstance with a revised GFE or are we required to eat the cost?  I was also wondering why the cost could not just go in the 1100 doc prep fee even though they are not involved in the title services or actual closing?

  • Answer: The loan origination charge includes all charges received by the originator, including all amounts received for any services including administrative and processing services performed on behalf of the lender or mortgage broker.  Loan document preparation done on behalf of the loan originator is a processing and administrative service in the origination of the loan and would be considered as part of your origination charge.  HUD RESPA FAQ 1/28/10 page 44 # 1 and 2.

Question 19 – We sometimes waive our Admin fee for repeat customers.  Should we still be listing this in our origination charges and checking box 2a with a credit instead of just not including?  We say waived on the initial fee worksheet instead of entering as a negative amount.

  • Answer: The fee may be included as part of Your Origination Charge, Block 1.  Block 2 is specific to credit (YSP) from interest rate chosen only and additional credits should not be part of this Block.

Question 20 – If there are any update changes such as appraisal fee, hazard monthly amount; can this be updated as they come along and does a new GFE need to be disclosed every time? [asked during webinar]

  • Answer: If the updated changes qualify as changed circumstances that would require reissue of the GFE, the GFE must be redisclosed within three days of receiving the information.

Question 21 – Where should a final inspection from the appraiser fee be placed? [asked during webinar]

  • Answer: This should be listed in Block 3, Required Services That We Select.

Question 22 – On Block 2, should the “credit” be a positive or negative amount? [asked during webinar]

  • Answer: The credit should appear as a negative.  Your Adjusted Origination Charge will be a total of Block 1 and Block 2.  Block 2, if a credit from YSP, will reduce total settlement charges.

Question 23 – I believe this box can change is your rate is NOT locked. If it is locked it may not change. [asked during webinar]

  • Answer: If the question is in reference to Block 2, going from an unlocked rate to a locked rate may constitute a changed circumstance and a reissued GFE may be disclosed with changes to Block 2 as well as Blocks containing interest rate dependant charges.  HUD RESPA FAQ 1/28/10 page 21 #3.

Question 24 – A changed purchase price will change the loan amount. will this be a changed circumstance? [asked during webinar]

  • Answer: Yes.  HUD RESPA FAQ #1 page 15, 1/28/10:  Information particular to the borrower or transaction that was not relied on in providing the GFE and that changes, or is found to be inaccurate, after the GFE has been provided.  May include the amount of the loan, the estimated value or any other information that was used in providing the GFE.

Question 25 – The fees may decrease correct? [asked during webinar]

  • Answer: Correct. Tolerance limitations apply to increase of fees at settlement.

Question 26 – If the til is off more or less .125 are we still req to re-disclose? [asked during webinar]

  • Answer: Yes, if the APR increases more than .125, the TIL must be redisclosed and evidence of redisclosure must be maintained in the file.

Question 27 – As a “lender” are we required to mark any box in section #2? As a lender we are not required to disclose any ysp correct? [asked during webinar]

  • Answer: Correct. Instructions for completing the GFE, section 5 of RESPA and 24 CFR 3500.7 states the following regarding Block 2 and disclosure required by lenders:  for transactions without a mortgage broker, the lender may choose not to separately disclose in this block and any credit or charge for the interest rate chosen on the loan, however, if this block does not include any positive or negative figure, the lender must check the first box to indicate that ‘The credit or charge for the interest rate you have chosen is included in our Origination Charge above’ (complete the box 1 with the interest rate).

Question 28 – On a VA loan how do we handle the extra fees? [asked during webinar]

  • Answer: We need you to specify which extra fees to answer this question accurately.

Question 29 – How do we define a “change in program?”  For example, in a HECM loan, a borrower may initially want to draw down a small amount of money and at docs decide a large amount – this will change the amount of rebate paid on the UPB – is this a program change [asked during webinar]

  • Answer: According to the information we have available, this does not constitute a program change.

Question 30 – Is an 800 phone number for a national company sufficient contact info for a list of settlement service providers? [asked during webinar]

  • Answer: The settlement service provider list should include the following information:  Service, Amount, Company Information and corresponding HUD 1 line #.   Lenders may have different requirements, we suggest verifying with them what is acceptable and custom practice.

Question 31 – Do you believe “mortgage taxes” unrelated to the transfer of the property should be included as Transfer Taxes? [asked during webinar]

  • Answer: No.  Block 8 is for Transfer Taxes and is subject to zero tolerance.  For Block 8, transfer taxes are considered state and local government fees on mortgages and home sales that can be expected to be charged at settlement. Mortgage taxes unrelated to transfer tax, such as property taxes, should be included in Block 9 -taxes held in escrow.

Question 32 – The answer seemed very evasive concerning the increase in compensation if the borrower requested an increase in the loan amount.  On page 26 Question 8 of the RESP UPDATE (1/28/10) it appears that HUD is stating that the broker’s compensation can increase IF all or part of the origination charges were based on a a percentage.  Just trying to get clarification on this issue.

  • Answer: This is the information we were able to gather from HUD RESPA FAQ’s 1/28/10-GFE-“Changed circumstances”, pg 16 & 19:
    5) Q: If circumstances change, may a loan originator issue a revised GFE with changes to all of the charges and terms related to the loan?
    A: No, the loan originator may only change those charges and terms that are affected by the specific changed circumstance.

    9) Q: If a GFE is revised to reflect a changed circumstance, may other charges on the GFE be made to reflect market fluctuations?
    A: No. A GFE may not be revised to reflect market fluctuations.

    GFE-Block 1, Pg 26:
    8.) Q: When the interest rate goes from float to rate lock, may Block 1 on the GFE change?
    A: No. However, Block 1 can increase due to a changed circumstance if the change affects the loan amount and all or a portion of the Origination Charges were calculated as a percentage of the loan amount. Block 1 may also increase if the borrower either requests a different loan product or the borrower is no longer eligible for the loan product contained in the initial GFE, but is eligible for a different loan product.

Question 33 – If there’s a premium yield spread it is disclosed but does it go to the borrower and reduces his cost or the lender/broker gets to keep it as usual?

  • Answer: All credit (YSP) for a chosen rate will show as a credit to the borrower on the HUD, reducing settlement charges.

ALWAYS check with your lenders and investors if you have any questions specific to your loan scenario. The information provided by Mortgage Compliance Advisors, LLC has been taken from various public resources and does not constitute legal advice.

No Comments »
Feb
18
2010

Slides for February 2010 Webinar: Making Sense of the New GFE

We would like to thank those who attended our first Webinar: Making Sense of the New GFE. We have posted the slides from the presentation for you in PDF format. Click here to download the slides.

We received many questions about the GFE and answered the top 5 during the webinar. Any questions that we did not answer during the presentation will be answered in a later blog entry and also in our March 2010 newsletter.

We will be holding these free webinars every month, so please let us know of any topics you would like us to discuss. Thank you!

No Comments »
Feb
05
2010

MCA’s February Webinar: “Making Sense of the New GFE”

MCA Logo

Making Sense of the New GFE

Join us for a free Webinar on February 18


Register Now

Space is limited.
Reserve your Webinar Seat Now at:
https://www1.gotomeeting.com/register/410456488


MCA will be offering free monthly webinars to answer your compliance questions. February’s webinar will be about the new Good Faith Estimate, which went into effect on January 1, 2010.

There has been a lot of information about the new GFE, and we want to help you make sense of it all. Please send us your questions and our professionals will answer the top five. Any questions that are not addressed in the webinar will be answered in next month’s newsletter.

Title: Making Sense of the New GFE
Date: Thursday, February 18, 2010
Time: 12:00 PM – 1:00 PM MST

After registering you will receive a confirmation email containing information about joining the Webinar.

System Requirements
PC-based attendees
Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista

Macintosh®-based attendees
Required: Mac OS® X 10.4 (Tiger®) or newer

Making sense of the new GFE
Mortgage Compliance Advisors
5505 South 900 East
Salt Lake City, Utah 84117

No Comments »
Feb
04
2010

MCA Monthly Update – February 2010

MCA Logo

MCA Monthly Update
February 2010

In This Issue
Underwriting & Processing Tips
FHA Update
Fannie Mae Update
Freddie Mac Update
VA Update
Quick Links
.

.
.

Lending Manuals

Stay Updated
.
Join Our Mailing List!

Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, our newsletters contain underwriting tips, processing tips, and compliance updates. We hope that you find the content informative and useful. As always, your feedback is appreciated.

MCA will be offering free monthly webinars to answer your compliance questions. February’s webinar will be about the new Good Faith Estimate.

Making sense of the new GFE

.

Get answers to your questions about the new GFE.

Join our free webinar on Thursday, Feburary 18 at 12:00 pm MST.
.

We will be emailing invitations Friday 2/5/2010. If you are interested in joining the webinar, click the link in Friday’s invitation to register. If you do not receive an invitation but would like to join, please reply to this email, or email: info@mortgagecomplianceadvisors.com.
.
There has been a lot of information about the new GFE, and we want to help you make sense of it all. Send us your questions and our professionals will answer the top five. Any questions that are not addressed in the call will be answered in next month’s newsletter.
.
.
If you have any questions, simply reply to this email or call us at 877-226-3216.

For real time compliance news, you can now follow us on Twitter and Facebook.
Underwriting & Processing Tips
Early Payment Defaults (EPDs)

Don’t forget that for FHA files, you need to audit 100% of your EPDs:

“In addition to the loans selected for routine quality control reviews, mortgagees must review all loans going into default within the first six payments. As defined here, early payment defaults are loans that become 60 days past due.” (See HUD 4060.1 7-6 (D))

Furthermore, in HUD’s ML 10-03, HUD announced its authority to terminate DE underwriting authority if a mortgagee has particularly high default and claim rates.

24 Month Period Ending Date

Termination Threshold

December 31, 2009

300%

June 30, 2010

250%

December 31, 2010

200%

.
*Make sure your compare ratio of defaults is below the termination threshold. You can check your compare ratio on HUD’s Neighborhood Watch.

FHA Update

- Announces FHA policy changes:

  • Increases mortgage insurance premium (MIP)
  • Updates FICO scores and down payments
  • Reduces allowable seller concessions from 6% to 3%
  • Increases enforcement on FHA lenders

View the entire press release

- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -


- Extends special authority granted in ML 09-20 (Processing Pre-Application Firm Invitation and Firm Commitment Extension Requests) to January 11, 2011. View the entire letter

- – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

ML 10-02: Increase in Upfront Premiums for FHA Mortgage Insurance

- Increases mortgage insurance premium to 2.25%. Effective for case numbers assigned on or after April 5, 2010. View the entire letter

- – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

- Extends FHA’s authority to terminate DE underwriting authority in areas where the lender has a high rate of early defaults and claims. View the entire letter

- – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

Provides guidance on how to assist borrowers facing imminent default. “At this time FHA is limiting the loss mitigation options that may be used…to forbearance and FHA-HAMP.” View the entire letter

- – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

ML 10-05: Announcement of the FHA Nonprofit Data Management System

Announces newly developed Nonprofit Data Management Systems (NPDMS).

- “Effective immediately…organizations participating in OSFH programs will be required to use NPDMS to initiate and manage their FHA activities…” View the entire letter

- – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.
To view all HUD Mortgagee Letters for the year, visit HUD’s website.

- – - – - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - -

*We offer FHA, VA, and HECM reference manuals with regulations and policies updated quarterly. For more information, visit our website or call 877-226-3216.

Fannie Mae Update

LL-2010-01: Special Approval Designation for Established Florida Condominium Projects

- Implements a new “Special Approval” designation for condominium projects located in Florida.  View the entire announcement

- – - – - – - – - - – - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.
.
- Updates reporting and reconciliation requirements for reverse mortgages. Also sets fines for non-compliance of reporting. View the entire announcement

- – - – - – - – - – - - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.

SVC-2010-02: Update to Imminent Default Guidance for Mortgage Loans Evaluated for the Home Affordable Modification Program

- Introduces use of Imminent Default Indicator, requires use of verified income documentation before entering borrower into a trial period plan, changes max cash reserves allowed.

- Also requires imminent default evaluation for all borrowers that are either current or in default but less than 60 days delinquent.

View the entire announcement

- – - – - – - – - – - - - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
To view all Fannie Mae Announcements and Letters for the year, visit Fannie Mae’s website.
Freddie Mac Update

Bulletin 2010-1: Home Affordable Modification Program

- Announces changes to HAMP, mandates use of newly introduced Imminent Default Indicator (effective March 1, 2010), revises imminent default requirements, etc.  View the entire bulletin

- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.
Bulletin 2010-2: FHA-Approved Project Review for Condominiums
.
- Revises guide so that “Sellers may only use FHA Condominium Project approval to determine that Mortgages secured by units in Condominium Projects are eligible for sale to Freddie Mac for the following Mortgage types:

  • FHA Mortgages
  • VA Mortgages
  • Section 502 Guaranteed Rural Housing (GRH) Mortgages
  • HUD Guaranteed Section 184 Native American Mortgages”
.
.
- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

To view Recent Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.

VA Update

Circular 26-10-01

- Provides guidance on fees and charges, in response to new RESPA rule. Also announces new documentation requirements and elimination of a previously required disclosure statement.  View the entire circular

- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.
.
- Provides instructions for modifying VA loans in accordance with the Making Home Affordable (MHA) program. Effective 2/1/10.  View the entire circular
.
- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -

Circular 26-09-17, Change 1

- Extends rescission date of Circular 26-09-17 (Interim Process for Pre-Approval of Loan Modifications on Current Loans) from January 1, 2012 to January 1, 2014.  View the change

- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.

- Extends rescission date of Circular 26-08-3 (Processing Transfers of Ownership Under VALERI) from January 1, 2010 to January 1, 2012.   View the change

- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
.
To view VA Circulars/News for 2010, visit the VA website.

Feel free to call us with any questions at 877-226-3216.
No Comments »
Jan
20
2010

HUD Press Release: FHA Announces Policy Changes to Address Risk and Strengthen Finances

Hud posted a press release this morning, announcing more policy changes. These changes are aimed at strengthening FHA’s capital reserves while working to reduce risk. The announced FHA policy changes include:

1. Increased mortgage insurance premium (MIP)
2. Updated FICO scores and down payments
3. Reduced allowable seller concessions from 6% to 3%
4. Increased enforcement on FHA lenders

Read all the details in HUD’s press release.

With all the recent regulation changes, it can be frustrating trying to keep up. We are happy to answer your questions. Visit www.MortgageComplianceAdvisors.com or call 877-250-5243.

No Comments »
Jan
07
2010

MCA Monthly Update – January 2010

MCA Logo
MCA Monthly Update
January 2010
 
 
In This Issue
Underwriting & Processing Tips
FHA Update
Fannie Mae Update
Freddie Mac Update
VA Update
Quick Links
 
 
 
 
 
Stay Updated

Twitter  

Facebook  

LinkedIn  

Join Our Mailing List!
 
Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, our newsletters contain underwriting tips, processing tips, and compliance updates. We hope that you find the content informative and useful. As always, your feedback is appreciated. 
 
*MCA has a new website!
 
Visit our newly redesigned website to find upcoming regulation deadlines, the latest compliance news, updated FAQs, and other helpful resources.
 
 Screenshot of MCA's New Website
 
 
If you have any questions, simply reply to this email or call us at 877-226-3216.
 
For real time compliance news, you can now follow us on Twitter and Facebook.
Underwriting & Processing Tips
 
1. The new RESPA regulations went into full effect 1/1/10. Visit HUD’s useful website for RESPA information. Some topics include:
 

2. “If a GFE is issued on the old form prior to January 1, 2010, then the old HUD-1 form must be used even if closing will occur after January 1, 2010. For GFEs issued on the old form, the loan originator has the option to reissue the GFE (with the same terms and charges) on the new form, in which case the settlement agent must complete the new HUD-1 form.” (from HUD’s FAQs for RESPA)  

3. A good practice is to make sure that your file always includes an underwriting loan approval from the lender.
 
4. To allow us to provide you with a quality audit, your submissions should contain the following:
 
  • Initial disclosures and application  
  • Credit, income and asset documentation (if applicable)
  • Signed underwriting package
  • Closing package (Collateral documents) 
  • *If possible, purge file of duplicates
 
FHA Update
 
 
- HUD proposes minimum standards that states must meet to comply with SAFE Act in licensing loan originators.  View the entire press release 
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
 - Letter from the FHA Commissioner, which contains brief Q & A about recent policy changes, including FHA approval process and RESPA.  View the entire letter 
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
- Provides guidance for borrower eligibility for short sales and short payoffs. Effective immediatelyView the entire letter 
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
- Contains the latest updated version of Chapter 6 (Special Underwriting) of HUD Handbook 4155.1.  View the entire chapter
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
Contains the latest updated version of Chapter 4 (Property Valuation and Appraisals) of HUD Handbook 4155.2.  View the entire chapter 
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
- Clarifies how fees must be disclosed on the new GFE and HUD-1, consistent with the RESPA changes.  View the entire letter 
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
To view all HUD Mortgagee Letters for the year, visit HUD’s website.
 
- – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - 
 
*We offer FHA, VA, and HECM reference manuals with regulations and policies updated quarterly. For more information, visit our website or call 877-226-3216. 
 
Fannie Mae Update 
 Ann. 09-36: Updates to the Home Affordable Modification Program…  

- Updates HAMP, including requirements for tax returns, income documentation, and title endorsement and recordation. Effective date is 1/1/10.  View the entire announcement  

- – - – - – - – - - – - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
- Updates policies for FHA-approved condo projects, credit score versions, DU Refi Plus and Refi Plus, etc.  View the entire announcement
 
- - – - – - – - – - - - – - – - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
 
- Contains several updates and clarifications for various servicing policies, such as temporary review period for HAMP Trial Modifications, Risk Profiler, Quality Assurance Reviews for Acquired Properties, etc.  View the entire announcement  
 
- – - – - – - – - – - - - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
To view all Fannie Mae Announcements and Letters for the year, visit Fannie Mae’s website.
 
Freddie Mac Update 

 

Bulletin 2009-28: Home Affordable Modification Program 

- Provides information about the Treasury’s Mortgage Modification Conversion Drive, announces changes to HAMP, and changes capitalization threshold on all mortgages being modified. Effective immediately.  View the entire bulletin
 
- – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - – - – -
 
To view 2009 Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.
 
VA Update 

 
 
- Extends rescission date of Circular 26-07-03 from 1/1/09 to 1/1/14.  View the entire circular

 - – - – - – - – - – - – - – - – - - - – - – - – - – - – - – - – - – - – - – - – - – - – - -

To view VA Circulars/News from 2009, visit the VA website.

 

 

 Get reference manuals for FHA, VA, and HECM.

Feel free to call us with any questions at 877-226-3216.

 

No Comments »
Jan
06
2010

Get the latest regulation news from our new website

Check out our newly redesigned website to find upcoming regulation deadlines, the latest compliance news, and other helpful resources.

Our new website is designed to be a helpful central location where you can find an abundance of frequently updated information for regulations from FHA, Fannie Mae, Freddie Mac, VA, the FTC, etc. Each deadline or resource is linked to the official regulation or form, so that you can read the exact wording.

Regulations continue to change, but Mortgage Compliance Advisors will help you comply.

No Comments »
Dec
17
2009

From FHA Commissioner

We found something interesting from HUD today and thought it might be helpful to you lenders. HUD posted a letter today from FHA Commissioner David H. Stevens with questions and answers for various topics, such as new FHA policies, reasoning behind changes to the FHA approval process, the new RESPA rule taking effect on January 1, 2010, etc. Read the whole letter here.

No Comments »