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MCA Monthly Update
March 2010
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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.
 Get 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:
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.
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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 |
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| 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.]
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| 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
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To view all HUD Mortgagee Letters for the year, visit HUD’s website.
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*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.
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| Fannie Mae Update |
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- 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
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- 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
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- Announces that the Selling Guide has been updated to incorporate several miscellaneous clarifications or omissions. View the entire announcement
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- 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
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- 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
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To view all Fannie Mae Announcements and Letters for the year, visit
Fannie Mae’s website.
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| Freddie Mac Update |
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- Provides guidance on HAMP, including requirement for full verification of borrower eligibility after servicer receives “Initial Package.” View the entire bulletin
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- 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
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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:
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Sellers must have copy of entire Note in file
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Sellers may not delegate endorsement of Notes via power of attorney
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Guide reflects a few updates for various states (IL, NH, RI, CA, GA, NC)
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| VA Update |
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[No new circulars]
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To view VA Circular/News for 2010, visit the VA website.
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Feel free to call us with any questions at 877-226-3216.
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