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MCA Monthly Update
May 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.
Join our free monthly webinar “Red Flags of Fraud.”
Be prepared for the FTC’s Red Flags Rule effective 6/1/10, and recognize the red flags of mortgage fraud.
Join our webinar on Thursday, May 20 at
12:00 pm MDT.
Reserve your webinar seat now at:
Don’t allow yourself to become a victim of mortgage fraud. Join us for our free “Red Flags of Fraud” Webinar hosted May 20th, where we will be providing you the tools you need to recognize the red flags of mortgage loan fraud. We will also provide invaluable information on the Federal Trade Commission’s Red Flag Policy effective June 1, 2010. This is a webinar you can’t afford to miss!
We are always happy to hear from you and encourage you to submit your questions to info@mortgagecomplianceadvisors.com.
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For real time compliance news, you can now follow us on Twitter and Facebook.
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| Underwriting & Processing Tips |
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*Don’t forget that the FTC’s Red Flags Rule enforcement date is June 1, 2010.
We want to thank everyone who attended our webinar: “Managing Your Early Payment Default Risk.” As promised, we have posted the slides and answers to the questions asked.
Question 1 – HUD just eliminated the Correspondent level of FHA approval. Will only DE’s apply to market watch?
- Answer – The market watch will now (once the regulation takes effect) only apply to the Sponsor (DE) lender. HUD no longer puts out a market watch list; however, they still do keep track of the lenders (sponsors) they have concerns about.
Question 2 – Are there other reports besides the Neighborhood watch, we the lender need to be reviewing?
- Answer – Outside of Neighborhood Watch, we suggest you practice effective communication with your lenders to determine how the loans you originate are performing.
Question 3 – A.) Is Sponsor responsible for tracking and if so How do they find out about EPD’s for 100% review, or B.) Is the investor responsible for reviewing the loan they purchased?
- Answer – The Sponsor is responsible for finding out about the EPD through Neighborhood Watch HUD website. The investor is not the one that would be responsible to HUD for the EPD.
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| HUD/FHA Update |
HUD published the Final Rule on April 20. HUD has implemented some changes to strengthen its risk management through its approved FHA-approved lenders. There are many changes, but we wanted to make special note of three.
1. Increasing Net Worth Requirements. HUD has increased the net worth requirements for current FHA-approved mortgagees and applicants from $250,000 to $2.5 million over a three year period… Click here to read the full article
View the entire rule in the Federal Register
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ML 10-15: FHA Case Number and FHA Roster Appraiser Assignments
- Provides guidance on ordering FHA case numbers and selecting FHA Roster appraisers. View the entire letter
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- Describes FHA’s centralizing of mortgagee compliance under one contractor.
View the entire letter
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- Announces that HUD “will only order a lead-based paint evaluation for HUD REO properties constructed before 1978, and purchased with FHA-insured financing.” Effective date June 1, 2010. 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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- Adjusts underwriting criteria for borrowers who have experienced a prior “preforeclosure event.” Reduces waiting period. View the entire letter
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- Updates two sections of the Servicing Guide: Part VII “Delinquency Management and Default Prevention” and Part VIII “Foreclosures, Conveyances and Claims, and Acquired Properties.” View the entire announcement
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- The Selling Guide is being updated to include changes to the following topics:
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ARM qualifying rate
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Interest-only eligibility requirements
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Retirement of balloon mortgage loans as a standard product
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Prior preforeclosure sale or deed-in-lieu of foreclosure
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Multiple financed properties
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Miscellaneous updates and clarifications
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Loan-Level Price Adjustment (LLPA) Matrix and Adverse Market Delivery Charge (AMDC) Information
View the entire announcement
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- Property Assessed Clean Energy (PACE) loans “generally have automatic first lien priority over previously recorded mortgages. The terms of the Fannie Mae/Freddie Mac Uniform Security Instruments prohibit loans that have senior lien status to a mortgage…” 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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- Amends both selling and servicing requirements, such as max LTV for Rural Housing, revised requirements for Servicing Released Sales Process (effective May 1, 2010), etc. View the entire bulletin
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- Reminds “Seller/Servicers that an energy-related lien may not be senior to any Mortgage delivered to Freddie Mac. Seller/Servicers should determine whether a state or locality in which they originate mortgages has an energy loan program, and whether a first priority lien is permitted…” View the entire announcement
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| VA Update |
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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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