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Mar
04
2010

MCA Monthly Update – March 2010

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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
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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.

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.

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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

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

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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.

Fannie Mae Update


- Announces four new mortgage insurers.  View the entire letter

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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  

Loan Quality Initiative Resources (FAQs, summary with key dates, live web seminars, etc.)
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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.

Freddie Mac Update

- 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:

  • 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)

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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

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

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

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

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Sep
04
2009

MCA Monthly Update – September 2009

Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, each newsletter we send contains underwriting tips, processing tips, and compliance updates. We hope that you find the content informative and useful. As always, your feedback is appreciated. If you have any questions, simply reply to this email or call us at 877-226-3216.

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

UNDERWRITING & PROCESSING TIPS

Based on some common findings from quality control audits, we have compiled a list of three tips from the month of August.

1. We are seeing TIL Disclosures on FHA loan files with conventional parameters. Remember on the initial TIL disclosure, the FHA late fee is 4% (not 5%) and the loan is assumable with conditions.

2. The Servicing Disclosure dated January 16, 2009, is now mandatory–any older version is unacceptable. Make sure it is properly completed with appropriate boxes checked.

3. We continually have problems determining compliance with the advance disclosures for TIL and RESPA. Remember, if the application and all disclosures are not completed in a face-to-face interview with signatures, use a date stamp showing “documents mailed to applicant(s) on September 3, 2009.” The date stamp should be on both the original as mailed and the file copy. When the original is returned by the applicant, the processor should remove the file copies to eliminate duplicate copies in the file.

FHA UPDATE

• Electronic Annual Certification to Replace Title II Yearly Verification Report: Letter 09-25. “Effective September 1, 2009, all program participants seeking renewal as an FHA-approved mortgagee must complete the electronic Annual Certification as a component of the renewal process [which replaces the paper Yearly Verification Report].” (View the entire letter.)

• Eligibility of Projects for Mortgage Insurance where Construction has Started: Letter 09-26.. This letter “temporarily authorizes and establishes policy for Section 220, 221(d) and 231 mortgage insurance programs for multi-family proposals that were unable to complete construction due to a loss of funding..” (View the entire letter.)

To view all HUD Mortgagee Letters for the year, visit the official website http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.

For information about our FHA, VA, or HECM reference manuals with regulations and policies updated quarterly, visit our website.

FANNIE MAE UPDATE

• Retirement of HomeStyle® Construction-to-Permanent: Announcement 09-28.. “Fannie Mae will be retiring the HomeStyle Construction-to-Permanent mortgage product… Effective immediately, lender applications for HomeStyle Construction-to-Permanent approval will no longer be accepted. Closed HomeStyle Construction-to-Permanent loans must be purchased by Fannie Mae from existing approved lenders by November 30, 2009.” (View the entire announcement.)

• Reminder: From Announcement 09-19, dated June 8, 2009: “Form 4506-T Lender Tips.”. On or after September 1, 2009, “Fannie Mae’s updated policy regarding use of IRS Form 4506-T to validate borrower income documentation (Announcement 09-19) requires the lender to:

- have all borrowers (regardless of income source) complete and sign Form 4506-T at both application and closing

- add the execution of Form 4506-T with the IRS (directly or through an authorized vendor) to their written quality control (QC) plan (refer to the Selling Guide, Subpart D1, Lender QC Process, for details about lender QC requirements)” (View the entire announcement.) If you need help complying with this rule, give us a call.

To view all Fannie Mae Announcements and Letters for the year, visit https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp?referrer=frpromo.

FREDDIE MAC UPDATE

• Single-Family Seller/Servicer Guide: Bulletin 2009-22.. This bulletin makes several changes to selling requirements, including guidance regarding area median income changes, amending appraisal requirements for super conforming mortgages, and updates for several forms and exhibits. (View the entire bulletin.)

• Off-cycle Update to Exclusionary List: Industry Letter dated August 21, 2009.. The Freddie Mac Exclusionary List has been updated and may now be accessed via the Freddie Mac Selling System, MIDANET, MultiSuite, and Loan Prospector.

“As a reminder…Seller/Servicers [are required] to represent and warrant that they have not employed and will not employ any person listed on the Freddie Mac Exclusionary List as a Principal in connection with any Mortgage sold to Freddie Mac or in connection with any function related to such a sale.” (View the entire industry letter.)

To view Freddie Mac news, visit http://www.freddiemac.com/singlefamily/.

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