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May
07
2010

MCA Monthly Update – May 2010

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MCA Monthly Update
May 2010


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

Lending Manuals

Stay Updated
Connect with us:
View our profile on LinkedIn Follow us on Twitter Find us on Facebook
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.

Join our free monthly webinar “Red Flags of Fraud.”
We have posted the slides from April’s webinar on our website. You can find slides from every webinar on our website under the News & Resources tab.

Red Flags of Fraud Webinar

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:
Register Now



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.

Underwriting & Processing Tips

*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.

We have included the first three questions below. *Please visit our website to read all the questions and answers.



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.

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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- Announces that FHA will accept electronic signatures on third party documents.  View the entire letter


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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.

Fannie Mae Update


- 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:

  • ARM qualifying rate
  • Interest-only eligibility requirements
  • Retirement of balloon mortgage loans as a standard product
  • Prior preforeclosure sale or deed-in-lieu of foreclosure
  • Multiple financed properties
  • Miscellaneous updates and clarifications
  • 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.

Freddie Mac Update


- 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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- Announces new Reimbursement System for submitting expense reimbursement requests.  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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To view Recent Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.


VA Update


- Extends rescission date of Circular 26-08-8 to October 1, 2011.  View the entire change


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- Extends rescission date of Circular 26-08-14 to January 1, 2012.  View the entire change



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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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May
04
2010

Answers to Questions from our Webinar “Managing Your Early Payment Default Risk.”

We want to thank everyone who attended our webinar “Managing Your Early Payment Default Risk.” As promised, below you will find answers to the questions asked during the webinar. You can also download the slides from the webinar.

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.

 

Question 4 – When reviewing Neighborhood Watch, how can we determine if a company is on the HUD Watch list vs. being terminated?

  • Answer – If the percentage reaches termination threshold, HUD will contact the appropriate parties. Neighborhood Watch will provide lender status as (A) active, (T) terminated or (M) merged.

 

Question 5 – How would a small sampling of loans affect the ratio, especially in HUD review for termination?

  • Answer – When HUD is analyzing the number of default loans compared to the region, or the nation, it does consider the total number of loans that were closed to see how that affects the default ratios. While there is no guarantee that a small number of loans with just a few defaults will make HUD overlook the ratios, it is one aspect of the overall analysis.

(Mortgage Compliance Advisors, LLC (MCA) makes reasonable efforts to ensure the accuracy of the answers. MCA makes no express or implied warranty of any kind respecting the information presented and assumes no responsibility for errors or omissions. This online chat is not legal advice and should not be used as a substitute for proper professional or legal advice.)

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Apr
08
2010

MCA Monthly Update – April 2010

MCA Logo

MCA Monthly Update
April 2010

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 “Managing Your Early Payment Default Risk.”
We want to thank those who attended last month’s webinar, especially our panelists. We had great interaction and discussion, and we look forward to the next webinar.
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We have posted the slides from March’s webinar on our website. You can find slides from every webinar on our website under the News & Resources tab.
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Because we receive many questions about Early Payment Defaults (EPDs), April’s webinar will focus on managing your EPD risk.

Managing Your Early Payment Default Risk

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Learn what constitutes an EPD, its effects, and how to limit your exposure.

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Join our webinar on Thursday, April 22 at 12:00 pm MST.
Reserve your webinar seat now at:
Register Now
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Today, mortgage lenders are working to reduce the risk of one of their loans going into early payment default (EPD). Join us for our next free monthly webinar to learn what constitutes an early payment default, how it can affect your business, and steps you can take within your organization to limit your exposure.
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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.
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For real time compliance news, you can now follow us on Twitter and Facebook.

www.MortgageComplianceAdvisors.com

Underwriting & Processing Tips

To add to the questions from February’s webinar, we received many excellent and challenging questions during our March webinar “Continuing to Make Sense of the New GFE: A More in Depth Look.” As promised, we have posted the slides from the webinar on our website, as well as answers to all 32 questions asked during the webinar.
We have included the first four questions below. *Please visit our website to read all 32 questions and answers.
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Question 1 - On the 2010 GFE – if a borrower gave an incorrect house number on a purchase, do we need to re-disclose as a changed circumstance?

  • Answer - Additional lines may only be added to Blocks 3, 6, 11 of the GFE.
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Question 2 - Can a separate line item be added for lock extension fee?

  • Answer - Additional lines may only be added to Blocks 3, 6, 11 of the GFE.
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Question 3 - Borrower is in the process of purchase loan and decided to purchase a different home – Is this a changed circumstance or new transaction and start with new application and RESPA?
  • Answer - A change in properties can be viewed to fit into the following definitions of allowable changed circumstance (1/28/10 RESPA FAQ’s pg. 15 #1):  A, 2) information particular to the borrower or transaction that was relied on in providing the GFE and that changes, or is found to be inaccurate after the GFE has been provided and 3) New information particular to the borrower or transaction that was not relied on in providing the GFE.  Change in legal address also constitutes a changed circumstance.  The originator is still bound by the dates of the initial GFE, however, we suggest contacting your lender to determine what is acceptable to them.

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Question 4 - How do you disclose the loan origination is a % and not a flat fee so if the loan increases our origination could increase?
  • Answer - We recommend contacting your lender or LOS provider for recommendations on this type of fee disclosure.   The lender/investor may have procedures used to determine a specific fee (such as an origination fee), has been disclosed as a percentage rather than a dollar amount, thus allowing the percentage to increase with the loan amount.

…Read the rest of the questions and answers on our website.

HUD/FHA Update
- Last September, FHA announced new regulations to strengthen risk management, and then solicited public comments. (These requirements deal with net worth requirements, streamlined lender approval, etc.) HUD published a press release on April 5 that discusses these changes and states that the “final rule [will] be published in the next few days.” View the entire press release
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- HUD has updated the RESPA FAQs (4/2/2010).  View the FAQs
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ML 10-07: Revisions to Model Home Equity Conversion Mortgage (HECM) Loan Agreement (Loan Agreement) and Fannie Mae Form 1009…

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- Revises model HECM Loan Agreement (and exhibits) and Fannie Mae form 1009. Effective 8/1/10. View the entire letter
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- Announces that effective 4/1/10, HUD REO appraisals will be valid for 120 days. Also announces conditions for ordering second REO appraisal when utilizing FHA financing. View the entire letter
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- Announces FHA servicing lenders’ Tier Ranking Scores for Round 38. View the entire letter
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- Revises Form HUD 92264-A, “Supplement to Project Analysis.” It changes line “c” of Criterion 4 from “Site not Attributable to Dwelling Use” to “Warranted Price of Land.” View the entire letter
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- Under certain conditions, servicers are eligible for Success Payments for FHA-HAMP mortgages. View the entire letter
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- Announces that those applying to become FHA lenders must submit application fees online. View the entire letter
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- Provides additional guidance on Appraisal Update Report. 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
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- Introduces “Alt Mod” – an alternative to HAMP modification for borrowers who were accepted into HAMP trial period but were not eligible for a HAMP permanent modification. View the entire letter
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Revises Selling Guide to update quality control standards, specifically:
  • Requirement for lenders to have written procedures for the approval of third-party originators and management procedures for third-party originations
  • Revisions to requirements related to the lender’s QC process and the lender’s QC plan
  • Revisions to requirements related to lenders that outsource their QC process
  • New requirement for a prefunding QC review process
  • Updates to the timing for lenders to select and conduct post-closing QC reviews and to loan sampling methodologies
  • Revisions to the post-closing QC mortgage review process
  • Addition of the Mortgage Loan File Document Submission Requirements exhibit
  • New requirement for a QC process audit review
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- Makes various updates to the selling guide, changing the following items:
  • Texas Section 50(a)(6) mortgages
  • DU Refi Plus™ and Refi Plus
  • Borrower-paid fees when purchasing a preforeclosure sale or short sale
  • Borrower Social Security number invalid format
  • Conversion of construction-to-permanent financing
  • Fannie Majorsmortgage pooling requirements
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- Makes several miscellaneous changes to servicing policies. View the entire announcement
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LL-2010-05: Selling Loans during Lapse of National Flood Insurance Program Authority

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- During lapse of National Flood Insurance Program, Fannie Mae will purchase loans in Special Flood Hazard Areas without flood insurance, under certain conditions. View the entire letter
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To view all Fannie Mae Announcements and Letters for the year, visit Fannie Mae’s website.
Freddie Mac Update
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- Revises multiple policies effective for mortgages with applications dated on or after 6/13/10, such as Freddie Mac no longer purchasing Initial Interest Mortgages, increased minimum Indicator Scores, etc.  View the entire bulletin
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- Announces Florida Condominium Effort to increase the availability of financing for Florida condos.  View the entire bulletin
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To view Recent Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.
VA Update

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- Extends rescission date of Circular 26-08-4 to 1/1/12. Stations can continue to issue VA Notices of Value or Master Certificates of Reasonable Value within the 6-month validity period.  View the entire change
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- Adds contact information for veterans to Circular 26-10-2.  View the entire change
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- Provides guidance on submission of title documents to VA’s property management contractor (for Florida properties).  View the entire circular
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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.

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
.

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Lending Manuals

Stay Updated
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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

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Get answers to your questions about the new GFE.

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

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*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

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- 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

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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

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- 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

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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

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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

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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

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

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

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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

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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

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Bulletin 2010-2: FHA-Approved Project Review for Condominiums
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- 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”
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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

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

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- 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

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

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