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Posts Tagged ‘fha update’

Sep
02
2010

MCA Monthly Compliance Update – September 2010

MCA Logo
Picture of autumn leaves
MCA Monthly Update
September 2010
In This Issue
Federal Reserve’s Final Rules
Webinar Q & A
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 Compliance Update. To help you stay compliant and up-to-date, our newsletters contain compliance tips and updates. We hope that you find the content informative and useful. As always, your feedback is appreciated.

Join our free monthly webinar “Revisiting the GFE: How to Resolve Common Findings.”


We have posted the slides from last month’s webinar on our website. You can find slides from every webinar on our website under the News & Resources tab.



Webinar

An in depth review of the  GFE and how to prevent common errors.



Join our webinar on Thursday, September 23 at 12:00 p.m. MDT.


Reserve your webinar seat now at:

Register Now





We continue to see GFE mistakes as one of the top findings in the quality control audits we perform. As a result of these continued findings, we felt further training on the GFE would be helpful. We will conduct an in-depth review of correctly completing the GFE. In addition, we will review the most common GFE mistakes we find and discuss how to proactively prevent these mistakes from occurring.



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.


Federal Reserve’s Final Rules


The Federal Reserve published final rules to protect mortgage borrowers from various unfair practices that can arise from originator compensation practices. The rules go into effect April 1, 2011. Some of these changes include:


- Prohibiting payments to the loan originator that are based on the loan’s interest rate or other terms.
- Prohibiting a mortgage broker or loan officer from receiving payments directly from a consumer while also receiving compensation from the creditor or another person…


You can read the Federal Reserve’s press release here, which includes attachments to the highlights and the actual final rule.

Webinar Questions and Answers


We want to thank everyone who attended our webinar: “Understanding How the LQI Affects You.” 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 – We are a lender who funds our own loans and sells them to investors after closing.  Should the Pre funding audit take place PRIOR to closing and us funding the loan at the closing table or should that take place after closing prior to shipping to an investor?

  • Answer – The pre-funding audit can really occur at any time in the process. However, pre-funding is the best time, as you will have all the signed final documents to review. If you were to review the file prior to closing, you would be missing critical documents to review. While there are no rules against pre-closing audits, we do not recommend it.


Question 2 - Are SSA-89 the SSN validation required by FNMA or only if there are inconsistencies and flags?


Question 3 – We utilize a Mortgage Lock in Agreement as our intent to proceed.  Does this seem sufficient to you, or do you recommend some other means of intent?

  • Answer – HUD/RESPA does not give specific guidance on how to comply with this rule. However, MCA recommends a separate specific disclosure to make sure there are no questions regarding your borrower’s intentions.
HUD/FHA Update


- Provides guidance regarding enhancements to FHA’s refinance program for underwater borrowers. View the entire letter


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- Eliminates unlimited CLTV ratio and returns FHA to its former CLTV limit for case numbers assigned on or after September 7, 2010. View the entire letter


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- Provides processing instructions and guidance to issue Mortgage Insurance for refinancing Cooperative Housing Projects under Section 207 pursuant to Section 223 (f) of the National Housing Act. View the entire letter


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- For Multifamily Mortgagees: Provides guidance on ML 08-19 regarding deferring submission of final architectural plans… View the entire letter


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- For Multifamily Mortgagees: Renews policy for eligibility of projects where construction has started. View the entire letter


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- Raises annual FHA premium and lowers upfront premium, except for HECMs. Effective for case numbers assigned on or after October 4, 2010. View the entire letter


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- Introduces new minimum credit scores and LTV ratio requirements for FHA loans. Effective for case numbers assigned on or after October 4, 2010. View the entire letter


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To view all HUD Mortgagee Letters for the year, visit HUD’s website.
Fannie Mae Update


- Updates the Selling Guide regarding the following topics:


  • Mortgage loans secured by properties subject to unexpired redemption periods
  • Delivery of repurchased loans
  • General warranty of project eligibility
  • Seasoned mortgage loan requirements
  • Co-op share loan documentation
  • Termination of inactive document custodians
  • Title Insurance ALTA Endorsement 21-06
  • Miscellaneous Selling Guide updates


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- Updates requirements for undisclosed liabilities and re-underwriting.

  • Also clarifies that lender is not required to obtain a new credit report to verify additional debt.


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- Identifies “Unique Hardships” that warrant use of relief provisions for borrowers impacted by unusual circumstances that create financial hardship.  View the entire announcement


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- Announces new requirements for lenders regarding borrowers who obtained Property Assessed Clean Energy (PACE) loans before July 6, 2010.  View the entire announcement


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- Revises foreclosure time frames for FL, MD, NV, and NY. Fannie Mae also reserves right to impose compensatory fees for breach of servicing obligations.  View the entire announcement


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- Announces that servicers must assign delinquent Florida mortgages to a FNMA attorney for mediation before initiating foreclosure proceedings.  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


- Makes changes to selling requirements, including providing guidance on 2010 median income changes, revising underwriting requirements regarding inquiries on borrower’s credit report, etc. View the entire bulletin


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- Provides guidance regarding Freddie Mac’s purchase of mortgages with a Property Assessed Clean Energy (PACE) obligation. View the entire bulletin


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


- Clarifies that breakout of charges should be attached to HUD-1, not on HUD-1 itself. 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
07
2010

MCA Monthly Update – May 2010

MCA Logo

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.

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.

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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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Dec
15
2009

MCA Monthly Update – December 2009

MCA Logo

MCA Monthly Update
December 2009 
 
In This Issue
Underwriting & Processing Tips
FHA Update
Fannie Mae Update
Freddie Mac Update
Quick Links
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. 
 
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
 
Based on some common findings from quality control audits, we have compiled a list of five tips from the month of November.
 
1. Remember that the effective date on the HVCC disclosure(conventional loans only) is 5/1/09.
 
2. Make sure to disclose fees correctly on the GFE. Also make sure that fees are itemized correctly to ensure accurate APR disclosure.
 
3. Remember that initial disclosures must be signed within three business days of initial application date, or an initial disclosure letter must be evident in the file showing that the disclosures were sent to the borrower within three business days.
 
4. The final signed underwriting and closing packages should be obtained from the lender and retained in the file.
 
5. As of 7/30/09, the initial and final TIL must contain the verbiage, “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”
 
FHA Update
 
PR 09-215: HUD Announces Restraint in RESPA Enforcement for First Four Months of New Rule
 

 - HUD will exercise restraint in RESPA enforcement for the first four months, for lenders who are showing a good faith effort to comply with the new RESPA requirements. The new RESPA requirements are due to take full effect January 1, 2010. View the entire press release 

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PR 09-216: FHA Proposes New Rules to Strengthen Risk Management
 
Two main parts of proposed rule:
 
 - Strengthen and Streamline Lender Approval. “While loan correspondents (mortgage brokers) will continue to be able to originate FHA-insured loans through their relationships with approved mortgagees, they will no longer receive independent approval for origination eligibility.”
 
- Strengthen the Capacity of FHA-Approved Mortgagees. Mortgagees must “maintain a minimum of $1 million in net worth within the first year and at least $2.5 million of net worth within three years of the effective date of the rule.” View the entire press release
 
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PR 09-218: HUD Announces New RESPA Outreach Campaign
 
- Announces series of live online presentations to explore RESPA’s new requirements. View the entire press release
  
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 ML 09-46b: Condominium Approval Process for Single Family Housing

 - Replaces ML 09-19, which implements new approval process for condominium projects. Effective for case numbers assigned on or after December 7, 2009. View the entire letter
 

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ML 09-46a: Temporary Guidance for Condominium Policy
 
- Waives five provisions of ML 09-46b and provides temporary guidance for condominium project eligibility, for case numbers assigned on or after December 7, 2009 through December 31, 2010. View the entire letter
 
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ML 09-47: Home Equity Conversion Mortgage (HECM) Counseling Standardization and Roster Final Rule 
 
- Provides guidance to counselors and lenders regarding the HECM Counselor Roster final regulation, which establishes:
 
  • Testing standards to qualify individuals as HECM counselors eligible to provide HECM counseling, and
  • A roster of eligible HECM counselors View the entire letter 

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ML 09-48: Second Appraisal Reporting Requirements

- Eliminates need for a second appraisal on high balance loans in declining markets. Effective immediately. View the entire letter
 
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ML 09-49: Home Equity Conversion Mortgage Program: Subordinate Liens 
 

- Addresses FHA requirements for secured subordinate financing under the HECM Program. View the entire letter  

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ML 09-50: 2010 FHA Maximum Loan Limits
 
- Discusses maximum loan limits for 2010. Conforming limit and FHA floor remain the same as in 2009. View the entire letter
  
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ML 09-51: Adoption of the Appraisal Update and/or Completion Report (Fannie Mae Form 1004D/Freddie Mac Form 442/March 2005)

- FHA adopts Appraisal Update and/or Completion Report. Effective for case number assignments on/after 1/1/10. 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 
 
Ann. 09-34: Confirmation of Conventional Loan Limits for 2010
  
- General loan limits for 2010 remain unchanged from 2009. View the entire announcement
  
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Notice, dated 11/20/09: Form Updates: Revisions to Forms 1013, 1014, and 1072

- Revises Forms 1013, 1014, and 1072. Effective date to use updated forms is 1/1/10. View the entire notice
 
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Ann. 09-35: Updates to the Home Affordable Modification Program – MBS Mortgage Loans

- Announces updates to policies for reclassification and removal of MBS mortgage loans from MBS pools. 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 2009-27: Loan Limits, Origination Data and Credit 
 
 - Announces 2010 loan limits. Temporary loan limits in designated high-cost areas and base conforming loan limits remain at 2009 levels.  View the entire bulletin
 
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To view 2009 Freddie Mac Bulletins/Industry Letters, visit Freddie Mac’s website.
Get reference manuals for FHA, VA, and HECM.

 
Feel free to call us with any questions, at 877-226-3216. 
No Comments »
Nov
04
2009

MCA Monthly Update – November 2009

Mortgage Compliance Advisors helps you stay compliant.



MCA Monthly Update
November 2009
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.

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.

Update: The FTC recently extended the enforcement date for the Red Flags Rule to June 1, 2010.* Implement your Red Flag Policy to comply.

*(See http://www.ftc.gov/opa/2009/10/redflags.shtm.)

Underwriting & Processing Tips

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

1. If the final TIL APR varies from the intial TIL by more than .125%, it must be redisclosed (as of July 30, 2009).

2. One of our most common problems is the duplication of documents throughout the file, which can make the file much larger than it should be. Please make sure to review your files to prevent excessive duplication.

3. The underwriting approval is required in your package. Make sure to retain and include a copy of the underwriting decision in your file.

4. For quality control audits, be sure to include only final AUS findings in the file.

FHA Update


ML 09-38: Update on Eligibility Requirements for Nonprofit Instrumentalities (115 Waiver).

- “Expand[s] eligibility requirements for nonprofit instrumentalities of government to include entities the income of which is excluded from Federal taxation under § 115 of the Internal Revenue Code of 1986 (IRC).



- [They can be approved] for placement on the FHA Nonprofit Organization Roster (Roster) and …participate in single-family housing programs as providers of secondary financing.” (View the entire letter.)

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ML 09-39: Updated Claim Filing and Delinquency/Default Reporting Requirements For FHA’s Making Home Affordable Modification Program (FHA-HAMP).

- “Updated claim filing and delinquency/default reporting requirements for the FHA Home Affordable Modification Program (FHA-HAMP).



- Mortgagees must begin reporting the updated status codes beginning with the January 2010 reporting cycle.”

(View the entire letter.)

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ML 09-40: Policy and Procedures on Multifamily Mortgage Insurance Applications Involving Master Lease Structuring to facilitate the use of Tax Credits.



- “Represents the Department’s final policy and procedures for Master Lease applications…

- A Master Lease, also known as a Sandwich Lease or Credit Pass Through, is used by developers of multifamily projects to maximize the realization of tax credit equity and distribute benefits among various investors.” (View the entire letter.)

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ML 09-41: Appraisal performance standards and sanctions.



- “Reminds mortgagees and appraisers of [FHA] appraisal performance standards… and FHA enforcement standards and sanctions that can be imposed by the Department upon appraisers who do not comply.” (View the entire letter.)

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ML 09-42: Sub-Servicing of FHA-insured Mortgages.

- “To meet the increased need for loss mitigation, the Department has no objection to mortgagees entering into subservicing agreements with other FHA-approved servicers to perform loss mitigation functions.” (View the entire letter.)

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ML 09-43: HOPE for Homeowners Program – Comprehensive Guidance.

“Key changes to the HOPE for Homeowners (H4H) Program:



- Borrowers are ineligible if their net worth exceeds one million dollars,

- Borrowers must not have defaulted on any substantial debt in the last 5 years,

- The age of appraisal now follows standard FHA guidance,

- Reduced mortgage insurance premiums,

- Revised loan-to-value and debt-to-income ratios,

- Maximum loan-to-value excludes the Upfront Mortgage Insurance Premium,

- Eliminated requirement for obtaining most recent two year tax returns,

- Eliminated special lender and underwriter certification,

- Exit Premium replaces Shared Equity,

- Shared Appreciation feature eliminated,

- New note and mortgage replaces previous shared equity and shared appreciation notes and mortgages, and

- Lenders must submit 5 test cases for pre-closing review by FHA.” (View the entire letter.)

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ML 09-44: Home Equity Conversion Mortgage (HECM) Program — Clarification of Debenture Interest Calculation for HECM Claim Type 21; Claim Filing Instructions for HECM Claim Types 21 and 24.


“Items addressed in this Mortgagee Letter:

-

Clarification of the term “due date” as it relates to HECM Claim Type 21.

- Identification of the additional information that must be provided for Claim Type 21, to ensure the proper calculation of debenture interest. (View the entire letter.)

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ML 09-45: Introduction of HUD’s Web-Based Training Application: Electronic Class (EClass) on Loss Mitigation and Servicing System.

- Announces that HUD’s on-line, web-based training application, EClass, is now available. It will provide additional training on FHA’s Loss Mitigation Programs, including FHA-HAMP, and other industry questions.

- The web-based application may be accessed at the following address: https://eclass.hud-nsctraining.com. (View the entire letter.)


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To view all HUD Mortgagee Letters for the year, visit the official 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


Update, dated 10/6/09: Mortgage Loan Data Requirements

- “Effective date for the requirement to deliver the loan origination identifiers and appraiser data elements has been extended to July 1, 2010.

- For mortgage loan applications taken on or after July 1, 2010, Fannie Mae will require the use of the updated Form 1003.” (View the entire notice.)



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Announcement 09-30: Retirement of the HomeSaver Forbearance™ and Conversion to the Payment Reduction Plan™.

- “Payment Reduction Plan™ (PRP) will replace the HomeSaver Forbearance™ (HSF) program.

- The purpose of a PRP is to provide a borrower with temporary payment relief while the servicer and the borrower work together to find the appropriate permanent foreclosure prevention solution.” (View the entire announcement.)

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Announcement 09-31: Updates and Clarifications to the Home Affordable Modification Program.



Contains updates and clarifications to the following topics:

- Updates to Standard HAMP Documents

- Changes to Eligibility Determination Based on Net Present Value Evaluation

- Principal Forbearance Thresholds

- Verifying Borrower Income and Occupancy Status

- Modification Process

- Reporting

- Clarification of Reimbursement of Administrative Costs (View the entire announcement.)


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Announcement 09-32: Selling Guide Update – October 2009.


- Announces the release of the first update to the April 2009 Selling Guide, which will replace the April 2009 Selling Guide. (View the entire announcement.)

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Selling Notice, dated 11/4/09: Electronic Appraisal Delivery Update.

- Announces deadline change from March 1, 2010 to July 1, 2010 for requirement to submit electronic appraisal reports in an acceptable XML format. (View the entire notice.)





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Announcement 09-33: New Deed-for-Lease Program.

- Introduces Deed-for-Lease Program (D4L), designed to minimize bad effects caused by vandalism and theft to vacant homes.

- “D4L allows qualifying borrowers of properties transferred through deed-in-lieu of foreclosure (DIL) to remain in their home and community by executing a lease of up to 12 months in conjunction with a DIL.” (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 2009-24: Credit and Property Eligibility.

- Revises certain credit and property eligibility requirements, including changes to requirements for Freddie Mac-owned streamlined refinance mortgages and Freddie Mac Relief Refinance Mortgages.

- Also announces that certain higher-risk mortgages will no longer be eligible for purchase. (View the entire bulletin.)

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Bulletin 2009-25: Multiple Subjects.

- Makes multiple changes to selling and servicing requirements, such as document custodial operations, uniform instruments, attorney fees and title expenses, etc. (View the entire bulletin.)

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Bulletin 2009-26: Home Affordable Modification Program.

- Reminds of changes to HAMP made in Supplemental Directive 09-07.

- Revises partial principal forbearance and NPV requirements

- Reminds of new HAMP tool available soon – Imminent Default Indicator (IDI)

- Reminds that Data Collector is being retired and replaced with the new HAMP Reporting Tool (View the entire bulletin.)

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To view Freddie Mac news, visit Freddie Mac’s website.

Get reference manuals for FHA, VA, and HECM.
No Comments »
Oct
05
2009

MCA Monthly Update – October 2009

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. For this month’s newsletter, our focus is on compliance updates because HUD has came out with several announcements since our last newsletter. 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.

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

Reminder: 3rd Quarter ended September 30. Remember to get your quality control file audits done for FHA, Fannie Mae, Freddie Mac, etc.

EFFECTS OF HUD’S ANNOUNCEMENT FROM SEPTEMBER 18, 2009

HUD announced several changes on September 18. These changes affect FHA lenders and loans, including the FHA approval process for brokers. Visit our blog to read how HUD’s announcement affects sponsors and brokers.

FHA UPDATE: NEW MORTGAGEE LETTERS

• Multifamily Housing Accelerated Processing Guide: Chapter 9, Environmental Review: Letter 09-27

- Announces the release of a revised and updated Multifamily Housing Accelerated Processing Guide, Chapter 9, with new environmental requirements. (View the entire letter.)

• Appraiser Independence: Letter 09-28

Announces New Requirements, effective January 1, 2010:

- Prohibition of mortgage brokers and commission based lender staff from the appraisal process
- Appraiser selection in FHA Connection must be the appraiser who actually performs the appraisal
- Clarifies and expands their policy regarding Appraisal and Appraisal Management Companies’ (AMC) third party origination fees

Re-affirms Existing Requirements:

- Prevention of Improper Influences on Appraisers
- Appraiser Independence Safeguards
- Mortgagees are reminded that they are they are responsible (along with the appraiser) for the integrity, quality, and thoroughness of the appraisal. (View the entire letter.)

• Appraiser Portability: Letter 09-29

- Addresses the portability of appraisals when a borrower switches the lender during loan processing– effective for all case numbers assigned on or after January 1, 2010.

- “Appraiser shopping” is prohibited. In this case, the first lender must, at the borrower’s request, transfer the case to the second lender. FHA does not require that the appraisal be changed to reflect the new lender, but FHA Connection must reflect the correct lender. (View the entire letter.)

• Appraiser Validity Periods: Letter 09-30

- Announces a change to the validity period for appraisals–reduced from 12 months for proposed construction and 6 months for existing construction to 4 months (120 days) for all appraisals. Effective for all case numbers assigned on or after January 1, 2010. (View the entire letter.)

• Strengthening Counterparty Risk Management: Letter 09-31

Provides notice of several FHA program changes as a result of the enactment of the “Helping Families Save Their Homes Act of 2009” (the HFSH Act):

- It provides limitations on those eligible for the program. Ineligible participants are identified as currently suspended, debarred, under a LDP, under indictment, subject to unresolved findings in a HUD or other government audit, investigation, or review, etc. It is important that you read these specifications in depth.

- Change of lender’s fiscal year end date must be reported to HUD 90 days before change.

- Effective January 1, 2010, all supervised mortgagees (banks and credit unions) must now submit an annual audited financial statement within 90 days of their fiscal year end.

- Mortgagees must use their name as registered with HUD in all advertising and promotional materials related to FHA. Lenders must retain a copy of all advertising for two years.

- Approved lenders are required to notify FHA if individual employees are subject to any sanction or any other administrative action, or if there is a revocation of a State-issued mortgage origination license.

- The HFSH Act expands FHA’s ability to seek civil money penalties against any owners, officers, or directors, for violations of program requirements. (View the entire letter.)

• Revised Streamline Refinance Transactions: Letter 09-32

Announces revised procedures and re-affirms existing procedures regarding Streamline Refinance transactions, to be effective in 60 days or November 18, 2009.

Key Revisions:

- Seasoning set at 6 months

- Minimum payment history standards established

- Net tangible benefit for the borrower at a 5% lower payment with additional provisions pertaining to changing from fixed rate to ARM, and ARM to fixed rate. Investors and second home borrowers are prohibited from refinancing to an ARM.

- Transactions that include a reduction in mortgage term must now be processed and closed as a rate/term refinance.

- If subordinate financing is in place, the maximum combined loan-to-value is set at 125% with or without an appraisal. If there is no new appraisal, the CLTV is based on the original appraisal.

- New maximum mortgage amount for streamline refinances without an appraisal cannot exceed the outstanding principal balance, minus any applicable UFMIP plus the new UFMIP that will be charged on the refinance. A streamline with an appraisal is the lower of outstanding principal balance or 97.75% of the appraised value plus the new UFMIP. Discount points may not be included in the new mortgage.

- If borrower agrees to pay the discount in cash, the lender must verify the availability of funds.

- Certification that borrower is employed and has income.

- If credit score(s) is/are available, the lender must enter the credit score(s) into FHA Connection.

- Lenders should not use TOTAL on streamline refinance transactions. If a lender uses TOTAL, that loan must be underwritten and closed as a rate and term (no cash-out) refinance transaction.

- Mortga
gees may no longer use an abbreviated version of the Uniform Residential Loan Application (URLA). The completed application must be dated and signed prior to underwriting of the loan. (View the entire letter.)

- It is our opinion at MCA that FHA is moving toward changing the streamlined rate reduction refinances as we have known them to correspond with other refinance transactions.

• Annual Base City High Cost Percentage Revisions effective January 1, 2009: Letter 09-33

- Announces the annual base city high cost percentage revisions for multi-family mortgages. (View the entire letter.)

• Home Equity Conversion Mortgage (HECM) – Principal Limit Factors: Letter 09-34

- Announces a change in calculating the maximum HECM loans, effective October 1, 2009. The new factors to be used result in a 10% reduced maximum loan. (View the entire letter.)

• Loan Modification: Letter 09-35

- Mandates that the interest rate on loan modifications be reduced to not more than 50 basis points above the FHA and FHLMC current weekly primary rounded to the nearest .125%, as of date of modification. The modified loan amount is then amortized over a 30-year period. (View the entire letter.)

• Revised Eligibility: Letter 09-36

- Reminds appraisers and lenders that as of October 1, 2009, appraisers listed on FHA’s Appraisal Roster who are not state certified will be removed from the roster. (View the entire letter.)

• Flood Zone Requirements and Responsibilities of FHA Mortgagees and Appraisers: Letter 09-37

- Reminds mortgagees and FHA Roster appraisers of their “responsibility to determine if a property is located within a Special Flood Hazard Area…[and reiterates FHA’s] eligibility requirements for properties located in such zones.” (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.

*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

• Notice: Refi Plus – Update: MBA Delivery Date for Loans with LTVs above 105 Percent, dated 9/4/09

- “The effective date for MBS delivery of Refi Plus loans with LTVs above 105 percent under the CQ prefix…[is] October 1, 2009.” (View the entire announcement.)

• Energy Loan Tax Assessment Programs: Lender Letter 07-2009

- “This Lender Letter is intended to alert lenders to issues concerning ELTAPs [Energy Loan Tax Assessment Programs] in the underwriting and servicing of Fannie Mae mortgages. …Typically, homeowners repay ELTAP loans via their property tax bill, and in the event of non-payment, the ELTAPs have priority over Fannie Mae’s mortgage lien.” (View the entire announcement.)

• Updates to Minimum Credit Scores, Mortgage Insurance, Pricing for Certain Desktop Underwriter Loans, Biweekly Loans, and Special Feature Codes: Announcement 09-29

“Following is a brief summary of the changes:

- Changes to minimum credit score requirements;
- A number of changes to mortgage insurance coverage requirements, including a new minimum level of coverage and corresponding loan-level price adjustment (LLPA), retirement of Lower-Cost and Reduced MI options, and changes to financed mortgage insurance;
- Changes to pricing for Flexible mortgages and improved pricing for Expanded Approval® (EA) recommendations, and changes to EA special feature codes (SFC);
- Retirement of biweekly mortgage loans; and
- Changes to SFC requirements for MyCommunityMortgage® (MCM®) and other transactions.” (View the entire announcement.)

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

FREDDIE MAC UPDATE

• Home Affordable Modification Program: Bulletin 2009-23

“Makes the following changes to the Home Affordable Modification Program (HAMP) requirements:

- Evaluate and process Mortgages for HAMP in Workout Prospector [effective November 1, 2009]
- Use the property value provided in Workout Prospector
- Collection and reporting of Government Monitoring Data
- Incorporating requirements for first-lien Servicers
- Revising our program activity reporting requirements
- Recordation of the Modification Agreement
- Capitalization and reimbursement of property inspection fees
- Permits Servicers to utilize temporary waivers” (View the entire bulletin.)

• September 25 Bulletin 2009-18 Single-Family Advisory E-mail

- Freddie Mac announced a one month extension for effective dates for underwriting requirements published in the July 10 Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-18 (which “revised…underwriting requirements with respect to borrower income, capacity, assets, and required documentation.”)

- The changes “will now be effective for all mortgages with application dates on or after November 1, 2009, and Freddie Mac settlement dates on or after February 1, 2010.” (View the entire announcement.)

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

Click to subscribe to the monthly newsletter.

No Comments »
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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Aug
07
2009

MCA Monthly Update – August 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. Since there have been multiple recent regulation changes, this month’s newsletter focuses on compliance updates. Beginning with the next newsletter, in addition to the FHA update, we will be adding update sections for Fannie Mae and Freddie Mac. 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.

REGULATION Z REVISIONS IN EFFECT JULY 30, 2009

On July 30, the new Regulation Z changes for the Truth in Lending Act (TIL) became effective. As part of Regulation Z, the Mortgage Disclosure Improvement Act (MDIA) revised TIL requirements surrounding early and final disclosures to homebuyers, as well as discussing when fees are allowed to be collected. (Read the Federal Reserve Board’s press release at www.federalreserve.gov/newsevents/press/bcreg/20090508a.htm.)

A Few Highlights:
– Creditors must “give good faith estimates of mortgage loan costs (‘early disclosures’) within three business days after receiving a consumer’s application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer’s credit history.
– Creditors [must] wait seven business days after they provide the early disclosures before closing the loan
– Creditors [must] provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance [.125%].”

UPDATE: DEADLINE FOR RED FLAGS RULE EXTENDED TO NOVEMBER 1

Last week the Federal Trade Commission announced a three month extension of the Red Flags Rule deadline. The FTC moved the deadline from August 1 to November 1, to give creditors and financial institutions more time to implement a written Identity Theft Prevention Program, also known as a Red Flag Policy. (For more information on this FTC requirement, see www.ftc.gov/opa/2009/07/redflag.shtm or contact us with questions.)

FHA UPDATE

HUD frequently publishes updates, known as Mortgagee Letters, containing new policies and other information for lenders. Since our last newsletter, HUD has published four additional letters. Below is a brief summary of all four:

• Home Equity Conversion Mortgage Refinancing of Existing Loans: Letter 09-21. This letter discusses a technical correction for the HECM program, and reiterates guidelines for refinancing HECM mortgages.

“FHA will insure all loans that were originated for the purpose of refinancing an assigned loan that is not in a due and payable status for reasons that cannot be corrected, such as death of the last mortgagor or conveyance of title by all mortgagors, but closed on or after October 6, 2008, the date of the Final Rule.” (Click here to view the entire letter.)

• Revised Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f) Apartments: Letter 09-22. This letter “rescinds and replaces ML 2009-06… [and] sets forth the Department’s revised policy to grant temporary authority to Multifamily Hub Directors to waive the Three-Year Rule for Section 223(f) applications, for the purpose of providing liquidity to recently constructed or substantially rehabilitated, self-sustaining properties that are unable to secure permanent long term financing due to the freeze in the capital markets…” (Click here to view the entire letter.)

• Making Home Affordable Program: FHA’s Home Affordable Modification Loss Mitigation Option: Letter 09-23. This letter “announces a new FHA Loss Mitigation option, the FHA-Home Affordable Modification Program (FHA-HAMP). FHA-HAMP will provide homeowners in default a greater opportunity to reduce their mortgage payments to a sustainable level. This Mortgagee Letter is effective August 15, 2009… FHA-HAMP can be utilized only if the mortgagor(s) does not qualify for current loss mitigation home retention options…”

A Few Highlights/Guidelines:
– Partial claim up to 30 percent of the unpaid principal balance as of the date of default combined with a loan modification
– Mortgagor must successfully complete a three month trial payment plan, making each scheduled payment on time.
– Servicer must obtain an executed Hardship Affidavit (available at https://www.hmpadmin.com/portal/docs/mod_docs/hamphardshipaffidavit.pdf) from every mortgagor and co-mortgagor seeking an FHA-HAMP
– Front end debt to income ratio must be as close as possible, but not less than, 31 percent
– Back end debt to income ratio must not exceed 55 percent
– Mortgagee may receive an incentive fee of up to $1,250 (Click here to view the entire letter.)

• Housing Tax Credit Coordination Act of 2008: Letter 09-24. This letter “describes the additional authority granted under HERA and the Department’s implementation of Sections 2832 and 2834 of the Act.

– Section 2832 of HERA requires the Secretary to implement administrative and procedural changes to expedite the approval of multifamily housing projects utilizing FHA mortgage insurance programs with either Low-Income Housing Tax Credits or tax-exempt housing bonds…
– Section 2834 of HERA provides three substantive changes to the Department’s processing of certain FHA mortgage insurance applications.” (Click here to view the entire letter and the details of all changes.)

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

FANNIE MAE UPDATE (Coming next newsletter)

FREDDIE MAC UPDATE (Coming next newsletter)

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Jul
02
2009

MCA Monthly Update – July 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.

For next month’s newsletter, we would like to address the biggest issues you are facing in the mortgage industry. Please let us know about any industry issues that you find confusing, or if you just want some more information. We’ll try to answer all your questions in the next newsletter.

REMINDER: APPROACHING DEADLINE OF RED FLAGS RULE

As a reminder, the Federal Trade Commission’s Red Flags Rule will go into effect in less than a month, on August 1. The FTC will require that all financial institutions and creditors, including mortgage brokers and mortgage lenders, have in place a written identity theft prevention program, also known as a Red Flag Policy. (For more information, visit www.FTC.gov or contact us with your questions.)

UNDERWRITING & PROCESSING TIPS

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

1. Make sure that the application and initial disclosures have correct dates. If they are mailed, be sure to date stamp when they were sent in the mail, to stay in compliance with the three day rule.

2. For Prepaid Finance Charges (PFC’s), make sure that they are disclosed accurately on the initial TIL, and clearly marked on the initial Good Faith.

3. Last month we mentioned that everyone should have a closing package from the closing agent for their file. FHA requires lenders to get and maintain copies of at least the HUD-1’s, Note, Deed of Trust, and the final Truth in Lending.

FHA UPDATE

HUD frequently publishes updates, known as Mortgagee Letters, containing new policies and other information for lenders. Since our last newsletter, HUD has published three additional letters. Below is a brief summary of all three:

• Energy Efficient Mortgages – Increase in the Dollar Amount of Energy Efficient Improvements: Letter 09-18. “In addition to the base FHA maximum mortgage amount limit, which is calculated on the value of the home, the mortgage loan amount for an Energy Efficient Mortgage (EEM) can be increased by the cost of effective energy improvements…

The maximum amount of the portion of the EEM for energy improvements is the lesser of 5% of:
o the value of the property, or
o 115% of the median area price of a single family dwelling, or
o 150% of the conforming Freddie Mac limit.” (Click here to view the entire letter.)

• Condominium Approval Process – Single Family Housing: Letter 09-19. FHA “is implementing a new approval process for Condominium Projects to insure mortgages on individual units… FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations.

…[this letter] provide[s] guidelines and instructions on options available to lenders to receive mortgage insurance on condominium units which are located in a project.” (Click here to view the entire letter.)

• Processing Pre-Application Firm Invitation and Firm Commitment Extension Requests: Letter 09-20. This letter discusses FHA’s “policy to grant temporary authority to Multifamily Hub/Program Center Directors to grant one extension, for up to 90-days, of the pre-application firm invitation letter and one 120-day extension of an issued Firm Commitment. The authority granted under this Mortgagee Letter expires December 31, 2009.” (Click here to view the entire letter.)

To view all HUD Mortgagee Letters for the year, click here.

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Apr
27
2009

MCA Monthly Update – April 2009

Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, each newsletter we send in the future will contain underwriting tips, processing tips, a quality control update, and an FHA update. For this month, we thought it would be helpful to summarize a few of HUD’s official mortgagee letters for the year. We hope that you find the content informative and useful. As always, your feedback is appreciated.

 
 FHA UPDATE
 
 HUD frequently publishes updates, known as Mortgagee Letters, containing new policies and other information for lenders. For the year 2009, HUD has already posted 14 letters. Below is a very brief summary of five of them, along with our interpretation: 
 

Annual Renewal of FHA Approval: Letter 09-01

  • “In order to maintain its status as an FHA-approved mortgagee, a mortgagee is required, among other things, to timely file annual audited financial statements that meet the requirements of the Secretary, sign and submit a yearly verification report and pay an annual fee for its main and registered branch offices.
  • …If a mortgagee fail[s] to meet one or more of the…annual renewal requirements, the Department [sends] a Notice of Violation… The Mortgagee Review Board may, among other things, impose penalties and/or withdraw the mortgagee’s FHA-approval or permit the Department to enter into a settlement agreement… If a mortgagee’s FHA-approval is terminated, that mortgagee may not reapply for FHA approval until 12 months after the effective date of their termination.”
  •  MCA Interpretation – FHA is going to be tougher on late renewals by brokers and lenders, and may not allow a late renewal at all.

 

Loan Limit Increases for FHA: Letter 09-07

  • Under both HERA and ESA, and thus under ARRA as well, the FHA national floor limits remain set at the 65 percent amount (the “floor,”) by property size.
  • MCA Interpretation – FHA has changed the loan limit floor and ceiling. To check for the loan limit in each area, go to https://entp.hud.gov/idapp/html/hicostlook.cfm

  

Limits on Cash-Out Refinances: Letter 09-08

  • “Effective for case number assignments on or after April 1, 2009, the loan-to-value (LTV) of any cash-out refinance to be insured by FHA may not exceed 85 percent of the appraiser’s estimate of value.”

 

Adoption of Market Conditions Addendum (Fannie Mae Form 1004MC/Freddie Mac Form 71) and Appraisal Reporting Requirements for Properties located in Declining Markets: Letter 9-09

  • “In order to ensure greater transparency and accuracy of appraisals performed for FHA-insured financing, FHA will adopt the Market Conditions Addendum (Fannie Mae Form 1004MC/ Freddie Mac Form 71, released November 2008).
  • MCA Interpretation – Appraisals performed after April 1, 2009 must include the market condition addendum. FHA lenders are responsible for poor or fraudulent appraisals.

 

Mortgagee Monitoring: Letter 09-12

  • “While not an exhaustive list, it is imperative that you ensure your organization:
  • implements and maintains a comprehensive quality control plan,
  • reviews all loans with early payment defaults;
  • does not engage in false or misrepresentative advertising;
  • fully documents the stability and amount of borrower(s) income; and,
  • does not charge excessive and unallowable fees to the borrower.”

 

 To view the complete letters, visit www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm. The remaining letters address multiple topics, including free education and outreach flyers to distribute to FHA borrowers, Tier 1 rankings with increased loss mitigation incentives, guidance for the HECM for Purchase program, etc.

 For more information on FHA compliance, visit www.MortgageComplianceAdvisors.com.

 

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