MCA Monthly Compliance Update

July 2011

Here are a few recent announcements that we thought you should know about:

Changes in Adverse Action Disclosure Requirements

On July 6, 2011, the Federal Reserve Board and the Federal Trade Commission issued rules that will change the adverse action disclosure requirements under Equal Credit Opportunity Act and the Fair Credit Reporting Act. The rule will be effective 30 days from the day the rule is published in the Federal Register.

Announcement on FederalReserve.gov

HUD’s Final Rule Regarding SAFE Act

On June 29, 2011, HUD published the final rule regarding the SAFE Act. The rule details HUD’s oversight responsibility over minimum requirements for state level SAFE Act implementation.

Final rule on OFR.gov

GFE Webinar Q&A

We want to thank everyone who attended our webinar: “GFE Compliance” in June. As promised, we have posted the slides and answers to questions asked.

• Download the slides

We have included the first three questions below. *Please visit our website to read all 64 questions and answers.

Question 1 – Discounts are charged in the origination charge.  What happens if you have a borrower who agreed to a discount and then changes his mind?  If you cannot change the origination charge, how can you fix this?

• Answer – If you are including the discount points in your origination charge then you are not allowed to change your origination charge. Discount points can be shown on Box 3 of Block 2 of the GFE. If discounts are listed here, you can change them as the rate changes.

Question 2 – RESPA states that Box 1 and 2 in Important Dates do not change.  Is this true?  If not, when does it change?

• Answer – Question 1 in the Important Dates section will change when loan locking information changes. Question 2 in the Important Dates section will not change and will remain the same on all subsequent re-issues of the GFE.

Question 3 – If the seller is responsible for the transfer tax in our state, is it required to be disclosed on the GFE?

• Answer - Please refer to RESPA FAQ (page 34 quesiton 2) Q: How is the transfer tax disclosed in Block 8 of the GFE?

  A: The amount the borrower is likely to pay for transfer taxes is disclosed in Block 8 of the GFE. In some areas this amount, as a matter of practice, is governed by state or local laws. If state or local law is unclear or does not specifically attribute transfer tax to a seller or borrower, the amount to be disclosed on the GFE is governed by common practice or experience in the locality of the property.

  If the seller is paying a portion of the transfer tax that was not disclosed on the GFE, then that portion should be listed in the seller’s column in the 1200 series on the HUD-1. …Read the rest of the questions and answers on our website.

ML 2011-20: Termination of the HOPE for Homeowners (H4H) Program

- Provides instructions on how to process cases during phasing out of HOPE for Homeowners (H4H) Program.

Letter on HUD.gov

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ML 2011-21: Revised Instructions for Preparing American Land Title Association (ALTA)/American Congress on Surveying and Mapping (ACSM) Land Title Survey for HUD Multifamily Housing Programs

- Revises instructions for preparing ALTA/ACSM Land Title Survey for Multifamily programs.

Letter on HUD.gov

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ML 2011-22: Condominium Approval Process for Single Family Housing – Consolidation and Update of Approval Requirements

- Updates requirements and procedures of Condominium Approval Process.

Letter on HUD.gov

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ML 2011-23: Unemployment Special Forbearance: Temporary Program Changes and Clarifications

- Temporarily amends Type I special forbearance program for unemployed borrowers.

Letter on HUD.gov

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

• Simplify servicing process
• Help servicers contact delinquent borrowers more effectively
• Determine eligibility and offer foreclosure prevention alternatives

- Provides requirements to process foreclosures in Hawaii, due to recent Hawaii law changes

This information has been taken from various public resources and does not constitute legal advice.

MCA Monthly Compliance Update

March 2011

Did you know…?

Brokers are not required to issue an initial TIL or initial Servicing Disclosure Statement.

In accordance with RESPA and TILA, we will not issue a finding to brokers if these documents are not in the file. Check out the regulations:

• Servicing Disclosure Statement: Delivery. The lender, table funding mortgage broker, or dealer that anticipates a first lien dealer loan shall deliver the Servicing Disclosure Statement within 3 business days from receipt of the application by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, e-mail, or other electronic means. In the event the borrower is denied credit within the 3 business-day period, no servicing disclosure statement is required to be delivered …Read the rest on our website.

QC Plan Webinar Q&A

We want to thank everyone who attended our webinar: “Essentials of a Compliant QC Plan.” As promised, we have posted the slides and answers to the questions asked.

• Download the slides

We have included the first three questions below. *Please visit our website to read all 10 questions and answers.

Question 1 – How do you go about verifying assets?

• Answer – You would attempt to get the company to verify the information you have in your file is correct, via new VOD or phone conversation. You will want to assure that the asset documentation has not been forged or altered in any way.

Question 2 – We are a broker and most of our lenders will require a quarterly audit of our FHA loans.  You mentioned the detailed QC Plan reviews are trickling downhill.  Do you foresee lenders requiring their approved brokers to do more than the 10% of FHA loans being audited?  The FHA loans are all we’re auditing at this time.  Do we need to include all of our other loan types?

• Answer – I do not anticipate any lenders requiring more than the FHA required 10% selection. We are certainly seeing a bigger focus on Quality Control from all lenders and agencies.  You are only required to audit files if your investors or licensing agencies require it.  However, I would recommend you QC at least 10% of all your loans. This will give you a good baseline of the quality and risk level of all the loans you originate.

Question 3 – What is acceptable to meet occupancy certification requirements?

• Answer - There is not guidance on this topic. However, if audited, you will need to justify that a satisfactory attempt to verify occupancy was conducted. …Read the rest of the questions and answers on our website.

ML 2011-09: Home Equity Conversion Mortgage (HECM) Counseling: Waiver of HECM Counseling Fees and Activities Included in the Time Recorded Portion of the HECM Counseling Certificate

To view all Fannie Mae Announcements and Letters for the year, visit

MCA Monthly Compliance Update

February 2011

Federal Reserve does not plan to proceed with finalizing three pending mortgage rulemakings under Regulation Z

- On February 1, the Federal Reserve announced that “it does not expect to finalize three pending rulemakings under Regulation Z, which implements the Truth in Lending Act (TILA), prior to the transfer of authority for such rulemakings to the Consumer Financial Protection Bureau (CFPB)” …  Press release on FederalReserve.gov

Common Findings Webinar Q&A

We want to thank everyone who attended our webinar: “Common Compliance Findings of 2010 & How to Prevent Them.” As promised, we have posted the slides and answers to the questions asked.

• Download the slides
  

We have included the first three questions below. *Please visit our website to read all 40 questions and answers.

• Question 1 – What kind of documents are reviewed for proof of UW signature?
  • Answer – Loan Approval, Transmittal Summary, FHA Transmittal Summary, FHA Conditional Commitment, FHA DE Approval, VA Loan Analysis, etc

• Question 2 – What is the Tabular TIL?
  • Answer – TILA, specifically MDIA, states the following:  “The September 2010 interim rule requires creditors who extend consumer credit secured by real property or a dwelling to disclose summary information about interest rates and payment changes in a tabular format.” This will be enforced on all applications taken after January 30.  For more information, please visit FederalReserve.gov.

• Question 3 – What are the penalties or ramifications for not disclosing correctly or timely?
  • Answer – The penalty for violating RESPA is up to $10,000 and/or 1 year in prison for each violation. The penalty for violating TILA is $5,000 and/or 1 year in prison for each occurrence. This is in addition to any restitution paid to borrowers. …Read the rest of the questions and answers on our website.

ML 2011-03: Extension of Temporary Guidance for Condominium Policy

MCA Monthly Compliance Update

January 2011

Coming in 2011 to MCA and its Clients

To further help our current clients, we will be adding and improving various services in the upcoming year. You can look forward to these changes in the coming months.

• Roundtable discussions for clients
  • We will be hosting online Round Table Discussions with our clients to open dialogue and discussion about common compliance issues.
• Enhanced state compliance
  • We are enhancing our state compliance service to be more effective for our clients.
• Trend tracking reports on all findings reports
  • Trend tracking reports will be included in each new Findings Report issued. This will allow our clients to track company and underwriter performance over an extended period of time.
• Updated website
  • We will be updating our website to include a fresh look and to contain more resources for your compliance needs.

ML 2010-41: Construction Specifications Institute (CSI), MasterFormat Editions

- Clarifies that, effective February 1, 2011, servicers must diversify referrals among two or more BPO providers

- Announces new reimbursement rates

To view all Fannie Mae Announcements and Letters for the year, visit

MCA Monthly Update

October 2010

• Download the slides

Reminder: Multiple FHA changes went into effect on October 4, such as changes to

MIP, minimum credit score, and LTV eligibility requirements.

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SVC-2010-14: Home Affordable Modification Program: Introduction of Second Lien Modification Program

- Provides guidance on Second Lien Modification Program (2MP), which is designed to work in tandem with HAMP. Servicers must implement no later than January 1, 2011.  View the entire announcement