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Apr
08
2010

MCA Monthly Update – April 2010

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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.

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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:

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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.
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Aug
28
2009

Mortgage Compliance Advisors is now on Twitter and Facebook

The mortgage industry and regulations are constantly changing, but you can now receive helpful, real-time updates by following MCA on Twitter. In addition to our monthly newsletters with compliance news, these Twitter updates will help keep you informed right as the news comes out. Get mortgage compliance updates on Twitter or become a fan of Mortgage Compliance Advisors on Facebook.

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