Mortgage Compliance Advisors

Please visit our website for new blog posts

mca1 — Mon, 03 May 2010 17:45:07 +0000

To keep all of our information in an easy-to-find, central location for you, we are now updating our blog only through our website. You can find all of our monthly newsletters, webinar Q&A, etc., on the blog on our website:

http://www.mortgagecomplianceadvisors.com/index.php/blog.

Filed under: About MCA, News

HUD Press Release: FHA Announces Policy Changes to Address Risk and Strengthen Finances

mca1 — Wed, 20 Jan 2010 20:00:49 +0000

Hud posted a press release this morning, announcing more policy changes. These changes are aimed at strengthening FHA’s capital reserves while working to reduce risk. The announced FHA policy changes include:

1. Increased mortgage insurance premium (MIP)
2. Updated FICO scores and down payments
3. Reduced allowable seller concessions from 6% to 3%
4. Increased enforcement on FHA lenders

Read all the details in HUD’s press release.

With all the recent regulation changes, it can be frustrating trying to keep up. We are happy to answer your questions. Visit www.MortgageComplianceAdvisors.com or call 877-226-3152.

Posted in About MCA Tagged: fha changes, fha guidelines, fha policy changes, hud changes, hud guidelines, hud regulations, mip, Mortgage Compliance

MCA Monthly Update – January 2010

mca1 — Fri, 08 Jan 2010 16:54:53 +0000

Find underwriting & processing tips and compliance updates in our January newsletter, including useful links and resources for the new RESPA Rule.

Posted in News Tagged: fannie guidelines, fha guidelines, fha update, freddie guidelines, hud update, Mortgage Compliance, new respa rule, respa

Get the latest regulation news from our new website

mca1 — Wed, 06 Jan 2010 20:35:59 +0000

Check out our newly redesigned website to find upcoming regulation deadlines, the latest compliance news, and other helpful resources.

Our new website is designed to be a helpful central location where you can find an abundance of frequently updated information for regulations from FHA, Fannie Mae, Freddie Mac, VA, the FTC, etc. Each deadline or resource is linked to the official regulation or form, so that you can read the exact wording.

Regulations continue to change, but Mortgage Compliance Advisors will help you comply.

Posted in About MCA, News Tagged: fannie mae, fannie mae guidelines, FHA, fha guidelines, freddie guidelines, freddie mac, Mortgage Compliance, new hud regulations

From FHA Commissioner

mca1 — Thu, 17 Dec 2009 20:37:35 +0000

We found something interesting from HUD today and thought it might be helpful to you lenders. HUD posted a letter today from FHA Commissioner David H. Stevens with questions and answers for various topics, such as new FHA policies, reasoning behind changes to the FHA approval process, the new RESPA rule taking effect on January 1, 2010, etc. Read the whole letter here.

Posted in News Tagged: FHA, HUD, HUD announcement, new respa rule

MCA Monthly Update – December 2009

mca1 — Wed, 16 Dec 2009 20:15:28 +0000

Read our December newsletter, with tips for underwriting and processing, as well as compliance updates for FHA, Fannie Mae, and Freddie Mac.

Posted in News Tagged: compliance newsletter, compliance update, fannie guidelines, fannie mae update, fha update, freddie guidelines, Mortgage Compliance, mortgage newsletter, Mortgage Quality Control

Quality Control Guidelines Summarized for Fannie Mae, Freddie Mac, and FHA

mca1 — Mon, 16 Nov 2009 21:58:27 +0000

Many investors and agencies, such as Fannie Mae, Freddie Mac, and FHA, require its lenders to have an active quality control plan in place. We wanted to help make the regulations more understandable for you, so we published an article summarizing basic quality control guidelines for Fannie Mae, Freddie Mac, and FHA. We hope you find the information useful — and we are always happy to answer your questions.

Read the full article summarizing QC guidelines for Fannie Mae, Freddi Mac, and FHA.

Posted in News Tagged: audit company, audit compliance, fannie guidelines, fannie mae quality control, fha guidelines, fha quality control, fha requirements, freddie guidelines, freddie mac quality control, Mortgage Compliance, Mortgage Quality Control

MCA Monthly Update – November 2009

mca1 — Fri, 06 Nov 2009 20:01:13 +0000

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 exceeds 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.)

*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.)

- – - – - – - – - – - – - – - – - – - – - – - – - – - – -

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.

Posted in News Tagged: fannie mae update, fha guidelines, fha regulations, fha update, freddie mac update, Mortgage Compliance, Mortgage Quality Control, processing tips, underwriting tips

Fun FTC Halloween Message

mca1 — Fri, 23 Oct 2009 19:12:37 +0000

The Federal Trade Commission published a fun Halloween-themed list of 12 tips to protect you, your kids, and your computer when online. For example, one of the tips is, “Garlic? Stake through the heart? OnGuardOnline.gov says only the latest security software protects you from online vampires.”

Read all 12 Halloween online security tips at:

www.ftc.gov/opa/2009/10/halloween.shtm

Posted in News Tagged: federal trade commission, ftc, ftc updates, identity theft, identity theft prevention, identity theft protection, online security tips

MCA MONTHLY UPDATE – OCTOBER 2009

mca1 — Tue, 06 Oct 2009 17:05:17 +0000

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.

- Mortgagees 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/.

Subscribe to the monthly newsletter.

Posted in News Tagged: compliance update, fannie guidelines, fha guidelines, fha regulations, fha update, freddie guidelines, HUD announcement, hud changes, hud regulations, hud update, Mortgage Compliance