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October - December, 2006
Compliance update for the week ending December 31, 2006
The Federal Reserve Board is publishing a notice in the Federal Register informing creditors that they may begin immediately using the revised CHARM booklet, lender must use the new booklets by October 1, 2007 therefore existing stock may be used until October 1, 2007, to comply with Regulation requirement that creditors must provide a copy of the CHARM booklet, or a suitable substitute, to consumers with every application for an adjustable rate mortgage loan. This revision basically covers more information on non-traditional mortgage types such as Interest Only and option payment loans.
Compliance update for the week ending December 8, 2006
HUD - A new OMB date on the HUD-I Settlement Statement was posted. The OMB number is not required on the settlement statement so no changes are required if you have no date. If, however, you are using the OMB date then you should update your form and it is available on HUDCLIPS.
Compliance update for the week ending December 1, 2006
FHA's Lender Insurance Program - FHA's Lender Insurance Program enables high-performing lenders to endorse FHA mortgage loans for insurance without a pre-endorsement review by HUD. For more information go to: http://www.hud.gov/offices/hsg/sfh/lender/lendins.cfm.
Fannie Mae discontinues LIBOR Index Values as of its Quarter 3 of 2007.
Fannie Mae publishes five of its own London Interbank Offered Rate (LIBOR) index values, not to be confused with the LIBOR index published in the Wall Street Journal. The Fannie Mae LIBOR index values will be discontinued and the last will be posted by close of business on June 28, 2007. Fannie has written in its Announcement 06-21, issued November 21, 2006 alternatives available in lieu of the discontinued indices.
Compliance update for the week ending November 24, 2006
Last week two important court cases came to the forefront. The first was in Ohio and the second in Michigan and both have to do with preemption of local jurisidication regarding mortgage lending.
The first was Ohio where the Ohio Supreme Court ruled in favor of AFSA in its challenge to the City of Oaklands local predatory lending ordinance. The Ohio Supreme Court held "that any local ordinances that seek to prohibit conduct that the state has authorized [in a general law] are in conflict with the state statutes and are therefore unconstitutional." The long-awaited decision resolves uncertainty that has surrounded the state's mortgage market since 2002. In other words state rule wins over local ordinance.
In Michigan, the state regulators are suing Wachovia for jurisdiction of its mortgage lending unit. The state using a states rights offense to gain regulatory authority, Wachovia claiming federal banking law supercedes the state authority. Lawyers for Wachovia Corp. and Michigan regulators will go be heard this week before the Supreme Court in the latest challenge over the oversight of national banks.
Compliance update for the week ending November 17, 2006
CA Automated Valuation Model Disclosure - CA Assembly Bill 2416 is effective January 1, 2007. This bill authorizes the collection of a fee for use of an automated valuation model results. The bill allows for a reduced appraisal fee for appraising the same real property one year after collecting a fee for an automated valuation model results if the borrower obtains another loan. The bill also requires a licensee in a loan transaction secured by real property to provide notice to the borrower that, upon request, the borrower is entitled to receive a copy of the automated valuation model result, if they paid for it.
Compliance update for the week ending November 10, 2006
Adjustable Rate Note Revision - The Note 5547 was revised to correct an error from Freddie Mac. The multistate and all state specifics were impacted. Language was removed on Page 3. The rider for this note 5147 was fine. The form is available here.
Compliance update for the week ending October 13, 2006
FHA Home Inspection Notice Form 92564CN from HUD - The new form can be used immediately and must be used for Applications taken on or after December 1, 2006. The form is available on www.hudclips.org. Please note the form no longer needs to be signed or included in the case binder. The form is essentially the same but was redesigned to have more impact on the applicant. The OMB number has also expired.
Compliance update for the week ending October 6, 2006
Fannie Mae: - Fannie updated its fixed rate Loan Modification Agreement, form 3179 and added two more forms for step mortgages and adjustable rate mortgages, forms 3161 and 3162. The mandatory use date for the 3179 is June 1, 2007, the two new forms and the revisions can be used immediately. See efanniemae.com for details and forms.
Federal regulations : - Regulators have caught the attention of lenders with a recently issued interagency guidance that addresses the risks posed by residential mortgage products that allow borrowers to defer repayment of principal and sometimes interest. Two additional related documents, Proposed Illustrations of Consumer Information for Nontraditional Mortgage Products and an addendum to the May 2005 Interagency Credit Risk Management Guidance for Home Equity Lending, were also issued. Comments are due in December and new disclosures regarding certian HELOC are anticipated.
July - September, 2006
Compliance update for the week ending September 29, 2006
Federal Issues: - New ARMS documents added with First Business Day Lookback. Freddie has posted documents for loans assumable during the life of the loan and those assumable after initial interest period. The note/rider sets available on the Freddie Mac website are: 5525/5125, 5535/5135, 5548/5148, 5547/5147. (Notes) (Riders)
Latest Updates from Freddie Mac and Fannie Mae
Freddie Mac has joined forces with Fannie Mae to make available 83 non-executable Spanish translations of the Fannie Mae/Freddie Mac Uniform Instruments to help lenders and others in the residential mortgage industry better serve Spanish-language dominant consumers in becoming homeowners. The collaborative effort is aimed at helping close the Hispanic and overall minority homeownership gap.(Read More)
Latest Updates from the IRS
Beginning on October 2, 2006 the IRS plans to return 4506T requests in electronic format for a fee of 4.50 per tax year. THe paper request was free. More information will be available on the IRS website.(Read More)
State Issues of interest
California Senate Bill 1609 revised its CA Civil Code Section 1632 and CA Civil Code Sections 1923.2 and 1923.5. REVERSE MORTGAGE lenders are required to comply with the provisions of Section 1632 requiring any person engaged in a trade or business that negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean in the course of entering into specified contracts to deliver to the other party, prior to the execution of a contract or agreement, a translation of it in the language in which it was negotiated.
Compliance for the week ending September 15, 2006
New ARM and Initial Interest ARM Notes and Riders with First Business Day LookbackFreddie Mac has added to its suite of ARM loan instruments, loan instruments with a First Business Day Lookback with either an assumable during life of loan or assumable after the initial interest period. Loan originators may use these loan instruments for any applicable ARM or interest only ARM loans they originate whether or not the loans will be sold to Freddie Mac. Seller/Servicers should refer to their Freddie Mac purchase contracts to determine if loans originated using these loan instruments are eligible for sale to Freddie Mac.
In an effort to make the documents more uniform and user-friendly, Freddie Mac has updated the titles and footers in the 45-day Lookback ARMs and Initial Interest ARMs to include the Lookback and assumability feature. Because this is a minor revision and no textual revisions were made to the documents, Freddie Mac has not placed a revision date on the document and will accept either document. Read More
Compliance Update two weeks ending September 8th, 2006
RHODE ISLAND HOME LOAN PROTECTION ACT:The purpose of this act is to prohibit predatory lending practices in the state of Rhode Island while preserving access to credit in the subprime market. This act contains the rules regarding what is to be considered a High Cost Loan in the State and will be effective from January 1, 2007. The important aspect of this act is: All high-cost home loan documents that create a debt or pledge property as collateral shall contain the following notice on the first page in a conspicuous manner: "Notice: This a high cost home loan subject to special rules under state law. Purchasers or assignees of this high-cost home loan may be liable for all claims and defenses by the borrower with respect to the home loan." Read More
Compliance update week ending August 11, 2006
Board of Governors of the Federal Reserve System: The Board is publishing a final rule amending the staff commentary that interprets the requirements of Regulation Z (Truth in Lending). The Board is required to adjust annually the dollar amount that triggers requirements for certain home mortgage loans bearing fees above a certain amount. The Home Ownership and Equity Protection Act of 1994 (HOEPA) sets forth rules for home-secured loans in which the total points and fees payable by the consumer at or before loan consummation exceed the greater of $400 or 8 percent of the total loan amount. In keeping with the statute, the Board has annually adjusted the $400 amount based on the annual percentage change reflected in the Consumer Price Index that is in effect on June 1. The adjusted dollar amount for 2007 is $547.
For more information Click Here
Compliance update week ending August 04, 2006
Fannie Mae:
Fannie Mae Interest First Notes:Fannie Mae announced on July 24, 2006, effective immediately, Lenders may use Interest First Notes and riders for their own proprietary interest-only loans or for Fannie Mae loan products with interest-only features by deleting all references to "InterestFirst" and, if to be delivered to Fannie Mae, replacing such references with "Interest-Only Period Adjustable Rate Mortgage" or "Interest-Only Period Fixed Rate Mortgage" as applicable.
NOTE: This is not a required change but "persmission for those lenders wanting to modify Fannie Mae Notes for there own porfolio or private investor and still have the flexibility to sell them to Fannie. Impacts ARM note numbers 3530 through 3537 and fixed note 3271. More details available on www.efanniemae.com
State Issues
Illinois:Public Act 094-0883 (2006) amends The Mortgage Escrow Act [765 ILCS 910/] effective January 1, 2007. Lenders must provide written notice of the following, within 45 business days after a tax payment: the date the taxes were paid, the amount of taxes paid, the permanent index number, mortgage account number, address of the property or other property description that is used for assessment and taxation purposes under the Property Tax Code. The notice may be included on or with other documents, notices or statement provided to the borrower and can be communicated via telephone, facsimile, e-mail or through the internet. To read the public act in full Click here
Kentucky:A new Pamphlet available impacting lenders and realtors in Kentucky "What Kentucky's Fair Housing Law Means". This pamphlet can be obtained by calling the Kentucky Commission on Human Rights at 800-292-5566 or downloaded from the following website
Tennessee:Tennessee House Bill 3597 enacts the Tennessee Home Loan Protection Act and is effective January 1,2007. It requires disclosures for High Cost Loans as well as special notices on the note and mortgage, for certain high cost loan transactions.
More details are available at the website
Ohio:Ohio modified a number of sections of the Ohio Revised Code with respect to mortgage lenders, brokers and loan officers effecting January 1, 2007. The primary change we noted was for prepayment penalties:
2)(a) No penalty may be charged for the prepayment or refinancing of a residential mortgage obligation of less than seventy-five thousand dollars that is made or arranged by a mortgage broker, loan officer, or non-bank mortgage lender, as those terms are defined in section 1345.01 of the Revised Code, and that is secured by a mortgage on a borrower's real estate that is a first lien on the real estate. For more info Click here
Compliance update week ending July 21, 2006
State of Illinois:Public Act 94-280 (HB 4050 from the 94th General Assembly) establishes a pilot program targeting communities with a high proportion of predatory loans, higher than average foreclosure rates and unusually high numbers of mortgages for individual properties. In those communities, the pilot program has been designed to provide additional financial guidance to families who wish to take on a mortgage, or refinance the mortgage they already have. In addition, the pilot program will allow the State to gather important information on the kinds of loans being offered to Chicagoans and the costs and terms of those loans. The Pilot Program Area is the geographic area situated within the following zip codes as designated by the United States Postal Service on January 27, 2006:60620, 60621, 60623, 60628, 60629, 60632, 60636, 60643, and 60652. Read More
For more information contact MBA at prichman@mortgagebankers.org or the Loan Reference section on HB 4050 website.
To check the map of all the affected areas Click Here
Compliance update week ending July 14, 2006
State Issues:Hawaii: New notary effective July 1, 2006 This is for Mortgage instruments and changes the date format and removes the he/she pronoun to the nouns Person or Persons. Here is the format cut and pasted form Hawaii House Bill 2476.Read More
Arizona: Just passed law the creator of any instrument that contains more than the last 4 digits to the SSN or any full identifying number that could be used in identity theft could be get liable for damages. So the clerk who files or the county clerk that records these instruments are not culpable for any damages but the creator of the document (not necessarily the preparer) will be held liable. This could mean our documents are at risk if the lenders add this information programmically. To my knowledge this is not happening but I thought I would let you know. This is the second state now toughening the SSN issue, FFS and MOL forms never prompted for SSN's so this should not be a problem for you, but if someone is sticking them in anyway (other than obviously hand typing or handwriting them in) you may have an unwanted lawsuit on your hands as the "creator" of the form.
Compliance update week ending July 7, 2006
State Law:Massachuetts:No longer required the Uniform Mortgage Loan Cost worksheet, effective July 1, 2006, it was part of the recent mortgage law change in the state. SB 2278. You can delete your form SS04MA. South Carolina: SC raised its Prepayment Penalty threshold and late charges, see new chart provided by the state on its website.
Louisiana: New law passes disallowing the imposition of a late charge when payoff is related to a Disaster as declared by itsGovernor.
Read More
Indiana: Most lenders are adding the following language on the Indiana security instruments regarding redacted social security numbers. We have added language to our security instruments where the preparer information is or near notary section ( if no room otherwise). The language is as follows: Read More
Increase in the VA funding Fee
The Veterans Housing Opportunity and Benefits Act of 2006 became law on June 15, 2006 (P.L. 109-233, 2006). The law increases the funding fee from 3.3 percent to 3.35 percent for subsequent loans with less than a five percent down payment closed during Fiscal Year 2007 (October 1, 2006 through September 30, 2007).
New recording requirements for MASS- special update
Please note that effective 1/1/07, new formatting standards will be adopted by all Registries. Read More
April - June, 2006
Compliance for the week ending June 30, 2006
HUD - Form 92541 - FHA Builder's Certification of Plans and Specifications, OMB number has been updated on the form. The form is available here
Compliance for the week ending June 24, 2006
Wyoming - Licensed Lenders (other than banks, subsidaries, savings and loans - in short "supervised lenders") must disclose at prepayment penalty on first liens owner occupied properties within 3 days of application. This will impact most independent brokers. The format of PREPAYMENT PENALTY DISCLOSURE form is available here
Compliance for the week ending June 2, 2006
VA - Debt questionnaire form 26-0551 (Available here). Form posted to VA website in March after a long absence, still no OMB number but the revision date changed to Oct 2004, the old form was dated April 1989, only changes were to correct punctuation errors. So no immediate action needed, looks like some housekeeping by the VA.
State Issues - Illinois changed a state statutes effective January 1st. Buried into the text - uncovered by our clients - was a change needed to the SSO2- Notice to Borrower of requirements of Illinois Mortgage Escrow Account Act. The change broaded the definitions in sections 2 and 4. The new form is available here
Compliance for the week ending May 22th, 2006
The IRS has made minor modifications to the 4506 and 4506T, The request for copy of Tax return. Forms are available at www.irs.gov website, the revision date is 4/2006 and the most recent change is the revision dates on the both pages of both forms and modified address to the IRS offices, in MA, GA, TX, CA AND MO on the second page. Changes in effect immediately.
Compliance for the week ending May 20th, 2006
MASSACHUSETTS:
We have been sifting through recent revisions to MASSACHUSETTS statutes. In general, the mortgage lending rules have relaxed a bit but we are not quite certain enough to delete many of the disclosures so we are being conservative and not recommending the elimination of any MA disclosures except for the note rate expiration disclosure on the loan application form 1003. You can delete on page 4 of the 1003 for massachutts, the information regarding expiration of the note date. I don't recall if you have a seperate MA form or are handling this via a field on the multistate. You may also have a MA 1003 with Balloon, if you do that same information regarding the note expiration should be deleted too. This is Effective July 1, 2006, and is based on MA Senate Bill 2278 amending MGL Chapter 184, Sections 17B, 17C and 17D.Compliance for the week ending May 5th, 2006
FEDERAL ISSUES:
New minor but mandatory revision to FEMA FORM 81-83: The new form is available here
STATE ISSUES:
Kansas: Effective July 1, 2006, In Kansas new law regarding disclosure of sales price information to an appraiser. This will be a new operational change since giving the sales contract copy to the appraisers is a typical practice. Kansas House Bill 2735 amends KSA 2005 Supp. 16a-1-301 by stating that no lender as defined by KSA 58-2237, or any person acting on behalf of a lender can disclose to an appraiser, or another person engaged in determining the appraised value of real estate, the amount of a proposed loan or the preferred value of any real estate intended to secure the loan. No forms impacted but Kansas lenders should be aware of this change.
Compliance for the week ending April 28, 2006
Fannie Mae recently update its Seller's guide in the following section and is effection for all loans delivered on or after June 1st: Part VII, Section 104.11: "Fannie Mae will not purchase or securitize a mortgage if the total points and fees charged to the borrower exceed the greater of five percent of the mortgage amount or a maximum dollar amount of $1000.00."
Here is the link to the announcement:http://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2006/06-04.pdf
Compliance for the week of April 7, 2006
Indiana passed House Bill 1114, effective July 1, 2006. The mortgages & assignments must contain the following statement from the preparer. "I affirm, under the penalties for perjury, that I have taken reasonable care to redact each Social Security number in this document, unless required by law (name)."
January - March, 2006
Compliance for the week of March 31, 2006
FHA/HUD: When the first change was reported in the HUD 92700(203K Maximum Mtg Worksheet) the form revision date was 2/17/2006, this week a slightly different version was posted at www.hudclips.org with the standard revision date format of 2/06. The only change besides the date was a small notice on the bottom of each page regarding UFMIP.
Compliance for the week of March 17, 2006
Ohio Regulators: The Mortgage Loan Origination Disclosure Statement (ss01) has been updated & is available here
Compliance for the week of March 3, 2006
VA - VA posted a revised (January 2006) version of the VA 26-1880, Request for Certificate of Eligibility. The revision is effective immediately and includes an update to the Privacy Act information and to the Eligibility Center address. The new form can be found here
New Jersey - No Personal Property For First Lien Loans: NJAC 3:15-10.4 is a new regulation effective January 17, 2006. The new regulation will prohibit first mortgage lenders from requiring or accepting as collateral or security, for a first mortgage loan, a borrower's household or personal goods such as furniture, electronic equipment, motor vehicles, appliances & jewellery.
Washington - New Consumer Loan Act Regulations: On February 27, 2006 Washington's new regulations concerning the Consumer Loan Act & its licensees will become effective. These rules are by & large self-explanatory & procedural. However, they should be reviewed in detail if a lender is operating under the Consumer Loan Act. There are two significant changes in the new regulations (i) Bonds for Consumer Loan licensees making real estate secured loans have been increased. The new minimum bond amount will be $400,000 for the first licensed location & an additional $100,000 for the each branch or office up to five (5) licensed locations. For each additional branch office over five, the amount of the bond must be increased by $10,000 (ii) A location that is solely providing underwriting and other back office services on Washington loans and has only incidental contact with the borrower, is not required to be licensed as a branch. However, this limited exception does not change the requirement that all locations where a person conducts business must be licensed. This includes locations that offer loans by mail or by internet.
Compliance for the week of February 20, 2006
FHA: Feb 17th, 2006 - HUD released the revised version of the 203K Mortgage Worksheet form 92700; there is no mortgagee letter released with this updated form but refers back to changes made in 'fall' last year. The form is available here
Fannie Mae: The following announcements were released this week "4 new Fannie Mae InterestFirst ARM Riders for all 3/1, 5/1 and 7/1 InterestFirst ARMS with Ten-Year Interest Only Periods; the new ARM Riders and ARM Plans are as follows: ARM Rider Form 3152 (ARM Plans 3515, 3504, and 3517), ARM Rider Form 3153 (ARM Plans 3516, 3505, and 3518), ARM Rider Form 3154 (ARM Plan 3513), and ARM Rider Form 3155 (ARM Plan 3514). These riders will be used with the existing InterestFirst ARM Notes with a Ten-Year Interest Only Period -- Note Forms 3534, 3535, 3536, and 3537, respectively. These forms can be utilized immediately, however, the mandatory use date is May 1, 2006." The forms are available here
Predatory LendingOhio: Sen. Joy Padgett introduced SSB185, a bill that would expand Ohio's Consumer Sales Practices Act (CSPA) to cover mortgage lending. Among other issues, there are concerns about how this piece of legislation would affect the secondary market operations of mortgage companies and that this bill would permit consumers to rescind mortgage transactions two years after settlement if they do not understand the contractual terms. For more information click here & related news article click here
Maryland: November 29, 2005, the Montgomery County Council passed Bill 36-04, a predatory lending ordinance, it will take effect on March 8, 2006. The act identifies specific practices related to lending activities that constitute discriminatory housing practices, including;(i) making a loan without tangible net benefit, (ii) abusive prepayment penalties, (iii) financing excess points and fees, (iv) steering borrowers to more expensive properties or loan programs, and (v) financing single premium credit insurance. The new 36-04 prohibits people from engaging in these types of discriminatory lending practices. It provides for damages for humiliation and embarrassment for these types of acts of discrimination. The bill also provides that the county's executive counsel provide an annual report on discriminatory lending practices and educate the public about these types of lending practices. Consumers will be able to file complaints based on discriminatory, predatory or abusive lending practices. The bill also expands the categories of lending activities that constitute discriminatory housing practices and increases the damages that the County office of Human Rights may award to victims from $5,000 to $500,000. For news article click here
Arizona: HB2844 relates to home loans, high cost loans are 5% (including existing or potential new prepayment penalties), or APR's 7% above comparable treasury on closed ended loans. This bill is not likely to have much, if any, traction.
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Illinois: HB5353 amends the Predatory Lending Database Article of the Residential Real Property Disclosure Act. There are changes of certain references in the Article from "predatory lending database" to "anti-predatory lending database" and from "broker" and "originator" to "licensee".
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HR824 urges the Illinois Congressional delegation to defeat proposals that would undermine Illinois predatory lending laws.
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SB2305 amends the High Risk Home Loan Act i.e. on or before October 1, 2006, but following the reporting requirements due for the 6-month period ending June 30, 2006, the reporting requirements for default and foreclosure rates on conventional loans shall not apply to the listed State-regulated financial institutions.
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Iowa: HF422 - this bill creates the "Iowa High=Cost Mortgage Act" in new Code chapter 535D.
The bill applies to lenders who are licensed mortgage bankers or brokers under Code chapter 535B that make high=cost mortgages. A "high=cost mortgage" is secured by the borrower's principal dwelling and is subject to a high rate of interest or a high percentage or amount of points and fees. The bill provides prohibitions, restrictions, and guidelines for lenders and high=cost mortgages. The bill addresses prepayment penalties, increased interest upon default, balloon payments, negative amortization, required disclosures, arbitration clauses, insurance, refinancing, home improvement contracts, acceleration, documentation procedures, loan criteria, late payment charges, and payoff information.
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HF2151 - This bill creates a new Code chapter known as the "Home Loan Protection Act". The bill is based on federal legislation designed to apply to all creditors that make real estate loans, including home equity loans. The bill prohibits various creditor practices in making and refinancing certain consumer home loans.
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Kansas: HB2806 - Section 1. K.S.A. 2005 Supp. 16a-3-308a is hereby amended to read as follows: 16a-3-308a. A loan subject to this section may not provide for the negative amortization of principal or a balloon payment. A loan payment is not a balloon payment if the amount of the payment is less than twice the amount of any other payment.
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Maryland: SB777 - prohibiting lenders from financing, through a home loan, specified insurance policies and debt suspension or cancellation agreements; establishing limitations on late payment fees lenders may charge with respect to a home loan; requiring lenders to provide a payoff balance to a borrower under specified circumstances; prohibiting lenders from recommending or encouraging a default on an existing loan or other debt under specified circumstances; prohibiting lenders from making high-cost home loans under specified circumstances; etc.
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Mississippi: HB1359 - An act to create the Mississippi predatory lending act; to define certain terms; to prescribe certain procedures, limitations and restrictions regarding home loans, consumer home loans and consumer loans to protect borrowers; to provide for enforcement of the provisions of this act; and for related purposes.
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HB1417 - An act entitled the "Mississippi home loan protection act"; to provide definitions; to prescribe certain prohibited acts and practices regarding home loans; to provide limitations and prohibited practices for high-cost home loans; to define procedures for curing any default and reinstatement of the home loan prior to foreclosure; to provide civil and criminal penalties for violations of this act; to authorize the attorney general to enforce the provisions of this act; and for related purposes.
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Missouri: HB1492 - establishes the High Risk Home Loan Act which regulates the offering of high risk residential mortgage loans.
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Servicing
Kentucky: SB45 - It includes a penalty of not less than $500 for failure to record an assignment.
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Louisiana: HB1A - changes the period of time from one hundred twenty days to sixty days for owners to contest the acquisition of abandoned property which was adjudicated to political subdivisions more than five years previously.
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HB4A requires that settlement payments on claims arising under homeowners insurance policies be placed in interest earning escrow accounts.
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HB7A - Prohibits mortgage holder from retaining amount of insurance settlement payment in excess of the unpaid portion of the secured indebtedness.
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HB10A - Provides for duties of a mortgage holder to a borrower with respect to insurance proceeds.
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HB15A - Establishes penalties for mortgage holders who fail to remit insurance settlement payments in excess of debt to the mortgagor
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HB55A - Abolishes the offices of recorder of mortgages, register of conveyances, and custodian of notarial archives and merges these offices in an elected recorder of real properties for the parish of Orleans.
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SB19A - Present law provides for office of the registry of conveyances, the office of the recorder of mortgages and the office of the custodian of notarial records for the parish of Orleans. Further provides for their election, or appointment in the case of the custodian of notarial records, and for their powers, duties and functions. Proposed law abolishes those offices and provides for the merger and consolidation of their powers, duties and functions into the office of the recorder of real properties for the parish of Orleans.
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SB39A - Notice to owners with properties on the abandoned housing properties list. A public officer, within ten days of the completion of the abandoned housing property list, or any additions thereto, shall send a notice, by certified mail, return receipt requested, and by regular mail, to the owner of record of every property included on the list and shall cause the list, including periodic updates to the list, to be published in the official journal of the local governmental subdivision, which publication shall constitute public notice, and, to the extent that the local governmental subdivision maintains an informational web site, post the list on the local governmental subdivision's informational web site.
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Rescue Fraud
Colorado: SB71 - Enacts the "Colorado Foreclosure Protection Act", prohibits certain deceptive and unconscionable business practices & requires purchasers of residences in foreclosure and foreclosure consultants to give home owners information necessary to make informed decisions regarding the potential or actual foreclosure of the residences. Also, specifies minimum requirements for contracts between such parties.
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Illinois: SB2349 creates the Mortgage Rescue Fraud Act. It outlines the terms that must be contained in a distressed property consultant contract and a distressed property reconveyance contract. Provides notice requirements for a distressed property consultant contract. Provides the right to cancel a distressed property consultant contract at any time until after the distressed property consultant has fully performed each contracted service. Provides the owner of the distressed property has a right to cancel a distressed property reconveyance contract at any time until midnight of the fifth business day following the day on which the owner of the distressed property signs the contract or until 8:00 a.m. on the last day of the period during which the owner of the distressed property has a right of redemption.
Read More
Other Information: For links to all the state legislatures including DC & Puerto Rico click here
Compliance for the week of February 3, 2006
HUD/FHA: FHA issued Mortgagee Letter 2006-04. This letter rescinds paragraph 5-2 of handbook HUD 4000.2 REV-3. Paragraph 5-2 lists closing costs and other fees that may be collected from the borrower; effective for endorsements FHA-insurance on or after January 27, 2006 mortgagees may charge and collect from mortgagors those customary and reasonable costs necessary to close the mortgage rather than the fees set forth in the aforementioned handbook. There are some specifics still unique to FHA loans such as not allowing a Tax Service Fee to be charged.
IRS: The W-9 form has been updated & is available here
Compliance for the week of January 21, 2006
VA Limits: The Ginnie Mae limit did increase for 2006, the maximum guaranteed amount for VA loans placed in Ginnie Mae pools is $417,000 for conforming home loans. Ginnie Mae will continue to require that the amount of cash down payment, plus the amount of the available VA guarantee, be equal to at least 25% of the lesser of the purchase price or the Notice of Reasonable Value. For details click here
FHA Limits: The 2006 FHA new maximum mortgage limits endorsements for insurance under the following sections of the National Housing Act: 203(b), 203(h), 203(k), 223(e), 234(c) and 255 in areas where 95% of the median house price is less than 48% of the Freddie Mac limit, the FHA limits for a one-unit house is $200,160. For .high cost. areas, the mortgage limit for a one-unit property is $362,790. For details click here
New Jersey: The Department of Banking and Insurance has adjusted the definition trigger for "high cost home loan" to $383,682.60. This adjustment is based on the rise in the Index, the last published increase was in the housing component of the National Consumer Price Index, New York - Northeastern New Jersey Region. [Bulletin 05-24]
October - December, 2005
Compliance for the week of December 30, 2005
Freddie Mac issued Bulletin 2006-5 dated December 14, 2005: Exhibit 5 Authorized Changes to Notes, Riders, Security Instruments and Uniform Residential Loan Application included an additional authorized change for the California Domestic Partner Registration Act. An additional change to the 'married' checkbox in Section III for borrower and co-borrower may be made to include a description in the parenthesis that 'married' includes registered domestic partners (California Civil code 1812.30(j)).
Compliance for the week of December 16, 2005
FHA: The NCPA 99a, Termite report, some lenders use this report although completed by contractor. New OMB date has no other changes. The report is available here
Freddie Mac: Two new Initial Interest ARM sets 5543/5142, and 5544/5144, 6 Month LIBOR, 45 day lookback. This adds an option to the 1 year Libor, 45 day lookback already released earlier this year. The forms are available here
Compliance for the week of December 9, 2005
Fannie Mae: In connection with the repeal of the Short-Term Mortgage Redemption Act, the North Dakota Security Instrument has been revised to remove reference to "Short-Term Mortgage Redemption" from the caption and to delete non-uniform covenant 24 (Short Term Redemption). The Waiver of Homestead covenant has been renumbered accordingly, and the revision date has been changed to "1/01 (rev. 12/05)." The form, if required, can be used immediately; however, the mandatory use date for the revised form is July 1, 2006.
Compliance for the week of December 2, 2005
FNMA/FHLMC TO IMPLEMENT 2006 LOAN LIMITS: New Limits Will Save Borrowers Up to $24,700 In Interest
McLean, VA - FNMA/FHLMC today announced it will implement an increase in its single-family mortgage loan limit from $359,650 to $417,000 effective January 1, 2006. This increase in conforming loan limits is based on the October-to-October changes in the average house prices, as published by the Federal Housing Finance Board (FHFB), and on Supervisory Guidance issued by the Office of Federal Housing Enterprise Oversight. The FHFB figures come from its monthly survey of lenders. Both new and existing homes are included in the survey.
The increase in the single-family mortgage loan limit makes it possible for an estimated 500,000 additional families to obtain lower cost mortgage financing. FNMA/FHLMC estimates that total mortgage interest savings for a borrower with a typical 30-year fixed-rate mortgage at the new conforming loan limit is as much as $24,700 over the life of the loan.
Effective for deliveries after January 1, 2006, the new loan limits for mortgages on one-to-four family properties will be: $417,000 for mortgages on one-family properties (up from $359,650); $533,850 for mortgages on two-family properties (up from $460,400); $645,300 for mortgages on three-family properties (up from $556,500); and $801,950 for mortgages on four-family properties (up from $691,600). Under FNMA/FHLMC charter, maximum original loan amounts are 50 percent higher for first mortgages on properties in Alaska, Hawaii, Guam and the U.S. Virgin Islands.
Compliance for the week of November 18, 2005
VA Loan Analysis - Form Number 266393: There has been a recent update to the VA Loan Analysis form (266393). The current lines 19 and 20 for Maintenance and Utilities have now been combined into one single line (line 19). Therefore, the subsequent numbers listed thereafter are now off a line, resulting the total number of lines of 53 in lieu of the previous 54 lines. In addition, the privacy act language was also updated. The newly revised date for this form is October 2005.
Compliance for the week of November 11, 2005
IRS forms: The 4506 has been revised again since September, as the 4506T has also been recently revised. Both for the page 2 of instructions, addresses and such. The page 1 changed only for the date on both and 4506 has minor text changes and room to request 8 years of tax returns versus 4 years. PDF's are available here
Compliance for the week of November 4, 2005
FHA/HUD: The HUD-1 and (HUD 1a) settlement statement has been updated on HUDCLIPS, it still carries the 3/86 date but has been updated for the OMB date 9/30/07, there is some additional language on the bottom of page 2. This is an "administrative" rather than a substantive update. Regulations allow for the substantially similar reproduction of the HUD-1 to be used, therefore no action is mandatory now
HUD 92544 has a new revision date of 9/2005, HUD Warranty of Completion. Form available on HUDCLIPS.
HUD 9746, DRAW REQUEST (section 203K), an OMB date changes only if you use the form, the HUD date of 8/95 has not changed and form is available on HUDCLIPS.
Compliance for the week of October 28, 2005
Freddie Mac issued Bulletin 2005-5, dated October 14, 2005, they announced the effective date for the recent revisions to Form 1003/1077(Rev. 6/2005) Uniform Underwriting and Transmittal Summary, to allow for different Condominium Project coding systems for Freddie Mac and Fannie Mae. The bulletin provides for several effective dates among other selling and servicing changes the bulletin link is here
HUD: Mortgagee Letter 2005-39 issued regarding revised URLA, FHA notified all mortgagees that the revised form may be used immediately, but is required for all loan applications taken on or after July 1, 2006. The letter can be found on HUDCLIPS
State Issues: California
Effective January 1, 2006 is California Assembly Bill 901 revising "covered loans". The definition was changed to increase the amounts from $25,000, to not exceeding the most current conforming loan limits. The bill link is here.
Compliance for the week of October 14, 2005
FHA issued Mortgagee Letter 2005-34 in late September
adopting Fannie Mae appraisal forms. Below is a excerpt from the mortgagee
letter which can be found at www.hudclips.org.
The Federal Housing Administration (FHA) will be adopting four of the
revised appraisal reporting forms recently released by Fannie Mae. For
all appraisals of properties that are to be security for FHA-insured
mortgages, and which are performed on or after January 1, 2006, the
appraisal must be reported on one of the following Fannie Mae appraisal
reporting forms as per property type:
1. Uniform Residential Appraisal Report (Fannie Mae Form 1004) for all
1 unit single family dwellings
2. Manufactured Home Appraisal Report (Fannie Mae Form 1004C) for all
manufactured homes
3. Individual Condominium Unit Appraisal Report (Fannie Mae Form 1073)
for all individual condominium units
4. Small Residential Income Property Appraisal Report (Fannie Mae Form
1025) for all 2 to 4 unit single family dwellings
The above forms are available here
Compliance for the week of October 7, 2005
A new notary law passed in California, Assembly Bill 361, signed by the Governor on September 22, 2005. This is effective on January 1, 2006. For the acknowledgment verbiage click here
Compliance for the week of October 6, 2005
Previously condo property types and 203K loan program (section of the act) types were exempt from the one time Up Front Mortgage Insurance Premium (UFMIP) of 1.5% and thus only had monthly MI. Now, effective as of 12/28/2005 these loan scenarios will no longer be exempt and will also be required to charge and apply the 1.5% UFMIP. All lenders are required to be in full compliance NO LATER THAN 01/01/2006.
See link for details: http://www.mbaa.org/resident/2005/fha-05-38.pdf
July - September, 2005
Compliance for the week of September 9, 2005
There is a new revision to the 4506-T dated 7/2005 you may not be able to access it for right now as the IRS pulled it back last week for a minor correction. This is the request for copy of Tax Form so many lenders do use it. This update just came our attention. You may find it on www.irs.gov, search for it by number under forms and documents.
Compliance for the week of August 19, 2005
Federal Regulation: (HOEPA TRIGGERS) The Federal Reserve Board published its annual adjustment of the dollar amount that triggers additional disclosure requirements under the Truth-In-Lending Act for home loans that fall under HOEPA Home Ownership and Equity -Protection Act of 1994. The total points cannot exceed the greater of the annually adjusted of $528 amount or 8% is effective on January 1, 2006. For details click here
State issues:
The North Dakota Short-Term Mortgage Redemption Act ND Century Code Section32-19.1 was repealed effective August 1, 2005. For details click here
This is important to the Security Instruments as the title of the instrument sometimes contains Short-Term Mortgage Redemption. Obviously if its there its no longer needed.Compliance for the week of August 12, 2005
Revised ARM Notes and new ARM Riders for use with
Initial Interest ARMs
We are providing revised ARM Notes and new ARM Riders for use with Initial
Interest ARMs. Sellers must use the revised Initial Interest ARM Notes
and the new Initial Interest ARM Riders for all Initial Interest ARMs
with a 10-year Interest Only Period originated on and after November
1, 2005.
Compliance for the week of July 30, 2005
Fannie Mae announced revisions to the Uniform Residential
Loan Application (Form 1003) and the Uniform Underwriting and Transmittal
Summary (Form 1008).
Revisions to the Uniform Loan Application 1003 were the addition of
borrower's acknowledgment of joint credit, technical changes to race/ethnicity
categories under HMDA, changes to language to accommodate for community
property ownership by non-spouses, revisions to the attestation to make
it clearer to borrowers that they are allowing access to certain information,
and clarifications to the borrower's authorization for lender to include
borrower's sex, race, and ethnicity based on appearance and surname
if the borrower declines to provide it. The form URLA has also redesigned
on a 11inch page( letter size) with a total of 5 pages, however it may
be reformatted to legal size. The changes also affect the Statement
of Assets and Liabilities (1003A), the Bilinqual URLA (1003s) and the
Bilinqual Statement of Assets and Liabilities (1003As). The new forms
can be used immediately, but MUST be used for loans with an application
date on or after January 1, 2006.
Revisions to the Uniform Underwriting and Transmittal summary include changes to the new condominium project codes, which were discussed in Announcement 05-03. Section I - Borrower and Property Information - Project Classification has been updated to reflect the new codes. The new form can be used immediately, but is required for loans with a delivery date on or after November 1, 2005.
Fannie Mae Announcement 05-05 can be viewed here
Form 1003 is available here
Compliance of the week of July 15, 2005
FHA: HUD is readdressing RESPA reform and has new sample documents including a Good Faith Estimate for industry review. This form is NOT mandatory but part of the general reform discussion HUD is initiating. More information is available on HUDCLIPS.
TEXAS: For Section 32 loans in TEXAS now require the following text on the first page of the Security Instrument in 14 point type:
(NOTE: This text requirement is not new - just the point size) The home loan is a home loan as defined in NRS 598D.040 and is subject to the provisions of § 152 of the Home Ownership and Equity Protection Act of 1994, 15 U.S.C. §1602(aa), and the regulations adopted by the Board of Governors of the Federal Reserve System pursuant thereto, including, without limitation, 12 C.F.R. § 226.32. Also in Texas as of September 1, 2005, if the mortgage terms were negotiated with applicant in Spanish, then the TIL must also be in Spanish. Note, we do carry a Spanish TIL form.
April - June, 2005
Compliance for the week of June 28, 2005
The FHA MIP FHA MIP excerpt from the Federal Register announces that HUD will be changing MIP calculations for 203(k) and 234(c) (condominium) loans effective 12/27/2005. There will be a look out for any FHA Mortgagee Letters in this regard.
At the present time FHA only collects monthly premiums in connection with these loan programs. There is no up front premium. As of the effective date these loans will charge MIP the same as the standard 203(b) loan programs. FHA might be forthcoming with additional details.
Compliance for the week of June 24, 2005
IOWA: New recording requirements effective July 1, 2005, require 3 inch top margin first , 3/4 inch sides and bottom and top of all subsequent pages.
VA: The URAR , the standard appraisal report mandatory in October, and allowable now per VA letter 26-05-01.
TEXAS: SB41 revises law that the notice of confidentiality rights notice need to be added to those form transferring ownership stating that lender can not require if social security numbers and or drivers license number on said forms. If the numbers are not on the form the notice need not be on the form either and and the recorders can not reject those forms simply because the notice is not there.
Compliance for the week of June 17, 2005
HUD: FHA revision to the URLA addendum 92900A was posted, withdrawn and reposted. Please download from HUDCLIPS the second new version (6/2005) which eliminates the new streamlined condo information on page 3. HUD does not have approval for this program yet so it has eliminated the reference to it. HUD acknowledges the problem with the mandatory date for this update and has posted instructions to lenders on how to comply and when the old 4/2004 is still acceptable.
Fannie Mae: Fannie is posting a new version with a 6/2005 revision date to its INTERESTFIRST documents. The notes effected are 3535 and 3537 and there there is a change to section 3B along with the revision date on each page.
Compliance for the week of June 10, 2005
VA updated the 26-1805 Request for Determination of Reasonable Value, for paperwork reduction act updating. Although the form was just updated on the website its revision date is AUG, 2004, which replaces June 2001. The multipage format has been cut down to one form and no longer has different pages for different file copies The revised for can be found here
HUD- The HUD handbook 4165.1, Endorsement of Home Mortgage Insurance Programs (Single Family) has been recently updated. We are in the process of reviewing the exhibits to make ascertain the impact of security instrument instruction on the current notes, riders, mortgages and deeds of trust and will let you know of any changes. The revised handbooks are available on HUDCLIPS.
Compliance for the week of June 3, 2005
HUD/FHA: Effective June 18, 2005, the Federal Housing Administration (FHA) will validate social security numbers for consistency with borrower names and dates of birth. The additional social security number validation procedures described in Mortgagee Letter 2004-17 is to reduce incidents of identity theft and fraud. There has been some shifting of text and part numbers and a new Part IV in the form 92900A, the HUD/VA Addendum to Uniform Residential Loan Application.
Fannie Mae: Authorized lenders may begin delivering loans with 40 year amortization periods beginning this month.
Compliance for the week of May 9, 2005
Federal regulatory issues:
Fannie Mae: For all lenders using Puerto Rico documents there are 11 form revisions mandatory January 1, 2006 , Please see www.fanniemae.com for details.
State Regulatory Issues:
Texas: The Finance Commission of Texas has adopted a new rule is to regarding standard forms to be used by a mortgage banker who represents to a prospective applicant that the applicant has been pre-approved or pre-qualified for a mortgage loan. Please refer to the following for exact language: Chapter 81, 7 TAC § 81.1, Definitions, and 7 TAC § 81.2 Loan Status Forms.Unless a mortgage banker does not make and issue a "firm offer of credit" as defined in the Fair Credit Reporting Act (15 USC § 1681 et seq), the mortgage banker must use the Conditional Qualification Letter to to evidence the applicant's conditional qualification. Please also note, that a mortgage banker or loan officer may use the Conditional Approval Letter to provide a loan applicant with confirmation that an application for a mortgage loan has been approved as to credit but not as to collateral .
In short, Lender who are using the FRCA letter it does not have to use the Conditional Approval Letter as outlined by Texas statute.
Compliance for the week of May 6 , 2005
State Issues: MASSACHUSETTS state-chartered bankers will find a new law impacting mortgage lending practices yet again, In April the Massachusetts Division of Banks adopted regulation 209 CMR 34.00. This regulation limits 90 and 95% LTV loans real estate loans secured by a first or subsequent lien.
Federal Issues:VA: VA issued its final rule in the Federal Register for Hybrid Arms on May 2, 2005.
HUD/HMDA: The HMDA reports go the Federal Reserve now not HUD, FHA only lenders need no longer submit information Details on HUD mortgagee letter 2005-17.
Compliance for the week of April 28, 2005
Government - HUD. FHA revised its payment-to-income and debt-to-income ratios from 29% and 41%, to 31% and 43%, respectively in Mortgagee letter 2005-16. This mortgagee letter also revises the treatment of child support income. HUD has decided to permit properly documented child support to be viewed under the same terms and conditions as other non-taxable income sources.
Compliance for the week of April 18, 2005
Fannie Mae and Freddie Mac: Fannie Mae Guide Announcement 05-02, dated 3/24/05 and Freddie Mac Industry Letter dated 3/31/05 revised appraisal reports for each property and inspection type for both Desktop Underwriter/Loan Prospector and manually processed mortgages. The revised appraisal reports are mandatory for appraisals performed on and after November 1, 2005 for Fannie Mae (and January 1, 2006 for Freddie Mac).
Compliance for the week of April 8, 2005
IRS- updated the for W-9 , REQUEST FOR TAXPAYER ID AND CERTIFICATION with a revision date of January 2005, the last update was 10/2004. The IRS will let you use older version of this form since it is substantially the same as previous versions. They updated references to webpages, broadened the disclosure regarding information sharing with other government agencies for non-tax and tax investigations, and changed type styles. No new information needs to be gathered - the form asks for the same information in the same format.
HUD- is making several changes to the procedures for scoring and documenting FHA insured loan using the TOTAL Scorecard. FHA is allowing greater tolerance before requiring a rescore. FHA has also reduced documentation requirements. These changes are effective immediately and can be found on HUDCLIPS, see Mortgagee letter 2005-15.
STATE ISSUES:Oregon: OR House Bill 2153 revised the interest rate payable on escrow funds index to the auction average rate on 91-day Treasury bills as published by the U.S. Department of Treasury, Bureau of the Public Debt. This is effective January 2006.
Virginia: VA Senate Bill 1029 eliminated the requirement for that real estate loans up to 90% LTV's be amortized by payments of principal and interest. This will allow for more interest only lending. This is effective July 1, 2005.
January - March, 2005
Compliance for the week of March 28, 2005
HUD- FHA announced a Five Year Hybrid ARM with 2/6 caps, this is new and Effective April 28th. This is addition to the 1/5 capped hybrid announced in 2004.
More information available at www. HUDCLIPS.org, in lender letters. Specifically the letter dated March 29, 2005.
Compliance for the week of March 25, 2005
STATE ISSUES:
New Jersey: New limits for High Cost Loans to 365.674.13 See Bulletin 04-25
Utah: Utah Senate Bill 157 modified its Consumer Credit Code and impacts prepayment fees for a subordinate loan not subject to HOEPA.
FEDERAL ISSUES: The major regulators jointly issued frequently asked questions (FAQs) concerning the independence of the collateral valuation process. The FAQs clarify existing standards in appraisal and real estate lending regulations.
Major points are as follows:- The guidance applies to both commercial and residential transactions.
- A regulated institution may not accept a borrower-ordered appraisal
- A regulated institution should not unduly influence the appraiser or in any way suggest the property's value
- Loan production staff may use a revolving, board approved list to select a residential appraiser, provided the development of the list is not under their control. Staff responsible for the development of the list should be independent of the loan production process.
- The appraiser must sign the certification page of the appraisal report
- A regulated institution should ask relevant questions of an appraiser to ensure the appraiser is independent of the transaction
- If a staff appraiser prepares an appraisal, that appraiser must be independent of the lending, investment, and collections functions
- Subject to certain qualifications, a regulated institution may accept an appraisal transferred from another regulated institution or from a financial services institution. A regulated institution is expected to perform a more thorough review when accepting appraisals from another financial services institution
- A regulated institution should review broker-ordered appraisals thoroughly
- A regulated institution should be the party to remit payment to the appraiser. A regulated institution may seek reimbursement from the borrower
- Documentation (that is, an engagement letter) should be available to indicate that the financial services institution (not the borrower) ordered the appraisal and that the appraiser has no direct or indirect interest, financial or otherwise, in the property or the transaction
- A regulated institution should perform a compliance review on all appraisals
- A regulated institution may grant conditional approvals to prospective borrowers before obtaining an appraisal
- The agencies' appraisal regulations allow regulated institutions to use an appropriate evaluation of the real estate in lieu of an appraisal for transactions with a value of $250,000 or less, business loans of $1 million or less, or subsequent transactions (transactions involving an existing extension of credit at the lending institution).
- A regulated institution should ensure independence in the ordering process for an appraisal even if the appraisal was not required under the agencies' appraisal regulations.
- A value from the taxing authority alone is insufficient to be considered an evaluation.
- A regulated institution may use an existing appraisal or evaluation to support a subsequent transaction, as long as the credit file documents the facts and analysis that support the institution's conclusion that the appraisal or evaluation remains valid.
- More information at: http://www.occ.treas.gov/occ_current.htm
Compliance for the week of March 7, 2005
Fannie released notes and Riders for Texas refinances for the 7/1 and 10/1 LIBOR, they have been posted on efanniemae.com.
Four new Texas Home Equity forms will be posted to our Fannie Maes today. We will be posting a new Fannie Mae Texas Home Equity Fixed/Adjustable Rate Note (with conversion option) (Form 3529.44), as well as the accompanying Rider (Form 3188.44) (ARM Plan Nos. 2726 and 2728). In addition, we will be posting a new Fannie Mae Texas Home Equity Fixed/Adjustable Rate Note (without conversion option) (Form 3528.44), along with the accompanying Rider (Form 3187.44) (ARM Plan Nos. 2727 and 2729). The ARM Plans for these new Texas 50(a)(6) documents are standard 7/1 and 10/1 LIBORS
Compliance for the week of February 21, 2005
Freddie Mac: Freddie Mac has released two new One-Year LIBOR ARM products: Freddie Mac Adjustable Rate Note 5542 & Rider 5142, 1-Year LIBOR Index, Assumable after Initial Period, First Business Day of Preceding Month Lookback ) and Freddie Mac Adjustable Rate Note 5541 and Rider 5141, 1-Year LIBOR Index, Assumable during Life of Loan, First Business Day of Preceding Month Lookback.
Freddie Mac also introduced Home Possible Mortgages "to meet the needs of more low- to moderate-income Borrowers. The Home Possible Mortgage suite provides low-downpayment options and credit flexibility. The suite also includes Home Possible Neighborhood SolutionSM Mortgages designed to help firefighters, law enforcement officers, healthcare workers and teachers who live in the communities they support."
See new chapter A34 in their Seller's guide for Home Possible Mortgages information and requirements .
HUD: HUD has officially discontinued for the 92068F with no replacement and 27050C Homeowners Fact sheet (use 92900 B in it place).
Compliance for the week of January 24, 2005
The big news of last week was the VA HYBRID arm . VA released an Errantum to Circular 26-04-12 dated December 10, 2004. In summary the VA Hybrids allowed for a 5 percent life time caps for those fixed/ adjustable loans with first adjustment periods of less than 5 year and a 1 year annual cap. It also allowed for a 6 percent lifetime cap for those loans with first adjustment periods of 5 or more years and for loans with a 6 % lifetime cap VA allowed for a 2 % first adjustment. This has not changed, what has been clarified concerns the second and subsequent adjustments are limited to 1% - EVEN IF the first adjustment was 2% -the second adjustment and those thereafter must be 1%. Please check your notes, rider and disclosures and programming to make sure you have 1% for the subsequent adjustments not 2%.
This notice regarding this information is posted on the VA website.
Compliance for the week of January 7, 2005
FREDDIE MAC: Freddie updated there initial interest notes on their website Freddiemac.com, go to forms and documents in single family, then to notes and you can pull up the most recent version. Not mandatory until April - but if lenders are using for interest only they may need to use revised forms now.
HUD: Per Mortgagee letter 2005-1, HUD now allows for the Get your Home Inspected disclosure (92564cn) to be incorporated in any sales agreement not just the FHA version, if the disclosure is not part of the sales agreement then it needs to be reexecuted and the stand alone form of the 92564 can be used. HUD letters 2005-2 to 2005-5 also released- no forms impacted. All letters available on HUDCLIPs.
Compliance for the week of January 6, 2005
Elimination of Refunds of Upfront Mortgage Insurance Premiums
Section 223 of the Consolidated Appropriations Act 2005 amended Section 203(c)(2)(A) of the National Housing Act to eliminate refunds of the Federal Housing Administration.s (FHA) upfront mortgage insurance premiums except when the borrower refinances to another mortgage to be insured by FHA.See circular for more information: HUD ML 2005-03.doc
Compliance for the week of January 3, 2005
HUD - FHA posted an update to the Important Notice to Homeowners to HUDCLIPS its 92900-B on the 10th of January as a result of mortgagee letter 2005-03 released on January 6, 2005. Important Notice to Homebuyers
October - December, 2004
Compliance for the week of December 27, 2004
FHA: HUD issued Mortgagee Letter 2004-46 which hikes the maximum insurable mortgage amount to $172,632 for single family homes for most areas and $312,895 for high cost areas such as California. Other mortgagee letters also released covering Total Scorecard and Property Flipping policies and procedures. Letter available on HUDCLIPS.
Freddie Mac- released letter 2004-5 in December with a selling guide update and new conventional loan limits.
State Issues: Annual rate changes for escrow accounts announced in Wisconsin - .72% and Connecticut - 1.5%.
National Regulations: FACT Act, effective July 1,2005 lenders must develop procedures to properly dispose of consumer information obtained from consumer reports to protect consumers against indenty theft.
Compliance for the week of November 30, 2004
Fannie Mae Announces 2005 Conforming Loan Limit of $359,650
WASHINGTON,DC -- Fannie Mae (FNM/NYSE), the nation's largest source of financing for home mortgages, today announced that it will apply new conforming loan limits, as determined by the Office of Federal Housing Enterprise Oversight (OFHEO) based on federal data on mean (average) home prices, to increase its single-family mortgage loan limit to $359,650 for 2005.
Conforming loan limits may adjust annually. The conforming loan limits adjustments are based on the October-to-October changes in the mean (average) home price, as published by the Federal Housing Finance Board (FHFB). The FHFB figures come from its monthly survey of lenders. Both new and existing homes are included in the survey.
Limits for multi-unit loans for 2005 will be as follows: two-family loans $460,400; three-family loans $556,500; and four-family loans to $691,600. The 2005 loan limit for second mortgages will be $179,825
Compliance for the week of October 1, 2004
On March 31, 2004, the Federal Reserve Board published a final rule, which revised Regulation Z. The effective date for the changes is October 1, 2004. The mandatory changes to Regulation Z include interpretative changes, new guidance on the delivery of rescission notices and technical revisions.
July - September, 2004
Compliance for the week of August 23, 2004
U.S. District Court upheld the California Financial Information Privacy Act - Senate Bill 1) this Act provides greater privacy protection than the federal Gramm-Leach-Bliley Act (GLB), specifically it has an opt-in instead of an opt-out requirement. This Act was effective in July.
The Oakland California City Attorney has agreed to delay the effective date of the City of Oakland Predatory Lending Ordinance No. 12361 until all appeals are exhausted for which an opinion from the Supreme Court is not expected before year end
Compliance for the week of August 20, 2004
VA Circular 26-04-09 issued provides information electronic submission of appraisal reports by VA fee appraisers. Appraisers and LAPP lender SARs should access the VA Portal to begin using E-Appraisals. The electronic transmission of appraisals will be mandatory October 1, 2004. For details click here
VA posted a revision to VA Form 26-1820, the Report and Certification of Loan Disbursement. The revisions to the Government Monitoring section due to earlier amendments to Regulation C.
Also revised VA Form 26-8937, the Verification of VA Benefit-Related Indebtedness. Changes in the Privacy Notice text and the Respondent Burden paragraph. No mandatory use date declared.
HUD: Mortgagee Letter 2004-32 issued regarding procedures for disaster declaration such as as Florida's declared disaster areas caused by Hurricane Charley and Tropical Storm Bonnie.