What’s with All the HUD Emails?

What’s With All the HUD Emails?

Karen Deis, Publisher, www.MortgageCurrentcy.com

I don’t know what’s happening at FHA lately, but they seem to be back-pedaling A LOT lately, and worse yet, modifying some of the mortgagee letters by sending an “email” instead of a “formal notice.”

Here are a couple of things HUD has updated that will affect your origination business right now.

First, FHA has delayed the $1,000 collection, disputed account, identity theft rule (ML 2012-3) from last month until July 1st (which means Case Numbers issued after that July 1st date—not the loan app date). Go through your files and search for the deals that you killed because of this rule—and get them closed. What we expect is a modified version of this rule down the road. So stay tuned.

Another email from HUD clarified that reducing the term of a mortgage on a streamline refi will also meet the net tangible benefit test. The big deal here is that previously it did not apply to streamlines, and now it does.

So, in yet another email, HUD gave step-by-step details on how to cancel case numbers on streamline refis and special instructions for streamlines that require an appraisal. HUD has updated the streamline refi worksheet that you should have started to use on April 6, and an updated FHA TOTAL Scorecard Guide came out on March 15.

Okay, enough about FHA and on to HARP 2.0. Fannie just updated their FAQ on March 15 and updated five of the questions. The biggie here is the addition of question 59, where Fannie says you can add a non-occupant borrower to the refi plus and DU refi plus loans. What are some of the reasons you would want to do this? One reason would be that on a manually underwritten loan, where the payment increases more than 20%, you might need additional income to qualify. Another reason would be to add a child, spouse, brother, or sister who has limited credit to help them establish a mortgage credit history.

The other questions that were updated are: Can you refi if the loan is in a trial modification period?

Does a DU refi plus loan for a property located in a condo project, have to have a condo project review?

How do you use DU to find the standardized address if DU gives you a property mismatch warning?

Which types of transactions are eligible for a DU Refi Plus field work waiver? By knowing which types of loans qualify for waivers—and there are five types—you will not only save your borrowers the appraisal fee, but you’ll be their mortgage hero.

In this issue, you’ll find the very first ever Mortgage Talking Points for consumers: What You Need to Know about HARP: Home Affordable Refinance Program. (By the way, there are a couple of training classes on the http://www.mortgagecurrentcy.com.) This article makes it easy for consumers to understand these different topics: • Determining if your home qualifies • What you will need to apply • What is the “unknown” • What are the benefits. So how can you use it? Facebook post, blog about it, an email and snail mail.

In this issue, you’ll find a couple more Mortgage Talking Points for your real estate agents. The first one is called Manufactured Housing: Quick FHA Financing Facts. There are certain areas of the country where you’ll find manufactured housing, and FHA will finance these types of homes if they meet the 11 conditions. Real estate agents need to know this if they are listing this type of home.

The second is called Mortgage Credit Certifications: A Blast from the Past. Freddie updated how they will use the tax credit to help borrowers qualify for a higher loan amount. So if you are in an area where it’s offered, it’s another way to get the word out on how it works.

And to wrap up what you need to know this month, Freddie has renamed chapter 26 from “Cash and Other Equity” to “Borrower Funds.” The big change here is that cash-out proceeds from a refi cannot be used as cash reserves on Freddie loans.

So, why read Mortgage Currentcy?

Because getting a loan approved these days IS rocket science.

What the FTC means by “Commercial Communications” For Mortgage Lenders & Real Estate Agents

The Mortgage Acts & Practices Rules have been in effect since August 19, 2011—so it’s been around for a while buy not many people know about it…YET!

A large part of the rule explains “definitions” and what they mean.  And the biggie here is the Fed’s definition of “commercial communications”—or the various ways real estate agents and loan officer communicate with potential home buyers.

Why would you care?  Because the rule states that if you do place an ad that includes mortgage terms, you must keep a written or electronic version of it for 24 months, in case you are ever audited.

Here’s what is meant by the term “Commercial Communications”:

  • Any written or oral statement
  • Illustrations such as charts and graphs
  • English or any other language
  • Labels
  • Packages
  • Package inserts
  • Radio
  • Television
  • Cable TV
  • Brochures
  • Newspaper
  • Magazines
  • Pamphlets
  • Leaflets
  • Circulars
  • Mailers
  • Book inserts
  • Free standing inserts
  • Letters
  • Catalogue
  • Billboards
  • Posters
  • Public transit cards
  • Point of purchase displays
  • Film
  • Power point slides
  • Audio transmitted over the telephone
  • Telemarketing scripts
  • On hold scripts
  • Upsell scripts
  • Training materials provided to telemarketing firms
  • Infomercials
  • Internet
  • Cellular phones/networks
  • Webpages
  • Email
  • Direct mail
  • In-person sales presentation
  • …anything else considered “commercial communication”

To further clarify record keeping,

  • You must keep copies of all advertising if “materially different”.
    • If the same/similar ad runs in different areas, only one copy required but a list of places where ad placed
    • Description of mortgage products offered to consumers
      • Including terms, conditions and any “unique names” given to the mortgage loan
      • Details of affiliated products, i.e. life/disability insurance

Just a heads up—the two federal agencies assigned the task of enforcing these rules are Consumer Finance Protection Bureau and Federal Trade Commission.

Here’s the info if you’d like to read more about it (or you need help falling asleep) Federal Register, FTC 16 CRF Part 321 or subscribers can Download MortgageTalkingPoints(tm) to share with real estate agents www.MortgageCurrentcy.com



NAR 2011 Home Buyer Survey Results – First Time Home Buyer Statistics

National Association of Realtors® 2011 Home Buyer Survey Results – First-Time Home Buyer Statistics.

The 2011 NAR report called “Profile of Home Buyers and Sellers 2011” has just been released, with a huge amount of information that will help you plan where you should be spending your time and your marketing dollars!  While this info is from 2011, what it does is identify trends.

In 2010, 51% of all home purchases were made by FTHB.  In 2011, it was 37%.  The 2010 numbers are skewed because of the First-Time Home Buyer Credit offering.

Overall, the numbers have significantly changed from 2011.  The entire report provides stats on first-time buyers, repeat buyers, FSBO, and investors, but this article is just about first-time home buyers with a little commentary from me on why the information is critical in your business planning efforts.

  • Over one-third of all homebuyers are buying for the first time.  Read on because you’ll also learn how a huge percentage of FTHB find you and the home they want to buy.  I suggest that you align your marketing with the way FTHB find information – but more on that later.
  • 77% of first-time buyers rented an apartment or a home prior to buying their first home.  Marketing to apartment complexes is still the number one way to market to and get leads from FTHB.
  • 48% of FTHB were married.  The other 52% are categorized by “unmarried couples,” “single men” and “single women.”  If you hold first-time buyer seminars, consider segmenting them into “singles only” or “couples only” events.  Each segment has its own set of home buying and loan approval issues.
  • Some areas are more affordable than others, but 48% of FTHB purchased a home $150,000 or less.  If you have listings in this price range, you may want to ask your sellers if they can offer home buyer incentives, like paying for closing costs.
  • The average distance that a buyer has moved is 12 miles away from where they were previously living.  So, if you are considering marketing to apartment complexes, check to see if there are affordable ($150,000) homes within that 12-mile radius.
  • Based on the information sources FTBH used, you may want to reallocate some of your marketing dollars to online marketing and open houses instead of printed ads.
    • 92% searched for homes on the web
    • 88% searched for real estate agents online
    • 53% used yard signs
    • 40% went to open houses
    • 28% used newspaper ads
    • 17% used homes magazines
    • When it comes to mortgage financing, 95% of the mortgages were fixed-rate type loans. In addition, 26% of FTHB say they got at least a portion of their down payment from a gift.  Since Fannie, Freddie, FHA and VA have their own “gift fund rules,” please call me if your clients tell you they will be getting their down payment as a gift.

So, think about creating a marketing campaign with  your real estate agents that exclusively targets first-time home buyers.  And a little shameless plub here, if you are looking to purchase apartment complex mailing lists, www.ApartmentToolKit.com Karen Deis 800-535-3343

Are You One of the 19 States? USDA Refi Pilot Program!

Good news. If you currently have a USDA loan, call me about the new refinance program.

  •  No credit report,
  •  no appraisal,
  •  no property inspections,
  •  no income verification.
  • Last 12 months mortgage payments must be made on time.
  • Interest rate must be 1% below current rate borrowers are paying now

With the issuance of AN4615 on February 1, 2012. USDA Rural Development announced a new refinance pilot program  designed to help existing Section 502 borrowers, for both the 502 direct and 502 guaranteed loans, to refinance their homes with greater speed and ease. I like what RD is trying to accomplish under this new refinance pilot initiative but I wish it was available in all states, not just the 19 selected. You can bet that many states outside of this select group and those distressed homeowners living in them feel they are just as deserving.

Only 19 States Allowed in USDA Pilot Refinance Program  – Additional States are not eligible at this time.

  • Alabama,
  • Arizona,
  • California,
  • Florida,
  • Georgia,
  •  Illinois,
  • Indiana,
  • Kentucky,
  • Michigan,
  • Mississippi,
  • Nevada,
  • New Jersey,
  • New Mexico,
  •  North      Carolina,
  • Ohio,
  • Oregon,
  •  Rhode Island,
  • South Carolina,  
  • Tennessee.

Eligible Borrowers: Current Section 502 Direct or Guaranteed Loan borrowers must:

  •  Meet current income eligibility requirements (Comment: While applicants for the program must still meet the income eligibility criteria, repayment income is technically not a factor in that an USDA RD grants an automatic ratio waiver)
  • Reside in an eligible rural area or an area that was eligible at the time of the original loan closing (Comment: In other words, even if the area where the property is located is no longer eligible you can still refinance under this program); and
  • A Rural Refinance Pilot loan may only include the principal balance of the loan plus a portion of or the full upfront guarantee fee. The applicable upfront refinance guarantee fee is 1.5 percent. No cash out is permitted to the borrower. Accrued interest, closing costs, lender fees, and late fees are not eligible to be part of the refinance loan. (Comment: This means that only the principal balance of the loan may be refinanced with only the 1.5% guarantee fee added to the loan amount. All other costs associated with loan must be either paid for by lender premium pricing or the borrower. In this case, I foresee many lenders pricing the loan in such a way as to allow them to pick up much of the borrowers closing costs. For the 502 direct program borrowers any subsidy recapture cannot be included in the refinance loan. RD however could subordinate the subsidy recapture amount)
  • Rural Refinance Pilot loans must be manually underwritten. They cannot be processed through the Guaranteed Underwriting System.

Really detailed information can be found www.MortgageCurrentcy.com (Trial subscription $1 for 7 days)

If you are located in one of the 19 states, go through your database.  This could be easier than HARP–especially if they “fit” the 1% rule and 12-month, on time payment requirement.  Karen Deis, Publisher.

Free H.A.R.P 2.0 Class – All Hype? Or a Big Help?

So, I asked a bunch of Loan Officers to post their HARP questions on www.facebook.com/mortgagecurrencty and there were so many, that I ended up doing a free class with a HARP expert–who has first-hand street creds because he also originates these types of loans.  Here’s a few of the things that you’ll learn”

  • Overview of HARP
  • The differences between “current” and “new” servicers
  • Fannie and Freddie differences
  • Qualifying Quirks
  • Private Mortgage Insurance
  • Manual vs. Automated Underwriting
  • Non-owner occupied rules
  • Subordinated Financing rules
  • Solicitation Rules
  • http://www.mortgagecurrentcy.com/videoupdates.php

Did I mention that it’s free?

Karen Deis

Do The Mortgage Rule Updates Want to Make your Brain Explode? More HARP

If This Just Doesn’t Want to Make Your Brain Explode…

Can you guess how many rule updates affected JUST the
origination side of the business from January 1st to December 31st,

Just guess!

Ok, I’ll tell you—it’s 259, or an average of 21 rule updates per month.  To get it down to the ridiculous, that’s 1
rule update for EVERY working day of the year.

Now, about the elephant in the room—HARP, or Home Affordable
Refinance Program. Fannie held a conference call and what’s clear to us is that
there are MORE questions than answers these days.

In fact, Fannie published an updated
FAQ for HARP and their DU Refi & DU Refi Plus loans.  Here are the new questions and answers
published as of December 20, 2011.  We
chose only the ones that affect loan officers and the processing of the loan.

Q. 23. (New) Does standard Selling
policy related to the 4506-T apply to Refi Plus and DU Refi Plus

Standard Selling Guide policy related to the 4506-T applies to Refi Plus loans if the
payment is increasing more than 20% and to all DU Refi Plus loans since
borrower income must be verified for qualification purposes. It is not
applicable to Refi Plus loans when the payment is not increasing more than 20%
since verification of borrower income is not required.

Q 26. (Updated)  Why was the “reasonable ability to repay”
representation and warranty removed?

The “Reasonable Ability
to Repay” terminology has been removed from the DU Refi Plus and Refi Plus
Underwriting Requirements sections of the Guide because these sections already
describe the specific underwriting requirements that are applicable to each

Under Refi Plus (manual underwriting) eligibility is based primarily on the payment history of the
existing mortgage and the borrower benefit provisions. Additionally, effective
with applications dated December 1, 2011, if a borrower’s payment increases
more than 20% then the borrower will have to be re-qualified. Under DU Refi
Plus, DU applies the standards for ensuring the borrower has a reasonable
ability to repay. For these reasons the lender is not responsible for meeting
additional “reasonable ability to repay” standards.

Q 59. (Updated) Even if no new
project review is required for a Refi Plus (manual underwriting) loan secured
by a condominium or cooperative, must the lender still confirm adequate
insurance coverage for the project or unit?

No confirmation of
insurance coverage is required for Refi Plus (manual underwriting). The
lender’s original project review would have included confirmation of the
required insurance coverage, and there are existing processes required by the
Servicing Guide to monitor and ensure such insurance coverage remains in force

Q 83. (Updated) If a loan is
originally submitted to DU, can it be converted to manual Refi Plus?

Yes. Loan casefiles
originally submitted to DU may be converted to a Refi Plus (manual) transaction
for any reason and without regard to the DU recommendation. In all cases, if
the lender is converting a loan from a DU Refi Plus to a Refi Plus (manual
underwriting) transaction, the lender must be the current servicer of the loan
and the loan must comply with all Refi Plus (manual underwriting) requirements.

Q 84. (Updated) For a loan to
be eligible for DU Refi Plus, the borrower(s) and subject property address on
the loan casefile must match an existing eligible Fannie Mae loan. Are there
any existing Fannie Mae loans that are not eligible to be refinanced using DU
Refi Plus?

Certain existing loans will not be identified by DU as eligible for DU Refi Plus. They
include, but are not limited to: loans purchased by Fannie Mae on or after June
1, 2009; loans currently subject to any outstanding repurchase request (see Q82
for related information); some loans that were subject to some form of
secondary-market credit enhancement (see Q56); and government mortgages.

Although these loans may not be eligible to be refinanced using DU Refi Plus, they may be eligible
for other Fannie Mae refinance options.

The last time we checked, there were about 30 questions, and now we are up to 100 even. The 5 listed  are the new and updated ones that affect loan
originators and processors.    We expect a bunch more as the program gets rolled out to everyone in March, 2012.  We will keep you updated on the new questions
as they are updated.

Home Affordable Refinance
FAQ’s 12-20-11


More rule updates can be
found www.MortgageCurrentcy.com where you can give it a test drive for just $1

Finally, A Govt Agency That Wants to Hear From You!

Looks like the CPFB has been working on hard on creating new loan disclosure forms and guess what?

They want to hear from you–yes YOU!

I’ve copied the email that they sent out!  They want you to choose between two loan scenarios (Jasmine and Nandina) and tell them why you would choose one loan option over the other one.  There is also a short questionnaire asking you for suggestions on what else you’d like to know about.

Would you please take a look and choose one of the other.  Please let us know which loan option you choose and why!  What suggestions did you make?  THIS IS YOUR CHANCE TO PROVIDE INPUT (which is totally rare for a government agency anyway!)  Karen Deis, Publisher, www.MortgageCurrentcy.com (Reading the fine print–so you don’t have to!)


                                                                       Email Notice From CFPB: 

Since May, we have been asking you to help us improve mortgage disclosure. By comparing different draft forms, you’ve helped us understand how to communicate information more effectively.

Now we need you to do something just a little different.

This time we’ve posted just one version of a disclosure, but with two different mortgage loan products. We’d like you to look at them and decide which one you would choose.

Make your choice today:

We’re shifting gears for a simple reason: Comparing two versions of a form is useful, but in the real world, consumers should be able to use disclosures to compare different loan offers, not different forms. An effective disclosure form should help people make the best decisions for themselves and their families.

We want to see how well this version of the form lets people do that. Can consumers use the form to choose the right loan for themselves and their families? Can lenders or advisers make a clear recommendation about the best loan?

Tell us which loan you prefer. Help us make mortgage disclosure forms easier to understand and use:

Thank you for your help,
The Consumer Financial Protection Bureau

Still Getting It Wrong–Reg Z Advertising Rules

I’m still watching TV commercials, listening to radio ads, and getting direct mail–where mortgage companies are NOT following the Reg Z Rules.

We need to level the Playing Field and if you notice a company not following these rules, then you need to call them–or report them–because we all need to play by the same rules.   Don’t lose deals because your competitor doesn’t disclosure everything they need to. 

The Truth-In-Lending Rules apply if you quote down payments, payments, interest rates or points.  But wait, there’s more!  These rules apply to all forms of advertising, including email blasts, flyers that you pass out at apartment buildings, TV & radio, and direct mail!  They apply to all dwelling-secured loans: single-family, condos, town homes, mobile homes, etc.

Existing Advertising Disclosure Rules

If your ad contains any financing info…

  • Dollar amount or % of down payment
  • Number of payments or number of years to repay the loan
  • Dollar amount of any payment
  • An interest rate or a finance charge

…then you must disclose the following:

  • The terms of repayment over the entire life of the loan, including ARMs, Balloon payments or temporary buy downs
  • Dollar amount or % of down payment
  • The Annual Percentage Rate

 Updated Rate & Payment Rules In Addition to Existing Rules

Effective 10-1-09, more disclosure must be included in addition to the existing rules above:

  • If fixed interest rate over the life of the loan, the rate and APR must be printed in the same size letters
  • If advertising a payment, you must include
    • Fact that the payment does not include taxes, mortgage or homeowners insurance
  • If rate or payment is NOT fixed,  (Buydown, ARM or Balloon)
    • Each rate or payment & time period changes for entire term of the loan
    • If ARM, future rate must be disclosed by adding index plus margin

Size of Lettering & Placement of Disclosure – Printed Ads

  • APR Rate and loan term details must be printed in the same size letters (or larger) than the rate or payment being advertised
  • Must be printed in “close proximity to info being advertised (not buried way down at the bottom or the ad)
  • Cannot be obscured in any way (i.e., shading, coloration, etc)

 TV, Radio, Video & All Oral Disclosures

Must include all the information above PLUS:

  • Must be clearly stated (no talking fast or low tone of voice); or
  • Must provide a toll free number that may be used to call for additional info

 For information only – it’s not comprehensive or intended as legal advice. Final Rule published in Federal Register Vol. 73, No. 147 and 12 CFR, Part 226