FHA Makes “Economic Event” an “Extenuating Circumstance” and It’s About Time!

FHA Makes “Economic Event” an “Extenuating Circumstance”

 

By: Tracey Rumsey, Staff Underwriter & Karen Deis, Publisher, www.MortgageCurrentcy.com

Well, it took 6 years – but FHA has decided that a job loss or decrease in income can now be considered an “extenuating circumstance,” which means additional business for you.

It’s great news for borrowers – but don’t jump the gun – at least not just yet!
This new FHA Mortgagee Letter (13-26)  released on August 15, 2013 and effective immediately now makes “Economic Event” (i.e., job loss, reduction in income, etc.) an acceptable extenuating circumstance.

And no, it was not previously allowed.
The good news:  This new guidance allows for a borrower to obtain a new FHA mortgage 12 months after a foreclosure, short sale or other derogatory event with re-established credit and housing counseling.
But, here are some of the issues you may run into: 
1. You don’t know if investors will accept this new guidance.

2. The borrower must document the decrease in income.

a. Decrease in income is defined as at least 20% loss of income that lasted for a period of 6 months or more.

b. Loss of job is defined as the “month” the borrower lost their job.

c. Recovery is defined as re-establishing credit for at least a 12-month time period.

d. Decrease in “household” income means “all individuals” residing in the primary residence at the time of the job loss.  (So, even if a spouse is not on the loan but lost their job, they still qualify for an extenuating  circumstances waiver.)

e. If job loss, written VOE showing date of termination.

1. If company is no longer in business, will need a written termination notice or public document showing the business was closed or start date of unemployment income.

2. If loss of income, VOE showing decrease from year to year, or signed tax returns or W-2 forms showing prior income, and compare to decrease in income of at least 20%.

3. If “seasonal income,” must have had a two-year history of receiving seasonal income and verification of loss of income (20%) or loss of job.

3. The borrowers must have satisfactory credit.

a. No late payments over the last 12 months, including housing, revolving, installment debts.

b. If they still have an existing mortgage, it’s okay if the mortgage was brought current with a loan modification, but still must have been paid on time for 12 months.

c. Non-traditional credit is okay, as long as the borrower has an on-time pay history over the last 12 months.

d. No collection accounts other than medical or identity theft issue.

e. Borrowers must have had satisfactory credit PRIOR to job loss or income decrease.

d. If judgments appear on credit report (and have been paid), they must also be a direct result of the job loss or income decrease.

f. If foreclosure, short sale or deed-in-lieu, must show proof that it was a direct result of income decrease or job loss.

g. If bankruptcy, must be at least 12 months from the date of discharge. Must be related to the economic event.
3. The housing counseling MUST happen a minimum of 30 days PRIOR TO LOAN APPLICATION. Depending on your institution’s definition of ‘application’, this could be difficult.

  1. A list of non-profit housing counseling services can be found at www.hud.gov or call 800-569-4287.
  2. Can be conducted by telephone, internet or in person.
  3. Counseling service must provide “specific” documentation and completion certificate signed by both the counseling service and the borrower
  4. Housing counseling fees paid by borrower or other agency that subsidizes housing counseling fees
  5. 4. If the foreclosure or short sale was on an FHA loan and there is a CAIVRS claim, a “Back to Work” waiver is available, but can’t be requested until full underwriting is complete.  (Interpretation:  More delays.)
  6. . Reverse Mortgages are not covered by this rule.

INTERPRETIVE COMMENTS: 

  • Check      with your lenders and see how they are planning to handle this new      “extenuating circumstance” and what documents they may require. HUD is      very, very specific as to the documents that are required to meet the      economic event underwriting rules.
  • Get  the word out to clients who are in the “derogatory waiting period” zone.
  • Let   your real estate agents know about the new change.

By the way, there are two other new Mortgagee Letters released regarding final guidance on collections and judgments.   But complete details can be found in in the September 10th issue of www.MortgageCurrentcy.com

Don’t End Up In Fair Housing Jail!

Title:  Don’t End Up in Fair Housing Jail!

Karen Deis, Publisher, www.MortgageCurrentcy.com  & Tammy Butler, www.OptimaBlue.com

Here’s a story that is happening more and more as the CFPB hires more people to “police” FAIR HOUSING – Can you defend yourself in case of an audit?

Examiner:  Mr. Mortgage Company:  can you please tell me why this client did not receive the lowest rate offered to her on this day?

Mr. Mortgage:  Uh, well let me call the loan originator.  Oh, he is not here anymore, okay I’ll call the processor.  Oh, she is on maternity leave.  Can someone look in the LOS and tell me if you see any notes on that file?  None about rate, huh!  Well, we will pull that file, get the rate sheets from that day and review everything.  I’m sure there was a good reason.

Examiner:  Fantastic, and while you’re at it, can you also pull the data together for these 350 files?  We have questions on those too.

Sound like a nightmare?  For many lenders this is a reality.  Yes, I know Fair Housing audits are not the most exciting topic; however it is the most important item you can focus on when it comes to making an exam easier.

We’ve created a Fair Housing Compliance Checklist and at the end of this article, you’ll find a “partial list.  Email Karen@mortgagecurrentcy.com for the complete 3-page checklist.

Here is how it works.  The loan originator answers the questions on the checklist.  The answers can be “yes,” “no” and/or a comment.  If they do not give you the answer that you have set up as a rule, then it needs to be noted in the file.

I have several pages of example questions; you will have to determine which ones you want to use.  The goal is to get your team brainstorming regarding the questions that you want to memorialize.

Here are some ways other lenders are using the Compliance Checklist function:

  1. Requiring explanation when the loan originator gave the client a higher rate (assuming equal price) than one of the offered programs.  This might be as simple as one lender taking the loan and another will not.  The examiner is searching for the reason.
  2. Requiring written explanation when a loan is re-locked.  What changed on the file that the program or rate needed to change?  This prevents any notion of baiting and switching.
  3. Reining in your TPO’s to get written reasons for loan selections.
  4. Ensuring that internal workflow is followed.  As an example, do you require a fully completed loan application prior to a lock in?
  5. Can the loan be locked only with this investor, or any investor?  If limited, why?

These are just a few ways the Compliance Checklist functionality is being used.  I cannot urge you strongly enough to get this started.  Ask anyone who has been through an audit and they will tell you that notations about what happened and when are so very important – and save you an enormous amount of time.

Oh, one more thing, they are monitoring real estate agents too.   A real estate agent recently got a letter that he was violating Fair Housing rules when he advertised a home as “adults only—no one under age 16” on the listing.

CFPB is out there and they have the people to monitor, audit and fine you!

Fair Housing Compliance Check List – Pricing Questions

Prices being equal, did you offer the client the lowest rate option available to them?

Is this a re-lock?  If yes, what changed on the file that it needs a re-lock?

Is this file dependent on the underwriting guidelines of the
investor you selected? If yes, what specifically?

Is the length of the lock being requested compatible with the time to close?

If you are requesting a 15-day lock, is the loan clear to close?

If you are requesting less than 60 days for a refinance or short sale, is that time frame realistic?  If yes, please indicate the loan status in the notations.

Is your final price par?

If your final price is above par, are you charging any discount points? If yes, are you giving a lender credit?  If yes, then how much is the lender credit?

Is your rate lock within (x% – lender determines) of the initial disclosed rate?

What are the client credit scores?  Please list (lender decides which scores they want listed in the notation).

Is this loan a pre-qualification?  If yes, when is closing anticipated?

Is this loan under contract?  If yes, what is the closing date?

What are the lender credits? Require notation.

If the price is below 100 or outside of your LO contract, did you receive prior exception?  If yes, by whom?  Did you document the reason for the exception in the loan file? (Lender sets what they mean by “document.”)

Does the requested pricing meet the parameters of your LO contract?  If no, give reason and who authorized lock.

Has this loan been locked with us during the last 120 days?

If you are requesting a re-lock, is the rate going up?  If so, is this based on a credit verification issue?  Notation needed for explanation.

If you are requesting a re-lock, and the rate or price are increasing, do you have written documentation in the file as to what changed and how that resulted in a higher rate or price?  Require notation.

Have The Regulators Seen Their Shadows?

Have the Regulators Seen their Shadow?

Karen Deis, Publisher, www.MortgageCurrentcy.com – View free video blog on home page.

Well, it seems like the agencies have “seen their shadow” and crawled back into a hole—because there were only a few updates within the last 30 days!

As part of the continuing mini-series of breaking apart the various rules from the Consumer Protection Finance Bureau, we are dissecting each topic that is important to loan originators, and writing about one every month—until they go into effect in 2014.

Part two of the mini-series talks about the Qualified Mortgage Rule and the five tiers of loan amount thresholds when it comes to the maximum amount of income that can be earned for each tier.  There are five different loan amount tiers to be aware of:

Greater than $100,000

$60,000 to $100,000

$20,000 to $60,000

$12,500 to $20,000

And less than $12,500

The maximum income earned on each tier is inclusive of fees and points that are NOT included in your commission.  It also states that those maximum commissions will be adjusted based on the CPI for inflation at the first of every year.

Loan Officer Compensation Rule defines the term “loan originator” in part two of the mini-series.  While it’s not new, it basically says that anyone who quotes rates, assists the consumer in filling out a loan application, or negotiates loan terms and issues approval letters is a loan originator.   SO, if processors, underwriters or assistants do any of these things, they must be licensed.

Something new that doesn’t affect you but we wanted you to know about is that if a seller finances residential property that they own, and provides financing for 4 or more properties within a 12-month time period, they are considered a “loan originator.”

So, if a builder is providing self-financing to home buyers AFTER the home has been completed, a builder would be considered a “loan originator.” However, if they are providing construction loan financing only, they would not have to be licensed.

Just a couple of update from FHA!

There will be a new 92900 form with the new MIP disclosures, but the form won’t go into effect until June 3.  HUD said they are not going to provide a copy of the new form until the changes go into effect, but check with your LOS systems to make sure they are working on the updated version.

And, there was a strange email from HUD.  On March 2, they sent an email with a link to a new TOTAL Scorecard update.  The link took everyone to an OLD update.  We searched the websites, contacted the HUD officials, and the mystery continues—no one knows where to find the March 2 update.   So watch for it in the future.

And, there has been nothing from VA in quite a while—it’s probably one of the most stable loan programs available today.

Remember, getting a loan approved and closed these days IS rocket science.

 

 

 

So, What’s This About a Social-Media Quality Control Plan and Your Mortgage Business? (FFIEC)

Social Media & Mortgage Marketing – FFIEC Proposed Rule

By: Karen Deis, Publisher, www.MortgageCurrentcy.com

So, what’s this about the social media quality control, mortgage marketing and the FFIEC?  We’ve taken the 36-page proposal and condensed it for you into just a couple of pages.  And, YES, this affects you, your company and third-party providers who use social media to communicate with customers on your behalf.  Read what is considered social media.  Which laws you need to comply with. What the company has to do to comply and what loan officers and staff must be aware of.

I’m sure not many people in the mortgage industry know who or what the “Federal Financial Institutions Examination Council” (FFIEC) is all about.

Well, be prepared, because they are now one of the agencies “folded into” into the Consumer Finance Production Bureau group of agencies and they want you to implement a social media quality-control plan.  Not only companies as a whole, but loan officers, staff members and third-party providers.

A little history:   Started in 1979, the FFIEC is an “internal federal agency” founded to create uniform standards and report forms for the federal examination of financial institutions for the

Board of Governors of the Federal Reserve System (FRB)

Federal Deposit Insurance Corporation (FDIC)

National Credit Union Administration (NCUA),

Office of the Comptroller of the Currency (OCC)

Consumer Financial Protection Bureau (CFPB)

In the past, FFIEC had very little to do with the mortgage industry (non-bank companies), but all of that has changed since CFBP hit the scene.

In January, 2013, the FFIEC has been given the task of providing “examination procedures” for SOCIAL MEDIA compliance and reporting.

So, way back when the rules were written, social media wasn’t around!  However, the CFPB has given them the task of not only making sure that consumer contact, marketing and communications using this method are monitored,  but that financial institutions, banks, savings and loans, and credit unions as well as non-bank entities have an internal quality control plan to make sure you comply with all the laws.

If their proposal is adopted http://www.ffiec.gov/press/pr012213.htm (here’s the link if you’d like to read the 36-page proposal), FFIEC will provide a “guide” for everyone to follow and you will be expected to make sure that any involvement with social media communications are legal and don’t incur any “risks” to consumer or the institutions themselves.  Once it is written, they will also encourage State Regulators to adopt the rules for THEIR examination process too.

What does the FFIEC consider “social media”?

Any form of interactive, online communications where you would generate or share “content.”  It includes:

  • Text
  • Images
  • Audio or video recordings
  • Email
  • Blogs
  • Websites
  • Bulletin boards/forums
  • Photo-sharing sites
  • Professional networking sites
  • Virtual worlds
  • Social games

So, how would this this affect you as a mortgage company?  As an LO or staff member?

First, let’s talk about how this would affect a mortgage company as a whole—and what company owners and managers need to know!

Companies are now using social media as a marketing tool to

  • Attract business
  • Communicate with consumers
  • Quote interest rates or loan programs
  • Offer incentives
  • Get new loan applications
  • Invite feedback from customers/prospects
  • Testimonials
  • Respond to complaints
  • Offer financial advice

Under the proposed rule, you will need a detailed “risk management” program to monitor and control the risks related to social media that may adversely affect your company/business.  The dealio here is that you’ll need to know the rules and regulations—and make sure you comply when using social media.  This includes the following rules and regulations.

  • Truth In Lending Act/Reg Z
  • Truth in Savings Act/Reg DD
  • Equal Credit Opportunity Act/Reg B
  • Fair Housing Act
  • Real Estate Settlement & Procedures Act/Section 8
  • Fair Debt Collection Practices Act
  • Unfair, Deceptive or Abusive Acts or Practices/Sec 5
  • Deposit/Share Insurance Disclosures
  • Advertising/Share Notice of NCUA Share Insurance
  • Non-deposit Investment Products
  • Electronic Fund Transfer Act/Reg E
  • National Automated Clearing House Association Rules
  • Bank Secrecy Act
  • Anti-Money Laundering Act
  • Community Reinvestment Act
  • Gramm-Leach-Bliley Act – Privacy Rules and Data Security Guidelines
  • CANN-SPAM Act
  • Children’s Online Privacy Protection Act

Some of these rules may not apply to you—but the part about managing the risk is to know each rule and make sure you comply.  For example, under the Fair Housing Act, if you post something that says you have “low-Income housing money available,” the rule considers that type of marketing as violating fair housing.  You may want to change the terminology to “rent-subsidized money available.”

Your Social Media Quality Control plan should include the responsibilities of your compliance department, technology people, legal counsel, human resources and marketing departments (internal and external).

How this will affect Loan Originators and staff members!

Loan officers, processors, underwriters, and servicing staff must also comply.  You will need to know the rules and regulations for each of the “Acts” mentioned above.  If you quote an interest rate, a down payment (even “no-down-payment) or a payment using any of the social media methods mentioned, you must comply with Reg Z Truth In Lending rules, which include full disclosure of the terms of the loan.

Even if you send a private message using email or social media asking for a Credit Card number or Social Security Number and the customer gives it to you, your technology department must ensure that your site is secure and complies with the Gramm-Leachy-Bliley Privacy Rules Act!

Oh and I recently saw a loan officer post a “contest” that if you send her a referral, your name will be entered into a drawing to win an iPad!  RESPA Section 8 kickback violation!

Do you see where I’m going with this? 

You must know every one of the rules that apply to you and your company and create disclosures that need to be included. You must also know the laws or what actions need to be taken when communicating using social media.

And it doesn’t stop there.  Even if you (a loan officer or internal staff) post something on your personal Facebook page, if it has something to do with your mortgage business (as people perceive that you represent the company), the company must have a plan in place as to what you are or are not allowed to post on your private social media pages.

Oh, and there’s more…

Included in the Social Media Quality Control Plan, you must also consider how you/your company will handle the following:

Risks to Your Reputation – Negative publicity could arise from negative comments from the public, the press, dissatisfied customers.  Even if none of the rules have been violated, you will need a plan to manage the risk of “reputation.”

Risks to Fraud and Brand Identity – It is suggested that you include in your plan a way to monitor your online/social media presence in case someone steals your identity, or in the case of fraudulent use, phishing, spamming or spoofing attacks.

Third-Party Monitoring – Many companies use virtual assistants or hire someone to post their blogs and content for them.  Sometimes the content is created by the company and they merely post the content.  Sometimes the third party creates the content for them.  It’s your responsibility to ensure that third-party companies comply with the rules and regulations too.

Just to let you know, the definition of “social media” may be expanded after the rule has been finalized.  There may be other “government acts” that will be included after the comment period.  The proposed rule will become law.  You may want to get started on it right now—with the information that I have provided here.

Big Brother is Watching – Joint Venture between FHFA and CFPB to Monitor the Mortgage Market

Joint Venture between FHFA and CFPB to Monitor the Mortgage Market!

A new national mortgage database is being created to provide the ability to track and monitor various topics.  Some of the ways this database would be used would be to:

  • Monitor the relative health of the mortgage markets and consumers by tracking mortgage loan performance, such as payments being made on time and information on loan modifications, foreclosures and bankruptcies
  • Provide new insight on consumer decision-making by  using the database to conduct surveys
  • Monitor new and emerging products in the mortgage market that would assist regulators in understanding potential problems or  new risks via volume and performance data
  • View both first- and second-lien mortgages for a  given borrower which would allow policymakers the ability to see how many mortgages borrowers may have and how they are performing
  • Understand the impact of consumers’ debt burdens  with the ability to view or have information on a borrower’s other debt obligations, including auto loans or student debt.

This database will include information from the birth of a mortgage loan through the servicing and will include a variety of borrower characteristics.  The database will include loan-level data about the mortgage such as the borrower’s financial profile, their credit profile, the mortgage product and associated terms and ongoing payment history.

The data would be updated on a monthly basis and would be able to track as far back as 1998.

What does it really mean to you? 

Does this mean Big Brother is upon us?  Yes it does.  This is being presented as a solution that the FHFA was required to implement under the Housing and Recovery Act of 2008, which was to conduct a monthly mortgage market survey. 

They go on to say that the database will not contain any personally identifiable information, but I find that hard to believe. 

Can this be a good thing?  It depends on the real purpose of this national database and how it will be used.  It seems innocent enough on the surface, but if used inappropriately it could further restrict the independence and decision-making that is currently left to a borrower or lender based on their own personal risk appetite.

Much of this information is currently available from many private entities that collect various bits of our lives, but it is not all inclusive with any one entity and there is no one central place that holds all this information in one place, UNTIL NOW! The government will now have access to this information. 

It will take a while to build this database, but the CFPB and FHFA are indicating that early versions of the database could be ready as early as sometime in 2013.

Karen Deis, Publisher of www.MortgageCurrentcy.com, an ezine that keeps you up to date on all the mortgage rule updates because getting a loan approved and closed these days IS rocket science! 

Just So There’s No Misunderstanding–Mortgage Rules & FAQ’s

Title:  Just So There’s No Misunderstanding

By: Karen Deis, Publisher, MortgageCurrentcy.com

Before I get started with the updates for December, what I’ve noticed over the last few months is that Fannie, Freddie, FHA, VA and USDA have issued quite a few clarifications and updates in the form of FAQ’s and enhancements to cover the “grey areas,” so underwriters and LO’s have a clearer picture of exactly what a rule change means in plain language (just so there is no misunderstanding).

You’ll find three of them here this month from Fannie, including the new FAQ started on 11-19-12 where they answer DU 9.0 questions. Fannie has also created a comparison chart between DU 8.3 and DU 9.0 to illustrate the differences between the two.  You’ll find it in this issue.

If there is one article I would recommend that you read this month, it’s the one where Fannie makes some big underwriting clarifications in Announcement SEL 2012-13.

Here are some of the highlights, because these affect your files in process right now.

  • If you are refinancing a loan, the property taxes are 60 days past due and you are paying the back taxes by including them in the loan amount, it triggers a mandatory escrow account.
  • Fannie went on to talk about “their indication of borrowed funds.” The trigger here is that if there is a large deposit that exceeds 25% of total monthly qualifying income, additional backup documentation is needed.
  • Retirement funds used for cash reserves may be discounted by up to 40%, depending on the volatility of the type of retirement account.
  • Additionally Fannie indicated that you no longer have to get a letter or back-up documents that say the collection poses no threat to their first lien position.  This will make it easier on you and your borrowers.
  • You’ll find five more updates in this announcement, including the treatment of capital gains or losses – you no longer have to count them, even if they are reoccurring. And Fannie says you no longer have to count the Treatment of Capital losses as a liability (or income), even if the losses are reoccurring.

Let’s talk about the Consumer Finance Protection Bureau.  The latest warning is their findings when it comes to deceptive advertising practices.  They are relying on Reg Z advertising rules, which cover mortgage companies, and the Mortgage Acts & Practices rules, which apply not only to mortgage companies, but to real estate agents and builders as well.

My personal observation is that CFPB is asking their examiners to review ALL types of advertising and then to create a section in their examination manual for everyone to follow.  That’s why, for right now, they are sending out warning letters instead of fines.

MAP has been around since 2011, and you’ll find attached to this newsletter the article and Mortgage Talking Points™ article for your real estate agents and builders and what they need to do to follow the rules. In addition, you’ll find a REG Z video training course, with examples of mortgage ads that don’t meet federal rules.

Other updates this month

  • A joint venture between FHFA and CFPB to monitor the mortgage market
  • HARP program extension
  • Updates to the Fannie Appraisal messaging system
  • No increase in loan amounts for Fannie/Freddie
  • HUD and NMLS team up to collect data when you order a case number
  • VA updates to form 26-8937
  • FHA Extends Anti-Flipping Rules

In recapping this year, we wrote 114 updates – or about 10 per month.  In addition, we posted 136 most frequently asked questions that we hoped would help you get more of your loans approved.  Oh, and I also wanted to mention the “marketing component” of your subscription to MC – the automatic Tweets, Facebook posts, Mortgage Talking Points™ and charts and checklists.  www.MortgageCurrentcy.com

I hope that 2013 is your best year ever in the mortgage industry – and remember, getting a loan approved and closed these days… is rocket science.

What Do NMLS, FHA Condos, HARP & USDA have in common?

Title:  What do NMLS, FHA Condos, HARP and USDA have in common? 

By: Karen Deis, Publisher, MortgageCurrentcy.com

What do NMLS, FHA Condos, HARP and USDA have in common?

All of them have had rule changes within the last 30 days!

So, let’s start by talking about what’s supposed to happen when NMLS updates their website on October 22…

They are updating their “credit flags” and “credit scoring thresholds” within the reporting features.  So what does this mean to you? When it’s time to renew your license,  if you have at least one derogatory credit issue or change from the previous year, or you have a decrease in your credit score, your state’s licensing board will be notified and they will determine whether or not your license will be renewed.

They have also added some additional questions when you reapply. The most significant one is where they ask you if you have had any local, state or federal displinary actions taken against you.  If you answer yes, you must explain what it is – and again, the state will decided whether to renew your license.

One thing you can do right now is check your credit, and remember that NMLS uses Vantage scores, not Fico scores.  SO within this article, we’ve include a link where you can order your Vantage credit score.

Next, Fannie and Freddie have made it easier for consumers to qualify for HARP  Refi’s.  You’ll find two separate articles, but they are pretty much in sync with each other now—including the biggie that if the new monthly payment changes less than 20% over the old monthly payment, they are reducing the documentation for income and assets.

For example, if a borrower has at least 12 months’ PITI in cash reserves, there is no need to verify income.

They have also made it easier to remove a borrower. And if you are refi’ng a rental property, they have eliminated Form 1007.

Here’s what you need to know – the DU System has not yet been updated, and underwriters have been advised to disregard DU messages and use these new requirements.

So, it’s important that YOU know what the changes are, just in case the underwriter doesn’t know what has been updated or is asking for documents that may appear on the findings, but are not needed due to these changes.

Oh, and I just wanted to mention again that you’ll find a couple of mortgage talking points for consumers about this topic.

Let’s switch to FHA, where they have changed the Condo approval process, making it easier to get them approved.

The biggest changes are the homeowner’s association dues and investor ownership percentages.  Those have been real deal-killers in the past.

And if you’ve wondered what the old condo approval rules were—and how they have changed—we not only created a handy chart for you to refer to, but also provided a Mortgage Talking PointsTM for your real estate agents.

One last bit of news from USDA…last month, they made an announcement that they would be eliminating some cities and changing income limits on others.

How they make that determination is based upon census information, but they found there was a flaw in the data because the 2010 census no longer asked for income information, which was the method used by Rural Housing to determine eligibility.  They claim they will have it all worked out by the end of March, 2013.  Makes me wonder how they plan to do THAT!

One of the reasons I write about the rules and regulations and interpret them in plain language for you, is that I realize that getting a loan approved and closed these days, is rocket science!

(Read these articles for just $1. www.MortgageCurrentcy.com)

What you don’t know–can cost you a commission!

What You Don’t Know—Can Cost You a Commission!

By: Karen Deis, Publisher, MortgageCurrentcy.com

Before I get started on the mortgage rule and regulation updates from the last 30 days, I wanted to mention that there is a free article for you this month about the Consumer Finance Protection Bureau’s proposed no point, no fee rules, with an example of how it would work in real life!  http://www.mortgagecurrentcy.com/free-article-list.php

Okay, so a couple of FHA updates for you.

FHA has a little-known area in their appraisal section in regard to what they call unique properties.  HUD has given guidelines when it comes to log homes, extra small homes, lower than normal ceiling heights, and so on.

If a property has excess land, you’ll find guidelines on how to get an FHA loan.  Also covered are commercial use of property and homes that have been moved to a new foundation.  You’ll find a Mortgage Talking Points ™article to email and share with your real estate agents with all the details.

There is a new HUD Mortgagee letter regarding documentation required to verify social security income.  Basically, they are now in line with Fannie and Freddie that if the award letter has no expiration date, the lender is to consider that the income is likely to continue.  This is great news for everyone, and loan officers and Underwriters finally have something to cover their backsides with specific documentations.  Keep this 12-15 Mortgagee Letter handy until they get the Handbook updated.

Oh, one last thing – it really doesn’t need an article written about it, but is important nevertheless – FHA updated their Total Scorecard Users Guide.  It’s been updated on the website, including the video training class called FHA Total Score Card – 8 Deal Killers.  If you are a subscriber, it’s included.  If not, you can access it for $9. http://www.mortgagecurrentcy.com/video_training/course_list.php  

Now, on to a big announcement for some of you in high-cost areas.  VA has increased quite a few loan limits, so take advantage!  Comb those “VA jumbo” past contacts and see if there are any Veterans you can help out with purchases and refinances. The higher amounts are for purchase contracts and refis between August 6 and December 31, 2012. 

If there is one article that you need to read in this issue, it’s Fannie’s announcement 2012-07 with a ton of updates that will go into effect with the release of DU 9.0 on October 20, 2012.

The biggest change here:  FNMA is retiring the Comprehensive Risk Assessment Worksheet that it created years ago to assist lenders in assessing risk on a manually underwritten loan.  Now FNMA is moving many of these tips and risk awareness/parameters to their Eligibility Matrix, which include DTI and minimum credit score flexibility restrictions.

You’ll also want to read the latest HARP 2.0 FAQ’s that came out on August 16.  They did not highlight the changes in bold this time around, so we had to go back to the previous one to find out what was changed and what was added.  There were a total of 5 updates.

One of the questions has to do with subordinated financing, which will be updated when DU 9.0 is live on Oct 20th.  The other biggie has to do with reps and warranties – which is a huge gift Fannie is giving to lenders and underwriters.

And, if you are doing Rural Housing loans, we sent an email to subscribers a couple of weeks ago that the money for refi’s is all gone for the fiscal year ending October 1st.

And if you have a purchase transaction sitting there waiting for a loan commitment for USDA, it has to have a conditional commitment by Sept 30 or new annual and guarantee fees go into effect.  If the files aren’t committed by then, you must redisclose.

Call your local USDA office and find out their backlog. You may also want to warn your clients and real estate agents that there is a good possibility that they may have to pay a higher fee.

One last thing – we have posted the latest NMLS list of licensing and continuing ed requirements, by state.  Check out the document and see what’s required in your state.

Remember, “Getting a loan approved and closed IS rocket science.” You can read all the articles for just $1.  Click Here to Access. http://www.mortgagecurrentcy.com/subscription_options.php