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’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.

Your Credit Report vs. Your Mortgage License–Heads Up!

Beginning November 1,  NMLS says that all LO”s are supposed to log into NMLS and authorize TransUnion to send a credit report (electronically, within NMLS) to their regulator(s). “MLOs will have to answer 3-4 questions about themselves in order to verify their identity with TransUnion before the credit report is generated.

So,  what’s “wrong” about the way loan officers have to be licensed?  ..first you pay all that money, spend all that time getting your license and only AFTER you’ve done that…will they pull a credit report…too see if you can continue doing loans.   I’ve heard of loan officers who are “on probation” because they had a collection 3 years ago.  Another state has suspended a LO’s license because of back child support (yeah, the child support needs to be paid–but how can he if he’s not working?)

It’s the cart before the horse scenario.

While a company may pay for the credit report through NMLS, only the MLO will be able to complete the identity verification process.” http://mortgage.nationwidelicensingsystem.org/profreq/credit/Pages/default.aspx. for more info on what’s involved and the fees.  Be sure to click thru to the OTHER links  on the website page metioned above.

I recommend that you check out your state’s “financial responsibility” measuring stick.  Your report will be sent to your state and they will contact you if problems. 

Keep up to date on all the rules and regulations with www.MortgageCurrentcy.com.  Try for $1 (just one buck)…