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.

 

 

 

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)

HVCC Morphs Into Appraiser Independence

HVCC Morphs into Appraiser Independence

Karen Deis. Publisher, www.Mortgage Currentcy.com

The new Appraiser Independence rule and the sunset of HVCC doesn’t change a thing. There are some publications out there stating that the Interim Rule doesn’t prohibit production staff from ordering, paying for, or participating in the appraisal process directly with appraisers – but we’re here to tell you differently. The link to the Federal Reserve gives you access to the actual Federal Register – it states that Lenders are required to ensure Appraiser Independence from production staff – essentially continuing the HVCC rules regarding ordering, payment, & process. Mortgage Brokers, LO’s, & other production staff are prohibited from selecting, influencing, paying, or having substantive communications with appraisers.

Portability – Reps & Warrants are still required for use of another Lender’s appraisal. Since this is now Federal Law and all Lenders will now be adhering to the Appraiser Independence Requirements, the portability should become easier. What was the problem before? Not all Lenders were selling to Fannie and Freddie and therefore did not need to comply with HVCC – since no one could ever guarantee the compliance across the board, the portability of appraisals was just not happening. If you noticed, there was never an issue with appraisal portability for Government Loans – that’s because ALL Lenders played by the same rules with clear guidance from HUD.

Fannie (SEL 2010-14) and Freddie (2010-23) issued their own interpretations—which are basically the same, HOWEVER, Freddie goes into much more detail—with added instructions on how appraisers are supposed to appraisal REO’s and Short Sales. Fannie’s interpretation leaves a lot to be desired! Can you say buy-backs anyone?

Realtors & Builders are not prohibited from having contact with or providing information to the appraiser – they are however prohibited from inappropriate or illegal behavior – coercion, extortion, collusion, compensation, inducement, intimidation, bribery, etc.

Interim Final Rule – the rule is out for comment for 60 days…a few tweaks are likely, but this was developed with all the HVCC problems in mind and all the players having input – I do not expect much will change.

Easy Way to Keep Track of Lender Overlays

Let’s say you do business with 5 or 6 lenders. You (or your compliance department) get email updates. Maybe you get them one at a time. Maybe you get 10 changes at one time. An easy way to keep track of all lenders, all at one time is by subscribing to www.LendingArt.com. It’s free and when you register, you can pick and choose which lenders you want updates from. It’s just that easy.

Drapes & Blinds Might Be a Seller Concession-Who Knew?

Okay, this is just a heads up–but check with your lender.  Looks like Fannie is using this little-known rule as “buy-back” leverage. 

So, I’ve seen a trend lately from several of the big lenders…that curtains, drapes, blinds are considered personal property.  Who knew– but in reviewing Fannie’s Underwriting Guidelines, looks that they added something about it in 2007. 

So, here’s the dealio…if it’s mentioned in the purchase agreement (and most PA’s already have the wording as part of the agreeement anyway)  it’s supposed to be treated as personal property, the appraiser must make a comment and deduct the value of the window covering from the value of the home.  If NOTHING is mentioned, they it’s assumed that they are NOT leaving the window treatments. 

…I’m just saying it’s just another thing to watch out for!