MCA Monthly Update - June 2009

Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, each newsletter we send contains underwriting tips, processing tips, and compliance updates. We hope that you find the content informative and useful. As always, your feedback is appreciated.

RED FLAG POLICY

Beginning August 1, 2009, the Federal Trade Commission (FTC) will require that all financial institutions and creditors, including mortgage brokers and mortgage lenders, have in place a written identity theft prevention program, also known as a Red Flag Policy. This policy should provide for the identification, detection, and response to patterns, or specific activities that could indicate identity theft. We’ve included a link that further explains the Red Flags Rule, as well as a link to the press release that extends the deadline from May 1 to August 1.

Explanation of Red Flags Rule - http://www.ftc.gov/bcp/edu/pubs/business/alerts/alt050.shtm
Extension Press Release - http://www.ftc.gov/opa/2009/04/redflagsrule.shtm

If you have questions about implementing a Red Flag Policy in your organization, let us know.

UNDERWRITING & PROCESSING TIPS

Based on some common findings from quality control audits, we have compiled a list of four tips from the month of May.

1. On the Good Faith Estimate, prepaid finance charges (PFC’s) are often marked incorrectly. Some are marked as PFC’s that should not be, and vice versa. Make sure to be mindful when marking PFC’s.

2. If the borrowers do not indicate their ethnicity on the Initial Application under “Government Monitoring,” the loan officer is required to fill it in. This can be based on the loan officer’s best estimate, based on observation or the borrower’s name.

3. Many brokers do not have approval documentation from the lender. If the broker simply asks for the approval documentation, the lender can get it. This documentation should be in the file.

4. Everyone should get a closing package from the closing agent for their file.


FHA UPDATE

HUD frequently publishes updates, known as Mortgagee Letters, containing new policies and other information for lenders. Since our last newsletter, HUD has published two additional letters. Below is a brief summary of both:

• Manufactured Housing Policy Guidance – Property and Underwriting Eligibility: Letter 09-16. “This Mortgagee Letter provides guidance on manufactured housing eligibility requirements for FHA mortgage insurance under Title II of the National Housing Act.” (Click here to view the entire letter.)

• Accuracy of Lender Data for FHA-approved Mortgagees: Letter 09-17. “In an effort to strengthen its controls, the Department will eliminate the paper version of the Yearly Verification Report (V-Form) required for all renewing FHA-approved lenders and replace it with an automated Annual Certification process completed in the FHA Connection. Only corporate officers and principal owners with authority to legally bind the corporation or entity will be permitted to complete the Annual Certification on behalf of an institution. …In order to prepare for these new requirements, all FHA approved lenders must confirm or update the information stored in the FHA Connection regarding their institutions so that it is accurate and complete.” (Click here to view the entire letter.)

To view all HUD Mortgagee Letters for the year, click here.

If you have any questions, simply call us at 877-226-3216.