Hud posted a press release this morning, announcing more policy changes. These changes are aimed at strengthening FHA's capital reserves while working to reduce risk. The announced FHA policy changes include:
1. Increased mortgage insurance premium (MIP)
2. Updated FICO scores and down payments
3. Reduced allowable seller concessions from 6% to 3%
4. Increased enforcement on FHA lenders
Read all the details in HUD's press release.
With all the recent regulation changes, it can be frustrating trying to keep up. We are happy to answer your questions. Visit www.MortgageComplianceAdvisors.com or call 877-226-3152.
Showing posts with label Mortgage Compliance. Show all posts
Showing posts with label Mortgage Compliance. Show all posts
Wednesday, January 20, 2010
Thursday, January 7, 2010
MCA Monthly Update - January 2010
Find underwriting & processing tips and compliance updates in our January newsletter, including useful links and resources for the new RESPA Rule.
Wednesday, January 6, 2010
Get the latest regulation news from our new website
Check out our newly redesigned website to find upcoming regulation deadlines, the latest compliance news, and other helpful resources.
Our new website is designed to be a helpful central location where you can find an abundance of frequently updated information for regulations from FHA, Fannie Mae, Freddie Mac, VA, the FTC, etc. Each deadline or resource is linked to the official regulation or form, so that you can read the exact wording.
Regulations continue to change, but Mortgage Compliance Advisors will help you comply.
Our new website is designed to be a helpful central location where you can find an abundance of frequently updated information for regulations from FHA, Fannie Mae, Freddie Mac, VA, the FTC, etc. Each deadline or resource is linked to the official regulation or form, so that you can read the exact wording.
Regulations continue to change, but Mortgage Compliance Advisors will help you comply.
Tuesday, December 15, 2009
MCA Monthly Update - December 2009
Read our December newsletter, with tips for underwriting and processing, as well as compliance updates for FHA, Fannie Mae, and Freddie Mac.
Monday, November 16, 2009
Quality Control Guidelines Summarized for Fannie Mae, Freddie Mac, and FHA
Many investors and agencies, such as Fannie Mae, Freddie Mac, and FHA, require its lenders to have an active quality control plan in place. We wanted to help make the regulations more understandable for you, so we published an article summarizing basic quality control guidelines for Fannie Mae, Freddie Mac, and FHA. We hope you find the information useful — and we are always happy to answer your questions.
Read the full article summarizing QC guidelines for Fannie Mae, Freddi Mac, and FHA.
Read the full article summarizing QC guidelines for Fannie Mae, Freddi Mac, and FHA.
Wednesday, November 4, 2009
MCA Monthly Update - November 2009
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| MCA Monthly Update November 2009 |
| Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, our newsletters contain underwriting tips, processing tips, and compliance updates. We hope that you find the content informative and useful. As always, your feedback is appreciated.
If you have any questions, simply reply to this email or call us at 877-226-3216. For real time compliance news, you can now follow us on Twitter and Facebook. Update: The FTC recently extended the enforcement date for the Red Flags Rule to June 1, 2010.* Implement your Red Flag Policy to comply. *(See http://www.ftc.gov/opa/2009/10/redflags.shtm.) |
| Underwriting & Processing Tips | |
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Based on some common findings from quality control audits, we have compiled a list of four tips from the month of October. 1. If the final TIL APR varies from the intial TIL by more than .125%, it must be redisclosed (as of July 30, 2009). 2. One of our most common problems is the duplication of documents throughout the file, which can make the file much larger than it should be. Please make sure to review your files to prevent excessive duplication. 3. The underwriting approval is required in your package. Make sure to retain and include a copy of the underwriting decision in your file. 4. For quality control audits, be sure to include only final AUS findings in the file. | |
| FHA Update | |
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ML 09-38: Update on Eligibility Requirements for Nonprofit Instrumentalities (115 Waiver). - "Expand[s] eligibility requirements for nonprofit instrumentalities of government to include entities the income of which is excluded from Federal taxation under § 115 of the Internal Revenue Code of 1986 (IRC).
- [They can be approved] for placement on the FHA Nonprofit Organization Roster (Roster) and ...participate in single-family housing programs as providers of secondary financing." (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ML 09-39: Updated Claim Filing and Delinquency/Default Reporting Requirements For FHA's Making Home Affordable Modification Program (FHA-HAMP). - "Updated claim filing and delinquency/default reporting requirements for the FHA Home Affordable Modification Program (FHA-HAMP).
(View the entire letter.)
- Mortgagees must begin reporting the updated status codes beginning with the January 2010 reporting cycle." - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
ML 09-40: Policy and Procedures on Multifamily Mortgage Insurance Applications Involving Master Lease Structuring to facilitate the use of Tax Credits. - "Represents the Department's final policy and procedures for Master Lease applications... - A Master Lease, also known as a Sandwich Lease or Credit Pass Through, is used by developers of multifamily projects to maximize the realization of tax credit equity and distribute benefits among various investors." (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ML 09-41: Appraisal performance standards and sanctions. - "Reminds mortgagees and appraisers of [FHA] appraisal performance standards... and FHA enforcement standards and sanctions that can be imposed by the Department upon appraisers who do not comply." (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ML 09-42: Sub-Servicing of FHA-insured Mortgages. - "To meet the increased need for loss mitigation, the Department has no objection to mortgagees entering into subservicing agreements with other FHA-approved servicers to perform loss mitigation functions." (View the entire letter.)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ML 09-43: HOPE for Homeowners Program - Comprehensive Guidance. "Key changes to the HOPE for Homeowners (H4H) Program:
- Borrowers are ineligible if their net worth exceeds one million dollars, - Borrowers must not have defaulted on any substantial debt in the last 5 years, - The age of appraisal now follows standard FHA guidance, - Reduced mortgage insurance premiums, - Revised loan-to-value and debt-to-income ratios, - Maximum loan-to-value excludes the Upfront Mortgage Insurance Premium, - Eliminated requirement for obtaining most recent two year tax returns, - Eliminated special lender and underwriter certification, - Exit Premium replaces Shared Equity, - Shared Appreciation feature eliminated, - New note and mortgage replaces previous shared equity and shared appreciation notes and mortgages, and - Lenders must submit 5 test cases for pre-closing review by FHA." (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ML 09-44: Home Equity Conversion Mortgage (HECM) Program -- Clarification of Debenture Interest Calculation for HECM Claim Type 21; Claim Filing Instructions for HECM Claim Types 21 and 24. "Items addressed in this Mortgagee Letter: - Clarification of the term "due date" as it relates to HECM Claim Type 21. - Identification of the additional information that must be provided for Claim Type 21, to ensure the proper calculation of debenture interest. (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ML 09-45: Introduction of HUD's Web-Based Training Application: Electronic Class (EClass) on Loss Mitigation and Servicing System. - Announces that HUD's on-line, web-based training application, EClass, is now available. It will provide additional training on FHA's Loss Mitigation Programs, including FHA-HAMP, and other industry questions.
- The web-based application may be accessed at the following address: https://eclass.hud-nsctraining.com. (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - To view all HUD Mortgagee Letters for the year, visit the official website. *We offer FHA, VA, and HECM reference manuals with regulations and policies updated quarterly. For more information, visit our website or call 877-226-3216. | |
| Fannie Mae Update | |
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Update, dated 10/6/09: Mortgage Loan Data Requirements - "Effective date for the requirement to deliver the loan origination identifiers and appraiser data elements has been extended to July 1, 2010.
- "Payment Reduction Plan™ (PRP) will replace the HomeSaver Forbearance™ (HSF) program.
- The purpose of a PRP is to provide a borrower with temporary payment relief while the servicer and the borrower work together to find the appropriate permanent foreclosure prevention solution." (View the entire announcement.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Announcement 09-31: Updates and Clarifications to the Home Affordable Modification Program. Contains updates and clarifications to the following topics: - Updates to Standard HAMP Documents
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Announcement 09-32: Selling Guide Update - October 2009.
- Announces the release of the first update to the April 2009 Selling Guide, which will replace the April 2009 Selling Guide. (View the entire announcement.)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Selling Notice, dated 11/4/09: Electronic Appraisal Delivery Update. - Announces deadline change from March 1, 2010 to July 1, 2010 for requirement to submit electronic appraisal reports in an acceptable XML format. (View the entire notice.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Announcement 09-33: New Deed-for-Lease Program. - Introduces Deed-for-Lease Program (D4L), designed to minimize bad effects caused by vandalism and theft to vacant homes. - "D4L allows qualifying borrowers of properties transferred through deed-in-lieu of foreclosure (DIL) to remain in their home and community by executing a lease of up to 12 months in conjunction with a DIL." (View the entire announcement.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - To view all Fannie Mae Announcements and Letters for the year, visit Fannie Mae's website.
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| Freddie Mac Update
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Bulletin 2009-24: Credit and Property Eligibility. - Revises certain credit and property eligibility requirements, including changes to requirements for Freddie Mac-owned streamlined refinance mortgages and Freddie Mac Relief Refinance Mortgages.
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Bulletin 2009-25: Multiple Subjects.
- Makes multiple changes to selling and servicing requirements, such as document custodial operations, uniform instruments, attorney fees and title expenses, etc. (View the entire bulletin.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Bulletin 2009-26: Home Affordable Modification Program.
- Reminds of changes to HAMP made in Supplemental Directive 09-07.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - To view Freddie Mac news, visit Freddie Mac's website. | |
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Monday, October 5, 2009
MCA Monthly Update - October 2009
Welcome to the MCA Monthly Update. To help you stay compliant and up-to-date, our newsletters contain underwriting tips, processing tips, and compliance updates. For this month’s newsletter, our focus is on compliance updates because HUD has came out with several announcements since our last newsletter. We hope that you find the content informative and useful. As always, your feedback is appreciated. If you have any questions, simply reply to this email or call us at 877-226-3216.
For real time compliance news, you can now follow us on Twitter and Facebook.
Reminder: 3rd Quarter ended September 30. Remember to get your quality control file audits done for FHA, Fannie Mae, Freddie Mac, etc.
EFFECTS OF HUD’S ANNOUNCEMENT FROM SEPTEMBER 18, 2009
HUD announced several changes on September 18. These changes affect FHA lenders and loans, including the FHA approval process for brokers. Visit our blog to read how HUD’s announcement affects sponsors and brokers.
FHA UPDATE: NEW MORTGAGEE LETTERS
• Multifamily Housing Accelerated Processing Guide: Chapter 9, Environmental Review: Letter 09-27
- Announces the release of a revised and updated Multifamily Housing Accelerated Processing Guide, Chapter 9, with new environmental requirements. (View the entire letter.)
• Appraiser Independence: Letter 09-28
Announces New Requirements, effective January 1, 2010:
- Prohibition of mortgage brokers and commission based lender staff from the appraisal process
- Appraiser selection in FHA Connection must be the appraiser who actually performs the appraisal
- Clarifies and expands their policy regarding Appraisal and Appraisal Management Companies’ (AMC) third party origination fees
Re-affirms Existing Requirements:
- Prevention of Improper Influences on Appraisers
- Appraiser Independence Safeguards
- Mortgagees are reminded that they are they are responsible (along with the appraiser) for the integrity, quality, and thoroughness of the appraisal. (View the entire letter.)
• Appraiser Portability: Letter 09-29
- Addresses the portability of appraisals when a borrower switches the lender during loan processing-- effective for all case numbers assigned on or after January 1, 2010.
- “Appraiser shopping” is prohibited. In this case, the first lender must, at the borrower’s request, transfer the case to the second lender. FHA does not require that the appraisal be changed to reflect the new lender, but FHA Connection must reflect the correct lender. (View the entire letter.)
• Appraiser Validity Periods: Letter 09-30
- Announces a change to the validity period for appraisals--reduced from 12 months for proposed construction and 6 months for existing construction to 4 months (120 days) for all appraisals. Effective for all case numbers assigned on or after January 1, 2010. (View the entire letter.)
• Strengthening Counterparty Risk Management: Letter 09-31
Provides notice of several FHA program changes as a result of the enactment of the “Helping Families Save Their Homes Act of 2009” (the HFSH Act):
- It provides limitations on those eligible for the program. Ineligible participants are identified as currently suspended, debarred, under a LDP, under indictment, subject to unresolved findings in a HUD or other government audit, investigation, or review, etc. It is important that you read these specifications in depth.
- Change of lender’s fiscal year end date must be reported to HUD 90 days before change.
- Effective January 1, 2010, all supervised mortgagees (banks and credit unions) must now submit an annual audited financial statement within 90 days of their fiscal year end.
- Mortgagees must use their name as registered with HUD in all advertising and promotional materials related to FHA. Lenders must retain a copy of all advertising for two years.
- Approved lenders are required to notify FHA if individual employees are subject to any sanction or any other administrative action, or if there is a revocation of a State-issued mortgage origination license.
- The HFSH Act expands FHA’s ability to seek civil money penalties against any owners, officers, or directors, for violations of program requirements. (View the entire letter.)
• Revised Streamline Refinance Transactions: Letter 09-32
Announces revised procedures and re-affirms existing procedures regarding Streamline Refinance transactions, to be effective in 60 days or November 18, 2009.
Key Revisions:
- Seasoning set at 6 months
- Minimum payment history standards established
- Net tangible benefit for the borrower at a 5% lower payment with additional provisions pertaining to changing from fixed rate to ARM, and ARM to fixed rate. Investors and second home borrowers are prohibited from refinancing to an ARM.
- Transactions that include a reduction in mortgage term must now be processed and closed as a rate/term refinance.
- If subordinate financing is in place, the maximum combined loan-to-value is set at 125% with or without an appraisal. If there is no new appraisal, the CLTV is based on the original appraisal.
- New maximum mortgage amount for streamline refinances without an appraisal cannot exceed the outstanding principal balance, minus any applicable UFMIP plus the new UFMIP that will be charged on the refinance. A streamline with an appraisal is the lower of outstanding principal balance or 97.75% of the appraised value plus the new UFMIP. Discount points may not be included in the new mortgage.
- If borrower agrees to pay the discount in cash, the lender must verify the availability of funds.
- Certification that borrower is employed and has income.
- If credit score(s) is/are available, the lender must enter the credit score(s) into FHA Connection.
- Lenders should not use TOTAL on streamline refinance transactions. If a lender uses TOTAL, that loan must be underwritten and closed as a rate and term (no cash-out) refinance transaction.
- Mortgagees may no longer use an abbreviated version of the Uniform Residential Loan Application (URLA). The completed application must be dated and signed prior to underwriting of the loan. (View the entire letter.)
- It is our opinion at MCA that FHA is moving toward changing the streamlined rate reduction refinances as we have known them to correspond with other refinance transactions.
• Annual Base City High Cost Percentage Revisions effective January 1, 2009: Letter 09-33
- Announces the annual base city high cost percentage revisions for multi-family mortgages. (View the entire letter.)
• Home Equity Conversion Mortgage (HECM) – Principal Limit Factors: Letter 09-34
- Announces a change in calculating the maximum HECM loans, effective October 1, 2009. The new factors to be used result in a 10% reduced maximum loan. (View the entire letter.)
• Loan Modification: Letter 09-35
- Mandates that the interest rate on loan modifications be reduced to not more than 50 basis points above the FHA and FHLMC current weekly primary rounded to the nearest .125%, as of date of modification. The modified loan amount is then amortized over a 30-year period. (View the entire letter.)
• Revised Eligibility: Letter 09-36
- Reminds appraisers and lenders that as of October 1, 2009, appraisers listed on FHA’s Appraisal Roster who are not state certified will be removed from the roster. (View the entire letter.)
• Flood Zone Requirements and Responsibilities of FHA Mortgagees and Appraisers: Letter 09-37
- Reminds mortgagees and FHA Roster appraisers of their “responsibility to determine if a property is located within a Special Flood Hazard Area…[and reiterates FHA’s] eligibility requirements for properties located in such zones.” (View the entire letter.)
To view all HUD Mortgagee Letters for the year, visit the official website http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.
*We offer FHA, VA, and HECM reference manuals with regulations and policies updated quarterly. For more information, visit our website or call 877-226-3216.
FANNIE MAE UPDATE
• Notice: Refi Plus – Update: MBA Delivery Date for Loans with LTVs above 105 Percent, dated 9/4/09
- “The effective date for MBS delivery of Refi Plus loans with LTVs above 105 percent under the CQ prefix…[is] October 1, 2009.” (View the entire announcement.)
• Energy Loan Tax Assessment Programs: Lender Letter 07-2009
- “This Lender Letter is intended to alert lenders to issues concerning ELTAPs [Energy Loan Tax Assessment Programs] in the underwriting and servicing of Fannie Mae mortgages. …Typically, homeowners repay ELTAP loans via their property tax bill, and in the event of non-payment, the ELTAPs have priority over Fannie Mae’s mortgage lien.” (View the entire announcement.)
• Updates to Minimum Credit Scores, Mortgage Insurance, Pricing for Certain Desktop Underwriter Loans, Biweekly Loans, and Special Feature Codes: Announcement 09-29
“Following is a brief summary of the changes:
- Changes to minimum credit score requirements;
- A number of changes to mortgage insurance coverage requirements, including a new minimum level of coverage and corresponding loan-level price adjustment (LLPA), retirement of Lower-Cost and Reduced MI options, and changes to financed mortgage insurance;
- Changes to pricing for Flexible mortgages and improved pricing for Expanded Approval® (EA) recommendations, and changes to EA special feature codes (SFC);
- Retirement of biweekly mortgage loans; and
- Changes to SFC requirements for MyCommunityMortgage® (MCM®) and other transactions.” (View the entire announcement.)
To view all Fannie Mae Announcements and Letters for the year, visit https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp.
FREDDIE MAC UPDATE
• Home Affordable Modification Program: Bulletin 2009-23
“Makes the following changes to the Home Affordable Modification Program (HAMP) requirements:
- Evaluate and process Mortgages for HAMP in Workout Prospector [effective November 1, 2009]
- Use the property value provided in Workout Prospector
- Collection and reporting of Government Monitoring Data
- Incorporating requirements for first-lien Servicers
- Revising our program activity reporting requirements
- Recordation of the Modification Agreement
- Capitalization and reimbursement of property inspection fees
- Permits Servicers to utilize temporary waivers” (View the entire bulletin.)
• September 25 Bulletin 2009-18 Single-Family Advisory E-mail
- Freddie Mac announced a one month extension for effective dates for underwriting requirements published in the July 10 Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-18 (which “revised…underwriting requirements with respect to borrower income, capacity, assets, and required documentation.”)
- The changes “will now be effective for all mortgages with application dates on or after November 1, 2009, and Freddie Mac settlement dates on or after February 1, 2010.” (View the entire announcement.)
To view Freddie Mac news, visit http://www.freddiemac.com/singlefamily/.
Click to subscribe to the monthly newsletter.
For real time compliance news, you can now follow us on Twitter and Facebook.
Reminder: 3rd Quarter ended September 30. Remember to get your quality control file audits done for FHA, Fannie Mae, Freddie Mac, etc.
EFFECTS OF HUD’S ANNOUNCEMENT FROM SEPTEMBER 18, 2009
HUD announced several changes on September 18. These changes affect FHA lenders and loans, including the FHA approval process for brokers. Visit our blog to read how HUD’s announcement affects sponsors and brokers.
FHA UPDATE: NEW MORTGAGEE LETTERS
• Multifamily Housing Accelerated Processing Guide: Chapter 9, Environmental Review: Letter 09-27
- Announces the release of a revised and updated Multifamily Housing Accelerated Processing Guide, Chapter 9, with new environmental requirements. (View the entire letter.)
• Appraiser Independence: Letter 09-28
Announces New Requirements, effective January 1, 2010:
- Prohibition of mortgage brokers and commission based lender staff from the appraisal process
- Appraiser selection in FHA Connection must be the appraiser who actually performs the appraisal
- Clarifies and expands their policy regarding Appraisal and Appraisal Management Companies’ (AMC) third party origination fees
Re-affirms Existing Requirements:
- Prevention of Improper Influences on Appraisers
- Appraiser Independence Safeguards
- Mortgagees are reminded that they are they are responsible (along with the appraiser) for the integrity, quality, and thoroughness of the appraisal. (View the entire letter.)
• Appraiser Portability: Letter 09-29
- Addresses the portability of appraisals when a borrower switches the lender during loan processing-- effective for all case numbers assigned on or after January 1, 2010.
- “Appraiser shopping” is prohibited. In this case, the first lender must, at the borrower’s request, transfer the case to the second lender. FHA does not require that the appraisal be changed to reflect the new lender, but FHA Connection must reflect the correct lender. (View the entire letter.)
• Appraiser Validity Periods: Letter 09-30
- Announces a change to the validity period for appraisals--reduced from 12 months for proposed construction and 6 months for existing construction to 4 months (120 days) for all appraisals. Effective for all case numbers assigned on or after January 1, 2010. (View the entire letter.)
• Strengthening Counterparty Risk Management: Letter 09-31
Provides notice of several FHA program changes as a result of the enactment of the “Helping Families Save Their Homes Act of 2009” (the HFSH Act):
- It provides limitations on those eligible for the program. Ineligible participants are identified as currently suspended, debarred, under a LDP, under indictment, subject to unresolved findings in a HUD or other government audit, investigation, or review, etc. It is important that you read these specifications in depth.
- Change of lender’s fiscal year end date must be reported to HUD 90 days before change.
- Effective January 1, 2010, all supervised mortgagees (banks and credit unions) must now submit an annual audited financial statement within 90 days of their fiscal year end.
- Mortgagees must use their name as registered with HUD in all advertising and promotional materials related to FHA. Lenders must retain a copy of all advertising for two years.
- Approved lenders are required to notify FHA if individual employees are subject to any sanction or any other administrative action, or if there is a revocation of a State-issued mortgage origination license.
- The HFSH Act expands FHA’s ability to seek civil money penalties against any owners, officers, or directors, for violations of program requirements. (View the entire letter.)
• Revised Streamline Refinance Transactions: Letter 09-32
Announces revised procedures and re-affirms existing procedures regarding Streamline Refinance transactions, to be effective in 60 days or November 18, 2009.
Key Revisions:
- Seasoning set at 6 months
- Minimum payment history standards established
- Net tangible benefit for the borrower at a 5% lower payment with additional provisions pertaining to changing from fixed rate to ARM, and ARM to fixed rate. Investors and second home borrowers are prohibited from refinancing to an ARM.
- Transactions that include a reduction in mortgage term must now be processed and closed as a rate/term refinance.
- If subordinate financing is in place, the maximum combined loan-to-value is set at 125% with or without an appraisal. If there is no new appraisal, the CLTV is based on the original appraisal.
- New maximum mortgage amount for streamline refinances without an appraisal cannot exceed the outstanding principal balance, minus any applicable UFMIP plus the new UFMIP that will be charged on the refinance. A streamline with an appraisal is the lower of outstanding principal balance or 97.75% of the appraised value plus the new UFMIP. Discount points may not be included in the new mortgage.
- If borrower agrees to pay the discount in cash, the lender must verify the availability of funds.
- Certification that borrower is employed and has income.
- If credit score(s) is/are available, the lender must enter the credit score(s) into FHA Connection.
- Lenders should not use TOTAL on streamline refinance transactions. If a lender uses TOTAL, that loan must be underwritten and closed as a rate and term (no cash-out) refinance transaction.
- Mortgagees may no longer use an abbreviated version of the Uniform Residential Loan Application (URLA). The completed application must be dated and signed prior to underwriting of the loan. (View the entire letter.)
- It is our opinion at MCA that FHA is moving toward changing the streamlined rate reduction refinances as we have known them to correspond with other refinance transactions.
• Annual Base City High Cost Percentage Revisions effective January 1, 2009: Letter 09-33
- Announces the annual base city high cost percentage revisions for multi-family mortgages. (View the entire letter.)
• Home Equity Conversion Mortgage (HECM) – Principal Limit Factors: Letter 09-34
- Announces a change in calculating the maximum HECM loans, effective October 1, 2009. The new factors to be used result in a 10% reduced maximum loan. (View the entire letter.)
• Loan Modification: Letter 09-35
- Mandates that the interest rate on loan modifications be reduced to not more than 50 basis points above the FHA and FHLMC current weekly primary rounded to the nearest .125%, as of date of modification. The modified loan amount is then amortized over a 30-year period. (View the entire letter.)
• Revised Eligibility: Letter 09-36
- Reminds appraisers and lenders that as of October 1, 2009, appraisers listed on FHA’s Appraisal Roster who are not state certified will be removed from the roster. (View the entire letter.)
• Flood Zone Requirements and Responsibilities of FHA Mortgagees and Appraisers: Letter 09-37
- Reminds mortgagees and FHA Roster appraisers of their “responsibility to determine if a property is located within a Special Flood Hazard Area…[and reiterates FHA’s] eligibility requirements for properties located in such zones.” (View the entire letter.)
To view all HUD Mortgagee Letters for the year, visit the official website http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.
*We offer FHA, VA, and HECM reference manuals with regulations and policies updated quarterly. For more information, visit our website or call 877-226-3216.
FANNIE MAE UPDATE
• Notice: Refi Plus – Update: MBA Delivery Date for Loans with LTVs above 105 Percent, dated 9/4/09
- “The effective date for MBS delivery of Refi Plus loans with LTVs above 105 percent under the CQ prefix…[is] October 1, 2009.” (View the entire announcement.)
• Energy Loan Tax Assessment Programs: Lender Letter 07-2009
- “This Lender Letter is intended to alert lenders to issues concerning ELTAPs [Energy Loan Tax Assessment Programs] in the underwriting and servicing of Fannie Mae mortgages. …Typically, homeowners repay ELTAP loans via their property tax bill, and in the event of non-payment, the ELTAPs have priority over Fannie Mae’s mortgage lien.” (View the entire announcement.)
• Updates to Minimum Credit Scores, Mortgage Insurance, Pricing for Certain Desktop Underwriter Loans, Biweekly Loans, and Special Feature Codes: Announcement 09-29
“Following is a brief summary of the changes:
- Changes to minimum credit score requirements;
- A number of changes to mortgage insurance coverage requirements, including a new minimum level of coverage and corresponding loan-level price adjustment (LLPA), retirement of Lower-Cost and Reduced MI options, and changes to financed mortgage insurance;
- Changes to pricing for Flexible mortgages and improved pricing for Expanded Approval® (EA) recommendations, and changes to EA special feature codes (SFC);
- Retirement of biweekly mortgage loans; and
- Changes to SFC requirements for MyCommunityMortgage® (MCM®) and other transactions.” (View the entire announcement.)
To view all Fannie Mae Announcements and Letters for the year, visit https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp.
FREDDIE MAC UPDATE
• Home Affordable Modification Program: Bulletin 2009-23
“Makes the following changes to the Home Affordable Modification Program (HAMP) requirements:
- Evaluate and process Mortgages for HAMP in Workout Prospector [effective November 1, 2009]
- Use the property value provided in Workout Prospector
- Collection and reporting of Government Monitoring Data
- Incorporating requirements for first-lien Servicers
- Revising our program activity reporting requirements
- Recordation of the Modification Agreement
- Capitalization and reimbursement of property inspection fees
- Permits Servicers to utilize temporary waivers” (View the entire bulletin.)
• September 25 Bulletin 2009-18 Single-Family Advisory E-mail
- Freddie Mac announced a one month extension for effective dates for underwriting requirements published in the July 10 Single-Family Seller/Servicer Guide (Guide) Bulletin 2009-18 (which “revised…underwriting requirements with respect to borrower income, capacity, assets, and required documentation.”)
- The changes “will now be effective for all mortgages with application dates on or after November 1, 2009, and Freddie Mac settlement dates on or after February 1, 2010.” (View the entire announcement.)
To view Freddie Mac news, visit http://www.freddiemac.com/singlefamily/.
Click to subscribe to the monthly newsletter.
Friday, September 4, 2009
MCA Monthly Update - September 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. If you have any questions, simply reply to this email or call us at 877-226-3216.
Additionally, for real time compliance news, you can now follow us on Twitter and Facebook.
UNDERWRITING & PROCESSING TIPS
Based on some common findings from quality control audits, we have compiled a list of three tips from the month of August.
1. We are seeing TIL Disclosures on FHA loan files with conventional parameters. Remember on the initial TIL disclosure, the FHA late fee is 4% (not 5%) and the loan is assumable with conditions.
2. The Servicing Disclosure dated January 16, 2009, is now mandatory--any older version is unacceptable. Make sure it is properly completed with appropriate boxes checked.
3. We continually have problems determining compliance with the advance disclosures for TIL and RESPA. Remember, if the application and all disclosures are not completed in a face-to-face interview with signatures, use a date stamp showing “documents mailed to applicant(s) on September 3, 2009.” The date stamp should be on both the original as mailed and the file copy. When the original is returned by the applicant, the processor should remove the file copies to eliminate duplicate copies in the file.
FHA UPDATE
• Electronic Annual Certification to Replace Title II Yearly Verification Report: Letter 09-25. “Effective September 1, 2009, all program participants seeking renewal as an FHA-approved mortgagee must complete the electronic Annual Certification as a component of the renewal process [which replaces the paper Yearly Verification Report].” (View the entire letter.)
• Eligibility of Projects for Mortgage Insurance where Construction has Started: Letter 09-26.. This letter “temporarily authorizes and establishes policy for Section 220, 221(d) and 231 mortgage insurance programs for multi-family proposals that were unable to complete construction due to a loss of funding..” (View the entire letter.)
To view all HUD Mortgagee Letters for the year, visit the official website http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.
For information about our FHA, VA, or HECM reference manuals with regulations and policies updated quarterly, visit our website.
FANNIE MAE UPDATE
• Retirement of HomeStyle® Construction-to-Permanent: Announcement 09-28.. “Fannie Mae will be retiring the HomeStyle Construction-to-Permanent mortgage product… Effective immediately, lender applications for HomeStyle Construction-to-Permanent approval will no longer be accepted. Closed HomeStyle Construction-to-Permanent loans must be purchased by Fannie Mae from existing approved lenders by November 30, 2009.” (View the entire announcement.)
• Reminder: From Announcement 09-19, dated June 8, 2009: “Form 4506-T Lender Tips.”. On or after September 1, 2009, “Fannie Mae’s updated policy regarding use of IRS Form 4506-T to validate borrower income documentation (Announcement 09-19) requires the lender to:
- have all borrowers (regardless of income source) complete and sign Form 4506-T at both application and closing
- add the execution of Form 4506-T with the IRS (directly or through an authorized vendor) to their written quality control (QC) plan (refer to the Selling Guide, Subpart D1, Lender QC Process, for details about lender QC requirements)” (View the entire announcement.) If you need help complying with this rule, give us a call.
To view all Fannie Mae Announcements and Letters for the year, visit https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp?referrer=frpromo.
FREDDIE MAC UPDATE
• Single-Family Seller/Servicer Guide: Bulletin 2009-22.. This bulletin makes several changes to selling requirements, including guidance regarding area median income changes, amending appraisal requirements for super conforming mortgages, and updates for several forms and exhibits. (View the entire bulletin.)
• Off-cycle Update to Exclusionary List: Industry Letter dated August 21, 2009.. The Freddie Mac Exclusionary List has been updated and may now be accessed via the Freddie Mac Selling System, MIDANET, MultiSuite, and Loan Prospector.
“As a reminder…Seller/Servicers [are required] to represent and warrant that they have not employed and will not employ any person listed on the Freddie Mac Exclusionary List as a Principal in connection with any Mortgage sold to Freddie Mac or in connection with any function related to such a sale.” (View the entire industry letter.)
To view Freddie Mac news, visit http://www.freddiemac.com/singlefamily/.
Additionally, for real time compliance news, you can now follow us on Twitter and Facebook.
UNDERWRITING & PROCESSING TIPS
Based on some common findings from quality control audits, we have compiled a list of three tips from the month of August.
1. We are seeing TIL Disclosures on FHA loan files with conventional parameters. Remember on the initial TIL disclosure, the FHA late fee is 4% (not 5%) and the loan is assumable with conditions.
2. The Servicing Disclosure dated January 16, 2009, is now mandatory--any older version is unacceptable. Make sure it is properly completed with appropriate boxes checked.
3. We continually have problems determining compliance with the advance disclosures for TIL and RESPA. Remember, if the application and all disclosures are not completed in a face-to-face interview with signatures, use a date stamp showing “documents mailed to applicant(s) on September 3, 2009.” The date stamp should be on both the original as mailed and the file copy. When the original is returned by the applicant, the processor should remove the file copies to eliminate duplicate copies in the file.
FHA UPDATE
• Electronic Annual Certification to Replace Title II Yearly Verification Report: Letter 09-25. “Effective September 1, 2009, all program participants seeking renewal as an FHA-approved mortgagee must complete the electronic Annual Certification as a component of the renewal process [which replaces the paper Yearly Verification Report].” (View the entire letter.)
• Eligibility of Projects for Mortgage Insurance where Construction has Started: Letter 09-26.. This letter “temporarily authorizes and establishes policy for Section 220, 221(d) and 231 mortgage insurance programs for multi-family proposals that were unable to complete construction due to a loss of funding..” (View the entire letter.)
To view all HUD Mortgagee Letters for the year, visit the official website http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.
For information about our FHA, VA, or HECM reference manuals with regulations and policies updated quarterly, visit our website.
FANNIE MAE UPDATE
• Retirement of HomeStyle® Construction-to-Permanent: Announcement 09-28.. “Fannie Mae will be retiring the HomeStyle Construction-to-Permanent mortgage product… Effective immediately, lender applications for HomeStyle Construction-to-Permanent approval will no longer be accepted. Closed HomeStyle Construction-to-Permanent loans must be purchased by Fannie Mae from existing approved lenders by November 30, 2009.” (View the entire announcement.)
• Reminder: From Announcement 09-19, dated June 8, 2009: “Form 4506-T Lender Tips.”. On or after September 1, 2009, “Fannie Mae’s updated policy regarding use of IRS Form 4506-T to validate borrower income documentation (Announcement 09-19) requires the lender to:
- have all borrowers (regardless of income source) complete and sign Form 4506-T at both application and closing
- add the execution of Form 4506-T with the IRS (directly or through an authorized vendor) to their written quality control (QC) plan (refer to the Selling Guide, Subpart D1, Lender QC Process, for details about lender QC requirements)” (View the entire announcement.) If you need help complying with this rule, give us a call.
To view all Fannie Mae Announcements and Letters for the year, visit https://www.efanniemae.com/sf/guides/ssg/2009annlenltr.jsp?referrer=frpromo.
FREDDIE MAC UPDATE
• Single-Family Seller/Servicer Guide: Bulletin 2009-22.. This bulletin makes several changes to selling requirements, including guidance regarding area median income changes, amending appraisal requirements for super conforming mortgages, and updates for several forms and exhibits. (View the entire bulletin.)
• Off-cycle Update to Exclusionary List: Industry Letter dated August 21, 2009.. The Freddie Mac Exclusionary List has been updated and may now be accessed via the Freddie Mac Selling System, MIDANET, MultiSuite, and Loan Prospector.
“As a reminder…Seller/Servicers [are required] to represent and warrant that they have not employed and will not employ any person listed on the Freddie Mac Exclusionary List as a Principal in connection with any Mortgage sold to Freddie Mac or in connection with any function related to such a sale.” (View the entire industry letter.)
To view Freddie Mac news, visit http://www.freddiemac.com/singlefamily/.
Friday, August 28, 2009
Mortgage Compliance Advisors is now on Twitter and Facebook
The mortgage industry and regulations are constantly changing, but you can now receive helpful, real-time updates by following MCA on Twitter. In addition to our monthly newsletters with compliance news, these Twitter updates will help keep you informed right as the news comes out. Get mortgage compliance updates on Twitter or become a fan of Mortgage Compliance Advisors on Facebook.
Monday, August 24, 2009
New Lending Manuals a Good Reference for FHA, VA, and HECM
We're excited to announce the launch of lending manuals for FHA, VA, and HECM. We all know that new regulations just keep coming out for the mortgage industry, and it can get overwhelming trying to keep up with them all. Luckily, we have some very experienced and helpful people here at MCA, who have written easy to understand, complete guides for FHA, VA, and HECM. These manuals are updated quarterly, so you don't have to worry about falling far behind in the regulations. We also included links to the actual regulations, in case you want to see HUD's exact wording. And of course if you have any additional mortgage questions, you are always welcome to call in and ask. Trying to keep up with all the regulations and paperwork can be stressful, but we hope these lending manuals will save you some time and hassle.
We actually published a press release about this announcement. Just click this link to read the full article. Or, if you'd like to request more information about the manuals, just give us a call at 877-226-3252 or visit our web page for the FHA Lending Guide.
We actually published a press release about this announcement. Just click this link to read the full article. Or, if you'd like to request more information about the manuals, just give us a call at 877-226-3252 or visit our web page for the FHA Lending Guide.
Friday, August 7, 2009
MCA Monthly Update - August 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. Since there have been multiple recent regulation changes, this month’s newsletter focuses on compliance updates. Beginning with the next newsletter, in addition to the FHA update, we will be adding update sections for Fannie Mae and Freddie Mac. We hope that you find the content informative and useful. As always, your feedback is appreciated. If you have any questions, simply reply to this email or call us at 877-226-3216.
REGULATION Z REVISIONS IN EFFECT JULY 30, 2009
On July 30, the new Regulation Z changes for the Truth in Lending Act (TIL) became effective. As part of Regulation Z, the Mortgage Disclosure Improvement Act (MDIA) revised TIL requirements surrounding early and final disclosures to homebuyers, as well as discussing when fees are allowed to be collected. (Read the Federal Reserve Board’s press release at www.federalreserve.gov/newsevents/press/bcreg/20090508a.htm.)
A Few Highlights:
- Creditors must “give good faith estimates of mortgage loan costs (‘early disclosures’) within three business days after receiving a consumer's application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer's credit history.
- Creditors [must] wait seven business days after they provide the early disclosures before closing the loan
- Creditors [must] provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance [.125%].”
UPDATE: DEADLINE FOR RED FLAGS RULE EXTENDED TO NOVEMBER 1
Last week the Federal Trade Commission announced a three month extension of the Red Flags Rule deadline. The FTC moved the deadline from August 1 to November 1, to give creditors and financial institutions more time to implement a written Identity Theft Prevention Program, also known as a Red Flag Policy. (For more information on this FTC requirement, see www.ftc.gov/opa/2009/07/redflag.shtm or contact us with questions.)
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 four additional letters. Below is a brief summary of all four:
• Home Equity Conversion Mortgage Refinancing of Existing Loans: Letter 09-21. This letter discusses a technical correction for the HECM program, and reiterates guidelines for refinancing HECM mortgages.
“FHA will insure all loans that were originated for the purpose of refinancing an assigned loan that is not in a due and payable status for reasons that cannot be corrected, such as death of the last mortgagor or conveyance of title by all mortgagors, but closed on or after October 6, 2008, the date of the Final Rule.” (Click here to view the entire letter.)
• Revised Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f) Apartments: Letter 09-22. This letter “rescinds and replaces ML 2009-06… [and] sets forth the Department’s revised policy to grant temporary authority to Multifamily Hub Directors to waive the Three-Year Rule for Section 223(f) applications, for the purpose of providing liquidity to recently constructed or substantially rehabilitated, self-sustaining properties that are unable to secure permanent long term financing due to the freeze in the capital markets…” (Click here to view the entire letter.)
• Making Home Affordable Program: FHA's Home Affordable Modification Loss Mitigation Option: Letter 09-23. This letter “announces a new FHA Loss Mitigation option, the FHA-Home Affordable Modification Program (FHA-HAMP). FHA-HAMP will provide homeowners in default a greater opportunity to reduce their mortgage payments to a sustainable level. This Mortgagee Letter is effective August 15, 2009… FHA-HAMP can be utilized only if the mortgagor(s) does not qualify for current loss mitigation home retention options…”
A Few Highlights/Guidelines:
- Partial claim up to 30 percent of the unpaid principal balance as of the date of default combined with a loan modification
- Mortgagor must successfully complete a three month trial payment plan, making each scheduled payment on time.
- Servicer must obtain an executed Hardship Affidavit (available at https://www.hmpadmin.com/portal/docs/mod_docs/hamphardshipaffidavit.pdf) from every mortgagor and co-mortgagor seeking an FHA-HAMP
- Front end debt to income ratio must be as close as possible, but not less than, 31 percent
- Back end debt to income ratio must not exceed 55 percent
- Mortgagee may receive an incentive fee of up to $1,250 (Click here to view the entire letter.)
• Housing Tax Credit Coordination Act of 2008: Letter 09-24. This letter “describes the additional authority granted under HERA and the Department’s implementation of Sections 2832 and 2834 of the Act.
- Section 2832 of HERA requires the Secretary to implement administrative and procedural changes to expedite the approval of multifamily housing projects utilizing FHA mortgage insurance programs with either Low-Income Housing Tax Credits or tax-exempt housing bonds…
- Section 2834 of HERA provides three substantive changes to the Department’s processing of certain FHA mortgage insurance applications.” (Click here to view the entire letter and the details of all changes.)
To view all HUD Mortgagee Letters for the year, visit the official website www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.
FANNIE MAE UPDATE (Coming next newsletter)
FREDDIE MAC UPDATE (Coming next newsletter)
REGULATION Z REVISIONS IN EFFECT JULY 30, 2009
On July 30, the new Regulation Z changes for the Truth in Lending Act (TIL) became effective. As part of Regulation Z, the Mortgage Disclosure Improvement Act (MDIA) revised TIL requirements surrounding early and final disclosures to homebuyers, as well as discussing when fees are allowed to be collected. (Read the Federal Reserve Board’s press release at www.federalreserve.gov/newsevents/press/bcreg/20090508a.htm.)
A Few Highlights:
- Creditors must “give good faith estimates of mortgage loan costs (‘early disclosures’) within three business days after receiving a consumer's application for a mortgage loan and before any fees are collected from the consumer, other than a reasonable fee for obtaining the consumer's credit history.
- Creditors [must] wait seven business days after they provide the early disclosures before closing the loan
- Creditors [must] provide new disclosures with a revised annual percentage rate (APR), and wait an additional three business days before closing the loan, if a change occurs that makes the APR in the early disclosures inaccurate beyond a specified tolerance [.125%].”
UPDATE: DEADLINE FOR RED FLAGS RULE EXTENDED TO NOVEMBER 1
Last week the Federal Trade Commission announced a three month extension of the Red Flags Rule deadline. The FTC moved the deadline from August 1 to November 1, to give creditors and financial institutions more time to implement a written Identity Theft Prevention Program, also known as a Red Flag Policy. (For more information on this FTC requirement, see www.ftc.gov/opa/2009/07/redflag.shtm or contact us with questions.)
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 four additional letters. Below is a brief summary of all four:
• Home Equity Conversion Mortgage Refinancing of Existing Loans: Letter 09-21. This letter discusses a technical correction for the HECM program, and reiterates guidelines for refinancing HECM mortgages.
“FHA will insure all loans that were originated for the purpose of refinancing an assigned loan that is not in a due and payable status for reasons that cannot be corrected, such as death of the last mortgagor or conveyance of title by all mortgagors, but closed on or after October 6, 2008, the date of the Final Rule.” (Click here to view the entire letter.)
• Revised Temporary Authority for Multifamily Hubs to Process Waiver Requests Pertaining to the Three-Year Rule for Section 223(f) Apartments: Letter 09-22. This letter “rescinds and replaces ML 2009-06… [and] sets forth the Department’s revised policy to grant temporary authority to Multifamily Hub Directors to waive the Three-Year Rule for Section 223(f) applications, for the purpose of providing liquidity to recently constructed or substantially rehabilitated, self-sustaining properties that are unable to secure permanent long term financing due to the freeze in the capital markets…” (Click here to view the entire letter.)
• Making Home Affordable Program: FHA's Home Affordable Modification Loss Mitigation Option: Letter 09-23. This letter “announces a new FHA Loss Mitigation option, the FHA-Home Affordable Modification Program (FHA-HAMP). FHA-HAMP will provide homeowners in default a greater opportunity to reduce their mortgage payments to a sustainable level. This Mortgagee Letter is effective August 15, 2009… FHA-HAMP can be utilized only if the mortgagor(s) does not qualify for current loss mitigation home retention options…”
A Few Highlights/Guidelines:
- Partial claim up to 30 percent of the unpaid principal balance as of the date of default combined with a loan modification
- Mortgagor must successfully complete a three month trial payment plan, making each scheduled payment on time.
- Servicer must obtain an executed Hardship Affidavit (available at https://www.hmpadmin.com/portal/docs/mod_docs/hamphardshipaffidavit.pdf) from every mortgagor and co-mortgagor seeking an FHA-HAMP
- Front end debt to income ratio must be as close as possible, but not less than, 31 percent
- Back end debt to income ratio must not exceed 55 percent
- Mortgagee may receive an incentive fee of up to $1,250 (Click here to view the entire letter.)
• Housing Tax Credit Coordination Act of 2008: Letter 09-24. This letter “describes the additional authority granted under HERA and the Department’s implementation of Sections 2832 and 2834 of the Act.
- Section 2832 of HERA requires the Secretary to implement administrative and procedural changes to expedite the approval of multifamily housing projects utilizing FHA mortgage insurance programs with either Low-Income Housing Tax Credits or tax-exempt housing bonds…
- Section 2834 of HERA provides three substantive changes to the Department’s processing of certain FHA mortgage insurance applications.” (Click here to view the entire letter and the details of all changes.)
To view all HUD Mortgagee Letters for the year, visit the official website www.hud.gov/offices/adm/hudclips/letters/mortgagee/index.cfm.
FANNIE MAE UPDATE (Coming next newsletter)
FREDDIE MAC UPDATE (Coming next newsletter)
Thursday, July 2, 2009
MCA Monthly Update - July 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.
For next month’s newsletter, we would like to address the biggest issues you are facing in the mortgage industry. Please let us know about any industry issues that you find confusing, or if you just want some more information. We’ll try to answer all your questions in the next newsletter.
REMINDER: APPROACHING DEADLINE OF RED FLAGS RULE
As a reminder, the Federal Trade Commission’s Red Flags Rule will go into effect in less than a month, on August 1. The 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. (For more information, visit www.FTC.gov or contact us with your questions.)
UNDERWRITING & PROCESSING TIPS
Based on some common findings from quality control audits, we have compiled a list of three tips from the month of June.
1. Make sure that the application and initial disclosures have correct dates. If they are mailed, be sure to date stamp when they were sent in the mail, to stay in compliance with the three day rule.
2. For Prepaid Finance Charges (PFC’s), make sure that they are disclosed accurately on the initial TIL, and clearly marked on the initial Good Faith.
3. Last month we mentioned that everyone should have a closing package from the closing agent for their file. FHA requires lenders to get and maintain copies of at least the HUD-1’s, Note, Deed of Trust, and the final Truth in Lending.
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 three additional letters. Below is a brief summary of all three:
• Energy Efficient Mortgages – Increase in the Dollar Amount of Energy Efficient Improvements: Letter 09-18. “In addition to the base FHA maximum mortgage amount limit, which is calculated on the value of the home, the mortgage loan amount for an Energy Efficient Mortgage (EEM) can be increased by the cost of effective energy improvements…
The maximum amount of the portion of the EEM for energy improvements is the lesser of 5% of:
o the value of the property, or
o 115% of the median area price of a single family dwelling, or
o 150% of the conforming Freddie Mac limit.” (Click here to view the entire letter.)
• Condominium Approval Process – Single Family Housing: Letter 09-19. FHA “is implementing a new approval process for Condominium Projects to insure mortgages on individual units… FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations.
…[this letter] provide[s] guidelines and instructions on options available to lenders to receive mortgage insurance on condominium units which are located in a project.” (Click here to view the entire letter.)
• Processing Pre-Application Firm Invitation and Firm Commitment Extension Requests: Letter 09-20. This letter discusses FHA’s “policy to grant temporary authority to Multifamily Hub/Program Center Directors to grant one extension, for up to 90-days, of the pre-application firm invitation letter and one 120-day extension of an issued Firm Commitment. The authority granted under this Mortgagee Letter expires December 31, 2009.” (Click here to view the entire letter.)
To view all HUD Mortgagee Letters for the year, click here.
For next month’s newsletter, we would like to address the biggest issues you are facing in the mortgage industry. Please let us know about any industry issues that you find confusing, or if you just want some more information. We’ll try to answer all your questions in the next newsletter.
REMINDER: APPROACHING DEADLINE OF RED FLAGS RULE
As a reminder, the Federal Trade Commission’s Red Flags Rule will go into effect in less than a month, on August 1. The 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. (For more information, visit www.FTC.gov or contact us with your questions.)
UNDERWRITING & PROCESSING TIPS
Based on some common findings from quality control audits, we have compiled a list of three tips from the month of June.
1. Make sure that the application and initial disclosures have correct dates. If they are mailed, be sure to date stamp when they were sent in the mail, to stay in compliance with the three day rule.
2. For Prepaid Finance Charges (PFC’s), make sure that they are disclosed accurately on the initial TIL, and clearly marked on the initial Good Faith.
3. Last month we mentioned that everyone should have a closing package from the closing agent for their file. FHA requires lenders to get and maintain copies of at least the HUD-1’s, Note, Deed of Trust, and the final Truth in Lending.
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 three additional letters. Below is a brief summary of all three:
• Energy Efficient Mortgages – Increase in the Dollar Amount of Energy Efficient Improvements: Letter 09-18. “In addition to the base FHA maximum mortgage amount limit, which is calculated on the value of the home, the mortgage loan amount for an Energy Efficient Mortgage (EEM) can be increased by the cost of effective energy improvements…
The maximum amount of the portion of the EEM for energy improvements is the lesser of 5% of:
o the value of the property, or
o 115% of the median area price of a single family dwelling, or
o 150% of the conforming Freddie Mac limit.” (Click here to view the entire letter.)
• Condominium Approval Process – Single Family Housing: Letter 09-19. FHA “is implementing a new approval process for Condominium Projects to insure mortgages on individual units… FHA will now allow lenders to determine project eligibility, review project documentation, and certify to compliance of Section 203(b) of the NHA and 24 CFR 203 of HUD’s regulations.
…[this letter] provide[s] guidelines and instructions on options available to lenders to receive mortgage insurance on condominium units which are located in a project.” (Click here to view the entire letter.)
• Processing Pre-Application Firm Invitation and Firm Commitment Extension Requests: Letter 09-20. This letter discusses FHA’s “policy to grant temporary authority to Multifamily Hub/Program Center Directors to grant one extension, for up to 90-days, of the pre-application firm invitation letter and one 120-day extension of an issued Firm Commitment. The authority granted under this Mortgagee Letter expires December 31, 2009.” (Click here to view the entire letter.)
To view all HUD Mortgagee Letters for the year, click here.
Monday, May 4, 2009
FHA Guidelines Require 10% Quality Control File Audits
As the number of FHA loans rapidly increases, HUD stresses the requirement to implement and maintain a comprehensive quality control plan that follows FHA guidelines.
FHA insured mortgage loans experienced phenomenal growth in 2008. After a large drop in its share of new mortgages in the early ‘90’s, tightening credit has caused an upsurge in FHA loans. In fact, FHA’s share of insured mortgages increased to 26% in 3rd quarter 2008, up from only 3% in 2007. As the volume of FHA loans increases, more lenders are becoming FHA approved. Once approved, they are met with the task of staying in compliance with FHA guidelines. In Mortgagee Letter 09-12 published for FHA approved lenders, HUD stresses the requirement to “implement and maintain a comprehensive quality control plan.” HUD further explains in Letter 09-01 that if a lender “fails to comply with HUD’s policies and procedures, HUD will take the appropriate action…which may include termination of mortgagee [FHA] approval.” (To view all HUD mortgagee letters, visit HUD's official website.)
According to FHA guidelines, before a lender can become FHA approved, they must submit a quality control plan. As stated in chapter 7 of the HUD 4060.1 handbook, a lender “must review [audit] 10% of the FHA loans it originates,” as part of its quality control plan. These mortgage audits can either be performed internally or by a third party provider. If done internally, the lender must establish and properly train a unit dedicated to quality control. FHA guidelines go on to explain that the staff must not be involved in loan production.
Third party providers can also perform these mortgage file audits, and even provide quality control plans that meet FHA guidelines. For example, Mortgage Compliance Advisors, LLC, can provide a quality control plan and perform the required quality control file audits for an FHA approved lender. When the file audits for a certain period are complete, the audit findings are compiled in a management report and sent to the lender. Third party providers do not report to HUD/FHA. Instead, it is the responsibility of management to review the findings and make any necessary changes to prevent similar findings in the future. When FHA conducts an audit, they want to see in writing what actions have been taken by the lender to stay in compliance with FHA guidelines.
For more information on quality control file audits or FHA guidelines, visit www.MortgageComplianceAdvisors.com or call 877-226-3217.
FHA insured mortgage loans experienced phenomenal growth in 2008. After a large drop in its share of new mortgages in the early ‘90’s, tightening credit has caused an upsurge in FHA loans. In fact, FHA’s share of insured mortgages increased to 26% in 3rd quarter 2008, up from only 3% in 2007. As the volume of FHA loans increases, more lenders are becoming FHA approved. Once approved, they are met with the task of staying in compliance with FHA guidelines. In Mortgagee Letter 09-12 published for FHA approved lenders, HUD stresses the requirement to “implement and maintain a comprehensive quality control plan.” HUD further explains in Letter 09-01 that if a lender “fails to comply with HUD’s policies and procedures, HUD will take the appropriate action…which may include termination of mortgagee [FHA] approval.” (To view all HUD mortgagee letters, visit HUD's official website.)
According to FHA guidelines, before a lender can become FHA approved, they must submit a quality control plan. As stated in chapter 7 of the HUD 4060.1 handbook, a lender “must review [audit] 10% of the FHA loans it originates,” as part of its quality control plan. These mortgage audits can either be performed internally or by a third party provider. If done internally, the lender must establish and properly train a unit dedicated to quality control. FHA guidelines go on to explain that the staff must not be involved in loan production.
Third party providers can also perform these mortgage file audits, and even provide quality control plans that meet FHA guidelines. For example, Mortgage Compliance Advisors, LLC, can provide a quality control plan and perform the required quality control file audits for an FHA approved lender. When the file audits for a certain period are complete, the audit findings are compiled in a management report and sent to the lender. Third party providers do not report to HUD/FHA. Instead, it is the responsibility of management to review the findings and make any necessary changes to prevent similar findings in the future. When FHA conducts an audit, they want to see in writing what actions have been taken by the lender to stay in compliance with FHA guidelines.
For more information on quality control file audits or FHA guidelines, visit www.MortgageComplianceAdvisors.com or call 877-226-3217.
Thursday, February 12, 2009
Dropping Interest Rates Boost FHA Mortgages and Need for Quality Control
With mortgage rates at their lowest levels in over 20 years, brokers, retail lenders, wholesale lenders, banks, and credit unions are seeing increased volume in their residential mortgage pipelines. With this increase comes a need for sound quality control practices.
Salt Lake City, UT - February 11, 2009 – Recently, the Associated Press reported that mortgage rates reached 4.96 percent in mid-January. This is the lowest recorded level since Freddie Mac began its rate survey in 1971. With interest rates so low, the volume of residential mortgage loans has steadily increased, particularly in the FHA arena. So that a certain level of quality is maintained, one of HUD’s requirements is that institutions originating FHA loans perform an audit on 10% of the loan files that they have either closed or cancelled. These audits can either be done on a quarterly or monthly basis, depending on volume. In some circumstances, other agencies and investors are adapting this same requirement. According to Craig Christensen, President and COO of Mortgage Compliance Advisors, LLC, “more and more investors are requiring brokers, correspondents, and others to have a quality control plan in place that provides for [quality control] audits, before approval or renewal of contracts.”
Third party firms, such as Mortgage Compliance Advisors, LLC, can perform this 10% quality control file audit function, along with other compliance and quality control functions, for brokers, lenders, banks, and credit unions. These services help organizations remain compliant with FHA, investor, and other agency guidelines and maintain high loan quality. Furthermore, since quality control file audits are required by HUD/FHA, HUD mortgagees will be prepared for the eventuality of an FHA onsite audit, by keeping management reports (a summary of the files audits for a certain period) on file.
Management reports (sometimes referred to as quality control findings reports) are filled with detailed information that will significantly improve quality control. For example, when auditors at Mortgage Compliance Advisors, LLC, perform a file audit, they use a comprehensive audit checklist to check each page for accuracy and then record their findings. After the post-closing or cancelled file audit is complete, management reviews the audit’s findings and summarizes them into a management report that is accurate and easy to understand. Approximately 30 days after the files selected for audit have been received, Mortgage Compliance Advisors sends the report to the client to review. After reviewing the report, management can take any necessary action to ensure continued loan file quality and compliance with HUD/FHA or other conventional guidelines.
About Mortgage Compliance Advisors, LLC (MCA): MCA was founded on the premise of providing mortgage brokers, retail lenders, wholesale lenders, and banking institutions of all sizes with a sound alternative for meeting their mortgage compliance needs. MCA's principals, Bob Warnock and Craig Christensen, have a combined sixty years of experience in the mortgage industry. Thirteen years of Bob Warnock's thirty-five year career in the banking and mortgage industry were spent at the Salt Lake City HUD/FHA office, first as an underwriting specialist, then branch chief over underwriting and insuring, and finally as Field Office Chief with responsibility to oversee lender approval, underwriting, insuring and the assignment program. Much of Craig Christensen's 25 year career has been in senior management positions with national retail and wholesale lenders.
For additional information on FHA file audits or questions about FHA approval, visit www.MortgageComplianceAdvisors.com.
Contact:
Sarah Adams – Director of Marketing
Mortgage Compliance Advisors, LLC
5505 South 900 East, Suite 110
Salt Lake City, UT 84117 Phone: 877-226-3217 Fax: 801-264-0301 sarah@mortgagecomplianceadvisors.com
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Salt Lake City, UT - February 11, 2009 – Recently, the Associated Press reported that mortgage rates reached 4.96 percent in mid-January. This is the lowest recorded level since Freddie Mac began its rate survey in 1971. With interest rates so low, the volume of residential mortgage loans has steadily increased, particularly in the FHA arena. So that a certain level of quality is maintained, one of HUD’s requirements is that institutions originating FHA loans perform an audit on 10% of the loan files that they have either closed or cancelled. These audits can either be done on a quarterly or monthly basis, depending on volume. In some circumstances, other agencies and investors are adapting this same requirement. According to Craig Christensen, President and COO of Mortgage Compliance Advisors, LLC, “more and more investors are requiring brokers, correspondents, and others to have a quality control plan in place that provides for [quality control] audits, before approval or renewal of contracts.”
Third party firms, such as Mortgage Compliance Advisors, LLC, can perform this 10% quality control file audit function, along with other compliance and quality control functions, for brokers, lenders, banks, and credit unions. These services help organizations remain compliant with FHA, investor, and other agency guidelines and maintain high loan quality. Furthermore, since quality control file audits are required by HUD/FHA, HUD mortgagees will be prepared for the eventuality of an FHA onsite audit, by keeping management reports (a summary of the files audits for a certain period) on file.
Management reports (sometimes referred to as quality control findings reports) are filled with detailed information that will significantly improve quality control. For example, when auditors at Mortgage Compliance Advisors, LLC, perform a file audit, they use a comprehensive audit checklist to check each page for accuracy and then record their findings. After the post-closing or cancelled file audit is complete, management reviews the audit’s findings and summarizes them into a management report that is accurate and easy to understand. Approximately 30 days after the files selected for audit have been received, Mortgage Compliance Advisors sends the report to the client to review. After reviewing the report, management can take any necessary action to ensure continued loan file quality and compliance with HUD/FHA or other conventional guidelines.
About Mortgage Compliance Advisors, LLC (MCA): MCA was founded on the premise of providing mortgage brokers, retail lenders, wholesale lenders, and banking institutions of all sizes with a sound alternative for meeting their mortgage compliance needs. MCA's principals, Bob Warnock and Craig Christensen, have a combined sixty years of experience in the mortgage industry. Thirteen years of Bob Warnock's thirty-five year career in the banking and mortgage industry were spent at the Salt Lake City HUD/FHA office, first as an underwriting specialist, then branch chief over underwriting and insuring, and finally as Field Office Chief with responsibility to oversee lender approval, underwriting, insuring and the assignment program. Much of Craig Christensen's 25 year career has been in senior management positions with national retail and wholesale lenders.
For additional information on FHA file audits or questions about FHA approval, visit www.MortgageComplianceAdvisors.com.
Contact:
Sarah Adams – Director of Marketing
Mortgage Compliance Advisors, LLC
5505 South 900 East, Suite 110
Salt Lake City, UT 84117 Phone: 877-226-3217 Fax: 801-264-0301 sarah@mortgagecomplianceadvisors.com
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Monday, July 7, 2008
Mortgage Compliance Advisors Launches File Audit & FHA Approval & Quality Control Services
June 13, 2008 ( PowerHomeBiz ) - Salt Lake City, UT www.MortgageComplianceAdvisors.com -- Mortgage Compliance Advisors, LLC (MCA) -- FHA approval is made simple by following the step by step process that Mortgage Compliance Advisors offers. MCA will walk you through the costs, paperwork, and FHA requirements to determine feasibility. MCA also provides an outsourcing solution to brokers, lenders, and financial institutions that alleviates the burden and expense of regularly auditing, in-house, a 10% file sampling as required by federal and/or state agencies.
Also, for lenders who are not FHA approved and want to apply for approval, Mortgage Compliance Advisors will guide and help with the entire process including:
Determining feasibility of approval -- Supply needed forms Help with preparation of documentation required by FHA for approval Provide resources for bonding/audits/sponsors – Help with assembling of approval package Follow up with FHA if difficulties arise Mortgage Compliance Advisors’ file audit process is efficient and effective. First, MCA randomly chooses, from a list provided by the lender, files to be reviewed. FHA requires file audits on 10% of a company’s closed files. Depending on volume, these audits are to be completed either on a monthly or quarterly basis. Some states require pre and post-closing file audits as well.
Once Mortgage Compliance Advisors has received the files to be reviewed, the assigned auditor uses a standardized checklist MCA has developed to review all documentation contained in a file and re-verifies documentation as needed. The auditor will also compare documentation to insure accuracy, as well as review the appraisal. A new credit report will be pulled on every file and appraisal field reviews will be completed as agency guidelines require. Once the file audits have been completed, MCA will provide a management report of significant findings and summaries.
In addition to full file audits (post-closing, pre-closing, and defaults) and FHA approval services, MCA provides loan file fraud detection services, training and CE courses, quality control plans, operational reviews, and consulting services.
About Mortgage Compliance Advisors, LLC (MCA):
MCA was founded on the premise of providing mortgage brokers, retail lenders, wholesale lenders, and banking institutions of all sizes with a sound alternative for meeting their mortgage compliance needs. MCA’s principals, Bob Warnock and Craig Christensen, have a combined sixty years of experience in the mortgage industry. Thirteen years of Bob Warnock’s thirty-five year career in the banking and mortgage industry were spent at the Salt Lake City HUD/FHA office, first as an underwriting specialist, then branch chief over underwriting and insuring, and finally as Field Office Chief with responsibility to oversee lender approval, underwriting, insuring and the assignment program. Much of Craig Christensen’s 25 year career has been in management positions with national retail and wholesale lenders.
Contact Info:
Brandt Page-Director of Sales & Marketing
5505 South 900 East, Suite 110 Salt Lake City, UT 84117 Phone: 801-649-6038 - Fax: 801-264-0301 bpage@mortgagecomplianceadvisors.com
http://mortgagecomplianceadvisors.com
Also, for lenders who are not FHA approved and want to apply for approval, Mortgage Compliance Advisors will guide and help with the entire process including:
Determining feasibility of approval -- Supply needed forms Help with preparation of documentation required by FHA for approval Provide resources for bonding/audits/sponsors – Help with assembling of approval package Follow up with FHA if difficulties arise Mortgage Compliance Advisors’ file audit process is efficient and effective. First, MCA randomly chooses, from a list provided by the lender, files to be reviewed. FHA requires file audits on 10% of a company’s closed files. Depending on volume, these audits are to be completed either on a monthly or quarterly basis. Some states require pre and post-closing file audits as well.
Once Mortgage Compliance Advisors has received the files to be reviewed, the assigned auditor uses a standardized checklist MCA has developed to review all documentation contained in a file and re-verifies documentation as needed. The auditor will also compare documentation to insure accuracy, as well as review the appraisal. A new credit report will be pulled on every file and appraisal field reviews will be completed as agency guidelines require. Once the file audits have been completed, MCA will provide a management report of significant findings and summaries.
In addition to full file audits (post-closing, pre-closing, and defaults) and FHA approval services, MCA provides loan file fraud detection services, training and CE courses, quality control plans, operational reviews, and consulting services.
About Mortgage Compliance Advisors, LLC (MCA):
MCA was founded on the premise of providing mortgage brokers, retail lenders, wholesale lenders, and banking institutions of all sizes with a sound alternative for meeting their mortgage compliance needs. MCA’s principals, Bob Warnock and Craig Christensen, have a combined sixty years of experience in the mortgage industry. Thirteen years of Bob Warnock’s thirty-five year career in the banking and mortgage industry were spent at the Salt Lake City HUD/FHA office, first as an underwriting specialist, then branch chief over underwriting and insuring, and finally as Field Office Chief with responsibility to oversee lender approval, underwriting, insuring and the assignment program. Much of Craig Christensen’s 25 year career has been in management positions with national retail and wholesale lenders.
Contact Info:
Brandt Page-Director of Sales & Marketing
5505 South 900 East, Suite 110 Salt Lake City, UT 84117 Phone: 801-649-6038 - Fax: 801-264-0301 bpage@mortgagecomplianceadvisors.com
http://mortgagecomplianceadvisors.com
Friday, May 23, 2008
Frequently Asked Questions
The FAQs below apply directly to FHA approved mortgagees and non exempt residential mortgage entities in certain states; however, their application may be prudent for non FHA approved mortgage origination entities as well.
- Do I have to have a Quality Control Plan?
- Do any states currently require a Quality Control Plan?
- What are the goals of Quality Control?
- Does the Quality Control function need to be independent of the origination function?
- Do persons performing Quality Control reviews need to be qualified?
- When should Quality Control reviews be performed?
- How and how many loans are chosen for review?
- What needs to happen during the Quality Control loan review?
- Can my accountant provide Quality Control reviews?
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Do I have to have a Quality Control Plan?
All FHA approved mortgagees, including loan correspondents, must have in place and implement a Quality Control Plan for the origination of insured mortgages as a condition of receiving and maintaining FHA approval. A copy of the plan must be submitted when applying for mortgagee approval. Quality Control must be a prescribed and routine function of each mortgagee�s operations whether preformed by a mortgagee�s staff or an outside source.
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Do any states currently require a Quality Control Plan?
The Utah Division of Real Estate currently requires that principal lending managers establish and maintain a Quality Control Plan that includes at a minimum procedures for performing pre-closing and post-closing auditing of at least 10 % of all loan files and taking corrective action for problems identified through the audit process. Quality Control Plans which comply with HUD/FHA or Freddie Mac requirements shall be deemed to be in compliance with this rule.
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What are the goals of Quality Control?
The following are the overriding goals of Quality Control. Mortgagees must design programs that meet these basic goals:
- Assure compliance with FHA's and the mortgagee's own origination or servicing requirements throughout its operations;
- Protect the mortgagee and FHA from unacceptable risk;
- Guard against errors, omissions and fraud; and
- Assure swift and appropriate corrective action.
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Does the Quality Control function need to be independent of the origination function?
The Quality Control function must be independent of the origination function. This independence may be accomplished in a variety of ways. Depending on a mortgagee's operations, loan volume, staff size or other factors, a mortgagee may prefer one method over another. Quality Control functions may be performed using:
In-House Staff Mortgagees may establish a unit that is dedicated solely to Quality Control. Staff performing Quality Control reviews must not be involved in the day-to-day processes that they are reviewing.
Outside Firms Mortgagees may engage outside sources to perform the Quality Control function. The FHA approved sponsors of loan correspondents are acceptable as such outside sources. A mortgagee contracting out any part of its Quality Control function is responsible for ensuring that the outside source is meeting HUD's requirements. Any agreement with the outside source must be in writing, state the roles and responsibilities of each party, and be available for review by HUD staff.
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Do persons performing Quality Control reviews need to be qualified?
Mortgagees must properly train staff involved in Quality Control and provide them access to current guidelines relating to the operations that they review. A mortgagee contracting out any part of its Quality Control function is responsible for ensuring that the outside source is meeting HUD's requirements.
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When should Quality Control reviews be performed?
Mortgagees must ensure that quality control reviews are performed on a regular and timely basis. Depending on a mortgagee's production volume, origination reviews may be performed weekly, monthly, or quarterly. The review of a specific mortgage should be completed within 90 days of closing.
For mortgagees closing more than 15 loans monthly, quality control reviews must be conducted at least monthly and must address one month's activity. Mortgagees closing 15 or fewer loans monthly may perform quality control reviews on a quarterly basis.
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How and how many loans are chosen for review?
The Quality Control Program must provide for the review of a representative sample of a mortgagee's loans. This review must evaluate the accuracy and adequacy of the information and documentation used in reaching decisions in either the origination or servicing processes.
Because it is not feasible to review all loans originated during a period, the Program must require that an appropriately sized sample is selected and evaluated during each review. A mortgagee who originates and/or underwrites 3,500 or fewer FHA loans per year must review 10% of the FHA loans it originates. A mortgagee who originates and/or underwrites more than 3,500 FHA loans per year may review 10 % of its loans or a statistical random sampling that provides a 95 % confidence level with 2 % precision. Each review must document how the sample size and selections were determined.
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What needs to happen during the Quality Control loan review?
The Quality Control Program must provide for the review and confirmation of information on all loans selected for review.
- Credit Report. A new credit report must be obtained for each borrower whose loan is included in a Quality Control review, unless the loan was a streamline refinance or was processed using a FHA approved automated underwriting system exempted from this requirement.
- Credit Document Reverification. Documents contained in the loan file should be checked for sufficiency and subjected to written reverification.
- Appraisals. A desk review of the property appraisal must be performed on all loans chosen for a Quality Control review except streamline refinances and HUD Real Estate Owned (REO) sales. In certain circumstances, a field review may be required.
- Occupancy Reverification. In cases where the occupancy of the subject property is suspect, mortgagees must attempt to determine whether the mortgagor is occupying the property.
- Underwriting Decisions. Each Direct Endorsement loan selected for a quality control review must be reviewed for compliance with HUD underwriting requirements, sufficiency of documentation and the soundness of underwriting judgments.
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Condition Clearance and Closing Each loan selected for a quality control review must be reviewed to determine whether:
- Conditions which were required to be satisfied prior to closing were in fact met prior to closing;
- The seller was the owner of record, or was exempt from the owner of record requirement in accordance with HUD regulations;
- The loan was closed and funds disbursed in accordance with the mortgagee's underwriting and subsequent closing instructions; and
- The closing and legal documents are accurate and complete.
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Can my accountant provide Quality Control reviews?
There is often confusion with mortgagees in regard to the annual financial/FHA rule audit performed by an accountant and the at least quarterly Quality Control file audits performed by properly trained staff separate of production or by a qualified outside firm. The annual financial /FHA rule audit and the at least quarterly Quality Control file audits are two separate and distinct functions that must be conducted by mortgagees.
Concerning the Quality Control file audits, mortgagees are required to properly train staff that are solely dedicated to Quality Control and provide them access to current guidelines relating to the operations that they may review.
If mortgagees engage outside sources to perform any part of its Quality Control function, the mortgagee is responsible for insuring that the outside source is meeting HUDs requirements. Quality Control reviews must be done at least quarterly and must review the credit and collateral package in the loan file including compliance with HUD underwriting guidelines, assuring prior to closing conditions were met, closing documents were accurate and complete and the loan funded per underwriting and closing instructions. Any agreement with the outside source must be in writing, state the roles and responsibilities of each party, and be available for review by HUD staff.
If outside sources, including accountants, are properly trained, have access to current HUD guidelines, are sufficiently familiar with HUDs requirements on all aspects of the loan process from application to funding, provide reviews at least quarterly and provide clear findings as to source and cause of deficiencies in writing to the mortgagee and to HUD as requested, the mortgagee can be relatively confident the outside source is qualified to conduct Quality Control reviews.
FHA, FHA Approval Services, FHA file audit, File Audits, HUD, Mortgage Compliance, Mortgage Compliance Training and Education, Mortgage File Audit, Mortgage QC plan, Mortgage Quality Control
Wednesday, May 7, 2008
Welcome to
Mortgage Compliance Advisors, LLC (MCA) was founded on the premise of providing mortgage brokers, retail lenders, wholesale lenders, and banking institutions of all sizes with a sound alternative for meeting their mortgage compliance needs. Our combined sixty years of knowledge, experience, and processes take the guesswork out of evolving compliance issues and tasks. The compliance services we offer give our clients more time and resources to originate new mortgage transactions as well as manage existing transactions through to closing; all while knowing that compliance is not being compromised. Ultimately, we view our client relationships not as short term business relationships, but as long term strategic partnerships focused on maximizing productivity and sustainability.
5505 South 900 East, Suite 110
Salt Lake CIty, UT 84117
phone 801-649-6038 fax 801-264-0301
info@mortgagecomplianceadvisors.com -- www.mortgagecomplianceadvisors.com
MCA provides comprehensive mortgage compliance solutions, including:
--FHA and Conventional Quality Control File Audits
• Post-Closing
• Pre-Closing
• Defaults
• Fraud Detection
-- FHA Approval Services
-- Quality Control Plan Implementation
-- Operational Reviews
-- Training and Education Courses
-- Advisory and Consulting Services
• Post-Closing
• Pre-Closing
• Defaults
• Fraud Detection
-- FHA Approval Services
-- Quality Control Plan Implementation
-- Operational Reviews
-- Training and Education Courses
-- Advisory and Consulting Services
5505 South 900 East, Suite 110
Salt Lake CIty, UT 84117
phone 801-649-6038 fax 801-264-0301
info@mortgagecomplianceadvisors.com -- www.mortgagecomplianceadvisors.com
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