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.
Showing posts with label fha audit. Show all posts
Showing posts with label fha audit. Show all posts
Thursday, July 2, 2009
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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