MCA Monthly Update - November 2009

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

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

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). - Mortgagees must begin reporting the updated status codes beginning with the January 2010 reporting cycle." (View the entire letter.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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

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. - For mortgage loan applications taken on or after July 1, 2010, Fannie Mae will require the use of the updated Form 1003." (View the entire notice.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Announcement 09-30: Retirement of the HomeSaver Forbearance™ and Conversion to the Payment Reduction Plan™. - "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 - Changes to Eligibility Determination Based on Net Present Value Evaluation - Principal Forbearance Thresholds - Verifying Borrower Income and Occupancy Status - Modification Process - Reporting - Clarification of Reimbursement of Administrative Costs (View the entire announcement.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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.

Freddie Mac Update

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. - Also announces that certain higher-risk mortgages will no longer be eligible for purchase. (View the entire bulletin.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 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. - Revises partial principal forbearance and NPV requirements - Reminds of new HAMP tool available soon - Imminent Default Indicator (IDI) - Reminds that Data Collector is being retired and replaced with the new HAMP Reporting Tool (View the entire bulletin.) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - To view Freddie Mac news, visit Freddie Mac's website.

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/.