Compliance News
In First American's Compliance News Archive you will find easy access to our library of GSE announcements, court findings, legislative changes, specific changes to state requirements, governmental guidance on issues that directly affect the mortgage document industry and more.April 2008
Maryland: Senate Bill 216/House Bill 365 (Effective April 3, 2008)
A mortgage, deed of trust or any other instrument securing a mortgage loan on residential property shall contain (1) the name and license number of the Maryland mortgage originator that originated the loan, and (2) the name and license number of the Maryland mortgage lender that made the loan. In addition, if the person that originated the loan or the lender who made the loan is exempt from the Maryland licensing requirements, an affidavit stating the exemption must be included. The failure to include this information may not be the basis for a clerk of the court to fail to record the instrument until the Commissioner of Financial Regulation adopts regulations.
The Commissioner of Financial Regulation issued a notice advising that the Commissioner is in the process of preparing the regulations to implement Senate Bill 216 and until such date that the regulations become effective the county recorder may continue to record security instruments that do not contain the above-mentioned name and license number and that no penalties will be imposed on lenders for recording security instrument that do not contain the same.
First American Loan Production Solutions is in the process of updating our Maryland security instruments and will have them available to our clients by April 25, 2008.
The Commissioner of Financial Regulation issued a notice advising that the Commissioner is in the process of preparing the regulations to implement Senate Bill 216 and until such date that the regulations become effective the county recorder may continue to record security instruments that do not contain the above-mentioned name and license number and that no penalties will be imposed on lenders for recording security instrument that do not contain the same.
First American Loan Production Solutions is in the process of updating our Maryland security instruments and will have them available to our clients by April 25, 2008.
Maryland: Senate Bill 217/House Bill 360 (Effective April 3, 2008)
A person who commits Mortgage Fraud, as defined below, is guilty of a felony and, upon conviction, subject to a fine not exceeding $5,000 or imprisonment not exceeding ten years or both.
Mortgage Fraud is any action by a person made with the intent to defraud that involves:
(1) knowingly making any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the intent that the misstatement, misrepresentation, or omission be relied on by a mortgage lender, borrower or an other party;
(2) knowingly using or facilitating the use of any deliberate misstatement, misrepresentation or omission during the mortgage lending process with the intent that the misstatement, misrepresentation or omission be relied on by a mortgage lender, borrower or any other party;
(3) Receiving any proceeds or any other funds in connection with a mortgage closing that violate the above-mentioned items;
(4) Conspiring to violate the above-mentioned items; or
(5) Filing any document relating to a mortgage loan that the person filing the document knows contains a deliberate misstatement, misrepresentation or omission.
Mortgage Fraud is any action by a person made with the intent to defraud that involves:
(1) knowingly making any deliberate misstatement, misrepresentation, or omission during the mortgage lending process with the intent that the misstatement, misrepresentation, or omission be relied on by a mortgage lender, borrower or an other party;
(2) knowingly using or facilitating the use of any deliberate misstatement, misrepresentation or omission during the mortgage lending process with the intent that the misstatement, misrepresentation or omission be relied on by a mortgage lender, borrower or any other party;
(3) Receiving any proceeds or any other funds in connection with a mortgage closing that violate the above-mentioned items;
(4) Conspiring to violate the above-mentioned items; or
(5) Filing any document relating to a mortgage loan that the person filing the document knows contains a deliberate misstatement, misrepresentation or omission.
Mississippi: Senate Bill 2075 (Effective March 26, 2008)
Every person who prepares a deed of trust must include an indexing instruction stating the section, township and range or one or more quarter sections or governmental lots or other applicable subdivisions of each section in which the land is located.
Utah: Senate Bill 134 (Effective May 4, 2008)
A person who commits Mortgage Fraud, as defined below, is guilty of a criminal offense the degree of which is determined by the total value of all property, money or things obtained by the violation.
Mortgage Fraud is any action by a person made with the intent to defraud that involves:
(1) knowingly making any material misstatement, misrepresentation, or omission during the mortgage lending process with the intent that the misstatement, misrepresentation, or omission be relied on by a mortgage lender, borrower or an other party;
(2) knowingly using or facilitating the use of any material misstatement, misrepresentation or omission during the mortgage lending process with the intent that the misstatement, misrepresentation or omission be relied on by a mortgage lender, borrower or any other party;
(3) Receiving any proceeds or any other funds in connection with a mortgage closing that violate the above-mentioned items; or
(4) Filing any document relating to a mortgage loan that the person filing the document knows contains a deliberate misstatement, misrepresentation or omission.
Mortgage Fraud is any action by a person made with the intent to defraud that involves:
(1) knowingly making any material misstatement, misrepresentation, or omission during the mortgage lending process with the intent that the misstatement, misrepresentation, or omission be relied on by a mortgage lender, borrower or an other party;
(2) knowingly using or facilitating the use of any material misstatement, misrepresentation or omission during the mortgage lending process with the intent that the misstatement, misrepresentation or omission be relied on by a mortgage lender, borrower or any other party;
(3) Receiving any proceeds or any other funds in connection with a mortgage closing that violate the above-mentioned items; or
(4) Filing any document relating to a mortgage loan that the person filing the document knows contains a deliberate misstatement, misrepresentation or omission.
HUD Mortgagee Letter 2008-08 (released March 28, 2008)
The Federal Housing Administration ("FHA") has clarified the guidelines for fixed rate Home Equity Conversion Mortgages (HECM). Specifically, lenders are reminded that:
(1) Fixed rate HECMs may be open-end or closed-end. The Note and the Loan Agreement must reflect whether the HECM is open-end or closed-end.
(2) The expected average mortgage interest rate and the Note rate must be identical and set simultaneously.
(3) The monthly servicing fee cannot exceed $30.00. (4) Borrowers may change payment plan options as long as the mortgage balance is less than the principal limit. Borrowers may not change from a fixed rate to an adjustable rate plan unless the mortgage is refinanced.
First American Loan Production Solutions is in the process of updating our fixed rate HECM documents and will have them available to our clients by May 23rd.
(1) Fixed rate HECMs may be open-end or closed-end. The Note and the Loan Agreement must reflect whether the HECM is open-end or closed-end.
(2) The expected average mortgage interest rate and the Note rate must be identical and set simultaneously.
(3) The monthly servicing fee cannot exceed $30.00. (4) Borrowers may change payment plan options as long as the mortgage balance is less than the principal limit. Borrowers may not change from a fixed rate to an adjustable rate plan unless the mortgage is refinanced.
First American Loan Production Solutions is in the process of updating our fixed rate HECM documents and will have them available to our clients by May 23rd.
HUD Mortgagee Letter 2008-09 (released April 1, 2008)
FHA implemented additional underwriting and collateral assessment practices for loans with mortgage amounts that exceed the 2008 conforming limit.
(1) A second appraisal is required on loans in declining areas, when the mortgage amount exceeds $417,000, excluding the upfront mortgage insurance premium ("MIP"), and the loan-to-value ratio, excluding upfront MIP, equals or exceeds 95%.
(2) The loan-to-value ratio may not exceed 85 percent of the appraiser's estimate of value for a cash-out refinance when the loan balance, excluding MIP, exceeds $417,000.
(1) A second appraisal is required on loans in declining areas, when the mortgage amount exceeds $417,000, excluding the upfront mortgage insurance premium ("MIP"), and the loan-to-value ratio, excluding upfront MIP, equals or exceeds 95%.
(2) The loan-to-value ratio may not exceed 85 percent of the appraiser's estimate of value for a cash-out refinance when the loan balance, excluding MIP, exceeds $417,000.
Statement on Subprime Mortgage Lending
As previously discussed in our July 11, 2007 Legislative Update, the final interagency Statement on Subprime Mortgage Lending ("Statement") clarifies how financial institutions can offer certain adjustable rate mortgage products in a safe and sound manner and in a way that clearly discloses the risks a borrower may assume.
To date, the following states have adopted the Statement, with the bold portions indicating the states that recently adopted the Statement.
Alabama, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Rhode Island, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming
To date, the following states have adopted the Statement, with the bold portions indicating the states that recently adopted the Statement.
Alabama, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Rhode Island, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming