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.February 2007
Arizona
MB/BK-07-01 Regulatory Alert (February 22, 2007) (43 Kb)
Arizona has adopted guidelines for nontraditional mortgage products, based on the federal interagency guidance issued in September of 2006.
As originally addressed in our December 29, 2006 Legislative Update, the federal Interagency Guidance on Nontraditional Mortgage Products clarifies how institutions can offer nontraditional mortgage products in a safe and sound manner that clearly discloses the risks a borrower may assume, by addressing three primary areas: loans terms and underwriting standards; portfolio and risk management practices and consumer protection issues.
To date, twenty-six states and the District of Columbia have adopted a variation of the federal guidance: AZ, CT, GA, HI, ID, IN, IA, KY, MA, MI, MN, MS, MO, MT, NH, NJ, NC, ND, OH, OR, RI, SD, TX, VT, WA, WY.
Illinois
815 ILCS 137/10 (effective January 1, 2007)
The dollar amount of the fee limitation imposed under the Illinois High Risk Home Loan Act, which triggers additional disclosure requirements and lending limitations for certain home mortgage loans, increased from $850 to $871 for 2007.
House Bill 4050 (January 19, 2007) (36 Kb)
Illinois Governor Blagojevich ordered the immediate suspension of the Predatory Lending Database Pilot Program. The Governor also directed the Illinois Department of Financial and Professional Regulations to continue searching for a system that effectively meets the goals of fighting predatory lending and protecting Illinois homebuyers.
Maine
Regulation 500 (effective February 10, 2007) (66 Kb)
The Office of Consumer Credit Regulation adopted the Loan Officer Education Rule. The rule requires that all loan officers take at least 12 hours of courses (including an hour of Maine-specific law instruction, and an hour of mortgage-related ethics) prior to January 31, 2008. Loan officers who register after that date will be required to first take 16 hours of instruction, including 2 hours of Maine-related courses and 2 hours of ethics.
New Jersey
Bulletin 06-25 (effective January 1, 2007) (86 Kb)
In accordance with the New Jersey Home Ownership Security Act (“Act”), the New Jersey Department of Banking and Insurance increased the maximum principal loan amount that, subject to the annual percentage rate and points and fees triggers, will result in a loan being considered a high cost home loan from $383,682.60 to $400,001.50.
North Carolina
18 NCAC 07C .0101 - .0604 (effective January 1, 2007) (41 Kb)
The Department of the Secretary of State adopted regulations implementing the North Carolina Electronic Notary Act, which detail notary signature and seal requirements for electronic notarizations. Under the new law, a notary and a principal must be in each other’s physical presence during the entire electronic notarization.
Pennsylvania
First Mortgage Loan Business Practices—Statement of Policy (21 Kb)
The Department of Banking published a guidance regarding what constitutes dishonest, fraudulent, illegal, unfair, unethical, negligent and incompetent conduct for licensees under the Mortgage Bankers and Brokers and Consumer Equity Protection Act. Licensees could face suspension, revocation or non-renewal of their licensees if they fail to adhere to the guidance.
Rhode Island
Senate Bill 2927 (Effective April 1, 2007) (18 Kb)
Every deed presented for recording due to the sale of property must contain or have endorsed upon it the total dollar amount of the actual sale.
Tennessee
Bulletin FI-07-1 (January 31, 2007) (23 Kb)
The Tennessee Home Loan Protection Act does not apply to national or state banks or trust companies, federal or state savings institutions, federal or state credit unions, or the operating subsidiaries of any of these institutions, with the possible exception of restrictions on high cost home loan closing locations.
Texas
7 TAC Chapter 83 (effective January 4, 2007) (147 Kb)
The Finance Commission of Texas adopted rules relocating and reorganizing provisions of the Secondary Mortgage Loan Act to provide a more logical location and order. The rules amend provisions pertaining to assessment fees, disclosure of owners and principal parties, and fingerprinting requirements. Additionally, the rules clarify procedures for the surrender or transfer of a license.
Attorney General Opinion GA-0519 (February 21, 2007) (3 Mb)
On February 21, 2007, Texas Attorney General Greg Abbott issued an opinion stating that the social security number of a living person is confidential and subject to mandatory exception from required disclosure under section 552.147(a) of the Public Information Act (“PIA”).
On February 28, 2007, in response to the concerns raised by legislative leaders regarding the logistical implication surrounding the rapid implementation of the statutorily-mandated social security number confidentiality, the Attorney General issued a 60-day abatement on Opinion No. GA-0519 to allow the Texas Legislature to address this issue. During the 60-day period, said opinion will have no force or effect.
Vermont
Senate Bill 284 (All sections, except for 9 V.S.A. 2440, effective January 1, 2007) (86 Kb)
Security Breach Notice Act
Any entity that handles, collects, disseminates or otherwise deals with personal information concerning a Vermont resident must notify the resident that there has been a security breach following discovery or knowledge of the breach. If the entity does not own the personal information, the entity must notify the information owner of the breach.
The written or electronic notice must be clear and conspicuous and include a description of the following information:
- The incident in general terms.
- The type of personal information that was subject to the breach.
- The general acts of the entity to protect the personal information from further unauthorized access.
- A toll-free telephone number that the consumer may call for further information and assistance.
- Advice that directs the consumer to remain vigilant by reviewing account statements and monitoring free credit reports.
Personal information means an individual’s first name or first initial and last name in combination with any one or more of the following date elements, when either the name or the date elements are not encrypted or protected:
- Social Security number.
- State driver’s license or identification number.
- Financial account number or credit or debit card number, if circumstances exist in which the number could be used without additional identifying information, access codes or passwords.
- Account passwords or personal identification numbers or other access codes for a financial account.
Financial institutions subject to federal oversight are exempt.
Document Safe Destruction Act
A business must take reasonable steps to destroy or arrange for the destruction of a customer’s records within its custody or control containing personal information which is no longer retained by the business by shredding erasing or otherwise modifying the personal information in those records to make it unreadable or indecipherable through any means for the purpose of:
- Ensuring the security and confidentiality of customer personal information.
- Protecting against any anticipated threats or hazards to the security or integrity of customer personal information.
- Protecting against unauthorized access to or use of customer personal information that could result in substantial harm or inconvenience to any customer.
Personal information means the following information that identifies, relates to, describes or is capable of being associated with a particular individual:
- His or her signature
- Social Security number
- Physical characteristics or description
- Passport number
- Driver’s license or state identification card number
- Insurance policy number
- Bank account number
- Credit card number
- Debit card number
- Any other financial information
Any bank, credit union or financial institution as defined under the federal Gramm Leach Bliley Act that is subject to federal oversight is exempt.
Washington
House Bill 2340 (effective January 1, 2007) (132 Kb)
The definition and requirements regarding loan originators has been amended. A loan originator is a person who:
- takes a residential mortgage loan application for a mortgage broker, or
- offers or negotiates terms of a mortgage loan, for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain.
In addition, this bill addresses requirements regarding written disclosures that must be provided by a loan originator to the borrower. FAND has amended the Washington Conflict of Interest Disclosure accordingly.
Wisconsin
Assembly Bill 912 (effective January 1, 2007) (22 Kb)
If a third party requests access to a consumer report on which a security freeze is in effect, the request is in connection with a credit application or other use and the consumer does not allow his or her consumer report to be access for that period of time, then the third party may treat the consumer’s application as incomplete.
Guidance on Nontraditional Mortgage Products
Oregon: (effective January 18, 2007)
New Jersey: (effective January 18, 2007)
Rhode Island: (effective February 1, 2007)
Oregon, New Jersey, and Rhode Island have adopted guidelines for nontraditional mortgage products, based on the federal interagency guidance issued in September of 2006.
As previously addressed in our December 29, 2006 Legislative Update, the federal Interagency Guidance on Nontraditional Mortgage Products clarifies how institutions can offer nontraditional mortgage products in a safe and sound manner that clearly discloses the risks a borrower may assume, by addressing three primary areas: loans terms and underwriting standards; portfolio and risk management practices and consumer protection issues.
To date, twenty-five states and the District of Columbia have adopted a variation of the federal guidance: CT, GA, HI, ID, IN, IA, KY, MA, MI, MN, MS, MO, MT, NH, NJ, NC, ND, OH, OR, RI, SD, TX, VT, WA, WY.
National Credit Union Administration
OGC Opinion 06-1219 (effective January 19, 2007) (27 Kb)
The National Credit Union Administration reiterated and clarified that credit unions can use automated valuation methods (“AVMs”) to determine the value of real property for smaller mortgages (mortgages less than or equal to $250,000 and transactions involving an existing extension of credit). AVMs can be used in the lending process provided each market valuation calculated by the AVM is reviewed by an individual (such as a credit union loan officer) with knowledge, training, and experience in the local real estate market.
Federal Reserve Board
Annual Adjustment of Fee Limitation (effective January 1, 2007) (117 Kb)
The dollar amount of the fee limitation imposed under the federal Home Ownership and Equity Protection Act of 1994, which triggers additional disclosure requirements for certain home mortgage loans, increased from $528 to $547 for 2007.
HUD Mortgagee Letter 2007-03
Revision of Preservation and Protection Requirements and Cost Reimbursements (published January 26, 2007) (117 Kb)
Attachment to Revision of Preservation and Protection Requirements and Cost Reimbursements (published January 26, 2007) (6 Mb)
The Department of Housing and Urban Development (“HUD”) updated its General Requirements for Preservation and Protection of Properties Securing FHA-insured Mortgages, including:
- An overall increase in cost reimbursements for many Preservation and Protection services
- A description of five different types of inspections
- A new requirement for Mortgagees to document the key code for changed door locks as opposed to mailing keys to the appropriate contractors
- An increase in the maximum allowable securing fee to allow for re-securing of a property without prior approval
- Clarification of the distinction between temporary and permanent roof repairs and clear guidance when each is appropriate
- Clarification of conditions under which HUD will accept conveyance of a property with mold
- A new requirement for the use of digital photographs and a new flat-fee reimbursement
- An update regarding lawn maintenance reimbursement
- Specific language that excludes normal household cleaning products from the definition of hazardous waste
- Removal of the requirement for installation of the Reduced Pressure Zone devise, except where mandated by state or local law
- A significant reduction in the number of local variances to general policy
- Updates to the Mortgagee appeal procedures
FDIC
FIL-6-2007 (January 22, 2007) (51 Kb)
The Supervisory Policy on Predatory Lending describes what the FDIC considers to be characteristics of predatory lending and reaffirms that such activities are inconsistent with safe and sound lending and undermine individual, family and community economic well-being. The statement describes the FDIC’s supervisory response to predatory lending, including a list of policies and procedures that relate to consumer lending standards. The FDIC expects the financial institutions it supervises to treat consumers fairly, adhere to all applicable legal requirements, and underwrite loan products appropriately.
News Archive
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