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.June 2009
STATE ANNOUNCEMENTS |
The Secure and Fair Enforcement Mortgage Licensing Act of 2008 ("S.A.F.E. Act"), Title V. Sec.1501, was signed into law on
July 1, 2008. States are provided guidance and encouraged to establish a system
for the Nationwide Mortgage Licensing System and Registry ("NMLSR") by July 1, 2009.
The NMSLR must be implemented by July 1, 2010. S.A.F.E. Act elements to be incorporated by states include, but are not
limited to: licensing requirements for mortgage loan originators, obtaining a unique identifier number, criminal fingerprint
background checks, pre-license education, testing, and continuing education and testing requirements. If a state does not
provide a licensing program, HUD is authorized to establish a program for them.
To date, the following states and the District of Columbia have enacted legislation (with the bold portions indicating
the states that recently adopted legislation) to comply with the S.A.F.E. Act: Alabama, Arkansas, Colorado, Georgia, Idaho,
Indiana, Iowa, Kansas, Kentucky, Maryland, Mississippi, Montana, Nebraska, New Jersey, New Mexico, North Dakota, Oklahoma,
South Carolina, South Dakota, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.
Alabama Senate Bill 233 (effective August 22, 2009)
Under the Alabama Residential Mortgage Fraud Act, an individual commits residential mortgage fraud by doing any of the following:
- knowingly making any material deliberate misstatement or misrepresentation during the mortgage lending process;
- knowingly using or facilitating the use of any material deliberate and known misstatement; or
- filing or causing to be filed with any public office any document known to contain a material deliberate misstatement or misrepresentation.
Residential mortgage fraud is a Class C felony.
Alabama Emergency Regulation 2009-1A (effective May 5, 2009)
The Alabama Banking Department adopted an emergency regulation authorizing providers licensed under the Mortgage Brokers
Licensing Act or Alabama Consumer Credit Act to charge and collect a fee up to $500.00 for consumer mortgage loan
modification services. Under this regulation, mortgagees on loans are not considered to be engaged in the business of
providing consumer mortgage loan modification services. Attorneys acting for the borrower are not subject to this regulation.
Indiana Senate Bill 492 (effective May 5, 2009; applicable sections effective July 1, 2009)
For purposes of prohibited home loan lending activities, the definition of a "mortgage transaction" is amended to include a
loan secured by a mortgage or deed of trust on a one-to-four family owner-occupied principal dwelling. A reverse mortgage
transaction is defined as a mortgage transaction that is secured by real estate on which a structure is located that is
occupied by the borrower as the borrower’s principal dwelling.
Nevada
Assembly Bill 151 (effective May 29, 2009)
Mortgage brokers must include their license number on each loan secured by a lien on real property.
Licensed financial institutions that offer nontraditional mortgage loan products, which includes adjustable rate mortgages,
must disclose to the borrower information regarding the actual costs and risks of the product. The disclosure must be
written in clear language, printed in at least 10-point bold type, and must include:
- information concerning potential increases in monthly payments, including information describing the circumstances under which interest rates or negative amortization could reach the contractual limits;
- information concerning the maximum monthly payment that the borrower may be required to pay if amortizing payments are required and the interest rate and negative amortization caps are reached;
- information concerning the circumstances under which structural payment changes will occur, the amount of the new payments and the method of calculating the amount of the new payments;
- information concerning negative amortization, including information describing the potential for increases in the principal balance and decreases in home equity and any other potential adverse consequences to the borrower resulting from negative amortization;
- if a nontraditional mortgage loan product includes prepayment penalties, information explaining the prepayment penalties and the amount of the penalties;
- if the financial institution offers full-document home loans in addition to low-document home loans, no-document home loans or stated-document home loans, information concerning any pricing premium that attaches to the low-document home loans, no-document home loans, or stated-document home loans; and
- for payment option adjustable-rate mortgages, information explaining each payment option available and the effect on the loan balance of each payment option.
With respect to each non-traditional loan made, the licensed financial institution must certify to the Commissioner that the above disclosure was made. A financial institution may contract with a nonprofit or government-operated consumer credit counseling or housing counseling agency, or a nonprofit or government-operated legal services agency to provide the certification to the Commissioner.
LPS has this disclosure available for client use.
Assembly Bill 287 (effective July 1, 2009)
Persons involved in a real estate transaction must not influence the development, reporting, result, or review of an appraisal through coercion, extortion or bribery; provided however, such persons may request that an appraiser consider additional appropriate property information, provide further detail for the appraiser’s conclusion as to value, or correct errors on the appraisal.
Assembly Bill 513 (effective May 29, 2009)
In connection with loans secured by real property, a mortgage broker must provide a disclosure with the following information:
- a specific dollar amount of all fees earned;
- an explanation of who is responsible for payment of the fees; and
- an explanation of the probable impact the fees may have on the terms of the loan, including but not limited to the interest rates.
West Virginia Senate Bill 425 (effective July 10, 2009)
Loans secured by residential real estate may be refinanced or consolidated with a new loan only if there is a reasonable,
tangible net benefit to the borrower. The reasonable, tangible net benefit must be documented in writing on a form
prescribed by the Commissioner of Banking of West Virginia that includes the terms of both the new and the refinanced loans,
the cost of the new loan and the borrower's circumstances.
AGENCY ANNOUNCEMENTS |
Fannie Mae Announcement 09-14 (May 29, 2009)
Fannie Mae reminds lenders about the requirements to notify them immediately if they learn of any misrepresentation or
possible breach of a selling warranty, including fraud. Lenders must be vigilant in their loan quality assurance concerning
the misrepresentation of Social Security numbers, individual taxpayer identification numbers, and all other aspects of the
mortgage loan.
Fannie Mae Announcement 09-16 (June 1, 2009)
Fannie Mae will no longer offer commitments to purchase CMT-indexed Home Equity Conversion Mortgages ("HECM") effective
September 1, 2009. Fannie Mae will continue to offer to purchase commitments to purchase for monthly adjustable-rate LIBOR
indexed HECMs and fixed-rate HECMs.
Freddie Mac Bulletin 2009-13 (May 26, 2009)
For mortgages that are or become at least 31 days delinquent, servicers must solicit eligible borrowers for a modification under the Home Affordable Modification Program no later than the 50th day of delinquency. This becomes effective July 1, 2009.
HUD Mortgagee Letter 2009-16 (May 21, 2009)
Pursuant to the Housing and Economic Recovery Act of 2008, HUD revised their guidance concerning manufactured housing requirements for FHA mortgage insurance under Title II of the National Housing Act. Specifically, individual manufactured housing units located in manufactured housing condominium projects now are eligible for FHA insurance. At this time, HUD has not published updated guidance on the processing of these project approvals; therefore, all approval requests must continue to be processed by the geographically applicable Homeownership Center.
HUD Mortgagee Letter 2009-17 (May 22, 2009)
Mortgagees are reminded of the requirements set forth in HUD Handbook 4060.1 REV-2 which states that HUD must be kept apprised of relevant business changes. The annual renewal process will be changed within the next few months for FHA approved lenders. The review process highlights inconsistencies in lender business and officer data. All FHA approved lenders must confirm or update the information stored in the FHA Connection to insure that it is accurate and complete.