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.March 2008
District of Columbia: Department of Insurance, Securities and Banking Bulletin 08-BB-01 (effective February 28, 2008)
As previously discussed in our February 15, 2008 Compliance Update, the
Mortgage Disclosure Amendment Act of 2007 (the "DC Act"), requires mortgage
lenders to provide written disclosures to borrowers in connection with
"non-conventional mortgage loans," and a mortgage lender must provide a
borrower with a Mortgage Disclosure Form within 3 business days of an
application for such loan. Additionally, the DC Act promulgated the Mortgage
Disclosure Form for lenders to use. The Department of Insurance, Securities and
Banking has since released a new Mortgage Disclosure Form to be used in lieu of
the form attached to the Act. The new Mortgage Disclosure Form applies to loan
applications submitted on or after February 28, 2008.
LPS has created the new Mortgage Disclosure Form and it is currently available to its clients.
LPS has created the new Mortgage Disclosure Form and it is currently available to its clients.
Office of Federal Housing Enterprise Oversight (effective March 6, 2008)
The Office of Federal Housing Enterprise Oversight ("OFHEA") released the
maximum conforming loan limits, which are effective through the end of 2008,
pursuant to the Economic Stimulus Act of 2008. The new loan limits are
available on the HUD website at https://entp.hud/gov/idapp/html/hicostlook.cfm.
U.S. Department of Housing and Urban Development Mortgagee Letter 2008-06 (effective March 6, 2008)
As a result of the enactment of the Economic Stimulus Act of 2008 (the
"Stimulus Act"), the Federal Housing Administration ("FHA") temporarily
increased the loan limits for mortgages endorsed for insurance on or after
March 6, 2008 through the end of 2008. The mortgage limits described in the
Mortgagee Letter are effective for mortgages insured under the following
Section of the National Housing Act: Sections 203(b)(FHA's basic 1-4 family
mortgage insurance program), 203(h)(mortgages for disaster victims),
203(k)(rehabilitation mortgage insurance) and 234(c)(condominium units). Please
note, Home Equity Conversion Loans (HECMs) were excluded from the Stimulus Act
and thus, the limits do not apply to such loans.
House Resolution 5140 (effective February 13, 2008)
The Recovery Rebates and Economic Stimulus for the American People Act (the
"Act") was passed to provide economic stimulus through recovery rebates to
individuals, incentives for business investment and an increase in FHA
conforming loan limits. The bill increases the cap on loans that Fannie Mae and
Freddie Mac can buy from $417,000 to $725,000 and raises the limit on FHA loans
from $362,000 to $725,000.
Freddie Mac: Bulletin Number 2008-1 (released February 20, 2008)
Freddie Mac amends the selling and servicing requirements to include the
following updates to Single Family Uniform Instruments: (1) Deleting
Pennsylvania's requirement regarding the Borrower's notice that accompanied the
seal in the Note and Security Instrument; (2) Adding language to the California
Deed of Trust regarding the notice of default; and (3) Providing a revised New
Mexico Deed of Trust (form 3032 rev. 1/08) instead of the Mortgage to provide
for non-judicial foreclosure through a trustee's power of sale as allowed under
the New Mexico Deed of Trust Act. Additionally, Freddie Mac will now purchase
eligible Texas Equity Section 50(a)(6) Mortgages.
The above-named changes are effective as of January 1, 2008 and LPS has made the necessary changes to its documents.
The above-named changes are effective as of January 1, 2008 and LPS has made the necessary changes to its documents.
Krupa v. Landsafe, Inc., No. 07-10061 (11th Cir. January 22, 2008)
The Court of Appeals for the Eleventh Circuit held that a cost-spreading
agreement between a mortgage lender and the credit reporting agency did not
violate the Real Estate Settlement Procedures Act ("RESPA"). In this case,
Countrywide used Landsafe, Inc. to obtain credit reports for its loan
applicants. Landsafe, Inc. charged $25 per credit report and Countrywide
charged the borrower the $25 fee for each loan that closed. Countrywide did not
charge borrowers any money for loans that did not close and absorbed the cost
completely. Countrywide and Landsafe later agreed to the increased charge of
$35 for each credit report obtained for loans that closed and no charge for
loans that did not close. The complaint alleged that the increased fee violated
RESPA's anti-kickback section 8(a) and anti-markup section 8(b) provisions. The
District Court granted summary judgment in favor of Countrywide and Landsafe,
Inc. and the Court of Appeals affirmed. The agreement did not violate RESPA's
anti-kickback provision because there was no change in business referred to
Landsafe, Inc. by Countrywide.
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, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, 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, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Tennessee, Texas, Vermont, Washington, West Virginia, Wisconsin, and Wyoming
Investor Relations
GMAC Bank
GMAC Bank Correspondent Funding Announcement CL08-032
As of February 15, 2008 GMAC Bank has begun to use Compliance Ease; an industry compliance tool to perform pre-funding compliance reviews of TILA disclosures. This process will help to ensure that loans do not exceed the established tolerance and that they are compliant with State and Federal law. All loans that do not meet TILA requirements will be suspended until corrected.
Citimortgage
Correspondent Lending - Combined Bulletin #2008-09 March 7, 2008
Citimortgage will no longer offer the following Freddie Mac products; Freddie Mac Alt 100 and Freddie Mac Alt 80/20. This is due to Freddie Macs decision to discontinue the product per their announcement dated February 21, 2008. All pending loans must be purchased by Citimortgage by May 7, 2008, in order to meet Freddie Macs final delivery date.
GMAC Bank Correspondent Funding Announcement CL08-032
As of February 15, 2008 GMAC Bank has begun to use Compliance Ease; an industry compliance tool to perform pre-funding compliance reviews of TILA disclosures. This process will help to ensure that loans do not exceed the established tolerance and that they are compliant with State and Federal law. All loans that do not meet TILA requirements will be suspended until corrected.
Citimortgage
Correspondent Lending - Combined Bulletin #2008-09 March 7, 2008
Citimortgage will no longer offer the following Freddie Mac products; Freddie Mac Alt 100 and Freddie Mac Alt 80/20. This is due to Freddie Macs decision to discontinue the product per their announcement dated February 21, 2008. All pending loans must be purchased by Citimortgage by May 7, 2008, in order to meet Freddie Macs final delivery date.