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.November 2007
Colorado: Department of Regulatory Agencies Division of Real Estate
Position Statement MB 1.2 - Mortgage Broker Contracts (November 2, 2007)
The Director of the Division of Real Estate issued a position statement to
clarify uncertainties regarding whether the Colorado Mortgage Broker
Registration Act ("Act") requires a contract between a mortgage broker and a
borrower. Specifically, Section 12-61-913(1) of the Act requires every contract
between a mortgage broker and a borrower to be in writing and Section
12-61-913(2) requires a mortgage broker to have a written broker agreement with
a lender before any solicitation of or contracting with, any member of the
public. Read together, the two sections ostensibly mandate a contract between
the mortgage broker and borrower. The position statement addresses this
uncertainty by clarifying that a contract between a mortgage broker and a
borrower is not required; however, if a contract does exist, then it must be in
writing and contain the entire agreement of the parties.
With regard to Section 12-61-913(2), mortgage brokers are deemed in compliance if they adhere to one of the following requirements:
(1) They individually have a written correspondent or loan broker agreement with a lender before any solicitation;
(2) They are an officer, partner, member, exclusive agent or employee of a company that has a written correspondent or loan broker agreement with a lender before any solicitation; or
(3) They are acting as an independent contractor and maintain a contractual agreement with a company that has a correspondent or loan broker agreement with a lender before any solicitation.
With regard to Section 12-61-913(2), mortgage brokers are deemed in compliance if they adhere to one of the following requirements:
(1) They individually have a written correspondent or loan broker agreement with a lender before any solicitation;
(2) They are an officer, partner, member, exclusive agent or employee of a company that has a written correspondent or loan broker agreement with a lender before any solicitation; or
(3) They are acting as an independent contractor and maintain a contractual agreement with a company that has a correspondent or loan broker agreement with a lender before any solicitation.
Emergency Rule - Mortgage Broker Disclosures (October 26, 2007)
The Director of the Division of Real Estate ("Director") adopted an emergency
rule entitled Mortgage Broker Disclosures that requires mortgage brokers to
disclose specific details of a loan transaction to the borrower within three
business days after the receipt of a loan application or any money from a
borrower. Additionally, mortgage brokers must disclose the amount of any
commission or compensation to be paid to the mortgage broker.
To ensure proper information is clearly and concisely disclosed, the Director issued two forms entitled the "Colorado Compensation Disclosure Form" and the "Colorado Lock-In Disclosure Form". Mortgage brokers must use the model forms or alternative forms that include the required information, as determined by the Director.
First American Loan Production Solutions is developing the above-referenced forms and will have them available to our clients by December 10, 2007.
To ensure proper information is clearly and concisely disclosed, the Director issued two forms entitled the "Colorado Compensation Disclosure Form" and the "Colorado Lock-In Disclosure Form". Mortgage brokers must use the model forms or alternative forms that include the required information, as determined by the Director.
First American Loan Production Solutions is developing the above-referenced forms and will have them available to our clients by December 10, 2007.
New York: State Department of Taxation and Finance TSB-A-07(5)R (effective October 18, 2007)
The New York Commissioner of Taxation and Finance issued an advisory opinion
stating that reverse mortgages are exempt from the mortgage recording taxes
imposed by Article 11 of the Tax Law. To be eligible for the exemption, the
reverse mortgage must qualify under the HUD Home Equity Conversion Mortgage
federal loan program. The following documentation is required to receive the
exemption:
(1) An affidavit executed by the mortgagee affirming that the reverse mortgage conforms to applicable federal law; and
(2) The second mortgage referencing the Home Equity Conversion Agreement and naming the Secretary of Housing and Urban Development as mortgagee should be recorded at the same time the reverse mortgage is recorded.
First American Loan Production Solutions is developing an affidavit that satisfies the above requirements and will have it available to our clients by December 10, 2007.
(1) An affidavit executed by the mortgagee affirming that the reverse mortgage conforms to applicable federal law; and
(2) The second mortgage referencing the Home Equity Conversion Agreement and naming the Secretary of Housing and Urban Development as mortgagee should be recorded at the same time the reverse mortgage is recorded.
First American Loan Production Solutions is developing an affidavit that satisfies the above requirements and will have it available to our clients by December 10, 2007.
North Carolina: House Bill 817 (effective December 1, 2007)
A person is guilty of residential mortgage fraud when, for financial gain and
with the intent to defraud, the person does any of the following:
(1) Knowingly makes or attempts to make any material misstatement, misrepresentation or omission with the mortgage lending process with the intention that a mortgage lender, mortgage broker, borrower or other party involved relies on it.
(2) Knowingly uses or facilitates or attempted to use or facilitate the use of any misstatement, misrepresentation or omission within the mortgage lending process with the intention that a party to the transaction relies on it.
(3) Receives or attempts to receive proceeds or any other funds in connection with a residential mortgage closing where a person knew or should have known would result in a violation.
(4) Conspires or solicits another to violate any of the above provisions.
Commitment of residential mortgage fraud is a criminal offense. Intent to deceive or defraud is sufficient to prosecute, as it is unnecessary to show any harm.
(1) Knowingly makes or attempts to make any material misstatement, misrepresentation or omission with the mortgage lending process with the intention that a mortgage lender, mortgage broker, borrower or other party involved relies on it.
(2) Knowingly uses or facilitates or attempted to use or facilitate the use of any misstatement, misrepresentation or omission within the mortgage lending process with the intention that a party to the transaction relies on it.
(3) Receives or attempts to receive proceeds or any other funds in connection with a residential mortgage closing where a person knew or should have known would result in a violation.
(4) Conspires or solicits another to violate any of the above provisions.
Commitment of residential mortgage fraud is a criminal offense. Intent to deceive or defraud is sufficient to prosecute, as it is unnecessary to show any harm.
Aurora Loan Services Announcement C07-45 (October 30, 2007)
Aurora's Second Liens (ALT-A and Choice Advantage) have been eliminated. The
last day to submit loans under this product was end of business November 2,
2007.
Franklin American Mortgage Co. Bulletin #2007-11 (November 2, 2007)
Franklin American suspended their Closed End Second Lien Products. Effective
November 2, 2007 5:00PM CST no new locks will be accepted for this product.
Chase JP Morgan Bulletin CB07-33 (October 17, 2007)
Chase increased their VA loan amount to $1,000,000 plus funding fees as
opposed to $1,000,000 including funding fees. This change is effective
immediately.
Effective November 5, 2007 Chase's Correspondent Division will begin to accept Texas 50(a)(6) Cash out Refinance loans for purchase under to following products.
Effective October 24, 2007 Deed Restricted Properties are eligible under Fannie Mae Products. Please see Product Guide for restrictions.
Chase Market Type 568, 668, 922, and 926 have been enhanced effective October 22, 2007. See Product Guide for more information.
Effective November 5, 2007 Chase's Correspondent Division will begin to accept Texas 50(a)(6) Cash out Refinance loans for purchase under to following products.
- Agency Fixed and ARM
- Non Agency Fixed and ARM
- Alt-A Fixed and ARM
Effective October 24, 2007 Deed Restricted Properties are eligible under Fannie Mae Products. Please see Product Guide for restrictions.
Chase Market Type 568, 668, 922, and 926 have been enhanced effective October 22, 2007. See Product Guide for more information.
IndymacBank Bulletin 07-45 (October 23, 2007)
Effective October 18, 2007 the max LTV/CLTV has been reduced to 90% for their
FlexPay product.
Indymac will no longer offer the 3/1 Libor ARM program under the Construction to Perm Alt-A Jumbo product effective immediately.
Indymac will no longer offer the 3/1 Libor ARM program under the Construction to Perm Alt-A Jumbo product effective immediately.
Citimortgage Bulletin #207-32 (October 26, 2007)
CitiMortgage discontinued their Second Lien /Home Equity Loans through AUS.
Effective November 10, 2007 loans falling under this product will have to be
manually underwritten per program guidelines. Please see Correspondent Manual
sections 280 and 281.