Loan Processor Blog :

Lots Of Action On FHA With New Mortgagee Letters And On Capitol Hill!

2010-04-30T11:06:00.003-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

It’s been a busy few weeks on the FHA-Front with the release of several Mortgagee Letters as well as movement on the FHA Reform Bill on Capitol Hill in Washington. Let’s review:

Mortgagee Letter 2010-13-Appraisal Update and/or Completion Report (Fannie Mae Form 1004D/Freddie Mac Form 442/March 2005)

It was definitely a positive that HUD issues this communication because the content of this bulletin most certainly clears up confusion on appraisal validity when an existing FHA appraisal is extended by the appraiser with FNMA Form 1004D. HUD communicates one fact in ML 2010-13 that was not so clear in the first communication issued via Mortgagee Letter 2009-51: That the original FHA appraisal may only be extended one time with the use of the Appraisal Update Report.

It was also clarified that the maximum validity of the FHA appraisal is 240 days if the Appraisal Update Report is used to extend the validity of the original appraisal report. In these cases, the DE underwriter may not add an additional 30 days extension to bring validity to 270 days.

The same requirements listed in ML 2009-51 apply in that the property cannot be located in an area of market decline. That in itself wipes out much of the ability to utilize the Appraisal Update to extend the validity of FHA appraisals and in most cases, once the original appraisal ages to 120 days, a new FHA appraisal will be required instead of using the FNMA Form 1004D to extend validity.

Always be sure to check your lender’s guidelines as some lenders are not even honoring the Appraisal Update Report and will always require a new FHA appraisal once the 120 milestone is reached.

Mortgagee Letter 2010-14 Electronic Signatures on Third Party Documents

This bulletin simply clarified what’s already been accepted for a few years as far as I’m aware. FHA simply clarified in writing that they are now accepting electronic signatures on third party documentation such as verification forms and real estate contracts. Note that this does not include their acceptance of electronic signatures on applications documents and disclosures nor closing documents. These all require actual ink signatures from our borrowers.

Mortgagee Letter 2010-15 FHA Case Number and FHA Roster Appraiser Assignments
As we all know, this bulletin was long overdue since Appraiser Independence standards were effective for cases assigned on and after February 15th. This ML simply communicates the changes to FHA Connection Case Assigning data screens in that we are no longer required to enter the appraiser information in the initial stages for case assignment. Instead, we will now be entering the appraiser information with appraisal logging procedures. This is a good change in that it will eliminate the masses of errors that had been created in the past when processors and underwriters logged a different FHA appraiser than the one who was originally assigned to the case.

There is one part of this bulletin I feel is of particular importance to point out, however, and that is point number 3 at the top of the letter:

3. Requires that the effective date of the appraisal be after the case number assignment date except in certain limited circumstances.

This change is especially important for those who have established the bad habit of ordering FHA appraisals before the case has been assigned. I’ve seen this happen way too often. The appraisers should not accept orders without the case assignments but they do and often, they end up completing the appraisal before the case is even assigned. This letter communicates that HUD is no longer accepting those except for the limited circumstances outlined in the bulletin which require lender certification.

Lastly, the H.R. 5072, “The FHA Reform Act” is moving its way through Capitol Hill. It passed the House Financial Services Committee on Tuesday, April 27th and will likely end up passing into law because it has the support of a diverse group of organizations including the National Urban League, the National Council of La Raza, the National Community Reinvestment Coalition, the Mortgage Bankers Association, the National Association of Realtors and the National Association of Home Builders.

This bill proposes increasing FHA annual mortgage insurance premiums from the current .50 and .55 rates to 1.50 and 1.55 which is a substantial increase to monthly mortgage payments for potential FHA homeowners. This is a bit concerning since as we all know, up-front mortgage insurance premiums were just increased from 1.5% and 1.75% to 2.25% effective in early April. If the annual mortgage insurance is increased for FHA, it may make FHA lending more difficult as far as qualifying lower income borrowers in certain areas of the country.

In addition the bill proposes to hold lenders accountable for indemnification of loans with claims paid out whereas a determination is made that fraud was involved. (this one I couldn’t agree with more. It’s about time lenders with poor screening processes be held accountable for the fraud that contributes to bad things for all of us in the industry).

The bill also proposes that HUD has the right to terminate underwriting authority for those lenders whose default rates are determined excessive, in addition to a number of other measures that are presented to preserve and protect the mortgage insurance reserve fund.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

FAQ Results from Recent HUD Webinar

2010-04-23T15:32:00.002-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I was quite impressed with the HUD webinar I listened in on April 20th. I was thrilled to see that a lot of commonly asked questions were addressed and explained. In the past, many of these same questions received different answers from various interpretations of the guidelines over the years. I’m excited to pass on some of the test questions and FAQS from the session! Test your own knowledge by reviewing the questions below. I’ve provided the answers at the bottom of this writing.

QUESTIONS:

1. Borrower currently owns a primary residence secured by FHA financing and wishes to purchase another home with FHA financing to accommodate the needs of a larger yard for Rex, the new family dog. Does this need meet FHA’s requirements for increase in family size which allows for ownership of more than one FHA-insured property?

2. Borrower is purchasing a property in a community property state with a non-purchasing spouse. Review of the borrower’s IRS tax transcript, as required by the lender, indicates a Schedule C business loss for the non-purchasing wife. Does the lender need to take the income losses of the non-purchasing spouse into account for the borrower’s qualifying purposes?

3. Borrower just returned to the work force after a job gap of 4.5 years due to her spouse’s consistent military transfers all over the country. She has been back on the job for 30 days. Can her income be used for qualifying purposes?

4. Review of borrower’s credit report shows obligation for a mortgage rated current with 2 x 30 late payments reflected in the most recent 12 month period. Borrower provides copy of divorce decree with settlement showing that the divorce awarded the prior marital home to the ex-spouse and that the mortgage was to have become the ex-spouse’s responsibility. Is the lender correct in omitting this debt from the borrower’s qualifying requirements?

5. Borrower’s credit report indicates a bankruptcy discharge just two years ago and review of documentation reflects that a home with mortgage liens was included in the bankruptcy. Is the borrower eligible for FHA financing?

6. Borrower’s credit report reflects an individual auto loan currently in repayment but the borrower states his sister makes payments on the auto since she now drives the car. He can provide 12 months cancelled checks to substantiate this. Can this debt be omitted from the borrower’s qualifying ratio?

7. Borrower earns commissions as a Schedule C sales person. The credit report reflects a large auto loan payment but borrower states that her business makes the payments. Is the lender correct in omitting this debt from qualifying if the tax returns demonstrate that the auto expenses are indeed being covered by the business?

8. Borrower’s credit report reflects a disputed account with a zero balance and AUS/TOTAL Scorecard has approved the loan. Does the automated approval require a downgrade to refer and must the loan be manually underwritten?

9. Borrower recently accepted new employment at a higher salary which has been used in qualifying, loan is AUS approved but borrower isn’t set to start the job until 30 days after the loan closes. Is this acceptable if a signed employment offer is obtained from the new employer confirming the salary and that the start date is within 60 days of loan closing?

10. Is a credit report required for a non-purchasing spouse when the non-purchasing spouse is an illegal alien with no valid social security number?

ANSWERS:

1. Unfortunately no. Increase in family size must be documented by the borrower providing documentation of an added dependent or extension of family as well as by an increase to the number of bedrooms when comparing the capacity of the current home to that of the proposed home. The definition of family member does not include pets for FHA’s purposes.

2. No. Business losses for non-purchasing spouses do not need to be accounted for in qualifying the purchasing borrower.

3. Unfortunately no. FHA requires a minimum of six months return to the work force after an extended period of absence as well as documentation that the borrower had a minimum two year employment history prior to the gap.

4. Yes. When documented by a divorce decree or court order, the debts of an ex-spouse may be omitted.

5. Unfortunately no. When a home mortgage is written off in a bankruptcy discharge, it is considered a foreclosure for FHA qualifying purposes and is subject to the minimum three year requirement before the borrower is allowed to purchase a home secured with FHA financing.

6. The auto payment can only be omitted if the sister is on the auto loan with the borrower. If the auto loan was obtained solely in the borrower’s name, the debt cannot be omitted even if another party provides evidence that someone other than the borrower has been repaying the loan.

7. Unfortunately no. A Schedule C Sole Proprietorship business which means the borrower is still solely responsible for all income, expenses and debt. The business would not be considered a co-obligor on the debt and thus, the obligation cannot be omitted from qualifying.

8. Yes. Regardless of the disposition of a disputed account, the loan must be downgraded from AUS Approve or Accept to Refer and must be manually underwritten.

9. It may be acceptable to the FHA guideline requirements but if the AUS findings require review of the most recent or 30 days paystubs, the lender cannot meet the documentation requirements because the borrower hasn’t yet started the new job for which income is being used to qualify. In this situation, the AUS approval must be downgraded to a Refer and the loan must be manually underwritten.

10. The lender must provide evidence of due diligence in attempting to obtain a credit report for the non-purchasing spouse. However, if the non-purchasing spouse does not have a valid SSN, it is unlikely to render a credit report result.

How did you do? I thought these were great questions that HUD addressed on the webinar. Am hoping you find the answers helpful as well!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

This Week’s Hot Topics

2010-04-16T10:35:00.002-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Two items in particular stand out this week. As being the commonly asked questions I’ve had to jump in and answer.

1. Where can I get hard copies of the HUD Settlement Cost Booklet?

2. What will lenders require in regards to tax transcripts after the April 15th filing deadline date?

To answer the first question, HUD Settlement Cost Booklets (recently updated on 3/25/2010) are available for download at the RESPA website at
http://www.hud.gov/offices/hsg/ramh/res/settlement-cost-booklet03252010.cfm.

HUD has not made the booklets available for order from their online distribution center this year. However, I’m told that you may still call and order up to 100 booklets at no charge by calling HUD Customer Service at 1-800-767-7468. Beware however, that shipments may be delayed due to the recent booklet update. Be sure to ask for the approximate shipping time.

In regards to question number two, I don’t know about anyone else but I am just sick to death of even hearing mention of the “T word.” (transcripts). I don’t understand why everyone in mortgage land is having such a difficult time with these new requirements. It all comes down to common sense which should be no different than any other underwriting situation!

Within the past day, I’ve researched and contacted a number of the largest lenders and the consensus among them was this: If the borrower’s 2009 earnings were significantly higher than in previous years and the 2009 income is required for the borrower to qualify for the mortgage, transcripts are expected to accompany all other documentation to substantiate the income. If the borrower’s 2009 income is used to qualify and no transcripts are in the file when it goes to the lender for purchase, the lender may downgrade your income qualifications by tossing out the 2009 figures to go off of 2008 transcript income. This can cause non-saleable loan issues and significant purchasing delays.

So, what’s the trick to making the judgment calls on these situations? Use conservative qualifying, meaning the worst possible case qualifying you can in order to avoid the requirement for the 2009 transcript if it’s not yet available.

For borrower’s, who do not need the 2009 income increase to qualify, simply obtain copies of the 2009 W2s, a copy of the 2009 filed return or extension to file, evidence that IRS transcript is not yet available and substitute the 2008 transcript instead.

For you originators out there - If you send out email alerts or marketing communications to past customers, be sure to inform them of the need for their transcripts in most loan situations. Give them the heads up that they should not delay filing their 2009 returns if their intent is to refinance or purchase a home within the coming months. Make sure they are prepared and can be certain that their transcripts will be available from the IRS at the time of application or shortly thereafter. You’ll be saving them a world of frustration and potential closing date delays but giving them the information ahead of time!

Be sure to inform your realtor, builder and financial planning partners about the tax transcript requirements as well so that they can assist in preparing potential applicants for the tax transcript requirements! Your business partners will appreciate you keeping them informed and up-to-date on the underwriting policies and requirements that can affect your mutual interest clients!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Helping Consumers Avoid Foreclosure

2010-04-09T11:45:00.007-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

There’s no question credit underwriting guidelines have tightened. So much so that a person pretty much needs excellent credit just to be able to refinance to a lower interest rate nowadays. Occasionally, I receive inquiries from people asking for advice on what to tell former clients who are facing foreclosure due to financial struggles because we have few if any lending options remaining to help them. Very recently the request for advice hit very close to home when a member of my own family informed me he was on the verge of foreclosure. I’m sure there are many similar circumstances shared among us. Never have I felt so helpless as when I realized I have all the power to assist with the financing end of things but am virtually helpless when it comes to helping struggling homeowners after the fact. In the past I’ve been able to help people avoid financial perils before their credit suffered. But those days have certainly gone by the wayside.

After my uncle informed me of his financial difficulties and lack of luck finding stable employment, I started researching. I was determined to find resources to potentially help him in his time of need. When a man in tears stands over six feet tall, near 300 pounds, with five children and a farm on the line, you tend to want to drop everything you thought was a priority in your own life to try and find ways to help. I was able to find a lot of great information and resources for him, many of which are listed below.

Click Here for a List of Resources: Foreclosure_Prevention_Resources.pdf

The truth is that with the enormously high rates of foreclosure out there, bank and financial institutions don’t want to result to foreclosing on people’s homes unless it’s absolutely necessary as a last resort. The time delays of the foreclosure process itself, the legal fees and declining market values of the properties give the banks the incentive to try and work out options with the homeowners to avoid the foreclosure process when at all possible. My uncle was fortunate enough to have worked out a solution with his bank. I suspect that the opportunities are there for many other struggling homeowners to do the same but they simply don’t know where to turn. Please pass on the information to anyone out there who might benefit. It’s worth it if it helps a single struggling homeowner get a good night’s sleep!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Big News - National Flood Insurance Program Authorization Expires!

2010-04-02T10:45:00.002-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

As of midnight on March 28, 2010 the NFIP’s authorization has expired. Congress did not act to extend the NFIP’s authorization before the deadline date, so the Program will not be allowed to operate at least until Congress resumes session after the Easter Break on April 12th.

So, what does this mean to us? It means that, until the NFIP is reinstated, the NFIP will not be able to:

(a) Issue new policies,
(b) Increase coverage on existing policies, or
(c) Issue renewal policies.

That’s a pretty BIG deal considering the amount of flooding occurring in various areas of the country right now and the number of potential buyer’s whose real estate purchase closings and settlements may be affected! Anyone trying to purchase a property that lies within a FEMA designated flood plain and required to obtain flood insurance will be unable to secure a policy if the premium was not paid by midnight on March 28th. This means that we may be required to cancel closings and require that buyer’s hold off on settlement dates from March 29th until the program is reinstated by Congress!

FEMA directs us to refer to Memorandum W-09068 which was issued on October 27, 2009 which communicates Recommendations/Guidance for Possible NFIP Authority Lapse and Hiatus. The memo states that any hiatus period should be brief, and most of the nearly 5.6 million flood insurance policyholders nationwide will not be affected.

The memorandum also includes the following information:

New Policies - Payments received before midnight of the last day of effective Program authorization

- New policies for which premium payment is received by the insurance company on or before midnight of the last day of effective Program authorization will be issued for coverage and will become effective after the last day of effective authorization, regardless of the policy effective dates.

- For loans closing prior to the first day of hiatus, when the premium payment is from the escrow account (lender’s check), title company, or settlement attorney, and the application date is on or before the closing, the policy can be issued even if the premium and application are received after the last day of effective Program authorization.

- As always, the starting dates of NFIP coverage depend on the applicable flood insurance waiting period.

Claims for Policies-in-Force - Policies-in-Force before midnight, last day of effective authorization

- Policies that are in force before midnight of the last day of effective Program authorization will remain in force, and claims under those policies are to be processed and paid as usual afterwards (once hiatus begins).

- Claims for covered losses occurring during a hiatus, on existing policies and on policies issued effective after the last day of effective authorization, are to be processed and paid as usual.

New Policy Premiums, Renewal Policy Premiums, or Added Coverage Endorsements - Received on or after NFIP Authorization expiration at midnight on March 28, 2010.

- The NFIP recommends that WYO Companies hold, in abeyance, any new policy premiums, renewal policy premiums, or added coverage endorsements received on or after the first day of the hiatus. See exceptions listed below “Determining Payment Receipt Dates.”

- If the renewal offer was issued prior to authorization expiration, and the renewal premium is received within the 30-day grace period, the policy can be reinstated even if the renewal premium was received after authorization expiration. The same rule applies on an underpayment notice issued before authorization expiration.

Claims

- For any new policy premiums, renewal policy premiums, or added coverage endorsements received on or after the first day of the hiatus, claim payments for losses suffered during a hiatus cannot be made until Congress retroactively extends NFIP authority. See exceptions listed above, under “Financials.”

- WYO Companies may investigate claims under a reservation-of-rights letter or a non-waiver agreement, up to the point of payment. Under either, WYO Companies would reserve the right not to pay the claim if Congress does not reauthorize the NFIP while continuing the investigation of the claim.

- If there is an NFIP hiatus, eventual reauthorization will likely be granted retroactively, and WYO Companies can issue policies effective as of the date they receive payments (subject to applicable waiting periods).

Determining Payment Receipt Dates - New Policy Premiums, Renewal Policy Premiums, Added Coverage Endorsements

- The controlling factor in determining payment receipt dates for new policy premiums, renewal policy premiums, or added coverage endorsements is when the insurance company receives payment, not the standard mail postmark.

- However, proof of mailing receipts or third-party receipts that WYO Companies receive through certified mail or from entities such Federal Express (FedEx), United Parcel Service (UPS), and courier services do serve as payment receipt dates.

- For policies to be renewed, WYO Companies must receive payments on or before midnight of the last day of effective Program authorization, as per payment receipt date determination factors listed above.

- There will be no interruption in coverage if a customer mails the premium and the WYO Company receives it on or prior to midnight of the last day of effective Program authorization. See exceptions listed above where the WYO Company is allowed to issue or renew policies even if the premium is received after a hiatus begins.

Policies without a 30-Day Waiting Period

In the unlikely event of a hiatus and reauthorization is not retroactive to the first day of the hiatus, policies without a 30-day waiting period would become effective on the date the reauthorization is effective. This rule applies to loan closings occurring on or after the first day of the hiatus.

Policies with a 30-Day Waiting Period

Policies with a 30-day waiting period would become effective when both the 30-day waiting period has ended and Congress has reauthorized the NFIP. The same rule applies for those applications and premiums made prior to the first day of the hiatus, and received on or after the first day of hiatus. The 30-day waiting period would be calculated from the application date and not from the NFIP reauthorization
date. However, the policy cannot be effective before the reauthorization date.

Renewals

- In the unlikely event of a hiatus, for renewal payments received after midnight of the last day of effective authorization, the renewal policy will go into effect at the earliest date consistent with both the terms of the expiring policy and the extension of the NFIP’s authority. Such renewal policies will only become effective if a new NFIP authorization becomes law, which is expected. If this does not occur, premiums will be refunded.

- WYO Companies are no longer authorized to renew policies if the premium is received on or after the first day of the hiatus, with the following exceptions:

- Renewal Effective Dates Prior to the first day of the hiatus – If the premium is received on or after the first day of the hiatus, but the premium receipt date is within 30 days from the policy expiration date, the policy can be renewed.

- Renewal Effective Dates on or after the first day of hiatus – If the renewal offer was mailed prior to the first day of hiatus, and the premium is received within 30-day grace period, the policy can be renewed even if the premium receipt date is on or after the first day of the hiatus.

Action Required by WYO Companies during an NFIP Hiatus

- WYO Companies are to communicate the status of the program to their agents ASAP.

- WYO Companies are no longer authorized to issue renewal offers after the last day of effective authorization.

- New Business applications and renewals not meeting the criteria listed above cannot be issued.

As of the time of this writing, only one agency and one investor have issued bulletins addressing their requirements during this NFIP hiatus- Freddie Mac and Flagstar Bank. Both have stated that their policies and requirements regarding flood insurance coverage remain unchanged which for most lenders means we have no choice but to hold up closings when there will be no active policy in place at the time of settlement.

This is surely frustrating when we are all working so diligently to improve the state of the housing industry and get buyers into re-sold homes. It’s unreal that congress apparently doesn’t share our priorities!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Processor and Underwriter Licensing Requirements Under HUD’s S.A.F.E. Act

2010-03-26T11:47:00.003-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I’ve noticed a few recent questions and comments listed in chat rooms and blogs in regards to confusion and questions on HUD’s S.A.F.E. Act licensing requirements as they relate to the capacity of loan processors and underwriters. Because of my own curiosity, I’ve “dug in” and started doing a little reading up on the topic and here is the information I’ve found that may provide answers to the licensing question- “required to be licensed or not required to be licensed.”

What exactly is the S.A.F.E. Act?

According to HUD’s explanation, the SAFE Act is designed to enhance consumer protection and reduce fraud by encouraging states to establish minimum standards for the licensing and registration of state-licensed mortgage loan originators and for the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish and maintain a nationwide mortgage licensing system and registry for the residential mortgage industry for the purpose of achieving the following objectives:

(1) Providing uniform license applications and reporting requirements for state licensed-loan originators;
(2) Providing a comprehensive licensing and supervisory database;
(3) Aggregating and improving the flow of information to and between regulators;
(4) Providing increased accountability and tracking of loan originators;
(5) Streamlining the licensing process and reducing regulatory burden;
(6) Enhancing consumer protections and supporting anti-fraud measures;
(7) Providing consumers with easily accessible information, offered at no charge, utilizing electronic media, including the Internet, regarding the employment history of, and publicly adjudicated disciplinary and enforcement actions against, loan originators;
(8) Establishing a means by which residential mortgage loan originators would, to the greatest extent possible, be required to act in the best interests of the consumer;
(9) Facilitating responsible behavior in the subprime mortgage market place and providing comprehensive training and examination requirements related to subprime mortgage lending;
(10) Facilitating the collection and disbursement of consumer complaints on behalf of state mortgage regulators.

When does the Act become effective?

The SAFE Act encourages states to participate in the Nationwide Mortgage Licensing System and Registry, and requires states to have in place, by law or regulation, a system for licensing and registering loan originators that meets the requirements of sections 1505, 1506, and 1508(d) of the SAFE Act. The SAFE Act requires the states to have the licensing and registration system in place by: (1) July 31, 2009, for states whose legislatures meet annually; and (2) July 31, 2010, for states whose legislatures meet biennially. For both this 1-year period and 2-year period, HUD may extend the deadline, by not more than 24 months, if HUD determines that a state is making a good faith effort to establish a state licensing law that meets the minimum requirements of the SAFE Act.

While states are charged with enacting licensing standards that meet the requirements of the SAFE Act, overall responsibility for interpretation, implementation, and compliance with the SAFE Act rests with HUD. In this regard, CSBS and AARMR requested that HUD review the model legislation, and advise of its sufficiency in meeting applicable minimum requirements of the SAFE Act. State legislation that follows the provisions of the model legislation, whether by statute or regulation, will be determined to have met the applicable minimum requirements of the SAFE Act. You may review the Safe Act Model State Law by visiting http://www.hud.gov/offices/hsg/ramh/mps/modellaw.pdf.

Based on the review of the model, it would seem that HUD’s intention is for licensing requirements to apply to those persons who serve in the capacity of a loan originator, according to their extremely complex and complicated definition of “loan originator.”

It appears that HUD’s model definitions of a Loan Processor, Underwriter or Mortgage Loan Originator are as follows:

MSL XX.XXX.030 DEFINITIONS—For purposes of this Act, the following definitions shall apply:

…
(5) LOAN PROCESSOR OR UNDERWRITER—

(a) IN GENERAL—The term ‘‘loan processor or underwriter’’ means an individual who performs clerical or support duties as an employee at the direction of and subject to the supervision and instruction of a person licensed, or exempt from licensing under [reference appropriate state mortgage licensing laws here.

(b) CLERICAL OR SUPPORT DUTIES—For purposes of subsection (a), the term ‘‘clerical or support duties’’ may include subsequent to the receipt of an application—
(i) The receipt, collection, distribution, and analysis of information common for the processing or underwriting of a residential mortgage loan; and
(ii) Communicating with a consumer to obtain the information necessary for the processing or underwriting of a loan, to the extent that such communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.

(c) REPRESENTATIONS TO THE PUBLIC—An individual engaging solely in loan processor or underwriter activities, shall not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that such individual can or will perform any of the activities of a mortgage loan originator.

(6) MORTGAGE LOAN ORIGINATOR—

(a) IN GENERAL—The term ‘‘mortgage loan originator’’—
(i) Means an individual who for compensation or gain or in the expectation of compensation or gain—
(A) Takes a residential mortgage loan application; or
(B) Offers or negotiates terms of a residential mortgage loan;
(ii) Does not include an individual engaged solely as a loan processor or
underwriter except as otherwise provided in MSL XX.XXX.040(4);
(iii) Does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with [State] law, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker, or other mortgage loan originator; and
(iv) Does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in section 101(53D) of title 11, United States Code.…

(10) REGISTERED MORTGAGE LOAN ORIGINATOR—

The term ‘‘registered mortgage loan originator’’ means any individual who—

(a) Meets the definition of mortgage loan originator and is an employee of—
(i) A depository institution;
(ii) A subsidiary that is—
(A) Owned and controlled by a depository institution; and
(B) Regulated by a Federal banking agency; or
(iii) An institution regulated by the Farm Credit Administration; and

(b) Is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.

As referenced above in (6)(B)(ii)… In the definition of MORTGAGE LOAN ORIGINATOR: (ii) Does not include an individual engaged solely as a loan processor or underwriter except as otherwise provided in MSL XX.XXX.040(4). Here is the verbiage of importance in XX.XXX.040(4);

(4) INDEPENDENT CONTRACTOR LOAN PROCESSORS OR UNDERWRITERS—

A loan processor or underwriter who is an independent contractor may not engage in the activities of a loan processor or underwriter unless such independent contractor loan processor or underwriter obtains and maintains a license under MSL XX.XXX.040(1). Each independent contractor loan processor or underwriter licensed as a mortgage loan originator must have and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry.

The following verbiage pertains to MSL XX.XXX.040(1) referenced above:

(1) IN GENERAL—An individual, unless specifically exempted from this Act
under subsection (3) of this section, shall not engage in the business of a mortgage loan originator with respect to any dwelling located in this State without first obtaining and maintaining annually a license under this Act. Each licensed mortgage loan originator must register with and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry.

The following verbiage pertains to subsection (3) as referenced above:

(3) EXEMPTION FROM THIS ACT—

http://www.hud.gov/offices/hsg/ramh/mps/modellaw.pdf

(a) Registered Mortgage Loan Originators, when acting for an entity described in MSL XX.XXX.030(10)(a)(i),(ii) or (iii) are exempt from this Act.

(b) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual.

(c) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual’s residence.

(d) A licensed attorney who negotiates the terms of a residential mortgage loan on behalf of a client as an ancillary matter to the attorney’s representation of the client, unless the attorney is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such lender, mortgage broker,
or other mortgage loan originator.

The following verbiage pertains to MSL XX.XXX.030(10)(a)(i),(ii) or (iii) as referenced above:

(10) REGISTERED MORTGAGE LOAN ORIGINATOR—

The term ‘‘registered mortgage loan originator’’ means any individual who—

(a) Meets the definition of mortgage loan originator and is an employee of—
(i) A depository institution;
(ii) A subsidiary that is—
(iii) An institution regulated by the Farm Credit Administration.

Now based on how I personally read all of the above, I drew the conclusion that HUD’s intent is to allow exemption of processors and underwriters if they are reporting to a licensed or registered person or entity. However, I also drew the conclusion that licensing is to be required of independent contracting processors and underwriters who are not W2 employees of an exempted entity. Though there is some conflicting language between HUD’s explanations given on their SAFE Act home page versus the model language, based on reading through the detailed back and forth referencing between all sections, it would certainly seem to me that non-W2 employed processors and underwriters are not considered to be under the direct supervision or reporting under a licensed or registered person or entity.

Whether or not my conclusions are 100% correct is simply another question. I am most definitely not an attorney nor do I wish to represent myself as a licensing expert by any means. But based on additional reading out on the web it would certainly seem as though my conclusions are shared with a number of high-ranking state agencies as well. I would certainly value any feedback from others of you out there who have had opportunity to research these licensing requirements and any added information you feel might be valuable to our dedicated readers.

Here are a few resources from which I gathered the information contained herein:

- HUD SAFE Mortgage Licensing Act Home Page: http://www.hud.gov/offices/hsg/ramh/safe/smlicact.cfm
- Safe Act Model State Law: http://www.hud.gov/offices/hsg/ramh/mps/modellaw.pdf
- HUD Safe Act FAQ: http://www.hud.gov/offices/hsg/ramh/safe/safeactfaq.pdf

For further information, Contact:
HUD
Office of Regulatory Affairs and Manufactured Housing
Department of Housing and Urban Development
451 Seventh Street, SW
Rm. 9162
Washington, DC 20410-8000
Telephone: (202) 708-6401
FAX: (202) 708-2678
Email: safeprogram@hud.gov

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

A Quiet News Week- Or is it?

2010-03-19T11:23:00.001-04:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

It’s been a quiet week this week for the most part but two major news items of interest certainly did come up which are worth mentioning along with a few pertinent reminders:

1. USDA announced depletion of federal funding for the Rural Housing Guaranteed Loan Program. By their estimates, program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

A major difference this time around versus funding shortages of the past is that in this case, once funding is exhausted, the Agency will not issue Conditional Commitments “subject to receipt of appropriated funds.” Usually funding for GRH doesn’t run out until the last few months of the year but with the popularity of the program in the current real estate market, the agency has burned through funding much faster than typical.

So, what does this mean for you? Well, if you originate or process rural housing loans, it means you’d best get it in gear and put in your time to get existing loans submitted complete and clean through the systems so you can obtain the non-conditional funding commitment from rural housing! Otherwise your borrowers may be left at the closing table without the funds they need to close their loans and move into their homes!

I suspect the local RD offices will be bursting at the seams trying to keep up with the influx of files they will receive for underwriting so it will be more important now than ever that you all do your best to submit complete and well documented loan files. It makes absolutely no sense nor is it fair to submit files that are incomplete simply to get them in line. There is nothing more irritating and irresponsible than the persons who do so. Make sure, your borrowers are aware of the urgency and that they understand that when you are requesting something from them, it’s urgent and may delay their loan approval and closing processes if they do not comply with what you ask of them!

Something tells me we’ll see funding run out sooner rather than later. There is no indication of when USDA expects funding may be replenished for 2010 but of course, I imagine many are lobbying on capital hill to make sure it happens.

2. The other news that certainly got my attention came in the form of a Discussion Draft I received notice of regarding the proposed FHA Reform Act of 2010. (Copy of the draft available at http://www.house.gov/apps/list/hearing/financialsvcs_dem/fhareform_xml.pdf).

We all know by now that, FHA Up-Front MIP is increasing to 2.25% for cases assigned effective April 5, 2010. This draft proposes increases to the FHA annual/monthly MI rates from the current rates of .50 and .55 percent to 1.50 and 1.55 percent! If this passes, FHA will no longer be a program we’ll be able to rely upon in today’s challenging market. With the significant increases to mortgage insurance rates, the typical first-time homebuyer will no longer qualify as they do currently.

We all continue to watch and wait for anticipated communications from HUD regarding the Mortgagee Letter they’ve promised on the Flipping Waiver. We’re also continuing to wait to receive more substantial information on the implementation of the minimum credit score requirement and the decrease to interested party contribution limits.

The month may have started out as a slow news month but I don’t expect it will end that way!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Why Aren’t More Lenders Following HUD’s “Flipping Waiver?”

2010-03-12T12:37:00.000-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

One of the hot buttons in our industry these days seems to be the lack of lenders honoring HUD’s recently issued “Flipping Waiver” for FHA lending. I’ve had a number of originators vent their frustrations with not having any outlets to turn to for this and a number have asked for further explanation. As someone who spends a majority of my time working with credit risk, I feel I can offer a pretty darn good explanation for why.

We all know what’s lead us to the state of the industry that we’ve dealing with for the past two plus years. Credit policy standards were far too low for us to eliminate high risk borrowers and far too little attention was paid to high risk trends because everybody was too busy making money. But FHA was a bit ahead of the game in that at last they had the 90-day seller seasoning requirement in place through that entire period. That gave lenders the ability to refuse lending to FHA borrowers who were purchasing properties from flippers and flipping rings that hadn’t been in title for at least 90 days. It offered at least some protection to the lenders. Unfortunately many of the flippers and flipping rings managed to get through the system using sub-prime and conventional lending which eventually contributed to the mass of foreclosures and default trends that eventually lead to the fall of our markets.

When mortgage defaults increased and foreclosures started rising, the lenders all found themselves having to expand their quality control monitoring which in many cases meant expanding the sizes of their QC staff. This lead to more costs while allowing them to meet minimum agency QC standards which the agencies had no choice but to start paying real attention to. Lenders started paying real attention to the details and trends of their defaulted loans and foreclosure portfolios.

With the major change from the world of sub-prime and conventional lending over to a dependence upon FHA lending for the first time in many years, lenders all experienced a significant learning curve. It took over a year for originators, processors, closers, funders, shippers, insurers, auditors, purchasers and servicers to really learn and get comfortable with the ins and outs of FHA lending. Many of them had come into the industry when it was booming and may have had no experience whatsoever with FHA lending. Now, with a major switch in lending trends, lenders had to get their staffs trained, reorganize their divisions, hire in FHA experts, spend money and time getting FHA-approved if they weren’t already and take serious looks at their internal processes and procedures. They all had to ramp up their training and education on high risk and fraud recognition and awareness.

It’s really just within the past few months I feel that the industry as a whole has really come to fully comprehend the differences between the former dependence on mainly conventional lending to now depending upon FHA-insured lending options. Employees of the industry now have gained an understanding of FHA guidelines and requirements and most lenders likely encounter many fewer “screw ups” than in the previous 12-18 month period. But just when we all feel like things have settled a bit BAM! HUD comes out with the flipping waiver that completely contradicts the message we’ve all been learning in the past few years about FHA. We are surrounded by constant crackdowns on credit policies and tougher lending standards and we’ve all read the articles and seen the news coverage about the FHA insurance funds being in trouble. But then instead of tightening standards, as they have in so many other areas, they tell us to ignore the 90-day seller seasoning standard to allow properties to move. Say what?

I remember my initial reaction when I received notice of the waiver. I believe I yelled out something like “have they lost their *(&*^&^ (&) P_&*&*(&(Y mind!” I immediately know that I wasn’t the only person who was thinking what I was thinking. My thoughts were of the contradictory message the waiver sends to the industry in these times where lending is tightening and fraudsters are sought out moreso than ever in the past. I expected that our main lenders might have serious issue with the waiver, just as I did. And I was correct in my thinking.

To date I have heard only of two outlets honoring the waiver. I am not aware of any significantly large and common lenders that are. To be honest, I don’t expect they will. They don’t trust the message that’s being sent out from HUD right now. On one hand, HUD has made it particularly clear they are monitoring lender performance moreso now than ever in the past. They have made their point known by the various news articles and announcements they’ve made subpoenaing lenders for investigations. We’ve seen the penalties and sanctions they’ve been distributing out there.

What it comes down to is this: In the past, lenders jumped on the bandwagon when opportunity presented itself to capitalize on the market because the other lenders were doing it. They were quick to ignore the risks of allowing no doc borrowers to go through the system, were quick to ignore the risks of allowing borrowers with no credit, minimal credit and borrowers who flat out didn’t qualify to go through the system, were quick to offer lending products like interest only when they clearly knew borrowers didn’t come near to qualifying for the full payment on said mortgage. All of those lenders have paid dearly for their bad business decisions.

In today’s world, lenders stop to weigh the options before jumping on the bandwagon of opportunity because they have all learned the hard way that opportunity now can end up costing later. With limited seller seasoning being a clearly identifiable lending risk, lenders simply cannot afford to take a chance on HUD’s waiver.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

FHA Case Transfers and Appraisal Portability

2010-03-05T11:12:00.003-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

With all of the recently implemented FHA appraiser and appraisal changes, it can be somewhat confusing as to what detail and information you as a loan officer or processor may need to be aware of when it comes to new appraisal orders and appraisals received as the result of case transfers. Below is some information you may find useful.

There are two common situations that can lead to an incoming FHA case transfer:

1. The borrower starts their FHA loan application with Lender A who obtains an FHA Case Assignment but the borrower chooses to finish out the loan process by re-applying with Lender B and requests their case be transferred from Lender A to Lender B; or

2. Lender B attempts to request a case assignment for a new application but receives a message in FHA Connection that an existing case, belonging to Lender A, exists in association with the subject property. (most often this involves different borrowers than applied with Lender A)

In either case, Lender B in is position to request a case transfer from Lender A. There are a number of things that must be taken into consideration by Lender B when requesting the case been transferred from Lender A to Lender B. These are pertinent questions that should be asked whenever you are in position to accept an incoming case from another lender:

1. Does Lender B have application from the same or differing applicants than started the process with Lender A?

2. Has Lender A underwritten and rejected a loan for the same borrower’s who are now in process with Lender B?

HUD requires that Lender A complete the Mortgage Credit Reject screen in FHA Connection prior to transferring the case to Lender B if indeed the loan was underwritten and rejected. When this screen is completed by Lender A, Lender B can “overturn” the rejection of Lender A by specifically explaining and documenting the reasoning in Lender B’s case file for insuring.

3. Has an FHA appraisal been received for the subject property by Lender A?

- If Lender A does not have an appraisal in hand, your borrower’s will be able to obtain an appraisal specifically for them and their property through whatever appraisal ordering process your organization has implemented for purpose of maintaining appraiser independence.

- If Lender A does have an appraisal in hand, Lender B should be aware of any internal procedures and requirements that may apply within Lender B’s organization for the review and acceptance of incoming appraisals related to FHA case transfers.

4. If Lender A has a completed FHA appraisal in hand, is the existing appraisal still valid? Will the appraisal remain valid by the time Lender B’s loan is set to close?

- If the case was assigned prior to January 1, 2010 the appraisal has a six month validity period for existing construction or a 12 month validity period for new construction.

- If the case was assigned after January 1, 2010 but before February 15, 2010 the appraisal expires after 120 days and a new appraisal is required after expiration.

- If the case was assigned on or after February 15 the appraisal has a validity of 120 days but when it expires, FNMA Form 1004D may be used to request an appraisal update If the appraisal meets the requirements of Mortgagee Letter 2009-51. If the appraisal does not meet such requirements, a new appraisal must be requested from the same appraiser who completed the incoming appraisal through whatever appraisal ordering process your organization has implemented for purpose of maintaining appraiser independence.

5. If Lender A has a completed FHA appraisal in hand, is the appraiser on Lender B’s ineligible list? Is there any reason Lender B cannot accept an appraisal completed by the appraiser who completed the appraisal for Lender A?

- Unless the situation meets either of the requirements listed in Mortgagee Letter 2009-29, Lender B must re-use the appraisal being transferred in from Lender A.

6. Does Lender A intend to charge Lender B for transferring the appraisal?

- Transferring lenders are entitled per HUD to charge reasonable fees for reimbursement of the appraisal expense. When the case involves different borrowers for a common property, FHA instructs that Lender B is to collect an appraisal fee from the new borrowers and present the fee to Lender A so that Lender A may reimburse the original borrower’s for the appraisal expense.

For any case transfer request, Lender B should specifically request that all rights to the existing case and appraisal be transferred to Lender B and that Lender B will accept all rights to the case. The questions listed above should also be kept in mind when requesting the case transfer so that informed decisions can be made at point of transfer and so that effective communications can be made to your borrower(s) involved with the case transfer process.

One thing to note of importance - If Lender B determines that any portion of the transferred appraisal received from Lender A requires updating, additional commentary, corrections, etc. the appraiser is obligated by the confidentiality regulations within USPAP and cannot honor the request of Lender B without considering it a new appraisal assignment. These situations can lead to additional fees and in some cases, requirements for another appraisal fee to be charged. HUD does not allow the borrowers to be charged for more than one appraisal.

HUD does not require that the borrower names, client (lender name) or transaction details match on the appraisal in cases of case transfer. They are concerned most that the value of the property is justified to meet the requirements of your transaction type and that the property meets HUD minimum property standards. However, Lender B may have their own requirements for all data to match between the appraisal and the transaction. Be aware that you cannot request that the appraiser change the client (lender) name or any of the other minor details without it being considered a new assignment which leads to added charges. HUD does not get involved with the appraiser charges or charges between the lenders concerning case transfers.

If the transferring lender is uncooperative, prior to contacting HUD, the new lender should attempt to resolve the situation with the original lender at a management level. If the new lender cannot reconcile the situation with the original lender, the new lender can fax the following items to the Director of Processing and Underwriting Division in the appropriate Home Ownership Center (HOC) containing the following:

1. The steps taken by the lender to try and accomplish the transfer;
2. A Listing of the fees (if any) the original lender has requested be paid;
3. The resolution, if any, to the request for payment of fees by the original lender;
4. A letter signed by the borrower stating that the borrower wants to work with the new lender.

HUD staff will transfer the case number or cancel the existing case number so that a new case number may be issued, as appropriate.

Fax the above listed information to the appropriate Homeownership Center as listed below:

- Atlanta Homeownership Center oversees the following states: Alabama, Florida, Georgia, Kentucky, Illinois, Indiana, Mississippi, North Carolina, South Carolina, and Tennessee.

Fax request to: 404-331-3361

- Denver Homeownership Center oversees the following states: Arkansas, Colorado, Iowa, Kansas, Louisiana, Missouri, Minnesota, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas, Wisconsin, Wyoming, and Utah.

Fax to (303) 672-5211 or (303) 672-5210, if busy

- Philadelphia Homeownership Center oversees the following states: Connecticut, Delaware, District of Columbia, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, Virginia, and West Virginia.

Fax to (215) 656-3434 for properties in DE, DC, MD, MI, PA, VA, WV

Fax to (215) 656-3438 for properties in CT, ME, MA, NH, NJ, NY, OH, RI, VT

- Santa Ana Homeownership Center oversees the following states: Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon and Washington.

Fax to (714) 796-5521

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Freddie Mac Favorites

2010-02-26T11:26:00.005-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

This week I am providing the last of my favorite lists of agency websites and resources. I like to visit these often to obtain as much training and education as I can get my hands on. Freddie Mac offers some of the most thorough and user-friendly education materials out there and I highly recommend taking advantage of everything they offer. Whether you are a loan officer, processor, underwriter, auditor, shipper or seller, you can benefit from Freddie Mac’s extensive list of resources!

View the list by clicking here: List of Freddie Mac Favorites.pdf

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Fannie Mae Favorites

2010-02-19T11:11:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

At the end of last year and beginning of the New Year I like to share my favorite resources for finding information that can be utilized to learn agency product guidelines, requirements and restrictions. Because HUD was so active releasing Mortgagee Letters and a number of important FHA guideline change dates were taking affect, I was interrupted a bit before finishing the issuing of my lists. Now that things have slowed a bit on the “FHA front” for now, I would like to resume my communications of my favorite freebie lists.

That being said, here are my favorite and most commonly utilized Fannie Mae websites and links:

Fannie Mae Single Family Main Page:
https://www.efanniemae.com/home/index.jsp

Subscribe to Receive Fannie Mae Bulletins, Announcements and Updates
https://www.efanniemae.com/lc/newsletters/index.jsp

Single Family Loan Limits:
https://www.efanniemae.com/sf/refmaterials/loanlimits/index.jsp

Mortgage Products Page:
https://www.efanniemae.com/sf/mortgageproducts/

Mortgage Product Training:
https://www.efanniemae.com/lc/mtgproducts/index.jsp

Selling and DU Guides:
https://www.efanniemae.com/sf/guides/index.jsp

Desktop Originator Main Page:
https://www.efanniemae.com/is/brokcorresp/do/index.jsp

Desktop Originator Training:
https://www.efanniemae.com/lc/technology/do/

DO Release Notes:
https://www.efanniemae.com/sf/guides/duguides/doreleasenotes/

Desktop Underwriter Main Page:
https://www.efanniemae.com/sf/technology/ou/du/index.jsp

Desktop Underwriter Training:
https://www.efanniemae.com/lc/technology/du/

DU Release Notes:
https://www.efanniemae.com/sf/guides/duguides/dureleasenotes/

DU Lender Administrator Quick Steps Training Page:
https://www.efanniemae.com/lc/technology/du/quicksteps/lenderadmin/index.jsp

DU Guide for FHA:
https://www.efanniemae.com/sf/guides/duguides/pdf/fhaug.pdf

DU Guide for VA:
https://www.efanniemae.com/sf/guides/duguides/pdf/vaduug.pdf

Fannie Mae Forms:
https://www.efanniemae.com/sf/formsdocs/index.jsp

Single Family Reference Materials-Matrices, Summaries,
Approved Condo/PUD Listing:
https://www.efanniemae.com/sf/refmaterials/approvedprojects/

Glossary of Mortgage Terms: (available in English & Spanish!)
https://www.efanniemae.com/sf/refmaterials/glossary/pdf/etosglossary.pdf

Housing Finance Institute Live Training Opportunities:
https://www.efanniemae.com/lc/hfi/index.jsp

Originator & Underwriter Web Training Seminars: **These are great!**
https://www.efanniemae.com/lc/ou/index.jsp

Web Training Seminars on Income, Assets, Liabilities, Credit, Appraisals, etc.
https://www.efanniemae.com/lc/ou/websem/

Becoming a Landlord Guide for Borrowers:
https://www.efanniemae.com/lc/publications/pdf/landlord.pdf

Mortgage Fraud Prevention Resources: **Great Tools & Resources!**
https://www.efanniemae.com/utility/legal/antifraud.jsp?from=hp

Publications for Quality Assurance, Underwriting, Servicing & Selling
https://www.efanniemae.com/lc/publications/index.jsp

Fannie Mae In the Loop Newsletter Archives:
https://www.efanniemae.com/lc/newsletters/sfnews/index.jsp?referrer=frpromobx

Letters and Announcements:
https://www.efanniemae.com/sf/guides/ssg/2010annlenltr.jsp?from=hp

Brokers & Correspondents Page:
https://www.efanniemae.com/is/brokcorresp/index.jsp

Appraisers Page:
https://www.efanniemae.com/is/appraisers/index.jsp

LOS Vendor Page:
https://www.efanniemae.com/is/losvendors/index.jsp

Mortgage Insurers Page:
https://www.efanniemae.com/is/mis/index.jsp

Real Estate Developers & Manufacturers:
https://www.efanniemae.com/is/redevelopers/index.jsp

Real Estate Professionals Page:
https://www.efanniemae.com/is/reprofessionals/index.jsp

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Helpful Tips on Calling the FHA Resource Center

2010-02-12T11:28:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

FHA offers a number of resources that I utilize on a regular basis to help find answers to questions that often come up on FHA lending. Most often I refer to FAQ sites because in the past, I haven’t been a big fan of calling 1-800-CALLFHA and sitting on hold forever with the depressing background music only to propose my question to a body who could only answer based on searching for something I’d already searched for. But I must admit, it sure seems like FHA has stepped up their customer service capacity and training because the last two times I’ve called I didn’t have to hold at all and the person at the end of the line was actually quite knowledgeable and able to really help with my question. How refreshing! I no longer hesitate to call with questions when needed.

Here is something I just learned about calls to FHA that I think you’ll find helpful: Each time you call 1-800-CALLFHA with a question, you are asked for your name, company and phone number. Behind the scenes, that information is used to develop tracking and a tracking number. The call center does not provide that tracking number as a normal course of business but you can ask for it. It’s in your best interest to always get the tracking number so that if you have to call again with additional questions on the same topic, you can provide the reference number to the call center associate who can then simply pull up the record(s) of your previous call(s) on said topic. This can save you time from having to re-explain the question or situation all over again. How handy is that?!

The FAQ sites that I refer to regularly are listed at HUD’s Frequently Asked Questions website at http://www.hud.gov/offices/hsg/sfh/faqs/faqsmenu.cfm. There you’ll find FAQ lists broken down in categories.

I also like to go directly to the FHA Resource Center FAQs at http://www.fhaoutreach.gov/FHAFAQ/ to search by topic because I know that questions that come through 1-800-CALLFHA are all eventually listed there. It’s pretty likely that someone else may have already asked the same question I have. Just choose the “Solutions” tab and click to “Search By Keyword.” Then simply enter the key word and scroll through the questions listed to see if you can find the answer you’re looking for.

You can also choose the tab “Contact FHA” which provides data fields for you to complete so you can send off your question directly to the FHA Resource Center. If you prefer, you can even email the Resource Center directly with your question by sending it to info@fhaoutreach.com.

FHA Resource Center Contact Information:

Website: http://www.fhaoutreach.gov/FHAFAQ/
Email: info@fhaoutreach.com
Ph: 800-CALL FHA (800-225-5342)

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Important Information about IRS Tax Transcripts for Income Verification

2010-02-05T11:02:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

This is always a confusing time of year as we all scramble to figure out who filed their taxes when and how, how soon we can get copies of transcripts, how to verify someone really did file and what exact documentation our lenders will require and accept in various qualifying situations.

I’d compiled a growing list of questions on this topic myself since the beginning of the year so I thought it important to take time out of my day to get answers straight from the Internal Revenue Service. I think you may find the following list of Q&A helpful to you as you review your loan situations and direct your borrowers on how to get you the information you need for their application as efficiently as painlessly as possible.

1. Once a taxpayer electronically files his/her 2009 tax return, approximately how long does it take before the taxpayer can obtain copies of his/her tax transcripts directly from the IRS?

3 Weeks. The consumer can call 1-800-829-0922 to check to see if their transcript is available and request it directly from IRS at no cost. However, they must allow 10 days to receive it.

2. If the taxpayer mails their return, approximately how long should they expect to need to wait until they can obtain a copy of their transcript directly from the IRS?

6-8 weeks and times may extend longer after April 15th. The consumer can call 1-800-829-0922 to check to see if their transcript is available and request it directly from IRS at no cost. However, they must allow 10 days to receive it.

3. Can taxpayer file their tax returns by visiting a local IRS office? And if so, will they get some sort of receipt as evidence they’ve filed their return with the IRS?

Yes and Yes.

4. Can taxpayers get copies of their tax transcripts by visiting their local IRS office in person?

Yes but only IF their return has been processed through the system (meaning still subject to the 3 week average expected turn time from date of electronic filing or 6-8 week turn time for mailed filings). However, once the transcript is available, keep in mind that if the borrower can get it at the local IRS office, it will save the added 10 day waiting period for mail time from requesting from the IRS 800 number.

5. How can we direct taxpayers to find their local IRS office location information?

Go to http://www.irs.gov/localcontacts/index.html, scroll down the page to the U.S. map and click on the state.

6. How does the taxpayer go about requesting copies of transcripts directly from the IRS? Is there a charge?

They can request their transcripts directly from IRS at no charge by calling one of the following numbers:

- 1-800-829-0922
- 1-800-829-1040 and listen to menu to select prompts to get to proper menu
- Visit local IRS office to request directly on site
The IRS does charge $57 if the consumer requests a copy of his/her actual return (not the same as a transcript).

7. Can you explain the different types of “products” that can be requested using the 4506-T and what purpose each might be used for?

- Return Transcript: includes most of the line items of a tax return as filed with the IRS. A tax return transcript does not reflect changes made to the account after the return is processed. Transcripts are only available for the following returns: Form 1040 series, Form 1065, Form 1120, Form 1120A, Form 1120H, Form 1120L, and Form 1120S. Return transcripts are available for the current year and returns processed during the prior 3 processing years. Note: Transcripts will not show amount of tax owed or paid, outstanding balance or IF an amended return has been filed.

- Account Transcript: contains information on the financial status of the account, such as payments made on the account, penalty assessments, and adjustments made by you or the IRS after the return was filed. Return information is limited to items such as tax liability and estimated tax payments. Account transcripts are available for most returns. Note: Verifies outstanding taxes owed, account status, payments made, penalties, interest and fees etc. This is what you may need if there is any concern that a borrower may have a large amount of outstanding tax liability with IRS

- Record of Account, which is a combination of line item information and later adjustments to the account. Note: Ideally THIS is what we should require rather than just transcripts because this actually shows line item filing information PLUS includes information on amendment filings. THIS is what we would want to require in any case where the tax return copy provided by the borrower doesn’t match up to the transcript we receive.

- Verification of Non-Filing: Proof from the IRS that the borrower did not file a return for the year. Current year requests are only available after June 15th. There are no availability restrictions on prior year requests. Note: We would need to require this product to verify that a particular individual was perhaps not required to file and therefore did not.

- Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript. A transcript that includes data from these information returns. State or local information is not included with the Form W-2 information. The IRS may be able to provide this transcript information for up to 10 years. Information for the current year is generally not available until the year after it is filed with the IRS. For example, W-2 information for 2007, filed in 2008, will not be available from the IRS until 2009.

So ideally, for a borrower who has recently filed tax returns for 2009 income that is for instance, required for qualifying such as may be a the case for some self-employed borrower situations, the most efficient way to obtain transcripts right now is to direct the borrower to check with the IRS periodically to determine when transcripts are indeed available. Then, if possible, have the borrower go to the local IRS office in person to request and obtain the transcripts on site. This will help avoid the additional 10 day or so waiting period for the IRS mailing process. This method also costs the borrower no fee for obtaining the transcripts.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

FHA Changes-An Active Start to the New Year

2010-01-26T10:52:00.004-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

So many changes happening so far in the New Year I thought it would be helpful to put them down in chronological order to help us all keep track! It’s looking like it will be a very active year for FHA program and guideline changes. Here is what we need to be aware of thus far:

December 16

I mention this one only because with people being so busy over the holidays, wanted to make sure nobody missed it! Mortgagee Letter 2009-52 stated HUD’s FHA Short Sales and Short Payoff Policy effective 12/16/2009.

January 1

RESPA revisions are effective on and after this date for all loan types which as we are all now well aware brings forth a completely new way of reflecting loan fees, charges and revenues. Be sure to visit HUD’s RESPA page which provides a lot of great resources to answer the questions you may have regarding the new rules. Mortgagee Letter 2009-53 also added some last minute clarifications for FHA.

January 1

2010 FHA Maximum Loan Limits announced in Mortgagee Letter 2009-50 become effective for loans with credit approval dates on and after 01/01/2010.

January 1

FHA appraisals for ALL cases assigned on and after this date will be valid for 120 days which is a change from prior FHA appraisal validity periods of 180 days for existing construction and 12 months for proposed and under construction cases. This change is announced in Mortgagee Letter 2009-30.

January 1

Mortgagee Letter 2009-29 stated that effective for cases assigned on and after this date, Mortgagees are expected to complete requested case transfers as well as transfer valid appraisals that have been completed for the property to the requesting lender. The announcement expands to state that the receiving lender may request a 2nd FHA Appraisal in particular cases where material deficiencies are noted in the transferred appraisal, when the appraiser who completed the first appraisal is ineligible as per the receiving lender’s exclusionary list, or when lack of receipt of the first appraisal in a timely manner would have a negative affect on the borrower’s circumstances. Reason for obtaining a 2nd appraisal must be explained and documented in the case binder and copies of BOTH appraisals must be saved in the case binder.

Be sure to check out the FAQs re: Mortgagee Letter 2009-29 at HUD’s new Lenders Page!

January 21

Effective with Mortgagee Letter 2010-03, HUD will systematically review all Direct Endorsement (DE) underwriting mortgagees’ defaults (loans 90 or more days’ delinquent) and claim rates on loans during the initial 24 months from the date of the commencement of the amortization. HUD, at its option, will exercise its authority to terminate the underwriting authority (Authority) of DE mortgagees with excessive default and claim rates. The Department will be publishing a list of Mortgagees which have had their Authority terminated in the Federal Register and on HUD’s website starting February 1st.

January 31

This is the last day that non-HUD approved condominium properties may be assigned FHA case numbers to be processed as spot loan approvals. Effective February 1, all condominium properties must be located in projects approved by HUD (HRAP) or by eligible lenders with full DE authority (DELRAP). Details on condominium project requirements and approval options can be found in Mortgagee Letter 2009-46B and Mortgagee Letter 2009-46A.

You’ll find HUD’s Condo FAQs at http://www.hud.gov/offices/hsg/sfh/condo/faqs_condo.pdf.

February 1

HUD implements the most recently signed waiver of 90 day seller ownership requirements for FHA loans that meet the criteria described in the waiver at http://www.hud.gov/offices/hsg/sfh/waivpropflip2010.pdf. This waiver is effective for cases assigned 02/01/2010-02/01/2011 unless otherwise amended by HUD and applies to all re-sales; not exclusive to foreclosure properties.

February 15

HUD adopts a stance similar to that of HVCC in that for cases assigned on and after this date, Mortgagees are expected to have processes and procedures in place to certify appraiser independence. As per Mortgagee Letter 2009-28, the original effective date of these requirements was set for January 1st but HUD issued an extension for implementation of the rules until 02/15/2010. The big change for lenders is the following:
FHA-approved lenders are now prohibited from accepting appraisals prepared by FHA Roster appraisers who are selected, retained or compensated in any manner by a mortgage broker or any member of a lender’s staff who is compensated on a commission basis tied to the successful completion of a loan.

You’ll find a number of helpful resources on this topic at HUD’s newly organized Lender’s Page: http://portal.hud.gov/portal/page/portal/HUD/groups/lenders. There you can access a copy of the announcement of extension for implementation and FAQs regarding ML 2009-28.

February 15

HUD adopts the ability to re-certify property value by using Fannie Mae Form 1004D. The effective date
was originally slated for January 1 but was extended by HUD out to 02/15/2010. Details regarding the terms of use for FNMA 1004D are reflected in Mortgagee Letter 2009-51. Details regarding delayed implementation of the Mortgagee Letter content can be found at http://www.hud.gov/offices/hsg/sfh/appr/delayed.cfm.

April 5

For cases assigned on and after this date, up-front mortgage insurance premiums change from the current structure to 2.25% for ALL standard FHA purchases and refinances. Details on the increase to MIP are reflected in Mortgagee Letter 2010-02.

In a press release issued on Wednesday, January 20th HUD also communicated the following which are expected to be formally released in the very near future:

- New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%. This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

- Interested party contributions will be limited to 3% which is a change to the current 6% allowance. This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Big News- Big Changes from HUD for FHA Lending!

2010-01-22T11:51:00.003-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

It’s been a BIG news week for FHA and is about to get even bigger with the anticipation of a number of Mortgagee Letters to be issued January 21st which will communicate further significant tightening of FHA qualifying calculations and guideline requirements.

Temporary Flipping Waiver

On Friday, January 15th, HUD released their most recent Waiver of Requirements of 24 CFR 203.37a(b)2. The waiver, which is in regards to time restrictions for property sales, applies only to FHA forward mortgages, not HECMs, and is effective 02/01/2010-02/01/2011.

As copied from the Code of Federal Regulations, here is that exact portion of the Code that is being waived:

a(b) Time restrictions on re-sales—(1) General. The eligibility of a property for a mortgage insured by FHA is dependent on the time that has elapsed between the date the seller acquired the property (based upon the date of settlement) and the date of execution of the sales contract that will result in the FHA mortgage insurance (the re-sale date). The mortgagee shall obtain documentation verifying compliance with the time restrictions described in this paragraph and must submit this documentation to HUD as part of the application for mortgage insurance, in accordance with §203.255(b).

(2) Re-sales occurring 90 days or less following acquisition. If the re-sale date is 90 days or less following the date of acquisition by the seller, the property is not eligible for a mortgage to be insured by FHA.

However, to summarize, the HUD announcement goes on to state the following conditions for the 90 day time-restraint waiver to be effective on a specific transaction:

- The transaction must be at arms length; meaning there cannot be any identity of interest between any of the interested parties to the transaction. This means that the lender must perform due-diligence to determine there are no undisclosed relations of interest which should include the following:

- LLCs, partnerships, corporations, etc. must be fully investigated to determine exactly who holds interest in the business. No party with interest in the business should be related to any other party participating in the transaction.

- 12-24 month minimum chain of title from the title company should be reviewed carefully to establish that there are no patterns of flipping between interested parties, that the owner of record listed in title is the same seller represented as the seller on the sales contract and is also the same owner of record listed in any public property tax record. You should never rely on the transfer records based on the prior 36 month history listed in the appraisal alone but should rather obtain the chain of title directly from the title company.

- Marketing history in regards to the sale of the property should be carefully reviewed to determine that it was marketed for sale openly via MLS, Sheriff Sale, Auction, FSBO, etc. If the marketing of the property cannot be determined through public means, be cautious!

- Sales prices for recent transfers of the subject property must be verified and if the proposed transaction contains a sales price that represents a 20% or greater increase from the prior sale price of the property, the lender must justify the increase in price/value using any of the following methods:

- Obtain specific documentation from the seller for improvements made to the property between the seller’s acquisition date and proposed sale of the property. This would include copies of paid invoices or receipts from contractors, builders, suppliers etc. with a complete list of the upgrades, repairs and/or improvements made

- Obtain a 2nd appraisal to justify the property sale price/value and recent improvements/repairs/upgrades made to the property

- Obtain a property inspection report from a state-licensed/certified inspector that is to be given to the buyer prior to closing and which must include:

- Inspection of the foundation, floor, ceiling, walls and roof;
- Inspection of the exterior siding, doors, windows, balconies, decks, walkways, driveway
- Inspection of the roofing, plumbing, electric, heating and air systems;
- Inspection of the interior of the property including insulation and ventilation systems, fireplaces, fuel-burning appliances

The waiver ONLY waives the 90 day timing restraint requirement IF the conditions listed above are met. Don’t forget that all other requirements set forth in Mortgagee Letter 2006-14 apply for all other properties acquired for up to one year from the seller’s acquisition date. In those situations, when the sales price increases 100% or greater, 2nd appraisal and other potential documentation requirements must be applied.

I will pass on more information next week in regards to the upcoming MIP rate hikes, minimum fico score requirements, minimum downpayment requirements and reduction to maximum allowed seller concessions. Those changes will have major affects on FHA qualifying in the near future!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Beware- HUD Isn’t Messing Around!

2010-01-15T11:40:00.001-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

As a person in the Mortgage Industry who works in a position that involves business and credit analysis and writing credit policies to protect the interests of the company, one particular article got my attention this week when it crossed my desk. It was an article released in Market Watch, part of the Wall Street Journal digital network. The article stated that HUD issued subpoenas to 15 mortgage companies on Tuesday in regards to higher-than-average default rates on FHA loans and an overabundance of mortgage insurance claims.

When I took a looked through the list I immediately recognized a number of pretty big players; mortgage brokers we have all likely dealt with at some point in our mortgage careers for one reason or another. But I can’t say I’m surprised to see a couple of them. I clearly recall that they were accepting what I considered “bottom of the barrel” FHA borrowers back in 2006 and 2007 before the market started its downward spiral due to foreclosures and market declines. In fact, I see two of them that I know flat out drug their feet implementing minimum credit score requirements in order to corner the market while other FHA lenders starting cracking down on their own qualifying requirements in anticipation of what was to come.

What always bothers me most when I see these things is the lack or moral judgment and integrity that was used by all of those involved. The unfortunate result of so many bad decisions made by bad companies is that the good companies are now subject to the consequences of the bad. One of our originators made a statement this week I found humorous though very valid. He said “I feel like things have gotten so out of control we can’t even get loans done anymore. I mean, what more documentation can I request from my borrowers short of them providing a sample of their DNA?” It’s unfortunate that so many of us have begun to feel this way.

I am still outraged that those responsible for the sub-prime market crisis aren’t rotting in prison somewhere. It still blows my mind to think that anyone in their right mind could sleep at night knowing they’d just agreed to grant a $200000 mortgage to borrowers with credit scores in the 400s, unstable employment and no verified history of housing expense. And it’s not just the lending part that concerns me but more importantly, the burden of knowing you’d put such borrowers in that position having to realize full well that they were headed toward disaster. They were guaranteed to fail but somebody lent them the money anyway. It doesn’t get more wrong than that.

So, what kinds of things can we all do to make sure our companies don’t end up being investigated for higher-than-average default rates? It’s really as simple as diverting back to the days of full loan documentation requirements in partnership with utilization of modern tools and technologies.

Even if your lenders aren’t requiring tax transcripts for underwriting, most companies are pulling them pre-purchase or post purchase so you may as well simply obtain them for all of your loan files and make sure qualifying income is tight and right from the beginning. Transcripts can be used as a great resource for more than just income verification. They can also be used to validate identity, occupancy and marital status. Transcripts validate most importantly that the person listed on your loan application filed taxes under the social security number and residence address listed on the loan application.

They also verify whether or not the returns were filed on time. Transcripts also confirm whether each borrower filed individually or jointly and will confirm the number of dependents so you can compare with loan application data. In addition, transcripts may verify undisclosed businesses potentially uncovering business losses that can negatively affect future financial stability and the borrower’s ability to make timely mortgage payments. In my opinion, any company that hasn’t incorporated transcript requirements into originating and underwriting procedures is a “sitting duck” for potential fraud and early defaults.

Transcripts have become much less expensive in recent months also. A year ago we may have been paying $20 and more for two years but with the IRS lowering their processing fee by $4 effective October 1, 2009, many companies became more cost-friendly. Now obtaining two years transcripts can cost as little as $15 and even lower for those companies that have the luxury of offering volume discount rates.

Other tools to be taken advantage of in today’s market are the fraud detection tools and services offered by credit bureaus and third party vendors like First American CoreLogic and Interthinx. Most credit vendors now have the ability to offer a full suite of fraud detection and risk analysis options that are available right as you pull your standard credit reports. These services have the ability to analyze a minimum data set in order to render risk scoring based on data combinations and public record searches. Vendors like CoreLogic and Interthinx take risk analysis even further by evaluation all of the loan parties as well as the property in order to render a full report that analyzes the overall loan risk by category to give red flags of potential loan fraud. Tools like this are invaluable in today’s world.

When researching vendor options for things like transcripts and fraud detection services, be sure to ask questions about volume discounts, support resources, systems integration and training abilities.

The sooner you implement tools and resources like those I’ve mentioned above, the less likely your company will be to end up subpoenaed by HUD for excessive defaults and claims like these lenders did:

- First Tennessee Bank N.A., Memphis, Tenn.
- Alethes LLC, Lakeway, Texas
- Security Atlantic Mortgage Co., Edison, N.J.
- Pine State Mortgage Corporation, Atlanta.
- Birmingham Bancorp Mortgage Corporation, West Bloomfield, Mich.
- Alacrity Financial Services, LLC, Southlake, Texas
- Assurity Financial Services, LLC, Englewood, Colo.
- D and R Mortgage Corporation, Farmington, Mich.
- Webster Bank, Cheshire, Conn.
- Mac-Clair Mortgage Corporation, Flint, Mich.
- Americare Investment Group, Inc., Arlington, Texas
- 1st Advantage Mortgage, Lombard, Ill.
- American Sterling Bank, Independence, Mo.
- Sterling National Mortgage Company Inc., Great Neck, N.Y.
- Dell Franklin Financial LLC, Columbia, Md.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

What are YOUR Business Goals for 2010?

2010-01-08T10:02:00.003-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

2009 is certain to be a year that will go down in our memories as one of the most challenging and stressful years many of us have experienced in our industry. Between all of the regulatory changes, guideline revisions, product eliminations and overall market challenges, it’s a wonder we all remain standing here at the start of 2010. But THAT is the key- we ARE still here! We made it through the adversity and for all of you that remain committed and motivated, I commend you! High fives all the way around!

Now, let’s put 2009 behind us and move forward to 2010. It’s a new year and a new opportunity for us to work forward using what we’ve learned in 2009. Time for a new attitude, new determination and business goals for the New Year. With that in mind, exactly what are your business goals for 2010? Here are a few suggestions and some things to think about as you contemplate your goals for the New Year:

1. Prepare a list of topics to help you evaluate the strengths and weaknesses you realized in 2009. Some areas to consider for the list:

- How well did you absorb and understand the market issues?
- How well did you absorb and understand the agency guideline changes? How well were you able to keep track of them?
- How do you feel you dealt with changes in technology such as LOS software, website detail, automated underwriting capabilities, imaging systems, etc.
- How well do you feel you dealt with communications?
- Were you able to absorb information from meetings and training?
- If you work in sales and originating, how would you rate your marketing abilities and capabilities? How do you think your borrowers would rate you on the same topic?
- If you work in sales and originating, how would you rate your communications with outside referral sources such as builders and realtors? How do you think those sources would rate you on the same topic?
- If you are a processor, how would you rate your overall organization level? How do you feel your loan officers and affiliates such as underwriters, closers, etc. would rate you for same topic?
- If you are a processor, how would you rate your communications for 2009? How do you feel your loan officers and affiliates such as underwriters, closers, etc. would rate you for same topic?
- If you are in sales/originating or processing, how would you rate your efficiency overall? How do you feel your colleagues and business partners would rate you for same topic?
- How would you rate your knowledge and understanding of the regulatory changes that occurred in 2009-2010 such as the TILA and RESPA changes?
- How would you rate your time management abilities in 2010? Do you feel you could benefit from more effective strategies so you can accomplish more in less time?
- What were your greatest achievements in 2009?
- What your greatest disappointments and faults in 2009?
- How well do you feel you were able to balance your work and business responsibilities in conjunction with your family life, hobbies, friends, free time and religion in 2009?
- Exactly what things do you feel you need to learn more about in 2010? How will you go about getting the information, education and training you need to learn what you wish?

2. Set appointments to discuss and review your progress and overall business dealings with those parties that can assist you in evaluating the areas you should focus on improving in 2010. Such should include:

- Your manager or supervisor
- Your immediate work colleagues; those you interact with on a daily basis; those who rely on you to achieve overall results and common goals
- If you are in sales, your realtors, builders and other business partners. What did they like and dislike about your relations in 2009? What did they expect and not receive? What are their goals involving your relations for 2010? Can you discuss each of your goals in order to establish team goals for the new year and how to hold each other accountable for them?
- Loan officers and processors should meet to discuss their faults, weaknesses and to establish areas where improvements can be made. Most often communications is a big concern.

3. Use the information from your own self-evaluation and the information you receive from your personal meetings with others to establish your top five goals for 2010 in priority order.

4. Determine the exact steps that need to be taken from where you are now to what it will involve and take to meet each of the top five goals. Once you are able to see the steps involved, you will be able to develop and establish fair and reasonable timeline expectations.

5. Establish and set timeline expectations for each of the top five goals on your list. Begin working forward through the steps needed to achieve and check off each goal.

6. As each of the top five goals is reached and cleared from your list, add another goal from your original list and work forward from there. This will keep you on track and will keep you challenged to strive for positive end results.

7. Be sure to document your goals and your progress in a place where it can be seen and viewed throughout your day. Whether it’s on a calendar, a bulletin board, on a piece of paper taped to the side of your computer monitor, scheduled in your electronic calendar, penciled in your planner, or spray painted on your wall, make sure that the goals are clear and that you hold yourself accountable for reaching to achieve them.

Always keep in mind, you made it through 2009, which was one of the most challenging years in our industry, so there is NOTHING you cannot door achieve in this New Year 2010. Reach for the stars!

Happy new year to you all! I wish you much success in 2010 and always!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

My Favorite Freebies Part Three- USDA Guaranteed Rural Housing Websites

2010-01-04T12:08:00.003-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

I re-familiarized myself with rural housing lending programs in 2009 and the best part is that I’m passing on what I learned to you! Below are my most used GRH websites. Add them to your favorites and utilize them often in 2010! The Guaranteed Rural Housing Program is a great program for homebuyers who qualify!

Subscribe to receive Single Family Housing News for GUS & GRH: http://www.rdlist.sc.egov.usda.gov/listserv/mainservlet

USDA Rural Housing Home Page: http://www.rurdev.usda.gov/RHS/

Rural Development Contacts Page: http://www.rurdev.usda.gov/RHS/Admin/contact.htm

Rural Development Regulations Page: http://www.rurdev.usda.gov/regs/

Rural Development FAQ Page: http://www.rurdev.usda.gov/rd/faqs.html

Rural Development Income & Property Eligibility Site: http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

Single Family Housing Guaranteed Loan Income Limits: http://www.rurdev.usda.gov/rhs/sfh/sfh%20guaranteed%20loan%20income%20limits.htm

Loan Application Package Checklist: http://www.rurdev.usda.gov/regs/an/an4470.pdf

Rural Development Regulations: http://www.rurdev.usda.gov/regs/

Rural Housing Origination Handbook 1980-D: http://www.rurdev.usda.gov/regs/regs/pdf/1980d.pdf

GUS Lender User Guide 2008: https://usdalinc.sc.egov.usda.gov/docs/rd/sfh/gus/lender/GUSLenderUserGuide.pdf
GUS Login Page: https://pws.sc.egov.usda.gov/login/login.aspx?TYPE=33554433&REALMOID=06-f8405ea7-471f-474d-8a4e-731f76f1e536&GUID=&SMAUTHREASON=0&METHOD=GET&SMAGENTNAME=-SM-S3%2fpukYCkOnlZ%2feImVktFvcBZTmcxsBEbQyvAIf2sN6XculadBu%2f5WF4TmWxHg2x&TARGET=-SM-HTTPS%3a%2f%2fgus.sc.egov.usda.gov%2faus%2findex.jsp%3fcallingPath%3dusdalinc.sc.egov.usda.gov%2fRHShome.do

Administrative Notices for Loan Origination and Underwriting: http://www.rurdev.usda.gov/wi/programs/rhs/sfhg/handbook/originating/ans.htm
USDA Rural Development Forms Library: http://www.rurdev.usda.gov/regs/formstoc.html

Rural Development State Office/Service Center Locator: http://www.rurdev.usda.gov/recd_map.html

USDA Live WebEx Training Schedule: https://rurdev.webex.com/mw0305l/mywebex/default.do?siteurl=rurdev&service=7

USDA LINC Training and Resource Library: https://usdalinc.sc.egov.usda.gov/USDALincTrainingResourceLib.do
Guaranteed Rural Housing Consumer Marketing Brochure: http://www.rurdev.usda.gov/RHS/sfh/GSFH_Information/Common/09_2009_Website_%20Hooray%20For%20Housing%20GRH%20Brochure.pdf

Guaranteed Rural Housing Consumer Marketing Booklet: http://www.rurdev.usda.gov/rd/pubs/pa1501.pdf

Rural Development Lender Information Page: http://www.rurdev.usda.gov/rhs/sfh/GSFH_Information/lenders.htm

Digital Rights and Copyright

Most information presented on Rural Development's website is considered public domain information. Public domain information may be freely distributed or copied, but use of appropriate byline/photo/image credits is requested. Attribution may be cited as follows: "USDA Rural Development."
Some materials on the Rural Development site are protected by copyright, trademark, or patent, and/or are provided for personal use only. Such materials are used by Rural Development with permission, and they have made every attempt to identify and clearly label them. You may need to obtain permission from the copyright, trademark or patent holder to acquire, use, reproduce or distribute these materials.

Best wishes for a productive and successful 2010!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

It’s that time of year again- My Favorite Freebies!

2009-12-28T14:18:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Last week I offered you my list of favorite FHA-related websites and this week, I’m offering my favorite VA websites as follows:

• http://www.homeloans.va.gov/ - VA Loan Guaranty Home Page
• http://www.homeloans.va.gov/ls.htm - VA Lenders, Servicers and Real Estate Professionals Home Page
• http://www.homeloans.va.gov/rlcweb.htm - Links to Regional Loan Centers
• https://vip.vba.va.gov/portal/VBAH/Home - Veterans Information Portal (VIP)
• http://www.homeloans.va.gov/help/html/portal/frameset.htm - Veterans Information Portal Help Guide
• http://www.warms.vba.va.gov/pam26_7.html - VA Lender’s Handbook
• http://www.homeloans.va.gov/loan_limits.htm - VA Loan Limits
• http://www.homeloans.va.gov/lgyfaq.htm - VA Home Loan FAQ by Category
• http://www.homeloans.va.gov/new.htm - VA Circulars
• http://condopudbuilder.vba.va.gov/2.2/frames.html - VA Condo/PUD/Builder Locator Site
• http://www.homeloans.va.gov/faqcv.htm - VA Construction & Valuation FAQ
• http://www.homeloans.va.gov/cav_approved_local_conditions.htm - Local Construction & Valuation Requirements by state
• http://www.usmilitary.com/2009-military-pay-chart/ - U.S. Military Pay Chart
• http://www.archives.gov/veterans/military-service-records/ - National Archives-Military Records
• http://www4.va.gov/vaforms/ - VA Forms Search Page
• http://www.homeloans.va.gov/sar.htm - Staff Review Appraiser Page (SAR)

Helpful Training Information for VA Home Loan Program

• http://www.homeloans.va.gov/train.htm - VA Training Options
• http://www.homeloans.va.gov/broadcast.htm - VA Live Training Broadcast schedule
• http://www.homeloans.va.gov/broadcast09.htm - VA Recorded Training Broadcasts
• http://www.homeloans.va.gov/docs/va101_handout.pdf - VA 101-Home Loan Program Basics Booklet
• http://www.homeloans.va.go/docs/Broadcast_Handouts_%20LGY_Eligibility_12162009.pdf - VA Eligibility booklet
• http://www.homeloans.va.gov/target_video.htm - VA Targeted Topic Short Videos

Home Loan Program Information For Veterans

• http://www.homeloans.va.gov/faqelig.htm - Eligibility FAQs
• http://www.homeloans.va.gov/pdf/veteran_registration_coe.pdf - Guide-How to Obtain Certificate of Eligibility
• http://www.vba.va.gov/VBA/benefits/factsheets/index.asp - Veteran’s Benefit Fact Sheets
• http://www.vba.va.gov/VBA/benefits/factsheets/homeloans/Homeloaneg_0906.doc - Home Loan Guaranty Fact Sheet for Veterans
• http://www.vba.va.gov/VBA/benefits/factsheets/homeloans/homemods.doc - Home Modification/Specially Adapted Housing Fact Sheet for Veterans

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

It’s that time of year again- My Favorite Freebies!

2009-12-18T11:53:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

At least once a year I like to share a list of “freebies” that I’ve discovered along the road associated with the various hats I wear within our beloved mortgage industry. For the most part, this is a list of websites I’ve discovered that offer vast information for learning purposes or websites that offer products that serve a great need for those of you that work as originators or processors in our business.

Because I’ve discovered so many, I’ll be dividing my list into categories- FHA, VA, USDA and standard freebies. Add these websites to your favorites list of internet sites and be sure to utilize them as they are a great recurring source of important and helpful information.

This week, I’m offering my favorite FHA-related websites and here is my list:

• www.hud.gov - HUD Home Page

• www.fha.gov - FHA Home Page

• http://www.hud.gov/offices/hsg/sfh/ref/hsgregst.cfm - Subscribe to HUD’s Single Family Mailing List

• http://hud.gov/offices/hsg/sfh/events/events.cfm - HUD Single Family Events & Training Page

• http://hud.gov/offices/hsg/sfh/talk/parc/phiarch.cfm - Phili HOC Recorded Webinar Archives

• http://www.hud.gov/groups/lenders.cfm - HUD Lenders Page **NEW**

• http://www.hud.gov/offices/hsg/sfh/lender/mtgeekit.cfm - Title II Mortgagee Starter Kit of HUD Handbooks

• http://www.disasterhousing.gov/offices/adm/hudclips/handbooks/hsgh/ - Complete List of Handbooks

• http://www.fhaoutreach.gov/FHAHandbook/prod/contents.asp?address=4155-2 - Link to Home Page for new 4155.1 and 4155.2 Searchable Handbooks

• http://www.hud.gov/offices/hsg/sfh/ref/hsgrcont.cfm - HUD/FHA HOC Reference Guide

• http://www.hud.gov/offices/hsg/sfh/faqs/faqsmenu.cfm - HUD/FHA FAQ by Category

• http://www.hud.gov/faqs/faqbuying.cfm - HUD Common Questions Page

• http://www.nls.gov/offices/adm/hudclips/letters/mortgagee/ - HUD Mortgagee Letters

• https://entp.hud.gov/idapp/html/hicostlook.cfm - FHA Mortgage Limits Search

• https://entp.hud.gov/idapp/html/condlook.cfm - FHA Condominium Search

• https://entp.hud.gov/idapp/html/apprlook.cfm - FHA Appraiser Roster Search

• http://www.hud.gov/groups/appraisers.cfm - FHA Roster Appraiser Home Page

• http://www.hud.gov/offices/hsg/sfh/reo/reohome.cfm - HUD REO Home Page

• http://www.hud.gov/offices/hsg/sfh/owning.cfm - HUD Owning a Home Consumer Info Page

• http://portal.hud.gov/portal/page/portal/HUD/states - Links to State-Specific HUD Home Pages

• http://www.hud.gov/library/index.cfm - HUD Online Library-Links to Various Common Topics

• http://portal.hud.gov/portal/page/portal/HUD/webcasts/archives - HUD Webcast Archives-Recorded Webcasts

• http://portal.hud.gov/portal/page/portal/HUD/webcasts/archives/sinfamily - HUD Single Family Housing Webcast Archives

• https://entp.hud.gov/clas/index.cfm - FHA Connection

• http://portal.hud.gov/portal/page/portal/HUD/program_offices/administration/hudclips/forms - HUD Forms Search

• http://www.hud.gov/offices/hsg/sfh/fharesourcectr.cfm - FHA Resource Center Home Page

• http://www.fhaoutreach.gov/FHAFAQ/ - FHA Resource Center Searchable FAQ

• http://www5.hud.gov:63001/po/i/netlocator/ - HUD Employee Locator-Online Search Engine

• http://www.hud.gov/offices/adm/dds/ - HUD Direct Distribution Center- Order Publications!

• http://www.hud.gov/library/bookshelf11/hudgraphics/fheologo.cfm - Equal Housing Graphic/Logo for Printing

• http://www.hud.gov/offices/hsg/sfh/sys/caivrs/caivrs.cfm - HUD CAIVRS Home Page

• https://www.epls.gov/ - Excluded Parties Listing System Home Page (EPLS)

• http://www.hud.gov/offices/fheo/promotingfh/928-1.pdf - Fair Housing Poster-English Version

• http://www.hud.gov/offices/fheo/promotingfh/lep.cfm - Booklets HUD Materials in English and Other Languages

• http://www.hud.gov/offices/hsg/sfh/buying/homebuyingguide.pdf HUD Homebuying Guide for Consumers

• http://www.hud.gov/offices/hsg/sfh/buying/loanfraudfaq.pdf HUD Smart Consumer Fact Sheet

• http://www.hud.gov/offices/hsg/sfh/ins/hoctenyr.pdf - HUD Approved 10 year Warranty Plans

• http://www.hud.gov/assist/webpolicies.cfm - HUD Web Policies

The below is copied and pasted from HUD’s Web Policies and Important Links Page

HUD's Linking Policy:

o HUD uses links to other websites if they add value to HUD content and help further the goals and mission of the Department, they help HUD's website visitors find related information, and they eliminate the need to duplicate information that already exists.

o We review all of our links at least quarterly, as part of our routine content certification process, to make sure they still work and that they still add value.

o When we choose a link, we make sure that it will add value, do not exist solely to promote specific products or services, are in good taste, and comply with all laws, regulations, and policies.

o As a rule, our links do not promote specific for-profit products or services. Sometimes, however, we do link to the home pages and/or email addresses of a category of private for-profit HUD partners (for example, HUD approved lenders) when it will promote HUD's program and customer service objectives. To make sure that we are fair, we post a complete list of the vendors in that category (both those with and those without websites/email); and we notify all vendors in that category that we will be creating links to the websites/email addresses of those that have them, before any links are posted.

o When we link to a non-federal website, you will see an "interceptor" page that reminds you that you are leaving the HUD website and that HUD does not endorse the organization or content on the site you will see.

o Because HUD's Internet website is in the public domain, anyone can link to it or replicate it without permission.

o If you have or know of a website that you think would add value to the content on HUD's website, you can send us the link. We will review the site to see if it meets our criteria.

Stay tuned next week for my list of VA website freebies!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

BIG News! HUD Announces Acceptance of Appraisal Form 1004D for Value Recertifications!

2009-12-11T13:30:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Mortgagee Letter 2009-51 communicates HUD’s acceptance of FNMA Form 1004D effective for cases assigned on and after January 1st.

The form is actually designed to serve two purposes:

1. To extend the validity period of an existing appraisal that is due to expire or has expired

2. To report the completion of a repair and/or the satisfaction of requirements and conditions noted in the original appraisal report referenced in the header of the Summary Appraisal Update and/or Completion Report.

You may recall that appraisal validity periods change effective January 1 for all property types to 120 days from the current validity periods of 180 days for existing construction and 12 months for all proposed and under construction cases. With the ability to have the appraiser recertify value with use of form 1004D when the original appraisal validity period expires, it will save the borrowers the expense of having to pay for a second appraisal and will save us lenders time from having to wait for a whole new appraisal to be completed when the original appraisal expires.

There are however, circumstances that render form 1004D invalid or not useable for purposes of re-certifying appraised value and such include the following:

- Property value has declined since original value effective date

- Building improvements that must be acknowledged to contribute to value cannot be seen from the street view

- Exterior of the property reflects deficiencies or other significant changes that were not in existence at the time of the original appraisal report.

When Form 1004D is utilized to re-validate the original appraised value of a property, the FHA Roster Appraiser who completed the initial appraisal must be the same person to complete the value recertification. The appraiser is responsible to complete the following actions in relation to appraisal updates:

1. Adhere to the Scope of Work and Appraiser’s Certification listed on the form, which includes an exterior inspection of the subject property from, at least, the street.

2. Research, analyze and verify current market data to determine if the property has declined in value since the effective date of the appraisal report being updated.

3. Assure compliance with development and reporting requirements of the Uniform Standards of Professional Appraisal Practice (USPAP), and specifically Advisory Opinion

4. Retain all supporting documentation in the work file.

5. Check the box applicable to Part A.

6. Concur with the original appraisal report and update the appraisal by incorporating the original appraisal report if the market value of the subject property has not declined since the effective date of the original appraisal.

7. Provide a photo of the street scene and photos from as many angles of the home that are visible from a public way.

The second part of form 1004D, Part B, can be used to report the completion of a repair and/or the satisfaction of requirements and conditions noted in the original appraisal report referenced in the header of the Summary Appraisal Update and/or Completion Report. Part B of the form, however, may not be used in lieu of HUD-92051 Compliance Inspection Report, if the case involves new construction or manufactured housing.

For Part B, the original FHA Roster Appraiser or any other FHA appraiser currently in good standing is allowed to complete the report. The appraiser is responsible to:

1. Review the requirements and/or conditions noted in the appraisal report referenced in the header of the Summary Appraisal Update and/or Completion Report.

2. Check the box applicable to Part B.

3. Perform a thorough inspection of the items noted in appraisal referenced in the Summary Appraisal Report and confirm completion/satisfaction of requirements and/or conditions.

4. Describe the impact on the value of the property if requirements and/or conditions are not completed in accordance with the original appraisal report.

The validity period of Form 1004D Appraisal Update and/or Completion Report is 120 days, which begins with the effective date of the appraisal report. The initial or underlying appraisal that has been subsequently updated with form 1004D cannot exceed 12 months old at the time of loan closing.

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

FHA Mortgage Limits for 2010

2009-12-04T11:11:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

As they do about this same time each year, HUD has announced FHA mortgage limits for 2010 with Mortgagee Letter 2009-50.

First, we all know by now that the conforming loan limit will remain at $417000. That in itself means little change for maximum mortgage limits. However, HUD allows any interested party to submit a request for a higher county limit to the Homeownership Center that serves jurisdiction over the area in question if one is under the opinion that the mortgage limit set forth doesn’t serve the area’s true market. The request must be accompanied by reliable housing price data provided by a local taxing authority, title company, or real estate data company. Specific details on the data requirements can be found within Mortgagee Letter 2007-01. Upon receipt of the request, the HOC will review the request for compliance within Departmental requirements, will verify the housing sales data and if revise the limit if it is deemed appropriate.

In most cases, maximum mortgage limits are determined by county. But there are also mortgage limits assigned to metropolitan statistical areas (MSA) and micropolitan areas. A metropolitan area has at least one urban area with a population of 50,000 or greater and an urban core that exerts economic influence on the surrounding territory as measured by commuting patterns. A micropolitan area contains a small urban center population between 10,000 and 49,999 where commuting patterns are also taken into account to determine overall economic influence. Micropolitan areas can be populated regions without large cores but metropolitan areas generally consist of large cores and may or may not be surrounded by additional population.

Metropolitan statistical areas (MSA) and micropolitan areas often overlap into more than one county. The mortgage limits in these areas are set based on the county with the highest median price within the metropolitan or micropolitan area.

The FHA maximum mortgage limits for 2010 consist of the higher of the loan limit established under the Economic Stimulus Act of 2008 (ESA) or the regular limits established under section 203(b) which was amended by the Housing and Economic Recovery Act (HERA).

Floor Limits-Low Cost Areas

These area loan limits are calculated at 65 percent of the conforming loan limit according to both ESA-2008 and HERA-2010 and since the conforming loan limit remains the same, so do the FHA floor limits for low cost areas:

- One Unit $271,050
- Two Unit $347,000
- Three Unit $419,400
- Four Unit $521.250

Ceiling Limits-High Cost Areas

Because the calculation of maximum mortgage is higher with The Economic Stimulus Act of 2008 (ESA) than it was in the Housing and Economic Recovery Act (HERA), ESA calculations prevail for high cost areas where the loan limits exceed the floor limit.

- One Unit $729,750
- Two Unit $934,200
- Three Unit $1.129.250
- Four Unit $1,403,400

However, if the area did not have loan limits as high as stated by ESA in 2008, the area will not be eligible for the highest ESA loan limits.

Loan Limits for AL, HI, Guam and U.S. Virgin Islands

The National Housing Act permits these areas to adjust up to 150 percent of the regular national ceiling limits so loan limits in these areas can be as high as:

- One Unit $1,094,625
- Two Unit $1,401,300
- Three Unit $1,693,875
- Four Unit $2,105,100

Between the Floor and Ceiling

Dependent upon the median home price calculations in the area, many area loan limits fall between the floor and ceiling limits as determined by the higher of the calculation allowed by Esa-2008 or HERA-2010. These areas reflect single unit loan limits ranging from 271,400 to as high as 716,250.

If you are like me, much of this doesn’t make much sense at first read but I highly recommend referring to the following additional resources which will explain further to help you become more comfortable in understanding federal max mortgage limits and their determinations:

- OMB Bulletin No. 09-01- Update of Statistical Area Definitions and Guidance on Their Uses
- FHA Mortgage Limits Website: https://entp.hud.gov/idapp/html/hicostlook.cfm
- HUD Mortgagee Letter 2009-50
- HUD Mortgagee Letter 2007-01
- HUD FAQ-Mortgage Limit Increases
- Metropolitan Median Prices-Quarterly Reports from National Association of Realtors (NAR)
- Various Housing Market Data from Federal Housing Finance Agency (FHFA)

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

HUD Lightens Up on FHA Second Appraisal Requirements

2009-11-25T11:33:00.002-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

Mortgagee Letter 2009-48 which was issued November 18, 2009 communicates the immediate elimination of requirements for second appraisals on high balance loans in declining market areas. Second appraisals are no longer required effective for cases pulled on and after November 19th.

As you may recall, second appraisal requirements were originally added for high balance loans in declining market areas with the issuance of Mortgagee Letter 2008-09 which HUD now rescinds in its entirety.

HUD has also rescinded the second appraisal requirements listed in Mortgagee Letter 2009-08 which originally implemented second appraisal requirements for cash-out refinances exceeding $417000 loan amounts when the subject property was considered in an area of market decline.

The only remaining second appraisal requirements apply for situations that fall under HUD’s Property Flipping Prohibition. These requirements were communicated in Mortgagee Letter 2006-14 which states the following second appraisal requirements:

• If the resale date is between 91 and 180 days following acquisition by the seller, the lender is required to obtain a second appraisal made by another appraiser if the resale price is 100 percent or more over the price paid by the seller when the property was acquired.

• If the resale date is more than 90 days after the date of acquisition by the seller but before the end of the twelfth month following the date of acquisition, FHA reserves the right to require additional documentation from the lender to support the resale value if the resale price is 5 percent or greater than the lowest sales price of the property during the preceding 12 months. At FHA’s discretion, such documentation may include, but is not limited to, an appraisal from another appraiser.

Underwriters are also allowed to use discretion and may require review appraisals to justify questionable value in certain circumstances. The important thing I always remind people in these situations is to always request an interior/exterior inspection with the second appraisal. HUD states that the second appraisal requirement is limited to a 2055 exterior only appraisal but in many situations, recent interior upgrades have contributed to the value assigned by the first FHA appraiser and need to be taken into consideration by the second appraiser. When the second appraiser isn’t allowed access to the interior of the property, most often property values will differ by far more than the accepted tolerance levels and you will be stuck with requirement to use the lower of the two appraised values. That is often a “deal killer.”

Third Quarter Delinquency Reports Reflect Trends of Concern

Mortgage Bankers Association recently released third quarter delinquency and trend reports and I’ll be honest, based on what I read I don’t think we’ve bottomed out in the housing market quite yet. In certain areas of the country, delinquency rates are still extremely high.

For serious VA mortgage delinquencies, the states of Florida, Indiana, Michigan, New Jersey, and Ohio stand out with the North Central region having the highest overall serious delinquency rates.

The states of Florida and Nevada take the lead by far in the category of prime fixed rate mortgage delinquencies with the South region having the highest overall serious delinquency rates.

It’s amazing how much the delinquency rates jump when comparing fixed programs to adjustable rate programs in the prime sector. It’s fair to state that nearly all states entertain delinquency rates close to 10% and greater with just a few exhibiting lower percentages. Florida, as example is showing a 28.93% serious delinquency rate in this category. Arizona, California and Nevada also display higher than average delinquency rates with West region averaging highest.

For FHA delinquency trends, the states of New Jersey, the entire East North Central region, and the South Atlantic region (includes Florida), display higher delinquency rates in comparison to other states and regions. The North Central Region is out in front in this category. And once again, the delinquency trend is much higher when comparing the delinquency rate of FHA fixed rate loans versus FHA adjustable rate loans.

Based on these statistics I can derive a few main facts worth mentioning:

• It’s clear where the most severely declining market areas are within the U.S. The states of Arizona, California, Florida, Georgia, Illinois, Indiana, Michigan, and Nevada appear to consistently display the highest delinquency rates across the board for nearly all program statistics.

• These tend to be areas where questions of artificially inflated values cropped up in the recent past in combination with areas of secondary residence ownership and also areas where the employment sector has been severely affected by the financial state of the country.

• Collateral value will continue to be a major area of concern for lenders who are accepting loans in these areas. The appraisals for properties in these states have to be strong and I suspect lenders will continue issuing conservative lending guidelines to cover the risk concerns for loan applications in a number of these areas- Florida and Arizona in particular.

Next week will bring forth more information on FHA Condominium Policy Changes.

Have a wonderful Thanksgiving with family and friends! May your tables be blessed with turkey!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

HUD Issues Final Condo Policy Decisions

2009-11-20T11:26:00.003-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

The anticipated guidance from HUD in regards to the final Condo Policy finally arrived last week in the form of two Mortgagee Letters. ML 2009-46B, which replaces the previously issued ML 2009-19 and ML 2009-46A which communicates additional temporary guidance on a number of topics.

One thing I found very odd when first reading these bulletins was the reversal of the numbering. I find it makes much more sense chronologically to reverse them and read them as if ML 2009-46B is actually 46A and as if 46A is really 46B. So let’s go to 46B FIRST.

December 7th remains the magical date for implementation of the new condo review and approval requirements. For cases pulled on and after December 7th, the condo project must either be currently approved on the approved condo list at https://entp.hud.gov/idapp/html/condlook.cfm or must be reviewed and approved before the case can close with FHA financing.

HUD still offers the two approval options- DELRAP and HRAP. DELRAP stands for Direct Endorsement Lender Review Approval Process and HRAP stands for HUD Review Approval Process. One major change from ML 2009-19 though is that HUD will allow lenders to mix the two approval options if they feel necessary. Previously it had been communicated that HUD was not allowing DE Lenders to “pick and choose” which projects they were comfortable reviewing and approving. It was an “all or nothing” option. It seems they received a lot of backlash on that requirement and have agreed to allow experienced lenders the option of taking on responsibility for reviewing and approving some projects while choosing to submit others directly to HUD for their expertise on others.

General project eligibility requirements include the following:

1. The project must include no less than two units

2. All projects must be covered by hazard and liability insurance and applicable projects must provide evidence of coverage for flood insurance and fidelity bond insurance when required.

3. For projects whose master insurance policy does not include interior unit coverage, evidence of the borrower’s HO-6 coverage must be obtained and provided.

4. Right of first refusal is now deemed acceptable as long as it does not subject any person to discrimination as listed or defined under the Fair Housing Act regulation 24 CFR part 100. In short, this regulation states that discrimination associated with the sale of or rental of housing because of race, color, religion, sex, handicap, or familial status is not to be tolerated under United States Policy.

5. No greater than 25% of the total project’s floor space may be used for commercial purposes, the commercial business(es) must be homogenous with residential use, and must be free of adverse conditions for the occupants of the condominium units. Note- The word “homogenous” is said to mean the following: All of the same or similar kind or nature; A term used to describe an area or neighborhood where the property types and uses are similar and compatible; same, alike, or unvarying in consistency, or components; The same or similar material throughout; Uniform in structure or composition.

6. No more than 10% of the units can be owned by a single individual or investor.

7. No more than 15% of the unit owners are allowed to be delinquent on their HOA fees.

8. Evidence of a minimum 50% pre-sale must be presented in the form of any of the following:

• Evidence of closed sales;
• Copies of executed sales agreements between seller and buyer with evidence of the buyer’s lender’s commitment to lend;
• Chart, spreadsheet or tracking sheet from the builder/developer displaying the sales data along with a signed certification statement, a sample of which is attached as Attachment F in ML 2009-46B.

The Certification requires the builder/developer to sign and certify as to the following:

The undersigned hereby certifies that in lieu of providing (1) Copies of sales agreements and evidence that a mortgagee has issued approval; or (2) Evidence that units have closed and are occupied; the Developer/Builder has attached to the signed and dated certification, a list documenting all units sold, under contract or closed (i.e., and excel spreadsheet). This information will be used to document the required minimum presale requirement of 50 percent.

Title 18 U.S.C. 1014, provides in part that whoever knowingly and willfully makes or uses a document containing any false, fictitious, or fraudulent statement or entry, in any matter in the jurisdiction of any department or agency of the United States, shall be fined not more than $1,000,000 or imprisoned for not more than 30 years or both. In addition, violation of this or others may result in debarment and civil liability for damages suffered by the Department.

9. At least 50% of the units must be occupied by owners or sold to owners who intend to occupy. For purposes of calculating owner-occupancy in units that contain multiple phases, refer to the following instruction:

• On multi-phased projects the owner-occupancy percentage is calculated on the first declared phase and cumulatively on subsequent phases if the ownership of the condominium project remains the same.
• If multi-phasing includes separate ownership per phase, each phase is calculated individually.
• In single-phase condominium project approval requests, all units are used in the denominator when calculating the 50 percent owner-occupancy percentage.

10. Projects consisting of three or fewer units must not have more than one unit encumbered by FHA financing.

Projects consisting of four or more units must not have greater than 30% of the total number of units encumbered by FHA.

HUD will be tracking the number of cases assigned in each project and the FHA concentration will be listed within the condo approval data screens at https://entp.hud.gov/idapp/html/condlook.cfm.

11. The homeowners association budget must be reviewed for adequacy to ensure sufficient funds are available to maintain and preserve all amenities and features unique to the condominium project.

Additional requirements, which are referenced in Mortgagee Letter 2009-46B, apply for conversions, manufactured and new construction projects.

It’s important to note that condo project approval is not required for FHA to FHA streamline refinances, HUD REO Sales or for Site condominiums in most cases.

Mortgagee Letter 2009-46A does offer some temporary good news. Spot loan condominium eligibility has been extended for cases pulled through January 31, 2010. The new condo policy review and approval rules are being phased in starting with eligibility requirements effective December 7th. Project review and approval will be required for non-approved projects effective for cases pulled on and after February 1st.

In addition to the good news on spot loan eligibility extension, HUD has also agreed to allow FHA project concentration to exceed the standard 30% allowance with the ability for project concentration to go to a full 100% in some cases. These temporary limit increases are effective from December 7, 2009- December 31, 2010.

HUD is also offering the ability to calculate owner occupancy off of the number of pre-sold units for proposed and under construction projects still in their marketing phases. Vacant or tenant-occupied real estate owned (REOs), including properties that are bank owned, may be excluded from the calculation of the required owner-occupancy percentage (should be removed from both the numerator and denominator. Plus, they are lowering the pre-sale requirement from 50% to 30% for new construction projects.

In short, the changes offered by these two Mortgagee Letters are positive ones. HUD has offered added flexibilities to allow condominium business to continue thriving. However, I still have concerns about HUD’s ability to handle the capacity of project reviews they are likely to see coming in. I was told that HUD had no plans or budget availability to add staffing in the Technical Review departments at the homeownership centers. (those are the departments that handle condominium project reviews and approvals). For these condo requirements taking effect in December and end of January, I would expect many folks at HUD take vacations and time off during the holidays and winter months. I can only imagine what the waiting times will be for some of these project reviews.

Use this time to assemble your project lists, check approval statuses, start gathering project documents and prepare your project packages for submission NOW before the lines grow longer in Atlanta, Denver, Phili and Santa Ana!

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)

Reminder- FHA Streamline Guidelines Change Effective November 17th!

2009-11-12T17:33:00.003-05:00

Written By: Stacey Sprain,
Certified Ambassador Loan Processor (CALP)

As announced in Mortgagee Letter 2009-32-Revised Streamline Refinance Transactions, major changes will be effective for cases requested on and after Tuesday, November 17th! Are you ready for these changes?

For many years, streamline refinances have been a treat for FHA-insured mortgagors because they have offered the benefit of little required documentation, immediate interest rate and/or payment reduction, and the ability in many cases to roll in all costs without the need for any funds out of pocket. Starting Tuesday I suspect we won’t be seeing nearly as many of them or we will be seeing more of them done with the need for borrowers to bring funds to their closings.

A number of things are changing with the implementation of the new requirements; one of them being a requirement for a minimum of six month’s seasoning on any FHA loan to be streamlined. In the past no seasoning has been required aside from investor overlays. Another requirement is the need for a strong payment history in the most recent 6-12 month period. If the mortgage being refinanced is seasoned less than 12 months, a perfect payment history must be verified. For those mortgages seasoned 12 months or greater, no more than 1 30-day late payment may have occurred in the most recent 12 month period and late payments cannot have been made in the most recent 90 day period.

Streamline refinances must still clearly exhibit a tangible benefit to the borrower(s) but requirements have been detailed a bit more specifically within the Mortgagee Letter than in the past.

Investor overlays have included the requirement for verbal employment verifications in some cases but starting Tuesday, the lender is required to certify that the borrower is employed and/or has income at the time of the loan application. This will lead to a requirement for verbal VOEs in all cases and if the lenders are wise, they will require that the employment be verified within a few days of settlement to protect their interests.

HUD still isn’t requiring minimum qualifying credit scores with the changes, however, they are said to be adding data fields within FHA Connection where credit scores must be entered if they are obtained to comply with lender minimum score requirements.

No caps on subordinate financing CLTV has always been a great benefit of streamline refinances in the past; especially in those areas that have experienced market decline but effective on the 17th, the CLTV when secondary financing is subordinated, can no longer exceed 125% of the property value. I suspect many lenders will cap this at 100% though.

I did verify with HUD that once a loan is run through TOTAL, it cannot be processed and closed as a non-credit qualifying streamline. Once it’s run through TOTAL, there is a record of the AUS run for the loan and it must close as a full credit qualifying rate/term refinance.

The most significant of changes to the streamline guidelines involves the new max mortgage calculations which, starting Tuesday, look like this:

To view the FHA Streamline - Max Mortgage calculation Tables
CLICK HERE: FHA%20Streamline%20Max%20Mortgage%20Calculation%20tableS.pdf

About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). If you would like to become a volunteer writer for NAMP, please email us at: blog@mortgageprocessor.org.

SOURCE: Published by NAMP Publishing Group, a division of the National Association of Mortgage Processors (http://www.MortgageProcessor.org)