Compliance Considerations

Written By: Bonnie Wilt-Hild
Senior DE Underwriter & NAMP Instructor

With the New Year fast approaching, it is time for everyone who has not given serious consideration to the new Respa rules to do so. In just a couple of weeks we will all need to be sure that our loan origination systems have been updated with the appropriate changes and documents and that our staff has been trained, particularly underwriting and processing because it is these two groups that need to make sure things are done correctly.

The major changes have everything to do with the good faith estimate and how things will now be disclosed, such as not itemization of lender fees, these will now be lumped in loan origination, how to treat yield spread if underwriting the broker business and of course what constitutes a bona fide changed circumstance and how to appropriately document them in the file. Documentation in terms of changed circumstances is also important because we must now meet the 3 year record retention rule so make sure that the appropriate controls have been put into place as far as practices and procedures are concerned to cover this stuff.

Policy and procedure also seem to be a major part of the RESPA procedures because we are now obligated as lenders to mange several facets of how, when and why re-disclosure may occur, not to mention document why it is acceptable. We also need to make sure we disclosure correctly because without that changed circumstance we will now be unable modify mistakes. In short, don’t make mistakes. The highlights where the new rule is concerned are as follows:

1) Use of the new GFE and HUD I settlement statement
2) How lender fees are disclosed
3) Zero tolerance and 10% tolerance fees as well as fees that are subject to change
4) Provider of Service lists
5) Changed Circumstances

These are the items that lenders now need to be most aware of because if disclosed incorrectly, lenders will now have to absorb the charges. If you work for an institution that has not provided training at this point, I strongly recommend that you take it upon yourself to complete training, I sat through it three times before I completely got it. OTS has some great information on their website for those of you who are looking for additional information and of course there is inform on Hud’s website as well. OTS has put together an entire information booklet which should help and make sure you read it all because there is a lot of information that no one is really thinking about that is really relevant to the new rules so don’t just get caught up in how and what to disclose when there are other considerations such as how many providers of services you need to disclose on the provider of service list, fixed fee schedules from these group or individuals and so on.

I will close by saying that growing into the new rules will be interesting at best but not impossible and I think once everyone gets comfortable with it, it will become as natural as the current rules. Happy Underwriting and safe New Year.

About the Writer. As an NAMP staff writer, Bonnie serves as a senior instructor for FHA Online University as well maintains a full-time job as Senior DE Underwriter for a major banking institution. If you would like to become a 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)