Reg. Z Appraisal Reminder; Can LO Commission Change Due to Investor? Do LO Fingerprints Expire?
Here is an e-mail from Gary B. up in Washington: "Rob, I work for a mortgage bank, and we'd heard that that LOs have to be fingerprinted every three years due to fingerprint requirements for licensed LOs in the Dodd-Frank rules and regulations. Have you heard that?" First of all, no I had not. So I sent a note to someone at the CFPB, who replied, "Odd, never heard of peoples fingerprints changing. Now that would be interesting." Thanks. So I looked at the NMLS site, and, although I am not a compliance person, I think the person took it out of context - it is for someone wanting to be licensed and having fingerprints on file - they must be less than three years old. And Gary did some digging and wrote, "The NMLS doesn't retain fingerprint records past three years. If the state licensing office needs to process a background check and if fingerprints are a required part of that inquiry, then a LO's relicensing will be held up until those prints are processed and posted to the individual's account. NMLS doesn't require them to be updated by themselves. But this could be another example of every state doing something slightly different. Hope that helps the LOs out there." Thanks Gary!
Here is an interesting question. "We are a direct lender and as such, we process, underwrite, close, fund and sell loans to the investor. After a loan is approved and closed, it is shipped to Investor A for purchase. If Investor A declines to purchase the loan, our company must re-lock the loan with another investor, Investor Z, and sell & ship the loan to Z. If the loan is re-locked and the rates have risen, is it legal for the lender to take back the Loan Officer's commission and make the loan a 'House Loan'?" I am not an attorney and don't purport to give legal advice, so take this with a grain of salt, but I'd say generally the answer is "no." Generally, the bank can't pay differently for a "house loan," or portfolio loan, than it would a loan sold to an investor. I believe that the bank will be able to reduce the LO's commission for specific loan quality issues come January 2014 (the regulation gives specific examples like RESPA tolerance cures, but our bank has other things in the contract language like EPDs, early payoffs, and others). One can search the section of Reg. Z that deals with compensation - here's a link. Don't forget to refer to the official commentary at the bottom related to each section. The stuff in red goes into effect next year - the stuff in black is in effect now.
Anytime I get a chance to visit our Nation's Daily Blog, I never hesitate. Earlier this month "the Agencies" as they are referred to (collectively a bouillabaisse of letters: FDIC, FHFA, NCUA, and OCC ) proposed to amend Regulation Z, which implements TILA, and the official interpretation to the regulation. This proposal relates to a final rule issued by the Agencies on January 18, 2013 (2013 Interagency Appraisals Final Rule or Final Rule), which goes into effect on January 18, 2014. The Final Rule implements a provision added to TILA by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or Act) requiring appraisals for "higher-risk mortgages." For certain mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the Final Rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used. The Agencies are proposing amendments to the Final Rule implementing these requirements; specifically, the Agencies are proposing exemptions from the rules for: transactions secured by existing manufactured homes and not land; certain "streamlined" refinancings; and transactions of $25,000 or less.
In other words, as a reminder, since this comes up every once in a while, earlier this year the CFPB issued a final rule implementing the new Dodd-Frank Act appraisal requirements for higher-priced mortgage loans. It also issued a proposed rule to create additional exemptions from those requirements. "This is the product of an interagency collaboration between the Consumer Financial Protection Bureau, Federal Reserve Board, Federal Deposit Insurance Corporation, Federal Housing Finance Agency, National Credit Union Administration, and Office of the Comptroller of the Currency. The proposal provides exemptions to the TILA (Regulation Z) appraisal requirements for the following three types of higher-priced mortgage loans: loans of $25,000 or less, certain 'streamlined' refinancings, certain loans secured by manufactured housing. Read the press release to learn more. "We are issuing this proposal as part of our ongoing commitment to facilitate implementation of the rules we issued under the Dodd-Frank Act in January. These proposed updates to the mortgage rules provide an opportunity for the prudential regulators and CFPB to address important questions raised by industry, consumer groups, and other agencies."
How about a little bank, agency, and investor news of recent note?
Bank closings have slowed down in 2013, but Friday we had two. Sunrise Bank of Arizona, Phoenix, Arizona, was closed, and opened today as First Fidelity Bank, National Association, Oklahoma City, OK. And Community South Bank, Parsons, Tennessee, was closed and folded in to CB&S Bank, Inc. Russellville, Alabama. On the M&A side, Essex Bank ($1.1B, VA) will sell 4 branches in GA with about $192mm in deposits to Community & Southern Bank ($2.6B, GA) at a premium of 1.33%.
Ginnie Mae is augmenting its loan-level feedback on data delivered for single-family MBS and HECM MBS for all new pool issuances (daily file) and monthly reporting (e.g. loans active in Ginnie pools). For single-family MBS, forward MBS data will be released for all of the data fields outlined in the MBS Loan-Level Disclosure Layout, Version 1.3, while for HMBS, the elements will be those disclosed in the HMBS Loan-Level Disclosure File Version 1.6 over two phases.
GNMA issuers are reminded that modification of loan terms that affect the amount or duration of loan payments of loans currently held in pools are not allowed. Loans must be eligible for buyout and bought out of the pool for modifications to be made.
California lenders are reminded that CalHFA has updated its income limits for the California Homebuyer's Downpayment Assistance Program and Mortgage Credit Certificate Tax Credit Program, replacing the limits previously outlined on August 5, 2011. See the official CalHFA release for a full matrix of limits by county.
Effective immediately, US Bank is accepting FHA cash-out refinances where USBHM is not the servicer.
US Bank is now offering Freddie's reduced delivery fee of .75 on HomePossible purchase transactions, replacing the previous 1.50 cost.
Affiliated Mortgage retired the 5/2/5 cap structure for all Conventional Conforming 5/1 ARMs as of August 19th, after which point all such loans will be required to have a 2/2/5 cap structure. This also applies to re-locks and re-negotiations. The Qualifying Interest Rate must be the greater of the fully indexed rate or the note rate plus 2%, and as a reminder, this must be manually applied to LP and DU Version 9.0 loans.
PennyMac has removed its 95% LTV/CLTV cap on VA transactions in Florida, Illinois, and Nevada, effective immediately. All applicable loans will now be subject to the standard -1.00 pricing adjustment.
Per Fannie's allowable age of credit documentation guidelines, PennyMac is now requiring that credit documents cannot be more than four months old on the date the note is signed. This replaces PennyMac's previous requirements, which did not allow credit docs older than 90 days for existing construction loans and 120 days for new construction loans.
MSI has reduced the pricing adjustment for Conventional loans with FICO scores over 740 and LTVs of 60 or less from -.250 to zero, affective for all loans locked on or after August 7th. In terms of FHA guidelines, MSI has eliminated the 1/1 ARM product and now requires a discharge of Bankruptcy with re-established credit dated a minimum of two years prior to the case number assignment. Manual underwrites and downgrades will no longer be permitted, as all loans must receive a TOTAL Scorecard Accept or Approve, and for any FHA loans closed in the seller's name, regardless of the underwriter, the minimum acceptable FICO is 640 and the minimum acceptable DTI 49.99, regardless of AUS. For loans underwritten by and closed in MSI's name, a DTI of 55 is eligible for loans with FICO scores over 680, while 50 will be accepted for loans with scores under 680.
MSI has updated a number of underwriting guidelines and is now requiring underwriters to document all payment history and actual payments for student loans and to report the loan as current, regardless of whether the student loan is in the process of being transferred to a new servicer or not.
Kinecta has adjusted its pricing for wholesale 5/1 and 7/1 Jumbo ARMs of less than $1 million, reducing the adjustment for all such loans with LTVs between 75 and 80 from .375 to .125.
As part of its effort to include more prospective homebuyers, Carrington Mortgage has expanded certain purchase guidelines to allow FICO scores down to 580, manual underwriting of FHA and VA transactions, non-traditional trade lines, and collection/charge-off accounts. For USDA loans, in addition to the 580 minimum FICO, borrowers are now able to qualify without cash reserves, and the funds can be used to build, repair, renovate, or relocate a home.
WesLend Wholesale has rolled out its Purchase Advantage Pre-Approval program, which allows lenders to submit a credit package for full underwriting review with a "TBD" property address in order to work with listing agents who require pre-approval to accept offers on their properties. After submission, the underwriter is able to issue the conditional approval necessary to move the transaction forward, and once the borrower has had their offer accepted, the balance of the credit package is submitted to WesLand for disclosures to be issued and the package reviewed. Apply for the program HERE.
For all Go! loans that receive a DU Approve/Eligible or LP Accept/Eligible, MGIC is aligning the bulk of its underwriting requirements with those of Fannie and Freddie. As such, Go! loans are subject to a maximum LTV/CLTV of 97/105%, minimum FICO of 620, cash-out refinance maximum of $150,000, and, for condos and co-ops, the parameters of the Ineligible Projects List. Investment and 3-4 unit properties remain ineligible, and lender-negotiated waivers or variances apart from co-op share loans, properties in Guam, HomeStyle Renovation, and affordable housing secondary financing require MGIC approval.
With regards to property flipping, MGIC is no longer requiring a manual underwrite if the property being acquired has sold within the last 180 days.
Kansas-based CapWest Mortgage is expanding its secondary market operations to include a wholesale and mini-correspondent platform. CapWest has begun offering a lender fulfillment program with HELOC and fixed-rate second lien programs and, as part of its wholesale operations, will partner with community banks and credit unions to offer underwriting and closing services.
Economy-wise, the news that New Home Sales had plunged 13.4% in July caught lots of people's attention on Friday. That is its weakest pace since October. Huh? What? Housing not skyrocketing? Well, the numbers are showing what lenders already know, and that is that a) most of the folks who could refinance did refinance, and are very happy with their 3.5% 30-yr loans, thank you, and b) rates do indeed influence the home buying decision. Of course the Fed can't buy all the agency MBS forever, but still...