Compliance Calendar

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Compliance Calendar for October 2019

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Single Close Combination Construction to Permanent Loans (aka “single close loans”)

Effective: October 1, 2019
Industry: Mortgage Lending
Source: USDA   Final Rule →
Tag: Underwriting
Details

Note: A corrected final rule was published 8/19/2019 pushing the effective date from August 21, 2019 to October 1, 2019. 

  • Eases the financial costs of interim construction financing for non-depository lenders (warehouse line of credit lenders or warehouse lenders) by allowing a temporary interest rate higher than the permanent note rate for interim construction financing
  • Removes the requirement for loan modification or re-amortization once construction is complete 
  • Allows for the reserve of regularly scheduled principal, interest, taxes and insurance (PITI) payments during the construction period 
  • Clarifies that the PITI reserve is an eligible use of single close loan funds 
  • Allows single close loans for the rehabilitation of existing dwellings upon their purchase and eliminate maximum interest rate cap requirements for all SFHGLP loans
  • Provides a definition of a warehouse lender and updates lender mortgage record retention requirements

Maryland Net Worth Requirements

Effective: October 1, 2019
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Maryland   ​Maryland House Bill 61 →
Tags: Maryland, Licensing
Details

Maryland House Bill 61 alters certain net worth requirements for certain applicants and licensees for certain mortgage lending, loan servicing, and loan origination activities to

  • establish certain net worth requirements for certain applicants and licensees acting as mortgage loan servicers for government-sponsored enterprises and other entities
  • authorize the use of an irrevocable letter of credit from certain institutions to satisfy certain requirements under certain circumstances; etc.

Maryland Foreclosed Property Registry

Effective: October 1, 2019
Industry: Mortgage Servicing
Source: Maryland   Maryland House Bill 107 →
Tags: Maryland, Foreclosure
Details

Maryland House Bill 107 

  • substitutes the Commissioner of Financial Regulation for the Department of Labor, Licensing, and Regulation in certain provisions of law relating to the Foreclosed Property Registry; 
  • renumbers certain sections; and
  • makes technical changes relating to the renumbered sections.

Montana Amends Provisions Regarding Reporting Requirements for Escrow Businesses

Effective: October 1, 2019
Industry: Mortgage Servicing
Source: Montana   Montana House Bill 108 →
Details

AN ACT REVISING THE REGULATION OF ESCROW BUSINESSES ACT; ALLOWING ANNUAL REPORTS

OF ESCROW BUSINESSES TO BE REVIEWED BY A CERTIFIED PUBLIC ACCOUNTANT EVERY ODD-NUMBERED YEAR; ALLOWING SERVICE BY COMMON COURIER WITH TRACKING CAPABILITY;

AMENDING SECTIONS 32-7-115 AND 32-7-124, MCA; AND PROVIDING AN EFFECTIVE DATE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

Section 1. Section 32-7-115, MCA, is amended to read:

"32-7-115. Maintenance of records. (1) A licensee shall establish and maintain the books, accounts, and records necessary to enable the department at any time to determine whether the escrow transactions performed by the licensee comply with the provisions of this part. The books, accounts, and records must be maintained in accordance with generally accepted accounting principles and good business practice.   

(2) A licensee shall establish and maintain the following records concerning general accounts:

(a) a general record reflecting the assets, liabilities, capital, income, and expense of the business,

maintained in accordance with generally accepted accounting principles;

(b) a cash receipt and disbursement journal; and

(c) a reconciliation of monthly statements to the general record.

(3) The records referred to in subsections (1) and (2) must be reconciled at least once each month with the bank statements reflecting each escrow account.

(4) A licensee shall preserve for at least 3 years after the close of any escrow:

(a) all bank statements reflecting each escrow account and records of monthly reconciliations of the

statements to the general record;

(b) all canceled checks drawn on each escrow account;

(c) any additional records reflecting banking transactions regarding each escrow account, including

copies of all receipts for funds transferred from other accounts into each escrow account;

(d) all statements of account;

(e) all escrow instructions and amendments to them; and

(f) all additional records pertinent to each escrow transaction.

(5) A licensee shall file annually with the department by a date set by the department by rule a statement of the licensee's financial condition as of December 31 of the preceding calendar year and its transactions and escrow activities during that preceding calendar year concerning consumers in this state. The financial statement must be certified reviewed by an independent public accountant every odd-numbered year and must be in a form and contain the information that the department requires."

Section 2. Section 32-7-124, MCA, is amended to read:

"32-7-124. Hearings -- penalties. (1) The department may impose a civil penalty not to exceed $1,000 for each violation if the department finds, after providing a 14-day written notice of alleged violations and opportunity for administrative hearing, that any person, any licensee, or any officer, agent, employee, or representative of the person or licensee, whether licensed or unlicensed, has:

(a) violated any of the provisions of this part;

(b) failed to comply with the rules or orders promulgated by the department;

(c) failed or refused to make required reports to the department;

(d) furnished false information to the department; or

(e) operated without a required license.

(2) The department may issue an order requiring restitution to parties and reimbursement of the

department's costs of bringing an administrative action. In addition, the department may issue an order revoking, conditioning, or suspending the right of the licensee, directly or through another, to engage in escrow business activities in this state.

(3) All hearing schedules and orders must be mailed to the person or licensee by certified mail to the address for which the license was issued or, in the case of an unlicensed business, to the last-known address of record.

(4) For purposes of this part, the department is considered to have complied with the requirements of law concerning service of process upon mailing by certified mail by sending by common courier with tracking capability any notice required under this part, postage prepaid and addressed to:

(a) the last-known address of the licensee's registered agent for service of process on file with the department;

(b) the last-known address of the licensee on file with the department for an in-state licensee; or

(c) the last-known address of an unlicensed person.

(5) In a judicial action, suit, or proceeding arising under this part or any administrative rule adopted

pursuant to this part between the department and a licensee who does not maintain a physical office in this state, venue is in the district court of Lewis and Clark County.

(6) The provisions of the Montana Administrative Procedure Act, Title 2, chapter 4, part 6, apply to a contested case brought under this part." Section 3. Effective date. [This act] is effective October 1, 2019.

Attorney Closing Requirement

Effective: October 1, 2019
Industry: Mortgage Lending
Source: Connecticut   ​Connecticut Senate Bill 320 →
Tags: Connecticut, Closing
Details
  • Prohibits persons other than attorneys from representing the legal interests of parties in real estate closings. Only a duly licensed Connecticut attorney in good standing may conduct real estate closings.
  • Prohibits lenders from inducing or requiring prospective mortgagors to use preferred attorneys or law firms.

A violation of the new requirement constitutes a Class D felony, punishable by a $5,000 penalty or five years in jail.

Takeaway

Lenders should ensure that only a Connecticut licensed attorney conducts the closing on any first- or second lien mortgage loan, other than a home equity line of credit, that require the issuance of title insurance.

Nevada Real Property Provisions

Effective: October 1, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Nevada   ​Nevada Senate Bill 382 →
Tags: Loan Documents, Payoffs-Reconveyances, Foreclosure
Details
  • Revises provisions governing deeds of trust
  • Revises provisions relating to foreclosure mediation
  • Revises provisions governing notice requirements for certain mechanics' liens
  • Revises provisions relating to how a mortgage of real property is not deemed a conveyance
  • Revises provisions relating to recording estates in property
  • Revises provisions relating to common-interest ownership
  • And other matters

Maryland Personal Information Protection Act

Effective: October 1, 2019
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: Maryland   Maryland House Bill 1154 →
Tags: Maryland, Information Security/Data Breach
Details

Maryland House Bill 1154 alters the applicability of certain security breach investigation requirements to certain businesses; altering the applicability of certain security breach notification requirements to a certain owner or licensee of computerized data to allow notification to national information security organizations created for information-sharing and analysis of security threats, to alert and avert new or expanded breaches; prohibiting a certain business from charging a certain owner or licensee of computerized data a certain fee; etc.

HARP Loan Program Ending

Effective: October 1, 2019
Industry: Mortgage Lending
Source: Fannie Mae , Freddie Mac   Bulletin 2017-19 →
Tags: Underwriting, Closing
Details

FHFA also directed the GSEs to extend their implementation of HARP to 2018. To ensure you can continue to offer refinancing opportunities to borrowers with mortgages with high LTV ratios until the new offering is available, we will purchase Freddie Mac Relief RefinanceSM – Same Servicer and Open Access mortgages with application received dates on or before December 31, 2018, and Freddie Mac settlement dates on or before September 30, 2019.

Colorado Mortgage Loan Originator Licensing and Mortgage Company Registration Act

Effective: October 1, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Colorado   Colorado House Bill 1172 →
Tags: Colorado, Licensing
Details

Colorado House Bill 1172 enacts an organizational recodification of title 12 of the Colorado Revised Statutes, and, in connection therewith, limiting substantive changes to those that conform similar provisions to achieve uniformity, eliminate redundancy, or allow for the consolidation of common provisions or that eliminate provisions that are archaic or obsolete.

Fee for Returned Checks

Effective: October 1, 2019
Industry: Consumer Lending, Mortgage Lending, Mortgage Servicing
Source: North Carolina   ​North Carolina Senate Bill 529 →
Tags: North Carolina, Fees, Cash Management
Details
  • Increases the return check processing fee maximum from $25.00 to $35.00 
  • Effective for checks, refused by the payor bank because of insufficient funds or because the drawer did not have an account at that bank, dated on or after October 1, 2019.

Montana Amends Provisions Regarding Mortgage Act

Effective: October 1, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Montana   HB-107 →
Tag: Montana
Details

AN ACT GENERALLY REVISING THE MONTANA MORTGAGE ACT; ADDING CAPITAL REQUIREMENTS FOR MORTGAGE SERVICERS; ADDING NET WORTH REQUIREMENTS FOR MORTGAGE LENDERS; REVISING DESIGNATED MANAGER AND BRANCH OFFICE REQUIREMENTS; REVISING SURETY BOND REQUIREMENTS; ALLOWING SERVICE BY COMMON COURIER WITH TRACKING CAPABILITY; PROVIDING RULEMAKING AUTHORITY REGARDING FALSE, DECEPTIVE, AND MISLEADING ADVERTISING, INTERNET AND ELECTRONIC ADVERTISING, MORTGAGE SERVICER CAPITAL REQUIREMENTS, AND DESIGNATED MANAGER SUPERVISORY REQUIREMENTS; PROVIDING FOR PENALTIES AND RESTITUTION FROM SERVICE PROVIDERS; AUTHORIZING INVESTIGATION OF SERVICE PROVIDERS; ALLOWING THE DEPARTMENT TO DISCLOSE INFORMATION ABOUT SERVICE PROVIDERS TO LICENSEES; AMENDING MORTGAGE SERVICER COSTS AND FEE SCHEDULE FILING REQUIREMENTS; AND AMENDING SECTIONS 32-9-103, 32-9-120, 32-9-122, 32-9-123, 32-9-128, 32-9-130, 32-9-133, 32-9-141, 32-9-149, 32-9-160, AND 32-9-170, MCA.

List of Contacts - Updated Email Address for the Payments Team

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-08 →
Details
  • The List of Contacts (E-1-03) has been updated to reflect the email address for our Payments Team for the submission of Forms 360, 482, 1072, or 1055

Note Endorsement and Required Custodial Documents

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-08 →
Tags: Closing, Secondary
Details
  • Note endorsements should be signed only by those persons specifically authorized to execute the document on the lender’s behalf 
  • Fannie Mae accepts facsimile endorsement of notes with certain requirements, one of which includes a corporate resolution authorizing specific officers by name or title
  • Fannie Mae has aligned the corporate resolution requirements to specify either the officer’s title or name for facsimile signatures in B8-3-04 and E-2-01

Monthly Debt Obligations - Alimony

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-08 →
Tags: Underwriting, Income
Details
  • Our current policy states that an alimony obligation can be a reduction to income in lieu of including it as a monthly debt in the DTI ratio 
  • When the lender uses this option for casefiles underwritten through DU, the lender must enter the obligation as a negative amount as its own line item (rather than reducing another income type by the amount of the obligation)  
  • If the borrower also receives alimony or child support income, this amount should be combined with the amount of the alimony obligation and entered as a net amount
  • Clarified to reflect that a copy of the divorce decree (or other related documentation)
    must be retained in the loan file

Adjustable-Rate Mortgages (ARMs) - Single-Closing Construction-To Permanent Transactions

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-08 →
Tags: Adjustable Rate Mortgage (ARM), Underwriting
Details
  • In follow up to LL-2019-05, providing clarification for purposes of single-closing construction-to permanent transactions the seasoning starts with the first payment of principal and interest (P&I) after the loan has
    converted to permanent financing

Employment Offers and Contracts

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Fannie Mae   SEL-2019-08 →
Tags: Underwriting, Income
Details
  • Currently policies allow the use of income for a borrower that has not yet started employment but has an employment offer or contract to start a job at some point after the application date but no later than 90 days after the note date 
  • Policies have been clarified to be based on the documentation the lender can provide, versus the timing of the borrower’s start date of employment 
  • Policies have been clarified to provide the documentation that is required based on specific loan features

Freddie Mac Relief Refinance Mortgages℠

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Underwriting
Details
  • Previously extended the expiration date of the Freddie Mac Relief Refinance Mortgage – Same Servicer and Relief Refinance Mortgage – Open Access offerings to Application Received Dates on or before December 31, 2018 and Settlement Dates on or before September 30, 2019 
  • The Guide is now updated to remove references to these offerings, where applicable, as these Mortgages can no longer be delivered to Freddie Mac

Certificate of Incumbency

Effective: October 2, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Secondary
Details
  • Updating the Seller/Servicer Certificate of Incumbency language in Section 2201.1 to specify that all Sellers, Servicers and Seller/Servicers must provide Certificates of Incumbency to Freddie Mac

Pledged Mortgages

Effective: October 2, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Secondary
Details
  • For Cash transactions, to provide greater specificity, we are removing the requirements that all Pledged Mortgages in a delivery must be financed by the same Warehouse Lender and that each Mortgage must be a Pledged Mortgage if included in a delivery with Pledged Mortgages
  • We are additionally updating Chapter 6305 for clarity and to change certain references from “Funding Date” (which is used only in the context of Cash transactions) to “Settlement Date,” which applies to all transactions

Seasoned LIBOR ARMs

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Adjustable Rate Mortgage (ARM), Closing, Loan Documents
Details
  • Current guide states that the Settlement Date for a LIBOR-indexed ARM must not be more than six months after the Note Date
  • Clarifying that for purposes of Section 4401.3 and Exhibit 17S (footnote 11), the Note Date is equivalent to the Effective Date of Permanent Financing for LIBOR ARMs sold to Freddie Mac as Construction Conversion Mortgages originated with Integrated Construction Conversion Documentation

Automated Collateral Evaluation (ACE) Eligibility

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Property - Appraisal, Underwriting
Details
  • Previously, the Guide stated that a Seller may not accept the ACE appraisal waiver offer if the Seller is aware of conditions that it believes warrant an appraisal being obtained.  
  • We are updating the Guide to state that a Seller may not accept the appraisal waiver offer if the Seller is aware of conditions that warrant an appraisal being obtained.

Recent Borrower Employment Gaps

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Underwriting, Employment
Details
  • Clarifying that while the Borrower is not required to provide a letter of explanation of recent employment gaps, the Seller remains responsible for establishing that the Borrower’s employment is stable, which may require analysis of recent employment gaps

Powers of Attorney - Document Custody

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Certification, Endorsement, and Delivery, Closing
Details
  • The original Power of Attorney (POA) must be delivered to the Document Custodian with the Note but need not be attached to the Note, as previously stated
  • Specifies that every POA must be notarized and that Document Custodians may accept a copy of the POA if it was recorded prior to the Note Date and shows the recording information or if the POA was sent with the Security Instrument to be recorded
  • In the latter case, when it is returned from the recording office, the Seller must promptly deliver either the original POA or a copy showing recording information to the Document Custodian

Quality Control Review - Seller's In-House Quality Control Program

Effective: October 2, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Quality Control
Details

We are revising Seller in-house quality control program requirements to provide that Sellers may notify Freddie Mac in writing within 90 days, instead of 60 days, of a determination that a quality control finding affects the eligibility of a Mortgage sold to us. This excludes fraud or possible fraud, which must still be reported within 60 days of the determination.

In addition, we are revising the requirements to, among other things:

  • Allow Sellers with annual production of less than 5,000 Home Mortgages to house the quality control functions to operate within the origination and underwriting departments
  • Require that records of completed quality control reviews be provided to a new Servicer only upon request
  • Allow Sellers to choose targeted Mortgage selections that focus on specific characteristic of a Mortgage, such as product, business source or underwriting component
  • Clarify that Sellers must pay any fees associated with reverifications in the quality control process
  • Remove the requirement that any new credit reports obtained during the quality control process must be ordered from a different source than the original reporting agency
  • Remove the requirement for appraisal reviews on Freddie Mac Enhanced Relief Refinance® Mortgages

Quality Control Review - Post Funding

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Quality Control
Details

We are updating certain postfunding quality control review requirements regarding:

  • Mortgage file documentation required for Mortgages submitted to Loan Product Advisor®, including Mortgages for which the Seller is offered, and accepts, an appraisal waiver in accordance with Section 5601.9, and
  • Mortgage file documentation required solely for Manually Underwritten Mortgages

We are also updating the Guide to:

  • Specify that except for trended credit, Freddie Mac will review all documentation sent to Freddie Mac in connection with a quality control review request, even if Freddie Mac does not require that documentation, and
  • Clarify our requirements for Mortgage file documentation relating to the final title insurance policy

Cash-Released XChange℠ - Transferee Servicer's Termination of a Seller’s Ability to Transfer Servicing Contract Rights

Effective: October 2, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Secondary
Details
  • Updated Section 6101.7(g) to reflect that as a result of system enhancements, the Transferee Servicer may now terminate a Seller’s ability to transfer Servicing Contract Rights to that Transferee Servicer without first notifying Freddie Mac

New and Established Condominiums – Budget Requirements

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Underwriting, Condominiums
Details
  • Clarified that the Condominium Project’s budget must be for the current fiscal year

Manufactured Homes

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Underwriting, Manufactured Homes
Details
  • Eliminated redundant references to the ineligibility of Manufactured Homes in Chapter 5701 while retaining our requirement in Section 5701.3(l)

Condo Ineligible Projects – Commercial Space

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Underwriting, Condominiums
Details
  • Consolidated the commercial space requirements from Section 5701.11 into Section 5701.3(d)
  • Added an easy-to-follow table showing what must be included and what may be excluded from the commercial or non-residential space calculation

Condo Project Waiver Requests (PWRs) via Freddie Mac Condo Project Advisor ® (CPA)

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Underwriting, Condominiums
Details

To expand eligibility, a project may still be considered as an Established Condominium Project where the developer retained more than 25% of the units (which otherwise makes the project a New Condominium Project) if:

  • The developer retained those units for rental purposes
  • The developer has owned those units for a minimum of 10 years; and
  • The Condominium Project otherwise meets the completion and project control requirements to be classified as an Established Condominium Project

Purchase Transaction Mortgages

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tag: Underwriting
Details
  • New Chapter 4305 added specific to purchase transaction mortgages
  • The new chapter specifies acceptable uses of the proceeds from a purchase transaction mortgage as well as the circumstances under which the Borrower may receive cash back or a principal curtailment may be made

Employer Assisted Homeownership (EAH) Benefit

Effective: October 2, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-20 →
Tags: Underwriting, Assets
Details
  • Removing the requirement that the EAH Benefit must permit the Borrower to continue making payments on the loan in the event the Borrower no longer works for the employer; applies to EAH Benefits that are both unsecured loans and secured loans
  • For EAH Benefits that are unsecured loans, specifying that those funds may be used only for Down Payment and Closing Costs 
  • Removing several requirements specific to repayment terms 
  • For EAH Benefits that are secured loans with regular monthly payments, clarifying that those payments must be included in the monthly housing expense-to-income ratio

Request for SFH Loan Guarantee – Form RD 3555-21

Effective: October 2, 2019
Industry: Mortgage Lending
Source: USDA   USDA Forms Search Page →
Tag: Certification, Endorsement, and Delivery
Details

Note: Enter "3555-21" in the Form Number search box.

  • USDA Office of Rural Development issued a revised Form RD 3555-21 (revision date October 2019)
  • USDA will discontinue use of the Form RD 3555-21 (revision date October 2018) 30 days after the effective date

USDA Handbook 1-3555, Chapter 12 Property and Appraisal Requirements

Effective: October 4, 2019
Industry: Mortgage Lending
Source: USDA   PN 529 →
Tags: Underwriting, Escrow-Impounds, Insurance, Property - Appraisal
Details

The following updates were made to Chapter 12 to include guidance on the new Single-Close Construction loan to coincide with the Final Rule and add the new feature for the purchase with repair and rehabilitation loan option. 

  • Paragraph 12.4, Removed language requiring the dwelling’s economic life meet or be greater than the loan term. This is a HUD 223 program requirement not HUD HB 4000.1. Economic life of the dwelling is covered under section 12.5. 
  • Paragraph 12.5 B, Removed the requirement for the Market Condition Addendum (Form FNMA 1004 MC).
  • Paragraph 12.6, Added statement to clarify if the property meets HUD Handbook 4000.1 then additional well and septic tests are not required other than water quality tests.
  • Paragraph 12.6, Removed language regarding the cost to connect to a public system as determined by the lender for clarification and ease of use.
  • Paragraph 12.7 A, To updated the language in 12.7A to match regulation 3555.201(b)(3).
  • Paragraph 12.9 B, Clarified language pertaining to the completion of plans and specs, building permits, and owner occupancy certificates.
  • Paragraph 12.9 B, “Evidence of Construction Inspections” removed the work “insured” as a one-year warranty is not insured.
  • Paragraph 12.9 B, Added language for clarification on manufactured home inspection
    requirements.12.9C Repair Escrows.
  • Paragraph 12.9 C, Updated and clarified interior and exterior repair escrow requirements for greater ease of use.
  • Paragraph 12.10 B, Updated language about maximum flood coverage by Flood Insurance to match the language in Chapter 16. 
  • Paragraph 12.12, (Rural Energy Plus Loans) Section removed. The language remains in 3555.209 however, there is not a loan benefit offered at this time. To avoid confusion the language has been removed. 
  • Paragraph 12.12, Section 7 “Combination Construction to Permanent Loans” renumbered to Section 6.
  • Paragraph 12.12, (Single-Close Features) Added language to clarify a construction to permanent loan may be considered a purchase transaction by the Agency yet should be identified and coded in GUS/GLS as “construction only”.
  • Paragraph 12.13, Updated language for clarification.
  • Paragraph 12.14, Added language to clarify an acceptable credit history for builder-contractors.
  • Paragraph 12.15, Edited section for clarity. 
  • Paragraph 12.15, Added updated eligible loan costs as determined by the Single-Close Final Rule.
  • Paragraph 12.17, Updated language to include reference to Section 3555.107(d).
  • Paragraph 12.20, Added language to include information on established reserve accounts for the fully amortized payment, interest, taxes, and insurance.
  • Paragraph 12.24, Updated language for better clarity.
  • Paragraph 12.24, Section 12.25 on Interest After Loan Closing was removed. The language was added to section 12.20 for greater clarification and to avoid confusion.
  • Paragraph 12.26, edited for greater clarity.
  • Paragraph 12.28, section has been added to address guidance pertaining to the
    Repair and Rehabilitation loan option.

USDA Handbook 1-3555, Chapter 9 Income Analysis

Effective: October 4, 2019
Industry: Mortgage Lending
Source: USDA   PN 529 →
Tags: Underwriting, Income
Details

The revisions to this chapter provide lenders clarification and guidance on evaluating acceptable income types and timeframes. It allows lenders additional flexibility in determining applicant’s stable and dependable income. 

  • Paragraph 9.3 B, Added a bullet to provide guidance on the use of income that will not continue for the entire ensuing 12 months for annual income calculations. 
  • Paragraph 9.3 E, Added bullet to outline the information required in paystubs/earnings statements for use as a verification source. 
  • Paragraph 9.3 E, Added bullets that specify requirements for information in W-2 forms and required tax return documents for self-employed applicants for income verification purposes. 
  • Paragraph 9.3 E, Clarified language pertaining to self-employed applicant’s required income documentation and defined sharp increases and decreases in self-employment income that must be carefully evaluated.
  • Paragraph 9.3 E, Clarified when business federal income tax returns are required.
  • Paragraph 9.3 E, Clarified language and formatting to the statement that IRS transcripts are required for all adult household members with the exception of full-time students.
  • Paragraph 9.3 E, Added language to address incomplete applications when the lender cannot obtain form IRS 4506-T for household members without a Social Security number or other acceptable identification number.
  • Paragraph 9.8, Added bullets to define sharp increases and decreases that must be evaluated when used as stable and dependable income. 
  • Paragraph 9.8, Added language to clarify the lender’s responsibility in their determination of stable and dependable income.
  • Paragraph 9.11, Added this paragraph to clarify the use of time spent in education as substitute for required repayment income timeframes to allow only education where specified certification can be obtained.
  • Attachment 9-A, Made revisions to relax the required timeframes for certain type of incomes used in repayment income calculations from two years to one year. 
  • Attachment 9-A, Added guidance on additional income types that were previously not included in the hand book. 
  • Attachment 9-A, Provided additional guidance for documentation source options.
  • Attachment 9-F, Clarified GUS Accept Full Documentation loan files are not manually underwritten loan files.

USDA Handbook 1-3555, Chapter 7 Loan Terms and Conditions

Effective: October 4, 2019
Industry: Mortgage Lending
Source: USDA   PN 529 →
Tag: Underwriting
Details
  • Removed language regarding the maximum interest rate cap. The Single-Close final
    rule published July 22, 2019, eliminates the maximum interest rate cap for SFHGLP loans. The language in section 7.3B has been updated accordingly.

USDA Handbook 1-3555, Chapter 6 Loan Purposes

Effective: October 4, 2019
Industry: Mortgage Lending
Source: USDA   PN 529 →
Tag: Underwriting
Details
  • Chapter 6: Loan Purposes to include updated regulation per the single close
    construction Final Rule and include the Repair and Rehabilitation feature. 
  • Updated Paragraph 6.2 B on repair and rehabilitation and refer to Chapter 12 for additional guidance. 
  • Paragraph 6.2 C., ‘‘Closing Costs’’ to include regulatory language removing seller concession limits for single close construction loans. 
  • In order to coincide with 3555.102(h) regarding seller concessions, ‘‘loan amount’’ was changed to ‘‘property’s sale price.’’ 
  • Added a bullet in Paragraph 6.2C to address eligible loan purposes for Single- Close Construction loans. 
  • Paragraph 6.2 D., to clarify eligible refinance purposes, identify the types of loans that may be refinanced, rearranged, renumbered paragraphs for clarity and removed redundant language. 
  • Clarified that the guarantee fee may be added over original loan amount with a streamline refinance. 
  • Paragraph 6.2 D (a)(3)(iii), to clarify a deceased borrower may be removed from a streamline assist refinance transaction. 
  • Removed paragraph’’ Additional Guidance for Existing Direct 502 Loans’’ and moved it to Attachment B of the chapter. 
  • Paragraph 6.2 D(b), edited for clarity under loan application documentation. 
  • Clarified Lender and Agency requirements in the submission process in Paragraph 6.2D(c).
  • Replaced the fax number to the NFAOC with the email address in Paragraph 6.2D(g).
  • Removed language in section 6.3 ‘‘Loan Discount Points’’ restricting discount points to 2% for non-streamline refinance transactions to concur with guidance throughout the chapter. 
  • Updated section 6.3 ‘‘Seller Contributions’’ to include regulatory language removing seller concession limits for single close construction loans. 
  • In 6.3, clarified that the 6% seller contributions are based on sale price and not applicable to construction loans. 
  • Attachment 6-A was added to summarize the differences in the refinance options. 
  • Attachment 6-B was added to provide additional guidance on refinancing Section 502 Direct Loans.

USDA Handbook 1-3555, Chapter 5 Origination and Underwriting Overview

Effective: October 4, 2019
Industry: Mortgage Lending
Source: USDA   PN 529 →
Tag: Underwriting
Details
  • Paragraph 5.2 A, to removed language regarding obtaining traditional credit.
    Reference was made to guidance on the same subject in Chapter 8. 
  • Updated the guidance on data threshold tolerance in Paragraph 5.3 G to match the language in the upcoming Chapter 10 revisions. 
  • Paragraph 5.3 J, to removed language requiring lenders to submit interest rate lock dates. The revised Form RD 3555-21 eliminates the field for rate lock dates.

Maryland Adopts Provisions Regarding Mortgage Lenders

Effective: October 4, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Maryland   09.03.06 Mortgage Lenders →
Tag: Maryland
Details
  • Regulation .02B(6): In response to comments received, the cross reference is being corrected.
  • Regulation .02B(17): In response to comments received, the cross reference is being clarified.
  • Regulation .02B(24): In response to comments received, the term “loan modification” is being deleted because it does not appear in any other regulation.
  • Regulation .02B(25): .025(B)(26) In response to comments received, this change avoids confusion by withdrawing the term “Maryland loan”.
  • Regulation .02B(30)(a): In response to comments received, the definition of mortgage servicer is being simplified to clarify the intent that a mortgage servicer performs activities during repayment of a mortgage loan.
  • Regulation .02B(30)(e): This change is being made to clarify that the word person applies to an attorney representing a mortgagee or its successors and assigns or to a substitute trustee, and to delete the word mortgage because a substitute trustee only applies to a deed of trust.
  • Regulation .05A(1), .05A(5)(c), .05B(1), .05B(1)(q)(ii), and .05B(2): The term “mortgage loan” is being substituted for “Maryland loan” because of the definition change in Regulation .02B(25).
  • Regulation .05A(5)(a), (b), and (c): During the 2019 legislative session, Md. Code Ann., Fin. Inst. §11-515(a)(2)(ii)(2) was amended to extend the time period from 36 months to 60 months within which the Commissioner must conduct an examination. Accordingly, the record retention requirement is changed to reflect the statutory amendment.
  • Regulation .05C(4)(c): In response to comments received that concerned a required manner of organization of records that has not been communicated to licensees, the language is being changed to provide the Commissioner with flexibility to adjust the manner of organization at the time of examination based on the size and complexity of the licensee.
  • Regulation .05D: In response to comments received that noted compliance with the “reasonably should know” standard would be impossible, this standard is deleted.
  • Regulation .07D: In response to comments received that noted inconsistency with current Maryland law, this section is deleted.
  • Regulation .08C(3): In response to comments received regarding clarity, the federal statutes are replaced with federal regulations.
  • Regulation .19C: In response to comments received regarding clarity, the cross reference is changed to the specific section.
  • Regulation .24C: In response to comments received that noted the very robust, new requirements for data protection, and that compliance processes could differ based on the size and complexity of licensees’ businesses, the requirement for the design of a licensee’s information security program to achieve certain objectives is changed to the requirement for the design to consider certain objectives.
  • Regulation .24H: In response to comments received that noted the requirement for an annual certification of periodic testing could be inconsistent with the timing of testing that will be based on the size and complexity of the licensee’s information technology system, the annual certification requirement is deleted.
  • Regulation .24I: The security risk assessment required under Regulation .24 is the foundation for testing and monitoring. Accordingly, requirements to retain records of the security risk assessment and periodic testing results and to provide a copy the security risk assessment and periodic testing to the Commissioner upon request are added.

Guide Chapter 8107 Rewrite, Release of Notes

Effective: October 9, 2019
Industry: Mortgage Servicing
Source: Freddie Mac   Guide Chapter 8107 rewrite, Release of Notes →
Tags: Servicing, Loss Mitigation, Servicing Transfers
Details

Guide Chapter 8107 rewrite

We are substantially rewriting Chapter 8107 to provide more information and specificity regarding the release of Notes and documents by, and their return to, Document Custodians.

Release of Notes

Previously, Servicers were required to return Notes and other documents that were no longer required for Servicing to Document Custodians “promptly.” To provide guidance for Servicers, we are updating the Guide to specify that such documents must be returned to Document Custodians within 90 days.

Additional Chapter 8107 updates

We are also updating our document custody requirements in Chapter 8107 to:

  • Provide additional information on constructive possession to support Servicers in managing legal matters
  • Remove requirements for retaining imaged copies of various forms. These requirements will remain in Chapter 1401.
  • Reiterate the requirement for Notes in transit to be insured and transported by nationally recognized commercial or bonded carrier services

New Document Custodians and Additional Chapter 2202 updates

Effective: October 9, 2019
Industry: Mortgage Servicing
Source: Freddie Mac   https://guide.freddiemac.com/app/guide/bulletin/2019-21?utm_source=eloqua&utm_medium=email&utm_campaign=2019_GUIDE_INFO_Auto-Email →
Tags: Document Custodian, Servicing, Servicing Transfers
Details

We updated Section 2202.2 to indicate that Freddie Mac is no longer accepting applications to become or approving new Document Custodians. The eligibility standards set forth in Section 2202.2 remain in effect for our current Document Custodians.

We updated Sections 2202.3 and 2202.6 to:

  • Align with current practices for processing new Tri-Party Agreements
  • Provide more detail concerning the parties’ responsibilities upon termination of a Tri-Party Agreement
  • Describe more specifically the duties and responsibilities of each party to a Transfer of Servicing or a transfer of custody

Freddie Mac Flex Modification® Streamlined Eligibility

Effective: October 9, 2019
Industry:
Source: Freddie Mac   https://guide.freddiemac.com/app/guide/bulletin/2019-21?utm_source=eloqua&utm_medium=email&utm_campaign=2019_GUIDE_INFO_Auto-Email →
Tags: Delinquent Loans, Loss Mitigation
Details

In response to Servicer questions, we are clarifying that Borrowers who reach the applicable Delinquency threshold for a streamlined offer for a Flex Modification remain eligible for the Flex Modification even if one or more payments subsequently results in the Borrower becoming less delinquent than the eligible Delinquency threshold. In these instances, the Servicer must provide the eligible Borrower with a streamlined offer for a Flex Modification within the required time frame, provided that the Borrower’s payment has not resulted in the full reinstatement of the mortgage.

Reinstatements

Effective: October 9, 2019
Industry: Mortgage Servicing
Source: Freddie Mac   https://guide.freddiemac.com/app/guide/bulletin/2019-21?utm_source=eloqua&utm_medium=email&utm_campaign=2019_GUIDE_INFO_Auto-Email →
Tags: Partial Releases, Loss Mitigation, Fees
Details

We are updating our requirements to clarify that coupling a partial reinstatement with a repayment plan is considered a best practice but is not mandatory. Servicers that choose not to pair a partial reinstatement with a repayment plan must continue to attempt to resolve the Delinquency and remain responsible for adhering to foreclosure timeline requirements.

Additionally, regarding full reinstatements, we are specifying that Servicers may charge or collect from the Borrower an amount that exceeds the expense limits specified in Guide Exhibit 57A, Approved Attorney Fees and Title Expenses, provided those amounts are legally allowable and recoverable.

Bankruptcy Cramdowns

Effective: October 9, 2019
Industry: Mortgage Servicing
Source: Freddie Mac   https://guide.freddiemac.com/app/guide/bulletin/2019-21?utm_source=eloqua&utm_medium=email&utm_campaign=2019_GUIDE_INFO_Auto-Email →
Tag: Bankruptcy
Details

In Bulletin 2019-18, Freddie Mac updated certain bankruptcy cramdown requirements, including when a Servicer must instruct counsel to file for relief from the automatic stay. We are updating Section 9401.3 to more closely align with those requirements.

Calculation of Monthly Housing Expense – Real Estate Taxes

Effective: October 10, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-16 →
Tag: Underwriting
Details

Effective for Mortgages with Settlement Dates on and after October 10, 2019, but Sellers may implement immediately

  • We are updating the Guide to state that real estate taxes must be based on the value of the improvements plus the value of the land
  • We are also adding specificity related to the amount of real estate tax that must be included in the monthly housing expense calculation in a jurisdiction where a transfer of ownership leads to a change in the tax amount and for properties with tax abatements

Comprehensive Revisions to Condominium Project Approval Requirements

Effective: October 15, 2019
Industry: Mortgage Lending
Source: FHA   FHA Info #19-41 →
Tags: Underwriting, Property - Appraisal, HECM
Details

NEW Section II.A.8.p, Condominiums, are effective for case numbers assigned on or after October 15, 2019. 

NEW Section II.C Condominium Project Approval are effective for Condominium Project Approvals and Recertifications on or after October 15, 2019.

  • Included in the condo project approval section is policy guidance around FHA’s new Single-Unit Approval process, which includes units with Home Equity Conversion Mortgage (HECM) loans
  • Extends project approval recertification period from two to three years
  • Includes requirements and sets standards for minimum owner-occupancy, maximum commercial space, and maximum FHA insurance concentration percentages

Home Equity Conversion Mortgage (HECM) Program – Condominium Requirements

Effective: October 15, 2019
Industry: Mortgage Lending
Source: FHA   Mortgagee Letter 2019-17 →
Tags: HECM, Underwriting, Condominiums
Details

The Condominium Project Approval requirements in Section II.C of Handbook 4000.1 and the requirements for Units in approved projects, site condominiums, and Units in projects not approved by FHA in Section II.A.8.p, Condominiums, apply to HECMs with additional guidance.

Requirements for Units in Approved Condominium Projects:

The Mortgagee must ensure all HECMs comply with the requirements in Section II.A.8.p. Condominiums, of Handbook 4000.1 when the individual Unit is within an approved condominium project.

FHA will insure HECMs on Units approved in accordance with Section II.A.8.p.iii, Single-Unit Approval, of Handbook 4000.1, provided that the mortgagee verifies the prospective HECM borrower: 

- meets the applicable geographical residual income standard as stated in Section 3.100 of the HECM Financial Assessment and Property Charge Guide without the use of Compensating Factors; and 

- has a satisfactory property charge payment history as stated in Section 2.28 of the HECM Financial Assessment and Property Charge Guide without the use of Extenuating Circumstances. 

FHA will insure HECMs on Units that meet the definition for a Site Condominium and comply with standards set forth in Section II.A.8.p.iv, Site Condominiums, of Handbook 4000.1. 

All other existing HECM eligibility and program requirements remain in effect. 

New York Student Loan Servicing Law

Effective: October 16, 2019
Industry: Consumer Lending
Source: New York   Alert →
Tags: New York, Consumer, Student Loan
Details
  • Servicers that are exempt from licensing or deemed licensed must provide notice of their loan servicing to the NYDFS and comply with certain provisions of the law, including those pertaining to nonconforming payments, credit reporting, prohibited practices, and recordkeeping.
  • Definition of “servicing” does not include collecting, or attempting to collect, on “a Direct Loan or FFELP Loan for which no payment has been received for more than 270 days or more, a Perkins Loan in default, or on a private student loan in default according to the terms of the loan documents.” 
  • Definition of “student loan”: “any loan to a borrower to finance postsecondary education or expenses related to postsecondary education. The term shall not include an extension of credit under an open-end consumer credit plan, a reverse mortgage transaction, or any other loan that is secured by real property or a dwelling.”
  • Requires a servicer to give a borrower “not less than ten business days to provide instructions” as to how to apply a nonconforming payment.
  • Requires the annual notice of information on repayment options and forgiveness to also include information or links to information regarding discharge options.
  • Servicer must “adopt policies and procedures permitting borrowers to obtain hard copies of information required to be disclosed by the student loan servicer, with particular focus on meeting the needs of borrowers without access to the internet.”

Supplemental Funding Fee Guidance to Chapter 8, Topic 8, The VA Funding Fee

Effective: October 17, 2019
Industry: Mortgage Lending
Source: VA   Circular 26-19-17, Change 1 →
Tags: Underwriting, Closing, Certification, Endorsement, and Delivery
Details

Circular 26-19-17 is changed as follows: 

  • Page 1, paragraph 2, section b: add the following statement to the end of the paragraph: “The surviving spouse must be in receipt of Dependency and Indemnity Compensation (DIC).” 
  • Page 1, paragraph 2, section c: add the following language to the end of the paragraph: “before the loan closing takes place.” 
  • Page1, paragraph 3, section a: replace with the following paragraph: “Funding Fee Exemption Determination. Ensuring that the funding fee exemption information is up to date at the time of closing is essential to avoid incorrect charges to exempt Veterans. Lenders must not advise Veterans who believe they are exempt from paying the funding fee to close on a loan without first establishing their funding fee exemption status and request a funding fee refund at a later date. The Veteran’s funding fee exemption status must be established before closing.”

Rescission: This Circular is rescinded July 1, 2020.

Supplemental Funding Fee Guidance to Chapter 6, Interest Rate Reduction Refinancing Loans (IRRRLs)

Effective: October 17, 2019
Industry: Mortgage Lending
Source: VA   Circular 26-19-17, Change 1 →
Tags: Underwriting, Closing, Certification, Endorsement, and Delivery
Details

 Circular 26-19-17 is changed as follows: 

  • Page 1, paragraph 3, section b: replace with the following paragraph: “For IRRRLs, a COE is now required, except in the following three situations: 

1) The Veteran has already been determined to be exempt from the funding fee as evidenced on IRRRL assignment screen in WebLGY. 

2) The entitlement encumbered on the loan being refinanced belongs to the surviving spouse of a Veteran. 

3) The entitlement encumbered on the loan being refinanced belongs to a Veteran who has since passed away and the IRRRL borrower is spouse who was also a co-borrower on the loan being refinanced. 

Please note: The spouse of a Veteran who is now deceased, will not be considered exempt from the VA Funding Fee unless (s)he is in receipt of DIC. Lenders may remit VA Form 26-8937, Verification of VA Benefits, to the RLC of jurisdiction to verify a surviving spouse’s exempt status. 

  • Page 2, paragraph 3, section f: Replace Item 3, paragraph f with the following information: “Funding Fee Refunds. Funding fee refunds must be paid to the Veterans by VA through FFPS. The lender/servicer must change the refund destination from ‘Lender/Vendor’ to ‘Primary Veteran’ in the refund setting section of FFPS. If the loan is in default, the Veteran will be advised that he/she may wish to use the refund to help bring their loan current. When a funding fee refund does not involve a Veteran, for example, a lender paid a funding fee to VA in error which was not charged to the Veteran, or a lender paid a funding fee before the Veteran decided not to close on the loan, the refund destination will be ‘Lender/Vendor’ in FFPS and the RLC will refund the funding fee to the lender.”

Rescission: This Circular is rescinded July 1, 2020.

Chapter 12, Appraisal Process Updates

Effective: October 18, 2019
Industry: Mortgage Lending
Source: VA   VA Pamphlet 26-7, Revised Change 35 →
Tags: Property - Appraisal, Underwriting
Details
  • Chapter 12, Topic 1 has been revised to add information about including detached improvements in the appraised value. 
  • Chapter 12, Topic 2 has been revised to specify that if more than one parcel is included in the appraisal, the appraiser must prepare the appraisal subject to the parcels being placed on one deed. 
  • Chapter 12, Topic 7 has been revised to more specify description of hairline cracks. 
  • Chapter 12, Topic 8 has been revised to specify that based on the appraiser’s knowledge of the market area, properties that are subject to regular flooding are not eligible, whether or not the area has been designated a Special Flood Hazard Area (SFHA). 
  • Chapter 12, Topic 21 has been revised to specify that the integrity of the envelope of the structure must not be compromised. 
  • Chapter 12, Topic 34 has been revised to specify that radon resistant construction techniques are considered to be applicable for properties located in Radon Zone 1 as designated by the Environmental Protection Agency (EPA).

DU for Government Loans Release Notes October 2019

Effective: October 19, 2019
Industry: Mortgage Lending
Source: Fannie Mae   Release Notes →
Tag: Underwriting
Details
  • Updates to support the Maximum Loan-To-Value and Combined Loan-To-Value Percentages for Cash-out Refinance Mortgages announced by FHA in Mortgagee Letter 2019-11

Investor Reporting System Updates

Effective: October 21, 2019
Industry: Mortgage Servicing
Source: Fannie Mae   Release Notes →
Tag: Investor Reporting
Details
  • Fannie Mae is adding two additional data quality checks to improve Mortgage Insurance (MI) data quality.
  • Shortage/surplus adjustment will be viewable the day following the reinstatement in the A/A Cash Position screen in Loan Servicing Data Utility (LSDU).

Real Estate Appraisals on Commercial Real Estate Transactions

Effective: October 21, 2019
Industry: Consumer Lending
Source: Other   NCUA Final Rule →
Tags: Property - Appraisal, Commercial
Details
  • (1) increases the threshold below which appraisals are not required for commercial real estate transactions from $250,000 to $1,000,000  
  • (2) restructures the rule to enhance clarity 
  • (3) exempts from the rule certain federally related transactions involving real estate in a rural area 
  • (4) makes conforming amendments to the definitions section. 

Effective 90 days after being published in the Federal Register.  *Date estimated until confirmed.

FHA Revises Handbook 4000.1

Effective: October 24, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: FHA   Single Family Housing Policy Handbook 4000.1 →
Tags: Loss Mitigation, Underwriting, Quality Control, Servicing, Condominiums
Details

This revision to the FHA Single Family Housing Policy Handbook, or Handbook 4000.1 (Handbook), is being published to update existing sections.

Below is a list of content updates being made to the Handbook:

Handbook Section

Handbook Changes

Page Number(s)

Section I – Doing Business With FHA

I.A.5.e Title II Direct Endorsement Lender Condominium Project Review and Approval Process Authority

Updated to note effective date of 10/15/2019.

37

Section II – Origination Through Post-Closing /Endorsement

II.A.8.d.v(B)(1) Cash-Out Refinances – Maximum Mortgage Amounts – Standard

Updated the Maximum Loan-To-Value (LTV) and Combined Loan-To-Value (CLTV) percentages to 80 percent on Cash-out Refinance Mortgages, consistent with ML 2019-11.

417

II.A.8.p Condominiums

Updated to note effective date of 10/15/2019.

477

II.A.8.p.ii(C) Condominiums – Form HUD-9991, FHA Condominium Loan Level/Single-Unit Approval Questionnaire

Updated requirements for units in Approved Condominium Projects to include form HUD-9991. Updated numbering of subsequent sections.

478-484

II.A.8.p Condominiums

Updated required documentation to reference form HUD-9991.

478, 479, 480, 481-482, 484, 486, 487, 488, 489, 490, 491, 492, 493, 494, 495, 496

II.A.8.p.iii(D)(2) Condominiums – Requirements for Eligible Properties – Form HUD-9991, Condominium Loan Level/Single-Unit Approval Questionnaire

Updated requirements for eligible properties to include form HUD-9991. Updated numbering of subsequent sections.

485-495

II.C Condominium Project Approval

Updated to note effective date of 10/15/2019.

510

II.C.2 Condominium Project Approval – Project Eligibility

Updated required documentation to reference HUD-9992.

512, 514, 518, 519, 520, 520, 521, 522, 524, 525, 526, 527, 529, 531, 532, 533

II.C.2.c.i Condominium Project Approval – Project Eligibility – Form HUD-9992, FHA Condominium Project Approval Questionnaire

Updated requirements for the Condominium Project to include form HUD-9992. Updated numbering of subsequent sections.

512-513

II.C.3.b.iv Condominium Project Approval – Project Approval Submission – HUD Review and Approval Process – Submission Process

Updated Condominium Project Approval Stacking Order Documentation to include form HUD-9992.

535

Section III – Servicing and Loss Mitigation

III.A.1.h.i Insurance Coverage Administration – Hazard Insurance

Updated Hazard Insurance guidelines for Mortgagees and the Payment of Renewal Premium requirements.

623

III.A.1.k.ii(E) Mortgage Insurance Premium Cancellation and Termination – Standard – Borrower-Initiated Cancellation of MIP

Updated the Borrower-Initiated Cancellation of MIP requirements for Mortgages with case number assignments before June 3, 2013.

633

III.A.1.k.ii(F) Mortgage Insurance Premium Cancellation and Termination – Standard – Artificial Principal Payment Reduction

Updated language regarding Borrowers with an outstanding Partial Claim/second mortgage. Updated subsequent numbering.

633-634

III.A.2.h.ii(B)(2) Early Default Intervention – SFDMS Default Reporting – Standard – Time Frame for Reporting

Added language regarding reporting accuracy and quality control.

644

III.A.2.h.vi(A)(2) Collection Letters and Electronic Communications – Standard – Electronic Methods of Communication

Clarified which electronic methods of communication are acceptable.

648

III.A.2.j.ii(B)(2) HUD’s Loss Mitigation Program – Owner Occupancy – Standard for Non-Occupant Borrowers

Updated the standard requirement guidance for Non-Occupant Borrowers.

666

III.A.2.j.iii HUD’s Loss Mitigation Option Priority Waterfall

Added clarifying guidance in Step 5.

670

III.A.2.k.v(B)(2) FHA-HAMP – Eligibility – Borrower Qualifications

Updated qualification language and extended qualification criteria to Mortgagees in PDMDAs.

680

III.A.2.k.v(H)(3)(b)(ii) Entering into the Trial Payment Plan Agreement – Standard – Trial Payment Plan Terms

Added clarifying language regarding Trial Payment Plan Terms.

684-685

III.A.2.k.v(H)(4) FHA-HAMP Trial Payment Plans – Waiver of Late Charges

Added section regarding waiver of late charges and renumbered all sections that follow.

686-688

III.A.2.k.v(P) FHA-HAMP – Loss Mitigation Assumption

Added Loss Mitigation Assumption guidance and renumbered all sections that follow.

694

III.A.2.l.ii(B)(2) Home Disposition Options – Pre-Foreclosure Sales – Eligibility – Property Maintenance

Added Property Maintenance language. Updated subsequent numbering.

695-701

III.A.2.p.ii(B) Qualification Criteria for Use of Commissioner’s Adjusted Fair Market Value – Standard

Removed language from standard to align with current policy.

725-726

III.A.2.p.iii(A)(2) Property Valuation and CAFMV – Required Appraisal – Extension to Appraisal Validity Period

Clarified requirements to Extension to Appraisal Validity Period.

726

III.A.2.p.iii(C) Property Valuation and CAFMV – Damage to the Property after Appraisal

Clarified guidance for submitting a variance.

727

III.A.2.r.ii(A)(3) Initiating Foreclosure – Notice to HOA or Condominium Associations

Clarified language regarding who is notified during the foreclosure proceedings.

736

III.A.2.r.ii(A)(4) Initiating Foreclosure – Outstanding HOA or Condominium Association Fees

Updated guidance to be consistent with ML 2013-18.

736

III.A.2.r.ii(H) Conduct of Foreclosure Proceedings – CWCOT Post-Foreclosure Sales Efforts

Updated guidance to clarify timing of sales efforts.

742

III.A.2.s.iii(B) Notice to Occupant of Pending Acquisition – Standard

Updated guidance to include instructions in the event of postponement of a foreclosure sale.

744

III.A.2.t.ii(C)(7)(a) Mortgagee Property Preservation and Protection Action – Securing and Maintaining the Property – Standard

Updated guidance for securing a vacant property.

752

III.A.2.t.iv Conveyance of Acquired Properties – Notice of Property Transfer

Updated guidance on notice of property transfer.

771

III.A.2.t.v(B)(1) Title Evidence – Fee or Owner’s Title Policy

Updated guidance on titles for consistency.

772

III.A.2.t.v(D) Submission of Title Evidence for Conveyance to HUD – HUD Review of Title Evidence

Removed guidance to align with ML 2010-16.

773

III.A.2.t.v(F) Submission of Title Evidence for Conveyance to HUD – Return of the Original Title Evidence to the Mortgagee

Removed guidance to align with ML 2010-16.

773-774

III.A.3.b.vii(B) Assumptions – Acceleration of the Mortgage – Acceleration not Permitted

Updated guidance for transfers by devise or descent.

783

III.A.3.c.iv(B) Loss Mitigation for Borrowers in PDMDAs – Forbearance Options for Borrowers in PDMDAs

Updated section title to specify Borrowers in PDMDAs, to align with ML 2019-14.

786

III.A.3.c.iv(C) Loss Mitigation for Borrowers in PDMDAs – Disaster Loan Modification; III.A.3.c.iv(D) Disaster Standalone Partial Claim; III.A.3.c.iv(E) Required Financial Evaluation for other Loss Mitigation Home Retention Options; III.A.3.c.iv(F) Home Disposition Options

Updated guidance for Borrowers in PDMDAs, to align with ML 2019-14. Updated numbering of subsequent sections.

787-790

Section IV – Claims and Disposition

IV.A.2.a.iv(A)(2) Submission of Claim Form Parts to HUD for Conveyance Claims – Submission of Part A – To P260

Updated language regarding documentation to be uploaded into P260.

907

IV.A.2.c.iv(A) Hazard Insurance Refund Adjustment – Standard

Updated guidance on submission of claim for a hazard insurance refund adjustment.

914

IV.A.2.c.vii Claims for Additional Funds

Removed guidance supporting when a supplemental claim form may be filed as it relates to Part A and Part B.

915

IV.A.2.c.vii(A)(2) Claims for Additional Funds – Supplemental Claims for Correction of Dates in Part A – Required Supporting Documentation

Updated guidance for required supporting documentations for supplemental claims for correction of dates in Part A.

916-917

IV.A.2.c.vii(B) Claims for Additional Funds when Subject to Administrative Offsets Not Permitted; IV.A.2.c.vii(C) Claims for Funds Related to Partial Claims Not Permitted

Updated title to clarify that such claims are not permitted.

917

IV.A.2.c.viii(A) Submission of Supplemental Claim Form Parts to HUD – To HUD

Updated address where to send supplemental claims.

918

IV.A.2.c.viii(C)(4) Time Frame for Submission of Supplemental Claims – HUD Requests for Additional Information

Removed unnecessary language from guidance on communication between HUD and a Mortgagee.

919

IV.A.2.c.x Appeals of Supplemental Claim Disposition

Updated the address where Supplemental Claim Appeals are to be submitted.

919

IV.A.2.d.iii(B) Computation of Claim Amount – Eviction and P&P Costs when Property is Sold to a Third Party

Updated CWCOT claim guidance.

921

IV.A.2.d.iii(D) Computation of Claim Amount – Deficiency Judgments

Added citation for CFR for more complete guidance.

922

IV.A.2.d.iii(E) Computation of Claim Amount – Third-party Auction Service Fees

Removed language indicating “net sales prices” for third-party auction service fees.

922

IV.A.2.d.iv Submission of Claim Form Parts to HUD for CWCOT

Removed extraneous language.

922

IV.A.2.e.ii(A)(4) Computation of Claim Amount – Allowable Costs – Attorney’s Fees for Postponed Foreclosure

Updated guidance for clarity.

923-924

IV.A.2.e.ii(A)(7) Computation of Claim Amount – Allowable Costs – Borrower Consideration

Updated guidance regarding claim reimbursement.

924

IV.A.2.h Claim Type 32 ** – FHA-HAMP Loan Modification

Added guidance regarding the FHA-HAMP Loan Modification incentive for this Claim Type.

926

IV.A.3.a.i(A) Processing of Claim Forms – Initial Payment – Definition

Updated the Initial Claim Payment definition for clarity.

927

IV.A.3.a.ii(A) Processing of Claim Forms – Final and Full Payments – Definition

Updated the Final Claim Payment definition.

928

IV.A.4 Title II Claims – Withdrawal or Cancellation of Conveyance Claims

Updated section title to be consistent with current policy.

929

IV.A.4.b.ii(B)(2) Reacquisition by HUD and Resubmission of Claim – Reacquisition Package – Required Documentation

Updated the Required Documentation requirements.

932-933

IV.A.4.b.ii(C) Reacquisition by HUD and Resubmission of Claim – Resubmission of Claim

Updated guidance establishing a time frame for submission.

933

IV.A.4.b.ii(D) Reacquisition by HUD and Resubmission of Claim – Expenses and Interest after Reconveyance

Updated guidance establishing a time frame for submission.

933

IV.A.6.a Title II Claims – Debt Collection and Administrative Offset – Demand Letter

Removed unsupported language.

936

IV.B.2.d.i(B) REO Property Disposition – Prospective Buyers – Owner-Occupant Buyers – Standard; IV.B.2.d.i(C) REO Property Disposition – Prospective Buyers – Owner-Occupant Buyers – Required Documentation; IV.B.2.d.v(B) REO Property Disposition – Prospective Buyers – HUD Employees – Required Documentation

Updated guidance for consistency.

941

942

947

IV.B.2.d.vi(B) Prohibited Buyers – Participants in HUD REO Marketing and Management

Updated guidance to provide more specific detail on prohibited buyers.

947

IV.B.2.i.ii Selection of Winning Bid – Submission of Sales Documents

Removed language for clarification and consistency.

958-959

Section V – Quality Control, Oversight and Compliance

V.A.2.a.i Institutional Quality Control Program Requirements – Who May Perform Quality Control – Employees

Added language that was inadvertently removed. This update is effective immediately.

975

V.C.2.d DELRAP Mortgagee Monitoring Reviews; V.E.3.a.v Return to Conditional or Withdrawal of Unconditional DELRAP Authority

Updated to note effective date of 10/15/2019.

1001, 1013

Throughout Document

Corrected instances of GTR to COR.

931-932, 967

3. Implementation:

Unless noted otherwise in this transmittal, previously announced effective dates are not impacted by these Handbook changes.

Handbook changes identified in Section II may be implemented with the original effective date of October 15, 2019, but must be implemented for case numbers assigned on or after January 2, 2020.

Handbook changes identified in Sections III and IV may be implemented immediately, but must be implemented no later than January 2, 2020.

4. Public Feedback:

HUD welcomes feedback from interested parties for a period of 30 calendar days from the date of issuance. To provide feedback on this policy document, please send any feedback to the FHA Resource Center at answers@hud.gov. HUD will consider the feedback in determining the need for future updates.

5. Superseded Policy:

Previous versions of Handbook 4000.1 are amended as described in this Transmittal. All previously superseded or canceled Mortgagee Letters, Housing Notices, and/or Handbooks remain canceled or superseded, except for items notated by * below. All superseded or canceled policy documents will continue to be available for informational purposes only on HUD’s website. Policy documents that have been superseded in full by the Handbook can always be found on HUD’s Client Information Policy Systems (HUDCLIPS) web pages, accessible from the Single Family Housing Superseded Policy Documents page at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/sfhsuperseded.

Mortgagee Letter(s) Superseded in Whole

ML Number

Updates to FHA’s Loss Mitigation Options for Borrowers in Presidentially-Declared Major Disaster Areas (PDMDAs)

2019-14

Maximum Loan-To-Value and Combined Loan-To-Value Percentages for Cash-Out Refinance Mortgages

2019-11

Quality Control Requirements for Direct Endorsement Lenders

2011-02

Properties Located in Eligible Disaster Areas

Effective: October 27, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-17 →
Tags: Property - Appraisal, Disaster, Underwriting
Details
  • We are updating Section 4407.3 to clarify that the eligibility for property valuation flexibilities that apply to appraisals is based on the effective date of the appraisal report, which must be no more than 180 days, as applicable, before the Note Date, the Effective Date of Permanent Financing for Construction Conversion and Renovation Mortgages, the modification date for Seller-Owned Modified Mortgages, the Conversion Date for Seller-Owned Converted Mortgages or any applicable assumption date.

Age of Documentation For Mortgages Secured By Properties In Eligible Disaster Areas

Effective: October 27, 2019
Industry: Mortgage Lending
Source: Freddie Mac   Bulletin 2019-16 →
Tags: Disaster, Underwriting
Details
  • Effective for new disasters that occur on and after October 27, 2019, we will automatically allow the age of documentation flexibilities to apply to all Eligible Disaster Areas
  • The flexibilities will remain in effect for six months from the disaster declaration date announced by the Federal Emergency Management Agency (FEMA) 
  • As a result of this update, Sellers will have more flexibility for extended age of documentation requirements without waiting for a Guide Bulletin announcement
  • Effective with the extension of the age of documentation flexibilities to all Eligible Disaster Areas on or after October 27, 2019, the Guide provisions regarding Freddie Mac’s announcement and implementation of its major disaster plan will be removed
  • To take advantage of the age of documentation flexibility, Sellers must deliver ULDD Data Point Investor Feature Identifier (Sort ID 368) and enter the valid value of “H37” indicating the extended age of documentation for Eligible Disaster Areas. This special delivery requirement is found in new Section 6302.44.

Removal of Designated Document Custodian

Effective: October 31, 2019
Industry: Mortgage Lending, Mortgage Servicing
Source: Fannie Mae   SEL-2019-04 →
Details

We are updating the Guide to remove all references to Fannie Mae’s designated document custodian (DDC) and full-service certification custodian (FCC) as now all Fannie Mae-approved custodians are equipped to certify all types of loans. Each custodian arrangement must be evidenced by the execution of a Master Custodial Agreement (Form 2017). Because of these changes, there will no longer be a difference in the data and document correction process for different custodians. Lenders may choose to opt in to receive email notices via Loan Delivery when their document custodian discovers data or document discrepancies. As a reminder, it is still the lender’s responsibility to work with the custodian to ensure all discrepancies are resolved. 

In addition to these changes, we are updating contact information for requests to transfer loans from one custodian to another (outside of a servicing transfer) and removed out-of-date information from the List of Contacts.

Effective Date

For those lenders that have not yet converted to Form 2017, Form 2003 and Form 2010 will be retired by the end of the third quarter 2019.