NEWS & UPDATES
18 MONTH HVCC MORATORIUM INTRODUCED - HR 3044
BROKERS - YSP MAY BE GONE
RESPA UPDATE - Part of H.R. 1728
HVCC STUDY - Part of H.R. 1728
RED FLAGS - Deadline Extended to June 1, 2010
INDIVIDUAL SAFE ACT REVIEW BY STATE
If you don't see a particular issue or topic listed, don't hesitate to contact us.
LEGISLATIVE & REGULATORY UPDATES
Updates: As of October 2009
NEW
The Identity Theft "Red Flags" effective date has been extended again. The new effective date is June 1, 2010.
RESPA changes will soon be effective. Contact CMS for information.
SAFE ACT LEGISLATION TRACKING Most states have passed or enacted the mandated SAFE Act legislation. A number of states have determined the min. credit score a loan originator needs to be eligible for licsenure under the SAFE Act. Contact CMS for state specific information.
On June 25, 2009 new legislation (HR 3044) has been introduced to impose an 18 month moratorium on the Home Valuation Code of Conduct. More information to follow.
BROKERS AND THE POSSIBLE LOSS OF THE YSP
The House passed a mortgage reform bill by a 300-114 vote that curbs incentivized payments to originators and which could totally ban yield spread premium payments — the main source of income for all loan brokers. The National Association of Mortgage Brokers is concerned that the bill "does not preserve consumers' financing options when working with a mortgage broker," NAMB president Marc Savitt said. NAMB chief lobbyist Roy DeLoach said the language in the bill is "very confusing." The wording suggests that a broker's commission and fees cannot be financed into the mortgage interest rate as a YSP and paid to the broker at the closing table. If true, the consumer would have to pay the broker with cash, which would make it very difficult for brokers to compete with banks, NAMB believes. Mr. DeLoach noted the bill still allows banks to receive servicing released premiums when they sell loans to investors and SRPs can be incentivized. "So all the incentivized payments are not going to be removed from the mortgage market," he said.
MORTGAGE DISCLOSURE INFORMATION ACT:
DISCLOSURE CHANGES UNDER THIS ACT HAVE BECOME EFFECTIVE FOR LOAN APPLICATIONIS TAKEN ON OR AFTER JULY 30, 2009. CONTACT CMS FOR MORE INFORMATION.
RESPA:
REGULATION Z:
THE FED'S AMEND REGULATION Z WITH NEW RULES TO PROTECT HOMEBUYERS. FOUR (4) KEY PROTECTIONS HAVE BEEN ADDED ALONG WITH A NEW DEFINED CATEGORY OF "HIGHER-PRICED MORTGAGE LOANS".
THE EFFECTIVE DATE FOR THE NEW RULES WILL BE OCTOBER 1, 2009.
For loans in the newly defined category of "higher-priced mortgage loans":
Prohibit a lender from making a loan without regard to the borrowers' ability to repay the loan from income and assets other than the home's value.
Require creditors to verify the income and assets they rely upon to determine repayment ability.
Require creditors to establish escrow accounts for property taxes and homeowner's insurance on all first mortgage loans.
Ban any prepayment penalty if the payment can change during the initial four years. On higher-priced loans, a prepayment penalty cannot last for more than two years.
The "higher-priced mortgage loans" will be based on a survey from FHLMC which the Federal Reserve Board will publish the index called the "average prime offer rate". A "higher-priced" loan is a first-lien mortgage that has an APR that is 1.5% points or more above this index, or 3.5% points for subordinate-lien mortgages.
For all other loans the rules adopt new protections for loans secured by a consumers principal dwelling:
Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home's value
Creditors must provide a good faith est. of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling, such as a home improvement loan or a loan to refinance an existing loans. Consumers cannot be charged a fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer's credit history.
Additional advertising standards that would ban seven deceptive or misleading advertising practices, including representing that a rate or payment is "fixed" when the rate can change.
For more information, contact Compliance Made Simple.
George Marentis, J.D.
Compliance Made Simple, LLC.
303.859.8550
Disclaimer:
Compliance Made Simple, LLC is not a law firm. Information provided by CMS and through this website is for informational purposes only and is not to be considered legal advice.