Recent Updates:

Minnesota passed a bill amending several provisions of the Minnesota Residential Mortgage Originator and Servicer Licensing Act (MRMOSLA). Under the amended law, the phrase “made primarily for personal, family, or household use” is deleted from the definition of a residential mortgage loan. As such, mortgage loans subject to the purview of the MRMOSLA are no longer limited to loans made primarily for personal, family, or household use. In addition, the bill increased the required retention period for certain records from 26 months to 60 months. The bill becomes effective August 1, 2008.

Link to full document »

Minnesota passed a bill clarifying a mortgage originator’s duty to verify a borrower’s ability to repay a residential mortgage loan. Under the bill, a mortgage originator’s analysis of a borrower’s reasonable ability to repay a loan may include (but is not limited to) consideration and verification of: the borrower's current and expected income; current and expected cash flow; net worth and other financial resources other than the borrower’s equity in the dwelling; current financial obligations; property taxes and insurance; assessments on the property; employment status; credit history; debt-to-income ratio; credit scores; tax returns; pension statements; and employment payment records. The bill becomes effective August 1, 2008.

Link to full document »

Minnesota passed a bill amending the state’s foreclosure law and allowing for the electronic recording of documents. Under the new law, the notice of sale, certificate of sale, and notice of pendency must include the name of the residential mortgage lender, broker, servicer and originator involved in the transaction. The bill additionally authorizes the electronic recording of documents pursuant to the Minnesota Real Property Electronic Recording Act. The electronic recording requirements become effective July 1, 2008 and the foreclosure notice requirements become effective August 1, 2008.

Link to full document »

Virginia passed a bill establishing notice and forbearance requirements for “high-risk mortgage loans” that are in default. The bill defines a high-risk mortgage loan as a first-lien loan on owner-occupied property with either: an APR that exceeds the yield on U.S. Treasury securities having comparable periods of maturity by at least 5 percentage points at the time of origination, or points and fees in excess of 7% of the total loan amount. Under the new law, lenders and servicers must provide a written notice to borrowers who have defaulted on a high-risk mortgage loan at least 10 business days prior to sending a notice of acceleration. In addition, if the borrower indicates the desire to avoid foreclosure, the lender or servicer must grant the borrower a 30-day forbearance. The bill becomes effective July 1, 2008.

Link to full document »

Virginia passed a bill amending several provisions of the Mortgage Lender and Broker Act (MLBA). Under the amended law, the term “owner-occupied” is deleted from the definition of “mortgage loan.” As such, mortgage loans subject to the purview of the MBLA are no longer limited to loans secured by owner-occupied properties. The amended law also requires mortgage lenders and brokers to consent to national and state criminal history records checks when applying for a license. In addition, mortgage lenders and brokers are now required to conduct background checks on all employees who may have access to personal identifying or financial information and must also ensure that employees are properly trained in applicable state and federal mortgage lending laws. The bill becomes effective July 1, 2008.

Link to full document »

Colorado adopted an emergency rule formalizing initial and continuing education requirements for mortgage brokers required to be licensed under the Mortgage Broker Licensing Act (MBLA). Under the rule, mortgage brokers must complete a 40-hour education course and pass an examination prior to initial licensure. Mortgage brokers currently licensed under the MBLA have until January 1, 2009 to complete the initial education course and examination. Mortgage brokers must also complete 9 credit hours of continuing education during each 3-year renewal cycle. The 9-hour continuing education requirement is not required until after the mortgage broker’s first 3-year renewal cycle. The rule went into effect on April 22, 2008.

Link to full document »

Clarifies VA’s position on allowable attorney fees and costs of outsourcing foreclosure referral and management services. While VA understands that servicers may find efficiencies in outsourcing certain functions, the cost for such outsourcing must be considered as an operating expense of the firm contracting for the outsourcing; i.e., the servicer. VA intends to reimburse only for attorney fees for services related to foreclosure of loans. This circular is rescinded July 1, 2010.

Link to full document »

Provides an update on the new submission process for Property Inspections and Property Operating Statements known as HCD Information Exchange. Based on recent testing results, implementation has been moved to May 21, 2008. Because of this date change, the deadlines for submission of Property Operating Statements have been extended as indicated in the Lender Memo.

Link to full document »

Introduces MATS ERL™, an Early Rate Lock option for use with certain Multiple Asset Transactions (MATS) that enables Borrowers to lock in attractive interest rates for up to 12 months prior to final deliver of properties under their facility. This Lender Memo is effective immediately.

Link to full document »

Freddie Mac announces an important change to its maximum financing requirements, as well as amendments to its requirements for Freddie Mac-owned "no cash out" and streamlined refinance mortgages that are secured by properties located in declining markets.

Link to full document »

Provides guidance to lenders and underwriters for establishing and evaluating nontraditional credit histories and also describes FHA’s acceptance of those enterprises that can develop a verifiable credit history, no less than 12 months in duration, for borrowers with limited traditional credit. This guidance is effective immediately but must be considered for borrowers without traditional credit beginning with case numbers assigned 30 or more days after the date of this mortgage letter.

Link to full document »

Provides the Fiscal Year 2008 nominal interest rate for Section 202 and Section 811 Capital Advance Programs.

Link to full document »

The MPF Program enhancements include, changes to the seasoning requirements for Government loans and clarification regarding appraisal and underwriting practices for appraisals used for mortgages sold under the MPF Program. Effective immediately except as noted.

Link to full document »

The Office of the Comptroller of the Currency (OCC), is revising its rules in order to reduce unnecessary regulatory burden, update certain rules, and make certain technical, clarifying, and conforming changes to its regulations. These revisions promote the safety and soundness of the national banking system, ensure that national banks can compete efficiently in the financial services marketplace, and foster fairness and integrity in national banks’ dealings with their customers. This rule is effective on July 1, 2008.

Link to full document »