Recent Updates:

FHA informs Mortgagees and Housing Counseling Agencies that provide Home Equity Conversion Mortgage (HECM) counseling, of a technical correction that is applicable to the Federal Housing Administration (FHA) HECM Program. The technical correction extends FHA’s refinance insurance authority and the benefit of a reduced initial mortgage insurance premium (MIP) to HECM loans that have been assigned to the Department in accordance with 24 CFR 206.107(a)(1) or 206.121(b). This Mortgagee Letter also reiterates and clarifies policy guidance that mortgagees must use when refinancing existing HECM mortgages.

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Amends and restates HUD’s draft Guidance dated June 2006, titled “Draft Policy for Assumption and Subordination of Mark-to-Market (“M2M”) Notes in Transfer of Physical Assets (“TPA”) Transactions. Amended guidelines apply to any request to assume, subordinate, and/or assign a loan evidenced by a note and to waive the due-on-sale or refinance clause contained therein.

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Announces expansion of FHA’s Hospital Mortgage Insurance Program to allow for refinancing of existing debt without conditioning such refinancing on new construction or renovation as is the current program requirement.

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Nevada passed a bill authorizing the electronic notarization of documents and establishing procedures for the performance of electronic notarizations. The bill becomes effective July 1, 2009.

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Nevada passed a bill requiring trustees to provide a notice to tenants of property subject to foreclosure. Under the bill, a trustee must provide a Notice to Tenants of the Property to any tenant or subtenant in actual occupation of the property subject to foreclosure not later than 3 business days after a Notice of Sale is given. In addition, the bill prohibits a tenant or subtenant in actual possession of property purchased at a trustee’s sale or foreclosure sale from being removed from the property until after the tenant or subtenant receives a notice of the change of ownership of the property and the expiration of a waiting period. The bill becomes effective October 1, 2009.

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Fannie Mae announces an increase to the maximum allowable LTV ratio to 125 percent for mortgage loans that qualify for the Refi Plus™ (manual underwriting) option under the Home Affordable Refinance initiative. There continue to be no limits on the CLTV or HCLTV ratios. Specific requirements will apply to Refi Plus™ loans with LTV ratios above 105 percent. Refi Plus™ mortgage loans with LTV ratios that exceed 105 percent are eligible for whole loan and MBS delivery on or after September 1, 2009.

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Fannie Mae is announcing updates to the following forms and the issuance of two new forms:

• Uniform Residential Loan Application (Form 1003)
• Uniform Underwriting and Transmittal Summary (Form 1008)
• Subordination Agreement (Refinance Mortgage) (Form 3747) (new)
• Subordination Agreement (Modified Mortgage) (Form 3748) (new)

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The OCC, Fed, FDIC, OTS, NCUA and FTC (collectively the Agencies), request comment to gather information that would assist the Agencies in considering the development of a possible proposed addition to the furnisher accuracy and integrity guidelines. The proposed addition would delineate the circumstances under which a furnisher would be expected to provide an account opening date to a consumer reporting agency to promote the integrity of the information. Comments must be submitted by August 31, 2009.

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Provides guidance on expectations regarding asset types entered on the loan application and corresponding documentation retained in the lender’s permanent case file for the Single Family Housing Guaranteed Loan Program (SFHGLP).

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With Single-Family Seller/Servicer Guide Bulletin 2009-16 (Outsourcing Document Custodial Operations), Freddie Mac is announcing that beginning October 1, 2009, Freddie Mac will no longer directly provide note certification and custody services. Freddie Mac will transfer the notes and related documents currently held by Freddie Mac's Document Custodial Operations (DCO) to the Designated Custodian, The Bank of New York Mellon Trust Company, N.A. (BNYM).

On or before October 1, 2009, each Seller/Servicer currently using DCO must submit the appropriate forms and other documents, as detailed in Bulletin 2009-16, to establish a custodial relationship with either BNYM or another third-party document custodian.

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Fannie Mae makes several updates to various servicing policies, as itemized below:

• Retirement of Risk Profiler®
• Third-Party Servicer for HomeSaver Advance™ (HSA)
• Changes to Mortgage Insurance Claim for Loss Form (Form 1015)
• Pooled from Portfolio (PFP) Report File Layouts

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The OCC, Fed, FDIC and OTS (collectively the Agencies), issue a notice of proposed rulemaking that would revise their rules implementing the Community Reinvestment Act (CRA). The purposed rule would incorporate statutory language regarding low-cost education loans to low-income borrowers. The proposal would also incorporate statutory language regarding loan participation and other ventures undertaken by nonminority-owned and nonwomen-owned financial institutions in cooperation with minority-owned and women-owned financial institutions and low-income credit unions. Comments must be received by July 30, 2009.

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The OCC, Fed, FDIC and OTS (collectively the Agencies), have adopted an interim final rule to provide that mortgage loans modified under the Making Home Affordable Program will retain the risk weight assigned to the loan prior to the modification, so long as the loan continues to meet other applicable prudential criteria. The interim final rule is effective June 30, 2009. Comments must be received by July 30, 2009.

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HUD issues notice that an exception to the Buy American Requirements of the American Recovery and Reinvestment Act of 2009 (Recovery Act) was determined applicable to the Boston Housing Authority’s construction of a project using Recovery Act funds.

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An updated version of the MPF Program credit enhancement rating system used by the MPF Provider to determine the credit enhancement amount for conventional loans will be installed the evening of June 30, 2009. Beginning July 1, 2009 the credit enhancement amount for any conventional loan submitted or resubmitted for loan presentment, with or without data changes, will be determined by this updated version of the system.

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