| In this Issue |
Letter from our President - Mortgage Disclosure Improvement Act (MDIA)
Marrying Service and Technology - Mortgage Technology Lender Views Article Featuring Key Mortgage Services and DX
DX Integrates with Interthinx PredProtect® Compliance Suite
CyberDocs Changes & Updates
Compliance Updates & Industry News
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| Upcoming Events |
ISGN Synergy 2009 User Conference
September 27-30, 2009
Marriott Evergreen Conference Resort
Stone Mountain, GA
MBA's 96th Annual Convention & Expo
October 11-14, 2009
San Diego Convention Center
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| LOS Interfaces and Partners |
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Letter from our President
Paul Fosco, President
MORTGAGE DISCLOSURE IMPROVEMENT ACT (MDIA)
There will be new Truth-in-Lending disclosure requirements for loan applications secured by a dwelling taken on or after July 30, 2009. Due to the passing of other economic stimulus-related legislation earlier this year, the implementation date has been accelerated from its original date of October 1, 2009. Below is a summary of the changes that are mandated:
1. Early Disclosures. There have been no significant changes relative to the timing of the delivery of the disclosures, which still remains at three (3) business days from receipt of written application. However, the content of the early TIL disclosures will require the addition of the following language: "You are not required to complete this agreement merely because you have received these disclosures or signed a loan application."
2. Fee Collection Restrictions. The collection of any initial fees from any borrower is now limited to the reasonable cost for a credit report. A lender may not collect any fees before the borrower has received the early disclosures.
3. Other Timing Requirements. MDIA requires a new waiting period of "at least seven (7) business days before consummation of the transaction" from delivery or mailing of the disclosures. However, evidence of actual receipt of the disclosures by the borrower is not required. Also, when a TIL disclosure is inaccurate and out of tolerance, a "re-disclosure" must be delivered to the borrower no later than three (3) business days before consummation of the transaction. This can no longer be handled at time of settlement. A re-disclosure is required if the APR in the final TIL varies from the APR contained in the early disclosure by more than .125% in a fixed rate transaction or more than .250% in an "ARM" or "Interest Only" transaction. A business day is defined as all calendar days except Sundays and specified legal public holidays.
4. Transactions Covered. MDIA is designed to give the borrower critical financial information earlier in the loan process and will be required for any mortgage subject to RESPA and secured by "a dwelling" of the borrower. As such, MDIA will apply to purchases, refinances, second homes, construction loans and on a limited basis, time shares.
5. Waiver of Waiting Period. The seven (7) and three (3) day "waiting periods" can be shortened or waived due to a bona fide personal financial emergency, including a foreclosure. Currently, there are no pre-printed forms available for the waiver and the borrower must submit a signed, detailed, written statement to the lender outlining the specifics of the emergency. Signatures are required from all borrowers who will be primarily liable for the legal obligation.
Now is a good time to review your internal policies and procedures to insure that the disclosures being delivered comply with the new regulations.
The Truth-in-Lending Disclosures provided in our packages are compliant with these new guidelines. |
Marrying Service and Technology
How outsourcing doc preparation can assist in
delivering consistently superior customer service
in the face of constantly changing rules.
Mortgage Technology, July 2009
TODAY'S MORTGAGE CLIMATE IS ONE FILLED with continually changing rules and regulations, new lending requirements and shifting investor guidelines. Regulatory and investor compliance is one of the biggest challenges we have today in the mortgage industry.
The proliferation of tighter standards and increased enforcement, in addition to the wave of new laws that are taking place on a state and federal level make it extremely difficult for lenders to maintain compliance without the assistance of key strategic partnerships.
We have seen new rules and regulations introduced or modified at a frantic pace that include areas such as federal and state regulations that now require names and registration numbers of mortgage brokers or originators on security instruments and other loan documents for certain states. New HUD-1 regulations; HOEPA; state, county and municipality high-cost analysis, predatory lending checks; OFAC checks; prohibited fee analysis and state usury analysis.
In addition, there is agency compliance with the likes of the Fannie Mae 5% check or staying up with investor compliance, programs, guidelines (ARM caps, assumability, per diem, etc.) and all of the forms.
Key areas such as validations and calculations which encompass late charges, aggregate escrow and reserves calculation, and rescission dates all need to be taken into consideration to deliver compliant mortgage documents.
These are just a few examples of the magnitude of changing
rules and regulations that lenders are faced with to maintain compliance in today's lending environment. Add this to the intense pressure financial institutions are under to do more with less, operate more efficiently, significantly reduce costs, increase reserves and the challenge is magnified even more.
We at Key Mortgage Services Inc., d/b/a Baird & Warner Financial Services, embrace this challenge head on by utilizing key strategic partnerships that have knowledge and resources to efficiently monitor these changes while delivering cost-effective document preparation solutions.
We realize that especially given the current state of the mortgage industry, no one out there today can do it alone. This is especially true with document preparation given our goal of delivering consistent superior customer service to our clients.
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Interthinx® Forms Strategic Alliance with Document Express
- PredProtect® now integrated with DX Closing Document system to screen loans -
AGOURA HILLS, CA, May 15th, 2009 - Interthinx® has formed a strategic relationship with Document Express, a firm that provides state-of-the-art mortgage loan document preparation as well as compliant lending documents, initial disclosures, closing documents, high-cost analysis, and flood certificates for lenders throughout the nation. Through the new alliance, the Interthinx PredProtect® Compliance Suite has been integrated into the DX Closing Document system. Interthinx is a leading provider of proven risk mitigation, fraud detection, and regulatory compliance tools for the residential mortgage industry.
The integration provides lenders with the option to verify loans against high-cost thresholds by using a comprehensive report that includes full testing at the federal, state, local, and GSE levels, along with additional checks for the Truth-In-Lending Act and state consumer loan laws. Through the Elite Series of loan closing products and services, Document Express customers can now benefit from comprehensive compliance reviews that feature clear, simple worksheets with Interthinx-exclusive Points & Fees DrilldownsSM to make it easier to comply with the law.
"With the torrent of new laws and increased enforcement by both regulators and investors, many lenders will not be able to keep up without outside support," said Kevin Coop, president of Interthinx. "PredProtect is the industry standard tool for helping ensure compliance with new lending requirements as they are enacted. The integration of PredProtect with the DX Closing Document system enables lenders to fund loans with increased confidence that they are in compliance with all applicable laws, rules, and regulations."
"Document Express is now able to provide this type of integration in connection with our Elite Series of closing services and products," said Paul Fosco, president and CEO of Document Express. "There is no longer a need to be concerned with inaccurate data, re-keying errors, or learning the nuances of additional verification systems. Clients enter loan data once into their LOS system, order, and get our quality products and services in seconds. Nothing could be easier."
Document Express client Rhonda DeRosa, head closer/manager of Mortgage Services III, LLC , noted, "By incorporating Interthinx technology into the Document Express Elite Series of closing options, we are now able to quickly and easily obtain closing packages while still complying with all applicable high-cost and predatory lending tests on federal, state, and local levels. The one-step, easy-click procedure - coupled with minimal overall processing time -makes the entire doc prep process faster and smoother. We particularly appreciate the user friendly print and view functions. By using the upgraded system, we now can close our loans more efficiently and productively."
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CyberDocs Changes and Updates
New PA Consumer Mortgage Disclosure: March, 2009: The PA Department of Banking has created a disclosure form that has been prescribed as a new requirement of PA regulation 10 Pa. Code 46.2. Licensed lenders and brokers must provide this new Consumer Mortgage Disclosure within 3 business days after the application is received or prepared by the licensee. The effective date for use of this new disclosure is March 20, 2009. We have added this form, VMP-966PA, to our Pennsylvania Initial Disclosure packages.
Updated NM FHA Mortgages: April, 2009: In 2006, New Mexico passed legislation amending the New Mexico Deed of Trust Act permitting the deed of trust instrument to be used in residential real estate transactions. In January 2008, in response to the new legislation, Fannie Mae and Freddie Mac revised their security instrument for New Mexico from a mortgage instrument to a deed of trust instrument. Due to the implementation by Fannie Mae and Freddie Mac of a different type of security instrument from the security instrument in existence in 1990, mortgagees have expressed confusion regarding the application of existing FHA guidance on the FHA model mortgage form for New Mexico. This Mortgagee Letter provides clarification guidance regarding the FHA model mortgage form to be used in New Mexico in light of Fannie Mae and Freddie Mac 2008 security instrument revision. There is no mandatory use date; however, HUD has advised mortgagees to create and to use the new deed of trust as soon as possible. The NM FHA Mortgages provided in our closing packages have been changed to reflect Deed of Trust instead of Mortgage.
Countrywide Bank, FSB Merges with Bank of America, FSB: April, 2009: Countrywide Bank, FSB merged with Bank of America, FSB on April 27th, 2009. We have updated CyberDocs and our doc packages to reflect this change.
Revised VA Loan Summary Document: May, 2009: VA circular 26-09-01 announced changes to the VA Loan Summary. A new section "Prior Loan Type" has been created to capture the type of loan being refinanced. There are eight options in this section. This must be completed if "3. Regular ("Cash-Out) Refinance" was selected in section 14. Loans processed for guaranty on or after May 1, 2009 will require the additional information. We have updated this form in our doc packages.
FEMA Revises Standard Flood Determination Form: June, 2009: The FEMA Form 81-93, Standard Flood Hazard Determination Form (SFHDF), which expired on October 31, 2008, has been replaced by FEMA Form 81-93, Standard Flood Hazard Determination Form (SFHDF) with a December 31, 2011 expiration date. To allow users of the Form time to update their systems to the new version, FEMA has announced that the effective date for mandatory use of the new Form will be June 16, 2009. SFHDFs completed on or after that date must be completed using the new Form for compliance purposes. We have updated this form, VMP-525, and it will print in the doc packages, if applicable.
PA 1st and Closed-End 2nd Documents Updated: July, 2009: The Transaction Specific Notices page was updated to include Open-End Mortgage Liens.
Ohio HB525 Amends Recording Requirements: July, 2009: Ohio HB525, effective 7/1/2009 amends ORC sec. 317.114 - recording requirements, including margin and 10 pt font size for all text and contents in document. We have updated our OH Security Instruments and Assignments to comply with these changes.
MS 1st and Closed-End 2nd Documents Updated: July, 2009: Effective July 1, 2009, Mississippi HB 475 adds MS Code Section 89-5-24 and amends MS Code Section 89-5-33. As amended, MS Code Section 89-5-33 requires new recording requirements found in MS HB 475 Section 1 to apply to deeds of trusts recorded on or after July 1, 2009. We have updated our MS Security Instruments to comply with these changes.
New HOEPA "Section 35" and HMDA Rate Spread Change: July, 2009: October 1 brings major changes to both HMDA and HOEPA. The HMDA rate spread calculation is being revised from the current T-Bill + 3% (+ 5% for junior liens) to the Freddie Mac Average Prime Offer Rate ("APOR") + 1.5% (+ 3.5% for junior liens). Concurrent with this change, new HOEPA "Section 35" creates a new class of "higher-priced mortgage loans" using the same formula. Interthinx®will update PredProtect with these changes on July 23, 2009. The new calculations will be available in the PredProtect systems beginning Friday, July 24, 2009. Clients submitting new loans then will see the new test results if they close or fund after September 30, 2009.
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Compliance Updates and Industry News
NV 1st and Closed-End 2nd Changes:
NV 2009 Assembly Bill 513, signed into law on May 29, 2009 and effective on May 29, 2009, amends NV state mortgage law. The bill establishes education requirements for an escrow agent or agency; revises provisions relating to holders of a beneficial interest in a loan; eliminates the exemption of consumer finance companies from provisions relating mortgage brokers; and requires a broker to make additional disclosures that must be certified by the Commissioner.
NV 2009 Assembly Bill 151, signed into law on May 29, 2009 and effective on May 29, 2009 requires a mortgage broker to include his license number on any loan secured by a lien on real property for which he engages in activity as a mortgage broker; requires certain financial institutions that offer nontraditional mortgage loan products to make certain disclosures to borrowers with respect to nontraditional mortgage loans; and requires such financial institutions to certify such disclosures to the Commissioner of Financial Institutions.
NV 2009 Assembly Bill 152 signed into law on May 29, 2009 and effective on May 29, 2009 defines the term loan modification consultant; requires mortgage lending professionals to be licensed; and revises the definition of homeowner in regards to foreclosure.
NV 2009 Assembly Bill 486 became law without the governor's signature and is effective on October 01, 2009. This bill relates to surety bonds, security, and fiduciary obligations and authorizes the Commissioner of Mortgage Lending to adopt regulations relating to mortgage lending and other such profession.
New Mexico Security Instruments Updated: Fannie Mae has made revisions to the New Mexico Deed of Trust. Fannie Mae has revised Section 22 to describe the borrower notice requirements and Section 25 to include non-judicial sales in the redemption period. The Fannie Mae tagline date for this instrument is 1/01 Rev 9/08. Minor revisions were also made the NM 2nd Mortgage Security Instruments to include non-judicial sales in the redemption sections. Document Express has added these revised documents to its closing packages.
AL 1st and Closed-End 2nd Changes:
Alabama Senate Bill 249 created the Secure and Fair Enforcement for Mortgage Licensing Act. The act was effective June 1, 2009 with licensing requirements effective date of June 1, 2010. The bill authorizes the Department of Banking to contract with the National Mortgage Licensing System to carry out certain provisions of the act.
Alabama Senate Bill 242 was signed into law on May 21, 2009 and is effective on August 01, 2009. This bill prohibits a mortgagee from initiating foreclosure proceedings against a surviving spouse or the estate of a mortgagor who died while deployed overseas on active duty for at least 180 days after the death.
DC 1st and Closed-End 2nd Changes: On June 5, 2009, the Department of Insurance, Securities and Banking repealed, in its entirety, the Mortgage Lender and Broker Act Regulations, D.C. Mun. Regs. tit. 26A, Section 1100 et seq., and adopted a new Chapter 11 entitled the same, which implement the Mortgage Lender and Broker Act licensing provisions. Beginning August 3, 2009, licensing applications must be filed through the Nationwide Mortgage Licensing System and Registry "NMLSR." Earlier this year, the District of Columbia enacted on a temporary basis A17-0068 which was effective on March 26, 2009 and expires November 5, 2009. This Act amended the District of Columbia Mortgage Lender and Broker Act, D.C. Code Section 26-1101 et seq. to require the licensing of mortgage loan originators. On May 20, 2009, with a projected law date of July 20, 2009 and no expiration date, District of Columbia A18-0089 which contains the same amendments as A17-0068 with additional clarifications was enacted.
WI First Changes:
WHEDA has suspended their HOME Loan Program and Home Improvement Loan Program due to market conditions.
VT 1st and Closed-End 2nd Changes:
Vermont HB 171 amends certain sections and adds new sections to the Vermont Licensed Lender Act. This legislation implements the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. Vermont HB 171 became effective July 1, 2009 with transitional effective dates for existing licensees. Mortgage brokers and lenders have until December 1, 2009 to comply with new bond and liquid asset requirement. All individuals employed by a licensed broker or licensed lender must complete educational and testing requirements and obtain a mortgage loan originator license no later than July 1, 2010. All other individuals must obtain a mortgage loan originator license prior to acting as a mortgage loan originator in Vermont.
Courtesy of StateLink
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We sincerely hope you enjoyed this issue of our quarterly newsletter. As always, we welcome any suggestions, comments and criticisms to help better serve you. Feel free to contact us anytime at support@documentexpressinc.com or at 800-476-3627.
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