Comments | Questions
|
|
Greetings!
In this issue, we are introducing the opportunity for you to offer suggestions and comments, inquiry about our services, and ask questions relating to residential mortgage compliance.Click HereorSidebar
|
Overview
Under the new Loan Quality Initiatives guidelines, there is an affirmation that the lender is responsible for implementing "practices to identify undisclosed liabilities in a transaction."
Thus, it is the lender's responsibility to develop and implement its own business processes to support compliance with Fannie Mae's requirements through the closing of a transaction. Fannie Mae has not changed the policy as it relates to credit reports. Credit documents, including the credit report, are valid for 90 days from the date of the report and may not be older than 90 days at time of closing (i.e., the date that the Note is signed by the borrowers).
However, the lender is responsible for confirming and factoring in the undisclosed liabilities that were not present in the loan processing reviews conducted prior to and through to the date of closing. Therefore, if the lender pulls a new credit report the day before closing and no differences are found compared with the original credit report, the lender is not relieved of representations and warranties for undisclosed liabilities.
Although pulling a new credit report may reduce the lender's risk exposure related to its representations and warranties on undisclosed liabilities, lenders remain responsible for any and all borrower debt up to and concurrent with closing. |
Highlights
Actions
- Retrieving a refreshed credit report just prior to the closing date and reviewing it for additional credit lines.
- New vendor services are becoming available to provide borrower credit report monitoring services between the time of loan application and closing - Equifax's Undisclosed Debt Monitoring™ is one example.
- Direct verification with a creditor that is listed on the credit report under recent inquiries to determine whether a prospective borrower did in fact enter into a financial arrangement with the creditor, which may not be listed on the loan application.
New P-T-C Credit Report Finds Undisclosed Liabilites
If additional liabilities are discovered prior to closing, the lender must consider any such additional debts of the borrower in the qualification: - If the lender is using Desktop Underwriter� (DU�) and identifies differences between the new and/or refreshed credit report and the credit report used when underwriting the loan case file through DU, the lender must take appropriate action when information that was not considered by DU might result in a recommendation other than that returned by DU.
Examples of situations in which loan case files should be resubmitted to DU:
- If additional debt has been incurred and the inclusion of the additional debt would increase the total expense ratio to a level outside the tolerance specified in section B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report, of the Fannie Mae Selling Guide.
- If new derogatory information is detected and/or the credit score has materially changed.
Example of a situation in which the lender should not have to resubmit the loan case file to DU would be if credit balances have changed slightly but the change in the total expense ratio remains within the DU Tolerances policy.
|
Visit our Library for Issuance
Fannie Mae: Loan Quality Initiative (LQI) Program FAQs - Update
5/28/10 |
|
Specializations
Mortgage Compliance Compliance
Administration Defaults and Claims Reviews Mortgage Defaults Task Force Forensic Mortgage Audit� Business Development Mortgage
Fraud Audit Quality Control FHA Examinations CORE Compliance
Matrix� State
and Federal Examinations Fannie/Freddie/Ginnie Applications Mortgage
Due Diligence Legal Reviews & Remedies Loss Mitigation
Compliance HMDA & CRA Reviews Disaster Recovery Plans IT
& IS Compliance Statutory Licensing
Lenders Compliance Group is the first full-service, mortgage risk
management firm in the country, specializing exclusively in mortgage
compliance and offering a full suite of services in mortgage banking. We
are your outsourcing compliance solution.This
communication is sent to our valued clients and colleagues, who
regularly receive our Advisory Bulletins, Mortgage Compliance Updates, Compliance Alerts, and News and Views. These
publications are free to subscribers. Information contained herein is
not intended to be and is not a source of legal advice. � 2010
Lenders Compliance Group, Inc. All Rights Reserved.
|
|
|
|
|