All posts by synergy

2018 HMDA Q&A – Get the Facts

July 16, 2017 synergy Leave a comment

“When the HMDA rule was originally enacted in 1975, it required depository and non-depository institutions to collect and report data about mortgage originations. On October 15, 2015, the scope of the rule changed—expanding reporting coverage for non-depository institutions, increasing transactions covered, and increasing data elements to report. The new HMDA rule now requires 48 data points be collected, recorded and reported: 25 are new data points (including total loan costs or total point and fees, automated underwriting system, and open-end line of credit) and 14 are modified from the previous rule.”[1]

Enough said. With this type of expansive change to the HMDA-reporting and -recordkeeping rules, there are bound to be questions. Here’s a sample.

Q: For HMDA recordkeeping and reporting, what’s the story on HELOCs?

A: Beginning January 1, 2018, covered loans under the HMDA rule will include not just closed-end mortgages, but also “open-end lines of credit secured by a dwelling” (i.e., HELOCs). Not every financial institution will be subject to the rule. Institutions that originated at least 25 closed-end mortgages or 100 HELOCs in each of the two preceding calendar years will be required to collect, record, and report HELOC data under HMDA.

Q: We have always relied on the Federal Financial Institutions Examination Council’s software (reporting to the Federal Reserve Board) each year for HMDA reporting. We’ll be able to continue using it, right?

A: There are no changes to the submission process for HMDA data collected by financial institutions in 2016. Financial institutions will file HMDA data with the Federal Reserve Board (FRB) using the FRB’s instructions, file specifications, and edits familiar to HMDA users. Please visit the FFIEC website for resources to help you file.

There is a new data submission process beginning with HMDA data collected by financial institutions in or after 2017. Financial institutions will file HMDA data with the Consumer Financial Protection Bureau (CFPB). The HMDA agencies have agreed that filing HMDA data collected in or after 2017 with the CFPB will be deemed submission to the appropriate Federal agency. You should refer to the FFIEC and the CFPBwebsites for resources to help you file.

Q: What if we need to resubmit HMDA data following the change to the reporting process?

A: There is a new data resubmission process beginning with HMDA data collected by financial institutions in or after 2017. Financial institutions will resubmit HMDA data collected in or after 2017 by filing with the Consumer Financial Protection Bureau (CFPB). Refer to the FFIEC and the CFPB websites for resources to help you file.

Q: We keep the loan application register (LAR) to aggregate data for HMDA reporting? Is there anything we need to know about identifying our loan transactions on the LAR under the new HMDA rules?

A: If your organization originates loans that will be required to be reported on a HMDA Loan Application Register (LAR), you will need to obtain a Legal Entity Identifier, or LEI. This string of 20 characters is used in part to create the 45-character Unique Loan Identifier (ULI) that must be assigned to each loan reported on the LAR. You may obtain your LEI from the Global Market Entity Identifier Utility website at www.GMEIUtility.org.[2]

Have more HMDA recordkeeping and reporting questions? Ask the Compliance Experts, or, use these additional resources:

Federal Financial Institutions Examination Council HMDA Page https://www.ffiec.gov/HMDA/
A Guide to HMDA Reporting: Getting It Right! https://www.ffiec.gov/hmda/guide.htm
CFPB Implementation & Guidance https://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/hmda-implementation/

Around the Industry:

Effective Now:

The time to comply with new HMDA rules is now.

On the Horizon:

FDIC Summer 2017 Consumer News highlights 10 popular scams plaguing customers. How do they compare to your risk management?

MCM Q&A

How are you recapturing EPO or EPD fees? How might it affect your loan officer compensation practices? See this for more.

[1] Wu, B. (2017, June). Keep Calm and Compliance On. Mortgage Compliance Magazine, pp 40-43.

[2] Kilka, L. (2017, June). The Roadmap to HMDA Implementation. Mortgage Compliance Magazine, pp 36-39.

Source: http://www.mortgagecompliancemagazine.com/weekly-newsline/hmda-questions-get-right/

Mortgage Banking

CFPB Issues Policy Guidance and Technical Corrections for Loan Servicing Rule Amendments

July 16, 2017 synergy Leave a comment

The CFPB recently issued two updates for its Mortgage Servicing Rule amendments to Regulations X and Z. Issued on August 4, 2016, the Mortgage Servicing Final Rule amended various aspects of the existing Mortgage Servicing Rules. These changes will become effective either on October 19, 2017 or April 19, 2018.

First, the CFPB issued non-substantive, technical corrections to the Mortgage Servicing Final Rule issued in 2016. The corrections include several typographical errors, revisions to show the correct effective date for certain provisions, and a citation correction.

The CFPB also issued non-binding policy guidance for a three-day period of early compliance with the amended Mortgage Servicing Rules. According to the Bureau, the policy guidance was issued in response to industry concerns over operational challenges presented by the mid-week effective date. Industry participants sought the ability to implement and test these changes over the weekend prior to the effective date.

Accordingly, the non-binding policy guidance states that the CFPB does not intend to take supervisory or enforcement action for violations of existing Regulation X or Regulation Z provisions, resulting from a servicer’s compliance with the new requirements, up to three days before the applicable effective dates. Therefore, for amendments that become effective on October 19, 2017, the three-day period will cover Monday, October 16 through Wednesday, October 18. For amendments that will take effect on April 19, 2018, the three-day period will cover Monday, April 16 through Wednesday, April 18.

Source: http://www.jdsupra.com/legalnews/cfpb-issues-policy-guidance-and-24696/

Mortgage Banking

Potential HELOC Compliance Changes on the Horizon

July 16, 2017 synergy Leave a comment

Community banks and credit unions may soon be subject to new guidelines that will require them to report information on home equity lines of credit, due to Home Mortgage Disclosure Act (HMDA) reporting requirements. Under rules scheduled to go into effect, credit unions and community banks are exempt from the requirement if they have originated fewer than 100 HELOCs during each of the previous two years.

The Consumer Financial Protection Bureau (CFPB) is proposing a two-year test run of a higher threshold. The new proposal would increase the rule’s threshold to 500 loans in each of the previous two years. The change would be temporary, in use through calendar years 2018 and 2019, so that the Bureau can consider whether to make a permanent adjustment.

“Home-equity lines of credit worsened the foreclosure crisis that swept the country in 2008 and 2009,” said CFPB Director Richard Cordray. “We need to keep track of the responsible use of these loans for consumers, but after hearing from community banks and credit unions we want to reconsider whether that goal can be achieved with a higher reporting threshold.”

HMDA, originally enacted in 1975, requires most lenders to report information on loan applications they receive and on loans they originate or purchase. The data collected is made available so that banking regulators and the public can monitor whether financial institutions are serving the housing needs of their communities, identify possible discriminatory lending patterns and assist in distributing public-sector investment to attract private investment to needed areas.

The Dodd-Frank Wall Street Reform and Consumer Protection Act transferred responsibility for HMDA reporting to CFPB, and the Bureau has updated the regulations to improve the quality and type of data collected. The requirement to report data on HELOCs and other dwelling-secured open-end lines of credit is one of the more significant changes to the regulations.

CFPB said including these loans in the reporting requirements is important because, just like traditional mortgage, a customer can lose their home if they default. Over leverage and defaults due to these products contributed to the foreclosure crises that many communities experienced in the late 2000s but this type of lending was not visible in the HMDA data or in any other publicly available data source collected at the time.

CFPB said that, while revamping HMDA it heard from community banks and credit unions that the new HELOC requirements represented a new, and in some cases, significant compliance burden for them. The original threshold of 100 dwelling-secured open-end lines in each of the previous two years was proposed for small-volume lenders where the benefits of the data do not justify the costs, Now CFPB is hearing that this threshold may still present challenges and costs greater than the Bureau had estimated. Additionally, analysis of more recent data suggests changes in open-end origination trends that may result in more institutions reporting open-end lines of credit than was initially estimated. The Bureau estimates that the temporary 500-loan threshold would still capture about three-quarters of the home-equity lending market, down from about 88 percent at the 100-loan threshold.

Source: http://www.mortgagenewsdaily.com/07142017_cfpb_rulemaking.asp

Mortgage Banking

Why the Mortgage Market is Hard To Conquer with New Technologies

July 16, 2017 synergy Leave a comment

Mortgage lending has proven to be a tough industry for new companies to make waves in, and the sudden shutdown last week of San Francisco mortgage startup Sindeo helps show why.

Sindeo was one of more than two dozen startups seeking to streamline the cumbersome mortgage application, origination and closing process. Despite having what many described as top-flight technology and executives, it took down its website Tuesday night and replaced it with a brief note saying it had “made the difficult decision to wind down Sindeo.”

It didn’t say why, but a note from CEO Nick Stamos to investors obtained by Housing Wire said an investor who had committed to fund it tacked on a last-minute requirement to close the deal that it couldn’t meet. “My subsequent efforts to secure emergency bridge financing from this investor and others were also not successful,” he wrote.

Stamos said the company laid off 61 of its 70 employees Tuesday, keeping a small team to deal with loans already in process.

According to CB Insights, Sindeo had raised $25.5 million from investors including Renren, the Chinese social networking company.

Sindeo was a mortgage broker, which means it originated loans for others, but did not fund them itself. Its website formerly said it offered access to “40+ lenders & 1,000+ loan programs to best meet your specific needs and goals” and “closings in as few as 15 days.”

Borrowers, it said, could apply for a loan on a smartphone, tablet or desktop computer and get a preapproval letter in just five minutes. Unlike other companies offering only automated service, Sindeo also had human advisers whose pay was based not on commission but on “customer satisfaction.”

Eric Boyenga, whose South Bay real estate firm had a marketing partnership with Sindeo, had more than 20 clients who got mortgages through Sindeo. “The technology behind it was great. They had really top talent,” Boyenga said. But “the whole tech industry is tightening a bit. All you hear about is Google, Amazon, Facebook and Apple. If you look at the startups, investors wanted to see a higher return, faster.” With Sindeo, “they weren’t seeing what they were looking for.”

Getting a mortgage is a time-consuming process that involves shopping for a loan; choosing from various rates and terms; filling out an application; submitting pay stubs, tax returns and financial statements; waiting for approval; and, finally, closing the loan.

It is highly regulated by federal and state governments and requires coordination with appraisers, title companies, county recorders’ offices and investors, who buy most loans.

Mortgage-tech companies are attempting to save people time and money by letting them shop and apply online and either upload their documentation or give the mortgage company permission to pull it directly from employers, financial institutions and the IRS. But it’s still a Herculean task.

A true digital mortgage “lets consumers run the loan from application to funding from any device, with the choice of working on their own or having a loan adviser jump in at any time — and enabling the lender to have a fully documented loan that passes all rules and regulations from both lawmakers and investors,” said Julian Hebron, an executive vice president with RPM Mortgage.

On top of hiring engineers and attorneys, “you need a huge investment in customer acquisition. In the end, it proved to be too much for Sindeo, and it will prove too much for the other mortgage disruptors.”

To compete, a company needs lending, technology, regulatory and marketing infrastructure, Hebron said.

The company that has all four is Quicken Loans, the nation’s largest nonbank mortgage lender and the third biggest overall after Wells Fargo and Chase, according to Inside Mortgage Finance.

Quicken makes loans directly to borrowers, traditionally over the phone. In early 2016, it launched Rocket Mortgage, an all-digital loan whose ads are hard to miss. In 2016, Rocket accounted for $7 billion of the company’s $96 billion in loans.

About two-thirds of those getting Rocket loans are buying rather than refinancing and about half are Millennials, said Regis Hadiaris, Rocket Mortgage product lead at Quicken.

He said Rocket customers are closing loans in as few as nine days for refis and 16 days for purchase mortgages. That compares with an industry average of 45 days.

“Because of the complicated nature of the industry, we took a very deliberate path to roll it out,” Hadiaris said. “We had a public (test) in 2013. We kept learning and adding to it.”

The question facing the industry, he said, is, “Will the large established companies with scale become innovative, or will the smaller, new entrants be able to scale?”

To succeed, “you need a lot more than a front-end user interface or mobile app. People’s financial lives are complicated. Mortgage underwriting is complicated. Building simple technology that lets people do this on their own is like putting someone who doesn’t know how to fly in the seat of a 747.”

That may be true, but it won’t stop companies from trying to break into the industry, which originated almost $2 trillion in mortgages last year.

CB Insights identified 25 “mortgage startups transforming the mortgage industry.”

Unlike Sindeo, which was purely a broker, some are mortgage banks that initially fund the loans they make, although they quickly sell most or all of them. They include Lenda and Clara Lending (both in San Francisco), and Better Mortgage (New York).

Lenda and Clara both distance themselves from Sindeo. “As a broker, you can’t control the price. You can’t control the speed” at which loans are closed, said Jason van den Brand, CEO of Lenda. “You can build something snazzy on the front end and give it to whoever you are brokering it to. But they could take two months to get it done. This is a business where time is money. We control the entire process.”

Others are business-to-business companies that provide software to mortgage originators who want to provide a digital experience. They include Blend (San Francisco), Roostify (Burlingame) and Cloudvirga (Irvine).

The industry is “so big and so complicated” that if you try to disrupt it all at once “you will probably die of indigestion,” said Blend CEO Nima Ghamsari. That’s why his company is focusing on one area. Sindeo, he said, “tried to disrupt it all at once.”

Source : http://www.sfchronicle.com/business/networth/article/Sindeo-shutdown-shows-why-mortgage-industry-is-11243444.php

Mortgage Banking

How Did YOUR Credit Union Perform in the Mortgage Market against California ?

July 16, 2017 synergy Leave a comment

California credit unions witnessed an uptick in mortgages over the past year, according to the latest snapshot report from the California Credit Union League that analyzed the year-over-year data trends for credit unions.

Credit unions in the state reported a 14% increase in first-mortgages year-over-year, which includes a mixture of fixed-rate, adjustable-rate, purchase, traditional refinance, and cash-out refinance.

Most notably, mortgages hit a record high outstanding dollar amount of $58 billion, rising 69% from the most recent low in 2011 of $34 billion. For added context, the last historical peak was $36 billion in 2009.

However, despite the record high in dollar amount, credit unions also posted an 8% year-over-year decrease in originations, falling to $2.82 billion.

This doesn’t come as too much of a surprise given the steady rise in home prices. According to S&P Dow Jones and CoreLogic’s latest report, home prices increased 5.5% in April.

Meanwhile, credit unions posted a 3% increase in the combined category of Home Equity Lines of Credit and home equity loans (second-mortgages). In total, the outstanding dollar amount hit $9.9 billion, rising 10% from the most recent low in 2014 of $9 billion. The record high was $14.2 billion in 2009.

As of late, regulatory pressure has hindered credit union growth. But, this doesn’t mean they aren’t doing well, as seen in the above numbers. Matt Kershaw, CEO of Clark County Credit Union, explained this in a recent interview with HousingWire. Kershaw noted that while credit unions have grown since the crisis, it’s not proof that regulations are not damaging the industry.

Source: https://www.housingwire.com/articles/40598-heres-a-snapshot-of-how-california-credit-unions-performed-in-the-mortgage-market

Mortgage Banking

Summary of Upcoming TRID Amendments for 2018

July 16, 2017 synergy Leave a comment

The CFPB finalized the long-awaited initial round of amendments to the TILA/RESPA Integrated Disclosure (TRID) rule, also known as the Know Before Your Owe rule. However, instead of addressing the so-called “black hole” issue, which refers to situations in which a lender may not be able to use a Closing Disclosure to reset fee tolerances, the CFPB punted by releasing a proposed rule on the issue.

The proposed amendments were posted on the CFPB’s website at the end of July 2016. Although the CFPB planned to finalize amendments in March, the final amendments, along with the related proposal, were not issued until the beginning of July. While the amendments will become effective 60 days after publication in the Federal Register, mandatory compliance with the amendments will not be required until October 1, 2018. The CFPB has been urged to take this approach to implementing regulations by industry members, as it allows for the testing of changes on a pilot basis before going live across a company’s entire platform.

In its press release announcing the amendments, the CFPB notes that it adopted (1) tolerances for the Total of Payments disclosure that are based on the existing finance charge tolerances, (2) a change to the partial exemption for certain down-payment and related assistance loans by excluding recording fees and transfer taxes from the fee limitation that applies to the exemption, (3) a change in the scope of the rule to cover loans on cooperative units, whether or not the cooperative is considered real property under applicable state law, and (4) clarifications on how to provide separate Closing Disclosures to the consumer and the seller.

The final rule is 560 pages in length and the proposal is 41 pages in length. We will be analyzing the final rule and proposal and will provide a more detailed analysis in a future edition of our Mortgage Banking Update.

Source: http://www.jdsupra.com/legalnews/cfpb-finalizes-trid-rule-amendments-76978/

Regulatory Updates

Fannie Mae Updates Selling Guide

June 5, 2017 synergy Leave a comment

advances in their origination and servicing processes.
We currently have policies describing our requirements for delivering an eMortgage to Fannie Mae, where the promissory note and other documents, such as the security instrument, are created, transferred, and stored electronically rather than on traditional paper documentation with pen and ink signatures. We have similar requirements with respect to servicing-related documentation.
Many states are beginning to consider the use of electronic notarization (“eNotarization”) as a means for expediting or facilitating the closing process. This next step in the process of moving deeper into electronic origination requires greater specificity in our current policies; therefore, we are taking this opportunity to clarify our requirements for eNotarization. The practice of electronic notarizations (including remote notarizations) is not limited to eNote/eMortgage transactions.
Many state laws expressly permit in-person eNotarization. Only Virginia and Montana, however, have adopted laws and regulations expressly permitting remote notarization for mortgage loan documents; that is, the use of real-time, two-way audio/video communication to notarize documents. eNotarization is addressed in the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act and the Uniform Electronic Transactions Act (UETA). However, the lack of specific state recognition of remote notarization has hampered its widespread adoption, particularly when accomplished by out-of-state notaries.
We accept delivery and servicing of mortgage loans with electronic documents, including security instruments or mortgage loan modification agreements that have been electronically notarized, either in person or remotely using real-time, two-way audio/video communication, provided certain requirements are met. The Selling Guide has been updated to reflect these requirements. Additionally, the Servicing Guide will be updated in June to reflect these requirements.
Effective Date
These requirements are effective immediately.

Medium of Recorded Mortgages
Currently, we require the lender to maintain a mortgage loan file that contains “originals” of the recorded mortgage or
deed of trust, riders, and loan modification agreements. Documents that are electronically recorded often appear the
same as those recorded on paper, which has led to confusion as to which documents are “originals” under our policy and
which are electronic copies.
As a result, we have updated this policy to allow for copies of the recorded documents that contain the recording
information from the recorder’s office. In addition, we have clarified that we require originals of any applicable unrecorded
rider and any other unrecorded document that changes the mortgage loan terms (or otherwise affects our legal or
contractual rights under the mortgage).
Effective Date
These updates are effective immediately.
ARM Pass-through Rate after Adjustment
Lenders may take down whole loan commitments to deliver ARMs to Fannie Mae. Currently, ARMs are committed using
the required net margin. We are changing the committing and delivery of whole loan ARMs to instead use the gross
mortgage margin that is on the security instrument. The Selling Guide has been updated to remove references to multiple
Glossary Terms that no longer apply. The Glossary Term yield differential adjustment has also been updated.
Using the gross mortgage margin will also impact how the pass-through rate is calculated when the ARM adjusts. This
change will be communicated in a future Servicing Guide update.
These changes will further align whole loan ARM execution with the process for ARM MBS.
Effective Date
These changes are effective for whole loan ARMs committed (and subsequently delivered) on or after September 1, 2017.
Over Deliveries of Whole Loan Commitments
We limit the amount by which a lender can deliver loans over the whole loan commitment amount, known as the “over
delivery” amount. The current maximum over delivery amount is 25% of the original commitment amount, up to a
maximum of the one unit single family conforming loan limit (currently $424,100). We are simplifying the over delivery
limit to only require that it not exceed 25% of the original commitment amount.
Effective Date
This change will be effective on whole loan commitments taken on or after June 12, 2017.
Whole Loan Cash Back Pair-offs
As part of the June 10, 2017 update to the PE-Whole Loan application, we are giving more flexibility to lenders in pairingoff
whole loan commitments. We are removing the following requirements when determining if a commitment is eligible
for a cash back pair-off:
• pair-off quotes requested after the expiration date of the original commitment (defined as no later than 5:00 p.m.
Eastern time on the expiration date);
• the lender accepts Fannie Mae’s offer of an overdelivery.
NOTE: Commitments paired off through the automatic pair-off process will continue to be ineligible for cash
back.

Effective Date
This change will be effective for lender-requested pair-offs performed on or after June 12, 2017.
*****
Lenders who have questions about this Announcement should contact their Account Team.
Carlos T. Perez
Senior Vice President and
Chief Credit Officer for Single-Family

Attachment
Section of the Announcement Updated Selling Guide Topics
Use of Electronic Notarization
including Remote Notarization
 A2-5.1-03, Electronic Records, Signature, and Transactions
 A3-2-01, Compliance With Laws
 B7-2-04, Special Title Insurance Coverage Considerations
Medium of Recorded Mortgages  A2-5.1-02, Individual Mortgage Loan Files
ARM Pass-through Rate after
Adjustment
 C2-1.1-07, Standard ARM and Converted ARM Resale
Commitments
 E-3-05, Glossary of Fannie Mae Terms: E
 E-3-13, Glossary of Fannie Mae Terms: M
 E-3-18, Glossary of Fannie Mae Terms: R
 E-3-25, Glossary of Fannie Mae Terms: Y
Over Deliveries of Whole Loan
Commitments
 C2-2-01, General Requirements for Good Delivery of Whole Loans
Whole Loan Cash Back Pair-Offs  C2-1.1-04, Mandatory Commitment Extensions and Pair-Offs

Source: https://www.fanniemae.com/content/announcement/sel1705.pdf

Regulatory Updates

Freddie Mac Announces Guide Bulletin 2017-8

June 5, 2017 synergy Leave a comment

SUBJECT: SELLING UPDATES This Guide Bulletin announces: Collateral representation and warranty relief – new automated collateral evaluation  Automated collateral evaluation, including requirements for: – June 19, 2017 (New)  Eligibility  Age of automated collateral evaluation offer  Delivery Condominium Projects  Simplified requirements for Detached Condominium Projects  Additions to our list of ineligible projects – May 31, 2017 and August 31, 2017  Elimination of separate underwriting paths for streamlined project reviews Appraisal and property specific requirements  Addition of Uniform Appraisal Dataset (UAD) condition and quality ratings and level of updating definitions to the Guide as new Exhibit 36  Additional details about the sales contract provided to the appraiser  Updates to our eligibility and appraisal requirements for a 1-unit property with an accessory unit – August 31, 2017 Area median income estimates  Updates to Loan Product Advisor® and the Home Possible® Income & Property Eligibility tool to reflect the area median income estimates for 2017 – June 13, 2017 EFFECTIVE DATE All the changes announced in this Bulletin are effective immediately unless otherwise noted. COLLATERAL REPRESENTATION AND WARRANTY RELIEF – NEW AUTOMATED COLLATERAL EVALUATION Effective June 19, 2017 Building on the collateral representation and warranty relief announced in Bulletin 2017-3, this Bulletin announces our automated collateral evaluation, which provides the Seller with the option to waive the appraisal requirements for certain Loan Product Advisor Mortgages. Freddie Mac’s automated collateral evaluation leverages data and proprietary models to assess whether the estimate of value provided by the Seller to Loan Product Advisor may be used to underwrite the Mortgage in lieu of the appraised value. When the Seller accepts an automated collateral evaluation offer to waive the appraisal, the Seller will be relieved of its representations and warranties related to value, condition and marketability of the property.

When accepted, this appraisal waiver will help shorten origination timelines and reduce costs for Sellers and Borrowers while providing greater certainty through collateral representation and warranty relief. Eligibility Loan Product Advisor offer The Seller will receive a feedback message indicating that a Mortgage is eligible for an appraisal waiver on the Loan Product Advisor Feedback Certificate. If the Mortgage is not eligible for an appraisal waiver, the Feedback Certificate will specify that an appraisal is required. If the Mortgage meets the eligibility requirements in this Bulletin and the Seller receives the feedback message indicating the Mortgage is eligible for the appraisal waiver, the Seller may accept the offer by delivering the Mortgage with the ULDD Data Points described in the “Delivery requirements” section below. Mortgage eligibility The following requirements apply for a Mortgage to be eligible for the appraisal waiver:  The Mortgage must be secured by a 1-unit Primary Residence or second home  The Mortgage must have a loan-to-value (LTV)/total LTV (TLTV) ratio less than or equal to 80%  The Mortgage must be a no cash-out refinance  Upon assessment by Loan Product Advisor, the Feedback Certificate must indicate the Mortgage is eligible for collateral representation and warranty relief with an appraisal waiver  The final submission to the Selling System® must indicate the collateral representation and warranty relief status is “Y” or “Yes” Ineligible Mortgages The following Mortgages are not eligible for an appraisal waiver:  Mortgages for which an appraisal has been obtained in connection with the Mortgage  Mortgages secured by one of the following:  A Condominium Unit  A Manufactured Home, or  A leasehold estate  Mortgages secured by Mortgaged Premises subject to resale restrictions  Construction Conversion and Renovation Mortgages  Freddie Mac Relief Refinance Mortgages SM – Same Servicer or Open Access  Mortgages with Freddie Mac Settlement Dates more than 120 days from the Note Date In addition, Sellers may not accept an appraisal waiver offer through Loan Product Advisor if any of the following apply:  The Seller is required by law or regulation to obtain an appraisal  The Seller is aware of conditions it believes warrant an appraisal being obtained. Examples include but are not limited to:  The property is located in an area recently impacted by a disaster  A contaminated site or hazardous substance exists affecting the property or the neighborhood in which the property is located Page 3 For Mortgages with appraisal waivers, the Seller must not make any representation that Freddie Mac has performed a property review or obtained a valuation of the Mortgaged Premises. Guide impacts: Guide Sections 4203.1, 4501.6, 4603.5 and 5601.9 Age of automated collateral evaluation offer The appraisal waiver offer is valid for 120 days. If the offer is more than 120 days old as of the Note Date, a resubmission to Loan Product Advisor is required to determine ongoing appraisal waiver eligibility. Note: If the Seller changes loan data (e.g., address of the property, loan amount, estimate of value, loan type, property type, occupancy of the property) in a subsequent Loan Product Advisor submission, the original offer may be invalidated and a different automated collateral evaluation eligibility determination may be provided. Guide impacts: Sections 5601.8 and 5601.9 Delivery requirements Once the Seller has accepted the appraisal waiver offer for a Mortgage, the Seller must deliver the following ULDD Data Points for the Mortgage:  Property Valuation Method Type (Sort ID 89) and enter a valid value of “None”  Investor Collateral Program Identifier (Sort ID 376) and enter a valid value of “Property Inspection Alternative” Guide impact: Section 6302.10 Additional resources We encourage Sellers to visit the Collateral Representation and Warranty Relief page on the Freddie Mac Learning Center for available training and resources. CONDOMINIUM PROJECTS Detached Condominium Projects As a result of recent Mortgage performance trends, we are simplifying the project eligibility requirements for Detached Condominium Projects: Detached Condominium Project Requirements Previous requirements Revised requirements The Seller was required to determine compliance with:  The Condominium Project review requirements in Section 5701.2(a), and  The Condominium Project eligibility requirements, which have two components:  General Condominium Projects in Section 5701.2(b), and  The Detached Condominium Project review type in Section 5701.7(b) The Seller was required to determine compliance with Section 5701.2(b), including determining that the project is not an ineligible project as specified in Section 5701.3. The Seller is required to determine compliance with:  The Condominium Project review requirements in Section 5701.2(a), and  The Detached Condominium Project eligibility requirements in Section 5701.7(b) The Seller is no longer required to determine compliance with Section 5701.2(b), including determining that the project is not an ineligible project as specified in Section 5701.3

Compliance with Sections 5701.2(a), 5701.2(b) and 5701.3 and one of the project review types in Guide Chapter 5701 is still required for all other Condominium Projects. Guide impacts: Sections 5701.2, 5701.3 and 5701.7 Ineligible Condominium Projects As a result of our research and analysis, we are updating our list of ineligible Condominium Projects in Section 5701.3 as follows:  Projects with names that include the words “hotel,” “motel,” “inn,” or “lodge” or a branded hotel chain or name remain ineligible unless the project does not have the characteristics of a hotel or similar type of transient housing  Projects with pending litigation involving minor matters that do not affect the safety, structural soundness, functional use or habitability of the project and in which the litigation amount is unknown may be eligible if the requirements in Section 5701.3(i) are met Additionally, effective August 31, 2017, we are updating our list of ineligible projects as follows:  A project or an investment in a project, including Condominium Unit ownership that is characterized or promoted as an investment opportunity, that could be deemed to be an investment security is an ineligible project  A project with mandatory dues or similar membership fees for the use of Amenities, such as clubhouses or recreational facilities, is ineligible with certain exceptions Guide impacts: Sections 1301.11, 5601.2 and 5701.3 Streamlined project review We are aligning and consolidating the maximum LTV/TLTV/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio requirements for “LP Accept Mortgages” and “All Other Mortgages” underwriting paths. The maximum LTV/TLTV/HTLTV ratio requirements are now indicated solely by occupancy type. As a result, the maximum LTV/TLTV/HTLTV ratio for streamlined project review of non-LP Accept Mortgages for Condominium Units in Established Condominium Projects not located in Florida is increasing from 80% to 90% for primary residences. Guide impact: Section 5701.4 APPRAISAL AND PROPERTY SPECIFIC REQUIREMENTS Uniform Appraisal Dataset (UAD) condition and quality ratings and level of updating definitions For ease of Seller use and efficiency in the appraisal underwriting process, we are incorporating the UAD condition and quality ratings and level of updating definitions into the Guide as new Guide Exhibit 36. These ratings and definitions were previously only published in UAD Specification Appendix D: Field-Specific Standardization Requirements, which is posted on our UAD web page. Guide impacts: Section 5601.12 and Exhibit 36 Information supplied to the appraiser – changes to the sales contract In response to Seller inquiries, we are specifying that Sellers are not required to provide the appraiser with an updated sales contract unless the updated terms impact the physical description or condition of the property. In such cases, the Seller must obtain an updated appraisal of the property. Changes to the sales contract that are not required to be provided to the appraiser include, but are not limited to:  Changes to the transaction terms such as sales price, financing or sale concessions, and  Date revisions, corrections to typographical errors, etc. Guide impact: Section 5601.3 Page 5 Property with an accessory unit Effective August 31, 2017 Currently, Freddie Mac will purchase a Mortgage secured by a 1-unit property with only one accessory unit. To assist Sellers in identifying an accessory unit, we are updating our requirements and guidance as follows:  Requiring that the accessory unit have a kitchen and a bathroom  Providing examples of characteristics that may indicate a 2-unit property rather than a 1-unit property with an accessory unit, such as the zoning and land use requirements, covenants or homeowners association requirements, the existence of separate meters, ingress/egress or separate addresses for the units We are updating our comparable selection requirements for a 1-unit property with an accessory unit that complies with the zoning and land use requirements (legal or legal non-conforming zoning compliance) to require that the appraisal must include at least one comparable sale with only one accessory unit. The accessory unit of the comparable sale must also comply with the zoning and land use requirements to demonstrate the conformity and marketability of the subject property to its market area. Additionally, to allow Sellers to deliver a Mortgage secured by a 1-unit property with an accessory unit that does not comply with the zoning and land use requirements (illegal zoning compliance), we are adding the following requirements:  The “Site” section of the appraisal report must indicate that the accessory unit does not comply with zoning and land use requirements (illegal zoning compliance)  At least two comparable sales with each having only one accessory unit must be included in the appraisal report. The accessory unit of each comparable sale must also be non-compliant with the zoning and land use requirements to demonstrate the conformity and marketability of the subject property to its market area  The Seller must confirm that the existence of the accessory unit will not jeopardize future hazard insurance claims Guide impacts: Sections 5601.2 and 5601.12 AREA MEDIAN INCOME ESTIMATES The FHFA has issued the area median income estimates for 2017. Loan Product Advisor and the Home Possible Income & Property Eligibility tool will be updated by start of business on June 13, 2017 to reflect the 2017 area median income estimates. Because some 2017 estimates are lower than the area median income estimates for 2016, Home Possible Mortgages underwritten using the 2016 area median income limits may no longer be eligible for sale. If a Home Possible Mortgage received an “AcceptEligible” evaluation prior to June 13, 2017, but receives an “Accept-Ineligible” when resubmitted to Loan Product Advisor on or after June 13, 2017 due only to the new area median income estimates (that is, no other purchase restriction/reason for ineligibility applies), we will honor the original Feedback Certificate for the “eligibility” and purchase the Mortgage as long as there is no change to the Borrower’s income and/or the address of the Mortgaged Premises. In these instances, the original Feedback Certificate (pre-June 13, 2017) must have been returned by Loan Product Advisor no more than 120 days before the Note Date and both Feedback Certificates must be retained in the Mortgage file. GUIDE UPDATES SPREADSHEET For a detailed list of the Guide updates associated with this Bulletin and the topics with which they correspond, refer to the Bulletin 2017-8 (Selling) Guide Updates Spreadsheet available at http://www.freddiemac.com/singlefamily/guide/docs/bll1708_spreadsheet.xls. CONCLUSION If you have any questions about the changes announced in this Bulletin, please contact your Freddie Mac representative or call Customer Support at (800) FREDDIE. Sincerely,

Christina K. Boyle

Senior Vice President

Single-Family Sales and Relationship Management

Source: http://www.freddiemac.com/singlefamily/guide/bulletins/pdf/bll1708.pdf

Regulatory Updates

The MPF Program Reminds Servicers of MI Cancellation Requirements for Conventional Loans

June 5, 2017 synergy Leave a comment

Reminder of MI Cancellation Requirements for Conventional Loans Servicers are reminded of their obligation to comply with the Homeowners Protection Act (HPA), the Guides, and all other Applicable Laws when cancelling mortgage insurance (MI) on conventional loans. Servicers must have policies and procedures in place to ensure MI is cancelled in accordance with HPA requirements based on borrower-requested cancellation, automatic termination, or final termination requirements. The MPF Program has reviewed the MI cancellation requirements in the Guides and clarified the guidelines. Each cancellation option now has its own section in the Guide, so that the requirements for each option are clear. See MPF Traditional Servicing Guide chapter 4.7.2. All eligibility requirements as specified in the HPA are incorporated into and are a pre-condition of the MPF Program’s MI cancellation policy.

Servicers of MPF Traditional and MPF Xtra loans are required to report all MI cancellations and terminations on conventional loans to the Master Servicer within five (5) Business Days of termination using the MI Cancellation Notice (Form SG343). See the updated form for additional information. MPF Traditional Servicing Guide chapter 4.7.2.6 and MPF Xtra Servicing Guide section 4.6 have been updated with the revised reporting requirements.

Source: https://www.fhlbmpf.com/ANNOUNCEMENTS/Lists/announcements/Attachments/54/MPF%20Announcement%202017-25.pdf

Regulatory Updates

CFPB Issues Notice Regarding ATR/QM Rule Assessment

June 5, 2017 synergy Leave a comment

The Bureau of Consumer Financial Protection (Bureau) is conducting an assessment of the ATR/QM Rule under the Truth in Lending Act (Regulation Z), in accordance with section 1022(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Bureau is requesting public comment on its plans for assessing this rule as well as certain recommendations and information that may be useful in conducting the planned assessment.

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