Monday, April 28, 2014

IDS to incorporate Fannie Mae required MERS Rider in MT, OR, and WA

IDS general update:

As a result of a recent judicial decision regarding MERS, Fannie Mae will now require a MERS Rider (FORM 3158) and related security instrument updates for MT, OR, and WA. Implementation for this change is required on Notes dated on or after October 15, 2014. It is anticipated that this change could affect multiple documents in our system, including the security instruments in these states, and may also require some small system customizations. The IDS Compliance team will verify the accuracy of any changes to our documents and system before the changes go live.

IDS client-specific updates:

  1. IDS Compliance has been doing some much-needed revisions to the Washington State housing programs. As a part of these revisions, we'll also be adding new Washington State housing programs not previously supported.
  2. IDS Compliance has also been performing revisions to the Colorado State housing programs. These revisions should be available to the next couple of weeks.
  3. IDS Compliance has begun work on our website to add a place for the Compliance Updates and other compliance resources in a blog-like format. The launch will take place together with the launch of the new look-and-feel of our company website, June 3, 2014.
  4. IDS Compliance is finally winding down the SOC2 audit period, which has been going on since November 2013.

Wednesday, April 23, 2014

IDS to Stop Using Counseling List Interim Alternative Fix

Everyone in the industry is probably familiar with the required Counseling List implemented on January 10, 2014, along with the other Dodd-Frank changes. IDS Customers may or may not be aware that the CFPB offered lenders an interim alternative fix that entails providing borrowers with a disclosure that has a link to the CFPB website and instructions on how borrowers can obtain a list of counselors on-their-own. The CFPB has given lenders this option while building out their own systems to generate the same list. The CFPB informed lenders that they could use this alternative during about a six month implementation window. IDS has only used this interim alternative fix as a back-up on a few rare occasions when the HUD servers have stopped functioning. Here are the details of this requirement:

Regulation X requires that a counseling list be generated and delivered to customers for most types of loans. The CFPB has given lenders two options: (1) generating a list for borrowers directly from the CFPB's own portal, or (2) generating a similar list with information pulled from HUD servers. IDS provides its customers with the second option so that the list is automatically generated within our system with initial packages.

CFPB Bulletin 2013-13 states:

"Lenders who prefer to adopt the second approach have informed the Bureau that they must undertake significant development of compliance systems to ensure that lists are generated in compliance with the RESPA Homeownership Counseling Amendments and the November interpretive rule. The Bureau understands that the systems development may take approximately six months.

"While lenders are incorporating § 1024.20(a)(1)(ii) list instructions into their systems, they may direct borrowers to the Bureau’s housing counseling agency website to obtain a list of housing counselors ... These steps, if taken by lenders in good faith while they are building their systems or are working with vendors to build systems, would achieve the goals of the regulation and would not raise supervisory or enforcement concerns."

IDS compliance plans on removing the rarely used interim alternative fix, which has only been used a backup during emergencies, before June 10, 2014, to remain compliant with the six month window given by the CFPB for using this option. 

Tuesday, April 22, 2014

IDS client-specific updates during the week of 
April 14-18, 2014:

1. IDS Compliance made minor changes and made minor changes to the Rhode Island forms listed below to make them more like the ones located in RI Regulation 3:

• \State Docs\RI Counseling Notice and Certification.rtf
• \State Docs\RI HLPA Disclosure High-Cost Home Loan.rtf
• \State Docs\RI Prohibited Acts of Lenders and Loan Brokers.rtf
• \State Docs\RI Prohibited Acts of Lenders and Loan Brokers - High Cost Loans.rtf
• \State Docs\RI Tangible Net Benefit.rft

2. IDS Compliance added the following HFA program: Texas State Affordable Housing Corp – SAHC.

3. IDS Compliance has completed a rough draft of the IDS State Compliance Matrix that we will be making available soon to all IDS Customers. 

4. IDS Compliance received positive feedback this week during a visit at headquarters from SOC 2 audit personnel.

Monday, April 14, 2014

IDS Compliance Updates

On April 10, 2014, IDS held its first webinar to all customers to review changes made to the IDS Settings related to Dodd-Frank changes from this past January. IDS Marketing recorded the webinar and will publish it in both video and print formats in the coming week.

IDS client-specific updates during the week of March 24-28, 2014:

1.    The Delaware Office of the State Banking Commissioner amended its regulations by clarifying, streamlining and updating the existing regulations for licensed lenders and mortgage loan brokers. These provisions are effective on April 11, 2014. 

Because of this change to DE regulation. For applications on/after April 11, 2014, IDS Compliance is removing the following forms from the DE initial disclosures set:
·         \State Docs\DE Licensed Lenders Regulations.rtf
·         \State Docs\DE Loan Broker Regulations.rtf
If the application date is missing, IDS Compliance is removing it if today's date is on/after April 11, 2014.

2.    IDS Compliance updated the \State Docs\TX Mortgage Banker Loan Origination Disclosure.rtf form. The reference to r Texas Fin. Code §157.007 was replaced with §157.0021

3.    IDS Compliance has reviewed Rhode Island Regulation 3 Section 5(A)(iv) and concluded that the RI Prohibited Acts of Lenders and Loan Brokers – High Cost Loans Form 2 HLPA should be provided to all applicants at the same time as the RI Prohibited Acts of Lenders and Loan Brokers Form 1 HLPA. IDS Compliance has adjusted it so that they now appear in packages together.

4.    IDS Compliance will receive a visit at headquarters from SOC 2 audit personnel this coming week, from April 1-17. 

Friday, April 11, 2014

QM Safe Harbor Determination vs. HPML Tests

The IDS Compliance team would like to review the differences between the QM Safe Harbor Determination test and the HPML test. Some confusion comes into play in the mortgage industry because of the proximity in how the two tests are calculated; however, to be clear, they are two different tests which can vary and have separate effects in the loan process.

The QM Safe Harbor/Rebuttable Presumption Test (formally known as Higher-Priced Covered Transaction)
(§ 1026.43(b)(4)):

• FHA QM Rebuttable Presumption = APR ≥ (APOR + (Annual MIP + 1.15%)); 1st Lien.
• Non-FHA QM Rebuttable Presumption = APR ≥ APOR + 1.5%; 1st Lien.
• Non-FHA QM Rebuttable Presumption = APR ≥ APOR + 3.5%; 2nd Lien.
• Non-FHA QM Rebuttable Presumption = APR ≥ APOR + 3.5%; 1st Lien Small Creditor Variance.

The effect of not meeting the Safe Harbor test above is that a loan becomes a rebuttable presumption, which gives the buyer the ability to refute that the creditor fully checked the buyer's ability-to-repay should the loan ever be disputed in court. The biggest issue may be that an investor is not willing to purchase a rebuttable presumption loan or may offer less for it.

The Higher Priced Mortgage Loan Test (§ 1026.35(a)(1)):

• HPML = APR ≥ APOR + 1.5%; 1st Lien; Non-Jumbo as Defined by FHLMC (Freddie Mac).
• HPML = APR ≥ APOR + 2.5%; 1st Lien; Is Jumbo as Defined by FHLMC (Freddie Mac).
• HPML = APR ≥ APOR + 3.5; Jr. Lien.

The effect of not meeting the HPML test is that other requirements come into place; e.g. an escrow account will have to be put into place on the loan, etc. IDS created and added an HPML checklist that gets added to all loans subject to HPML requirements. This form is provided as an extra compliance tool to help make sure that our creditors meet all the HPML requirements.

Tuesday, April 8, 2014

IDS Employee Cinderella Wins NCAA Bracket Competition

Just like the underdog team the UConn Huskies took the NCAA Championship, we had our very own office Cinderella who rose to the top in the IDS NCAA Bracket Competition – against all odds. 

One of our newest and youngest employees, Ashley Gregory, took the office challenge of filling out a bracket for the NCAA Tournament for the first time. Knowing little about the teams, Ashley had a method of her own to filling it out.

"I chose mostly the higher seeds to win, but when it came to Harvard, I knew that was the school in Legally Blonde, so I went with it."  

In the fervor and excitement of March Madness, Ashley made a copy of her bracket to keep at her desk so that she could keep score of her own bracket while our Compliance Officer Clint Salisbury kept all of the employees brackets to score at his. With a total of 33 employees in the running, each were competing for the top spot to win $20, the second spot to win $10, and the top ten to receive $0.30 for a soda.

On the morning of the second day of March Madness, Ashley's champion pick Duke lost 78 to 71 to Mercer and she thought that was the end of it. She was so determined she had lost the entire competition that she went to Clint's desk, tore up her bracket and threw it away. Little did she know, most of our office chose Duke as their champion as well; she still had a shot.

As March Madness progressed, Ashley saw from her desk bracket that her bracket wasn't that bad after all, in fact, she was still collecting wins above that of her office mates. She decided to get back in the running. After completing the contest with 40 total wins (out of 63), she was able to gain the victory.

"I am shocked and honored to have won. If I can do it, you can do it." 

Ashley and IDS would also like to thank Clint for holding the fun March Madness Competition and giving out prizes.

Thanks Clint!