Tuesday, May 27, 2014

IDS Publishes a VA IRRRL QM Checklist

The VA definition for a Safe Harbor Qualified Mortgage in general encompasses any loan guaranteed by the VA; however, the VA carved out additional requirements in the rule before an IRRRL will qualify as a Safe Harbor loan—if the loan doesn't meet the additional requirements then it will be considered a Rebuttable Presumption loan. 

IDS Compliance completed a huge project to implement the new VA Qualified Mortgage test into its proprietary software system. The implementation includes several new audits available for IDS Customers to review on the QM page in the Settings section of the IDS website. Also, to help IDS customers comply with the new Safe Harbor requirements of a VA IRRRL QM, IDS has developed a checklist that logically walks creditors through the steps that ensure Safe Harbor status will be achieved on the IRRRL. Be sure to watch for the checklist in your VA IRRRL packages.

IDS Compliance wants to remind its customers that this VA interim final rule defining QM was published and effective on May 9, 2014, which also means that the CFPB's temporary definition of QM for VA loans has effectively come to an end. IDS implemented the changes at 5 pm on Tuesday, May 20, 2014. IDS made the changes effective for loans with an application date of May 9, 2014, or later.

Tuesday, May 20, 2014

May Compliance Updates for idsDoc

1. MERS Rider Implementation Update: by default, the 3158 MERS Rider and accompanying security instrument will start appearing in MERS Originated Mortgage(MOM) closing loan packages that use the FNMA/FHLMC Uniform Security Instrument for MT, OR, or WA where the note date is on/after Oct. 15, 2014. You may start using the 3158 MERS Rider sooner per FNMA SEL-2014-03. At present IDS Compliance is planning on adding a MERS Rider option for other products, e.g, FHA. 

2. MO Loan Brokerage Agreement and Disclosure Statement (Initial Disclosure): IDS Compliance added the following definition regarding "brokers" in Missouri to the "State Specific" page of IDS Loan Files: Residential mortgage loan broker means "any person, other than an exempt person, engaged in the business of brokering, funding, servicing. or purchasing residential mortgage loans." This defines what is commonly considered a mortgage lender. However, Missouri defines a lender as "any person who either lends money for or invests money in residential mortgage loans." IDS Customers should determine based on these definitions if this disclosure must be given. Note: it appears that this document should be given in most circumstances, whether there is a broker involved or not. 

 3. IDS Compliance updated the TDHCA Second Lien documents in Texas.

Monday, May 19, 2014

The "Incurable" NMLS# Mistakes

An IDS Client recently asked us if we could clarify where exactly the "incurable" language comes from with regards to making sure NMLS#s appear as they should on the Note and Security Instrument. This problem is made "incurable" mostly by the way that investors are interpreting the statute. Here's how a couple of the big investors are addressing it:

Wells Fargo Newsflashes C13-067FR & C13-074FR:

"As a result, Wells Fargo Funding is expanding our pre-purchase review to ensure the required information is present on the application, Note, and Security Instrument as required by the rule.
  • Because the rule specifies that the information must be present when these documents are “provided to the consumer/presented to the consumer for signature," non-compliant Loans must be recommended for non-purchase.
  • Failure to provide name/NMLSR information as stipulated in the rule cannot be cured post-closing."
  • Chase Bulletin CB13-77: 
     "The following data must be listed on the Note and the Security Instrument:
  •  Loan Originator Organization (LOO) company name
  • Name and NMLS ID (if any) of the individual Loan Originator who, under the LOOs policy, is primarily responsible for the transaction (as defined by the Dodd-Frank Act Truth-In-Lending Act requirements).
      Notes:
  • The names of LOO and LO registered on NMLS must appear on the documents as they appear in NMLS.
  • The LOO and LOO ID must be on the specified docs when the documents are delivered to the borrower to sign and cannot be added post-closing.
  • The LO name and LO ID (if any) must also be on the specified docs when the documents are delivered to the borrower to sign and cannot be added post-closing."

It appears that what the investors are really struggling with is the idea that the NMLS#s are present on the note and security instrument at the time of signing. Inferring that finality is created when the documents are signed and no other changes are then allowed to be made to what has been signed.

IDS Compliance believes that it is a good reminder that this is still the current view of many investors. Please keep an eye out for data entry accuracy with the NMLS#s and corresponding names. IDS will update its clients as soon as it hears any changes to this rule.

Monday, May 12, 2014

VA Issues Interim Final Rule regarding Qualified Mortgages

IDS Compliance received Federal Register, Vol. 9, No. 90, dated Friday, May 9, 2014, which contains the Department of Veterans Affairs interim final rule definition of Qualified Mortgage and Ability-To-Repay required under the Truth in Lending Act. In general, The VA defines a Qualified Mortgage for the purposes of a VA Loan as being "any loan guaranteed, insured, or made by VA, with certain limitations on streamlined refinances, also known as Interest Rate Reduction Refinance Loans (IRRRLs)." All standard VA loans appear to have QM Safe Harbor status; however, IRRRLs may either have a "rebuttable presumption" status or a "safe harbor" status. Safe harbor status on IRRRLs is achieved when certain additional requirements are met.

IDS Compliance is reviewing this information and making plans for the best way to implement it into our system. The interim final rule is effective May 9, 2014, with a comment period that expires June 9, 2014. The rules states that the final-final rule should be published within 90 days of May 9 2014, or shortly thereafter with a matching effective date. IDS Compliance anticipates complete implementation of this new rule in our system before this date.

Wednesday, May 7, 2014

IDS client-specific updates:

    1. IDS Compliance updated two Texas Forms, the Conditional Qualification Letter and the Conditional Approval Letter. Texas made minor modifications to these forms which are located at 7 TAC § 80.201.

    2. IDS Compliance has made great strides in developing the new Fannie Mae required MERS Rider for MT, OR, and WA. Due to the fact that this change came about as a result of a legal decision, IDS is reviewing whether riders or changes to security instruments themselves are required for other loan types, e.g., FHA, USDA, et al. 

    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. Legal is heading up our Security and Data Management Committee. The team meets regularly to ensure that client and system information is always protected.

    5. IDS Compliance has been creating and updating many documents for several Housing Financial Authorities, including the following:

a.    WSHFE 3% Deed of Trust
b.    WSHFE 3% Note
c.    WSHFE 3% TIL
d.    WSHFE Home Advantage 0% 2nd Deed of Trust
e.     WSHFE Home Advantage 0% 2nd Note
f.     WSHFE Home Advantage 0% TIL
g.    WSHFE Home Advantage First Payment Notification
h.    WSHFE Home Advantage First Payment Notification DPA
i.      WSHFE Home Advantage Notice of Assignment
j.      WSHFE House Key Plus Seattle Deed of Trust
k.    WSHFE House Key Plus Seattle Note
l.      WSHFE House Key Plus Seattle Shared Appreciation Disclosure
m.   WSHFE House Key CLT TIL
n.    WSHFE House Key Plus CLT Deed of Trust
o.    WSHFE House Key Plus CLT Note
p.    WSHFE Home Choice DOT
q.    WSHFE Home Choice Note
r.     NCHFA 305 Home Advantage Deed of Trust, to the most current version, 4/2014
s.    NCHFA 306 Home Advantage Promissory Note, to the most current version, 4/2014
t.     CHFA 305 Second Mortgage Note, Created loan program for HomeAccess 2nd Mortgage
u.    CHFA 310 Second DOT, Created loan program for HomeAccess 2nd Mortgage
v.    CHFA 306 Second Mortgage Note (Interest Bearing) - Updated & proofed, changed "2nd Mortgage" loan program to pull this updated doc.
w.   CHFA 311 Second DOT (Interest Bearing) - Updated & proofed, changed "2nd Mortgage" loan program to pull this updated doc.
x.    CHFA 739 First Payment Letter (Interest Bearing) - Created this doc.
y.    CHFA 331B Final TIL Disclosure - Updated to the most current version.

       6. May 04-07 is the much-anticipated MBA's Legal Issues and Regulatory Compliance Conference at the San Diego Marriott Marquis and Marina. The IDS Compliance teams looks forward to attending and learning more about industry changes. Our team also looks forward to meeting any clients who will be attending the conference. 

Tuesday, May 6, 2014

IDS Compliance Updated Docs to Conform with Freddie Mac Bulletin 2014-6

Due to FHLMC bulletin 2014-6, which states:

Rent loss insurance for 2- to 4-unit Primary Residences 

Prior to this Bulletin, the Guide required that the Borrower maintain six months’ rent loss insurance for a 2- to 4-unit Primary Residence when rental income is used in qualifying. We are removing the requirement for rent loss insurance when the property is a 2- to 4-unit Primary Residence. Sections 22.19, General Property Insurance Requirements, and 58.3.2, Rent Loss Insurance, have been updated to reflect this change.

As a result of this change, we are adding a permitted change to the 1-4 Family Rider, Form 3170. If the Mortgaged Premises is a 2- to 4-unit Primary Residence, originators must delete Paragraph D (Rent Loss Coverage) from the 1-4 Family Rider. (emphasis added)

As a reminder, the Borrower must maintain six months’ rent loss insurance for an Investment Property when rental income is used in qualifying, as required in Section 22.22.1, Investment Property Mortgages;

The IDS system has been programmed to remove Paragraph D (Rent Loss Coverage) from the 

1-4 Family Rider when:

• the note date is on/after 4/24/2014, 
• the occupancy type is set to primary, and
• the number of units on the 1003 is NOT set to 1.

While this change affects loans with note dates on/after 4/24/2014, it was not added to the system until late afternoon 5/1/2014.