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Here we will share articles of interest. All members are encouraged to post their own articles, share and comment on others.

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  • August 03, 2016 9:10 AM | Anonymous

      About Us | Services | EmployersJob Seekers | Contact Us

    August 3, 2016
    Highlights from New TRID Rule
    Feel free to settle into a cozy armchair with a cup of coffee and a highlighter and read the 293 pages of the new TRID Rule amendments. Or, of course, stay tuned here and we'll try to keep you up to date. 
    So I'm sure by now you're aware that the CFPB's long-awaited update to TRID has been released. If you're living under a rock, you can find the release here. Keep in mind this is only a proposed rule. So while many thing included are "clarifications" (meaning they help immediately), there are  a number of new changes that won't affect us for months. 

    There are actually a ton of helpful things included, but how about we cover some highlights?


    1) Creates a Tolerance for Total of Payments
    "Total of Payments" is one of those things in Loan Calculations on page 5 of the Closing Disclosure. It discloses to the borrower the total amount they'll have paid by the time they pay off the loan.

    2) "Black Hole" Issue - Solved?
    It appears that the amendments will solve for the Black Hole issue - meaning we can feel comfortable using a Changed Circumstance with a Closing Disclosure. Good news!

    3) Instructions on Piggyback Loan Disclosures
    It's tough to summarize in this newsletter, but suffice it to say that, if you've struggled with deciding how to disclose simultaneous second lien loans in the past, there is very likely some helpful instructions on how to do so now available.

    4) Gift Funds Received Before Closing
    In another positive change, the proposed Rule now requires us to disclose only those cash gifts that are given at closing. Gifts that are given before closing will not be disclosed on the LE or CD. I think it's safe to interpret this as a clarification - the explanation states that the Rule is currently silent on this. So go ahead and make that change right away!

    5) LE Expiration Date. 
    Remember that the Loan Estimate expiration date is supposed to show the 10-day period that the borrower has to provide intent to proceed. Currently, we "freeze" that date on revised loan amounts, which can be confusing to a borrower. Under the proposed rule, we will simply leave that date blank.

    6) Payoffs on a Purchase Loan. 
    Now will be disclosed in Section H.

    7) Late Rate Locks.  
    We know that a revised LE is required within 3 days of rate lock (but continue to argue over whether it is required if no fees actually change). But I supposed there has been some confusion over whether we're then required to lock a loan prior to issuing a Closing Disclosure. The answer from the CFPB is No; if you happen to lock a loan after issuing a CD, that is permissible. No revised LE is required. Of course an updated CD will be required if anything changes. 



    There will be a lot more from this as we all digest it - hopefully more good clarifications. I'm also sure there are still unanswered questions. But this seems like a great step forward. 



    In Other News: 
    • Interesting things happening on Cape Cod ... while the B&T reports that home prices are lagging behind Boston and other areas, anecdotal data reports mortgage applications are way up. Is the ripple just now reaching the Cape? 
    • What a time to be in the Boston area - currently $7 billion in construction projects underway, according to this B&T article
    • Hey if you're into underwriting, post-closing, or compliance and want a more flexible lifestyle - give us a call, we'd love to chat. :) 

    Ever hear of the 5-year rule for saving money? According to Forbes' writer Robert Berger: 

     
    A good rule of thumb is not to invest any money in the stock market that you'll need over the next five years. This is particularly important for those who are in retirement and relying on their investments for daily expenses.

    The goal here is to avoid a situation where you have to sell stocks during a bear market in order to meet living expenses.

    This rule is difficult to follow today given the extremely low yields in the bond market. But given the relatively high prices of equities, it's an important rule to follow. With at least 5-years worth of expenses out of the market, an investor is more likely to weather a bear market knowing their immediate needs are taken care of.





      _________________

    (On why SpaceX doesn't have patents) "We have essentially no patents in SpaceX. Our primary long-term competition is in China -- if we established patents, it would be farcical, because the Chinese would just use them as a recipe book."

    -  Elon Musk

    ______________




    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • August 01, 2016 9:08 AM | Anonymous

      About Us | Services | EmployersJob Seekers | Contact Us

    July 27, 2016
    Are you disclosing broker compensation correctly?
    A quickie on broker compensation.
    Do you sometimes work with or as a mortgage broker? Maybe you broker out FHA loans because you don't have a DE underwriter. Maybe you accept broker loans from a geography where you are only just starting to develop market share. 

    Well one thing our audits are picking up is that they aren't always disclosed correctly. I'd guess the confusion comes from the fact that how we disclose broker compensation is different on the Loan Estimate and Closing Disclosure, and also depends on whether it is lender- or borrower-paid. 

    So here's the Rule as simple as I can state it:

    1) Loan Estimate: Only Disclose Borrower-Paid 

    On the Loan Estimate, lender-paid mortgage broker compensation is NOT disclosed. Please note this is different than with the GFE.  Only borrower-paid broker compensation is disclosed on the LE.


    2) Closing Disclosure: Both Disclosed

    On the Closing Disclosure, however, both lender-paid and borrower-paid mortgage broker compensation are disclosed. Borrower-paid will be disclosed as a normal fee paid by the consumer. While lender-paid will be disclosed as paid by others as shown in this picture:


    **Reminder**
    This is probably as good a time as any to remind you of the relatively new "anti-pricing concession" Rule.  Under this Rule, mortgage brokers and loan officers generally cannot offer to reduce their own compensation once terms have been offered to a customer (my opinion would be that this occurs at least by the time we issue a Loan Estimate). Please reach out if you'd like to discuss this more - there are exceptions, but the exception, in my opinion, are narrower than people think. 


    In Other News: 
    • The final Military Lending Act Rule is effective October 3, 2016. How does this affect mortgage lending? I don't believe it does. According to my colleague Bryan it applies to things like payday loans, auto title loans, and tax refund anticipation loans (caps interest rate at 36%!). If this does affect you, read more about it from the FDIC here or call into the office and ask for Bryan.
    • Read the FDIC Chairman's July 13 speech on De Novo Banks and Industrial Loan Companies (among other things) here on the FDIC website. Very interesting!
    • Would this need two appraisals? Company selling "prenup homes" that can physically be divided in two in the case of a divorce. Sad state of affairs! 

    A crisis is bad for business right? Maybe not always. Maybe sometimes it's exactly what you need to get your team to work together and trust each other. Maybe sometimes a crisis forces a company to clean up its practices, eradicate politics, and refocus on how exactly to help customers more than they currently do. But in the words of Patrick Lencioni, "Why wait for a crisis?" 




      _________________

    "I would like to die on Mars. Just not on impact."

    -  Elon Musk

    ______________




    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • July 20, 2016 6:32 AM | Anonymous

      About Us | Services | EmployersJob Seekers | Contact Us

    July 20, 2016
    Summer 2016 CFPB Mortgage Exam Trends
    A summary of what the CFPB is finding as reported in its Summer 2016 report.
    Let's The CFPB regularly issues summary reports on what its examiners are finding. The most recent "Supervisory Highlights" is from July 6th and is available here

    The CFPB described several common findings related to mortgage compliance. Here they are:

    1. Incorrect Calculation of Amount Financed
    In the case of discount points, if you're disclosing a negative finance charge and an amount financed that exceeds the stated loan amount, you're probably doing it wrong.

    2. RESPA Section 8 Violations
    If you have an affiliated business arrangement, do you require borrowers to use that service? Is it possible your affiliated business disclosures are inaccurate? If so, these are some common violations that the CFPB has recently found related to the RESPA Section 8 rule (in other words, the prohibition on accepting a fee or kicback in exchange for referalls). 


    3. Failure to Provide FCRA Adverse Action Notices
    Remember that if you take adverse action based in part on the consumer's credit score, then you have to include the credit score and related information (such as how to get a copy of the credit score) in an adverse action notice. 

    4. Incorrect Disclosure of Interest-Only Loans
    Ouch ... I know I've seen a few construction loans come across like this. Turns out the CFPB has found a good number of instances (enough to make the top 6 list) where the interest-only portion of a loan wasn't disclosed separately, but rather just included in a standard P&I. 

    Good reminder to check any loan products that have interest-only features.

    5. Weak Compliance Management System
    The CFPB report is relatively vague on this topic. Remember that CMS is the process by which you manage compliance, and you will be graded on how well you perform regarding oversight, training, monitoring, independent audit, and other CMS categories. 

    They only gave two specific examples:
    • Weak oversight of automated systems, including inadequate testing of codes that calculate the finance charge and the amount financed
    • Failure to monitor for changes that would require updated disclosures (this might include failure to ensure that your system is sending TRID disclosures on land-only loans, for example)

    6. HMDA
    Of course they note that HMDA compliance "remains a top priority." They also noted some particular violations. It may be best for me to quote directly from the CFPB on this one:

    During one or more HMDA data integrity reviews conducted substantially within the last year, examiners found that after issuing a conditional approval subject to underwriting conditions, the institutions did not accurately report the action taken on the loans or applications. For example, examiners found where one or more institutions issued a conditional approval subject to the applicants meeting underwriting conditions, and then the applicants withdrew their applications before the institutions made a credit decision, the institutions incorrectly coded the action taken as "Application denied" (Code 3) or "File closed for incompleteness" (Code 5) instead of "Application withdrawn" (Code 4). In other instances, examiners found that one or more institutions incorrectly coded the action taken as "Application approved but not accepted" (Code 2) instead of "Application denied" (Code 3) after the applicants failed to respond to a conditional approval subject to the applicants meeting underwriting conditions, and did not send the applicants either a written notice of incompleteness or an adverse action notice as required by Regulation B.



    In Other News: 
    • Keeping an eye on recent enforcement actions is a good way for a compliance officer to stay in touch. Where do you find stuff like this without a paid subscription to some research tool? Well, some institutions post that online, as the FDIC does here
    • Looks like the SCA-sponsored LOS/POS Lunch will be August 10th for anybody still interested please contact me or Paul Bates at PBates@scapartnering.com
    • If you're a depository in Massachusetts, you're crazy if you're not offering solar energy loans subsidized by Massachusetts. As a reminder you can find out more here at their website or call one of us at SCA because we're helping Massachusetts with this great program.
      
     

    What happens when the only feedback you receive is negative? Well, normally I would say you need to start doing a better job. But maybe the real point is that you'll stop focusing on doing things right, instead obsessing over making a mistake. Certainly we see sometimes this with responses to our QC and Compliance Audits. So you made a mistake ... big whoop! Let's look at why it happened and how we can stop it from happening again. Then go home, play Frisbee with the dog and read your daughter a bed-time story. Life goes on! 




      _________________

    "A good plan violently executed today is better than a perfect plan executed next week."

    -  General George Patton

    ______________




    Thanks so much for reading our weekly newsletters.  We're not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we're always going to be trustworthy.  Your calls and e-mails are very helpful - please keep contributing.

      **These are our opinions. We're not authorized, or willing, to express those 
          of others.**  

     

    This article was prepared by Ben Giumarra with the support of other experts at SCA. Ben is a specialist in lending and regulatory compliance.

    SCA has consultants like Ben available to provide as-needed consulting support and advisory services. Specialties include risk management, quality control, system implementations and conversions, secondary markets, financial analysis, and other areas related to mortgage banking. 

    Hourly, retainer, and project-based options available. 

    Quick Links

  • July 01, 2016 10:54 AM | Anonymous

    Below is Lender Notice 2016-08 eDocs submissions and instructions from the Maine State Housing Authority.

    If you have any questions please contact your assigned account officer.


    Lender Notice 2016-08 eDocs Submission

    Lender Online eDocs Submission Procedures

  • June 29, 2016 8:36 AM | Anonymous

    Click the link below to view the Lender Notice 2016-07.

    Should you have any questions, please contact your assigned Homeownership Officer.


    Lender Notice 2016-07 Rate Increase



  • June 10, 2016 12:26 PM | Anonymous

    Below is the Lender Notice 2016-06 Revised Income and Purchase Price Limits (that become effective June 14, 2016).

    Should you have any questions please contact your assigned account officer.


  • May 31, 2016 12:21 PM | Anonymous

    Below is the Lender Notice 2016-05.

    Should you have any questions, please contact your assigned Homeownership Officer.


    Lender Notice 2016-05 Rate Reminder & PG Changes

     

  • March 04, 2016 1:28 PM | Anonymous
         
     

    Dear MAA Member:

    Earlier today, the House Financial Services Committed unanimously passed H.R. 2121, the SAFE Transitional Licensing Act of 2015.

    H.R. 2121 is an MBA priority and an important bill for the mortgage industry that would provide transitional authority to originate mortgages for individuals who move from a federally-insured institution to a non-bank lender while they work to meet the SAFE Act’s licensing and testing requirements.  Transitional authority would be available to MLOs that have a clean history as an originator (e.g., no license denials, revocations or suspensions, no cease and desist orders, and no felonies that preclude licensing).

    The language of the bill has been endorsed by MBA after consultation with the Conference of State Bank Supervisors (CSBS) and would be a narrow and simple solution to allow individuals to continue working and underwriting loans, while in no way weakening the important consumer protections of the SAFE Act.

    While H.R. 2121 has been approved by the House Financial Services Committee, receiving broader support is important to ensuring final passage by the full House. It is imperative that we collectively speak up as an industry to move this legislation forward. Please write your member TODAY and urge them to support this important piece of legislation. Click here to send a letter to your Member of Congress and make your voice heard on this important issue. 

    You will notice that this Call to Action is hosted on the MBA’s new Advocacy Action Center. This platform should be much smoother than the previous Call to Action website and you will no longer need to log in to take action. The first time you take action, you will need to re-enter your information, but if you select “Remember Me”, the system will store your information going forward. If you encounter any issues, please contact Peter Shapiro at 202-557-2933 or pshapiro@mba.org.

    If you have difficulties reading this HTML email, please view the online version

  • January 15, 2016 11:22 AM | Anonymous

    Below is the links to the Lender Notice 2016-01 and Salute ME Summary.

    **Should you have any questions, please contact your assigned Home ownership Officer.

     

    Lender Notice 2016-01 A Salute to Maine's Veterans


    Salute_ME_Summary 011916

  • September 13, 2015 10:14 AM | Santo Longo

    By Santo Longo, Esq. and Shannon Merrill, Esq. of Bendett & McHugh, P.C.

    The 127th Maine Legislative Session adjourned July 16, 2015 after well-publicized disputes between the legislature and Governor LePage.  Once the dust settled from the various vetoes and overrides, several important default- and foreclosure-related measures were enacted.  The following is a summary of the new laws, all of which become effective October 15, 2015. 


    Bank of America v. Greenleaf
    :

    In July 2014, the Maine Supreme Judicial Court made several important changes and clarifications to Maine foreclosure law and practice in the landmark case Bank of America v. Greenleaf, 2014 ME 89.  The case created uncertainty regarding property title issues, and also regarding the pre-foreclosure notification letters that foreclosing lenders and investors must provide to borrowers.  Two new laws were passed to address these uncertainties:

    • Standing to Foreclose and MERS: Statutory changes codified at 33 M.R.S.A. § 508 create a presumption that a mortgage assignment, partial release, or discharge executed by a party acting as nominee for another party is valid.  This includes mortgage-related instruments executed by Mortgage Electronic Registration Systems, Inc. (“MERS”) when acting as nominee for lenders.  Importantly, in regard to assignments of mortgage specifically, the presumption of validity only applies in the context of foreclosure actions if the judgment of foreclosure is obtained and the applicable appeal period has run without an appeal being filed as of October 15, 2015, the effective date of the Act.  This limits the cloud on property titles caused by the high court’s holdings in the Greenleaf case to only those property titles affected by assignments of mortgage.  Fortunately, the new law does remove any doubt as to the validity of mortgage discharges and releases executed by MERS.
    • Notice to Cure Requirements: New provisions in Maine’s notice of default statute (14 M.R.S.A. § 6111) require that the pre-foreclosure notification letters sent to borrowers specifically state that the amount needed to cure the default does not include any amounts that will become due after the date of the notice itself.

    Municipal Action Regarding Abandoned Properties:

    A new law authorizes Maine municipalities to issue a finding that real property, or a mobile home, is “abandoned,” and then order the property owner(s) to address identified conditions at the property.  If the property owner fails to comply, the municipality can perform the work itself and seek reimbursement from the owner.  The Act further requires a mortgagee, when initiating a foreclosure action, to provide the municipality with the contact information of an in-state representative for the purposes of receiving communications from the municipality regarding property abandonment issues. 

    Under the new law, when title to real property in Maine is transferred pursuant to a foreclosure judgment, the new owner becomes subject to orders to correct property conditions, as well as potential liability and enforcement.  This includes foreclosing lenders who take title at foreclosure sales and hold properties in REO portfolios.  Because of the potential costs and liabilities posed by this new law, foreclosing lenders will need pay close attention to property conditions, safety concerns, and related issues associated with abandoned properties they may acquire ownership of through foreclosure.

    Expediting Final Foreclosure Hearings:

    New legislation will permit foreclosing lenders to request an expedited final hearing in cases where either: (1) efforts to mediate did not result in settlement or dismissal of the action, and any party that has appeared in the action consents to the request; or (2) the defendant did not answer the complaint and any appearing party consents.  Once the court receives the request, the court will, “as the interests of justice require,” schedule the final hearing within 45 days from the date the request is filed.  The burden of proof and statutory requirements for entry of a foreclosure judgment remain the same.

    Certification of Proof of Ownership Required:

    Beginning October 15, 2015, foreclosure complaints must contain a certification of proof of ownership of the defaulted loan.  This change specifically requires that the name of the owner of the loan is disclosed in the complaint that is filed at the initiation of a foreclosure action.  In a case where a loan servicer is bringing the foreclosure action in the servicer’s name and on behalf of the lender or investor that owns the loan, the identity of that lender or investor will need to be identified.

    Because of the limitations contained in the statute, it appears that use of the new expedited hearing process will largely be limited to default cases with no parties in interest actively contesting the foreclosure.  The purpose of this legislation is to encourage judicial efficiency in foreclosure actions and to reduce the overall timeline of unopposed foreclosure actions in Maine. 

    Power of Sale Foreclosure: 

    New legislation modifies Maine’s non-judicial foreclosure process.  This process allows mortgagees to proceed directly to sale in certain cases where specific statutory requirements are met, and is generally only available in cases involving commercial properties.  The changes are largely procedural, not substantive.  Specifically, the archaic requirement that notices must be sent by “registered mail” has been updated to a more commercially reasonable “certified mail” requirement.   The bill also eliminates the requirement that post-sale, a petition must be filed with the Maine Superior Court to correct a purely typographical error or omission in the final vesting documents. 

    Maine Fair Debt Collection Practices

    Maine’s debt collection practices statute underwent amendment this session as well, despite opposition and a veto from the Governor.  The new amendments require that any payment arrangement entered into with a debt collector must be documented and approved by the court or reduced to writing.  (See 32 MRSA §§ 11012; 11013).  In addition, the amendments prevent a debt collector from bringing an action against a consumer if the statute of limitations on the collection action has expired, and also provide that once the statute of limitations has run on an action to collect a debt, a new window within which suit can be brought is not opened if the consumer makes a payment or takes other action regarding the underlying debt.

    These changes are meant to address the perception that, at times, suspicious collection practices have been undertaken by debt collectors who have purchased previously charged off debts.  The original bill was much more aggressive in its attempts to raise the burden of proof that must be met by a debt collector attempting to enforce a debt if the debt collector is not the original creditor. 

    The end result of the recent changes to Maine’s debt collection statute is that they will likely reduce debt collection actions brought by debt purchasers against consumers who are unaware that the statute of limitations on the collection of the debt has expired.

    For additional information on the new laws discussed above, you may contact the authors directly.  Santo Longo: slongo@bmpc-law.com and Shannon Merrill: smerrill@bmpc-law.com.

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