FACTS
HUD’s regulations permit HUD to terminate the Agreement with any mortgage having a default and claim rate for loans endorsed within the preceding 24 months that exceeds 200 percent of the default and claim rate within the geographic area served by a HUD field office, and also exceeds the national default and claim rate.
Termination of the Agreement precludes that branch(s) of the mortgagee from originating FHA-insured single-family mortgages within the area of the HUD field office(s) listed in this notice.
A terminated mortgagee may apply for a new Origination Approval Agreement if the mortgagee continues to an approved mortgagee meeting the requirements of 24 CFR 202.5, 202.6, 202.7, 202.8 or 202.10 and 202.12, if there has been no Origination Approval Agreement for at least six months and if the Secretary determines that the underlying causes for termination have been remedied.
MORAL
In simple English (as if law can ever be put into simple English), once the termination goes into effect, the branch office of the mortgagee operating in the HUD field office area where it was terminated must wait six months before it can reapply (at least in this person's opinion. However, all other branches not terminated may continue to operate and loans in progress can be transferred to the other branches. If you have any questions, give me a call.
EFFECTIVE APRIL 1, 2011, REG Z WILL CONTROL ALL LOAN ORIGINATION FEES TO BROKERS AND LOAN OFFICERS ON CLOSED END LOANS
FACTS
The final rule (which does not apply to HELOC’s) prohibits payments to loan originators, which includes mortgage brokers and loan officers, based on the terms or conditions of the transaction other than the amount of credit extended. The final rule further PROHIBITS ANY PERSON OTHER THAN THE CONSUMER FROM PAYING COMPENSATION TO A LOAN ORIGINATOR IN A TRANSACTION WHERE THE CONSUMER PAYS THE LOAN ORIGINATOR DIRECTLY. The Board is also finalizing the rule that prohibits loan originators from steering consumers to consummate a loan not in their interest based on the fact that the loan originator will receive greater compensation for such loan. The final rules apply to closed-end transactions secured by a dwelling where the creditor receives a loan application on or after April 1, 2011.
Section 1403 of the Dodd-Frank Reform Act creates new TILA Section 129B(c), which imposes restrictions on loan originator compensation and on steering by loan originators. The Board intends to implement Section 129B(c) in a future rulemaking after notice and opportunity for further public comment. This is in addition to this new final rule that goes into effect on April 1, 2011.
Section 226.36(d)(1) of the final rule is consistent with TILA Section 129B(c)(1), which prohibits payments to a mortgage loan originator that vary based on the terms of the loan, other than the amount of the credit extended. Likewise, § 226.36(d)(2) of the final rule is consistent with TILA Section 129B(c)(2), which allows mortgage loan originators to receive payment from a person other than the consumer (such as a yield spread premium paid by the creditor) only if the originator does not receive any compensation directly from the consumer.
TILA Section 129B(c)(2) also imposes a second restriction when an originator receives compensation from someone other than the consumer: the consumer also must not make any upfront payment to the lender for points or fees on the loan other than certain bona fide third-party charges. This restriction was not contained in the proposed rule, and therefore, is not included in this final rule and will be addressed in a subsequent rulemaking.
This final rule only applies to parties who arrange, negotiate, or obtain an extension of mortgage credit for a consumer in return for compensation or other monetary gain.
MORAL
You can receive YSP from the creditor or Origination from the borrower but not both. However, you still must comply with Reg X as amended.
BUY BACK DEMANDS INCREASE AND SO DO LAWSUITS
FACTS
Lenders are facing increasing loan-repurchase demands from Fannie Mae and Freddie Mac. In addition, the mortgage insurance companies are rescinding coverage on more loans, which is putting even more pressure on lenders. MI "rescissions of mortgage insurance coverage continued to increase in the first half of 2010," Freddie Mac said in a recent public securities filing. This forces the GSE to go back to the lender to negotiate a buyback or reimbursement for losses.
Freddie currently has $5.6 billion in buyback requests outstanding and 24% of those requests are more than 120 days old and remained unpaid as of June 30. To insure more timely payments, Freddie said it is now requiring "certain seller/servicers commit to plans for completing repurchases, with financial consequences or with stated remedies for noncompliance, as part of the annual renewals of our contracts with them."
Freddie collected $1.4 billion from loan repurchases in the second quarter, compared to $911 million in the year-ago period.
