Recent Changes in The Mortgage Industry

Topics 
    

HVCC (Home Valuation Code of Conduct) MDIA (Mortgage Disclosure Improvement Act) FHA Condo Approvals FNMA Condo Approvals New GFE/RESPA Reform Good Funds Statute (IL only)

HVCC

(Home Valuation Code of Conduct- Effective 5/1/09) Conduct-

HVCC

HVCC    

Appraisals must be ordered through an independent appraisal company or department. On appraisal orders, or value disputes, the loan officer can contact the appraiser directly. Additional comps can be provided for value rebuttals, but they must be provided thru the appraisal desk. Borrower(s) must be provided with a copy of the appraisal at least 3 business days before closing.

Appraisal criteria in today¶s market 

  



3 closed comps within 90 days required. If no comps are available within 90 days, then comps within 6 months can be used with a time adjustment for value. Comps need to be within ½ mile radius of subject property, and for condos, one comp from subject project is required. 1 active listing, and 1 pending sale are required. Be aware that foreclosure sales are used as comps, and can impact value.

MDIA

MDIA
(Mortgage Disclosure Improvement Act Effective 7/30/09)

MDIA

Upfront fees can not be collected by the lender until initial disclosures are received by borrower(s). Change in Annual Percentage Rate (APR) by more than .125% will require the lender to send a revised Truth in Lending (TIL) disclosure to the borrower(s) at least 3 business days prior to closing> Written verification of receipt must be in the file. Closing date must be a minimum of 7 business days from date disclosures are sent to borrower(s). Signing can occur on the 7th business day)

MDIA

WHAT CAN IMPACT THE APR?
Any changes to the rate Change in the loan amount Product change Change in closing date Changes to fees, inclusive of settlement agent fees

FHA Condo Approvals

FHA Condo Approval Changes

FHA Condo Approvals

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Effective February 1st, 2010 FHA will be eliminating the Spot Loan approval process. Lenders will have (2) condo approval options: (1) HUD Review Approval Process (HRAP) (2) Direct Endorsement Approval Process (DELRAP)

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*** Guaranteed Rate offers the DELRAP method, meaning we have a dedicated & qualified staff for reviewing and approving Condo projects ***

FNMA Condos

FANNIE MAE CONDO APPROVALS

FANNIE MAE CONDO APPROVALS

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All condo projects will require approval through Fannie Mae Project Approval (CPM) Lenders are requiring full approval on new construction, conversions, and existing condos Full Review consists of Appraisal, Decs, By-laws, Budget, Questionnaire, Insurance, Architect or Engineer s report (for Conversions)

FANNIE MAE CONDO APPROVALS

General Requirements for Condo Approval
70% of the project s units must be sold or under contract 70% of the project s units must be conveyed to owner occupant principle residence or second home purchases 1 entity can not own more than 10% of the condo project More than 15% of the condo fee payments can be 2 or more months delinquent. Reserves must be 10% of the operating income

FANNIE MAE CONDO APPROVALS

General Requirements for Condo Approval
If 20% of the total square footage is commercial space, then the property will not be approved by Fannie Mae All common elements must be 100% complete, and no additional phasing can take place. No pending litigation

FANNIE MAE CONDO APPROVALS

If Pending Litigation, The Following is Needed:
Copy of the law suit Letter from the homeowner s association attorney explaining the lawsuit A time frame for resolution for the law suit Notation if the master liability insurance coverage is sufficient to cover potential losses Letter must state estimate of the amount of the HOA will need to pay in special assessments
*** Supplying this documentation does not guarantee approval ***

NEW GFE RULES 

    

GFE must be disclosed within 3 days once an Application is taken An Application is defined by: Name, SS#, Income, Property Address, Loan amount, Purchase price or Appraised value New GFE is 3 pages long but does not include and estimate of funds due at closing 3 different buckets for estimated costs and the variance by which they can tolerably change Buyer must receive a Service Provider list with vendors from local market If buyer selects a Service Provider listed, Guaranteed Rate is bound to the fees estimated and must cure the difference paid by buyers within 30 days

³Good Funds´ Statute   

  

Good Funds statute will change the procedure for submitting funds to a title insurance company/agent/escrowee for a real estate closing company/agent/escrowee Any funds in the aggregate amount of $50,000 or more received from any single party to the transaction must be Good Funds or Collected Funds *** Title companies are interpreting this in various ways *** Good Funds = Wired funds to the fiduciary trust account of title insurance Funds < $50,000 must also be Good Funds, i.e. Cashiers checks, certified checks, bank money orders, official bank checks, or teller s checks from a chartered financial institution Purchase or Refi: A personal check or checks in an aggregate amount Refi: not exceeding $5,000 per closing

How Do These Changes Impact The Realtor and Home Buyer / Seller?
Plan for no less than a 30 day close Try and lock loan at least 10 days prior to close Understand that any change in mortgage product could impact the APR, and therefore the close date Provide the settlement agent info to the lender as early in the process as possible It is critical that any third party fees that impact the APR are accurate (.125% change requires re-disclosure) Allow for a longer Mortgage Contingency period to avoid extensions Prepare clients putting down more than $50k (including earnest money) that they ll need to wire funds to the Title co prior to closing

QUESTIONS?

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