Loan Officer Magazine http://www.LoanOfficerMagazine.com

How to Market the $7500 Tax Credit to Realtors - Flyer! Written By: Karen Deis If you've not heard about the $7500 First Time Homebuyer Income Tax Credit (or is it a loan?), you must have been out of the country for the last few months. However, if you have heard of it and are looking for a way to get the word out to your real estate agents, MortgageCurrentcy.com has created just the right marketing flyer for you called Mortgage Talking PointsTM. The National Association of Realtors® has also produced a Research Paper and the webpage link is included in this article. While most of the marketing pieces have been created for consumers, this one is exclusively for agents and builders. Best of all, you can add your name and contact information to the flyer, print and use for sales meetings and first time homebuyer seminars. Read the content and download the flyer... Written By: Karen Deis

How Incentives & Contributions to Borrowers Affect Your Conforming Loans! Written By: Leslie Petersen, www.MortgageCurrentcy.com. Leslie is a nationally acclaimed trainer and author for the mortgage industry, having owned a mortgage training company since 1992. She is known for her research and accuracy, and the ability to show loan officers and processors everywhere how to make their loans work. She has been able to draw upon her more than 30 years of mortgage experience to provide the most thorough mortgage training to more than 13,000 students around the nation. One of the major changes addressed in FannieMae Announcement Letter 7-23 is how Fannie Mae (and Freddie Mac) will now treat ANY incentive or contribution by interested parties in the transactions—including real estate commissions paid back to the buyer. While the percentages remain the same, FannieMae has defined some of the incentives more clearly than ever before. Any time that a party with an interest in a purchase transaction contributes something to the borrower as an incentive to purchase, it is considered an Interested Party Contribution (IPC). IPCs are either financing concessions or sales concessions. Financing concessions are allowable up to certain (unchanged) pre-determined percentages based on the CLTV of the transaction. Sales concessions must always be deducted from the sales price before calculating the LTV and CLTV ratios for underwriting and eligibility purposes. Changes and clarifications to Fannie Mae’s IPCs rules are: Written By: Leslie Petersen

The Skinny on FHA Loan Limit Increases! Written By: Leslie Petersen Everybody keeps asking if FHA loan limits were increased with the Economic Stimulus Act, and if so, by how much?  The final version of the Stimulus Act was signed by the President on February 13th, and YES, FHA  maximum loan limits are increased!  There's a lot of confusion and misinformation out there, probably because there's a lot that we don't know yet. But there is plenty that we DO know, and I think it's great news!  I'm only going over the single-family provision of the Act, of which we DO know:  FHA maximum loan limits are increased. The increase is for FHA loans that are approved on or before 12-31-2008. $271,050 is the new FHA floor, based on 65% of Freddie Mac current limits.  The previous floor was $200,160 based on 48% of Freddie Mac limits. The new limits will be the lesser of: 125% of the Area Median Price; or $729,750 which is 175% of 2008 Freddie Mac limits. HUD has 30 days after enactment to define the Area Median Prices in the Country and publish the new loan limits. This means that ALL FHA limits will be increased by something! The areas with low median prices will go to $271,050. The areas with high Area Median Prices can go as high as $729,750. But until we know what HUD will use for Area Median Prices, we won't know what any of the exact amounts are. Written By: Leslie Petersen

FHA Payment Abatement Rules Written By: Leslie Petersen, Rules and Regulations Expert and Editor of www.MortgageCurrentcy.com. Question: Have you ever heard of a FHA loan that would allow the seller to pay the interest portion of the payment for up to six months out of the seller contributions? ~ Vicki Williams, Montgomery, AL Answer: Yes, this is an acceptable FHA practice! It’s just like the payment abatements that are no longer allowed by Fannie Mae and Freddie Mac, but it’s interest abatement, only. FHA allows 6% to be paid by the seller, builder, real estate agent, or other third party for financing concessions, regardless of the LTV or loan amount. The allowance for interest payment abatements comes directly from HUD Handbook 4155.1 REV-5, 1-7, A., second paragraph: “The six percent limitation also includes seller payment for permanent and temporary interest rate buydowns and other payment supplements, payments of mortgage interest for fixed rate mortgages and GPM only (but not principal)…” It reads loud and clear to me, and I verified its acceptability on a recent phone call with one of the HUD Underwriters. Payment of mortgage interest on behalf of an FHA borrower is acceptable as long as: Written By: Leslie Petersen

Investment Property Guidelines Simplified - Fannie Mae & Freddie Mac Written By: Leslie Petersen, Rules and Regulations Expert and Editor of www.MortgageCurrentcy.com. As lenders tighten their underwriting belts, the rules for residential (1- to 4-unit) investment property mortgages get even tougher. I’ve heard from a lot of brokers questioning whether Fannie Mae and Freddie Mac loans are a realistic option for their investor borrowers. In response, I believe that Fannie and Freddie mortgages are the best possible options for your borrowers. The rates, terms, and products are far superior to almost anything else that you can find in today’s market. At the same time, we all know that investment property mortgages are super-high risks for the lenders and investors. These are not easy loans, and they continue to get more restrictive. The way that I see it, there are two primary challenges: (1) Most loan officers don’t know what they are doing; and (2) It’s very difficult to squeeze an investor borrower into a set of convoluted and prohibitive rules. The second challenge is trickiest because you just can’t squish some of your clients enough, and they flat out won’t qualify. What’s best is to recognize it quickly. Which brings us back to the first challenge, and I can help you, right now, by interpreting the rules for you and how you can get those loans closed! (www.MortgageCurrentcy.com) Let’s start with the rules. Written By: Leslie Petersen

Are Your Competitors Violating Reg Z? Written By: Karen Deis Listening to the radio the other day, I heard an ad from a mortgage lender advertising an interest rate! The rate was mentioned at least 5 times in the 30-second commercial. The rate was comparable with other rates out there. The troubling part? It was one of the biggest lenders in the country--your competitor--who I'm sure has a huge team of attorneys! WHAT WAS MISSING WAS THE REG Z disclosure--and yes, it applies to written ad, TV and radio, too. One of my competitors was a large bank and they did not comply with REG Z. Their written ad had a great rate, but no disclosure that it was an ARM. I sent them a letter (return receipt) giving them the rule and the copy of the ad and asked them to change it. They did not. I reported it to the State's consumer division, and the FTC! They changed it. Why did I do that? Because I wanted to level the playing field...if I had to disclose the terms and conditions, then the big boys had to play by the same rules. Are your competitors violating Reg Z? Here's the challenge to you - Written By: Karen Deis

New Rules if Client Does Not Sell Current Home Before Buying Another One! Effective 8-1-2008 Written By: Leslie Petersen, Rules and Regulations Expert and Editor of MortgageCurrentcy.com. (The following is in regard to Fannie Mae Announcement 08-13, June 13, 2008) For loan applications taken on or after 8-1-08, the following applies to all loans, both manually and DU underwritten. If the borrower is purchasing a new residence and is retaining current principal residence (not sold at time of closing) the following apply: Existing Home Pending Sale, Not Closed Include both current and proposed payments in DTI Existing Home Converts to Second Home Include both current and proposed payments in DTI; and Reserves required are 6 months PITI each for both properties; or If 30% equity is evidenced in existing property per new appraisal, AVM, or BPO – 2 months PITI each for both properties; or Reserves Per AU approval Existing Home Converts to Investment Property Home Include both current and proposed payments in DTI; and Reserves required are 6 months PITI for each for both properties; or Per AU approval OR: Use 75% of rental income to offset current payment, but only if: 30% equity is evidenced in existing property per new appraisal, AVM, or BPO; and Fully executed lease is in file; and Security deposit received from new tenant is verified & deposited into borrower's account Interpretive Comments Here’s what Fannie left unsaid. Far too often lately, individuals who are way upside-down in their current homes are going out and buying new homes. Knowing that their current home won’t sell, the borrower makes a decision (sometimes with the counsel of a real estate agent and/or the loan officer) to keep their current house as a “second home” or a “rental”. Continue the story for Leslie's interpretations of the rule for Loan Originators, Processors, Underwriters and Owners/Managers. Written By: Leslie Petersen

New Fannie Loan Limits - Act Now - End of Year Decrease! Written By: Leslie Petersen, President, MortgageCurrentcy.com, the online newsletter that interprets the rules and regulations 4 different ways - how it affects loan officers, managers, processors and underwriters! Effective with loans that are closed (note date) after 12-31-08, new conforming maximum loan limits are: General Limits - "shall not exceed" $417,000: 1-unit $533,850: 2-units $645,300: 3-units $801,950: 4-units Maximum Loan - 150% of General Limit $625,500: 1-unit $800,775: 2-units $967,950: 3-units $1,202,925: 4-units High Cost Area - Calculated at the greater of 115% of median home price in the area; no lower than the General Limit, and no greater than the Maximum Loan. Beyond 2009 - Increases will follow the housing price index as maintained by the Federal Housing Finance Agency Increase will be equal to percentage increase in housing index Limits will never go down If limits remain the same due to a decrease, the next year will take the cumulative amount to calculate the new loan limits Leslie's Comments I think this is excellent news! Yeah, I know that we lost the $729,750 maximum, and that it will hurt, but remember that it was temporary? And we’ve ended up at $625,500 in high cost areas! It’s a heck of a lot better than $417,000 – which is where we were headed! The new maximum loan amounts may not take effect until 1-1-2009, but you can still use this information now. Let’s review how: (Realtor® Flyer/Email for subscribers) Written By: Leslie Petersen

Does Fannie, Freddie, FHA or VA Consider a Loan From Your 401K as a Debt to Qualify These Days? Written By: Leslie Petersen, MortgageCurrentcy.com Question: Does Fannie, Freddie, FHA or VA Consider a Loan from Your 401K as a Debt to Qualify These Days? One loan officer asked 3 people and got conflicting answers from the wholesale reps and underwriters. Has that happened to you? Conflicting information doesn't surprise me, probably because Fannie & Freddie have flip-flopped on the issue more than once. FHA and VA have not changed. Read what is considered, what is not and the resources to back you up! Written By: Leslie Petersen

Top FHA Myths & Little Known Quick Tips - Mortgage Talking PointsTM Included Written By: Leslie Petersen, MortgageCurrentcy.com QUESTION: I'm fairly new to FHA because the loan limits in my area weren't viable until this year. The problem is my real estate associates aren't convinced that FHA is worth it. They tell me that the seller has to pay for some of the borrower's closing costs, that it's too hard to get clients qualified, and their clients don't like having to pay mortgage insurance. Is any of this true? I'm not quite sure how to deal with their preconceived perceptions. Submitted by: Cindi Gardner, Opes Advisors, California Written By: Leslie Petersen

Can a Borrower have More than One FHA Loan? Written By: Tracey Rumsey, MortgageCurrentcy.com Stop me if you've heard this one...a loan officer walks into a real estate office and overhears a bunch of real estate agents talking FHA loans. Evidently, a borrower had a previous FHA loan and the agent just found out that the loan had been denied because of this reason. Which begs the question...can a borrower have more than one FHA loan at a time? The answer is YES! A borrower can have more than one FHA loan. There are four common scenarios under the current FHA rules and regulations where this can happen. If you or your company are approved FHA lenders (or are going thru the process right now) you need to know about these exceptions! In fact, we have created a MortgageTalkingPointsTM flyer for you to distribute to your agents. Here are the 4 exceptions along with the Mortgagee Letter in case you need to prove it to the underwriter! Written By: Tracey Rumsey

How Does a Bill Become a Law? Written By: Leslie Petersen and John Norman, Esq. (MortgageCurrentcy.com) Recently Congress passed the Housing and Economic Recovery Act of 2008 in what was lightening speed for Congress. In order for a Bill to become a law, there are several different hearings in each Chamber of Congress and procedural hurdles, which typically make it a long time before a Bill becomes law. A bill is essentially an idea for a new law. A legislator - who is either a Senator or member of the House of Representatives - gets an idea for a new law from a constituent(s), a lobbyist, from legislative leadership, or from their own experience. Almost every consumer protection law from RESPA, TILA, ECOA, to HMDA grew out of a desire to address very specific problems in lending and in some cases, specifically mortgage lending. So let's step through this process for the making of the laws that govern our nation and our industry. INTRODUCTION OF THE BILL After the legislator gets an idea for a bill it must be "introduced". The introduction comes after the legislator works with legislative counsel to write, or "draft" the bill. The draft is then placed in the "Hopper" by the Representatives in the House of Representatives; or, introduced by the Senator during the Morning Hour1 in the Senate. After the bill is introduced it is given a number and sent to the Government Printing Office (GPO) for copies to be made. 1Morning Hour - A 90 minute period on Mondays and Tuesdays in the House of Representatives set aside for five minute speeches by members who have reserved a spot in advance on any topic. (www.VoteSmart.org) ASSIGNED TO COMMITTEE(S) Next, the Presiding Officer in the Senate or the Speaker of the House of Representatives assigns the bill to a committee. A bill can be assigned to multiple committees or different parts of the bill can be assigned to different committees. The committee chair can then: (a) do nothing; (b) send the bill to a sub-committee; or (c) schedule hearings to debate the bill. These three options occur in varying sequences with any bill: i.e., a bill coming out of a subcommittee can be held in the full committee without further action. IN THE COMMITTEE No Action (doing nothing): If the committee chair fails to hold hearings or if the committee takes no action on the bill, then it is effectively defeated or killed. To stop this from happening, the House allows a bill to be lifted from committee by a Discharge Petition, but it takes a minimum of 218 signatures from the members of the House to lift the bill. Sent to a Subcommittee(s): Subcommittees follow some or all of the same procedures as a full committee. When their work is completed, findings are sent to the full committee. Full Committee Hearing: Committee steps are: Comments from relevant government agencies, industry representatives and other parties. Hearing and debates may be held. Subcommittees report their findings. Finally, the bill is "ordered to be reported" for a final vote. The committee holds a "mark-up" session during which it makes revisions and additions. If substantial amendments are made, the committee can order the introduction of a "clean bill" which will include the proposed amendments. This new bill will have a new number and will be sent to the floor while the old bill is discarded. The chamber must approve, change or reject all committee amendments before conducting a final passage vote. If the bill gets a passing vote, the committee staff prepares a written report explaining why they favor the bill and why they wish to see their amendments, if any, adopted. Committee members who oppose a bill sometimes write a dissenting opinion in the report. The report is sent back to the whole Senate or House of Representative floor, and is placed on the calendar. House of Representatives Rules Committee: In the House, most bills go to the Rules Committee before reaching the floor. The committee adopts rules that will govern the procedures under which the House will consider the bill. These rules can have a major impact on whether the bill passes. For instance, a "closed rule" sets strict time limits on debate and forbids the introduction of amendments. The rules committee can be bypassed in three ways: 1) members can move rules to be suspended (requires 2/3 votes); or 2) a discharge petition can be filed; or 3) the House can use a Calendar Wednesday2 procedure. 2 Calendar Wednesday - A procedure in the House of Representatives in which standing committees may bring any bill up for consideration that was reported on the floor on or before the previous day. The procedure also limits debate for each subject matter to two hours. (www.VoteSmart.org). TO THE HOUSE OR SENATE FLOOR Now the Bill is placed on one of the calendars, usually in the order in which it was reported to the floor. All the members of the House or the Senate then consider the Bill for debate on the floor. The House of Representatives follows the rules for debate as set by the Rules Committee. It is helpful to understand that House Rules are generally based on majority rule. Thus, no one member of the House can hold up a piece of legislation by themselves. In the Senate there is unlimited time for debate and the Majority Leader decides when a bill can be considered on the floor. Any individual Senator can talk as long as he or she would like, thus, a small number of Senators or even one Senator can filibuster (talk a Bill to death). If a vote is held by either Chamber (House or Senate), and the majority vote is in favor of the Bill – it passes. If any Bill passes the Senate, it must then be sent to the House to start the process over again under the House rules. If any Bill passed the House, it must then be sent to the Senate where it starts the process over again under the Senate Rules. DIFFERENT VERSIONS PASS In all likelihood, once a Bill passes both Chambers of Congress there are differences between the two versions. In that case it is then sent to a Conference Committee consisting of members of both Chambers. The Conference Committee will then come to a compromise and issue a Conference Report. The Conference Report must then be sent to both the House of Representatives and to the Senate for approval. TO THE PRESIDENT FOR SIGNATURE If both Chambers approve the Conference Report, the bill then goes to the President for a either a signature or a veto. If a bill is signed, it becomes law. If it is vetoed, it will only become law if both Houses of Congress override the veto. WHAT IF THE BILL DOESN'T PASS IN THE CURRENT SESSION? Currently we are in the 110th Session of Congress. The Federal Fiscal Year begins in October. Thus, each Congress ends in September. The current projection is that the 110th Congress will adjourn on September 26, 2008. If a bill fails to pass both Houses of Congress during any session, it is dead and the process must start over again during the next session. DELIBERATE AND TRANSPARENT SYSTEM You can see that we have a system that is deliberative and transparent. This process takes a long time to complete for any idea to become law. The Housing and Economic Recovery Act of 2008 had momentum because policy makers wanted to look like they were addressing the problems created by the sub-prime fallout. Many of the ideas in the Recovery Act were proposed as early as last year. For example, the licensing provisions that were part of H.R. 3915 that passed the House in December 2007. It looks like there are more changes to come, but we will need to wait for the Presidential Elections to see who controls the White House in 2009. To get our voices heard it is important to vote, contact your Senator and Representative, and generally be active in politics. “Democracy is not meant for the naive, apathetic or the lethargic.” (Neal A. Maxwell) If we, the people, fail to participate, then the system does not function properly. If the system doesn’t function, confidence in the system is lost. When confidence in the system is lost, we cease to be a society governed by the rule of law. The rule of law is what preserves our freedoms. As we can see with the subprime crisis, there is no confidence from investors in mortgage-backed securities. This lack of confidence could potentially erode the whole financial system. Perhaps the Housing and Economic Recovery Act of 2008 will restore that confidence, especially in the debt issued by Fannie Mae and Freddie Mac. But we must also insist that our Representatives and Senators fix the lack of confidence caused by the actions of rating agencies and security issuers, which also facilitated this crisis. Copyright - 2009 - LoanOfficerMagazine.com Written By: Leslie Petersen and John Norman, Esq.

Fannie Establishes Additional Requirements and New Appraisal Addendum (Form MC1004) - Mortgage Talking PointsTM Flyer Included Written By: MortgageCurrentcy.com Staff (MortgageCurrentcy.com) Rule Synopsis: Fannie Mae has announced they are establishing additional appraisal requirements to supplement the Uniform Standards of Professional Appraisal Practice (USPAP) NEW Form 1004MC – “MARKET CONDITIONS ADDENDUM to the APPRAISAL REPORT” required on all 1- to 4- family appraisal reports dated on or after April 1, 2009, and includes Trend of Property Values, Demand/Supply, Marketing Time – Additional data required on form Written conclusions and reasons: must be included in writing for declining market determinations, over-supply, or marketing time > 6 months Transfer to appraisal: CONCLUSIONS reported on 1004 in “Neighborhood” Section Seller & Third Party Concessions Analysis – required to determine trends Adjustments for concessions on market influence, not dollar for dollar Adjustments may be required EVEN if concessions are typical UPDATED APPRAISAL POLICIES Effective with Appraisals Dated on or after January 1, 2009: Supervisory Appraisers – Must inspect all properties if signing as appraiser Sales Contract Required – Lender must provide appraiser with sales contract, all addenda, and all contract changes during the loan process Appraiser’s Selection of Comparables – Appraiser must provide explanation if comparable used is outside of subject’s neighborhood. Written By: MortgageCurrentcy.com Staff

All You Need to Know About FHA Streamlined Refinances! Written By: Leslie Petersen, author of the FHA and VA Streamlined Refinance Handbook and mortgage rule & regulation expert! Work less, make more money and put your client into a better loan! Yeah, right – heard that before, haven’t you? What about no appraisal and no income qualifying? Too good to be true, right? Let’s test it out. All of the following are rumored to be features of the FHA Streamlined Refinance program. How would you answer? Read the answers and subscribers can download the “Funds Shortage & Commission Calculation Checklist”. Written By: Leslie Petersen

Fannie Mae: MyCommunityMortgage® Refinance - Best Kept Secret Written By: Dan Moralez, First Place Bank and Staff Writer for MortgageCurrentcy.com. Did you know you can get more of your loans approved—and with better rates—by offering the little-known MyCommunityMortgage Refinance option? Simply put, one of the biggest loopholes in Fannie Mae’s guidelines and most loan officers don’t even know it exists. You can get many more loans approved, with better rates, cheaper MI and no FICO score pricing adjustments. PLUS, it’s easier to get DU approvals. With rates at record low levels, refis are booming and so are the problems with FICO score adjustments and appraisals that are coming in low. So what does this have to do with Fannie’s MyCommunityMortgage®? MCM allows for Limited Cash out Refinance Transactions. In other words, this product can be used not only to purchase but to refinance. Consider the following: Written By: Dan Moralez

How to Structure Your FHA Streamlined Refinances So You Don't Lose Your Commissions Written By: Leslie Petersen, HUD and VA Expert - New FHA/VA Streamline Refinance Handbook (Updated February 2009) - $97. Be honest with me here! How many times have your "FHA Streamline Refinance" borrowers arrived at the settlement table only to be told that they are short funds to close; and you don't even know how it happened?! As you frantically attempt to save the deal, you may end up cutting your precious commissions, or heaven forbid, losing the transaction entirely. The problem lies in the calculation - which are entirely unlike any other loan type. Minor changes and miscalculations can be disastrous. In the end, it's all a numbers game, and you must stay on top to win. And yes, I know how much all of you love math - but you can do it! Here's how: Written By: Leslie Petersen

A Reg Z Primer: What You Need to Know to Comply with the Advertising of Loan Terms! Written By: Karen Deis Regulation Z covers many areas of consumer credit—but the most misunderstood and widely misused is the section that governs the way you advertise mortgage information! To quote the law (regarding open-end and closed-end loans when it applies to owner-occupied real estate) it covers “any commercial message that promotes consumer credit”. One more important piece of information—this law ONLY applies to residential properties that are to be owner-occupied. (So if the listing or your ad is plainly geared towards “real estate investors” you don’t have to disclose the financing terms.) Additionally, the law applies to any real estate financing that requires 4 or more payments! First, the definition of a “creditor” means anyone who has financed 5 or more transactions in the prior year! If a seller is offering financing, they are exempt from the law unless they are in the business of providing home mortgages. Have you ever prepared a “finance sheet” for a real estate agent? Have you co-marketed (paying for your fair share of the cost of the ad) in a real estate magazine? Do you have rates displayed on your website, blog page, billboards, electronic signs, window displays? Are you involved with foreclosure properties where your company is approved to “finance” the resale? (Yep, Fannie and Freddie and you are NOT exempt!) If you are complying with the law, and your competitors are not, I have always thought, hey if I have to provide the disclosures in my ads, they do, too! In fact, throughout my mortgage career, I have reported both banks and mortgage companies to the FTC and my State’s Financial Department. What I can tell you is that they sent a letter immediately and my competitors complied right away! Reg Z advertising rules can be very intimidating and fines of up to $10,000 per infraction are normal. To date, the largest fine paid by a builder was $300,000. Here’s a Reg Z Advertising Rule Primer and a handy reference chart for Fixed, Buy downs and Variable Rate Loans! (As always, be sure to check with your attorney if you have any questions.) Written By: Karen Deis

Underwriting Rules for Rent-to-Own or Contract-for-Deed Written By: Kim Payne, Folsom Mortgage, Folsom, CA “Rent to Own Your Next Home” “No money down”! This is an old standby way to buy a home. Call it what it is – a Lease Option – a lease for a set period of time with an option to buy the property at an agreed upon price by an agreed upon date. A second method to sell the home would be a Contract For Deed—aka Land Contract. We are hearing these phrases more and more these days and blogs are brimming with advice on how to do this. Some of the information is just plain wrong! So, what’s it all about? As a loan officer, you need to know so you can advise agents, sellers and future homebuyers on what to expect when buying a home on a lease/option or land contract and what documents they will need somewhere down the road. Written By: Kim Payne

How to Become a VA Lender: It's Not Rocket Science! Written By: Tracey Rumsey, Staff Writer, MortgageCurrentcy.com Yes…I know…it’s government lending. Yes…I know…government can’t spell S-I-M-P-L-E, let alone utilize it in their practices. But honestly, if you are a broker who would like to originate VA loans, but go crossed-eyed just thinking about what that may entail – think again. VA does not work anything like FHA when it comes to lender approval. All you need to do is to become an “Agent” for a VA approved lender and you’re in! Here’s how it works: Written By: Tracey Rumsey

Restricted Use Appraisals and Why You Should Use Them! Written By: Karen Deis No longer will you be able to call your local appraiser to “just run some comps”, with the promise of ordering the appraisal thru him or her in the future! Well, I guess you could still do that...but what incentive would an appraiser have to provide you with value information? That’s one of the reasons for the HVCC in the first place. Since most of your appraisals will be performed by Appraisal Management Companies (AMC’s) (FHA and VA are exempt from the HVCC Rules), will you have to wait for two weeks to find out if you have a value problem? And all the while, the “lock clock” is ticking! Who knows what’s going to happen if the appraisal value is challenged. You can get a good estimate, quickly, by using a little-known report called a Restricted Appraisal. Appraisers have been talking about it on blogs and discussion boards—it’s a way for them to provide sellers and borrowers with a preliminary value—and get paid for it! Bottom line: preliminary values will no longer be “free”. But first a warning! I personally talked to 7 different appraisers throughout the country and only 2 of them knew what I was talking about. Some did not even know there was such a form. Read About the Restricted Appraisal Report: Why it’s a viable option; and View a copy of what it looks like, Prices that appraisers are charging and How to have the pre-appraisal discussion with your real estate agents, sellers and borrowers. Written By: Karen Deis

Fannie Mae DU Refi Plus - Is it Enough to Help Struggling Homeowners? Written By: Dan Moralez, Staff Writer, MortgageCurrentcy.com Fannie has introduced 2 new refi programs, Refi Plus and DU Refi Plus. You’d think they’d name them differently so it’s not so confusing…but here’s the scoop. Refi Plus is ONLY available for companies who currently SERVICE the loan. DU Refi Plus is available for companies who currently DO NOT service the loan (and servicers). This article is for companies and loan officers who DO NOT service the loan. First, 2 important things we need to mention: The current streamline refi options ARE GOING AWAY! Secondly, the DU Refi Plus only makes sense for clients who are at 80% LTV’s and here’s why! Written By: Dan Moralez

11 Government Websites You Should Care About! Written By: Karen Deis The Obama Administration has ushered in a new era—information teamed with technology has created more transparency than ever before. In fact, I have personally monitored these websites over the last few years and can assure you that I never, and I mean never, have not only found it easy to find “stuff”, but RSS feeds keep me informed and keyword searches make them easy to navigate! This article not only shares 11 government websites that you should care about, I also explain why each one is important and what to look for when you visit each site. Yes, we have done the “content shopping” for you! Even if you don’t originate FHA loans or VA loans, as a professional loan originator, you still need to know the latest updates! For example, did you know that the 95% FHA cash out refis are going away on April 1? (MortgageCurrentcy.com) Here are the eleven websites with explanations as to WHY each one is important to you! Twitter.com FinancialStability.gov WhiteHouse.gov FederalHousingTaxCredit.com HUD.gov eFannieMae.com FreddieMac.com MakingHomeAffordable.gov Treas.gov Facebook.com VA.gov Written By: Karen Deis

Myths & Realities: Home Valuation Code of Conduct Reprinted with Permission: Appraisal Institute (for further information, please contact: InsideTheBeltway@AppraisalInstitute.org) Myths and Realities The Home Valuation Code of Conduct (HVCC) is scheduled to take effect May 1, 2009. As of that date, institutions that deliver loans to Fannie Mae or Freddie Mac must represent and warrant that the appraisals obtained adhere to the requirements found in the HVCC regarding appraisal management, ordering and review by lenders. The release of the Home Valuation Code of Conduct has raised many questions on the part of lenders, appraisers, and others involved in mortgage lending activities. Lenders that sell loans to Fannie Mae or Freddie Mac are likely reviewing their internal appraisal operations, and some may have to retool or restructure their operations to achieve compliance. Unfortunately, there is confusion and misinformation in the marketplace regarding HVCC compliance and appraisal policies in general, particularly in regard to use of third party vendor management firms. To help bring clarity to these issues, the information below is intended to identify some of the myths we have identified and state the reality. Myth: The HVCC requires lenders to use Appraisal Management Companies. Reality: Use of appraisal management companies is not required under the Home Valuation Code of Conduct (HVCC). Lenders may engage appraisers directly without the use of third parties. Myth: Mortgage sellers cannot achieve compliance without outsourcing the appraisal function. Written By: Karen Deis

FHA Minimum Standards for Existing Property Written By: Tracey Rumsey, Staff Writer, MortgageCurrentcy.com. Foreclosed homes pose a special problem when purchased and sold using FHA financing. While there are no "minimum property standards" in the true sense of the word, there are some guidelines that FHA appraisers use. Most of the guidelines are "common sense" requirements - having to do with the health and safety of the FHA homebuyer. Subscribers can download the checklist and distribute to your real estate agnets - regardless if you offer FHA loans or not! Written By: Tracey Rumsey

Fannie Mae’s New Selling Guide: The Good, Bad & The Ugly! Written By: Dan Moralez, Staff Writer, MortgageCurrentcy.com. Interpretive Comments It's finally out and available, Fannie Mae's newly updated Selling Guide. So you’re probably wondering what we think about it? As part of the writing I do for Mortgage Currentcy, I rely heavily on my own personal knowledge with over 18 years experience originating, but I obviously also use tools such as Fannie Mae's Selling Guide. It is of the utmost importance that the information we provide our subscribers is accurate and a crystal clear interpretation of the agencies guidelines. If you have read the agencies guidelines in any detail in the past, you know like I do that they are difficult to read, understand and interpret. In addition, they often times reference other sections of the selling guide so you feel like you are going on a wild goose chase. Both agencies provide free online access to sources such as AllRegs in an attempt to make it easier for partners to find information. Truth be told, the agencies and AllRegs have done such a great job. However, there is a need for a publication such as Mortgage Currentcy that is able to break down all of the jargon while showing you how to apply the information to what you do on a daily basis. Written By: Dan Moralez

Truth in Lending - The Final Rule! Written By: Leslie Petersen, MortgageCurrentcy.com Advisory Board Member & President, Mortgage Training Tools. Yikes – there are 94 pages of whopping Reg Z revisions, and hardly anyone’s heard about them! And there’s just so much you NEED to know, I made it into a two-parter. Part One: Following are new rules that regulate advertising, the very heart of the mortgage industry. These regs affect just about everything that you do to get business in the door; e-mail blasts included. Part Two: Next month is everything else, which includes a new category of HOEPA called “High Priced Loans.” And don’t think you’re off the hook, because “high priced loans” will actually affect some of your prime loans. And there’s a lot more. “The Feds” never cease to amaze me. This Rule was written an entire year ago to protect consumers from the rip-off brokers who are pretty much gone from the industry by now; and geeze, it sure messes up any simplicity you try to achieve in advertising. And here’s a good one: How many of you call yourselves a “Mortgage Loan Counselor,” or some variation with “counselor” in it? I’m seriously thinking you better get yourselves new business cards pretty darned quick. As of 10-1-09, to be exact. I’ll clarify below. I’m getting ahead of myself. Nothing’s effective until 10-1-09, and you will truly have enough time for implementation. So stay tuned for the September issue of MortgageCurrentcy. As for advertising regs, read on! The Official Rule Effective with all advertising on or after 10-1-2009, Regulation Z, Section 226 is revised. The intent is to ensure that advertising provides accurate and balanced information and does not contain misleading representations. Written By: Leslie Petersen

FHA 203(k)...The Process, The Players, The Possibilities (Part 1 - The Process) Written By: Catherine Hall, 203(k) Streamline Expert and Advisory Board Member (MortgageCurrentcy.com). Visit her website at 203kInABox.com. This is the first in a three part series that will be presented to introduce the program to some and re-acquaint others with an FHA product that is receiving a lot of attention in this “New Home Buying Market”- and rightly so. It is a great product and one that every member of the homeownership industry should take the time to understand – at least their potential role in the process. PART I- THE PROCESS What is a 203(k) mortgage? The FHA 203(k) product/program provides a buyer with the ability to buy a home that is in need of significant repairs with an FHA insured loan and get the repairs completed after closing. When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim. Often the interim financing (the acquisition and construction loans) involves relatively high interest rates and short amortization periods. The Section 203(k) program was designed to address this situation. The borrower can get just one mortgage loan, at a long-term fixed (or adjustable) rate, to finance both the acquisition and the rehabilitation of the property. To provide funds for the rehabilitation, the mortgage amount is based on the projected value of the property with the work completed, taking into account the cost of the work. Who could use this program? Written By: Catherine Hall

Mortgage Credit Certificate - Doubling Your Borrowers' Tax Benefits Written By: Dan Moralez, Staff Writer, MortgageCurrentcy.com. It seems like as much as things have changed in the mortgage business, they stay the same. It never ceases to amaze me how the products we used to use are making a come back in today’s lending environment. Mortgage Credit Certificates (MCCs) are such a product. An MCC is a dollar for dollar tax credit on a borrower’s federal tax return. This credit is used to offset a tax liability. That means in order to get the full benefit of the credit your client must have a tax liability at the end of the year. This liability is “washed” away by the tax credit. Most borrowers create a tax liability by changing their withholdings out of their paycheck. That means more money in every paycheck. Because the amount of tax withheld from the borrowers check is decreased, this should lead to a tax liability at the end of the year. The tax liability is able to be washed away dollar for dollar by the MCC credit. Read examples on how it works. Download copies of the IRS Forms, IRS Publication 530 and Mortgage Talking PointsTM flyer for your real estate agents. Written By: Dan Moralez

Explaining MDIA in Simple, Understandable Language Written By: Karen Deis Unless you have been living in a cave the last few months, you are aware that your life in the mortgage business, as you know it, has changed as of July 30, 2009. The Mortgage Disclosure Improvement Act will impact ALL owner-occupied real estate transactions where there is a mortgage involved, including mortgage modifications, time-shares, reverse mortgages and vacation/2nd homes. Yes, the Federal Register has 76 pages of instructions. To simplify it for your real estate agents, builders and clients, here’s a shortened version you might use to explain the process and the mandatory waiting periods required by law. The bottom line is that the new rules are all about giving the borrower time to decide if they want the loan they applied for at the time of application. RULE: Borrowers have 7 days from the “official” application (meaning they must have a property address) before they can close the loan. TRANSLATION: Rush closings are a thing of the past – even if a file is transferred to you from another mortgage company. Written By: Karen Deis

The 1004MC - Making Market Condition Adjustments and Determining When Values Are Declining Written By: David A. Braun, MAI, SRA (President, Braun & Associates, Inc.) has been actively engaged in real estate appraisal, review, and consulting since 1976. David is also the author of Appraising in the New Millennium - Due Diligence & Scope of Work, 3rd Ed. All of his products can be found on ScoopGear.com/automated-valuation-techn.html. I am enthusiastic about appraisers gathering large amounts of data onto a spreadsheet for analysis. The power gained from the appraiser being enlightened through this process is staggering. I am on record for supporting Fannie Mae in the over-all process, and condemning the appraisal profession for not beating Fannie to the punch. I believe strongly that the form (not the process) is far too limited. Many creditors are correct when they say, “Appraisers are providing misleading market condition analysis.” I agree that many appraisers are limiting their data and scope of work to such a degree that the results and conclusions are just not reliable. Appraisers are much more like the Wright Brothers at Kitty Hawk, than the modern-day jet pilot . . .but we have to start somewhere. In this part of “The 1004MC INDUSTRY UPDATE” the process of extracting the appropriate market conditions (time) adjustment for the direct comparison grid and determining the value trend’s direction (stable, increasing, declining) will be addressed. This method is appropriate for vacant land, apartments, and various commercial properties. Microsoft Excel is the canvas used in the following adjustment extraction process. While I’m not trying to turn loan officers and real estate agents into appraisers, I thought it would be enlightening to show you some of the models/formulas used to complete the 1004MC form. The market conditions extraction process has the following steps: Written By: David Braun

E-Sign Act and How It Relates to the Mortgage Disclosure Improvement Act Reprinted with permission from MortgageCurrentcy.com. The Mortgage Disclosure Improvement Act says that you can email your disclosures--BUT THAT IT MUST COMPLY WITH THE E-SIGN ACT of 2001, AKA Electronic Signatures In Global and National Commerce Act. So, I went in search of what THAT law was all about and wanted to share what I found, including a form that I created that you might want to use if you plan to email any of your disclosures. However, please make sure that your company/legal counsel approve - because you just might want to create your own form, using this one as an example. Written By: Karen Deis

Fannie's Conventional Alternative to the FHA 203k Program - HomeStyle® Renovation Program Written By: Dan Moralez, Staff Writer, MortgageCurrentcy.com. What you probably don’t know about this product is the fact that it has been around since 2005! So where have we all been? As FHA 203k loans grow in popularity, so does the frustration associated with those loans and their limitations. Fannie’s HomeStyle® Renovation loan is a great alternative with much more flexibility than a 203k loan. This is a great alternative for homebuyers purchasing a home. If you are doing the remodel of an existing home, the LTV calculations are far less favorable. With all of the foreclosures, there has definitely been a demand for rehabilitation loans to help homeowners not only purchase but make improvements to the home they are purchasing. Many have turned to the FHA 203k program. However, the 203k program has limitations not found with Fannie Mae's HomeStyle® Renovation loan. Fannie's HomeStyle® Renovation product is available on a negotiated basis. Not all lenders have access to this product. Here’s what you need to know: Written By: Dan Moralez

YSP & Solutions to the Proposed Federal Reserve Rule! Written By: Brent Green, Staff Writer, MortgageCurrentcy.com. This PROPOSED Rule prohibits payments to mortgage brokers and to creditors’ employees who originate loans that are based on the loans terms and conditions. In English – the Rule bans YSP payments for everyone at the origination level. YSP Background—In Case You’re Wondering Yield Spread Premium – it exists. It exists at every level of the mortgage transaction and broadly defined, it exists in every industry where there are Wholesale and Retail channels. It is profit, and it's at the very core of our economy. For the purposes of this proposed Rule it is “the present dollar value of the difference between the lowest interest rate a wholesale lender would have accepted on a particular transaction and the interest rate a mortgage broker actually obtained for the lender.” The Fed concedes that while this is used for compensation, it may also be applied to costs, thereby benefitting the consumer. The primary problem according to the Committee on Consumer and Community Affairs is that YSP creates financial incentives to steer consumers toward riskier loans for which the loan originators receive greater compensation. According to the committee this creates a conflict of interest for the LOs and since the consumer is not aware of the conflict of interest, consumers cannot protect themselves against being treated unfairly. Written By: Brent Green

Confusion About Changed Circumstances and When to Issue a New Good Faith Estimate Written By: Brent Green, Staff Writer, MortgageCurrentcy.com. How does that go? “The road to ______ is paved with good intentions!.” The new RESPA rules started to go into effect over the past year and are scheduled to finalize implementation on January 1, 2010. “Changed Circumstances” is part of the implementation of the new Good Faith Estimate disclosure rules and tolerances. “Changed Circumstances” is the standard by which you determine whether you may (not should) issue a revised GFE. HUDs 7 (and counting) updated FAQ’s made a number of changes to the proposed rule and has clarified the different types of circumstances that can be a basis for providing a revised or new GFE. Brass Tax – HUD wants you to be clear about costs and does not want you changing costs without documented reasons that HUD considers allowable. But, just ask any head of operations – they have been sitting in webinars with attorneys to learn about the implementation of all the changes coming in January, and are coming out the other side thoroughly confused with no real consensus being reached. I will reserve judgment until I get to use all of this in practice, but I have got to tell you…so much for simplifying the rules. They are getting more complex and it is getting more and more difficult to achieve compliance. The 2008 RESPA proposed rule referred to “unforeseeable circumstances” and since these unforeseen circumstances happened enough to be “reasonably foreseen”, the final rule replaced the definition of “unforeseeable circumstances” with a new definition for “Changed Circumstances”. Now, what do the linguistic changes mean? Written By: Brent Green

HUDs Good Neighbor Next Door Homebuying Program - FHA Offers Half-Priced Homes Written By: Catherine Hall, (the “203k Queen”) is the author and creator of the 203k in a box consultant certification and training system. She has owned and operated Value Home Inspections since 1993. She can be contacted through her site 203KinaBox.com. (Information provided in this article is not intended to be legal advice and is informational only.) There are so many programs for homebuyers today that it seems that information about one of the best, most universally beneficially programs, has been drowned out in the din. This is a HUD program that not only helps and rewards our hardworking community professionals (teachers, law enforcement officers, firefighters and EMT’s) but the communities that need these professionals the most. The program is the Good Neighbor Next Door (GNND) Home Sale Incentive and believe it or not, it has been around since the mid 1990s! The GNND is a program to provide a substantial incentive for eligible professionals to buy HUD owned homes in specific “Revitalization Areas”. It allows these deserving buyers the ability to buy these HUD single-family properties for half of the list price. That’s right! A 50% discount on any HUD home listed in specific areas in hundreds of cities around the country. The purpose of providing these regionalized sales incentives is to promote revitalization through expanded homeownership opportunities. Thereby improving the health and stability of the communities in the most need. The revitalization areas are designated by HUD, based on household incomes, homeownership rates and FHA-insured foreclosure activity. The buyers can use any type of financing: FHA, VA, Conventional and Cash. If the buyer is buying FHA, they are eligible for any and all additional FHA incentives that would be available for a non-GNND buyer. For example, if they are qualified for an FHA-insured mortgage they may be able to get the home with the $100 down payment program and have all closing costs financed as well. Also, any state or local homebuyer program incentives are also permitted along with the discounted purchase. No, I am not making this stuff up, really! Oh, and let’s not forget the $8000 tax credit that has been extended until April 2010. The homeowner who is buying with the GNND program would get a “silent” second mortgage for the discounted amount – interest and payment free. This second mortgage stays active for a 36-month occupancy period; one of the few conditions of the loan, and an understandable one considering the purpose is to create a long-term improvement in the quality of life in these neighborhoods. The 3-year residency requirement begins following the end of the “move-in date”. Based on the condition of the home, HUD establishes the “move-in date” of 30, 90 or 180 days. This is due to the fact that HUD is aware that many HUD homes require repairs prior to occupancy. As the homebuyer is getting the property for half of it’s value, these homes are ideally suited to the FHA 203(k) Rehabilitation Mortgage (see article, FHA 203(k) - The Process, The Players, The Possibilities). Needed repair costs escrowed in with the purchase price many times are still less than the list/appraisal price of the home. The FHA 203(k) loan allows a maximum of 6 months for completion of the repairs - tying in nicely with the “move-in date” allowance. Here’s how it works: Written By: Catherine Hall

21 Website Resources to Help You Find Mortgage Info Immediately! Written By: Tracey Rumsey, Staff Writer, MortgageCurrentcy.com. I don’t know about you—but it seems to me that when I NEED to find information quickly—or documentation that needs to be included in a loan submission package - I swear, it takes me forever to find it. That’s why I compiled a list of 21 website resources that you can use to quickly find bankruptcy paperwork, Fannie and Freddie announcements and bulletins, FHA guides, handbooks (the new one) and FAQs, VA circulars & handbooks. I’ve also given you links to USDA lending and the most recent comments about the homebuyer tax credit directly from the IRS site (yeah, just try to find something on THAT site.) By the way, we have created a one-page resource as a download, in Word, so you can “save” it and quickly visit the website you need. The links are “live” so you don’t have to type the URL address. Written By: Tracey Rumsey

Who Regulates What Mortgage Rules? Written By: Brent Green, Staff Writer, MortgageCurrentcy.com. Want to know who regulates what rule? The volume of interrelated regulatory laws and governmental agencies makes mortgage banking one of the most highly regulated industries in history. And, why would you care? If you’ve ever tried to find a rule or reg (especially on search engines), you’ll get various versions of who is responsible for regulating them! If you’re ever audited, you can double check for yourself. If your clients or real estate agents need some answers—you can direct them to the PRIMARY government agency! Okay – We’ve put together a fairly complete list of Regs affecting mortgage lending for you! Included is a handy chart called: RULES, REGULATIONS & WHO ENFORCES THEM. The loving, yet mysterious regulators that are responsible for enforcement just like to join-in and enforce regs they have absolutely no responsibility for. In short, every regulator feels the need to enforce the other regulator's regs -- One big happy family. The more you understand about the mortgage industry and how the business really works, the more successful you will be. Our Main Players and some Respective Regulations (the short version) are: Written By: Brent Green

7 Prohibited Practices - RegZ - Section 226.24 Written By: Karen Deis I’ve seen about a dozen or so emails from loan originators, just within the last few weeks, who are using Mortgage/Loan/Financial Counselor as their “title”. Unless you work for a non-profit agency, as it relates to what the feds call “dwelling-secured loans”, you cannot call yourself a “counselor” anymore. You had better get yourself some new business cards because it’s one of the 7 things prohibited with the updated Reg Z rules that went into effect on October 1, 2009. Here are the new advertising rules that loan officers and real estate agents must now follow. Just take a look at the real estate section in your local magazines & newspapers. They are misleading the public—not a place you or your company want to be! The following are prohibited practices in advertising for ALL dwelling-secured loans. Written By: Karen Deis

How to Use HUD Settlement Cost Booklet as a Sales Tool Written By: Karen Deis, www.MortgageCurrentcy.com (7-Day Trial Subscription here) The year was 1974 - the first time that HUD required a uniform, standard closing statement (HUD1) and a Good Faith Estimate. Not much has changed since then—but expect 2010 to be the year the mortgage industry, as we know it, changes forever. After waiting almost 6 months for the new HUD Settlement Cost Booklet, it was finally released on Dec 16, 2009 (HUD’s website) and incorporates the new GFE, HUD 1 and MDIA disclosure dates. The entire mortgage application, closing and servicing (the loan) process is all explained in a 49-page booklet and I venture to say—it’s really GOOD! This booklet protects you, the loan originator and mortgage company manager! Pretty much everything clients need to know is covered—so clients can’t come back to you and say—“you’ve never explained that to me”. Some “experts” say that the booklet is required to be given ONLY to someone who is purchasing a home. We disagree. In the Mortgage Disclosure Improvement Act, it specifically lists the transactions that require disclosures and we believe that they renamed the booklet “Shopping for Your Home Loan…” for a reason! Written By: Karen Deis

Are You Having Trouble Explaining RESPA to Consumers? Written By: Tracey Rumsey, Staff Writer, MortgageCurrentcy.com & Loan Originator with SWBC Mortgage, Salt Lake City, UT. If RESPA changes are the final blow - swaying you to consider a simpler career path, say neurosurgery or something, you are not alone. I have to vent for a minute, because I know you are with me on this one. Let’s see…. A new borrower comes to you because his Realtor told him that you are a fabulous loan officer and he needs to get pre-approved and get a Good Faith Estimate. You look the new borrower square in the eye and have to say, “Wonderful! But I can’t give you a Good Faith Estimate because you haven’t identified a property. But I can give you this other “Non-Binding Settlement Estimate” form that my legal department has authorized, that has a 2-page disclaimer stating that you can’t hold me to any of these figures.” So the new borrower, with a confused look on his face, takes your new form and goes back to his Realtor. The Realtor calls you trying to figure out what you said to the new borrower who now, doesn’t feel so confident about you or anything else in this transaction. You explain. The Realtor calms down. The new borrower comes back with an identified property and says; “Now I want a Good Faith Estimate.” You prepare one, in perfect accordance with the new RESPA procedures and hand it to new borrower. He gasps. “This is $3,000 more than the previous estimate you gave!” “Oh, don’t be alarmed,” you say in your most toddler-calming voice. “This isn’t what you are really going to be paying. This is just how I have to disclose it to you.” The new borrower gives you a sideways suspicious glance, “But what about all the fees the seller is paying on my behalf? I can’t find a credit on this form for those.” “Don’t worry…it will all work out at closing. This is how we protect you now. We give you inaccurate information all the way up until you actually close on the property. Isn’t that fun! Kind of like a surprise party!” you happily chime - beaming like an idiot while beads of sweat run down your torso. The new borrower marches out to his car in tearful frustration and calls the next lender on his list. Scalpel anyone? Copyright - 2010 - LoanOfficerMagazine.com Written By: Tracey Rumsey

Are You Listed on the Official Website for Consumers to Check Your Mortgage License Online? by: MortgageCurrentcy.com Written By: Karen Deis The SAFE Act legislates that all states must have a loan origination licensing and registration system in place by August 1, 2009 (or August 1, 2010 if they have a governing body that meets biennially). If a state does not participate, HUD has the right to step in and implement the licensing system for those states. (Right now, Minnesota and Nevada are the only two states not included.) One of the provisions in the Act is that a consumer website be created to determine if a loan officer is in “good standing” with the licensing laws. We played with the National Mortgage Licensing System site and it’s pretty much impossible to find “individual loan officers”. Consumers are going to freak out if they can’t find you. Learn a few tricks on how to find your NMLS listing - to make sure your clients can verify that YOU hold a valid mortgage license. Here’s the official website link — but can you easily be found? Written By: Karen Deis

Mortgage Tax Credit Dates for Veterans Extended Until 2011 Written By: Karen Deis When HR 3548 - Tax Credit Extension for first timers and repeat buyers was extended, there was a special rule for members of the Armed Forces & Foreign Service. The Big News here is that if they sold a home between 1-1-09 and 4-30-10 - due to orders - they will qualify for the tax credit even if they are not first time homebuyers or if they are repeat buyers. Who qualifies? Written By: Karen Deis

NMLS Proposal to Streamline Financial & Annual Compliance Reports Written By: Wendy Bernard, Esq., experience includes General Counsel, Director of Regulatory Compliance, Vice President of Quality Control, and Post-Funding Operations for Mortgage Banking/Broker institutions since 1993. She is a member of the bars of the states of Connecticut, New Jersey and New York and is also an Adjunct Professor of Business Law. She is also a Captain in the United States Army Reserve Judge Advocate General Corps (JAG). Loan officers may not know or care, but if it’s the first quarter of any calendar year, a select group of mortgage professionals are swamped with annual and financial reports that must be submitted by the last day of March or the first day of April, depending on the State or regulator. The people who typically manage such reporting run the gamut from Sole Proprietors to Operations Officers. In some companies it may be delegated to the Accounting Department in conjunction with Compliance personnel, or either. Regardless of the designated Responsible Party in an organization, the main concern and focus is the same: accurate completion and timely submission of reports. Missing the deadlines can have significant consequences to the organization both in financial penalties and legislative sanctions. For example, some states may penalize late submissions up to $50.00 per day for every day past the annual report submission date. Others may fine organizations for late submissions and may immediately suspend the entity’s license to conduct business in that state. Annual and financial reporting compliance for a single jurisdiction is work enough, but if a company is licensed in multiple states, the first quarter can be a daunting undertaking. Approximately thirty-eight states have unique annual reporting requirements and approximately forty-two States have distinctive financial reporting formats. In addition, if the company is FHA approved, the responsible party must also manage and submit the independent auditor’s report and complete all annual renewal and recertification requirements. Whether reporting concerns the states or FHA, those ninety days from January through April can cause significant anxiety to the person who bears the organization’s reporting compliance burden. Enter the Nationwide Mortgage Licensing System (NMLS). On March 15, 2010, the NMLS announced that they were seeking public commentary on their proposed NMLS Mortgage Call Report, a reporting system designed to streamline multiple State reporting requirements, purportedly to relieve the state specific compliance burden described above. FHA annual recertification requirements would not be covered under this streamlined report. The Mortgage Call Report may be good news or bad for responsible parties, depending on perspective. Purpose of the Mortgage Call Report Written By: Wendy Bernard, Esq.

Fannie's New Pre-Foreclosure, Extenuating Circumstances & Re-Establishing Credit Rules! Written By: Brent Green, Staff Writer, MortgageCurrentcy.com. For a long and frustrating time, we have been commenting on and responding to Fannie’s lack of policy specific to Short Sales & Deed-in-Lieu – WELL IT IS FINALLY HERE, AND YES, IT IS CONSIDERED A “PRE-FORECLOSURE SALE”. Fannie Mae is further defining “pre-foreclosure” and updating policy for waiting periods, bankruptcies, and re-establishing credit. The terms “short sale” and “pre-foreclosure sale” are now considered to have the same meaning – the sale of a property in lieu of a foreclosure resulting in a payoff of less than the total amount owed, which was pre-approved by the servicer. Some good news here — waiting periods have decreased if you have more money to put down. Here are the new waiting periods, which go into effect on July 1, 2010. Written By: Brent Green

HUD Letter Tries to Clarify Mass Confusion Over RESPA! Written By: Tracey Rumsey, Staff Writer, MortgageCurrentcy.com & Loan Originator with SWBC Mortgage, Salt Lake City, UT. RESPA = Mass Confusion. That’s what’s going on. And of course, there have been even more FAQs of epic proportion — that have been added to HUD’s website. The newest letter from Commissioner Stevens (which, by the way, has no date on it ANYWHERE...just a “June 2010” notation in the web address when you click on the link) has a couple of items worth mentioning. There are three main topics of clarification offered in this letter. Written By: Tracey Rumsey

FAQs - The S.A.F.E. Act and Checking LOs Credit - Are You Ready? Written By: James Hogle is nationally recognized as the “credit expert” author, speaker and is the Executive Director of US Consumer Credit Restoration Association, LLC. Former President of Trust Financial, Inc., an Indiana Licensed Mortgage Broker with over 15 years of experience he specialized in working with “credit challenged buyers”. Click here for more info. What happens when a 20-year veteran Loan Officer in GA has his credit pulled for licensing and finds some old debts and collections that haven’t been paid? Well the State of Georgia is asking him for documentation – see exactly what’s happening below! “The state I am in just pulled my credit and they also pulled my credit score. My income has gone down since 2007 and my credit has taken some hits, what are they going to do?” “My credit was perfect until a messy divorce last year. My wife got the rental property, after it went into foreclosure; my income is way down because of the market conditions and property values. What are they going to do to me?” The stories like this just keep rolling in. If it isn’t bad enough that home values are down, lender guidelines are tighter, jobs have been lost and now this! Your license renewal or approval may and very probably hinge on your credit report and its contents. Hopefully the following questions and answers will help prepare you when they pull your credit. Here is what we have found out so far and some actual responses from some states. What is the SAFE Act Requirement pertaining to my credit? Most of you will have your credit reviewed between October 2010 – March 2011 according to the SAFE ACT (if they haven’t already gotten a copy). Each state is different, some are looking at your credit reports and some states are pulling credit scores. What are they looking for? Any late payments, Bankruptcies, Foreclosures, short sales, tax liens, judgments, collections, school loans, and child support. Basically anything negative reporting on your credit report. What if they are all paid? So far it doesn’t matter. We have seen almost every state ask for a letter of explanation for each negative item EVEN IF IT’S PAID. So it’s on a case-by-case basis, you know – how old is it, was it an illness, job loss, medical etc. - so document your response well. We did an hour-long webinar on this very subject and one person on the call had dismissed Chapter 7 bankruptcy OVER 10 years old (that shouldn’t have even been reporting) and she had to write a letter of explanation for it!!! What if I do have negative items on my report because of the economy and our whole industry, is that going to be held against me? That remains to be seen. But take a look at this information that came directly from the State of Georgia… Please supplement your application by providing the Department with a detailed written explanation why this/these debts are outstanding and any plans to pay the debts. The Department is aware of economic conditions, but a statement to that effect does not relieve the MLO of financial responsibility. The response must include documentation for any debts listed above that have already been paid or disputed, or documentation showing that payment plans have been established for each unpaid financial obligation that is past due and that at least three payments have been made on each one. (Explanations or documentation regarding any type of medical occurrence or debt should not contain personal information. For example, “surgery” is sufficient if you wish to describe the procedure; including the type of surgery is unnecessary. Remember that all documentation becomes part of the application file.) If you have no such documentation, please state that in the written explanation you will be providing to the Department. Please note: The responsibility lies with the MLO to investigate, document, and respond to the Department regarding these credit issues. Failure to provide documentation as noted for each item listed above may result in the denial of licensure. Documentation must include: Proof the debt has been paid; or Proof that a payment plan has been established and that three payments have been made; or Proof that the debt is not yours and has been disputed with the credit provider Your response must include your name, NMLS number, and your signature at its conclusion. What are the penalties? Are they really going to revoke my license? The short answer is yes they can. We are seeing some states giving you 6 months to make restitution or set up payment plans. Some are putting you on notice and they will review your credit again in 3 months or 6 months. It’s really a crapshoot as to what each state’s specific action will be. And in the Georgia case above, he has 3 open collections with balances and he was informed that if they are not settled by the end of July, his license will be revoked after 20 years in the business!! (One of the debts is past the statute of limitations for his state and will fall off his credit report in the spring of 2011.) We have seen everything from a couple of 30-day lates during some tough economic times to a loan professional that has student loans that are 13 years old with balances. Documentation and your explanation will be key (have I said that enough yet?) What can I do now to get ready? First, get a copy of your credit report and see what’s reporting on it... Here’s the site where you can get a FREE one: www.AnnualCreditReport.com is monitored by the FTC (Federal Trade Commission) where you are allowed by law to receive one copy from each credit bureau every 12 months for FREE! Second - get your documentation ready, including any proof, validation of medical, illness, or other "life happens" events. The better you document your case the better chances you will have. How can I improve my credit before October? Here is how we can help! We have 9 TIPS on how to improve your credit and things to look for on your credit report! If you would like to see the webinar, we can forward you the link and USCCRA will be happy to provide you with a free credit report review if you have any questions. Just email us at info@usccra.com. We are here to help the industry. Is this really fair? We have gotten a lot of feedback on this issue. Were there some bad apples in the bunch? Sure. But that’s true in any business or industry. But where is the correlation of having some credit issues in the last 10 years and doing a good job as a loan professional? That I haven’t seen. FICO just released information that 25% of Americans have a 599 score or lower, so are we going to start using someone’s credit to judge their work habits and abilities? How about our legislators, senators and representatives? Are they held to this standard? Maybe it's time they are, but that’s another story. For now let us know how we can help you. Copyright - 2010 - LoanOfficerMagazine.com Written By: Jim Hogle