requires careful enforcement in order to assure that originators will meet these guidelines. Specifically, compliance with the requirement to receipt the appraisal. “Borrower Receipt of Appraisal” (Section II) of the HVCC states: “The lender shall ensure that the borrower is provided a copy of any appraisal report concerning the borrower’s subject property promptly upon completion at no additional cost to the borrower, and in any event no less than three days prior to the closing of the loan. The borrower may waive this three-day requirement. The lender may require the borrower to reimburse the lender for the cost of the appraisal.”
Information contained in the “Regulatory Compliance Outlook” column is not intended to be and is not a source of legal advice. The views expressed are those of the contributing author and do not necessarily reflect the views or policies of National Mortgage Professional Magazine (NMP), any governmental agency, business entity, sponsoring organization or institution. NMP makes no representation concerning and does not guarantee the source, originality, accuracy, completeness or reliability of any statement, information, data, finding, interpretation, advice, opinion or view presented therein.
Mortgage Disclosure Improvement Act (MDIA)
O Disclosure statement: Now requires the following statement: “You are not required to complete this agreement merely because you have received these disclosures or signed a loan application.”
Both Fannie Mae and Freddie Mac adopted the HVCC, whose effective date of implementation was May 1, 2009. One area of implementation
The SAFE Act requires the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) to establish a Nationwide Mortgage Licensing System and Registry (NMLSR) for loan originators. All states must participate in the NMLSR and develop a licensing system for mortgage loan originators that meets certain, minimum standards set forth in the SAFE Act, as determined by the U.S. Department of Housing and Urban Development (HUD), by Aug.1, 2009 (or Aug. 1, 2010 in the case of legislatures that meet biennially). A loan originator must be registered if that originator is an employee of an
Do you have a regulatory compliance issue that you’d like to see addressed in the “Regulatory Compliance Outlook” column? If so, e-mail your issue or concern to Jonathan Foxx at jfoxx@lenderscompliancegroup.com. Jonathan Foxx, former chief compliance officer for two of the country’s top publicly-traded residential mortgage loan originators, is the president and managing director of Lenders Compliance Group, a mortgage risk management firm devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted at (516) 442-3456 or by e-mail at jfoxx@lenderscompliancegroup.com.
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O JULY 2009
O Fee restrictions: Prior to issuing early disclosures, collection is limited to a reasonable fee for the credit report.
Home Valuation Code of Conduct (HVCC)
Secure and Fair Enforcement for Mortgage Licensing Act of Submit your questions … 2008 (SAFE Act)
NEVADA MORTGAGE PROFESSIONAL MAGAZINE
O Early disclosure: Now extends to “any extension of credit secured by the dwelling of a consumer.” Excluding home equity lines of credit (HELOCs), early disclosure must be implemented for any mortgage loan subject to the Real Estate Settlement Procedures Act (RESPA) that is secured by the consumer’s dwelling (i.e., purchase money, refinances, second mortgages, on primary and second homes).
O Prior to consummation—Seven day waiting period: From delivery or mailing of the TILA Disclosure, prior to consummation. Timing begins when a creditor mails or otherwise delivers the TILA Disclosure. Counting of days as “business days” is defined as all calendar days except Sundays and legal holidays. May be waived for bona fide financial emergencies.
Action steps O Develop a process for implementing two new forms, one to acknowledge receipt of the appraisal and another to waive the three-day rule. O Develop procedures to test the process to be sure that these forms are being timely disclosed. Monitor for corrective actions.
Action steps O Develop procedures to obtain criminal history background checks. O Assist loan originators with understanding the initial examination requirements prior to licensure. O Offer a table to calculate the individual’s net worth requirement. O Institute an ongoing policy to offer individual credit checks. O Arrange training venues for the initial education needed prior to licensure. O Determine and announce state-specific, continuing education requirements. O Provide assistance in ascertaining an individual surety bond.
www.NationalMortgageProfessional.com O
The Mortgage Disclosure Improvement Act (MDIA) amends the Truth-inLending Act (TILA) and provides new regulatory structure. However, many provisions go into effect on July 30, 2009, not on Oct. 1, 2009 (as MDIA initially required). The Federal Reserve Board re-set the effective date to July 30, 2009, pursuant to amendments made to the MDIA on May 8, 2009 by the Emergency Economic Stabilization Act. Effective: July 30, 2009, certain requirements must be implemented:
O Re-disclosure—Three day waiting period: If the annual percentage rate (APR) is out of tolerance (not more than 1/8 of one percent above or below the actual APR), redisclosure is required three business days prior to consummation. Counting of days as “business days” is defined as all calendar days except Sundays and legal holidays. May be waived for bona fide financial emergencies.
insured depository institution (or one of its subsidiaries) or originates loans for a state licensed mortgage company (i.e., a lender or mortgage broker). If a state is not in compliance with all the requirements of the SAFE Act licensing mandates, it still must comply with certain standards. Therefore, all affected financial institutions should proactively implement basic standards and procedures on behalf of their loan originators.
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