| Quote of the month:
"We have always been very pleased with our relationship with ProClose. You have always been very helpful in getting problems solved."
Teresa Faul Kelly
Sr. Vice President - Administration
M & S Bank
- ProClose Platinum
- What's NEW!
Recovery and Reinvestment Act Reaction - Guest Author: Steve
- Housing Program
- Question of the Month
| ProClose Platinum - What's NEW!|
ProClose Platinum, our web-service closing software product, continues to improve the user's experience. Platinum works with any LOS that produces a MISMO XML. Recently, we made the following updates:
Dynamic Settlement Instructions
We streamlined our Settlement Instructions to print certain loan information dynamically based on the loan type and the fields on the "Additional Loan Data" screens. For example, ARM information and buydown information will appear on the Settlement Instructions only when they are applicable. The streamlined version of the Settlement Instructions also reduced the number of pages from five to four.
Post Closing Screen
A new menu option was added to the left-hand menu to allow the user to print the Post Closing Package. The screen changes dynamically, depending on the type of insurance escrow collected on the loan, allowing you to enter the applicable information to complete the "Transfer of Insurance" Letter information. When the investor requires their own versions of the "Transfer of Insurance" letters, these versions automatically replace the ProClose generic forms in the Post Closing Package.
New and Improved Inter Vivos Trust Forms
We recently released our improved Inter Vivos Trust forms. The new versions allow each loan to have two Trusts; each Trust allows two Trustees, two Grantors, multiple Beneficiaries and a Power of Attorney (POA), which prints for the Trustee and Grantors.
Additional Field Help
We are in the process of adding Help to certain Platinum fields. The Help appears as a question mark near the field. The information appears when the user "hovers" over the question mark or by clicking on the question mark, as is the case with the "Provider Information."
Generate your own custom Closing Reports with just a few clicks or use the Platinum default settings. Choose your date range, your sort options and your preferred report format, HTML or CSV, and you have reports suitable for upper management or day-to-day forecasting.
What the future holds for Platinum?
- Company default tab
- Dynamic signatures
|In a press release February 4, 2009, the Mortgage Bankers Association (MBA) and MERSCORP® announced the two organizations have entered into a management agreement under which MERSCORP will be responsible for managing the day to day operations of the Mortgage Industry Standards Maintenance Organization, Inc.® (MISMO). Under the management agreement, MBA retains full control of MISMO and will maintain a permanent seat on the MISMO Board of Directors. |
"MBA is pleased to enter into this agreement with MERS signaling the next generation of MISMO," said John A. Courson, president and CEO of MBA. "It has always been the intent for MBA to develop and nurture MISMO and then align with another entity to conduct day-to-day management of the company in a way that best serves the real estate finance industry. MERS, as an industry utility owned in part by MBA, provides an ideal infrastructure for MISMO and will ensure the user experience of current MISMO participants remains constant at its current high level. We are confident this agreement will result in the continued enhancement of data standards and transparency which are critical to the return of investor confidence and liquidity in our marketplace."
"As the mortgage industry's utility, MERS has always been a strong supporter of MISMO in the advancement of industry standards," said R.K. Arnold, President & CEO of MERS. "We are pleased with the confidence that the MBA has shown in us by entrusting management of MISMO's day-to-day operations to us on behalf of the real estate finance industry.
In related news, MBS recently attended the MISMO conference held in Washington, D.C. January 26 - 29, 2009. A mix of business and IT staff were in attendance in workshops and task groups. While we are unable to go into the details of the workgroups and decisions at this time, overall thoughts of our attendees were positive and they were impressed by the mass of scope and details. "It's still very much a work in progress. Many things still need to be decided before the next release," stated Scott Baeder, IT at MBS-ProClose. MISMO is critical to the future of e-mortgages and the ease of data transfer in the mortgage industry.
| American Recovery and Reinvestment Act Reaction - Guest Author: Steve Jankiewicz|
When President Obama signed the American Recovery and Reinvestment Act into law on February 17, 2009, everyone waited in anticipation to see what congress had in store for our immediate and long-term future. The anticipation gave way overnight to mixed feelings as to whether or not this newly decided path could produce the results necessary to turn our economy around. More importantly, would this bill help stabilize the failing housing market and restore buyer confidence? Critics from both sides of the aisle immediately went to work dissecting this massive piece of legislation in the hopes of better understanding its implications. While not everything is apparent from the start, enough details are known where we can begin to sort through the plan, identify what it aims to accomplish, whom it will and will not help, and how. However, some of the most important factors that may directly impact how successful this legislation ultimately becomes will only be revealed in the future. The policies of this new administration will undoubtedly play a meaningful role in how things play out. Let's take a look at what we know.
One important aspect to keep in mind is the bill was not crafted to ensure everyone remain homeowners. Economists agree there are just some people who should be career renters instead of homeowners. Similarly, there are those who probably will end up successful homeowners down the road but happened to get into a home when they were either not financially ready or at the wrong possible time, i.e., just prior to losing their job. Unfortunately, some of those who should be renters either found a way to game the system, qualified for loans due to forced banking policies, were victims of predatory lending practices, or just happened to be at a financial peak in their lifetime they would not be able to maintain indefinitely. Some foreclosures will continue to take place as these mortgage holders are culled from the system. An unfortunate side effect of growing foreclosures is a continued increase in the overall supply of available houses. Other mortgage holders who will find themselves ineligible for government assistance are those who are currently "underwater," or owe more than 105% of the current market value of their home. This particular segment may rise for some time as property values continue to fall while more and more people find themselves unemployed. Those who purchased jumbo loans, or, loans valued over $417,000, will also be left out of the assistance package. So will anyone stuck with an additional mortgage resulting from trying to flip a house unless the issuer of the second mortgage agrees to keep it in the second position, and, the borrower proves they will still be able to afford the newly refinanced first loan. Also, while attempting to restructure existing loans, if it is determined the only way for a homeowner to afford the mortgage is by reducing the interest rate to 2% or lower, those homeowners will be deemed ineligible for assistance. So if not everyone will benefit, then who will, and how?
Let's go back to those not eligible for loan restructuring or who face imminent foreclosure for just a minute. These people will not necessarily be cast out, homeless, to go back to renting apartments or living in public housing. There is talk of a provision that would allow them to remain in the home they currently occupy, only now as a renter. While ownership of the home would revert back to the loan issuer, some banks could be willing to allow people to remain as renters paying a smaller, more affordable amount. Three positive outcomes here: one is the family is not displaced, another is one less home on the market for sale, and finally, the bank will still realize some income from the property even though they did not intend to get into the home ownership and rental business. Lenders and financial institutions are also going to be encouraged to restructure loans through cash incentives. Here is where we get into the meat of the plan.
To make mortgages more affordable for borrowers facing financial hardship, financial institutions should aim to reduce monthly payments to no more than 38% of the borrowers' monthly income. If this can be achieved, the government will then match any additional reductions dollar for dollar with the aim of dropping the payments to as little as 31% of a borrowers monthly income. In an effort to be proactive, for every loan the mortgage servicers and holders can successfully restructure before a borrower misses a payment, the loan servicers will receive $500 while the mortgage holders will receive up to $1500 in incentives. Once a loan has been restructured, providing the borrower manages to stay current the entire time, mortgage holders will also get an additional incentive of $1000 annually for the next three years. Borrowers are also eligible for monthly rewards, up to $1000 annually, for the next 5 years if they stay current on all mortgage payments. Unfortunately, only mortgages financed through Fannie Mae or Freddie Mac are eligible for government assistance under this program. For those who were not financed through either of the two government backed institutions, the government has threatened to modify bankruptcy codes in an effort to get those lenders to make voluntary changes. With modified bankruptcy codes, judges would then have the flexibility to write down mortgages, ultimately costing lenders more. There is also a $10 billion insurance fund that will be established by the Treasury Department. The aim here is to encourage lenders to refinance loans now by partially offsetting future losses lenders would expose themselves to if housing prices continue to drop and the borrower ultimately defaults. One of the last elements of the plan is to entice first - time buyers into the housing market. In order to facilitate new home buying, the bill calls for an $8000 tax credit the borrower will not have to repay so long as they purchase a new home in the 2009 calendar year by December 1st.
While these initiatives will undoubtedly help some people, many more will get little or no relief at all. Even the tax incentive for first - time buyers is seen as divisive by some. Why should someone who buys a home in 2009 get an $8000 credit that does not have to be repaid when those who purchased in 2008 got a $7500 credit that does have to be repaid? It can be argued that anyone who purchases a home in 2009 is much more aware of the current market situation and is probably more financially stable if they're in the market for a home now. If they aren't, they shouldn't be house hunting! Surely the plan could have grandfathered in 2008 buyers? Obviously, the idea is to get people to buy houses now; however, 2008 home buyers have to feel like those who bought the iPhone 3G's the day before Apple announced its $100 price cuts! Even with the tax credit, it remains to be seen whether potential buyers will remain on the sidelines and watch home values continue to drop while waiting for prices to stabilize, or will the credit be the incentive they need to make a purchase? Economists believe values may continue the downward trend for another 10 - 15%. Much of this could depend on the area of the country in question. While certain areas of the country have been little affected, others have been devastated. This brings up another good question: what criteria will bankruptcy judges use when deciding how to value mortgages when ordering adjustments? Will the criteria vary by region or will there be a universal template? Will the template change for adjustments made in Phoenix during the month of June versus adjustments made 6 months later in December when values may have dropped even further? Further unknowns include the affect President Barack Obama's upcoming speech Tuesday evening on the economic crisis will have on the financial market. He is expected to announce tax increases on the richest American's. Tax increases, regardless of who they are aimed at, will probably not sit well on a Wall Street in the middle of a worldwide recession. If the global slump continues, how many more will lose jobs and face foreclosures in the future? Even those helped by the previously outlined refinancing measures may eventually wind up in default as newly restructured loans would revert back to current market levels when they expire after 5-years time.
No matter what preconceived notions anyone may have, the way forward has been laid out. It is in everyone's best interest to see this bill succeed, and succeed mightily. The next major date is March 4th, when the final plan and a detailed description of its workings are scheduled to be unveiled by Treasury Secretary Tim Geithner. Much has been entrusted to our new President and the staff he has assembled. Through no fault of his own, he has not been dealt a good hand to start things off. How he guides us through these tough times will say much about who he is and serve as a testament to his character and leadership. Let's hope he indeed has the ability to bring about the change we need so badly.
Steve Jankiewicz is a graduate of Auburn University. He is a concerned homeowner in Alabama.
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Appraisal clarifications and raised Credit Score requirements were the big trend for Investors over the last 2 months. Clarifications and updates were made on everything from appraisal signature requirements, to new approved and ineligible appraiser lists. Greater guidelines, even complete restrictions, are being made on TPO (Third Party Originated) loans.
Effective January 27, 2009, BB&T announced a new vendor for ordering tax transcripts via the IRS Form 4506-T. MBS-ProClose updated its BB&T version of this form with the new information (printing in line 5) and provided this to all MBS clients. BB&T also raised their minimum credit score requirements on all FHA loans from 580 to 620 (effective February 2, 2009).
Flagstar Bank now requires a Social Security Authorization Form in the closing package of all government loans. While this is not a requirement on conventional loans, Flagstar Bank does recommend it. MBS-ProClose is creating the form as ProClose ID AAFLC1. It is currently being added to all Flagstar formsets.
On February 9, 2009, Flagstar Bank announced their Fannie Mae HomePath Program. Geared toward borrowers purchasing REO property from FNMA, it includes fixed, adjustable, Flex, High Balance and Expanded Approval options.
Franklin American Mortgage Company
FAMC has suspended their non-conforming 15-year fixed rate term and their non-conforming 7/1 ARM. The minimum credit score has been raised to 720 on all non-conforming loans. These new changes are effective on loans locked as of February 12, 2009.
Effective February 6, 2009, GMAC Bank discontinued their Freddie Mac Alternative Product (Codes 947 & 948). GMAC PITI Abatement feature has been discontinued from their conforming products (these loans must have been locked before February 13, 2009 and must be purchased by GMAC by March 1, 2009). Starting February 23, 2009 GMAC Bank's High Balance product codes are all new. Effective March 9, 2009 GMAC Bank will be enforcing stricter regulations on Third Party Originated (TPO) loans. Refer to bulletin CL09-039 for more details.
Effective for loans locked on or after February 11, 2009, SunTrust raised their minimum credit score requirements to 640 for ALL loan products. Programs that previously required a higher than 640 credit score (such as 660 minimum for Agency Plus and 720 for Key Loan Program) remain at the higher score requirement.
Taylor, Bean & Whitaker
TB&W added/updated several forms over the last two months including: their MD Tangible Net Benefit form, MD Mortgage Loan disclosure, WA disclosures, and four North Dakota forms.
On February 2, 2009, US Bank Home Mortgage began offering two Mortgage Insurance options: Upfront Single and Split Premium on their high LTV loans. US Bank discontinued all of their My Community Mortgage Programs. January 16, 2009 was the last day of purchase.
|As with all lending entities, the various state housing authorities have been evolving in response to the upheaval in the mortgage market. Like many investors, housing authorities have streamlined their program offerings, removing all but fixed rate loans from the available loan options in many cases. For example, in 2008 the Virginia Housing Development Authority (VHDA) dropped its Interest-Only Conventional loan product, as well as the Step Rate Loan Program, which offered reduced loan rates during the first several years of the loan on FHA, VA, RHS and Conventional fixed loans. Likewise, the Maryland Department of Housing and Community Development (CDA) dropped all of its Interest-Only programs as of December 3, 2008. Like VHDA, CDA continues to offer a full variety of fixed options, as well as closing cost assistance 2nd loans, which could prove very attractive in the current restrictive lending environment. |
Interestingly, the constriction in the market is presenting new opportunities for some lenders. On December 1, 2006 VHDA had issued a moratorium on the acceptance of new lender applications in the face of limited funding resources and increased competition for access to their program. Now, with the significant reduction in lender numbers due to mergers and adverse market conditions, VHDA reopened the application process for new lenders for a 30-day period during November 2008. They anticipated adding between 15 and 20 new lenders, based on additional bonding capacity and projected volume.
MBS/ProClose closely monitors all of these developments, and performs ongoing maintenance of housing authority programs and forms for a large number of states, including Virginia, Maryland, Delaware, Georgia, Florida, New Jersey and Pennsylvania, among others. These plans are already available in our ProClose Classic product and we will be adding them to our Platinum web service offerings in the next few months.
|Federal Housing Finance Agency Announces Increase of 2009 Conforming Loan Limits |
The Recovery and Reinvestment Act (ARRA) increased the maximum conforming loan limit for mortgages originated in 2009, affecting 250 counties across the United States . For these areas, Fannie Mae and Freddie Mac loan limits will return to their late-2008 levels, which were up to $729,750 for one-unit properties in the continental United States. Loan limits in other areas are not changed by the legislation.
Announced late 2008, Conforming loan limits for 2009 were calculated under terms set forth in the Housing and Economic Recovery Act of 2008 (HERA). The new ARRA legislation stipulates that, for loans originated in 2009, the loan limit is to be the higher of the 2008 limits and those originally calculated for 2009 under HERA. The 2008 limits tend to be higher and thus, in most cases, loan limits are reverting back to last year's levels. For the relatively few counties where 2009 limits actually increased (43 counties in Virginia, North Carolina, and California), the new limits will remain at the higher level.
The loan limits established under ARRA apply to all loans originated in 2009. For loans purchased in 2009 that were originated from July 1, 2007 through December 31, 2008, the same limits apply. The limits previously announced by FHFA on November 7, 2008 and updated in December apply on loans purchased in 2009, but originated before July 1, 2007. For example, a $700,000 mortgage originated in 2006 is not eligible, even if the applicable local limit under ARRA is $729,750. See lookup tables.
Maryland Regulator Announces Enforcement Date with the Availability of the "Average Prime Offer Rate"
The Maryland Commissioner of Financial Regulation announced February 5, 2009, that their November 2008 amendments regarding provisions to "higher-priced mortgage loans" will become effective March 19, 2009. This effective date comes following the release of the "average prime offer rate" available at http://www.ffiec.gov/ratespread/newcalc.aspx, (which was previously not being published). The "average prime offer rate" is to be used when determining a "higher-priced" mortgage, as defined by Maryland law. For more information, see COMAR 09.03.06.02B(13) and COMAR 09.03.09.02B(6).
Pennsylvania Adoption of "Proper Conduct of Lending and Brokering in the Mortgage Business"
Under 10 Pa. Code 46, all mortgage loan businesses licensed under the Mortgage Act or that engage mortgage business under the Consumer Discount Company Act must perform an "ability to repay" analysis on every loan. Assuming a fully amortized repayment schedule, the licensee must determine that an applicant has the ability to repay the offered loan with the loan terms and loan conditions at the fully indexed rate.
10 Pa. Code Chapter 46 also requires licensees to: (1) provide a new consumer mortgage disclosure form within 3-business days of application; (2) verify and document the income and fixed expenses of each applicant; (3) NOT primarily rely upon the sale or refinancing of the applicant's loan collateral to repay the loan; and (4) NOT ignore facts or circumstances that would indicate that the applicant does not have the ability to repay the offered loan.
While the subsections 46.2(b) through (i), which include the repay analysis and disclosure provisions, are not effective until March 20, 2009, the PA Department of Banking is requesting that each licensee submit internal policies and procedures on how they will comply and implement the repay analysis to the Department by no later than February 28, 2009.
VA Loan Summary Sheet Updated
Beginning May 1, 2009, lenders will be required to use a new version of the VA Loan Summary Sheet, form 26-0286. The new version has an additional field "Prior Loan Type" which must be filled out when the "REGULAR ("Cash-out" ) REFINANCE" box is checked in section 14. MBS-ProClose is currently adding a new "Prior Loan Type" field with the corresponding 8 options to meet the new VA form requirements. While the form is optional now, the new version (ProClose ID AADT1V) will be released in March in plenty of time to meet the May 1, 2009 deadline.
What does it mean when I cannot access ProClose Classic and get the following messages:
Error 14: License file is missing, user database cannot be found. OR
Error 16: License file is corrupt.
Go to My Computer and browse files to see if network drive containing ProClose (and/or other drives) is still connected. If not, it's likely that the user's mapping to the network has been lost. User will need to contact his or her tech support to be re-mapped, and this should resolve the problem.