Home Valuation Code of Conduct Summary - May 1 st Deadline
The Home Valuation Code of Conduct (HVCC or the Code) was created to enhance and protect the independence and integrity of the home appraisal process. While there are several resources available, below is a recap of some of the basics of the code:

• Effective on loans with application dates on or after May 1, 2009.
• Establishes a uniform set of appraisal guidelines (including ordering guidelines) for all loans sold to FNMA and FHLMC in all states. It does NOT apply to FHA/VA loans.
• Lenders must ensure they are compliant with the HVCC and the appraisal process is completely independent of their loan production.
• The appraiser must be compensated by the lender, Appraisal Management Company (AMC) (use of AMC not required), or other lender authorized third party. The broker may NOT select or directly compensate the appraiser. The broker or borrower may reimburse the lender for the appraisal fee.
• A complete unaltered copy of any appraisal report must be provided to the borrower prior to 3-days of closing unless the borrower waives the 3-day requirement.

MBS-ProClose created a Borrower Receipt of Appraisal Acknowledgment form to be signed at closing and included in all Conventional loan packages (as required by Investors such as Wells Fargo). It includes a checkbox for either meeting the 3-day receipt requirement or the 3-day receipt waiver option and is signed by the borrowers. The ProClose form ID is AADID1.

As the final deadline approaches, please review and finalize your appraisal procedures for compliance with HVCC. Additional resources are available from:

Fannie Mae
Freddie Mac

Making Home Affordable
In early March, the U.S. Treasury released the requirements for the "Making Home Affordable" program. It is estimated that as many as 9 million at-risk borrowers can be helped. Below is a brief summary of the Programs:

The Home Affordable Refinance Program

• Homeowners must have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac.
• Documentation requirements are less burdensome due to GSE lenders and servicers already having the borrower's information.
• ARMs may be refinanced to a 30-year fixed rate loan.
• The Home Affordable Refinance Program ends June 2010.

The Home Affordable Modification Program

• At-risk homeowners avoid foreclosure by reducing monthly mortgage payments.
• This program works with an expanded and improved Hope for Homeowners program.
• Loans must be originated on or before January 1, 2009.
• Servicers must enter into the program agreements with Treasury's financial agent no later than December 31, 2009.
• Incentives to servicers for successful modification and performing loans and to Borrowers with current mortgage payments.

These are loans/documents the Servicer is most likely to prepare.  If you will be offering these programs and would like MBS-ProClose to generate the documents, please call your MBS Client Service Representative.

• HB 1776 - § 6.1-422 and § 6.1-431 of the Code of Virginia are reenacted and amended to the Code of Virginia. These amendments prohibit a broker from failing to make reasonable efforts to secure a loan in the best interests of the borrower. A borrower who incurs a loss as the result of the broker may bring action to recover actual damages.
• HB 2030 - § 6.1-423.1 and § 6.1-423.2 of the Code of Virginia are repealed. These provisions required mortgage lenders and brokers to perform background checks and ensure proper training before allowing employees to access or process identifying or financial information from a borrower.
• HB 2262 - § 6.1-430 is reenacted and amended and § 6.1-430:1 is added to the Code of Virginia. These amendments state that no person in connection with a mortgage loan transaction may use any deception or fraud and give authority to the Attorney General to issue a civil investigation should there be reasonable cause. If a person is found guilty, the Attorney General may recover a civil penalty of $2500 per violation.
• HB 2568 - § 6.1-2.22 is reenacted and amended and § 6.1-2.21:1 is added to the Code of Virginia. These amendments state that the seller may not condition the sale of the property upon the use of a particular settlement agent and the provisions of the State Consumer Real Estate Settlement Protection Act cannot be altered or waived by agreement or contract.

The above bills become law on July 1, 2009.

• HB 2031 - Adds a new chapter 16.1 and new sections § 6.1-431.1 through § 6.1-431.21 to the Code of Virginia. This new chapter prohibits anyone from acting as a mortgage loan originator without obtaining a license from the State Corporation Commission as required by the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008. The chapter outlines licensing procedures and criteria, including requirements for bonding, background checks, education, testing, continuing education, investigations, examinations, reporting, payment of annual fees, license suspension and revocation, and fines.

The above bill becomes law on July 1, 2010.

MORE updates on GFE & HUD-1
The HUD has mandated changes to the Good Faith Estimate which are scheduled to take effect January 2010, rendering the GFE to be more tightly tied to the HUD-1.  While the MBA is busy dealing with a wide variety of regulatory changes, these particular changes have the possibility of sneaking up on lenders and vendors alike.  Presently, it is unclear how MISMO will ultimately proceed with regard to inclusion of the new data elements in the dictionary, posing a challenge where integrations are concerned.  MBS-ProClose is taking a proactive approach, along with Calyx Software, to insure readiness.

The first major change to the GFE is the document itself going to three pages, which includes an instructional page to help borrowers better understand their loan offer. As well, the use and function of the form has changed. There is no longer a concept of a Broker vs. a Lender GFE. Interestingly, the itemization of line item fees has mostly been removed and replaced with aggregated totals for different types of fees or services (i.e. Services the Lender Requires - Section 3 vs. Services the Borrower can Shop for - Section 6). Each designated line on the HUD-1 will include a reference to the relevant line on the GFE.  

The new form also includes a summary of the loan and a "Tradeoff table" to help borrowers understand the impact of lower settlement charges and a lower interest rate.

BB&T
Effective March 2, 2009, the following BB&T programs are eliminated:

• Conf 5-year Balloon (106)
• Non-Conf 3-Year Non-Convertible CMT ARM (334)
• Conf 5-Year Convertible CMT ARM (351)
• Non-Conf 5-Year Convertible CMT ARM (353)
• Conf 5-Year Convertible LIBOR ARM (360)
• Non-Conf 5-Year Convertible LIBOR ARM (361)
• FHA 3-year ARM (217)
• FHA 5-Year ARM (218)

BB&T also updated their ARM Disclosures. All affected forms are in process with our MBS-ProClose forms department.

• Redirection to the updated Correspondent Lending Web site to Bank of America
• Change of name to Bank of America, N.A. on endorsements, bailee and goodbye letters; and
• Changes to several email and mailing addresses. 

MBS-ProClose released Bank of America closing documents edited for the new brand and/or naming conventions on the April 27, 2009 effective date. 

Flagstar Bank
Following Fannie and Freddie's suspension of Streamline programs, Flagstar Bank announced the suspension of the following programs:

• FNMA Streamlines (Doc. #5339 & #5348)
• FHLMC Streamlines (Doc. #5343 & #5344)

Correspondent loans must be delivered by June 1, 2009.

Also suspended due to market changes are

• Freddie Mac A-Minus Balloons (Doc. #5303)
• Freddie Mac 5- & 7-Year Balloon (Doc. #5304)
• Fannie Mae 7-Year Balloon (Doc. #5305)
• Fannie Mae 1-Year SMT ARM Non-Convertible (Doc. #5306)
• Freddie Mac 1-Year CMT ARM (Non-Convertible/Convertible) (Doc. #5307)
• Freddie Mac 6-Month LIBOR ARM Non-Convertible (Doc. #5308)

Loans must be locked no later than Friday, May 1, 2009.

Flagstar introduced their VA jumbo fixed rate loan products March 4, 2009. Loan Amounts under the Jumbo VA products go from $417,000 through $1,094,625. On April 6, 2009 Flagstar released the new FNMA HomePath Renovation Program specifically for borrowers purchasing a real estate owned (REO) property directly from FNMA. Fixed, ARM and Flex options are available. Flagstar must underwrite loans.

SunTrust Bank
Effective April 1, 2009, an $85.00 fee is imposed on all loans delivered for purchase with an assignment. Lenders are not required to be MERS members; however, SunTrust encourages lenders to close and deliver loans using MOM documents and a valid MIN number. The $85 fee is withheld from the wired funds when an assignment to MERS or SunTrust is used. The MBS-ProClose closing library includes all MOM documents, MIN generation and quick and easy MERS registration through ProMerge.

Taylor, Bean & Whitaker
TB&W is eliminating their Fixed and ARM Conventional Interest-Only products. All Conventional Interest Only mortgages must be delivered for purchase no later than close of business April 30, 2009. Announced April 9, 2009, TB&W posted a comprehensive reference of Mortgage Insurance Requirements available with the product profiles.

USBank
USBank eliminated several programs. The last day to deliver USBank Interest-Only Fixed (#3649 & #3665), the Piggyback Buster LPMI (#3684) and the Barrier Buster (#3672) loans was April 10, 2009. The 97 Plus #3630/3631 program is no longer accepted as of April 6, 2009.

Where can I find information on the ProClose monthly form updates?

Answer:
MBS-ProClose f orm update notices are posted on our Compliance Form Updates webpage.  You can view General Form Updates, which include Generic forms, Investor Form Updates and Obsolete Forms.