Announced September 1, 2011, MERS will no longer provide their Mortgage Loan Transfer Notice Service. Anyone using this service must have another method in place by November 1, 2011. MERS originally introduced the service back in 2009 to comply with the Helping Families Save Their Homes Act of 2009. The Act required the new owner of a note to notify the borrower in writing within 30 days of the transfer of ownership. Since then, some MERS members have created their own solution or are contracted with a vendor to replace this service. MBS-ProClose is happy to provide this service to our ProClose clients. If you need to replace the MERS solution, please contact your MBS client support representative or sales@proclose.com to learn more.

Truth-In-Lending Disclosure changes effective October 1, 2011

Based on clarification made by the Federal Reserve Board (FRB), new truth-in-lending disclosure (TIL) statements are required as of October 1, 2011. Already on the MBS version of the TIL, the changes include the following:

• Interest-Only ARM information now has a First Adjustment column, which shows when the principal payment begins.
• Dates in the “Max Ever” and “Max Within 5 Years” columns now show the interest rate adjustment date, not the date the payment changes.
• The “Max Within 5 Years” example is through payment period 61, not the previous 59 payment periods.

HUD Clarifies Annual Premium Policy

On September 21, 2011 HUD issued Mortgagee Letter 11-35 to clarify requirements for Annual Mortgage Insurance Premiums on loans with amortization terms of 15 years or less, and an LTV of 78% or less at the time of loan origination. HUD confirmed there are no Annual Premiums charged for loans meeting both of these criteria. The letter is effective retrospectively, for case numbers issued on or after April 18th of this year. The appropriate sections of the HUD Handbook 4155.2 are being modified accordingly, and the mortgagee letter contains an updated chart summarizing the Mortgage Insurance Premiums.

House Passes Bill to Extend VA Loan Limits

H.R. 2433 passed in the House, extending the maximum VA loan limits for three more years. The bill also assists unemployed veterans to apply for Montgomery GI Bill benefits.

VA Funding Fee Changes

The Department of Veterans Affairs (VA) Circular 26-11-15 updated the changes to the Funding Fee structure. On October 5, 2011, the President signed bill H.R. 2646, Veterans Health Facilities Act Capital Improvement Act of 2011. Included in the bill is a provision reverting funding fees to the same rates, which existed prior to October 1, 2011 for loans closed October 6, 2011 through November 17, 2011. Please see the Circular in its entirety to see rates for loans closed prior to the enactment of the bill and for loans closed on or after November 18, 2011. Congress is likely to pass more legislation in the coming weeks with additional changes to the funding fee structure. See VA’s website to check for updates.

California Amends Mortgage Loan Originator Licensing

Several provisions under the California Finance Lenders Law were amended October 4 in Senate Bill 217. Important provisions include: 1. Applicants with an expunged or pardoned felony conviction are allowed to obtain a license (though specific facts and circumstances must be reviewed and considered about the crime). 2. A person exempt from the California Finance Lenders Law is authorized to apply to the Commissioner of Corporations for an exempt company registration so they may sponsor other individuals required to be licensed as mortgage loan originators under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE ACT). The mortgage loan originator must be covered under an exclusive written contract with and originate loans solely on behalf of the exempt person. The exempt person is required to comply with all rules and orders the Commissioner deems necessary for compliance with the SAFE ACT and to pay an annual registration fee. Read the full bill for more details.

Investor notices remained slow regarding form and program changes; however, many reminded lenders to use the newly revised USDA Form RD 1980-21 “Request for Single Family Housing Loan Guarantee.” USDA announced that beginning October 1, 2011, Rural Development will issue Conditional Commitments “subject to the availability of commitment authority.” Investors are saying they will NOT accept loan files with this new statement since the loan must be in fundable condition. Monthly escrow account requirements were also added for the new Annual Guarantee Fee for loans with Conditional Commitments dated on or after October 1, 2011.

Bank of America

Bank of America (BOA) plans to exit the correspondent mortgage-lending channel to focus completely on retail distribution for its mortgage products and services. BOA is closing its Correspondent Lending channel by the close of 2011 with Best Efforts and Mandatory locks accepted through October 31, 2011. Loans must be purchased by December 15, 2011. Locks already extended past December 15, 2011 as of October 3, 2011 will be honored.

BB&T

Beginning September 15, 2011, BB&T Correspondent Lending accepts loans originated under the FHA & VA Energy Efficient Mortgage programs (EEMs). Correspondents must disburse escrow holdback funds and provide evidence all work is completed.

Chase

Chase’s Funding Request Form and Submission Checklist was updated October 18, 2011. Proof of payment of the VA Funding Fee was added to the “Closing Documents for Delegated and Non-Delegated Loans” table on page two. Chase accepts either the Loan Guaranty Certificate (LOC) or VA Funding Fee receipt printed through the VA Funding Fee Payment System as proof of payment.

CitiMortgage

See Citi bulletin 2011-20 dated September 23, 2011, for the new address to be used in a Goodbye Letter for Customer Servicing.

GMAC Bank

All GMAC Bank Conforming ARM products no longer offer a 40-year amortization term effective September 9, 2011. The maximum term is 30 years. The final fund date was October 15, 2011.

SunTrust Mortgage

Bulletin COR11-179 dated September 30, 2011 notified lenders of SunTrust’s updated mailing address on their underwriting (COR 0005) and loan closing (COR 0013) checklists. SunTrust Mortgage discontinued forwarding loan files from the old address September 23, 2011.

As of September 23, 2011, SunTrust Mortgage eliminated their Portfolio Affordable Housing Mortgage Program. SunTrust continues to offer Community Reinvestment Act incentives on their Agency, Agency Affordable Lending, FHA and VA programs.

For USDA loans, do I still need to enter the extended up-front factor in order to get the correct Guarantee Fee and Total Loan Amount?

Answer
No, you no longer need to enter the extended up-front factor in ProClose. Simply enter the factor as “2.0” for purchase loans with Conditional Commitments on or after October 1, 2011 or as “3.5” for purchase loans with a Conditional Commitment prior to October 1, 2011. (The factor for Refinance loans remains 1%.) Then enter the “Amount Paid in Cash” and “Financed Amount” and the system calculates the Guarantee Fee and the Total Loan Amount.