Lender, Investor and Agency Updates, Plain and Simple

Sometimes
the investor news piles up, and there is so much going on in the mortgage and
real estate biz that a separate commentary is warranted. As always, when
dealing with lender & investor news, a quick reminder is needed to say that
it is always better to read the full
bulletin
from the investor, MI company, or agency – the information here
is more to present recent trends in lending over the last few weeks. In no
particular order…

There is
an amendment to last Saturday’s underwriting updates: it should have read that Franklin American has improved the
price adjustment on Jumbo loans from 0.250 to 0.375 for LTVs of 65% or less. So
Franklin American has just improved
the price adjustment on Jumbo loans by 0.125 for LTVs less than or equal to
65%, raising it from 0.250 to 0.375.  Further adjustments have been made
to Jumbo products in several states.

Wells Fargo wholesale has updated
and clarified some of its co-op guidelines.  Delegated underwriting
authority for co-op loans has been removed, which means that all conventional
products secured by a cooperative project unit are required to be delivered for
Prior Approval underwriting.  In addition, any given project’s exposure
limit, which is considered to be the number of Wells loans in the project
divided by the total number of units, has been increased from 20% to 30%. 

Wells offers a clarified definition of both “new construction” (either units
that have never been occupied or projects and units that have not been turned
over to the co-op board) and “new conversion” (projects whose ownership is
being turned over to a cooperative board that hasn’t been in place for more
than three years).  New York City is now the only location in which Wells
will allow new conversion and new construction co-ops; this includes the
boroughs of the Bronx, Brooklyn, Staten Island, Manhattan, and Queens, as well
as Nassau, Rockland, Suffolk, and Westchester counties.

The co-op policy has been expanded to include projects that are built on leased
land and/or that have 3-4 units, given that they are located in New York City,
100% owner-occupied, and the appraisal comparables support market
acceptance.  Previously, Wells policy required any cooperative project to
have at least five units.

The requirements for transfer fee (flip tax) eligibility and calculations have
been revised, as have the requirements for pro rata shares, insurance company
ratings, and the delinquency limit for unit owners.  The commercial income
requirement has been eliminated completely; this requirement dictated that, if
the rental income from a project’s commercial units exceeded 20% of the total
operating income of the co-op corporation, it had to be managed by a separate
association.

Additional clarification has been provided on business insurance, presale owner
occupancy requirements, the definition of “common elements,” secondary
financing, and subsidies/tax abatements requirements, which are allowed in New
York City but not in New Jersey if the subsidies/abatements terminate partially
or fully in the next three years.

The bulk of the policy changes are effective for Best Effort Registrations,
Best Effort Locks, and Mandatory Commitments on and after May 21, 2012, apart
from the removal of delegated underwriting authority, which effective for these
cases was last Monday.

Wells
Fargo has made changes to the counties listed in the Home Mortgage/Home Equity
Classification List, which went into effect on April 14th for stand-alone Home
Equity and on April 16th for Home Mortgage and simultaneous transactions. 
Note that this doesn’t affect Market Classification Policy.  The Appraisal
Review Request, which is used to report errors in factual information or
comparable sales selection, has also been updated.  It now includes check
boxes to select the reason for making the request, text boxes in which brokers
can add supporting information, and six entries for comparable sales to support
the request.

Lenders are reminded that invoices for third party fees (credit report,
appraisal, survey, et cetera) incurred on FHA, VA, and USDA transactions should
be submitted to Wells before closing documents are generated.

Due to recent high volume, Wells is revising its underwriting timelines on
purchase and FHA streamline transactions.  Newly submitted purchase loans
will move from a 5 to a 10-day prioritized initial underwrite, and all newly
submitted FHA streamline transactions will be queued for underwriting first-in
first-out.

Effective for all loans received on or after April 23rd, if broker compensation
indicated is not a percentage of the loan amount on the Fee Details Form, does
not match the amount on the GFE, or if the Fee Details form indicates a flat
fee, the loan will be stopped.

Impac is no longer accepting
government ARM loans and has removed all relevant pricing from the rate sheet.

Fannie Mae and Freddie Mac no longer
allow expanded debt ratios for properties constructed using energy efficient
designs, materials and equipment, which means that FNMA 1004A Energy Addendum
and FHLMC 70A Energy Addendum forms will no longer be issued.

Starting on July 1, 2012, Fannie will require servicers to make sure that
priority liens for delinquent HOA dues and assessments on acquired properties
are cleared in the 30 days following the foreclosure sale or acceptance of a
deed-in-lieu of foreclosure.

Freddie and Fannie have both been keeping an eye on the use of the new Uniform Appraisal Dataset and have
provided some additional resources to help lenders and appraisers use it. 
The Uniform Appraisal Dataset Update will provide various reminders and
clarifications, and the UAD Specification Appendix D: Field-Specific
Standardization Requirements is a useful reference source that goes into more
detail on Condition and Quality ratings.

Servicers in Chicago are reminded
that, as of May 1st, they will have to submit the Cash Disbursement Request
(Form 571) and the updated expense designations for any expenses incurred that
are related to the City of Chicago Vacant Property Ordinance and not otherwise
required by the Servicing Guide.

Under updated VA regulations, an Alive
and Well statement
is required when a VA IRRRL loan is closed using Power
of Attorney.  This statement indicates that the borrower is alive and not
Missing In Action and should be signed by the borrower’s Commanding
Officer.  This went into effect on Monday, April 16th.

For some borrowers, trying to get a loan may be an issue if their
non-purchasing spouse has outstanding collections and/or disputed
accounts.  Guild has provided
some insight into this, and if the property being financed is in a community
property state, those disputed amounts would indeed be factored into the $1,000
limit.  However, if the borrower can provide a copy of the marriage
license and the state law ruling that “community property” did not apply to
debts incurred before the marriage, the spouse’s debt will not be included in
that $1,000.

On the subject of disputed accounts, the FHA has provided borrowers with a
loophole where, in particular circumstances, their debt won’t be considered
part of the $1,000 limit.  Disputed debt incurred due to “life
events”-medical, death, divorce, or loss of employment, for instance-may be
exempt if the borrower provides a written explanation and appropriate
documentation that is consistent with the rest of the credit information in
their file.

As a reminder, FHA Up-Front Mortgage
Insurance Premium and Annual Mortgage Insurance Premium increases went into
effect April 9th.  The UFMIP has gone from 1% to 1.75% while Annual MIP
has gone up by 0.1%.  Jumbo loans will be subject to a fee increase on
June 11th.

The FHA has decided to delay the date on which the amendments to Handling of
Disputed Accounts, Public Records FHA Total User Guide Chapter 2 and Paying Off
Collections and Judgments (Handbook 4155.1 4.C.2.e) will go into effect. 
Lenders will now have until July 1, 2012 to implement the new guidance; in the
meantime, the FHA will accept input on the changes and clarify as needed. 
Any case numbers assigned prior to July 1st are subject to the old guidance,
and mortgagees assigned case numbers between the 1st and 8th of April are permitted
to have used either the old or new guidance.

Section 238(c) Military Impact loans endorsed on or after March 20, 2012 have
been suspended, and properties in Jefferson, Lewis, and St. Lawrence counties
in New York and Bryan, Camden, and Liberty counties in Georgia are subject to
the up-front and annual mortgage insurance premiums for section 203(b) or
243(c) loans.

A few things about cancelling FHA case numbers in bulk: lenders should make
sure that the number is for a streamline refinance, for a mortgage that hasn’t
yet closed, and was endorsed on or before May 31, 2009.  Starting on April
27th, “Different MIP Structure” will be available as a reason for cancellation
on the Case Cancellation Screen in FHA Connection, and lenders will be able to
start requesting new case numbers as of June 11th.  New case numbers
issued prior to that date will not be eligible for the lower MIP structure.

It appears that the USDA Rural
Development program
didn’t take in-ground swimming pools into
account.  The official ruling now is that they’re allowed as long as loan
funds aren’t put towards the contributory value of the pool.  The
contributory value should be calculated by the appraiser and subtracted from
the appraised value before the maximum loan amount is determined. 
Inoperable pools are exempt from this.

Citi has updated its Ineligible
Originator List, which provides a comprehensive listing of brokers,
correspondents, or any other parties that are not permitted to have a role in
originating loans submitted for purchase.  You can view it in full, along
with the regularly updated Appraiser/Monitor Ineligible List, in the elfno
section of the Citi Correspondent site.

The new eScore tool, which allows lenders to obtain a preliminary version of
the risk weighted score (or a “BR Score) in the earliest possible stages of the
commitment and delivery process, is now available on Citi’s website.  By
uploading loan data to the system, lenders will be able to receive a BR score
within a matter of hours.

In the wake of HARP II, Citi will be
expanding its HARP guidelines
and removing certain credit overlays for DU
Refi Plus and LP Open Access Program loans registered on or after April
21st.  Fixed rate and ARM loans serviced by Citi will have a maximum
LTV/CLTV/HCLTV of 125% and 105%, respectively, while such loans will have a
105% maximum if not serviced by Citi.  As for credit overlay guidelines,
LP Open Access borrowers are subject to the Freddie policy of paying on time
for the past six months and having no more than one late payment for the past
7-12 months, but DU Refi Plus borrowers will now have their mortgage history
reviewed by DU to gauge eligibility.  Where before the new P&I payment
couldn’t increase more than 20%, DU and LP now determine the acceptable monthly
payment increase for their respective products.

As of April 12th, US Bank has
removed the LTV/TLTV restrictions on using Property Fieldwork Waivers for
Fannie DU Refi Plus Programs 3523, 3524, 3525 and 3526.  Should the DU
response offer a PFW, it can now be used at all LTV and TLTVs per maximum
stated in the guidelines.

US Bank will not accept any FHA loans submitted for underwriting that have a
DTI ratio greater than 50%, regardless of FICO score.  This goes into
effect on Monday but does not apply to delegated correspondents using their own
Direct Endorsement (DE) authority.

Provident Funding is no longer
accepting loan applications with borrower-paid broker compensation that exceeds
2% at the time of the initial registration and GFE audit.  Existing locks
will still go through, but this is immediately effective for all new
applications.

Affiliated Mortgage has added to its Unacceptable Appraiser List, which can be
viewed in full here. 
AMC also reminds lenders of the new guidance issued on FHA Fixed Rate and FHA
Jumbo Fixed Rate products, the latter for which lenders must receive AMC
approval to be eligible.

Another reminder from AMC: images scanned for loan delivery should be
sufficiently clear so as not to delay the process.  Scanners should be set
to at least 200 dpi, and everything but the appraisal should be scanned in
black and white.  Using the original documents is best, and these should
be scanned in the vertical orientation.  AMC encourages using BlitzDocs to
submit loan files rather than using PDFs.

Mountain West Financial has
partnered with Condo Approvals LLC, a service that provides FHA condo complex
approvals as well as complimentary pre-screens to gauge probable
eligibility.  See condoapprovalsllc.com
for more info.

A son who
takes his 89 year old dad to Vegas for his 90th birthday.  The son decides
he is going to give the old man a special night.  He sends the beautiful
25 year old to the old man’s room.  She knocks and he answers.  She
says to him “I am here to offer you super sex”.  The old man says “Christ
Almighty, I better have the soup, I think the sex would kill me!!”

 

…(read more)

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