Category Archives: Regulatory Updates

FHA Multifamily Delays Implementation of CNA e Tool Date

With this Mortgagee Letter, the Department of Housing and Urban Development (HUD) amends Mortgagee Letter 2016-26, published December 30, 2016, by delaying the implementation date for the new Capital Needs Assessment tools (CNA e Tool). The updated CNA e Tool is being released concurrent with this Mortgagee Letter. To ensure adequate time for users to familiarize themselves with the tools, the required use of the CNA e Tool for all CNAs submitted under covered programs is delayed from July 1, 2017, as stated in Mortgagee Letter 2016-26, to October 1, 2017. Use of the CNA e Tool will be voluntary for all CNAs submitted through September 30, 2017. All CNAs submitted to HUD on or after October 1, 2017 must be submitted through the CNA e Tool to fulfill program requirements. All other provisions of Mortgagee Letter 2016-26 remain in effect, including programs covered. Questions regarding this Mortgagee Letter may be directed to David Wilderman at (202) 402-2803. For technical questions concerning the system tools or system access call your designated help desk or contact Sean Cortopassi at 202 402 4087. Persons with hearing or speech impairments may access assistance via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).

Source : https://portal.hud.gov/hudportal/documents/huddoc?id=17-09ml.pdf

Fannie Mae Updates Selling Guide

Selling Guide Updates The Selling Guide has been updated to include changes to the following:  Student Loan Solutions  Project Eligibility Review Waiver for Fannie Mae to Fannie Mae Limited Cash-Out Refinances  Properties Listed for Sale in the Previous Six Months  PERS Expiration Dates  Truncated Asset Account Numbers  Flash Settlement for Mortgage-Backed Securities  Servicing Execution Tool Bifurcation Option Terms and Conditions  Miscellaneous Selling Guide Update Each of the updates is described below. The affected topics for each policy change are listed on the Attachment. Lenders should review each topic to gain a full understanding of the policy changes. The updated topics are dated April 25, 2017. Student Loan Solutions Student Loan Payment Calculation We are simplifying the options available to calculate the monthly payment amount for student loans. The resulting policy will be easier for lenders to apply, and may result in a lower qualifying payment for borrowers with student loans. If a payment amount is provided on the credit report, that amount can be used for qualifying purposes. If the credit report does not identify a payment amount (or reflects $0), the lender can use either 1% of the outstanding student loan balance, or a calculated payment that will fully amortize the loan based on the documented loan repayment terms. The current Desktop Underwriter® (DU®) message issued when an installment debt on the loan application does not include a monthly payment will be updated in a future release to reflect this new policy. Until then, lenders may disregard the statement in the message specifying the previous policy and follow the requirements in the Selling Guide. Effective Date This policy change is effective immediately. Debts Paid by Others We are simplifying our requirements for excluding non-mortgage debts from the debt-to-income ratio. Non-mortgage debts include debt such as installment loans, student loans, and other monthly debts as defined in the Guide. If the lender obtains documentation that a non-mortgage debt has been satisfactorily paid by another party for the past 12 months, then the debt can be excluded from the debt-to-income ratio. This policy applies regardless of whether the other party is obligated on the debt.

Effective Date Lenders may implement this flexibility immediately. The DU message on omitted debts will require documentation to support the omission of the debt, but will not reference the documentation requirements specified above as DU is not able to identify if the debt was omitted as a result of this policy. Student Loan Cash-out Refinance With this update, we are introducing the student loan cash-out refinance feature, a cost-effective alternative to use existing home equity to pay off student loan debt. This feature provides the opportunity for borrowers to payoff one or more student loans through the refinance transaction, potentially reducing their monthly debt payments. The loan-level price adjustment that applies to cash-out refinance transactions will be waived when all requirements have been met. The student loan cash-out refinance feature contains elements of both a cash-out refinance and a limited cash-out refinance transaction as described in the table below.

Source https://www.fanniemae.com/content/announcement/sel1704.pdf

Fannie Mae Updates Standard Modification Interest Rate Adjustment Exhibit

The Fannie Mae Standard Modification Interest Rate is subject to periodic adjustments based on an evaluation of prevailing market rates. The servicer must use the current Fannie Mae Standard Modification Interest Rate indicated below when evaluating a borrower for a conventional mortgage loan modification, excluding Fannie Mae HAMP Modifications. NOTE: As a reminder, the interest rate used to determine the final modification terms must be the same fixed interest rate that was used when determining eligibility for the Trial Period Plan and calculating the Trial Period Plan payment.

Source : https://www.fanniemae.com/content/guide_exhibit/fannie-mae-standard-modification-interest-rate.pdf

CFPB Issues Final Rule Officially Delaying Effective Date of Prepaid Accounts under Regulations E and Z Rule

The Bureau of Consumer Financial Protection (Bureau or CFPB) is issuing this final rule to create comprehensive consumer protections for prepaid accounts under Regulation E, which implements the Electronic Fund Transfer Act; Regulation Z, which implements the Truth in Lending Act; and the official interpretations to those regulations. The final rule modifies general Regulation E requirements to create tailored provisions governing disclosures, limited liability and error resolution, and periodic statements, and adds new requirements regarding the posting of account agreements. Additionally, the final rule regulates overdraft credit features that may be offered in conjunction with prepaid accounts. Subject to certain exceptions, such credit features will be covered under Regulation Z where the credit feature is offered by the prepaid account issuer, its affiliate, or its business partner and credit can be accessed in the course of a transaction conducted with a prepaid card. DATES: This rule is effective on October 1, 2017. The requirement in § 1005.19(b) to submit prepaid account agreements to the Bureau is delayed until October 1, 2018.

I. Summary of the Final Rule Regulation E implements the Electronic Fund Transfer Act (EFTA), and Regulation Z implements the Truth in Lending Act (TILA). On November 13, 2014, the Bureau issued a proposed rule to amend Regulations E and Z, which was published in the Federal Register on December 23, 2014 (the proposal or the proposed rule).1 The Bureau is publishing herein final amendments to extend Regulation E coverage to prepaid accounts and to adopt provisions specific to such accounts, and to generally expand Regulation Z’s coverage to overdraft credit features that may be offered in conjunction with prepaid accounts. The Bureau is generally adopting the rule as proposed, with certain modifications based on public comments and other considerations as discussed in detail in part IV below. This final rule represents the culmination of several years of research and analysis by the Bureau regarding prepaid products. Scope. The final rule’s definition of prepaid accounts specifically includes payroll card accounts and government benefit accounts that are currently subject to Regulation E. In addition, it covers accounts that are marketed or labeled as “prepaid” that are redeemable upon presentation at multiple, unaffiliated merchants for goods or services, or that are usable at automated teller machines (ATMs). It also covers accounts that are issued on a prepaid basis or

capable of being loaded with funds, whose primary function is to conduct transactions with multiple, unaffiliated merchants for goods or services, or at ATMs, or to conduct person-toperson (P2P) transfers, and that are not checking accounts, share draft accounts, or negotiable order of withdrawal (NOW) accounts. The final rule adopts a number of exclusions from the definition of prepaid account, including for gift cards and gift certificates; accounts used for savings or reimbursements related to certain health, dependent care, and transit or parking expenses; accounts used to distribute qualified disaster relief payments; and the P2P functionality of accounts established by or through the United States government whose primary function is to conduct closed-loop transactions on U.S. military installations or vessels, or similar government facilities. Pre-acquisition disclosures. The final rule establishes pre-acquisition disclosure requirements specific to prepaid accounts. Under the final rule, financial institutions must generally provide both a “short form” disclosure and a “long form” disclosure before a consumer acquires a prepaid account. The final rule provides guidance as to what constitutes acquisition for purposes of disclosure delivery; in general, a consumer acquires a prepaid account by purchasing, opening, or choosing to be paid via a prepaid account. The final rule offers an alternative timing regime for the delivery of the long form disclosure for prepaid accounts acquired at retail locations and by telephone, provided certain conditions are met. For this purpose, a retail location is a store or other physical site where a consumer can purchase a prepaid account in person and that is operated by an entity other than the financial institution that issues the prepaid account. The short form disclosure sets forth the prepaid account’s most important fees and certain other information to facilitate consumer understanding of the account’s key terms and

 

Source http://files.consumerfinance.gov/f/documents/20161005_cfpb_Final_Rule_Prepaid_Accounts.pdf

Fannie Mae Selling Guide Updates SEL-2017-03

In response to requests from a number of our customers, we are clarifying that lenders may obtain a verification report for use with the Desktop Underwriter® (DU®) validation service directly from a “report supplier” that generates the report and sends the data electronically to DU, or from a “report distributor” that obtains the report from an authorized report supplier. Continue reading Fannie Mae Selling Guide Updates SEL-2017-03

FHA Provides Effective Dates for Implementation of the Loan Review System and Timeframe for Conducting Pre-Endorsement Mortgage Reviews

Effective Date of Implementation of the Federal Housing Administration’s Loan Review System, and Change in Effective Date for Timeframe for Conducting Pre-Endorsement Mortgage Reviews for Unconditional DE Authority Continue reading FHA Provides Effective Dates for Implementation of the Loan Review System and Timeframe for Conducting Pre-Endorsement Mortgage Reviews

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