Mortgage Archive
| Equal Credit Opportunity Act/Regulation B | |
| Compliance Points | 2007 |
| Articles | 2008 2007 |
| Q&A | 2008 2007 |
Fair Credit Reporting Act |
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| Compliance Points | No archived content available. |
| Articles | 2007 |
| Q&A | 2008 |
Fair Housing Act |
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| Compliance Points | 2007 |
| Articles | No archived content available. |
| Q&A | No archived content available. |
Flood Insurance |
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| Compliance Points | 2008 2007 |
| Articles | No archived content available. |
| Q&A | 2008 |
Home Mortgage Disclosure Act/Regulation C |
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| Compliance Points | 2007 |
| Articles | 2007 |
| Q&A | 2008 2007 |
Loan process (application to closing) |
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| Compliance Points | 2008 2007 |
| Articles | 2008 2007 |
| Q&A | 2008 2007 |
Miscellaneous |
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| Compliance Points | 2008 2007 |
| Articles | 2008 2007 |
| Q&A | 2008 2007 |
Nontraditional Mortgage/Subprime/Predatory Lending Issues |
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| Compliance Points | 2008 2007 |
| Articles | 2008 |
| Q&A | No archived content available. |
Regulator Guidance/Enforcement Action |
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| Compliance Points | 2008 2007 |
| Articles | No archived content available. |
| Q&A | No archived content available. |
RESPA/Regulation X |
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| Compliance Points | 2008 |
| Articles | 2008 |
| Q&A | 2008 2007 |
Secondary Market Issues |
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| Compliance Points | 2008 2007 |
| Articles | 2007 |
| Q&A | No archived content available. |
Servicemembers Civil Relief Act/Lending to Military Personnel |
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| Compliance Points | No archived content available. |
| Articles | No archived content available. |
| Q&A | No archived content available. |
State Legislative Issues |
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| Compliance Points | 2007 |
| Articles | 2008 2007 |
| Q&A | No archived content available. |
Truth in Lending Act/Regulation Z |
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| Compliance Points | 2008 2007 |
| Articles | 2007 |
| Q&A | 2008 2007 |
01/11/2008 - FRB Proposes Reg Z Amendment
The Federal Reserve Board proposes to amend Regulation Z, which implements the Truth in Lending Act and Home Ownership and Equity Protection Act. The goals of the amendments are to protect consumers in the mortgage market from unfair, abusive, or deceptive lending and servicing practices while reserving responsible lending and sustainable homeownership; ensure that advertisements for mortgage loans provide accurate and balanced information and do not contain misleading or deceptive representations; and provide consumers transaction-specific disclosures early enough to use while shopping for a mortgage. Comments for this proposal are due on or before April 8, 2008.
12/19/2007 - Comment Requested on Consumer Protection from Unfair/deceptive Mortgage Practices
The Federal Reserve Board has proposed and requested public comment on changes to Regulation Z (Truth in Lending) to protect consumers from unfair or deceptive home mortgage lending and advertising practices. The rule, which would be adopted under the Home Ownership and Equity Protection Act (HOEPA), would restrict certain practices and would also require certain mortgage disclosures to be provided earlier in the transaction.
10/25/2007 - Court of Appeals Decides TILA CaseThe United States Court of Appeals for the Seventh Circuit, has issued a ruling in the case of Hamm verses Ameriquest Mortgage Company. In this case, the court ruled that a financial institution must specifically state, in its Truth in Lending disclosures, the payment period for a borrower's loan.
08/08/2007 - FRB publishes HOEPA dollar adjustmentThe Board has published a final rule amending the staff commentary that interprets the requirements of Regulation Z (Truth in Lending). The Board is required to adjust annually the dollar amount that triggers requirements for certain home mortgage loans bearing fees that exceed the greater of $400 or 8 percent of the total loan amount.
06/01/2007 - HOEPA Notice of Public Hearing and Request for CommentIn the May 31, 2007, Federal Register (Volume 72, Number 104, pages 30380-30383) , the Board of Governors of the Federal Reserve System posted a Notice of Public Hearing and Request for Comment for HOEPA hearings on curbing abusive lending practices in the home mortgage market. The date of the hearing is June 14, 2007. Comments must be received by August 15, 2007.
05/07/2007 - FRB announces HOEPA hearingThe Federal Reserve Board has announced that it will hold a public hearing under the Home Ownership and Equity Protection Act (HOEPA) on June 14, to gather information on how it might use its rulemaking authority to curb abusive lending practices in the home mortgage market, including the subprime sector.
| 10/03/2007 | Common right of rescission compliance questions answered |
| 05/16/2008 | Do early truth in lending disclosures apply when consumer is purchasing a mobile home with no real property attached or involved? |
| 05/06/2008 | Are we allowed to provide Truth-in-Lending disclosures in Spanish? |
| 04/25/2008 | Exactly which transactions are subject to the home equity disclosure rules of Regulation Z? |
| 04/11/2008 | Do the disclosures we have on our open-end home equity disclosure form have to appear in any particular order? |
| 04/04/2008 | If a mortgage transaction involves more than 25 acres with borrowers primary residence, does TILA and RESPA apply? |
| 03/28/2008 | If a borrower obtains a variable rate second mortgage on his primary residence to purchase a truck for his business (an LLC), is the loan subject to the right of rescission? |
| 03/14/2008 | In a mortgage refinance transaction where right of rescission is required, is it acceptable to use the date that the borrower executes the commitment as the start date for the rescission period? Or, is it necessary to start the rescission period on the date the borrower signs the note? |
| 03/07/2008 | We are doing a consumer loan and taking land only as collateral. The customer plans to build on the land in the future. Are early disclosures required? |
| 02/22/2008 | When calculating the points & fees that effect the calculation to determine if the loan is subject to HOEPA or not, is the PMI Premium that is paid after closing on a monthly basis to be included in the fee total? |
| 02/08/2008 | Are there any special rules or compliance issues regarding owner occupied consumer mortgages with balloon payments at maturity? |
| 02/01/2008 | Do I need to have a 3 day right of rescission notice given to the borrower if my mortgage is for the purpose of a permanent loan to payoff the construction of the principal dwelling when they have title in the land? They have not lived in the home. |
| 01/18/2008 | I would like to know what disclosures must be given. I have a customer who is purchasing a second home in Wyoming. It will be a rental home 9 months of the year and a vacation home for the borrower for 3 months. Is this considered investment property? |
| 12/28/2007 | What is a "residential mortgage transaction" and what is the significance of a transaction having that status? |
| 12/21/2007 | I have a mortgage loan that was set up as a construction loan for the purpose of building an additional room. We did it for 6 months. Does HOEPA apply to this loan? |
| 12/14/2007 | On a mortgage loan that requires “early” disclosures (i.e., good faith estimates of TILA disclosures and settlement costs), we’re required to provide those disclosures within three business days of receiving the application. What if we decide to deny credit before that time expires? Are we still required to provide the disclosures? |
| 12/07/2007 | We are refinancing an open end HELOC for the sole purpose of giving them a better rate. We are not increasing the line but we are extending the maturity date. Is this transaction subject to rescission? |
| 11/22/2007 | Is a credit union required to comply with the three-business-day rescission period for a loan on a floating home? The floating home pays real estate property taxes to the county. |
| 10/05/2007 | Is Saturday considered a business day for purposes of the right of rescission if we are not open on Saturdays? |
| 09/28/2007 | When do you have to give the early Truth in Lending Act disclosures? |
| 08/31/2007 | If a residential mortgage loan is brokered by Company A, and closed in the name of Company B, can the customer create a valid rescission during his/her 3 day period if they send the notice of rescission to Company A? or is it only valid if it is sent to company B? |
| 08/24/2007 | Is a fee for the recording of the lender's mortgage a finance charge and, if so, a prepaid finance charge? |
| 08/17/2007 | If you have an eleven month real estate note with a balloon and a variable rate during the eleven months, would you be required to give the CHARM booklet? |
| 08/10/2007 | What liabilities can we face if we do not comply with Reg. Z and cancel the security interest in a property after a rescission within the 20 day period? Due to a clerical error, this was not done until 3 years after the rescission notice was received. This oversight also caused distress on the consumer's credit rating. |
| 07/20/2007 | On a owner occupied refinance, where the mortgage and deed are signed by husband and wife, but wife did not sign the truth in lending form, does the wife have a right to rescind, even if husband does not wish to? |
| 06/29/2007 | Our Bank currently cuts loan proceeds checks for loans which require a ROR on the same day of the loan closing and retains the checks in the files until the three day rescission period has ended. They are then mailed to customers or their designates. My concern is the date on the checks are the same day as the closing. It would be hard to prove that they were not mailed on the same day of closing. I believe we should not cut and date the loan proceeds checks until after the three day right of rescission has lapsed. Am I correct? |
| 06/08/2007 | In consumer lending if a customer uses his primary residence as collateral for a Home Equity Line of Credit and the purpose of the loan is for business purposes do they have the 3 days to rescind? |
| 06/01/2007 | If we failed to complete the ROR at closing - the initial signatures were obtained but not the second set waiving the right to rescind - do we have to notify the borrower? I understand they have the right to rescind for up to three years. And once we become aware of the error, can we ask them to come in and sign the rescission? |
| 05/18/2007 | Do rights of rescission apply in this scenario: There is a mobile home on its own land, the buyer is purchasing a new mobile home to put on the property in place of the old. There is also cash out to payoff debt using the equity in the land. Do rights apply to the transaction? |
| 04/20/2007 | A customer was purchasing their new home and we did a home equity loan on the home they are purchasing. Our second mortgage loan closed behind the first loan to purchase the property. Would the right of rescission apply to our loan? Also, does RESPA apply to home equity loans? |
05/13/2008 - HUD Extends RESPA Proposal Comment Period
The Department of Housing and Urban Development has published notice in the Federal Register that it is extending the comment for its proposed changes to the RESPA rule. The public comment period was set to close on May 13, 2008. The public comment period will now close on June 12, 2008.
03/17/2008 - HUD Issues Proposed RESPA AmendmentsIn the March 14, 2008, Federal Register, the Department of Housing and Urban Development issued a proposed rule to simply and improve the disclosure requirements for mortgage settlement costs under the Real Estate Settlement Procedures Act of 1974 (RESPA). The objective of the proposed rule is to protect consumers from unnecessarily high settlement costs. The comment period for this proposal ends on May 13, 2008.
To accomplish this objective, the proposal includes:
- An improved and standardized Good Faith Estimate (GFE) with page 1 of the estimate providing a clear summary of loan terms and costs to enable Borrowers to comparison shop;
- An improved disclosure of yield spread premiums to provide borrowers with the understanding of how the premiums can affect the borrower’s settlement charges;
- A comparison of the GFE and HUD-1/HUD-1A which includes a modification of the HUD-1 and HUD-1A to allow borrower to easily compare the estimated charges from the GFE with the final charges on the HUD-1/HUD-1A;
- Providing a “closing script” to be read to borrowers to ensure that at settlement borrowers are made aware of final loan terms and cost;
- Clarification of HUD’s current regulations concerning discounts; and
- Revision regulations to allow pricing mechanisms that benefit consumers, including average cost pricing and discounts, including volume based discounts.
ComplianceHeadquarters.com will provide a more detailed analysis of the RESPA changes shortly.
| 04/18/2008 | Does the rule against kickbacks and unearned fees in RESPA apply to the person giving the fee or kickback or the person receiving it? |
| 04/04/2008 | If a mortgage transaction involves more than 25 acres with borrowers primary residence, does TILA and RESPA apply? |
| 02/29/2008 | When doing a loan where real estate is the collateral and the customer uses the proceeds of the loan to purchase another/different piece of real estate; which HUD Settlement Statement is required? HUD 1 or HUD 1A? |
| 12/14/2007 | On a mortgage loan that requires “early” disclosures (i.e., good faith estimates of TILA disclosures and settlement costs), we’re required to provide those disclosures within three business days of receiving the application. What if we decide to deny credit before that time expires? Are we still required to provide the disclosures? |
| 11/30/2007 | How many days are required between RESPA early documents and the closing of the loan? |
| 11/16/2007 | How should the “place of settlement” be completed on the HUD-I when loan documents are signed at various locations? |
| 11/09/2007 | Can a “thank you” gift be given to a realtor after a closing that was a referral or does this constitute a violation of the RESPA section 8 rule? |
| 10/19/2007 | Does RESPA apply to the refinancing of a second home? |
| 09/19/2007 | Are we required to provide the RESPA Special Information Booklet in a subordinate-lien situation? |
| 09/07/2007 | I’ve heard that we're required to make the HUD-1 settlement statement available to the borrower a day in advance of the closing. Is this true? |
| 07/27/2007 | If a primary residence is being used as collateral for a loan which is for personal AND business purposes (primarily business) is it subject to RESPA and REG Z? This is an open end line of credit for 18 months at a fixed rate. |
| 05/11/2007 | I believe RESPA prohibits kickbacks such as referral fees to realtors or builders when no services were performed, correct? Where do I find the fines, sanctions etc. to support this? And is it illegal for the realtor to accept such kickbacks or just the Loan officer to provide the kickback? |
| 04/20/2007 | A customer was purchasing their new home and we did a home equity loan on the home they are purchasing. Our second mortgage loan closed behind the first loan to purchase the property. Would the right of rescission apply to our loan? Also, does RESPA apply to home equity loans? |
10/02/2007 - FRB Amends Reg B Addresses
The Board is publishing amendments to Regulation B (Equal Credit Opportunity Act) to update the address where questions should be directed concerning creditors for which the Federal Reserve System administers compliance with the regulation.
Effective Date: October 29, 2007. Compliance is optional until October 1, 2008.
| 01/08/2008 | Uncertainty continues regarding borrowers signing joint statement |
| 11/06/2007 | Mortgage origination decline has increased regulatory compliance expectations |
| 05/09/2008 | In what circumstances are we required to collect the “Information for Government Monitoring Purposes?” |
| 05/02/2008 | Does the notice of right to receive copy of appraisal pertain to only residential property? |
| 02/15/2008 | On page one of Form 1003 (residential loan application) there is a section in the upper left which is new and unclear. It appears that the co-owner of community property being pledged as security should complete the application as a co-borrower merely because they might have community property rights in the collateral. Is this correct? |
| 12/18/2007 | Under ECOA is there an age specified for elderly or senior citizen? |
| 11/02/2007 | |
| 10/23/2007 | Is the Intent to Apply for Joint Credit form required for a sole proprietorship? |
12/19/2007 - FRB Increases HMDA Asset-Size Exemption
The Federal Reserve Board has published its annual notice of the asset-size exemption threshold for depository institutions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).
The asset-size exemption for depository institutions will increase from $36 million to $37 million based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the twelve-month period ending in November 2007. As a result, depository institutions with assets of $37 million or less as of December 31, 2007, are exempt from collecting data in 2008. An institution’s exemption from collecting data in 2008 does not affect its responsibility to report the data it was required to collect in 2007.
The adjustment is effective January 1, 2008.
09/14/2007 - FFIEC announces availability of HMDA dataThe Federal Financial Institutions Examination Council (FFIEC) has announced the availability of 2006 data on mortgage lending transactions at 8,886 financial institutions covered by the Home Mortgage Disclosure Act (HMDA) in metropolitan statistical areas (MSAs) throughout the nation. For more information, click here.
| 11/06/2007 | Mortgage origination decline has increased regulatory compliance expectations |
| 05/09/2008 | In what circumstances are we required to collect the “Information for Government Monitoring Purposes?” |
| 01/11/2008 | We have an individual who wants to pay off a contract for deed on a primary residence. Is this considered a purchase or refinance for purposes of reporting under HMDA? Our loan will be secured by a mortgage on the property. |
| 08/03/2007 | Has there been a change to HMDA reporting requirements? The Q & A answer for the husband and wife who wanted to add the wife's daughter to the property title stated There are three separate rules that require collection of government monitoring information: (1) Regulation B, (2) the substitute requirement of the Office of the Comptroller of the Currency (which applies instead of Regulation B to national banks only), and (3) HMDA/Regulation C. All three apply only if the "applicant" occupies the home as a principal dwelling. Is this correct? There is a Code 2 in the Occupancy Category on the HMDA LAR that is for "Not owner-occupied as a principal dwelling." Or am I misunderstanding the answer? |
| 07/06/2007 | We have a husband and wife who are refinancing a house and land that is not their primary residence. When they refinance they want to add the wife's daughter's name to the title of the property so it will be titled in all three names. The daughter is living in the house. The daughter is also a coapplicant so all three parties will be signing the note. We are a HMDA reporting bank. Should we get monitoring info on all three applicants? |
| 01/04/2008 | Our bank does not use a credit score (BEACON) during the underwriting process for approval of loans, but we have been informed by our regulatory agency that because the BEACON score appears on the CBI report we must comply with 609(g) of the Fair Credit Reporting Act. Since we must comply with this section of the act are we (the bank) required to provide a "Range of Possible Credit Scores" or is this a requirement of the credit bureau agencies since the credit bureau developed the scoring system? |
03/25/2008 - Agencies Release Proposed Revisions to Flood Insurance Q&A
The regulatory agencies have issued Interagency Questions and Answers Regarding Flood Insurance.
Among the changes the agencies are proposing are substantive modifications to questions and answers previously adopted in the 1997 Interagency Questions and Answers pertaining to construction loans and condominiums. The agencies are also proposing the introduction of new questions and answers in a number of areas, including second lien mortgages, the imposition of civil money penalties, and loan syndications/participations.
Comments for this proposal must be received by May 20, 2008.
For more on this proposal, click on the appropriate regulator.
10/24/2007 - FEMA Publishes Updated Flood Insurance Booklet
The Federal Emergency Management Agency (FEMA) published an updated Mandatory Purchase of Flood Insurance Guidelines booklet. This booklet provides guidance to the federally regulated lending industry for implementing the mandatory purchase provisions of the National Flood Insurance Reform Act of 1994 and other key legislation that governs the National Flood Insurance Program (NFIP). These guidelines are intended to augment, not replace, a review of the applicable statutes and regulations. The booklet was last revised in 1999. While there has been no change in the law or in the flood regulations, the updated Guidelines clarify the appropriate handling of a number of flood insurance issues and incorporate industry best practices. The new Guidelines provide two separate Sample Notices of Special Flood Hazard and Availability of Federal Disaster Relief Assistance - one for participating communities and one for non-participating communities.
VMP will be replacing the current form, VMP1525, with the VMP1525N, Notice of Special Flood Hazards and Availability for Federal Disaster Relief Assistance: Non-Participating Communities and with the VMP1525P, Notice of Special Flood Hazards and Availability for Federal Disaster Relief Assistance: Participating Communities at an undetermined date.
| 03/21/2008 | I have a loan that is collateralized with two pieces of property. One is in the SFHA and one is not. How do I calculate the amount of flood insurance required? |
| 03/04/2008 | Are loan extensions subject to the flood insurance rules? |
| 01/25/2008 | We have an appraisal on real estate stating it is in flood plan but we also have a flood determination stating it is not in the flood zone. Which one do we follow? The city and county cannot make a determination as to if it is or isn't located in a flood zone. If we do not require insurance will we be in violation. |
05/01/2008 - FTC Addresses Subprime Mortgage Market Issues
The Federal Trade Commission testified before the U.S. Senate Committee on Commerce, Science, and Transportation’s Subcommittee on Interstate Commerce, Trade, and Tourism, about the Commission’s continuing efforts to protect subprime mortgage borrowers. The testimony described the agency’s priorities, including deceptive mortgage advertising, deceptive or unfair servicing practices, discrimination in lending, and foreclosure rescue scams by mortgage companies.
In addition, the FTC has charged Foreclosure Solutions, LLC and Timothy A. Buckley with operating a nationwide mortgage foreclosure “rescue” scam. According to the FTC’s press release, the company charged consumers as much as $1,200 to save their homes from foreclosure but failed to do so. The FTC seeks to bar them from further law violations and make them forfeit their ill-gotten gains.
04/03/2008 - FRB Releases Subprime Mortgage MapsThe Federal Reserve System has announced the availability of a set of dynamic maps and data that illustrate subprime and alt-A mortgage loan conditions across the United States. The maps, which are maintained by the Federal Reserve Bank of New York, will display regional variation in the condition of securitized, owner-occupied subprime, and alt-A mortgage loans. The maps and data can be used to assist in the identification of existing and potential foreclosure hotspots.
07/10/2007 - Regulators Issue Final Subprime Mortgage Lending Statement
Federal banking regulators have issued a final statement on subprime mortgage lending aimed at clarifying how institutions can offer certain adjustable rate mortgage (ARM) products in a safe and sound manner, and in a way that clearly discloses the risks that borrowers may assume.
Regulators said they were particularly concerned about the growing use of ARM products that provide low initial payments based on a fixed introductory rate that expires after a short period, and then adjusts to a variable rate plus a margin for the remaining term of the loan. Borrowers who obtain these loans may face unaffordable monthly payments after the initial rate adjustment, difficulty in paying real estate taxes and insurance that were not escrowed, or expensive refinancing fees. Regulators noted that any of these situations could cause borrowers to default and potentially lose their homes.
The final statement on subprime mortgage lending includes standards that institutions should follow to ensure their customers can afford to repay their loans. These standards include a fully indexed, fully amortized qualification for borrowers and cautions on risk-layering features, including an expectation that stated income and reduced documentation should be accepted only if there are documented mitigating factors that clearly minimize the need for verification of a borrower's repayment capacity.
Consumer protection standards include clear and balanced product disclosures to customers and limits on prepayment penalties that allow for a reasonable period of time, typically at least 60 days, for customers to refinance prior to the expiration of the initial fixed interest rate period without penalty.
Senate Banking Committee chairman Christopher Dodd, D-Conn., said regulators had taken an important step in the right direction, "but it only gets us part way to our final goal." Dodd called on the Federal Reserve to take the guidance, strengthen its protections by requiring escrow accounts and limiting prepayment penalties, and turn it into a regulation. Dodd said such a regulation would apply to all lenders, not just those that are federally-regulated.
John Robbins, chairman of the Mortgage Bankers Association (MBA), said the guidance would help curb abuses, but would likely also constrain consumer credit choices. Robbins called on Congress to quickly pass Federal Housing Administration modernization in order to restore affordable credit options for worthy borrowers. Also, Congress should refrain from passing legislation that would further constrain credit by forcing lenders to deal with rigid underwriting standards and litigation risk. Congress should instead focus on legislation to improve transparency and accountability throughout the mortgage transaction, he said.
Sarah Borchersen-Keto, ComplianceHeadquarters Washington Correspondent and Reporter for CCHGroup, Inc.
07/09/2007 - OCC publishes information on nontraditional mortgage productsIn a press release, the Office of the Comptroller of the Currency announced it has posted on its web site illustrations of consumer information for nontraditional mortgage products that can be downloaded and printed for easy production to assist bankers if they choose to use them.
07/03/2007 - Regulatory agencies issue final statement on subprime mortgage lendingThe federal financial regulatory agencies have issued a final Statement on Subprime Mortgage Lending to address issues relating to certain adjustable-rate mortgage (ARM) products that can cause payment shock.
According to agency press releases, the statement describes the prudent safety and soundness and consumer protection standards that institutions should follow to ensure borrowers obtain loans they can afford to repay. The agencies published the proposed Statement on Subprime Mortgage Lending for comment on March 8, 2007. Comments were received from financial institutions, trade associations, consumer and community organizations, members of Congress, state and local officials, and members of the public. The agencies made a number of changes to the proposal to respond to commenters' concerns and to provide additional clarity.
06/01/2007 - Agencies issue nontraditional mortgage product informationThe federal bank, thrift, and credit union regulatory agencies have issued final illustrations of consumer information intended to help institutions implement the consumer protection portion of the Interagency Guidance on Nontraditional Mortgage Product Risks that the agencies adopted October 4, 2006.
The illustrations consist of (1) a narrative explanation of nontraditional mortgage products, (2) a chart comparing interest-only and payment option adjustable rate mortgages (ARMs) to a traditional fixed-rate loan, and (3) a table that could be included with monthly statements for a payment option ARM showing the impact of various payment options on the loan balance.
Institutions are not required to use the illustrations. They may choose to use the illustrations, provide information based on the illustrations, or provide the consumer information described in the guidance in an alternate format.
05/22/2007 - Fed's Bernanke says Subprime Market Regulation Must be BalancedFederal Reserve Board chairman Ben Bernanke said regulators must walk a "fine line" between preventing abusive lending practices, and curtailing responsible subprime lending or closing off refinancing options that would be beneficial to borrowers.
"Together with other regulators and the Congress, our success in balancing these objectives will have significant implications for the financial well-being, access to credit, and opportunities for homeownership of many of our fellow citizens," Bernanke said at a May 17 Federal Reserve Bank of Chicago conference.
Bernanke stated that effective disclosures should be the first line of defense against improper lending. "If consumers are well informed, they are in a much better position to make decisions in their own best interest," he said. Bernanke added that while markets are adjusting to the problems in the subprime market, the regulatory agencies must consider what additional steps might be needed.
Currently the Fed is undertaking a thorough review of all its options under the law, and it has initiated an evaluation of mortgage-related disclosures through a series of hearings around the country under its Truth in Lending Act (TILA) authority. Bernanke noted that using consumer testing, the Fed will be working to improve the disclosures associated with mortgage lending and to fight deceptive marketing practices.
Meanwhile, Bernanke said that the patchwork nature of enforcement authority in subprime lending "poses additional challenges." As an example he noted that rules issued by the Fed under TILA or the Home Ownership Equity Protection Act (HOEPA) apply to all mortgage lenders but are enforced by one of five federal regulators of depository institutions, the Federal Trade Commission (FTC), or state regulators. "To ensure consistent and effective enforcement, close cooperation and coordination among the regulators are essential," Bernanke said.
Sarah Borchersen-Keto, ComplianceHeadquarters Washington Correspondent and Reporter for CCHGroup, Inc.
05/07/2007 - FRB announces HOEPA hearingThe Federal Reserve Board has announced that it will hold a public hearing under the Home Ownership and Equity Protection Act (HOEPA) on June 14, to gather information on how it might use its rulemaking authority to curb abusive lending practices in the home mortgage market, including the subprime sector.
| 03/26/2008 | Resolving mortgage crisis requires early borrower communication |
| 02/15/2008 | Loan modifications may be the answer to the mortgage market slump |
04/03/2008 - Treasury Releases Blueprint for Stronger Regulatory Structure
The U.S. Treasury Department has released its Blueprint for an improved financial regulatory structure. This structure is designed to strengthen consumer protections, improve tools for market stability and enhance financial innovation. Treasury's Blueprint for a Modernized Financial Regulatory Structure also presents a series of short-, intermediate- and long-term recommendations for reform of the U.S. regulatory structure.
04/03/2008 - FRB Releases Subprime Mortgage MapsThe Federal Reserve System has announced the availability of a set of dynamic maps and data that illustrate subprime and alt-A mortgage loan conditions across the United States. The maps, which are maintained by the Federal Reserve Bank of New York, will display regional variation in the condition of securitized, owner-occupied subprime, and alt-A mortgage loans. The maps and data can be used to assist in the identification of existing and potential foreclosure hotspots.
02/14/2008 - OCC Calls for CRA Amendment to Address Mortgage CrisisIn a press release, Comptroller of the Currency John C. Dugan has called for an amendment to the Community Reinvestment Act regulation to provide CRA consideration for community development investments in middle-income communities that are distressed as a result of mortgage foreclosures and related economic factors affecting the area.
01/28/2008 - Online Marketers of Prepaid Debit Cards to Subprime Consumers Fined $2.2 MillionIn a press release, the FTC announced that an operation marketing Visa- and MasterCard-branded prepaid debit cards to subprime consumers has agreed to settle Federal Trade Commission charges that it made unauthorized debits from consumers’ bank accounts and engaged in deceptive marketing practices.
11/05/2007 - Delay to Implementation of FHA Downpayment Assistance Rule
HUD has been enjoined from implementing the downpayment assistance rule that was to have gone into effect today. The injunction, which was issued by Judge Friedman of the United States District Court for the District of Columbia, is applicable to everyone that was affected by the rule. HUD will provide further guidance as appropriate.
10/15/2007 - OCC Issues Statement on Loan StructuringsThe OCC has issued Bulletin 2007-38 that addresses the federal regulators’ statement on residential real estate loan structuring for serviced loans.
10/10/2007 - HUD Publishes Rule on Mortgagor’s Investment in Mortgaged PropertyAlthough HUD has long held that funds from a seller cannot be used to meet the statutory investment requirements on FHA loans, many types of seller funded, charitable gift programs have evolved over the past few years and have circumvented this policy. The main concern with these programs is that the funds provided by the seller are derived by artificially increasing the sales price.
In a final rule posted on October 1, 2007 in the Federal Register, HUD addressed this problem by codifying its long standing practices. Specifically, the rule prohibits “gifts” from the seller, or any other person or entity that financially benefits from the transaction; or any third party or entity that is reimbursed directly or indirectly by the seller or any third party that financially benefits from the transaction. The effective date of this rule is October 31, 2007. In order for a homebuyer to use a gift that was received from a seller funded gift program, the sales contract must be signed prior to that date. In addition, contracts using Nehemiah gifts for down payment assistance must be executed prior to April 1, 2008.
10/03/2007 - VA Issues Circulars for Appraisal Report FormsVA issued Circular 26-05-1, Change 1 dated September 17, 2007, entitled New Appraisal Report Forms and Instructions for Use. The purpose of this change is to extend the rescission date of the basic circular and to update a Lenders Handbook reference and a Fannie Mae website. The new rescission date for Circular 26-05-1 is now October 1, 2008.
VA also issued Circular 26-06-4, Change 1 dated September 17, 2007 entitled Manufactured Home Appraisal Report. This purpose of this change is to extend the rescission date of the basic circular so that stations continue to provide guidance on VA’s position with respect to this procedure. The rescission date for Circular 26-06-4 is now October 1, 2008.
10/02/2007 - HUD Issues Regs for Housing Counseling ProgramHUD has established regulations for their Housing Counseling
program, as authorized by the Housing and Urban Development Act of
1968, and for which, for the past several years, notices of funding
availability have been issued on an annual basis. This final rule
follows publication of a December 23, 2004, proposed rule that adopted
and augmented the Housing Counseling program requirements with which
grantees and housing counseling agencies are already familiar.
Effective Date: October 29, 2007.
09/14/2007 - FTC Warns Mortgage Advertisers on Deceptive AdsThe Federal Trade Commission has issued a warning to mortgage brokers and lenders, and media outlets that carry their advertisements for home mortgages, that some of the advertising claims currently appearing in Web sites, newspapers, magazines, direct mail, and unsolicited e-mail and faxes may violate federal law.
HUD recently issued 3 Mortgagee Letters. Mortgage Letter 2007-10, is dated August 28, 2007 and announces a change in the Upfront and Periodic Mortgage Insurance Premium (MIP) collect processes.
Mortgage Letter 2007-11 is dated September 5, 2007 and announces an initiative that will enable homeowners to refinance various types of adjustable rate mortgages (ARMs) that have recently reset.
And finally, Mortgagee Letter 2007-12, dated July 11, 2007 with the purpose to update Mortgagee Letter 2004-40 and announce that the contact information for preservation and protection (P&P) issues related to HUDs single family properties in Virginia and West Virginia has changed.
09/06/2007 - FHASecure InitiativeIn Mortgagee Letter 2007-11, HUD announced the FHASecure initiative, which is a temporary program designed to provide refinancing opportunities to homeowners and lenders while also increasing liquidity in the mortgage market. Under this program, non-FHA ARM mortgages that have become delinquent due to increased rates from ARMs resetting may be refinanced. In order to be eligible for this program, applications must be signed by December 31, 2008. Some highlights of the program include:
- The mortgage being refinanced must be a non-FHA ARM that has reset
- The payment history must show that the mortgagor was current for 6 months prior to the reset
- Under certain circumstances, if there is sufficient equity in the home, missed mortgage payments may be included
- Mortgagees must determine that the reset of the ARM caused the mortgagor’s inability to make the monthly payments
For more information, please see the Mortgagee Letter.
07/16/2007 - HUD Mortgagee Letter 2007-09 Allows Truncated Social Security Numbers on Credit ReportsHUD issued Mortgagee Letter 2007-09, dated June 20, 2007 which provides assurances to FHA-approved mortgagees that credit reports with truncated Social Security Numbers are acceptable for FHA mortgage insurance purposes. However, the loan application must contain the full 9-digit SSN and the borrowers name, SSN, and date of birth must be validated through FHA Connection or its functional equivalent.
06/19/2007 - HUD to Modify the Single-Family Upfront and Periodic Mortgage Insurance Premium Collection ProcessThe Department of Housing and Urban Development has announced modification to the single-family Upfront and Periodic mortgage insurance premium (MIP) collection process. In response to the Department of Treasury's mandate for all agencies to switch from their current lockbox services to the Treasury’s Pay.gov collection service, after September 30, 2007, all MIP payments will be collected directly by HUD and processed using the Pay.gov system. Pilot testing for Upfront MIP will start in mid-June, 2007 and mid-July, 2007 for Periodic MIP. All lenders are encouraged to take steps to complete their initial bank account setup by July 2007 and to switch to the Pay.gov process before the end of September, 2007. HUD has set up at Pay.gov Implementation website at: http://www.hud.gov/offices/hsg/comp/premiums/sfpaygov.cfm
01/15/2008 - HUD Posts Final Rule on FHA Appraiser Roster Requirements
The Department of Housing and Urban Development issued a final rule in the January 8, 2008 Federal Register on FHA Appraiser Roster Requirements. This final rule explicitly conforms the eligibility requirements for applicants to the Federal Housing Administration Appraiser Roster to longstanding HUD practices, as well as to existing nationwide industry practice.
01/15/2008 - HUD Posts Final HECM Program RuleThe Department of Housing and Urban Development issued a final rule in the January 8, 2008 Federal Register which makes two technical changes to HUD’s Home Equity Conversion Mortgage (HECM) program. The rule extends the date for calculating the maximum claim amount in the HECM program from the date of the underwriter’s receipt of the appraisal report to the date of closing. The second change made by rule corrects an unintended consequence that results in a situation where HECM loans that are not in default but have been assigned pursuant to regulatory provisions, and remain in effect, are not eligible to be refinanced with a discounted initial mortgage insurance premium.
10/26/2007 - IRS Publishes Revised W-9 and Instructions
The IRS has reposted the W-9. The form has an IRS revision date of 10/2007. This revision makes corrections to the W-9 instructions, the form itself was unchanged.
10/19/2007 - IRS Pulls Revised W-9The September 2007 revision of Form W-9, Request for Taxpayer Identification Number and Certification, has been temporarily removed from the IRS web site. A necessary correction to the instructions was recently discovered. The previously posted version should not be used. It is anticipated that the corrected version will be available no later than Monday, October 22.
10/10/2007 - IRS Posts Revised W-9 FormThe IRS has posted a revised W-9 form (VMP9030) on their website. The form has a revision date of September, 2007. The changes to form include a new checkbox on page 1 for Limited Liability Company along with a space to enter a tax classification for the LLC. Page 1 also has some changes in the instructions section, page 2 has a change to the instructions for LLCs, and finally a new section, entitled Secure Your Tax Records from Identity Theft, was added to page 4. A fillable pdf can be found on the IRS’s website. The VMP9030 will be scheduled for a completion date of December 1, 2007.
| 03/17/2008 | New mortgage document solution simplifies closing process |
| 02/15/2008 | Loan modifications may be the answer to the mortgage market slump |
| 12/06/2007 | Security freezes used to thwart ID theft |
| 09/14/2007 | Benefits of using electronic delivery for early loan disclosures. |
| 02/15/2008 | On page one of Form 1003 (residential loan application) there is a section in the upper left which is new and unclear. It appears that the co-owner of community property being pledged as security should complete the application as a co-borrower merely because they might have community property rights in the collateral. Is this correct? |
| 09/21/2007 | If we are not ordering an appraisal (relying instead on a tax bill, past appraisal, etc.) should the customer sign "Notice to Receive Copy of Appraisal"? |
| 04/27/2007 | If an appraisal is not required under federal regulations, are we required to do any sort of estimate of the value of real property securing a loan? |
12/07/2007 - AR Fair Mortgage Lending Act Update
VMP announced in our November 2, 2007 E-letter, that we will be adding an Arkansas Disclosure Certification to inventory. The new form will be the VMP1061AR and delivery is scheduled to begin in mid-December.
12/07/2007 - CA Bill Makes Changes to Certificate of AcknowledgmentCalifornia Assembly Bill 886, effective January 1, 2008, requires that a notary public determine the existence of certain facts or identities from satisfactory evidence and provides that failure to obtain the satisfactory evidence would subject the notary public to a civil penalty. The CA Certificate of Acknowledgment has been changed to remove the phrase "personally know to me" and added a certification that the information is true and correct. VMP is revising all forms with a CA Notary Acknowledgment with delivery of the forms scheduled to begin in mid-December.
11/14/2007 - CO Division of Real Estate Issues a New Emergency RuleOn October 26, 2007 the Director of the Colorado Division of Real Estate issued a new emergency rule defining mortgage broker disclosures pursuant to section 12-61-914, C.R.S. This rule requires mortgage brokers to disclose the financial terms of the loan, all third-party fees, mortgage broker compensation and lock-in agreements. Effective October 26, 2007, the new rule provides additional clarification, creates two new disclosures, and requires mortgage brokers to maintain the disclosures for a period of 4 years. Wolters Kluwer will be adding the VMP1061(CO), CO Compensation Disclosure Form and the VMP1077(CO), CO Lock-in Disclosure Form.
11/13/2007 - Arkansas Fair Mortgage Lending ActEffective October 1, 2007, the AR Securities Department issued amendments to their Fair Mortgage Lending Rules. Rules 5005-1, Financial Statement and Accounts; Rule 5010-1, Financial Privacy; rule 5010-2, Disclosures and Certification and Rule 5011-1, Required Books and Records were amended. Rule 5010-2 requires a signed copy of the Disclosure Certification be “included in the closing documents and retained in the records set forth in Rule 5011-1(2)(b).” This disclosure certifies that all transactions have been disclosed; all cost and fees have been documented and reflected on the HUD -1 or other settlement statement, and no split fees or shared commission involved in the loan that have not been disclosed on the HUD-1 or other settlement statement. Wolters Kluwer is in the process of adding this disclosure certification to inventory and will provide additional information regarding this new form in the near future.
11/12/2007 - Massachusetts Implements New Predatory Lending RulesThe Massachusetts Attorney General recently promulgated Regulations relating to mortgage lenders and brokers (940 CMR 8.00: Mortgage Brokers and Mortgage Lenders). These regulations were enacted primarily to address concerns about predatory lending practices. The regulations provide a description of acts and practices which are considered unfair and deceptive in a number of different categories, such as advertising and direct dealings with consumers. While the regulations are not too unusual in terms of the rules they impose upon lenders, they do require that disclosures be given to all lenders, regardless of the terms of the loan, no later than three business days after the earliest of application, any communication leading the lender to incur an expense other than obtaining a credit report, any agreement between the lender and the borrower, or the issuance of a commitment. Wolters Kluwer will be adding both of the disclosures required by the regulation – the VMP1070(MA) for lenders and the VMP1070A(MA) for brokers. The rule is effective in November 15, 2007, but the disclosures are not required until January 2, 2008.
10/10/2007 - CA Bill Provides Verification of TranslationCalifornia Assembly Bill 349, effective January 1, 2008, provides that an English translation of an instrument executed or certified in any language other than English may be presented to the county clerk for verification that the translation was performed by a certified, accredited or registered court interpreter. The translation must be accompanied by a notarized declaration by the interpreter or translator that the translation is true and accurate, and includes the certification, qualification, or registration of the interpreter or translator. The bill authorizes the clerk to charge a verification fee.
10/04/2007 - CA Dept. of Real Estate Disclosure UpdateOn September 28, 2007 the California Department of Real Estate posted a notice on their website stating that the Mortgage Loan Disclosure Statement/Good Faith Estimate - Nontraditional Mortgage Product (One to Four Residential Units), RE 885, is now required and is available along with an Instructional Guide under "Forms". The VMP766NCA is in production with an anticipated completion for the November 2007 Update. Please contact Customer Support at 1-800-521-7291 or your sales representative to place an order.
10/03/2007 - NV Mortgage Lending Division Issues Letters Regarding Assembly Bill 440The NV Mortgage Lending Division posted letters advising lenders on how the Division interprets certain amendatory language to NV Revised States Sections 598D.100 and Section 598D.040 as contained in Assembly Bill 440 of the 2007 Session.
Effective October 1, 2007, AB 440 expanded the definition of “Home Loan” to cover all consumer credit transactions that are secured by mortgage loans which involve real property located in Nevada, whether or not they are “mortgages” within the meaning of the Home Owners and Equity Protection Act of 1994 (“HOEPA”). NRS 598D.130 requires a written notice on the front page of the deed of trust stating that the loan is a home loan as defined by NRS 598D.040. Through Mortgage Lending Division Letter No.: 2007-1, the Division believes that only home loans that are defined as HOEPA loans under federal law must include the notice. Our NV security instruments current contain a data field on the first page were the notice can be place for loans subject to the notice requirement.
AB 440 also required lenders to use a “commercially reasonable means or mechanism” in determining a borrower’s ability to repay a home loan. In Mortgage Lending Division Letter No.: 2007-2, the Division believes that all home loans as defined by NRS 598D.040 are subject to this requirement, even home loans that have been approved, but not closed, by October 1, 2007. The Division has set forth suggested guidelines for licensees, which includes the completion of a worksheet for each home loan. We will be adding the VMP1086NV, Commercially Reasonable Means or Mechanism Worksheet, to our inventory. Customers must place an order to receive the form and our Customer Support staff can be reached at 800-521-7291.
10/01/2007 - CA Adopts New Nontraditional Mortgage Products RegulationThe California Department of Real Estate adopted a regulation to assist mortgage brokers involved in “nontraditional mortgage products” to meet the disclosure requirements to borrowers pursuant to Sections 10240 and 10241 of the Business and Professions Code. This new regulation is effective September 28, 2007. VMP will be adding a new Mortgage Loan Disclosure/Good Faith Estimate Nontraditional Mortgage Product (One to Four Family Residential Units) (RE Form 885) disclosure to inventory as the VMP766N(CA). This new form is similar to the RE Form 883 Mortgage Loan Disclosure/Good Faith Estimate (VMP766CA) but is used for nontraditional mortgage products. CA Department of Real Estate forms are mandatory two to three months following adoption of the regulation.
The regulation also amended the regulation to require licensees to provide detailed information distributed to borrowers solicited for "high risk" loan products to assure such advertising is not misleading or deceptive.
Information regarding the regulation may be found under the CA DRE’s Regulations website under Proposed Changes.
09/28/2007 - CT Bill Adds Margin Requirements for Recordable DocumentsCT Public Act 07-252, Section 52(f), effective October 1, 2008, requires that instruments presented for recording must have a 3/4 inch margin on all sides. Also, each instrument must have a return address and addressee appearing at the top of the front side of the first page of the instrument. However, the clerk shall not refuse any instrument which does not conform to the requirement and the requirement shall not affect the priority or validity of the document. The only standard VMP documents affective by this new requirement are the VMP76CT and the VMP76NCT. These documents are in the process of being updated and customers with these forms on their contracts will receive the revised forms in a future update.
09/11/2007 - CO Division of Real Estate Issues 2 Emergency RulesOn September 4, 2007 the Colorado Director of the Division of Real Estate issued a new Emergency Rule defining what constitutes a reasonable inquiry into a borrower’s financial status and explaining how to determine if a product provides a reasonable tangible net benefit to the borrower. This rule provides additional clarification to the new mortgage broker bill signed by the Governor on June 1. 2007 and governs individuals who broker a mortgage or act as a mortgage broker. This emergency rule is effective September 4, 2007. As a result of this new rule, VMP will be adding the CO Tangible Net Benefit Disclosure, VMP1090(CO) anticipating completion November 2007.
On September 6, 2007 the Colorado Director of the Division of Real Estate issued a new Emergency Rule regarding Good-Faith Temporary Registration for Mortgage Brokers. This rule allows both for immediate temporary registration of any mortgage broker who had previously been exempted and adequate time for these affected persons to become compliant with mortgage broker registration required by the new mortgage broker bill signed by the Governor on June 1. 2007.
08/27/2007 - Pennsylvania State Specific NotesPA Senate Bill 860, effective 6/1/2007, amended the PA Plain Language Consumer Act of 1993. This legislation requires that contracts under seal include the following statement: "This is a contract under seal and may be enforced under 42 PA C.S. Section 5529(b)." Section 42 PA C.S. 5529(b) extends the time limitation for actions to be taken upon a contract under seal to 20 years. Fannie Mae and Freddie Mac both posted authorized changes on their websites this week requiring the addition of this language to all PA notes and security instruments. As a result, Wolters Kluwer Financial Services is creating state specific notes for PA and revising security instruments to include the required language. These forms will be sent to customers in our September release.
08/15/2007 - Notice of Proposed Illustrations with Requests for Comment for Subprime Mortgage LendingThe Agencies (OCC, FRB, FDIC, OTS & NCUA) have posted a notice of proposed illustrations of consumer information with a request for comment for Subprime Mortgage Lending, in the August 14, 2007 Federal Register, Vol. 72, No. 156, pages 45495 through 45500. Comments must be submitted on or before October 15, 2007.
07/16/2007 - CO Division of Real Estate Issues Position Statement MB 1.1 – Non-Traditional Mortgage Products and Documentation TypesOn July 3, the Colorado Division of Real Estate issued a Position Statement to clarify uncertainties regarding non-traditional mortgage products and documentation types. The statement is applicable to all mortgage brokers and their required duty of good faith dealing in all communications and transactions with a borrower. This statement provides that CO Revised Statute Section 12-61-904.5(1)(b) does not prohibit any specific mortgage products or documentation types, rather the statute prohibits the abusive recommendation of mortgage brokers.
07/10/2007 - Agencies publish subprime mortgage lending guidanceThe regulatory agencies have published the final guidance—Statement on Subprime Mortgage Lending in the Federal Register. This guidance is effective July 10, 2007.
07/02/2007 - MERS Provides a Street Address for IN Recordable DocumentsMERS Announcement 2007-2 posted June 21, 2007, advised lenders that in order to insure the continuity of the recording of MERS documents in the state of Indiana, a street address for MERS should be included on all mortgage instruments and assignments to MERS. The change was a result of Indiana Senate Bill 232 which has an effective date of July 1, 2007. In response to the MERS announcement, VMP will be changing the following standard documents: VMP6AIN, VMP4NIN, VMP76NIN, VMP94IN and the VMPC665IN. In addition, in order to meet these requirements, VMP will be adding 3 new modification agreements: the VMP854AIN, VMP898AIN and the VMP852AIN. VMP expects to include these documents in an update release in the near future.
07/02/2007 - MT License Bill Provides New FormsMontana House Bill 69, effective October 1, 2007, created the Residential Mortgage Lender Licensing Act. This legislation establishes licensing requirements and regulates activities of mortgage lenders. In response to the bill, VMP is creating 3 new forms:
- VMP1091MT – Montana Prepayment Penalty Disclosure which is required to be given to borrowers by mortgage lenders within 3 business days of a prepayment penalty being added to the terms of a loan.
- VMP96DMT – Montana Mortgage Loan Commitment which is required to be given by licensed lenders anytime a commitment fee is collected.
- VMP1077MT – Montana Lock-In Agreement which is required if a licensed lender wishes to collect an upfront rate lock in-fee. This agreement provides the terms of the mortgage, as well as the terms/refundability of the lock-in fee.
The mandatory use date for these new forms is October 1, 2007. Orders for the documents can be placed with sales reps/customer service and the documents will be available prior to this mandatory date.
07/02/2007 - NV Assembly Bill Revises Provisions Concerning the Protect of Certain Personal Identifying InformationEffective January 1, 2008, Nevada Assembly Bill 600 revised provisions concerning the protection of certain personal identifying information. The bill makes consistent the information that is protected from disclosure by public entities on certain documents. The definition of Personal Information is amended to provide that the last 4 digits of a social security number are not personal information for the purposes of the provisions. As a result of the bill, the VMP368CNV, Nevada Affirmation Cover Sheet, will be revised. The changes to the VMP368CNV will include revisions to the affirmation statement at the top of the page, changing "social security number" to "any Personal Information about any person(s) as defined by NRS 603A.040 on the document" and adding a reference to NRS 239B.030 at the bottom of the page. VMP expects this revision to be available in our standard quarterly update prior to the bill’s effective date.
07/02/2007 - NV Bill Clarifies Unfair Lending PracticeNevada Assembly Bill 440, effective October 1, 2007, clarifies the unfair lending practice provision for a lender to knowingly or intentionally make a home loan to a borrower based solely on the borrower's equity and without determination of the borrower's ability to repay. The bill also revised the definition of "Home Loan" and made various other changes regarding rules on dealing with military service persons and foreclosure consultants.
07/02/2007 - NV Revises Licensing RequirementsNevada Assembly Bill 375, effective October 1, 2007, creates education and examination requirements related to an initial license for a mortgage broker or mortgage agent; requires that a qualified employee be designated by a mortgage broker who is not a natural person; revises provisions concerning continuing education and mortgage lending; and revises the range of fees that may be charged for a license as a mortgage broker and a mortgage banker.
07/02/2007 - MT Passes 2 Licensing ActsMontana House Bill 69 created the Residential Mortgage Lender Licensing Act. This legislation establishes licensing requirements (effective October 1, 2008), provides rulemaking authority for the Department of Administration, provides for examination and investigations by the Department and regulates activities of Mortgage Lenders. Senate Bill 92, effective July 1, 2007, revises the Mortgage Brokers and Loan Originator Licensing Act by eliminating the exceptions to the experience and examination requirements for licensing, provides that an individually licensed Mortgage Broker may only work for one employing entity and clarifies who pays certain fees.
06/19/2007 - CO Passes Legislation Intended to Eliminate Questionable Lending Practices by Mortgage BrokersOn June 1, 2007, the Governor of Colorado signed 4 significant bills which are intended to eliminate questionable lending practices. CO Senate Bill 07-85, effective date of June 1, 2007, prohibits a mortgage broker from improperly influencing a real estate appraisal with respect to the appraised value of the secured property. Senate Bill 07-203, effective January 1, 2008, requires mortgage brokers to obtain a license and not just a registration number. To obtain a license, mortgage brokers must receive classroom instruction in subjects relating to mortgage lending and pass a test. The bill also specifies prohibited acts and grounds for discipline of licensees. Senate Bill 07-216, effective July 1, 2007, requires refinancing transactions to have a tangible, net benefit to borrowers; creates a duty of good faith and fair dealing for mortgage brokers in their communications and transactions with borrowers; and requires the Director to adopt rules governing the marketing of nontraditional mortgage by mortgage brokers.