The pace of change in Federal regulations has never been faster and keeping up can be a daunting task. Rules from the Federal Reserve, HUD, FHA, Fannie Mae, and Freddie Mac, as well as many investor and lender guidelines have changed or will be changing soon.
Many regulations go into effect beginning January 2010, and some requirements have already been implemented. Here are just a few significant changes to be mindful of:
- Requirements of the Mortgage Disclosure Improvement Act and the Truth in Lending Act began July 30 and October 1st respectively. Along with new restrictions on imposing fees are mandates to re-disclose when the APR and/or the amount of Finance Charges changes. Additionally, a new class of mortgage loans, called Higher Priced Mortgage Loans (HPML) or Section 35 loans, was introduced implementing additional HMDA reporting requirements and restrictions on loan features if the loan is found to be a HPML.
- HUD’s final RESPA Rules, issued November 17, 2008, require loan originators to provide a new standardized Good Faith Estimate (GFE) and final settlement statement of the loan terms and costs of obtaining a home mortgage. Mandatory use of the new GFE form is effective January 1, 2010.
- In addition to the new GFE, the revised RESPA Rules require mortgage companies to provide a list of service providers, on a separate form, at the same time the GFE is issued. The service provider must be affirmatively identified, along with the service they provide and the fee they charge for their service. Conducting business in the mortgage world will never be the same. Make sure you understand the impact and additional procedural changes necessary to keep up with the Rules.
- New regulations, consistent with Title V of the Housing and Economic Recovery Act of 2008—the S.A.F.E. Mortgage Licensing Act, require loan originators, loan origination companies, Branches, and Control Person(s) to be uniquely identified by a National Mortgage Licensing System (NMLS) number. Almost all states have passed legislation implementing their interpretation of the statues and many now require some or all of the license information to be printed on loan documents and advertising materials.
- The FHFA mandated that Fannie Mae and Freddie Mac obtain loan-level identifiers for the loan originator, loan origination company, field appraiser and supervisory appraiser. This information must be included in the electronic loan file and must print on the loan application. However, on October 6, 2009 Fannie Mae announced they were delaying the implementation of a new 1003 form and also delayed the requirement to include the license information data in the electronic loan file until July 1, 2010.