Updates

09.19.14

Updates to Security Instruments

NMLS Number Moved in Security Instruments 

We have been involved in discussions with Fannie Mae and in accordance with their recommendations, we have removed the NMLS numbers from the footers of our security instruments and have moved them to a location beneath the signature lines. While FNMA indicated that they are not currently enforcing placement of the numbers below the signature lines, they recommended moving the NMLS numbers to that location. Accordingly, you will notice that the NMLS numbers will no longer appear in the footers of security instruments and will appear directly below the signature lines.

Please see below from Fannie Mae’s website: https://www.fanniemae.com/singlefamily/legal-documents

Authorized Change to Legal Documents to add Mortgage Loan Originator Name and Nationwide Mortgage Licensing System and Registry (NMLSR) Identification (ID) Number

To comply with the requirements of the Truth in Lending Act and Regulation Z (12 C.F.R. § 1026.36(g)), lenders are authorized to add to the last page of the note and the last page of the security instrument the name of the mortgage loan originator (LO) and NMLSR ID number for both an organization and individual. This information must be placed below the borrower signature lines and any notary section. If state or local law requires the placement of this information in a different location on the legal documents, lenders may place the LO name and NMLSR ID in an alternate location in order to comply with applicable requirements. Lenders may implement this change immediately and must implement it by no later than January 10, 2014.

NOTE: This authorized change has not yet been added to the individual instructions for each legal document.

Witness Signature Lines Removed from Security Instruments

We have also removed the witness signature lines from all states that do not explicitly require witness signatures. All security instruments except for the states of CT, FL, GA, LA, and SC will no longer contain witness signature lines.

If you have further questions, please feel free to contact our compliance department.

08.19.14

Updated Threshold Amounts for HOEPA and Qualified Mortgages Announced

Update to the HOEPA and QM Thresholds for 2015 Published in the Federal Register

Regulation Z HOEPA and Qualified Mortgage Annual Threshold Adjustments
In the August 15, 2014 issue of the Federal Register (79 FR 48015), the Consumer Financial Protection Bureau established the following 2015 thresholds for high-cost and qualified mortgages under §§1026.32 and 1026.43, respectively.

High Cost Mortgages (HOEPA) and Qualified Mortgage (QM) 2015 Threshold Adjustments

Effective January 1, 2015, the $20,000 loan amount stated in §1026.32(a)(1)(ii)(A) and (B) is increased to $20,391 and the $1,000 amount stated in §1026.32(a)(1)(ii)(B) is increased to $1,020.

Click here for the Federal Register Publication:

https://www.federalregister.gov/articles/2014/08/15/2014-18838/truth-in-lending-regulation-z-annual-threshold-adjustments-card-act-hoepa-and-atrqm

07.25.14

CFPB Requesting Comments for on Consumer Complaint Database

Proposed Policy Statement for Consumer Complaint Database Open for Public Comment

The Bureau of Consumer Financial Protection (Bureau) currently discloses certain
complaint data it receives regarding consumer financial products and services via its web-based,
public-facing database (Consumer Complaint Database). On July 23, 2014, the Bureau
published in the Federal Register a Notice of Proposed Policy Statement with Request for Public
Comment (Proposed Policy Statement) proposing to expand its disclosure to include
unstructured consumer complaint narrative data (narratives). The Proposed Policy Statement
provided a 30-day comment period that will end on August 22, 2014. To allow interested
persons additional time to consider and submit their responses, the Bureau has determined that
an extension of the comment period until September 22, 2014, is appropriate.

See the link to the complete policy statement below:

http://files.consumerfinance.gov/f/201407_cfpb_proposed-policy_extension_consumer-complaint-database.pdf

05.10.14

Mortgage Choice Act Approved

Mortgage Bankers Association Advocacy Update

The House Financial Services Committee on Wednesday unanimously approved the Mortgage Choice Act, an MBA legislative priority that would, if enacted, end the discriminatory treatment of affiliated title charges under the QM rule by removing them from the three percent cap on points and fees. The bipartisan vote in Committee increases the chances the legislation will be considered by the full House in the coming month.

Meanwhile, the Senate Banking Committee will continue its consideration of the Johnson-Crapo GSE reform bill next week. However, a Thursday announcement by the undecided Committee Democrats that they will not support the bill means that although the legislation will still clear the Committee, its prospects for floor action are unlikely.

House Financial Services Committee Approves Mortgage Choice Act
On Wednesday, the House Financial Services Committee held a markup on a slate of financial services bills. As indicated, H.R. 3211, the Mortgage Choice Act, was successfully voted out of Committee by a voice vote. This bipartisan legislation would make important changes to the way points and fees are calculated under the Qualified Mortgage (QM) definition in the Dodd-Frank Act, in order to ensure greater consumer choice in mortgage and settlement services under the QM rule. Specifically, H.R. 3211 would remove affiliated title charges from the three percent cap on points and fees. Approval of the legislation at the committee level is a significant victory for MBA, which advocated strongly for H.R. 3211 in a letter to Committee leadership, as well as in a coalition letter. Additionally, members of the Mortgage Action Alliance provided their own support by urging their Committee Representatives to approve the bill. The next step for the Mortgage Choice Act would be a floor vote in the full House of Representatives. For more information, please contact Dion Spencer, (202) 557-2741 or Len Wolfson, (202) 557-2712.

VA Issues ATR/QM Interim Final Rule
The VA has issued an interim final rule outlining its QM definition under the Ability to Repay (ATR) rule. Under the rule, all loans meeting VA underwriting standards will be QMs, and almost all such loans will be safe harbor QMs. While all VA loans will be QMs, some VA Interest Rate Reduction Refinance Loans (IRRRLs) will be deemed rebuttable presumption QM loans. Under the rule, it appears that VA loans that have a rebuttable presumption may be challenged based on a failure to satisfy the ATR requirements. In order for an IRRRL to be considered a safe harbor QM, the loan must meet the following requirements to avoid equity stripping: the loan being refinanced must have been originated at least six months before the new loan’s closing date, and the veteran must not have been more than 30 days past due during the six months preceding the new loan’s closing date; the recoupment period for all allowable fees and charges financed as part of the loan or paid at closing must not exceed 36 months; and all other VA requirements for guaranteeing an IRRRL must have been met. The interim final rule is effective immediately and comments on the rule are due by June 9th. For more information, please contact Ken Markison, (202) 557-2930; Tamara King, (202) 557-2758; or Joe Gormley, (202) 557-2870.

MBA Supported Bipartisan Legislation Introduced to Solve New York FHA-Subprime Issue
One week after the regional New York MBAs’ Unified Advocacy Day, legislative leaders in the State’s Senate and Assembly introduced bipartisan legislation to provide a permanent solution to the issue created when FHA changed its policy to require life-of-loan calculations for mortgage insurance premiums. This federal change caused most FHA-insured loans in New York State to unintentionally trigger the definition of “subprime” under New York Banking Law. As a result of FHA loans being classified as subprime, many banks, warehouse lenders and secondary market buyers determined that this classification represented an untenable compliance and reputational risk for their institutions, and would not fund or buy these loans, even though they were FHA-insured. The legislation, SB 7224 and AB 9539, would codify the emergency regulations issued by the State’s Department of Financial Services (DFS), which have been temporarily protecting the ability of New York families wishing to take advantage of low interest rates to purchase or refinance their homes and access affordable mortgage credit. If enacted, the new law would increase by 75 basis points the calculation used to trigger the subprime definition for most FHA-insured loans in New York. Important to note, the Mortgage Action Alliance (MAA) is preparing a Call to Action for early next week to increase momentum for these bills, which need to be enacted before the sunset of DFS’s emergency regulations. Accordingly, New York MAA members are asked to be ready to Take Action. For more information, please contact William Kooper, (202) 557-2737 or Scott Nowak, (202) 557-2811.

41 State Regulators Have Now Adopted the National MLO Licensing Test with Uniform State Content
This week, with the announcement that Maine’s Department of Professional and Financial Regulation (DPFR) will adopt the Uniform State Test (UST) for state-regulated Mortgage Loan Originators (MLOs), effective July 1st, the number of state mortgage banking regulators that have adopted the test now stands at 41. Prior to the DPFR’s adoption, MBA sent a letter to Superintendent William N. Lund, expressing its support for recent changes in Maine law that effectively allowed the DPFR to implement the UST. The jump from 39 to 41 adopting regulators also reflects the news from late last week that Guam’s Department of Revenue and Taxation officially implemented the test on April 28th. MBA and its state MBA partners continue to make the case strongly for acceptance of the UST by urging regulators and legislators to move quickly to consider, and ultimately support, the test. This year, in addition to Maine, these combined efforts have led to important movement on legislation in Ohio and California to remove statutory impediments to the test’s adoption in each state. To view a map of adopting states, click here. For more information, or to get involved in advocacy in the remaining non-adopting states, please contact William Kooper, (202) 557-2737 or Scott Nowak, (202) 557-2811.

04.10.14

CFPB Publishes Guide for Completing New Combined TILA/RESPA Disclosure

The CFPB has released a guide to completing the new combined TILA/RESPA Disclosure. The guide is available on their website. See the link below:

http://files.consumerfinance.gov/f/201404_cfpb_tila-respa-integrated-disclosure-form.pdf

03.21.14

Consumer Counseling Disclosure Available

Beginning on Wednesday, March 26, 2014, Docu Prep clients will notice that the CFPB’s Interim Counseling Disclosure has been replaced in initial disclosure and closing packages by the fully populated Consumer Counseling Disclosure.  This disclosure contains a dynamically populated list of counseling agencies nearest to the loan applicant.

Docu Prep clients do not need to make any updates or change their process to comply.  All updates and requirements will be managed by Docu Prep.

Along with a listing of counseling agencies, the disclosure contains the following required language:

“The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. This list shows you several approved agencies in your area. You can find other approved counseling agencies at the Consumer Financial Protection Bureau’s (CFPB) website: consumerfinance.gov/mortgagehelp or by calling 1-855-411-CFPB (2372). You can also access a list of nationwide HUDapproved counseling intermediaries at http://portal.hud.gov/hudportal/HUD?src=/ohc_nint.”

If you have further questions please contact us at support@docuprep.com.

12.10.13

QM Added to Loan Analysis and Ready for Testing

In preparation for the implementation of the new Qualified Mortgage rules under Dodd-Frank, Docu Prep has added features to its Loan Analysis product to test for QM compliance. Until your LOS vendor is able to pass the data to Docu Prep, all users will be able to access the test through use of Docu Prep’s MyPortal interface. Fields have been added to allow the user to input the data necessary to calculate compliance with the QM criteria.

The test includes the Debt to Income ratio and Points and Fees test. Data fields have also been added to permit users to select Agency Qualified Mortgages.

The test will display “Example P” for loans that meet the Qualified Mortgage standards and “Example NP” for loans that do not. When the QM rule becomes effective in January, the word “example” will be removed and replaced with Pass and Not Pass.

The manner in which LOS vendors pass fees to Docu Prep can vary. The points and fees test will default to include the fees indicated for consideration in the federal high-cost loan test, absent data to the contrary. Please take the time to test your particular system configuration to ensure the proper results.

11.18.13

CFPB Delays Enforcement of Counseling Disclosure Provisions

The CFPB has issued an interpretive rule that allows lenders and their vendors additional time to put systems in place to meet the requirements of 12 CFR 1024. (Consumer Counseling Disclosure)

The Bulletin states:

“The Bureau understands that the systems development may take approximately six months. Thus, these lenders appear unable to provide the lists under the second alternative approach in time for the rule’s January 10, 2014 effective date.

Accordingly, while lenders are incorporating § 1024.20(a)(1)(ii) list instructions into their systems, they may direct borrowers to the Bureau’s housing counseling agency website to obtain a list of housing counselors, using the format and text suggested below, www.consumerfinance.gov/find-a-housing-counselor. These steps, if taken by lenders in good faith while they are building their systems or are working with vendors to build systems, would achieve the goals of the regulation and would not raise supervisory or enforcement concerns.”

Docu Prep has prepared a disclosure to meet the interim requirements. In addition, Docu Prep is continuing to work on the webservice connection with the CFPB to allow automatic generation of the list of housing counselors for inclusion in document packages.

The site for locating housing counselors is:

http://www.consumerfinance.gov/find-a-housing-counselor/

The bulletin announcing the interpretive rule:

http://files.consumerfinance.gov/f/201311_cfpb_bulletin_homeownership-counseling-list-requirements.pdf

The rule referred to in the bulletin:

http://files.consumerfinance.gov/f/201311_cfpb_interpretive-rule_homeownership-counseling-organizations-lists.pdf

The rule states:

Lenders comply with 1024.20(a)(1) when the following language is included:

“The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. This list shows you several approved agencies in your area. You can find other approved counseling agencies at the Consumer Financial Protection Bureau’s (CFPB) website: consumerfinance.gov/mortgagehelp or by calling 1-855-411-CFPB (2372). You can also access a list of nationwide HUDapproved counseling intermediaries at http://portal.hud.gov/hudportal/HUD?src=/ohc_nint.”

10.28.13

Simplification of VA Loan Closing Packages

We are in the process of updated our security instruments for Veteran’s Administration (VA) loans. As a result, the VA required language that has previously been appended to the security instrument via the document titled “VA Guaranteed Loan and Assumption Policy Rider” is now present in the body of the security instrument itself. This rider will no longer be necessary for VA loans and will be removed from VA loan closing packages. We have already completed this change in the following states: AK, AZ, CA, CO, HI, ID, NV, OR, UT and WA. The process is ongoing and we will provide notice as additional states are updated.

We believe this change will benefit our customers by reducing the total number of documents for VA loans, and will reduce recording costs. Please feel free to contact us regarding this update if you have additional questions.

10.21.13

CFPB Changes and Document Updates Effective January 10, 2014

In accordance with the new rules for Loan Originator Compensation (12 CFR 1026.36), effective January 10, 2014, Docu Prep is adding the NMLS ID to all security instruments, notes or loan contracts, and to the credit application. The NMLS ID will be added to the footer of each of these documents and will include the NMLS ID of the originating organization and the NMLS ID of the originating individual.

In conjunction with these additions, we are conducting a comprehensive review of our entire library of non-custom Notes and Security Instruments. We will be reviewing these documents for compliance and for formatting consistency. As part of this review we will be replacing the language in our second mortgage security instruments and notes, to refer to “junior lien” instead of “second mortgage.” This will allow for greater flexibility in the usage of these documents. The change will be most evident in the footer(s) of each document, but will occur anywhere the “second mortgage” language is present.

Due to the large number of documents to be included in these changes, the updates will occur continuously over the next several months. All required changes will be in place prior to the January 2014 deadline.

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