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Mortgage Guaranty Insurance Corp. has published more restrictive underwriting guidelines in bulletin #10-08

Mortgage Guaranty Insurance Corp. has published more restrictive underwriting guidelines in bulletin #10-08 which changes its underwriting criteria to apply to mortgage insurance applications received on or after Nov. 24, 2008:   

[1] the maximum debt-to-income ratio will be limited to 45 percent, according to the bulletin. DTIs between 45 and 55 percent will require manual underwriting in addition to an automated underwriting approval from Fannie Mae or Freddie Mac.

[2] credit reports must reflect a minimum of three open and active tradelines during the most recent 12 months in order for the borrower's FICO score to be valid. This requirement stands regardless of the automated underwriting decision. Exceptions require manual underwriting.

[3] loans with credit scores below 660, but higher than 619, will only be insurable under expanded criteria rates.

[4] borrowers with adverse credit -- including bankruptcies, foreclosures, deeds-in-lieu and short sales -- will require four years of seasoning prior to the application date.

[5] borrowers whose current residence has not sold by the time the subject loan closes must be qualified using principal, interest, taxes and insurance payments for both properties unless an executed sales contract with no financing contingencies on the current residence is documented.

[6] borrowers with less than 30 percent equity in their current residence will be required to have six months of reserves, while borrowers with at least 30 percent equity will only be required to have two months.

[7] the maximum LTV on second homes is 90 percent, while the minimum FICO score is 680. Second home financing is unavailable in

Arizona

,

California

,

Florida

and

Nevada

.

[8] cashout refinances require at least six months reserves at the time of the application, though cashouts are not available if the house had been listed for sale during the prior six months.

[9] as-is appraisals are required on cashout transactions. Commitment certificates are good for 120 days when the property is appraised as-is and 12 months for properties appraised subject-to-completion -- in which case a re-certification of value is require after 120 days of the commitment.

[10] the maximum LTV on properties subject-to-completion is 95 percent in unrestricted markets and 90 percent in restricted markets, while the minimum credit score is 700.

[11] commitments on properties in

Arizona

,

California

,

Florida

and

Nevada

and in restricted markets are limited to 120 days even if appraised subject-to-completion.

[12] on properties in restricted markets and restricted states, the maximum LTV on loans higher than $417,000 is 85 percent, though it can go to 90 percent if the property is appraised subject-to-completion and not in a restricted state.

[13] the minimum FICO score in restricted states is 720, and no construction-to-perm loans are allowed.

MortgageDaily.com provides free FHA Hope for Homeownership Program Explanation

MortgageDaily.com provides free FHA Hope for Homeownership Program Explanation:

http://www.mortgagedaily.com/WbskH4hReport101008.asp

Mortgage Servicing News Reports That Spanish Bank Acquires Top 40 Servicer

Spanish Bank Will Buy Rest of Sovereign, a Top 40 Servicer

October 13, 2008

Spanish bank Banco Santander SA is in advanced talks to buy Sovereign Bancorp of Philadelphia, a top 40 ranked residential servicer. Santander already owns 25% of Sovereign, which had $18.9 billion in residential servicing rights on its books at mid-year, according to the Quarterly Data Report. The Pennsylvania-based lender is also a larger player in the multifamily and HELOC markets. On Monday Santander released a statement confirming that it was talking to the thrift, which could turn out to be America's largest depending on what the new owners of Washington Mutual, Countrywide, and Wachovia FSB do with their thrift charters. Santander's bid is valued at $3.81 a share. On Monday Sovereign's shares were trading at $3.74, giving the company a market capitalization of $2.45 billion. Its 52-week high is $17.35.

Mortgage Servicing News Reports that Wells Has Acquired Wachovia

Wells Will Get Wachovia After All, Increasing Its Mortgage Empire

October 10, 2008

Wells Fargo & Co. will wind up as the owner of Wachovia Corp. after all, a purchase that will help the San Francisco-based bank battle Bank of America for control of the residential lending and servicing arenas. Late Thursday Citigroup ended its pursuit of the ailing Wachovia but said it will follow through on a $60 billion damage claim against Wells for striking a deal after it had already agreed to buy the company. (The Federal Deposit Insurance Corp. had sanctioned Citi's purchase in late September -- but that was before Wells made a higher bid.) With Wachovia under its belt, Wells will control 17.65% of the $9.6 trillion housing receivables market compared to Bank of America's 21.06%. In lending, Wells/Wachovia will have an origination share of 17.73% to BoA's 19.99%. (The market share figures are based on June 30 data and take into account BoA's July 1 purchase of Countrywide Home Loans.) The deal also gives Wells a major retail deposit base in the mid-Atlantic where the housing market has held up well compared to states like California, Florida, and Nevada. Wells' takeover price for the Charlotte-based bank is valued at just under $6 a share.

Housewire.com reports that Treasury is hiring asset managers for TARP

Look Who’s Hiring: Treasury Seeks Asset Managers

By: DIANA GOLOBAY
October 6, 2008

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The U.S. Department of the Treasury announced Monday that it plans to add new staff members to manage the troubled assets bought through the Emergency Economic Stabilization Act signed into law Friday by President George W. Bush.

The Treasury will hire managers for mortgage securities separately from managers who will handle whole mortgage loans, the government said. Securities asset managers will deal with prime, Alt-A and subprime residential MBS as well as commercial MBS. Whole loan asset managers, on the other hand, will handle a range of products spanning residential first mortgages, home equity loans, second liens and commercial mortgage loans, according to the Treasury.

Interested “Financial Institutions,” defined in the Act as banks, savings associations, credit unions, security brokers or dealers or insurance companies “established and regulated under the laws of the United States,” should submit a response to the public notice issued on the Treasury’s Web site.

The Treasury said it will select qualified candidates to advance in the selection process and provide additional information and qualifications. The Treasury will also provide the opportunity for small and minority- and women-owned financial institutions that don’t meet requirements to enlist as sub-managers within the troubled asset portfolio.

“Given the urgent need to implement the Troubled Assets Relief Program quickly, the selection process for asset managers may involve extremely short deadlines for submitting information and for traveling to Washington, D.C. for meetings or interviews,” the Treasury said in a media statement.

Read the Treasury’s full list of asset manager hiring guidelines >>

Hours after the Treasury’s open asset manager announcement, Treasury Secretary Henry Paulson appointed close adviser Neel Kashkari to a lead position on the $700 billion rescue effort. An assistant secretary or international economics, Kashkari will take on the title of interim assistant secretary for financial stability, according to a report by Market Watch.

Editor’s note: To contact the reporter on this story, email diana.golobay@housingwire.com.

Fannie Increases Net Worth Requirement according to Mortgage Chronicle.com

Mortgage Industry News Headlines Summary of stories published by | Mortgage Statistics

Last Updated Wednesday, September 17, 2008 02:33 PM CST

According to the 9-17-2008 issue of Mortgage Chronicle.com, Fannie Mae issued a bulletin indicating it updated its lender eligibility and contractual requirements. The revisions were prompted by "extraordinary circumstances occurring in the mortgage industry over the past several months," Announcement 08-23 stated. Beginning on Dec. 31, 2008, new lenders will be required to have a $2.5 million net worth, excluding goodwill and other intangible assets.

IN Broker, IN 1st Lender and IN 2nd Lender Licenses

Joint Guidelines of the Securities Division and Department of Financial Institutions on Determination of Agency to Regulate Mortgage Professionals Issued in Compliance with Sec. 37 of HEA 1359 

September 1, 2008

As required by Sec. 37 of HEA 1359 ( P.L. 145-2008), the Securities Commissioner and the Director of the Department of Financial Institutions issue the following guidelines addressing the appropriate agency to oversee the regulation of certain persons within the mortgage industry.

1. Question: What mortgage professionals are regulated by the Securities Division of the Indiana Secretary of State's office (the "Securities Division")?

Answer: Under lC 23-2-5, the Securities Division licenses and regulates loan brokers. The Securities Division also registers loan originators and principal managers who work on behalf of the licensed loan brokers.

2. Question: What is a loan broker?

Answer: A "loan broker" means any person who, in return for any consideration from any source procures, attempts to procure, or assists in procuring, a loan from a third party or any other person, whether or not the person seeking the loan actually obtains the loan. IC 23-2-5-3(d).

3. Question: Who is excluded from the definition of loan broker?

Answer: The term "loan broker" does not include: (1) any supervised financial organization (as defined in IC 24-4.5-1-301(20), including a bank, savings bank, trust company, savings association, or credit union; (2) any other financial institution that is: (A) regulated by any agency of the United States or any state; and (B) regularly actively engaged in the business of making consumer loans that are not secured by real estate or taking assignment of consumer sales contracts that are not secured by real estate; 

(3) any insurance company; (4) any person arranging frnancing for the sale of the person's product; or (5) a creditor that is licensed under IC 24-4.4-2-402.

4. Question: What mortgage professionals are regulated by the Department of Financial Institutions (the "Department")?

Answer: There are two types of licenses issued by the Department for persons engaged in mortgage lending: First, under the First Lien Mortgage Lending Act ("FLMLA") (effective on January 1,2009), a person who is regularly engaged in Indiana as a creditor in first lien mortgage transactions, and who is funding the loan with its own assets or its own established line of credit, must first obtain a license from the Department. IC 24-4.4-2-401. This person is referred to as a "mortgage lender" throughout this document. Second, under the Uniform Consumer Credit Code ("UCCC"), a person who is regularly engaged in Indiana in making consumer loans, taking assignments of consumer loans or undertaking direct collection of payments from, or enforcement of rights against, debtors arising from consumer loans, must first obtain a license from the Department. Second lien mortgage loans are included in the definition of a "consumer loan" under the UCCC. If a person is regularly engaged as a lender for both first and second lien mortgage loans, it is required to be licensed by the Department under both the FLMLA and the UCCC.

5. Question: What is the difference between a loan broker, licensed by the Securities Division, and a mortgage lender, licensed by the Department?

Answer: Witn respect to first lien mortgage transactionsl, the key difference between a loan broker and a mortgage lender is that the mortgage lender is the named creditor on the loan ønd funds the loan through the use of lender's own funds or established line of credit. A loan broker may or may not close the loan in its name but does not provide the funding from its own funds or its own establishedli ne of credit.

6. Question: What is a tablefunded transaction?

Answer: "Tablefunded" means a transaction in which: (a) a person closes a first lien mortgage transaction in the person's own name as a mortgagee with funds provided by one (1) or more other persons; and (b) the transaction is assigned simultaneously to the mortgage lender providing the funding not later than one (1) business day after the funding of the transaction. IC 24-

7. Question: V/ho regulates persons that tablefund all of their loans?

Answer: The FLMLA specifically excludes tablefunding from the definition of "creditor" (IC 24-4.4-1-301(13)) which means that the Department does not require mortgage companies that exclusively tablefund loans to be licensed. It is the interpretation of the Securities Division that tablefunding is part of the loan brokerage business and, therefore, covered by the Indiana Loan Broker Act. Any person that exclusively tablefunds loans must be licensed by the Securities Division to be able to do business in Indiana.

8. Question: Does the fact fhat the loan broker is approved by HUD, VA, FHLMA, or FNMA eliminate the need to obtain a license under the Loan Broker Act or the FLMLA?

Answer: No, these exemptions are not included in the FLMLA, and all of these exemptions, previously included in the Indiana Loan Broker Act (IC23-2-5-19(a)(8)), have been repealed.

9, Question: If a person does a combination of loan brokering and mortgage lending, who is its regulator?

Answer: A license issued by the Department is required under the FLMLA if a creditor is regularly engaged as a mortgage lender (a named creditor who funds the loan with its own funds or its own established line of credit) in first lien mortgage transactions in Indiana. The creditor is regularly engaged if: (a) the person acts as a creditor in first lien mortgage transactions in Indiana more than five (5) times in the preceding calendar year; or (b) the person did not meet the numerical standards set forth in subdivision (a) in the preceding calendar year, but has or will meet the numerical standards set forth in subdivision (a) in the current calendar year. IC 24-4.4-1-301 (10). Therefore, if a person acts as a mortgage lender under the FLMLA on more than five consumer purpose first lien mortgage transactions in a calendar year, it will be licensed and regulated by the Department. The Indiana Loan Broker Act exempts any person licensed by the Department under IC 24-4.4-2-402 îrom the definition of a loan broker.

10. Question: If a person acts as a mortgage lender under the FLMLA for fewer than five first lien mortgage transactions in a calendar year and tablefunds the remainder, who will be its regulator?

Answer: If the person acts as mortgage lender under the FLMLA on fewer than five consumer purpose first lien mortgage transactions in a calendar year, it is not considered to be regularly engaged in first lien mortgage transactions in Indiana and is not required to be licensed by the Department. If the person is not licensed by the Department, it will be required to obtain a license with the Securities Division because of its tablefunding activity.

11. Question: If a person is licensed with the Department, but still tablefunds or brokers some of its loan, which agency will regulate those tablefunded transactions?

Answer: In cooperation with the SecuritiesD ivision, as necessary, the Department will regulate those activities consistent with its licensing, examination, and investigative authority.

12. Question: If a person is licensed as a loan broker with the Securities Division, but also engages in mortgage lending activities (but not enough to require a license with the Department), who will regulate those mortgage lending activities?

Answer: The Securities Division, in cooperation with the Department, as necessary, will have jurisdiction over mortgage lending activities through its authority to deny, revoke, or suspend a license for dishonest or unethical practices.

13. Question: Where can I find more information regarding the licensing and regulation of loan brokers and mortgage lenders?

Answer: Additional information is available at the Web sites of the Securities Division and the Department,a t http://www.in.gov/sos/securities/loanBroker/LBInfoWP.htmand http://www.in.gov/dfi/2673.htm, respectively.

 

Recommendations for Legislation Needed to Implement Regulation of the Persons Described Above:

Footnotes to this guidance include some potential legislative issues to be addressed in the 2009 General Session.  Additionally, and significantly, on July 30, 2008, the President signed into law the SAFE Mortgage Licensing Act. This act will require 2009 amendments to mortgage licensing authority for both the Department and the Securities Division.  As noted above, effective January 1, 2009, the Department will assume regulation of first mortgage lenders. The SAFE Act compels states to enact legislation that requires state mortgage regulators to ensure that individual loan originators meet licensing standards (education, testing, and background checks), and that the mortgage companies, through their loan originators, follow applicable state and federal laws and regulations. The SAFE Act provisions require states to not only regulate non-depository mortgage lenders, but also to license each individual mortgage loan originator. This is a significant departure from the Department's current regulatory scheme. The effect on the Securities Division will be less significant as it already registers individuals, and have in place education requirements, testing, and background checks.

INDIANA SECRETARY OF STATE

SECURITIES DIVISION

Chris Navlor

Securities Commissioner

INDIANA DEPARTMENT OF FINANCIAL INSTITUTIONS

Judith G. Ripley, Director

 

North Carolina Mortgage Servicer License

NMLS begins managing North Carolina Mortgage Servicer License
The North Carolina Mortgage Lending Act was amended by S.L. 2008-228 (BB 2463) to include a Mortgage Servicer License type. Companies will need to submit a Form MU1 through NMLS and choose the Mortgage Servicer License type to apply for this license. NC licensed Mortgage Lenders are authorized to service loans under their current mortgage lender license and therefore are not required to obtain a separate Mortgage Servicer License. For more information, see the North Carolina Requirements Page. The full text of this regulation and a summary are available on NC’s website at: www.nccob.org.

Alert: KY Requires the Licensing of Loan Processors

KENTUCKY LOAN PROCESSOR REGISTRATION

Who is required to have this license?

Any individual who works under the instruction of a mortgage loan originator performing clerical functions such as gathering information, requesting information, word processing, sending correspondence, or assembling files, and may or may not perform any of the duties or responsibilities of a mortgage loan originator in the mortgage loan lending process. This includes individuals working for a third party processing company.

Pre-requisites for license applications? [general requirements]

1. Criminal background check: Yes; however, will grant temporary license for 6 months until background check obtained.

2. Pre-licensure Education: 12 Hours 

3. Total license costs: $50 including NMLS processing fee. All fees are collected through the NMLS and ARE NOT REFUNDABLE. 

4. Jurisdiction-specific requirements as identified on the KY Loan Processor checklist must be received with the checklist within 5 business days of the electronic submission of your application through the NMLS; however, a temporary license will be granted for 6 months until the background check information is received.

5. WHO TO CONTACT – Contact KY Office of Financial Institution’s licensing staff by phone at 1-800-223-2579 ext. 254 or send your questions via e-mail to for additional assistance.

Nationwide Mortgage Licensing System: Annual License Renewals for 2009

Nationwide Mortgage Licensing System

Annual License Renewals for 2009 As part of the NMLS 2009 Streamlined Renewal Process, all company and individual licensees must log into NMLS and attest that their record is accurate and current.  NMLS will allow users to attest to their record as part of the NMLS 2009 Streamlined Renewal Process starting October 13th. Company and individual licensees who have kept their record up to date will be able to renew their license(s) in a few steps. The NMLS 2009 Streamlined Renewal Process will begin November 1st and end December 31st.  Between now and November 1st, licensees should review their record and make sure it is up-to-date.  Any changes to a record must be submitted prior to the renewal request.  For more details about the renewal process see the Renewal Overview.