Herb Thomas Mortgage License News http://www.thomas-law.com

MORTGAGEE LETTER 2009-42 dated 10-19-2009 says all mortgagees that service FHA insured mortgages must be FHA –approved, and this includes sub-servicing mortgagees

MORTGAGEE LETTER 2009-42 dated 10-19-2009: Summary: An FHA-approved servicer may enter into a sub-servicing agreement to perform loss mitigation services on behalf of another FHA-approved servicer, however,  all mortgagees that service FHA insured mortgages must be FHA –approved, and this includes sub-servicing mortgagees.

MORTGAGEE LETTER 2009-42

 

 

TO:      ALL APPROVED MORTGAGEES

      ALL APPROVED SERVICERS

 

SUBJECT:    Sub-Servicing of FHA-insured Mortgages

 

 

    The recent mortgage crisis, and the Administration’s response to this crisis, has increased the demand for loss mitigation services.  In many instances, the need for loss mitigation services may have outpaced many servicers’ capacity to process defaulted borrowers requests in a timely manner.  To ensure that FHA approved mortgagees and their servicers can respond to all loss mitigation requests, this Mortgagee Letter summarizes things that mortgagees and servicing mortgagees need to keep in mind if they need to expand their servicing capacity including loss mitigation processing capacity. As a reminder, the servicing of FHA-insured loans must be performed by a mortgagee that is approved by FHA pursuant to FHA regulations.  See 24 CFR §§202.5 and 203.502.  The regulations do not preclude an FHA approved from performing servicing actions on behalf of another FHA-approved servicer or at the direction of an FHA-approved mortgagee.  For example, an FHA-approved servicer may enter into a business arrangement to perform loss mitigation services on behalf of another FHA-approved servicer.  Within the industry, those business arrangements are often referred to as sub-servicing agreements.  As stated in Mortgagee Letter 93-03, issued January 7, 1993, all mortgagees that service FHA insured mortgages must be FHA –approved, and this includes sub-servicing mortgagees. Although sub-servicers presently are neither specifically identified nor tracked in any FHA system, holding mortgagees and servicing mortgagees that decide to use sub-servicing mortgagees must ensure that the sub-servicer  is an FHA approved mortgagee .  Under FHA’s regulations 24 CFR §203.502, “The mortgagee shall remain fully responsible to the Secretary for proper servicing, and the actions of the servicer shall be considered to be the actions of the mortgagee.  The servicer shall also be fully responsible to the Secretary for its actions as a servicer.”  In turn, the holding mortgagee is responsible for the actions of the sub-servicer, and the sub-servicer is responsible to the Secretary as an approved mortgagee for its actions in servicing the FHA mortgages. In summary, to meet the increased need for loss mitigation, the Department has no objection to mortgagees entering into subservicing agreements with other FHA- approved servicers to perform loss mitigation functions.  As a reminder, the costs associated with subservicing are treated the same as for outsourcing in that the costs of such services may not be imposed on the FHA mortgagor or passed along to the Department on any subsequent claim for mortgage insurance benefits.  This prohibition also extends to independent contractors that often target mortgagors in distress and then charge for their services.  Too many distressed mortgagors have been taken advantage of by so-called loss mitigation or foreclosure avoidance “counselors”.  FHA-approved mortgagees and mortgage servicers must not assist in legitimizing the services of those individuals that prey on distressed mortgagors.  Questions regarding this Mortgagee Letter may be directed to HUD’s National Servicing Center (NSC) at 888-297-8685 or hsg-lossmit@hud.gov.  Persons with hearing or speech impairments may access this number via TDD/TTY by calling 1-877-TDD-2HUD (1-877-833-2483).  Sincerely,  David H. Stevens, Assistant Secretary for Housing –Federal Housing Commissioner

 

 

Mortgage Servicer- Urban Myths

Urban Myth #1 - Mortage Servicers only need Collection Agency Licenses in order to service mortgage loans.

Truth #1 - 40 States require Mortgage Servicer Licenses and only 22 states require Collection Agency Licenses

Urban Myth #2 - As long as the License Application has been filed with a State, it is alright to begin servicing mortgage loans. 

Truth #2 - You are in violation of state licensing law if you begin servicing activities prior to receipt of the required licenses in that state.  Beware that the Licensing Applications are signed under "penalties of perjury" so yo may be commiting a crime if you state in the application that you have never done business in their state when in fact you were conducting servicing activities when the application was submitted.

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

Advertisements

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.

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.

Mortgage Servicing Companies Cannot Engage in Servicing without Mortgage Servicing Licenses

As the Subprime Meltdown takes it effect and over 263 Mortgage Companies have imploded, critical liquidity  is entering the industry through hedge funds purchasing distressed mortgage pools containing both performing loans and nonperforming "scratch and dent" loans.  These passive investment pools are required by law to obtain from 11 to 15 mortgage lender licenses [where lender is defined broadly to include "acquire"] to be legal and eliminate regulatory liablilty to its investors.  These "scratch and dent"morgage pools are being purchased at major discount allowing room for foreclosure prevention through loss mitigation [both repayment plans and loan modifications] and resale of the reperforming loans at significant profit.  Some are also employing refinance as a way to rehabilitate loans and increase their resale value.  This additional capability will require mortgage lender licenses. 

Companes are also building their own mortgage servicing platforms rather than trying to purchase existing servicing platforms.   Pure servicing companies require 34 mortgage servicer licenses and 16 collecion agency licenses to avoid regulatory shut downs.  Mortgage servicers with refinance capabilities require an additional 35 mortgage lender licenses for a total of 85 licenses in order to be fully regulatory compliant.  We are the leading mortgage licensing company assisting mortgage servicers obtain the necessary licenses in the shortest amount of time by using an automated online mortgage licensing engine. We are currently engaged in 13 national mortgage servicer licensing projects each of which are pursuing between 50 and 80 licenses 

Housing Wire Magazine says: Origen Completes Sale of Servicing Portfolio to Green Tree

July 2, 2008   Origen Financial, Inc. (ORGN: 1.31, +5.65%) said Wednesday that it had completed a previously-announced sale of its servicing platform assets to Green Tree Servicing LLC, a well-known servicer of manufactured housing loans, other residential and consumer loans. The deal involves approximately $1.6 billion of manufactured housing loans, Origen said in a press statement. Green Tree will also assume the lease for Origen’s Fort Worth, Texas-based servicing facility. Specifics of the transaction were not made public, but Origen said in a press statement that it used proceeds from the sale to retire a $15 million loan, to partially repay a $46 million secured loan facility entered into in April 2008, and for working capital. “With the agreement to sell our servicing platform, we are focused on trying to sell our origination platform assets and right size our employee and cost structure to accommodate the continued management of our $1 billion securitized loan portfolio,” Origen CEO Ronald Klein said in May, when the deal was first announced. Shares in Origen had fallen 3.62 percent to $1.33 in afternoon trading when this story was published.

Housing Wire Magazine says: Fasthold Capital Rolls Out Advisory Service for Distressed Mortgages

July 2, 2008   As the number of sub- and non-performing residential mortgages continue to grow on the balance sheet of banks and other financial institutions nationwide, one of the larger hindrances to a sale of any mortgage pool has been uncertainty over pricing. After all, just what is a troubled mortgage really worth, when the value of the of the collateral securing it is losing more value by the day? Orange Calif.-based Fasthold Capital, Inc., which specializes in structuring the sale of residential, commercial and consumer loan portfolios, said Tuesday that it had launched a loan advisory service targeting the whole loan trade in distressed mortgages that will try to solve the pricing conundrum that investors say is holding up an increasing number of deals. The service is based on what the company is branding as the Settlement Optimization Process, or SOP. Fasthold said it designed the process in an effort to eliminate common concerns associated with marketing and liquidating distressed assets — in particular, eradicating any fade in price that might occur from the time an indicative bid is made to the final settlement on a pool of loans. “With the state of the market today, it is important to offer our customers the most effective and efficient means of liquidating their assets,” said Michael Castanon, managing partner at Fasthold Capital. “One of the biggest concerns our customers face is not having accurate information or experiencing a reduction in price from bid to settlement.” Castanon said that the firm’s SOP method “completely erases those concerns.” As part of its approach, the company will commit to purchase any or all assets at a stated price to assure the seller that all assets can be traded; Fasthold also performs independent due diligence on loan pools for trade and provides the diligence data to both sellers and qualified principal buyers, as well as providing sellers with an expected settlement range. The company also manages the entire settlement process from start to finish in-house, it said. Sources that spoke with HW thought the idea was intriguing. “Soup-to-nuts advisory in whole loan distressed mortgage trades makes a bunch of sense right now,” said one source, a fund manager that asked not to be identified. “The only question I’d have is whether we’re talking about a committed sale or not, and of course how the loan-level backstop is priced.” In plain English: Fasthold’s SOP means that the company will agree to purchase any assets that don’t close in a trade at a stated price (the “loan-level backstop”), which makes the question of what price Fasthold commits to a pretty relevant one for any potential seller.  “Everything comes down to price on execution,” the source said, noting that it’s still pretty common for the so-called bid-ask spread — the difference between what sellers want to get and what buyers want to pay — to remain wide. Sellers often want more than many buyers feel the loans are worth, while buyers may be attempting to low-ball a seller in an effort to juice returns, he said. Fasthold said it, in part, will look to get around such “ambiguities” in collateral valuation by gathering all due diligence materials independently and providing the data to both seller and buyer, so that each ostensibly is starting from a similar baseline and using the same data to value a loan pool for liquidation.