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Mortgages By the Book

Mortgages By the BookRecent mortgage compliance activity

January 21, 2009

By staff

New data to be required on conforming loans will help the government-sponsored housing enterprises track the performance of loans based on the originator or the appraiser. In other compliance news, lenders must now adhere to requirements that prevent mortgage fraud while compliance with another new rule has been delayed.Implementation of a final rule on the Real Estate Settlement Procedures Act has been delayed until April 16, a Federal Register notice last week said. The delay was the result of recently initiated litigation. The rule had been scheduled for implementation on Jan. 16.

Calyx Software’s new Point 6.2b addresses the first mandatory compliance update for the new RESPA Rules, a press release last week said. The latest version includes a HUD modified Regulation X and updated Servicing Disclosure Statement — which Calyx indicated are both required by the rule.

The Red Flags Risk Platform has been launched by Informative Research, a press release Friday said. The new offering — designed to help detect, prevent and mitigate ID fraud — is an add-on for credit reports that helps originators and lenders comply with FACTA Red Flags requirements.

Lenders were required to comply with Red Flag requirements beginning in November 2008, while mortgage brokers must comply beginning on May 1, Informative Research said.

The Mortgage Bankers Association released a report this month explaining that Red Flags rules address identity theft and address discrepancies. The group noted that its members have indicated that “implementation of the Red Flag requirements is more about tweaking existing fraud prevention programs than creating any new initiative.”

Fannie Mae and Freddie Mac will be required to obtain loan-level identifiers, an announcement from their regulator — the Federal Housing Finance Agency — said last week. The requirement — which applies to loans with applications dated Jan. 1, 2010, or later — will enable performance monitoring of loan originators, loan origination companies, field appraisers and supervisory appraisers. The required originator data is available through Nationwide Mortgage Licensing System and Registry required by the S.A.F.E. Mortgage Licensing Act.

“If originators or appraisers have contributed to the incidences of mortgage fraud, these identifiers allow the enterprises to get to the root of the problem and address the issues,” FHFA Director James B. Lockhart stated in the announcement.

A press release earlier this month from the Comptroller of the Currency indicated the asset size exemption for reporting data under the Home Mortgage Disclosure Act has been raised to $39 million. Depository institutions had previously been exempted at $37 million in assets.

The Federal Home Loan Bank of Seattle disclosed last week that it was likely out of capital compliance on Dec. 31 because of “ongoing turmoil in the capital and mortgage markets.” The risk-based capital deficiency resulted from a market-value decline in its private-label mortgage-backed securities.

Cogent Road said recently that its new intelligent document management system for originators — Business Spaces — automatically ensures full compliance with the Equal Credit Opportunity Act’s Regulation B and the Truth in Lending Act’s Regulation Z. The service automatically delivers adverse action letters electronically or through the postal service — creating an audit trail in the process.

Adverse-action letters are automatically sent out on files with no underwriting decisions within 30 days, as required by Reg B, Cogent said. When Reg Z disclosures are not sent out within three days, an adverse action letter is automatically generated and mailed — though the originator is warned just prior to the letter.

An alliance between Lenders One Mortgage Cooperative and Document Systems Inc. will provide Lenders One members with preferred pricing for fully compliant initial disclosures and closing documents, a press release this month said.

“The cooperative saw great opportunity in partnering with Document Systems Inc. to help members streamline processes with e-disclosures and closing documents reviewed by in-house compliance experts,” Lenders One Chief Executive Officer Scott Stern said in the statement. “Lenders can instantly send borrowers fully compliant initial disclosures at point of sale.”

First Internet Bank of Indiana will utilize MRG Document Technologies document preparation services to ensure compliance on its mortgage loans. MRG said it was able to provide home-equity line-of-credit documents that were compliant with varying state lending laws.

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