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HVCC, Red Flag Deadlines Loom

HVCC, Red Flag Deadlines LoomRecent mortgage compliance activity

April 14, 2009

By staff

Mortgage brokers are up in arms and appraisal management companies are in the spotlight over the upcoming deadline to comply with the Home Valuation Code of Conduct. Another looming deadline that will require mortgage companies to establish mortgage fraud prevention procedures has at least one service provider giving away toolkits for mortgage brokers. Meanwhile, Pennsylvania originators are now required to provide a new dislcosure.The Dallas Association of Mortgage Brokers issued an alert warning its members that the HVCC will become mandatory on May 1 and advising them of an emergency meeting this week about the rule. The trade group explained that loan originators and real estate agents will be required to utilize appraisal management company to randomly select appraisers.

“No one will have any degree of confidence as to the appraiser’s abilities, knowledge or experience,” the DAMB warned. “The trust factor is in doubt.”

The association went on to say appraisers — forced to split their fees with the management companies — will either charge more or do poorer quality work.

RealEC Technologies Inc., which reports that more than 42 million orders have been processed through its network since it was founded in 1998, said last month that it signed up AmTrust Bank and Flagstar Bank as customers of its HVCC-compliant appraisal management solution. The service is targeted at lenders and appraisal management companies.

Mortgage brokers can obtain a free tool kit from Informative Research for the Fair and Accurate Credit Transactions Act of 2003, which becomes enforceable on May 1, a news release earlier this month said. The kit includes summaries of the regulation, background information from the Federal Trade Commission and specific guidelines for writing policies and procedures to help meet the regulations. It also includes a step-by-step checklist.

“Because most brokers do not service loans, the scope of their identity theft procedures is far less than that of a traditional lender,” Informative Research stated. “Still, all brokers large and small must create and document their own program uniquely — there is no singular approach or solution to meet the regulations.”

Mortgage Cadence’s Orchestrator has been integrated into DataVerify’s DRIVE platform, an April 8 statement said. Among other things, the integrated offering ensures compliance with Red Flags Rules.

Lenders that utilize Commerce Velocity’s Spectrum loan origination system will now have access to compliant loan documents with the recent integration of ConformX, a press release last week said. The LOS reportedly repairs problem loan files and verifies that the loans comply with investor guidelines.

Dow Louisiana Federal Credit Union was the first lender to join AppOne’s credit union platform, according to an announcement last week.

Under The Mortgage Act, 7 Pa. C.S. § 6101 et seq., Pennsylvania mortgage licensees are required to provide a new consumer disclosure form within three days of taking an application. In addition, they must require applicants to sign, date and return the disclosure within 10 days of receiving it. Mortgage brokers, however, can skip the disclosure if the wholesale lender meets the disclosure deadline based on the broker’s application date.

A report this month from the Consumer Mortgage Coalition said Regulation X of the Real Estate Settlement Procedures Act — which was designed to simplify borrower understanding of loan terms and settlement costs — will have the opposite impact. The group said revised RESPA requirements must be coordinated with Truth In Lending Act disclosure requirements.

The coalition warned that the differences between RESPA and TILA interest rates and annual percentage rates are complicated and said Reg X prohibits lenders from providing loan commitments prior to selecting a property. Also at issue is the lack of clarification about how to reconcile mortgage broker disclosures that differ from the wholesale lender’s disclosures.

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