Issue Publish Date

July 10th, 2010June 10th, 2010May 10th, 2010April 10th, 2010March 10th, 2010February 10th, 2010January 10th, 2010December 10th, 2009November 10th, 2009October 10th, 2009September 10th, 2009August 10th, 2009July 10th, 2009June 10th, 2009May 10th, 2009April 10th, 2009March 10th, 2009February 10th, 2009January 10th, 2009December 10th, 2008November 10th, 2008October 10th, 2008September 10th, 2008August 10th, 2008July 10th, 2008June 10th, 2008May 10th, 2008April 10th, 2008March 10th, 2008February 10th, 2008January 10th, 2008

Fannie Mae

Jul 10, 2010 Fannie Clarifies Underwriting Foreclosure Borrowers – SEL 2010-08 – Effective October 1, 2010. [Includes Mortgage Talking PointsTM flyer, Foreclosure/Bankruptcy: Summary of All Waiting Periods & Underwriting Requirements AND Reference Chart: Fannie - Summary of All Waiting Periods for Foreclosures, Bankruptcy, Deed-In-lieu & Short Sales This officially demonstrates a good decision by Fannie, to really give a clear incentive to borrowers for working with their servicers regarding property disposition. However, Fannie SEL-2010-05 rules are still in effect until 10-1-10. Mortgage Talking PointsTM flyer & Reference Chart for LOs and Processors Included. Mortgage Talking PointsTM flyer (from May 2010) Updated - Advising Foreclosure, Short Sales, Deed-In-Lieu Clients. Supporting Resources: Mortgage Talking PointsTM flyer Advising Short Sale and Deed-in-Lieu Clients Mortgage Talking PointsTM flyer Summary of All Waiting Periods for Derogatory Events Fannie Summary of All Waiting Periods & Requirements for Derogatory Events

Fannie Updates and Clarifies Appraisal Policies - SEL 2010-09 (Effective 9-1-10) Finally some reasonable guidance on dealing with value and deficiencies… for the most part, we now have a reasonable solution to those appraisals that are just plain awful. Interior photos will be required AND Fannie clarifies that you DON’T have to order your appraisals thru an AMC! (Fannie Mae SEL 2010-09)

Jun 10, 2010 Fannie Mae Hasn’t Been Clear In The Past, So We’re Saying It Again: Mortgage Insurance Clarified; Foreclosure Redemptions; Refi Rules to Buy Out an Owner’s Interest and Misc. Updates. SEL 2010-07 – May 27, 2010. [Download Mortgage Talking PointsTM flyer, Fannie Cracking Down on Foreclosure Redemption Periods] If financed MI is still bothering you after you read this, please email your questions. As for the Foreclosure issue – become familiar with your state’s rules. If you are doing loans in states where you are not familiar with the laws, proceed very carefully – make sure your seller can actually transfer the property and the redemption has actually expired. [Mortgage Talking PointsTM flyer, Fannie Cracking Down on Foreclosure Redemption Periods] Supporting Resources: Mortgage Talking PointsTM flyer Fannie Cracking Down on Foreclosure Redemption Periods

The REAL Scoop about Undisclosed Liabilities - Fannie Loan Quality Initiative FAQ (5/28/10 & 6/7/10) [Links to Fannie's Frequently Asked Questions] Straight from the horse’s mouth! We’ve picked the FAQs that deal with Fannie’s “Undisclosed Liabilities Policy” and this is a MUST READ because there is a lot of misinformation out there, too. Prepare to add “soft credit reports” to your processing checklist! (LQI FAQ 5/28/10 & 6/7/10)

May 10, 2010 Fannie How to Underwrite Pre-Foreclosure or Deed-in-Lieu Borrowers – SEL 2010-05 (Effective July 1, 2010) [Download Mortgage Talking PointsTM flyer, Advising Short Sale and Deed-in-Lieu Clients] For a long and frustrating time, we have been commenting on and responding to Fannie’s lack of policy specific to Short Sales – WELL IT IS FINALLY HERE, AND YES, IT IS CONSIDERED A “PREFORECLOSURE SALE”. I do appreciate the simplification of the whole mess, but still…what took so long? And why don’t they just call it what it is - a “short sale”. [Download Mortgage Talking PointsTM flyer, Advising Short Sale and Deed-in-Lieu Clients] (SEL 2010-05)

Fannie’s Tips for Identifying Undisclosed Liabilities – An Update to Annc. SEL 2010-01 Fannie makes the “tips” sound easy enough – but have you ever “refreshed” a credit report? Me either. However, these changes are coming – before July 2010. Start getting used to chasing down inquiries and coach your borrowers – NO BUYING THINGS, INCEASING CC BALANCES OR APPLYING FOR CREDIT UNTIL AFTER THEY CLOSE! (Announcement SEL-2010-01)

Fannie Issues Lender Quality Initiative (LQI) FAQ Highlights [Download LQI Reference Chart Matrix Included] The LQI, FAQ, has 29 questions (for now anyway). We’ve interpreted 8 of the biggies for you—with real-world applications and understanding what they mean in plain language! [Download LQI Reference Chart Matrix Included] (LL 2010-03) Supporting Resources: LQI Matrix

Fannie DU Version 8.1 – To be updated on June 19, 2010 to incorporate changes from Annc. 2010-05 and 2010-06 that are in effect NOW! Fannie has incorporated most all of the changes for this year into DU 8.1. The only updated surprise for this release is the Property Fieldwork Waiver enhancement. And, Fannie is offering this up to 125% LTV on the expanded approval products – this should be a nice feature…wish they had done it sooner. (Desktop Underwriter Release Notes; SEL 2010-05; SEL 2010-06 [Effective 4-30-2010])

Fannie Updates ARMs, Balloons & Interest-Only Loans and Clarifies Employment Documents all in Announcement 2010-06 (Effective April 30, 2010) ARM qualifying changed with no warning - just out of the blue – so watch your ratios. I/O loans are still alive and Fannie is the only avenue. You’ll find one more multiple-finance-property loophole closed. Misc. updates on employment verification. (SEL 2010-06)

Fannie Mae/Freddie in Brief

Jun 10, 2010 HVCC - Is It Down for the Count? Fannie & Freddie to Deploy Appraisal Complaint Process [FHFA News Release 5-20-10] HVCC may be changed, be allowed to sunset or be legislated out of existence, but one thing is for certain – even if HVCC is no longer the rule, it will be replaced. By the way… under current HVCC rules – you CAN talk to an appraiser? You are prohibited from a material discussion about the value conclusion and you cannot have any impact on the ordering process. Company policies may go further, but HVCC did not prohibit talking about repairs, scheduling, etc. (Letter to Cuomo & New Financial Regulatory Legislation) Supporting Resources: FHFA News Release (May 20, 2010): Fannie Mae, Freddie Mac to Deploy Appraisal Compliant Process

Fannie & Freddie Loan & Appraisal Data Uniform Data Collection - The Next Big Thing! (FHFA News Release - Effective June 2010 for Loans; Effective October 2010 for Appraisals) FHFA forces everyone to get on with uniformity and accurate data collection as part of an overall risk management strategy. The changes will be painful for lenders and vendors alike as this will be a major shock to operations and business practices. We probably will think they should have called it Data Uniform Mortgage Program – DUMP. (Federal Housing Finance Agency) Supporting Resources: FHFA News Release: Fannie Mae & Freddie Mac Launch Joint Effort to Improve Loan & Appraisal Data Col

May 10, 2010 Fannie & Freddie Clarify Their Positions On Energy Efficient (PACE) Loans Let the negotiations begin…The letters from Fannie and Freddie have effectively put everyone on notice – PACE loans that require a Senior-lien position are NOT allowed. More to follow on this for sure…because the local governments have the monies for these programs…but… (Fannie LL 2010-06, Freddie Industry Letter - May 5, 2010)

FHA

Jul 10, 2010 FHA Assistant Request Form: Case Number Transfers and Uncooperative Lenders – What to Do? [Includes Charts/Checklist: FHA HOC Assistant Request Form for Case Number Transfer.] Ever had a problem with getting another lender to transfer an FHA appraisal to you? In a recent FHA online seminar they re-stated the procedures outlined in the Handbook 4155.2 regarding requesting assistance from a Home Ownership Center (HOC) when a lender won’t respond to a case number transfer request. So, we’ve created a handy fax cover sheet for you to use! Supporting Resources: FHA HOC Assistant Request Form for Case Number Transfer

FHA Final Rule on Approved Lenders – ML 2010-20 – 1st Phase (Effective 5-20-10) Official Net Worth Requirement- 3 Phases: If you are a loan correspondent and not planning on pursuing a lender approval for 2011 you’d better start looking for your sponsoring lenders who will take you on. This year will be over before you know it and FHA is a mighty player in the mortgage game. (Implementation of Final Rule FR 5356-F-02, “Federal Housing Administration: Continuation of FHA Reform – Strengthening Risk Management through Responsible FHA-Approved Lenders, Mortgagee Letter 2010-20, June 11, 2010) Supporting Resources: FHA Mortgagee Letter 2010-20: Implementation of Final Rule FR 5356-F-02

FHA-Letter from Commissioner David H. Stevens – June 2010, Re: RESPA, Home Warranties, Pre-Approvals, Use of Worksheets, SAFE Act. This newest letter from Commissioner Stevens (which, by the way, has no date on it ANYWHERE...just a “June 2010” notation in the web address when you click on the link) has a couple of items worth mentioning—Pre-approvals, worksheets explained & home warranty kickbacks to real estate agents are illegal. (Letter from Commissioner David H. Stevens – June 2010) Supporting Resources: June 2010 Letter from the Desk of David H. Stevens

Jun 10, 2010 FHA Provides "suggested" Condo Approval Checklist. [HUD Cover Letter/Checklist: For Condo Initial Project Approval Included] There was no drum roll, no flare, no official announcement whatsoever, but FHA did quietly post a suggested cover letter checklist for an initial condo approval submission and it’s included with this article. [HUD Cover Letter/Checklist: For Condo Initial Project Approval Included] Supporting Resources: HUD Cover Letter/Checklist: For Condo Initial Project Approval

Letter from FHA Commissioner David H. Stevens [Includes Waiver for HO-6 Coverage for Condo Rules] (Effective April 29, 2010 to April 29, 2011) We’ve read the letter…the items discussed that are actually new that you will want to know about: Temporary waiver of HO-6 insurance on condo loans (download copy of rules); Next steps in expansion of electronic signature acceptance; Definition of a ‘small business’ lender for net worth requirements. Supporting Resources: Letter from David H. Stevens HO-6 Insurance Waiver Rules

FHA Net Worth Requirements [Download FHA Net Worth Requirements Timeline Chart] We’ve created a FHA Net Worth Requirements Timeline Chart for you. Special Note: the new net worth requirements mentioned lenders approved as “small businesses” and provided for a lower requirement for these lenders. Most of us were going, “Huh?” We had never heard of this classification – now we have the answer for you! Supporting Resources: FHA Net Worth Requirements Timeline

FHA Streamline Refinance Transactions and FHA TOTAL Scorecard - No Longer a Fatal Error! ML 2010-19 (Effective May 27, 2010) Regardless of case number assignment date, lenders may score streamline refinance transactions through FHA TOTAL and not process the transaction as a rate-and-term refinance. I have already seen lenders respond favorably so there shouldn’t be any ugly lender overlays on this one but always double check. (Streamline Refinance Transactions and FHA TOTAL Scorecard, Mortgagee Letter 2010-19, May 27, 2010) Supporting Resources: FHA Mortgagee Letter 2010-19: Streamline Refinance Transactions and FHA TOTAL Scorecard

May 10, 2010 FHA Electronic Signatures on Third Party Documents – ML 2010-14 (Effective April 8, 2010) [Download copy of E-Sign Act] It’s a sign (no pun intended) of the times… either that or the National Association of Realtors AND Apple yelled REALLY loud since the new iPad works great for electronic signatures. Double check that you can read the electronic signatures and dates when both viewing your sales contracts electronically and when you print them out…so much for saving trees! (Mortgagee Letter 2010-14, Electronic Signatures on Third Party Documents, April 8, 2010) Supporting Resources: Electronic Signatures in Global and National Commerce Act (ESIGN) Mortgagee Letter 1995-50: Electronic Signatures on Appraisal Reports Mortgagee Letter 2001-01: Case Binder Stacking Order & Documentation Issues FHA Mortgagee Letter 2010-14: Electronic Signatures on Third Party Documents Uniform Electronic Transactions Act (UETA)

FHA Says NO Audited Financial Statement Requirements for Brokers - Finally We’ve Got Something in Writing! [Download Official HUD Letter From David Stevens] Finally, (thanks to subscriber Kelly Whytock), we have something in writing from the HUD Lender Assessment SubSystem that specifically says that currently approved loan correspondents are not required to submit audited financials this year. (Announcement Regarding FHA Loan Correspondent Renewal) Supporting Resources: Letter from David H. Stevens - FHA Loan Correspondent Clarification

HUD Issues Appraisal Independence FAQs There are 6 pages of FAQs here and they are helpful in better understanding FHAs appraisal ordering policies, but it was the broker specific items I thought many of you would be interested in. It may be 6 pages long, but it’s a large-font, fast read and worth the time. (FAQs – ML 2009-28 – Appraisal Independence) Supporting Resources: FAQs for ML2009-28: Appraiser Independence

FHAs Response to Appraiser/Mortgagee Frustrations with AMCs - Just Deal With It HUD created an FAQ, addressing all of the complaints we outlined in this article, with the same answer, stated several different ways. “We don’t control AMCs. We don’t control fees. We don’t set turnaround times. Appraisers and lenders, figure it out ‘cause it’s not our problem.” (HUD FAQs - AMCs/Reasonable and Customary Fees/Turnaround Time) Supporting Resources: AMCs/Reasonable and Customery Fees/Turnaround Time FAQs

FHA Case Number and FHA Roster Appraiser Assignments ML 2010-15 (Effective 2-15-10) No. The effective date on this isn’t a typo. The ML was issued on April 20. The effective date is February 15. Get this on the processor and underwriter’s radar! Make sure YOU know exactly what the processing practices are in the office or create new ones to avoid having any problems. There is potential ugliness if you don’t. (Mortgagee Letter 2010-15, FHA Case Number and FHA Roster Appraiser Assignments, April 20, 2010) Supporting Resources: FHA Mortgagee Letter 2010-15: FHA Case Numbers and FHA Roster Appraiser Assignments

HUDs Stance: Schedule C tax loss of income by a non-purchasing spouse should not be counted against the borrower spouse. I was surprised to hear that some lenders were counting a non-purchasing spouse's Schedule C tax loss of income against the borrower spouse. This disturbed me on multiple levels so I posed the following question to HUD, but now we've got it in writing.

Freddie Mac

Jul 10, 2010 Freddie Rescinds PUDs Rule (Eff. 6-15-10); Relief Refi Adding/Deleting Borrowers (Eff. 6-15-10) LO & Appraiser ID’s (7-1-10) – Bulletin 2010-13 – [Download Mortgage Talking PointsTM flyer, Planned Unit Developments: Keeping It Simple] A couple of biggies here: PUD approvals back to where they were before (don’t have to treat as a condo) and you can now add and delete borrowers—under certain conditions! (Freddie Mac Bulletin 2010-13) Supporting Resources: Mortgage Talking PointsTM flyer Planned Unit Development - Keeping It Simple

Freddie Offers Help on Chinese Drywall Problem - Industry Letter 6-25-10 [Download Mortgage Talking PointsTM flyer, Some Relief for Chinese Drywall Problem] We normally do not address Servicing issues like forbearance, but this issue isn’t just about a Servicing relief program. Problem Drywall comprises over 3,000 homes in 37 States, the District of Columbia, American Samoa, & Puerto Rico. Ultimately, this issue potentially affects YOUR clients and YOUR Realtor and Builder’s clients. Mortgage Talking Points: Some Relief For Chinese Drywall Problem. (Industry Letter: Problem Drywall, 6-25-2010) Supporting Resources: Mortgage Talking PointsTM flyer Some Relief for Chinese Drywall Problem

Freddie Releases Their Implementation Guide for Loan Delivery Data – Bulletin 2010-15 (Effective 9-1-11) This is Freddie’s version of their plans to implement ULDD--Don’t waste your time on this one yet—does not go into effect until September 2011. We’re sure there will be more updates and FAQs then you can say grace over! (Freddie Mac Bulletin 2010-15)

May 10, 2010 New LTVs for Rural Housing (effective June 13, 2010) and Manufactured Homes (effective April 8, 2010) – Bulletin 2010-09 This bulletin updates and clarifies some LTVs for rural housing and manufactured homes…no big deal…no surprises and unless you are selling these types of loans to Freddie, no need to read this one! (Freddie Mac Bulletin 2010-9)

Universal Topics

Jul 10, 2010 S.A.F.E. Act Mortgage Licensing Rules: By State. [Download Charts/Checklists - SAFE Act Compliance Chart by State!] Do you know the current rules for your state in regards to the S.A.F.E. Act? The deadlines? Do you want to know the rules for other states that you want to do business in? [Download Charts/Checklists - S.A.F.E. Act Compliance Chart by State!] Supporting Resources: S.A.F.E. Act Compliance Chart by State

Jun 10, 2010 SAFE Mortgage Licensing Act - [Download Checklist - Who Needs to Be Licensed and HUDs State Model for Implementing SAFE Mortgage Licensing Act] You may be surprised to see who actually has to be licensed under this Act. I know I was. Also, HUD’s proposed SAFE Act State Model Language is attached. We’ve put together a checklist, Who Needs to Be Licensed, to help you determine who does and doesn’t need to get licensed under the SAFE Act. Supporting Resources: HUDs State Model for Implementing S.A.F.E. Mortgage Licensing Act Checklist - Who Needs to Be Licensed?

USDA

Updated 2010 Income Limits for the USDA Guaranteed Rural Housing Program (Eff. June 2, 2010) [Download Mortgage Talking PointsTM flyer, Six Common Deductions Allowed By USDA PLUS EXTRA BONUS: Income Eligibility Calculation Worksheet] For “non-high cost counties”, the limits for households have increased $600. While not a big increase, it’s always nice to see an increase in income limits. Just remember, this is based upon “adjusted gross” and USDA allows deducts from the gross to qualify. Mortgage Talking PointsTM flyer, Six Common Deductions Allowed By USDA PLUS EXTRA BONUS: Income Eligibility Calculation Worksheet Supporting Resources: Income Eligibility Calculation Worksheet Mortgage Talking PointsTM flyer Six Common Deductions Allowed by USDA

VA

Jul 10, 2010 VA Extends Expansion of Ownership Interests Allowable for Specially Adapted Housing – Cir. 26-08-5 VA recognized that there are more choices being utilized by today’s veterans when it came to property ownership and estate planning. Therefore they announce the acceptance of 2 more types of ownership interests. (Expansion of the Types of Ownership Interests Permissible Under the Specially Adapted Housing (SAH) Grant Program, Circular 26-08-5, Change 2.) Supporting Resources: VA Circular 26-08-5: Expansion of the Types of Ownership Interests Permissible Under the Specially A VA Circular 26-08-5 - Change 2

Jun 10, 2010 VA Offers Some Temporary Leniency on Condo - VA Cir. 26-09-19 (Effective May 17, 2010) [Download Mortgage Talking PointsTM flyer, Great News! VA Offers Some Leniency on Condos & Condo Comparison Chart Updated] We just got done telling you for the last 5 months that the only way we could do a VA loan on a condo was if the project was on the VA approved list. This change is a big deal for the next 6 months and will open up the number of properties available to veteran buyers. Download Mortgage Talking PointsTM flyer, Great News! VA Offers Some Leniency on Condos & Condo Comparison Chart Updated (Rescission of VA Acceptance of HUD/FHA Condominium Approvals, Circular 26-09-19, Change 1, May 17, 2010) Supporting Resources: Condo Eligibility Quick Reference Chart Mortgage Talking PointsTM flyer Great News - VA Offers Some Leniency on Condos VA Circular 26-09-01, Change 1 - Rescission of VA Acceptance of HUD/FHA Condominium Approvals

May 10, 2010 VA Updated Home Buyer Assistance Program Dates – Cir 26-08-14 The original Circular 26-08-14 (attached to this article) was issued in August of 2008 and explained what is and isn’t acceptable to VA when it comes to Homebuyer Assistance Programs (HAPs). In a nutshell, VA accepts government HAPs but private HAPs have to be submitted to VA for approval. (Circular 26-08-14, Change 1, April 23, 2010, VA Acceptance of Homebuyer Assistance Programs) Supporting Resources: VA Circular 26-08-14: VA Acceptance of Homebuyer Assistance Programs VA Circular 26-08-14: VA Acceptance of Homebuyer Assistance Programs