FHA Lowers Mortgage Insurance Premiums Again

OLYMPUS DIGITAL CAMERAToday, HUD released Mortgagee Letter 2017-01, announcing a reduction in the FHA annual mortgage insurance premium by 20-25 basis points across the board and eliminating MI surcharges on loans over $625,500 in high-cost areas. This announcement, sure to please originators across the country, comes on the heels of the FHA Mutual Mortgage Insurance Fund (MMIF) once again reaching its statutory-mandated reserve of 2% in 2016.

The premium cut goes into effect with closings/disbursements on or after January 27, 2017. This is a slight departure from typical FHA policy changes which are usually implemented by the date the case number is obtained. Note, the UPFRONT MI Premium (UFMIP) is not changing and remains at 1.75% for forward mortgages.

The new annual premiums, effective January 27th, are highlighted below.

Happy originating!

Peter

NMLS Reminders for a Successful CE Season

Red bow on finger

According to the NMLS, the number-one question they receive from Mortgage Loan Originators is, “Do I need to do CE?” If you’re not sure, you should log into NMLS to review your education requirements. Your Course Completion Record will indicate whether you still need to earn Continuing Education this year. The NMLS has prepared a quick guide to help you navigate your record.

The NMLS also reminds MLOs that:

  • You may not complete the same CE course as last year.
  • Pre-license education courses do not count toward CE. However, MLOs do not need to take continuing education in the same calendar year in which they took an NMLS-approved 20-hour pre-license course.
  • Nearly half of all state agencies have a state-specific CE requirement. See the
    NMLS 2016 State-Specific Education Requirements Chart for the number of hours and other requirements.

  • Several state agencies have early CE or renewal deadlines. Check the state-specific education requirements chart for details.

Real Estate Institute offers top-rated 2016 CE courses in all three formats: Classroom, Live Webinar and Online, Self-Study. Try our courses and find out what it’s like to take CE that’s relevant and interesting.


Mortgage Lending Gets Personal

Hello, friends!  It’s been a while since I’ve posted to this blog, but I hope to be a more frequent communicator over the next few months as exciting things happen in the Mortgage Education Division for 2012 – starting with the NMLS approval of a brand-new CE class/webinar.  When that approval is in, we’ll be sure to share all of the details, as I’m looking forward to spending time with all of you again!

 CFPB and ECOA News Coming Soon

I fully planned for this post to cover the CFPB’s recent bulletin putting our industry on notice that fair lending (specifically ECOA) is going to continue to take center stage in examinations and with enforcement actions.  However, due to some recent experiences, I’ve decided to put that off until next week.  Today, if you’ll allow me, I’d like to reflect on the more personal side of our business.

 When the Going Gets Tough

As many of you know, aside from my course development and instruction career at Real Estate Institute, I maintain an active origination business; mainly because I need more stress in my day-to-day life.  I’m currently involved in one of “those loans,” full of roadblocks, detours and unforeseen underwriting conditions. (Yes, even those of us who teach the business for a living have them occasionally.)  This loan has required me to go back to the borrower and their employer(s) multiple times to get everything in order, have conversations of varying levels of pleasantry with attorneys and real estate agents, and generally has left me wishing I would have pursued a career in something less stressful, such as manual defusing of nuclear weapons.  Although I’d be the happiest MLO in the world if I never ran across another loan like this, it has given me cause for reflection, and that’s never a bad thing.

 When we get one of these Tales From the Crypt files, it’s tempting to play possum, letting calls go to voicemail, putting off emailing and otherwise becoming an invisible person.  It’s only natural to want to delay unpleasant news, both to save us from dealing with an uncomfortable phone call and the client from angst.  In doing so, we’re forgetting a key element – that there is another person on the other end of the transaction with real emotions who is often literally staring at the phone waiting for a call from us.  Think of your life as a teenager when you were first navigating the complex world of personal relationships.  Remember how it felt the first time you got a call from someone you were interested in?  EUPHORIA!!  Now… remember how it felt the first time you didn’t get a call from someone you had been seeing and were really into.  “Devastating” doesn’t even begin to address the range of emotions.  “Why isn’t this person calling?  What doesn’t this person want me to know?  WHAT’S GOING ON?!?!?!?!”  Well, that’s the mortgage business in a nutshell.  It’s easy to deal with the files that have one underwriting condition – heck, anyone could do that.  It’s how we deal with the surprises, the roadblocks, the bumps and the sinkholes that define who we are as originators, who we are as people and why we deserve to be paid well for what we do.  Remember, bad news isn’t like good scotch – it doesn’t get better with age.  Those of you who master the art of communication in both good times and bad and are able to manage expectations of everyone in the transaction will truly set yourselves apart from your competition.  It’s not easy, but the most rewarding things in life never are.

 Pause for One of the Good Guys

In closing, I’d like to take a moment to ask all of you to keep one of the good guys in our industry in your thoughts and prayers.  Dustin Hughes, President of Northwest Mortgage Advisors in Portland, Oregon, has been an industry leader since the mid-1990s and an inspiration to many, many people in our business.  I’ve only had the pleasure of meeting Dustin twice, but I was simply amazed both times by his character, energy and love of life, and I personally know many, many others who have been positively influenced by this amazing person.  As some of you may know, Dustin is battling Stage 4 glioblastoma (brain cancer), and the battle is getting tougher.  I’m a firm believer in the power of positive energy, and I’m sure that Dustin and his family could use as much as they can get at the moment.  Dustin is chronicling his battle with this disease (and continuing to inspire people) on his blog at www.blinkofamoment.com, and you can also find information and lend support on the Facebook group “Hughes’ Troop.”

Three Ways to Complete Your NMLS Continuing Education

Real Estate Institute is pleased to announce three convenient solutions for state-licensed mortgage loan originators (MLOs) to complete NMLS-approved continuing education. These include:

  1. Live classes that offer up-to-the-minute regulatory news;
  2. Live webinars that provide the advantage of interacting with a live instructor from your home or office;
  3. Online self-paced *NEW* This online course helps busy MLOs work from anywhere 24/7 and provides the flexibility to complete the course when you have time. Start and stop whenever you want.  We keep track of your progress and let you know when you are finished. The final exam is also online for your convenience. 

All three courses have instructor assistance available from experienced mortgage lending professionals. For no additional charge, students may contact our instructors with questions about course material, regulatory insight or other mortgage-related issues.

 Students successfully completing any one of these courses will receive 8 hours of continuing education credit, satisfying the comprehensive continuing education requirement under the SAFE Act.  Some states may require additional state-specific continuing education. For state-specific continuing education requirements in 2011, refer to this resource at the NMLS website.

About Real Estate Institute

Real Estate Institute is a nationwide NMLS-approved provider (NMLS #1400102) and has been offering mortgage education for the past 10 years.  In addition to mortgage continuing education solutions, Real Estate Institute offers leading-edge content in its 20-hour pre-license courses, a comprehensive SAFE test preparation program, PREP-to-PASS, and even free online SAFE practice tests.

HVCC is dead, long live HVCC! Fannie and Freddie announce new Appraiser Independence Requirements.

In monarchies of old, it is said that whenever a King or Queen died, the courtiers would lament the passage of the old ruler and usher in the new in the same breath.  While chants of “The King is dead!  Long live the King!” are stuff of legend and lore, it seems appropriate to make the comparison to Friday afternoon’s announcement by both Fannie and Freddie regarding the “new” Appraiser Independence Requirements to replace HVCC effective November 1, 2010 at the latest.

As promised, we are providing you with a synopsis of the release.  Here are the highlights:

1)   Under the new requirements, lenders selling to Fannie or Freddie are still responsible for engaging (ordering appraisal reports from) appraisers.  This can be done through lender roster appraisers, lender-approved appraisal management companies or through correspondent lenders who may have their own appraisers or appraisal management company relationships.  In no case is a true third-party (including mortgage brokers) allowed to compensate appraisers or order appraisals unless through a lender-approved Appraisal Management Company (AMC).  Much to the chagrin of most mortgage brokers, there is essentially no change from the existing HVCC requirement here.

 2)   Lenders must continue to keep the origination function completely isolated from the appraisal function.  In other words, any employee who works in mortgage origination (or “sales”) should not order an appraisal or “have any substantive communications with an appraiser or AMC relating to … valuation or having an impact on valuation, including ordering or managing an appraisal assignment.”  The only change from the existing HVCC requirement is that AMCs are now explicitly included on the list of prohibited contacts for sales/origination employees.  Also, an exception to these requirements has been added for small entities who truly can’t keep the two functions absolutely separate, as long as they have “prudent safeguards” in place to ensure that no influence or interference with appraisals occurs from a sales employee.  Note that this exemption only applies to entities that are actually selling loans to Fannie and Freddie, NOT to correspondent lenders or brokers.

 3)   Lenders are now explicitly permitted to order appraisals from Appraisal Management Companies who are affiliated with them, as well as staff (employee) appraisers or appraisers acting as independent contractors.  This removes all doubt of the acceptability of such relationships which were questioned by many in the industry since HVCC was first announced.  It will be interesting to see the reaction to this, as it raises serious questions about a conflict of interest in the transaction.  How can you assure appraiser independence if the appraiser is being compensated by an entity that is wholly owned by the lender selling the loan to Fannie or Freddie?  This seems to cut against the general intent of these rules.

 4)   Second appraisals should not be ordered on any transaction unless the lender has reason to believe that the original appraisal was flawed or tainted (reasons for which must specifically be noted in the file) OR the second appraisal is required by law or ordered as part of a standard appraisal review or QC process.  If second appraisals are ordered for review/QC, lenders need to have a policy of selecting the “most reliable appraisal, rather than the appraisal that states the highest value”.  This is a slightly more in-depth explanation of the prohibition on “value shopping” than appears in HVCC.

 5)   Lenders are now explicitly allowed to use appraisals transferred from another lender or lender’s AMC, including for transactions where a mortgage broker has originated the loan.  Note that if a lender elects to do so they must assume complete responsibility for that report’s compliance with the appraiser independence requirements.  This provision should come as a relief to mortgage brokers across the country who have long been fighting for the ability to transfer reports and save borrowers’ time and money.

 6)   Borrowers must continue to be provided with copies of appraisal reports “promptly upon completion at no additional cost…and in any event no less than three days prior to closing.”  This 3 day requirement can be waived by the borrower in writing, so long as the waiver request is completed at least 3 days before closing.  In practice, just as with the rescission waiver allowed in the Truth-in-Lending Act, don’t expect lenders to accept these appraisal report waivers either.

 7)   It should go without saying, but appraisers must continue to be State-licensed or certified by the State in which the subject property is located.  Additionally, all of the prohibitions on coercion, influencing or attempting to influence the value or composition of an appraisal report remain in effect.  They are too numerous to list here, but are fully detailed in the Fannie and Freddie releases.

 A document with the full requirements can be found at: https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/appcode/pdf/air.pdf

If you read the above document, remember that the term “Seller” refers to the entity actually selling a loan to Fannie Mae or Freddie Mac, which is not always the entity funding that loan.

***The effective date for the sunset of HVCC and implementation of the new requirements is November 1, 2010 or when the Federal Reserve issues final regulations on the Dodd-Frank bill, whichever is earlier.  HVCC remains in effect until that time.***