Tag Archives: loans

Fannie Mae Announces 97 Percent LTV Option for First-Time Homebuyers

3 percentdownpayment (Jeff Sorg, OnlineEd) –  Today, Fannie Mae (FNMA/OTC) announced an option for qualified first-time homebuyers that will allow for a down payment as low as three percent.  Building upon Fannie Mae’s successful lower down payment program offered through state Housing Finance Agencies, the 97 percent loan-to-value ratio (LTV) option will expand access to credit for qualified first-time homebuyers that may not have the resources for a larger down payment. These loans will meet Fannie Mae’s usual eligibility requirements, including underwriting, income documentation and risk management standards. These loans will require private mortgage insurance or other risk sharing, as is required on purchase loans acquired by the company with greater than 80 percent LTV.

“Our goal is to help additional qualified borrowers gain access to mortgages,” said Andrew Bon Salle, Fannie Mae Executive Vice President for Single Family Underwriting, Pricing and Capital Markets. “This option alone will not solve all the challenges around access to credit. Our new 97 percent LTV offering is simply one way we are working to remove barriers for creditworthy borrowers to get a mortgage. We are confident that these loans can be good business for lenders, safe and sound for Fannie Mae and an affordable, responsible option for qualified borrowers.”

With today’s announcement, homebuyers can purchase a home under Fannie Mae’s standard offering or its My Community Mortgage® product with a three percent down payment if at least one co-borrower is a first-time buyer. In addition, eligible homeowners who wish to refinance their Fannie Mae-owned mortgage but do not qualify under the Home Affordable Refinance Program (HARP) can refinance their loan up to the 97 percent LTV level under a limited cash-out option. Lenders must use Fannie Mae’s Desktop Underwriter® tool when evaluating mortgage applications for this product. Today’s announcement can be found here.

Fannie Mae has implemented prudent risk management practices to ensure that loans the company acquires are appropriately underwritten, including mortgages with lower down payments. These include essentially eliminating risk-layering on purchase money loans, requiring income documentation to avoid “low-doc” or “no-doc” lending, and requiring income verification.

As noted, private capital will be in the first loss position. Mortgage insurers and other risk sharing partners will have to conclude that these loans are prudent to make in order for these loans to be originated and delivered to Fannie Mae in the secondary market.

Fannie Mae has also worked to provide lenders with greater clarity on what circumstances would result in a loan repurchase request. Some lenders have said that uncertainty around these requests has led to them curtailing mortgage availability. This new clarity is intended to help lenders make mortgages to more creditworthy borrowers.

In addition, Fannie Mae is making new tools available to help lenders better evaluate risk on loans. For example, early in 2015 the company will offer Collateral Underwriter®, which gives lenders access to the same appraisal review tool that Fannie Mae uses. Collateral Underwriter will be offered at no additional cost to Fannie Mae’s customers.

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  This article was published on December 9, 2014. All information contained in this posting is deemed correct and current as of this date, but is not guaranteed by the author and may have been obtained by third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

 

CFPB to Drop Enforcement Attorneys in Mortgage Lender Examinations

(OnlineEd – Portland, OR) Good news from the CFPB – they’re still not quite speaking softly, but starting in November at least, they’re leaving the big stick at home.

The Consumer Financial Protection Bureau confirmed earlier this month that enforcement attorneys would no longer be accompanying examiners in on-site exams of mortgage lenders.

The CFPB began the practice of having an enforcement attorney present at exams starting in 2012. This practice led to uneasiness in lenders and often made the process more costly. Detractors also argued that this practice limited the effectiveness of the examination process and differs from the practices of other federal regulators.

Beginning November, however, the agency will no longer have enforcement attorneys present at exams. According to a Bureau spokeswoman:

“We found that it wasn’t efficient to have both examiners and enforcement attorneys physically present on exams,” said the CFPB spokeswoman.  “We think this approach will result in better overall oversight.”

However, just because enforcement attorneys are on the bench, doesn’t mean that they will be uninvolved.  The CFPB made sure to clarify that enforcement attorneys will still be working with examiners:

“Supervision Examiners and enforcement attorneys will continue to work closely to ensure that the financial institutions that we oversee are following the rules.”

Not all of the news coming out of the CFPB is good, with many mortgage lenders struggling to make changes to comply with several January final rule effective dates, but this news should encourage mortgage lenders and should help relieve some of the stress and burden on the industry.

 

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8 New Mortgage Regulation Deadlines Coming Out of the CFPB

OnlineEd Mortgage Compliance Management System

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(OnlineEd – Portland, OR) – The Consumer Financial Protection Bureau (“CFPB”) gave 12 months (and sometimes less) from the “issue date” to implement the majority of these new requirements.  Because the CFPB considers the “issue date” as the date of publication on the CFPB’s website – rather than publication in the Federal Register,  your company will have less time to comply with the final rules.

Below lists the recent regulations along with a link to the regulation page on the CFPB website and the effective date.

June 1, 2013 – Escrow Requirements for Higher-Priced Mortgage Loans

June 1, 2013 – Prohibition on Mandatory Arbitration and Financing of Credit Insurance Premiums (from MLO Compensation Regulation)

January 10, 2014 – Qualified Mortgage and Ability-to-Repay Requirements

January 10, 2014 – Mortgage Servicing Requirements – Reg Z (TILA) and Reg X (RESPA)

January 10, 2014 – Loan Originator Compensation and Training, Certification and Identifier Disclosure

January 10, 2014 – High-Cost/HOEPA Mortgage Loans and Homeownership Counseling Disclosures

January 18, 2014  – Disclosure and Delivery of Free Copies of Appraisals – Regulation B

January 18, 2014 – Appraisals for Higher-Priced Mortgage Loans

Make sure your company is keeping tabs on when these regulations go into effect and has a plan in place to ensure complete compliance in the event of an audit.

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If you would like information about OnlineEd’s® Compliance Management System, InlineEd, developed for the mortgage industry, please visit www.InlineEd.com or telephone (866) 519-9597.

If you have questions or would like to learn more about OnlineEd®, please visit www.OnlineEd.com.

This article was published on May 15, 2013.  All information contained in this posting is correct and current as of this date.  Due to the fluid nature of the subject matter, regulations, requirements, laws, prices and all other information may or may not be correct in the future and if cited, should be verified before use by the user.