GMAC "Significantly Scales Back"; Citi's HARP 2.0; Lots of Investor, Agency, MI, and Conference Updates

In an anticipated, but nonetheless disappointing announcement for many in the industry, GMAC Bank Correspondent Funding (GMACB) sent word out to its approved correspondent clients, "please be advised that we are significantly scaling back our government production which includes FHA, USDA and VA products. As a result, all loans including AOT, Direct and Forward Trades must be locked/assigned on or before 5:00 PM EST, April 16, 2012. GMACB will honor existing pipeline. No Relocks will be accepted and a maximum of 30 days of extensions will be allowed. All other lock policies will apply."

Although conventional and jumbo production was not mentioned, the bulletin follows GMAC cutting back its MBS trading lines, stories about the impending ResCap bankruptcy, attempts at selling pieces of its business, and so on. And obviously GMAC was, with the exit of BofA and MetLife and ING in recent months, hoped to play an important role. (Here are the top 15 correspondent lenders in the 4^th quarter, in order of volume: Wells Fargo (34% market share), Chase, Ally/ResCap (GMAC), CitiMortgage, Bank of America, PHH Mortgage, Branch Banking & Trust (BB&T), U.S. Bank Home Mortgage, Franklin American Mortgage, SunTrust Mortgage, MetLife, Provident Funding, Fifth Third Mortgage, Astoria, and Crescent Mortgage Company.)

Turning to other agency/investor/lender/MI news, in no particular order (and a reminder that readers are advised to read the full bulletins on their own), Fannie Mae and Freddie Mac no longer allow expanded debt ratios for properties constructed using energy efficient designs, materials and equipment, which means that FNMA 1004A Energy Addendum and FHLMC 70A Energy Addendum forms will no longer be issued.

Starting on July 1, Fannie will require servicers to make sure that priority liens for delinquent HOA dues and assessments on acquired properties are cleared in the 30 days following the foreclosure sale or acceptance of a deed-in-lieu of foreclosure.

Freddie and Fannie have both been keeping an eye on the use of the new Uniform Appraisal Dataset and have provided some additional resources to help lenders and appraisers use it.  The Uniform Appraisal Dataset Update will provide various reminders and clarifications, and the UAD Specification Appendix D: Field-Specific Standardization Requirements is a useful reference source that goes into more detail on Condition and Quality ratings.

Servicers in Chicago are reminded that, as of May 1st, they will have to submit the Cash Disbursement Request (Form 571) and the updated expense designations for any expenses incurred that are related to the City of Chicago Vacant Property Ordinance and not otherwise required by the Servicing Guide.

Under updated VA regulation, an Alive and Well statement is required when a VA IRRRL loan is closed using Power of Attorney.  This statement indicates that the borrower is alive and not Missing In Action, and should be signed by the borrower's Commanding Officer.  This goes into effect on Monday, April 16th.

For some borrowers, trying to get a loan may be an issue if their non-purchasing spouse has outstanding collections and/or disputed accounts. California's Guild has provided some insight into this, and if the property being financed is in a community property state, those disputed amounts would indeed be factored into the $1,000 limit.  However, if the borrower can provide a copy of the marriage license and the state law ruling that "community property" did not apply to debts incurred before the marriage, the spouse's debt will not be included in that $1,000.

On the subject of disputed accounts, the FHA has provided borrowers with a loophole where, in particular circumstances, their debt won't be considered part of the $1,000 limit.  Disputed debt incurred due to "life events"-medical, death, divorce, or loss of employment, for instance-may be exempt if the borrower provides a written explanation and appropriate documentation that is consistent with the rest of the credit information in their file.

As a reminder, FHA Up-Front Mortgage Insurance Premium and Annual Mortgage Insurance Premium increases went into effect last Monday (April 9th).  The UFMIP has gone from 1% to 1.75% while Annual MIP has gone up by 0.1%.  Jumbo loans will be subject to a fee increase on June 11th. Who pays? The borrower, of course!

The FHA has decided to delay the date on which the amendments to Handling of Disputed Accounts, Public Records FHA Total User Guide Chapter 2 and Paying Off Collections and Judgments (Handbook 4155.1 4.C.2.e) will go into effect.  Lenders will now have until July 1, 2012 to implement the new guidance; in the meantime, the FHA will accept input on the changes and clarify as needed.  Any case numbers assigned prior to July 1st are subject to the old guidance, and mortgagees assigned case numbers between the 1st and 8th of April are permitted to have used either the old or new guidance.

Section 238(c) Military Impact loans endorsed on or after March 20, 2012 have been suspended, and properties in Jefferson, Lewis, and St. Lawrence counties in New York and Bryan, Camden, and Liberty counties in Georgia are subject to the up-front and annual mortgage insurance premiums for section 203(b) or 243(c) loans.

A few things about cancelling FHA case numbers in bulk: lenders should make sure that the number is for a streamline refinance, for a mortgage that hasn't yet closed, and was endorsed on or before May 31, 2009.  Starting on April 27th, "Different MIP Structure" will be available as a reason for cancellation on the Case Cancellation Screen in FHA Connection, and lenders will be able to start requesting new case numbers as of June 11th.  New case numbers issued prior to that date will not be eligible for the lower MIP structure.

It appears that the USDA Rural Development program didn't take in-ground swimming pools into account.  The official ruling now is that they're allowed as long as loan funds aren't put towards the contributory value of the pool.  The contributory value should be calculated by the appraiser and subtracted from the appraised value before the maximum loan amount is determined.  Inoperable pools are exempt from this.

Citi has updated its Ineligible Originator List, which provides a comprehensive listing of brokers, correspondents, or any other parties that are not permitted to have a role in originating loans submitted for purchase.  You can view it in full, along with the regularly updated Appraiser/Monitor Ineligible List, in the elfno section of the Citi Correspondent site.

The new eScore tool, which allows lenders to obtain a preliminary version of the risk weighted score (or a "BR Score) in the earliest possible stages of the commitment and delivery process, is now available on Citi's website.  By uploading loan data to the system, lenders will be able to receive a BR score within a matter of hours.

In the wake of HARP II, Citi will be expanding its HARP guidelines and removing certain credit overlays for DU Refi Plus and LP Open Access Program loans registered on or after April 21st.  Fixed rate and ARM loans serviced by Citi will have a maximum LTV/CLTV/HCLTV of 125% and 105%, respectively, while such loans will have a 105% maximum if not serviced by Citi.  As for credit overlay guidelines, LP Open Access borrowers are subject to the Freddie policy of paying on time for the past six months and having no more than one late payment for the past 7-12 months, but DU Refi Plus borrowers will now have their mortgage history reviewed by DU to gauge eligibility.  Where before the new P&I payment couldn't increase more than 20%, DU and LP now determine the acceptable monthly payment increase for their respective products.

Wells Fargo wholesale has made changes to the counties listed in the Home Mortgage/Home Equity Classification List, which go into effect on April 14th for stand-alone Home Equity and on April 16th for Home Mortgage and simultaneous transactions.  Note that this doesn't affect Market Classification Policy.  The Appraisal Review Request, which is used to report errors in factual information or comparable sales selection, has also been updated.  It now includes check boxes to select the reason for making the request, text boxes in which brokers can add supporting information, and six entries for comparable sales to support the request.

Lenders are reminded that invoices for third party fees (credit report, appraisal, survey, et cetera) incurred on FHA, VA, and USDA transactions should be submitted to Wells before closing documents are generated.

Due to recent high volume, Wells is revising its underwriting timelines on purchase and FHA streamline transactions.  Newly submitted purchase loans will move from a 5 to a 10-day prioritized initial underwrite, and all newly submitted FHA streamline transactions will be queued for underwriting first-in first-out. Effective for all loans received on or after April 23rd, if broker compensation indicated is not a percentage of the loan amount on the Fee Details Form, does not match the amount on the GFE, or if the Fee Details form indicates a flat fee, the loan will be stopped.

Wells will be taking off Patriots Day (April 16th) in the state of Massachusetts, where it will not be included as a business day for the purpose of Right of Rescission timing. Following Fannie's update of DU, Wells plans to make system changes that will allow DU Expanded Approve/Eligible recommendation on DU Refi Plus loans that Wells is currently servicing.  Loans that receive an Extended Approval recommendation from DU aren't eligible for registration, lock, and delivery at this time.

As part of its underwriting process, United Guaranty will now pull a "soft" credit report upon receipt of a full file loan submission for Mortgage Insurance in which the borrower's additional credit activities are analyzed for any indication that they might not be able to meet the monthly mortgage payments.  This won't affect borrowers' credit scores but will appear as an inquiry on the report.  At present, this affects submissions received through the delegated program, but the plan is to extend the process to all submissions.

In conference and event news, the HUD National Servicing Center will be hosting a Servicer Performance Scorecard (SPS) webinar on Wednesday, April 25th.  The webinar covers the SPS scoring elements, calculation methods, and resources for servicers and self-monitors and includes a Q&A.  You can register here.

HUD is sponsoring a Veterans Housing Symposium that will take place in New York City on Tuesday, May 1st to educate real estate professionals on housing issues veterans are facing at present.  Registration and more information can be found here.

The Vermont Mortgage Bankers Association and Mortgage Bankers/Brokers Association of New Hampshire are hosting a Mortgage Compliance Conference next weekend on the 18th and 19th.  The event, which takes place at the Lake Morley Resort in Fairlee, Vermont, covers topics such as the CFPB, an update on Dodd-Frank, the Mortgage Act & Practices Rule, and social media.  There's still time to register.

A friend hosted a dinner party for family far and wide and everyone was encouraged to bring all their children as well.
All during the sit-down dinner one four-year-old girl stared at the uncle sitting across from her. The girl could hardly eat her food for staring.
The uncle checked his tie, felt his face for food, patted his hair in place but nothing stopped her from staring at him. He tried his best to just ignore her but finally it was too much for him.
He finally asked her "Why are you staring at me?"
Everyone at the table had noticed her behavior and the table went quiet for her response.
The little girl said "I'm just waiting to see how you drink like a fish."