DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/234855
» VISIT US ONLINE @ DSNEWS.COM HUD DEFINES TWO TYPES OF QUALIFIED MORTGAGES HUD issued a newly revised definition for Qualified Mortgage (QM) which affects all Federal Housing Administration (FHA) loans moving forward. The new rule goes into effect January 10, 2014, and applies to mortgages that are insured, guaranteed, or administered through HUD. HUD is legally required to define a QM by the Ability-to-Repay criteria set out in the Truth-in-Lending Act (TILA), as mandated by the Dodd–Frank Wall Street Reform and Consumer Protection Act. HUD's new rule builds on the existing QM rule finalized by the Consumer Financial Protection Bureau (CFPB), which also become effective January 10. HUD's rule defines two types of legal QMs. Both types must meet the following criteria: » Require periodic payments without risky features. » Have terms not to exceed 30 years. » Limit upfront points and fees to no more than 3 percent with adjustments to facilitate smaller loans (except for Title I, Title II Manufactured Housing, Section 184, Section 184A loans). » Be insured or guaranteed by FHA or HUD. Both types of HUD QMs have protective features for consumers but different legal consequences for lenders. The main difference between the two is the relation of the loan's annual percentage rate (APR) to the average prime offer rate (APOR), which is the rate for the average borrower receiving a conventional mortgage. HUD's two categories of QMs are: » A Rebuttable Presumption Qualified Mortgage. These will have an APR greater than APOR + 115 basis points (bps) + on-going Mortgage Insurance Premium (MIP) rate. » Safe Harbor Qualified Mortgages. These loans will have an APR equal to or less than APOR + 115 bps + on-going MIP. These mortgages offer lenders the greatest legal certainty that they are complying with the Ability-to-Repay standard. Safe harbor QMs also cover Title II manufactured housing, Title I manufactured housing and property improvement loans, Section 184 Indian Home Loan Guarantee Program mortgages, and Section 184A Native Hawaiian Housing Loan Guarantee Program mortgages, regardless of the APR to APOR ratio. This is to avoid interfering with current lending practices until appropriate parameters can be determined. In the HUD ruling, the agency also adopted CFPB's list of transactions that are exempt from the Ability-to-Repay requirements, some of which include: » Reverse mortgages » Bridge loans with a term of 12 months or less » Construction-to-permanent loans for 12 months or less for the construction phase » Extension of credit by a housing finance agency » Extension of credit by Community Development Financial Institutions (CDFIs) HUD's mortgage insurance and loan guarantee programs have played a historic mission to act as a stabilizing force during times of economic distress in the housing market. The agency's final rule aims to ensure the continuity of access to mortgage financing for creditworthy, yet underserved borrowers while further strengthening protections for FHA borrowers and taxpayers, alike. KNOW THIS The Department of Justice's Antitrust Division continues to uncover collusive schemes among real estate speculators aimed at eliminating competition at real estate foreclosure auctions. Investigations led by the division have exposed auction bid rigging and fraud involving more than 3,400 foreclosed homes and more than $23 million in losses, primarily to mortgage holders. Division officials are currently working with the FBI and HUD inspectors to investigate general bid rigging and fraud in local real estate markets in Alabama, California, Georgia, and North Carolina. THE FIVE STAR CONFERENCE WOULD LIKE TO THANK HOST OF THE 2014 FIVE STAR CONFERENCE The largest event in all of mortgage servicing, the 11th annual Five Star Conference will showcase more new features and opportunities than ever before, including new and streamlined academics, dozens of all-new networking events, an expansionto the industry's largest Expo Hall, and, of course, our new hosting sponsor, Safeguard Properties. The future of industry events arrives in September. ENGAGE IN THE NEXT DECADE OF THE FIVE STAR. SEPTEMBER 14 - 16, 2014 HILTON ANATOLE :: DALLAS, TEXAS FiveStarConference.com :: 214.525.6760 33