February 2021 Compliance Roundup

A number of changes were identified by our compliance experts during the month of February, as detailed below. Remember that you will always be up to date, up to the minute, by following the posts in our compliance blog.

Also, this month, Senior Regulatory Compliance Specialist Timothy A. Raty penned two excellent articles. The first is entitled Finance Charges 102 -- Special Emphasis on Seller-Paid Costs. A creation of the Truth-in-Lending Act, the finance charge is used to measure the cost of consumer credit as a dollar amount. What this means to lenders as a practical matter – particularly regarding seller-paid costs - is the subject of this article. 

In his second February article, Raty provides key takeaways from CFPB’s statement regarding consumers with limited English proficiency (LEP). According to numbers provided by the CFPB, approximately 25.5 million people over the age of five in the U.S. are considered to have LEP. Due to language differences, however, they face obstacles in obtaining capital to be used for purposes related to real estate. See his article here. 

Investor and Regulatory Compliance News
We saw regulators and investors make some changes in February; here is what happened:

Fannie Mae. In a letter to lenders, Fannie Mae said loans started in legacy format prior to March 1, 2021 - but not submitted by then - will not receive an “Out of Scope” message from the AUS until May 1, 2021. In addition, they state that neither they, nor Freddie Mac, have described how a lender should determine the “loan application start date” for determining when the new URLA should be used, thus leaving it to lenders to make a subjective determination as to when this “start date” occurs. Learn more.

Freddie Mac. In its February Bulletin 2021-4, Freddie Mac said the company will not purchase any CMT-indexed ARM that has an application received date of July 1, 2021 or later. Fannie Mae made a similar announcement the day before. We are reviewing our document library to determine whether changes must be made. Learn more.

Indiana. Changes were made to the Indiana state code last year which allegedly included an error requiring both a notarial acknowledgement and a proof on instruments submitted for recording. The code has been amended to now require only one of those. A number of state documents have been updated to reflect this change. Learn more.

Ohio. The state’s Department of Commerce has announced an increase in the coverage amount for a residential mortgage to be subject to, or exempt from, a prepayment penalty under Ohio code. We have updated our Prepayment Penalty Matrix accordingly. Learn more.

USDA. The USDA posted to their website an advanced copy of revised RD HB-1-3555, Chapter 9, Subsection 9.3, which now stipulates that lenders must require each household member to complete and sign either IRS Form 4506-C or 4506-T. Under the old subsection, only the 4506-T was acceptable. We are reviewing this announcement to determine any impact to our document library. Learn more.

Wyoming. Governor Mark Gordon has signed a new law which repeals the Wyoming Uniform Law on Notarial Acts and replaces it with a new Revised Uniform Law on Notarial Acts. The latter authorizes Remote Online Notarizations and Remote Ink Notarizations, while the former did not. Learn more.

Other Document Changes
Our compliance team delivered a number of document updates in February. The changes have been summarized below, with links to the full descriptions of the updates.

  • A number of changes have been made to form Cx20667 to align it with the redesigned FNMA Form 1003/FHLMC Form 65 in the wake of the new URLA. Learn more and also here.
  • The issuance of a new IRS form 4506-C has required us to update a number of documents, including Cx3095 and Cx17841. Learn more.
  • Due to a change in Maine’s statutes, the exception threshold for withholding tax has changed, requiring us to update form Cx1570. Learn more.
  • Pursuant to our monthly audit of federal agency forms, we made changes to a number of various FHA forms. Learn more.
  • As part of our review of state-specific documents, to support new “simultaneous broker document” packages, we have changed certain documents related to anti-coercion insurance disclosures. Learn more.
  • Certain Oklahoma mortgage documents have been changed so that sentences regarding which laws apply to the mortgage loan transaction have been modified to stipulate that the laws of the State of Oklahoma apply. Learn more. 

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