August Compliance Roundup - VA Circular 26-19-22, URLA updates delayed, more news.

August saw several changes handed down by various government agencies and investors, along with new state-mandated document changes. The details are here in our monthly compliance update blog post. For updates as they are published, subscribe to our compliance blog.

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Two big items in August. The first was a communication sent by the Veterans Administration that cleared up some confusion around certain agency loan products. Well, the administration hoped it would clear it up.

Thanks to our compliance team, we bring you an in-depth article on Veterans Administration Circular 26-19-22, explaining what it does and what it doesn’t do. According to the VA, its circular “consolidate[s] and clarif[ies]” how the Economic Growth, Regulatory Relief, and Consumer Protection Act affects VA Interest-Rate Reduction Refinance Loans. It’s not as simple as it sounds. Get all the details in this month’s article.

The other big news had to do with the upcoming Uniform Residential Loan Application, which the nation’s largest secondary market investors have been working on for some time. In August, Fannie Mae and Freddie Mac announced that the mandatory start date of February 1, 2020, is postponed to a date to be determined later. As part of the delay, there are also changes to the forms and data fields, which are outlined below.

State and Investor Compliance News

Here is a look at what happened in August.

Fannie Mae.FNMA announced in August that it had “updated the summary document for the Multistate Fixed-Rate Note 3200.” This now permits lenders to include additional information in Section 6(A) of that form. We are planning to incorporate this change and details of any modifications we make will be announced on our website. Learn more.

Fannie Mae & Freddie Mac.In early August, FNMA and FHLMC jointly announced that they will be removing the “Language Preference” and “Homeownership Education and Housing Counseling” questions from the new URLA and including them in a new “voluntary consumer information form” which is under development.  They will also be revising other parts of the URLA. Learn more.

USDA.The USDA Office of Rural Development announced in August that it had revised form RD 3555-21. The Agency eliminated the fields for the interest rate, lock and floating dates. An advance copy of the form has been posted to the USDA LINC Training and Resource Library under Loan Origination – Document and Resources. We are currently reviewing this change to determine any impact to our document library and/or systems and evaluating any necessary changes. Learn more.

Veterans Administration.In accordance with VA Circ. 26-19-22, providing preliminary guidance concerning the correlation between Interest Rate Reduction Refinance Loans (“IRRRL”) and the “Economic Growth, Regulatory Reform, and Consumer Protection Act” (See article referenced above), we will offer several Data Integrity checks as a courtesy to our clients, to assist them with providing accurate data which complies with the required changes. These Data Integrity check modifications are available on Stage servers for testing and are now in effect on Production servers. Learn more.

Document Changes

The document library also saw a few revisions in August. They’ve been summarized below with links to the full descriptions of the updates.

  • VA IRRRL Net Tangible Benefit Form (Cx22343) has been retired as a generic document by the Veterans Administration. The VA will address the net tangible benefit test for IRRRLs in a future rulemaking. Learn more.
  • VA IRRRL Lender Certifications (Cx14500) have been updated in response to changes made by the VA. Detailed information provided on the compliance blog. Learn more.
  • Document changes related to the FNMA PMI cancellation updates for California, Connecticut and Washington, which were previously announced as taking place in March of this year are now in effect. Learn more.
  • The Inter Vivos Revocable Trust Rider (Cx21131) has been modified to better reflect the individual Borrower and Non-Purchasing Entity signature lines printing on the security instrument and other riders to security instrument. Learn more.
  • The “VA IRRRL Loan Comparison Statement” (Cx14501, renamed from “VA Refinance Loan Comparison”) has been modified in accordance with VA Circ. 26-19-22. Learn more.
  • We have updated HUD Form 92541 “Builders Certification” (our Cx3971) to mirror the new revision of the form provided by HUD on their website. The updates to Cx3971 consists of minor grammatical and formatting changes throughout the document. Learn more.
  • ConformX DC Mortgage Disclosure Form (Cx13354) is being provided in DC Initial Disclosure packages for ARM loans with a loan term of 30 years, as required by D.C. Code. While the text of the form does not intuitively apply to HELOCs, open-ended loans are not specifically exempted from the definition of non-conventional mortgage loans under this regulation. New fields have been added to Cx13345 for HELOCs. Learn more.
  • The VA is in the process of publishing revisions to each chapter of their “Lender’s Handbook” and have revised Chapter 9 in the process. Among other changes, the VA has tweaked the wording of the acceleration, funding fee, processing charge, and indemnity liability assumption clauses, which we include in our security instruments as a rider in “VA Rider Assumption Policy” (Cx53). The VA has also tweaked the wording in the “alive status” certification, which we provide in “Lender’s Certification of Veteran Alive at Time of Closing” (Cx16760). Learn more.
  • When the VA updated Chapter 13 of its “Lender’s Handbook,” it provided delivery requirements for the “Notice of Value” form. We have now created form Cx23330 “Lender’s Notice of Value,” which is now available for assignment. Learn more.
  • Recently, the Georgia Department of Financial Institutions adopted an amendment to Ga. Comp. R. & Regs. r. 80-11-1-.01(9), which removed a clause that was previously required. Consequently, we will be changing the print configuration for form Cx1011. Learn more.
  • A change has been made to the South Carolina Borrower Complaints document Cx4694 regarding telephone numbers provided on the form. We have been apprised of the fact that the toll-free number is only applicable to the S.C. Department of Consumer Affairs, therefore we made appropriate changes. Learn more.

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