Summertime is a relatively slow time for lawmakers, and with most state governments in recess, we didn’t see any compliance-related changes coming out of the state houses in July. However, July was a surprisingly busy on the federal and investor compliance front. From changes at the GSEs to IRS and Social Security updates, lenders will need to account for new processes.
The details are here in our monthly compliance update blog post. You can always find up to the minute compliance information on our compliance blog. Subscribe to the blog to be among the first to learn about all the industry’s most important compliance news.
Fannie Mae & Freddie Mac. The nation’s largest two investors have announced that they “expect” to make an ARM product based on the Secured Overnight Financing Rate (SOFR), which is becoming the preferred standard for replacing the LIBOR when it is retired towards the end of 2021.
In addition to developing a SOFR product, FNMA announced that they are planning to adopt the “ARRC Consultation on LIBOR Fallback Contract Language for Adjustable Rate Mortgages” regardless of whether the ARMs are LIBOR- or SOFR-based. We are monitoring these changes and will provide further updates as more actionable details are released by the GSEs. Learn more.
Internal Revenue Service. An update to IRS Form 4506-T, which we reported on in June that called for the removal of Line 5a regarding mailing the tax transcript to third parties, has been postponed pending further clarification from the IRS. In the meantime, our partners have alerted us that the March 2019 version of the form containing the third-party mailing section should continue to be used by IVES participants. Learn more.
Social Security Administration. On May 24, 2018, President Trump signed into law the “Economic Growth, Regulatory Relief, and Consumer Protection Act” (“EGRRCPA”). This act required the Social Security Administration (“SSA”) to establish an identification process for the prevention of fraud, which included a requirement for a financial institution to obtain an individual’s written consent before their data is submitted into the SSA’s new database for verification purposes. We are currently reviewing the change to determine any required changes to our document library. Learn more.
The document library also saw a few revisions in July. They’ve been summarized below with links to the full descriptions of the updates.
- Document Cx3750, the Rhode Island version of the anti-coercion insurance disclosure has been updated to conform to the state’s statutes. Learn more.
- After a periodic review, we have updated the language of our generic PMI Disclosure forms. The most notable update is an update to the “Automatic Termination of PMI” provision. Learn more.
- In response to the Veterans Benefits Administration’s VA Circular 26-19-17, we have added default behavior to VA Form 26-8937, Verification of VA Benefits (Cx3952). Learn more.
- We have updated the Vermont High Rate/High Point Notices (Cx3708) to comply with Vt. Admin. Code 4-2-6, which provide specific requirements for the form’s appearance. Learn more.
- The Florida interest rate lock agreement document Cx13498 has been updated in response to concerns over the previous language. Learn more.
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