March Compliance Recap: The Uncertain Future of VA IRRRL Refinances of ARM Loans

There were a number of document updates and even some new documents added to our document compliance library in March. Here are highlights from the topics we shared in our compliance blog last month. Subscribe to be among the first to learn about all the industry’s most important mortgage compliance news.

In March, our Senior Regulatory Compliance Specialist Timothy A. Raty took a closer look at the uncertain future of VA IRRRL refinances of ARM loans. Congress, in passing the Economic Growth, Regulatory Relief, and Consumer Protection Act may have severely restricted the types of fixed-rate VA Interest-Rate Reduction Refinance Loans (“IRRRLs”) and so-called “Type I Cash-Out Refinance Loans” which refinance a previous adjustable-rate mortgage. Raty provides a complete analysis. Learn more.

Some of our document changes are related to this new law, as you’ll see below.

State and Investor Compliance News

HUD and many state regulators required document changes or updates in March. In addition, the compliance team issued a reminder about an important address update. Here is the overview with links that will take you to additional information on our compliance blog.

HUD. In FHA INFO # 19-09 it was revealed that the agency had published an update to its Single Family Handbook that contains “technical changes for consistency and clarity, and several policy updates.” We are currently reviewing these changes to determine any impact to our document library and/or systems and evaluating any necessary changes. Learn more.

Fannie Mae. The compliance team issued a reminder last month about the recent address change for Fannie Mae. The investor previously advised lenders that to avoid potential certification delays, they should begin using our new corporate address as soon as possible. The compliance team reminded clients that if they are passing defaults for investor/assignment addresses they may want to review any defaulted addresses they are currently using for FNMA. Learn more.

Kentucky. Gov. Matt Bevin (R) signed KY SB 114 (2019) into law this month. The new law adds sections governing notarial acts (including notarial certificates) under Chapter 423 of Kentucky’s Revised Statutes. We are currently reviewing this change to determine any impact to our document library and/or systems and evaluating any necessary changes. Learn more.

Maine. In a joint rule of the Maine Bureau of Financial Institutions and the Bureau of Consumer Credit Protection, the disclosure requirements for a number of the state’s Alternative Mortgage Transaction Disclosure documents were repealed and replaced with rules which better conform to Federal Regulations D and Z, which no longer require separate disclosures. Because these documents are not required by state law, they will no longer print as generic documents and will be removed from our standard packages. Learn more.

Utah. On March 26, 2019 Gov. Gary Herbert (R) signed into law UT HB 247 (2019) which repeals the “RESPA Caption” requirement promulgated under Utah Code. This repeal takes effect on May 14, 2019. We are currently reviewing this change to determine any impact to our document library and/or systems and evaluating any necessary changes. Learn more.

Document Changes

The document library saw several revisions last month. They’ve been summarized below with links to the full descriptions of the updates.

• Cx2283 is a duplicate of form HUD-92564-CN, which is provided pursuant to the requirements of FHA Single Family Handbook 4000.1. We will be updating this document to more closely match the model HUD has provided. Learn more.
• Cx5533 is a duplicate of VA Form 26-6393, which is required under VA Lender’s Handbook. Upon a review, we have determined that the amount disclosed for “RATIO” in Line 44 should be rounded “to the nearest two digits.” As a result, we are changing our default behavior to round the amount disclosed in Line 44 to the nearest two decimal places. Learn more.
• Because FNMA and FHLMC are retiring all legal documents specific to the use of COFI, a number of documents have been retired from our library. Learn more.
• The Previous Loan Note Date (FI 6677) field has a global optional prompt that fires for IRRRL loans. Since Field 6677 is no longer on our VA Refinance Loan Comparison (Cx14501), we are removing this global prompt. Learn more.
• Over the past year, we have expanded our support for cooperative loans into multiple states and multiple loan products. A great many additional documents have been added to the library to support this. Learn more.
• The new “VA Non-IRRRL Refinance Comparison Certification” (Cx22999) will print by default in place of Cx14501 for Non-IRRRL VA refinances. Part of this change is to print Cx22999 in Redisclosure document packages, as lenders are encouraged to in VA Circ. 26-19-5. In addition, several existing global optional field prompts will be added to the Redisclosure package as well as data integrity checks. Learn more.
• We have created a copy of FNMA’s “Uniform Underwriting and Transmittal Summary” (FNMA Form 1008) as our new form Cx22822. FNMA requires the form to be used starting July 1 and FHLMC requires the form to be used for loans with application dates on or after June 5. Both investors allow the use of the form before these dates. Learn more.

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