October Compliance Roundup

The industry saw very little new investor compliance activity in October. Regulator activity was likewise muted, perhaps due to the runup to the presidential election. The only activity from any government agency came from the IRS, who finally published their long-awaited new 4506-C form.

With a lack of new regulations, our compliance experts focused on providing in-depth analysis of recent changes in California and the Social Security Administration’s new eCBSV system. Senior Regulatory Compliance Specialist Timothy A. Raty’s first article is an examination of California’s mortgage disclosure laws that require some mortgage documents to be translated into certain languages from English. Two of the state’s rules deal with the issue, but they differ in approach and apply to different types of mortgage industry participants.  

In his second October article, Raty explores the EGRRCPA rules that allow the Social Security Administration to accept the consent of a consumer to verify their Social Security Number, when such consent is submitted electronically. This was a welcome change from the previous “ink-signed” requirement.

Government Compliance News
Only one item made our compliance blog in October and this is from the Internal Revenue service. 

IRS. The IRS has provided the industry with a copy of its anticipated Form 4506-C. It is available now on the IRS website. The purpose of this form, according to the government, is to allow Verification Express Service (IVES) Participants to order Tax Transcript records electronically for a third party. The IRS will require the 4506-C to be used exclusively by IVES participants starting March 1, 2021. Learn more.

Document Changes
Our compliance team did deliver a number of document updates in October. The changes have been summarized below with links to the full descriptions of the updates.

• California code requires disclosure of the name, address, license number, and NMLS number of both the broker and the lender, but the rule is not clear on whether the NMLS number of the broker company or of an individual broker should be disclosed. After considering a specific statutory exclusion, we will be using field “Mortgage Broker Company NMLS” (FI 96914) by default instead, if it has a value; if not, the value of field “Loan Originator NMLS Number” (FI 43035) will continue to print. Learn more.
• FHA Non-Purchasing Spouse (NPE) Authorization (Cx19872) is provided pursuant to the FHA Single Family Handbook. After recently reviewing this document, First American Docutech has made a number of changes. Learn more.
• California has changed the name of its “Department of Business Oversight” to the “Department of Financial Protection and Innovation.” While this change does not go into effect until January, regulators there have already embraced the change and so a number of state documents have now been altered to reflect the change. Learn more.
• A number of changes have been made to the redesigned FNMA Form 1003/FHLMC Form 65 (our Cx20667) following further testing that has been done during the FNMA/FHLMC Limited Production Period. Learn more.
• Forms Cx18182 and Cx18183 are provided due to a combination of Regulation B, Regulation Z, and “Appraiser Independence Requirements.” These forms are being modified by including language within the forms disclosing to the consumer that, despite their waiver, they may still receive copies of their appraisal and/or valuation prior to closing if required by law. Learn more.
  

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