Financial Crisis News Center

Examiners to Test for RESPA Compliance

This story appeared in Bank Digest.

Banks supervised by the Federal Deposit Insurance Corp. have been notified that beginning Jan. 1, 2010, agency examiners will begin examining for compliance with the amended provisions of Regulation X, which implements the Real Estate Settlement Procedures Act. The Department of Housing and Urban Development amended Regulation X regarding the Good Faith Estimate (GFE) and HUD-1 Uniform Settlement Statement (HUD-1). The HUD amendments created a new version of the GFE, which is subject to tolerances for accuracy; and expanded the HUD-1, which promotes comparison of loan terms and settlement charges between the HUD-1 and the GFE. The FDIC also issued supplemental information regarding the final RESPA rule.

HUD Proposes Responsibilities under the SAFE Act

This story appeared in Bank Digest.

The Department of Housing and Urban Development has issued a proposed rulemaking that would establish the agency’s responsibilities under the Secure and Fair Enforcement Mortgage Licensing Act of 2008, or SAFE Act. The proposed rulemaking would address the criteria that HUD will use to determine whether a state has put in place a system for licensing and registering loan originators, as required by the SAFE Act.

Administration Kicks off Mortgage Modification Conversion Drive

This story appeared in Bank Digest.

The Treasury Department and Department of Housing and Urban Development (HUD) kicked off a nationwide campaign to help borrowers who are currently in the trial phase of their modified mortgages under the Obama Administration's Home Affordable Modification Program (HAMP) convert to permanent modifications. The modification program, which has helped over 650,000 borrowers, is part of the Administration's broader commitment to stabilize housing markets and to provide relief to struggling homeowners and is a primary focus of financial stability efforts moving forward. Roughly 375,000 of the borrowers who have begun trial modifications since the start of the program are scheduled to convert to permanent modifications by the end of the year.

“We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowners,” said the new Chief of Treasury's Homeownership Preservation Office (HPO), Phyllis Caldwell. “We now must refocus our efforts on the conversion phase to ensure that borrowers and servicers know what their responsibilities are in converting trial modifications to permanent ones.”

Information Sought on FHA's Financial Health

This story appeared in Bank Digest.

Oversight and Government Reform Committee Ranking Member Darrell Issa, R-Calif., and Financial Services Committee Ranking Member Spencer Bachus, R-Ala., sent a letter to Housing Secretary Shaun Donovan requesting information on the financial health of the Federal Housing Administration in light of an announcement by the FHA regarding its annual independent actuarial study that is expected to show the capital reserve ratio dropping below the congressionally-mandated threshold of two percent. Among the items Issa and Bachus request are: data supporting claims that the FHA will not need to ask Congress for any funding; records and communications between HUD or FHA employees related to the decline in FHA's reserve fund; and complete explanation of the Administration's plan to prevent the need for any taxpayer bailout of FHA.

Administration Urges Congress to Approve Housing Measures

This story appeared in Bank Digest.

Treasury Secretary Tim Geithner and Housing and Urban Development Secretary Shaun Donovan have called on Congress to approve three measures to improve housing and the housing market for Americans: extension of the First Time Homebuyers Tax Credit for a limited period; extension of higher loan limits for home mortgages; and secure funding for the Housing Trust Fund. The administration supports a limited extension of the First Time Homebuyers Tax Credit, which currently is set to expire on Dec. 1, 2009; a one-year extension of the current loan limits for the Federal Housing Administration, Fannie Mae, and Freddie Mac; and $1 billion in funding for the Housing Trust Fund. House Financial Services Committee Chairman Barney Frank, D-Mass., has supported the White House call to action, calling the Trust Fund socially and economically necessary and saying that higher GSE loan limits are needed to address market differences.

FDIC Alerts Banks to Tenant Protection Act

This story appeared in Bank Digest.

The FDIC has published highlights of the “Protecting Tenants at Foreclosure Act of 2009,” which became effective on May 20, 2009. The law is intended to protect tenants from immediate eviction by persons or entities that become owners of residential property through foreclosure and extends additional protections for tenants with U.S. Department of Housing and Urban Development Section 8 vouchers. It establishes a minimum time period that a tenant can remain in a foreclosed property before being evicted. Tenants must be given at least 90 days notice; tenants with leases must be permitted to remain until the end of the lease, except that a lease can be terminated with 90 days notice by a purchaser who intends to occupy the property.

Federal, State Officials Discuss Housing Anti-Fraud Efforts

This story appeared in Bank Digest.

Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, Federal Trade Commission Chairman Jon Leibowitz, Financial Crimes Enforcement Network Director Jim Freis and attorneys general from 12 states met on Sept. 17, 2009, to discuss emerging trends and proactive strategies to combat fraud against consumers in the housing markets as well as best practices to bolster coordination across state and federal agencies. The federal agencies have committed to coordinating information and resources across agencies to maximize targeting and efficiency in fraud investigations. This includes alerting financial institutions to emerging schemes, stepping up enforcement actions and educating consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

HUD Issues FAQs on New RESPA Rules

By Richard Roth, J.D., Editor, the CCH Federal Banking Law Reporter, CCH Bank Compliance Guide and Bank Digest.

The Department of Housing and Urban Development has issued a set of frequently asked questions and answers that are intended to help loan originators—mortgage brokers and lenders—comply with the changes to the agency's Real Estate Settlement Procedures Act (RESPA) rule. The rule makes significant changes to the Good Faith Estimate (GFE) form that must be given to a consumer who is applying for a loan as well as to the HUD-1 and HUD-1A forms that are used to set out all of the financial aspects of a mortgage loan transaction at the loan closing. It was effective Jan. 16, 2009, but compliance with some provisions is not mandatory until Jan. 1, 2010.