Beginning mid-April, 2010, if an FHA refinance loan transaction includes both an upfront mortgage insurance premium (UFMIP) and a refund of mortgage insurance premium (MIP Refund) on the original FHA loan that is being refinanced, the net amount of UFMIP, MIP Cash, if any, and the MIP Refund is reflected currently in Block 3 of the GFE and Line 902 of the HUD-1 Statement (hereinafter referred to as the "net method").  Previously, only the full amount of UFMIP and MIP Cash, if any, were reflected in Block 3 of the GFE and in Line 902 of the HUD-1 Statement.

Note: This updated and modified article incorporates much of the information contained in a number of separate articles regarding the Fannie Mae high cost tests published in prior editions of the Compliance Wizard.  A list of those articles appears at the bottom of this article.

The Colorado Division of Real Estate ("Division") adopted a new rule (4 Colo. Code Regs. 725-3, Rule 5-1-2) regarding Mortgage Loan Originator Disclosures that requires, among others, a separate disclosure to each borrower that itemizes all third-party fees and costs to comply with the provisions of Colo. Rev. Stat. Ann. § 12-61-914(2)(b).  According to Section 12-61-914(2)(b), a mortgage loan originator must provide the borrower a written disclosure that contains the following information: The itemized costs of any credit report, appraisal, title report, title insurance policy, mortgage insurance, escrow fee, property tax, insurance, structural or pest inspection, and any other third-party provider's costs associated with the residential mortgage loan.

On May 12, 2010, the Governor of Georgia signed House Bill 1055 which became effective immediately.  The Bill includes a provision that increases the loan fee from $6.50 to $10.00 for each residential mortgage loan transaction that closes for which a security deed, a modification of a security deed or other form of modification of a security interest is recorded.  This fee is paid by the borrower, collected by the mortgage lender or mortgage broker and remitted to the Georgia Department of Banking and Finance.  Residential mortgage loan transactions closed on any date from May 12, 2010, through June 30, 2010 must begin submitting the $10.00 loan fee to the Department.  Residential mortgage loan transactions that closed on any date from January 1, 2010, through May 11, 2010, must submit the $6.50 loan fee.  After the current reporting period of January 1, 2010 through June 30, 2010 concludes, a $10.00 fee for each residential loan that closes will be applicable unless and until such time as a further law change may take effect.

Written by Jennifer Dozier*

The Department of Housing and Urban Development (HUD) recently published final rules in the Federal Register regarding net worth and supervision requirements. Specifically, the rules set forth the new net worth requirements for HUD-approved mortgagees (non-supervised and supervised). The rules also provide for the discontinuation of HUD-approval for loan correspondents. The final rules are generally effective May 20, 2010.

Our most recent SAS 70 Type II audit, completed on April 30, 2009, tested the operating effectiveness of DocMagic, Inc., for the period of October 1, 2008 through April 30, 2009.  DocMagic is currently undergoing a SAS 70 Type II audit for the review period of May 1, 2009 through October 31, 2010.  To cover the interim period, we're offering our partners and customers a "Gap Letter."

HUD-1A Statement Available

Although the HUD-1A Statement (HUD1A.MSC) does not return, by default, in a DocMagic refinance, closing loan package, DocMagic's Compliance Department has caused the HUD-1A to be laid out and programmed accordingly.  The HUD-1A Statement is available upon request by contacting DocMagic's Customer Service Department, at (800) 649-1362.  Please be sure to request file name HUD1A.MSC (for the HUD-1A Statement).  The HUD-1A Addendum (File name: HUD1AADD.MSC) will automatically print along with the HUD-1A Statement.

This month DSI has no new or updated loan programs of any investors to post to its Investor Updates page.  However, please visit the Investor Updates page to review a description of each investors' current loan programs, including the promissory notes, prepayment riders and addenda that are used in a particular loan program, and any rate caps and interest-only periods that may be applicable to investors' variable rate loan programs.

In order to keep DocMagic software users better apprised of document changes and additions as they occur, DSI posts listings of all newly created and revised documents.  Here is the list of forms created or modified in April, 2010.

The U.S. Treasury security yield values for May 2010 may be viewed online here.  The yield is determined as of the 15th day of the month immediately preceding the month in which the creditor receives the application.  The yield value is used for Section 32 and most state high-cost tests. These values will, therefore, be used for loan applications received by the creditor in June 2010.

To view this month's list of announcements or newsletters related to our mortgage industry, please click here.