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This Week in Washington

FHA waives in-person contact for mortgage servicing

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This Week in Washington
Monday, February 8, 2021
The Federal Housing Administration (FHA) has issued a series of waivers of provisions in its Single-Family Housing Policy Handbook 4000.1 that would normally require in-person contact between mortgage servicers and borrowers, including seniors with FHA-insured Home Equity Conversion (HECM) reverse mortgages.

These waivers allow important mortgage servicing activities to continue, but in a manner that allows for safe social distancing to help combat the COVID-19 pandemic. 

“President Biden has made it clear that protecting the health, safety, and homeownership security of the nation’s most vulnerable populations, including seniors, are urgent and immediate priorities,” Acting HUD Secretary Matthew Ammon said in a release. “The policy waivers issued today are another important step in addressing these priorities.” 

The waivers build upon previous waivers and put in place the following provisions through Dec. 31, 2021: 

  • Allowing alternative methods for servicers to conduct borrower interviews for FHA-insured forward and HECM mortgages when performing early default interventions for borrowers in danger of foreclosure;
  • Waiving the $5,000 property charge payment arrearages cap on recalculated repayment plans, allowing servicers to help more HECM borrowers who are behind on their property charge payments; and
  • Eliminating the requirement for servicers to obtain a signature on an occupancy certification from a HECM borrower. 

The waivers augment FHA’s actions to deliver on President Joe Biden’s “Day One” request to provide urgent and immediate support to the nation’s homeowners struggling to make their mortgage payments due to COVID-19. 

FHA also extended its foreclosure and eviction moratorium for borrowers with FHA-insured single-family mortgages through March 31, 2021. In addition, the agency extended the deadline for borrowers financially impacted by COVID-19 to request a new forbearance from their mortgage servicer through March 31, 2021.

Today's other top stories
M&A compliance considerations for title companies
Settlement possible in Maryland alleged kickback scheme
FHA revises servicing policies
NAR report: Buyers want ‘green’ properties
Waters asks House to increase FinCEN appropriations


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“The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction."

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12 USC Section 2605 or Section 6 is titled Servicing of mortgage loans and administration of escrow accounts. It pertains to qualified written requests, notices of transfer of servicing and the administration of escrow accounts.
An arrangement that involves a person who is in a position to refer business as part of a real estate settlement service and who has an interest in a settlement services provider.

In the arrangement, the person, who has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a settlement services provider, directly or indirectly refers business to that provider or influences a consumer to select that provider.
An arrangement that involves a person who is in a position to refer business as part of a real estate settlement service and who has an interest in a settlement services provider.

In the arrangement, the person, who has either an affiliate relationship with or a direct or beneficial ownership interest of more than one percent in a settlement services provider, directly or indirectly refers business to that provider or influences a consumer to select that provider.
A mortgage disclosure that lists all estimated charges and fees associated with your loan. In addition to fees and charges, it will list your loan amount, mortgage rate, loan term and estimated monthly payment. Your escrows due at closing for insurance and taxes will also be outlined. Mortgage lenders are legally required to provide a GFE within three days of receiving your application.
A mortgage disclosure that lists all estimated charges and fees associated with your loan. In addition to fees and charges, it will list your loan amount, mortgage rate, loan term and estimated monthly payment. Your escrows due at closing for insurance and taxes will also be outlined. Mortgage lenders are legally required to provide a GFE within three days of receiving your application.
Under RESPA Section 2605(e)(1)(B), a qualified written request is a written correspondence that includes: 1) the name and account of the borrower, or has enough information to allow the servicer identify that information; and 2) a statement of the reasons for the belief of the borrower that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

A QWR cannot be written on a payment coupon or other payment medium supplied by the servicer.
Under RESPA Section 2605(e)(1)(B), a qualified written request is a written correspondence that includes: 1) the name and account of the borrower, or has enough information to allow the servicer identify that information; and 2) a statement of the reasons for the belief of the borrower that the account is in error or provides sufficient detail to the servicer regarding other information sought by the borrower.

A QWR cannot be written on a payment coupon or other payment medium supplied by the servicer.
12 USC Section 2609 or Section 10 is titled Limitation on requirement of advance deposits in escrow accounts. It governs escrow accounts including notifications and statements to borrowers. Section 10 also sets out penalties for those who violate the section.
RESPA Section 3 provides that a thing of value includes any payment, advance, funds, loan, service or other consideration

Regulation X says thing of value includes: monies, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing monies that may be paid at a future date, the opportunity to participate in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special bank deposits or accounts, special or unusual banking terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payment of another person’s expenses or reduction in credit against an existing obligation.
A form used by a settlement or closing agent itemizing all charges imposed on a borrower and seller in a real estate transaction. This form represents the closing transaction and provides each party with a complete list of incoming and outgoing funds. RESPA requires the HUD-1 to be used as the standard real estate settlement form in all transactions in the U.S. involving federally related mortgage loans.
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