The FHA has issued important guidance concerning short sales and short refis.  These guidelines are effective immediately, and apply to all existing approvals in the pipeline as well as new loans.

Guidelines for purchases only:
Borrowers are NOT eligible for FHA-financing if they are selling their current primary residence to purchase a similar or superior property within a “reasonable commuting distance” of their current job.  In most cases, if the borrower is not changing the location of their employment, the case will be disqualified.

Generally, if the mortgage balance on the credit report exceeds the sale price, this is evidence that the borrower may have pursued a short sale agreement.  For the time being, all purchases involving a borrower selling their current residence with a short-sale agreement must be approved by management.

Guidelines for refinances only:
In order to be eligible for an FHA-insured mortgage:
(1) the subject property must have insufficient equity to complete the transaction without using a short sale agreement; AND/OR
(2 the borrower has experienced a reduction in income and does not have the capacity to repay the existing loan.

Guidelines for purchases and refinances:
In order to be eligible for an FHA-insured mortgage:
(1) the borrower must have made all payments on the mortgage in question on time for the last twelve months;
(2) the borrower must have made all payments on all other installment debt on time for the last twelve months;
(3) the borrower must not have sold a property using a short sale agreement or disposed of a property through a pre-foreclosure sale in the last three years (three years from the date of the claim if the property was FHA-insured).

If you have any questions, please contact your AE.

Increase in Underwriting Fee

In order to offset costs incurred by our company associated with the recent industry-wide changes, REMN is increasing our underwriting fee to $650.  The higher fee is effective for all loans submitted on or after Monday, January 18, 2010.  This amount applies to all transaction types and all States where REMN currently charges this fee.

FSBO Guideline Changes

Effective immediately, REMN will no longer approve loans involving a FSBO (for sale by owner) subject property if the following criteria apply:
(1) the subject is a 2-4 unit property AND

(2) the subject is either in foreclosure or involves a short sale agreement with the current lien holder.

In addition, all FSBOs that are approved will be subject to additional quality control review

Amended Tax Return Guideline Changes

Effective immediately, files submitted with amended tax returns increasing the income earned in prior years will be subject to the following guidelines:

(1) if the amended income is less than 25% higher than the original income, the amended income will be used, provided that there is a satisfactory explanation for the amendment.

(2) if the amended income is more than 25% higher than the original income, the borrower must qualify using the original income.  The higher, amended income cannot be used.

Gift Guideline Changes

Effective immediately, the following new guidelines apply for all transactions involving a gift:

(1) REMN will no longer accept gifts from employers, churches, or friends;

(2) REMN will no longer accept gifts from non-immediate family members unless satisfactory evidence that the relationship exists is provided.  Immediate family members do not need to provide this evidence.  Immediate family members include parents, siblings, children, grandparents, and grandchildren (as well as in-laws).

If you have any questions, please contact your AE.

For mortgage applications taken on or after January 1, 2010, lenders and Brokers are required to provide borrowers with a new standard Good Faith Estimate (GFE) that clearly summarizes key loan terms, fees, and closing costs.  At settlement, the closing agent must provide a new HUD-1 Settlement Statement that offers a side-by-side comparison of the estimated charges from the GFE to the actual charges on the HUD-1.

There are many resources available to explain the details of the new amendments.  We recommend that you seek specific legal counsel and/or call your regional FHA Home Ownership Center to answer questions. HUD has provided a significant amount of helpful information on its website: http://www.hud.gov/offices/hsg/ramh/res/respa_hm.cfm

Our policies and procedures related to these sweeping changes, as well as copies of the forms you will need, are included in our RESPA Reform Memo.

If you have any questions, please contact your AE.

CASH OUT REFINANCES OVER 85% LTV

The deadline to close any cash-out FHA refinance with an LTV over 85% is September 30, 2009.  No exceptions will be granted.

FHA DE TEST CASES
Effective immediately, REMN will no longer accept new submissions from any non-supervised lender currently in the “test case” phase of their DE application.  Once the non-supervised lender has received their DE designation from the FHA, they may request that REMN enter into a “Principal/Agent” relationship.  At this time, REMN is entering into this type of relationship on an exception basis only.

LOANS TO REAL ESTATE AND MORTGAGE INDUSTRY PROFESSIONALS

Effective immediately, REMN will no longer accept new submissions if any of the borrowers on the application are real estate or mortgage industry professionals.  This includes, but is not limited to: realtors, appraisers, title company employees, and real estate speculators/rehabilitators.  We will still accept loan applications for borrowers who are employed by mortgage companies, but due an increased incidence of irregularities, these files will be subject to additional quality control measures prior to closing.

PRE-CLOSING QUALITY CONTROL REVIEWS

As most of you are already aware, REMN performs random pre-closing QC review on approximately 10% of the files cleared from underwriting.  Please be advised that if your file is chosen for review, it may result in possible delays and/or additional underwriting conditions.

NEW YORK CLOSING ATTORNEY CHANGES

Effective immediately, we require that our Attorney, The Law Firm of Bonnie Nachamie, perform the title review and coordinate all New York closings.  Our “approved attorney” list has been deleted.  The Law Firm of Bonnie Nachamie will dispatch an attorney to represent REMN at the settlement.  For additional information, please see the “NY Attorney Info” page, which can be found by choosing the “Company Info” tab.

If you have any questions, please contact your AE.

“LITEFILE” SUBMISSION OPTION TO FACILITATE EARLY DISCLOSURE
Effective immediately, all brokers are eligible to submit “Litefiles” to REMN. The purpose of a Litefile submission is to meet the initial disclosure requirements of the MDIA. Once a Litefile is received by REMN, we will mail out initial disclosures to the borrower within one business day. We will email you a notification upon our mailing out of the disclosures (along with a copy). The three-day waiting period will begin upon our mailing of the disclosures. Once the three days have elapsed, fees can be charged and collected from the borrower. Litefiles must be submitted to the following email address: litefiles@remn.com.

A Litefile submission consists of the following documents, which must be accurately completed in their entirety:

1. REMN Submission Cover Sheet with Litefile indicated as Submission Type.

2. Fully completed Loan Submission Addendum Page (Please make sure the BAP is calculated correctly).

3. Fully completed 1003 signed by borrower and interviewer.

4. Broker generated GFE, TIL and Itemization.

5. Credit reports for all borrowers.

6. Borrower Certification and Authorization Form.

7. REMN Broker Compensation And Fee Certification.

OPTION TO REQUEST EARLY RE-DISCLOSURE

Currently, REMN checks to ensure compliance with MDIA APR and fee tolerances only once the loan is cleared from underwriting, which can result in inconvenient delays if re-disclosure is necessary due to broker initiated fee or mortgage amount changes. However, effective immediately, you can request that our TIL Team (TILT) re-disclose to the borrower at any point PRIOR to the loan being cleared from underwriting. Early re-disclosure can greatly decrease the time between clearance from underwriting and closing.

Early re-disclosure requests must be made by Requesting a New TIL. (also available in the “I Want To” menu above)

If you have any questions, please contact your AE.

In accordance with the Mortgage Disclosure Improvement Act (MDIA), we have implemented a number of sweeping procedural changes that will affect every transaction.  Click here for the detailed memo.

If you have any questions, please contact your AE.

NEW SUBMISSION COVER SHEET

Effective immediately, the new submission coversheet must be utilized.  It is posted on the front page of our website.  The new submission sheet contains an up-to-date list of our underwriters.  Also, please be aware that for a multitude of reasons we can no longer guarantee your file will be assigned to one of the underwriters you have selected.  Here are two tips for receiving one of the underwriters you prefer:  (1) While you must select AT LEAST six underwriters, there is no maximum; select as many underwriters as possible.  (2) Submit your file between the hours of 5:00pm (the day before) and 12:00pm, which insures you will be one of the first to request the underwriters you have selected.

RE-DRAW FEE

As a result of a dramatic increase in the number of files requiring closing docs to be drawn more than once, we have been forced to institute a $150 re-draw fee.  Effective for closings beginning Monday, July 20, this fee will be subtracted from your YSP.

USE OF POWER-OF-ATTORNEY

Due to a growing number of default cases involving a POA for a borrower who later claimed to be unaware of the loan application’s existence, effective immediately all POAs require an exception to be granted by our corporate counsel, Philip A. Schild, Esq. or the Title Department Supervisor, Tamie Kulpa.  Examples of acceptable reasons to use a POA are active military duty or physical medical disability preventing the borrower from attending the closing.  We require 72 business hours to review a POA exception request, so please plan accordingly.  The five-item internal checklist is posted in the “Forms and Documents” section of our website.

REASONABLE AND CUSTOMARY FEES

This is reminder that all fees charged to the borrower on an FHA closing must be “reasonable and customary” per Mortgagee Letter 2006-04.  Please be advised, fees deemed excessive may be reduced at the time of settlement at SA’s discretion.

If you have any questions, please contact your AE.

Currently, TOTAL Scorecard Approve/Eligible findings are acceptable in lieu of manual underwriting.  However, effective Wednesday, January 28, REMN reserves the right not to accept Approve/Eligible findings for loans that appear to lack sufficient credit quality.  If the underwriter concludes that the findings are not acceptable, the file will be brought to a manager to determine if the loan must be manually underwritten.

If you have any questions, please contact your AE.

Important Changes To Our Broker and Emerging Banker Agreements  Read More