SAFE Act Exam Prep

FHA Makes Shifts

Randall Bedwell — Mon, 25 Jan 2010 17:07:29 +0000

FHA Announces Policy Changes to Address Risk and Strengthen Finances

New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities

WASHINGTON – Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.

The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement. U.S. Housing and Urban Development Secretary Shaun Donovan previewed the changes in December of last year, noting that the FHA would announce additional details before the end of January.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”

Announced FHA Policy Changes:

Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending

The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.

If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

Update the combination of FICO scores and down payments for new borrowers.
- - New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
  - This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
  - This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
Reduce allowable seller concessions from 6% to 3%
- - The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
  - This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
Increase enforcement on FHA lenders
- - Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
    - - This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
  - Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
    - - Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
      - This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
  - Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
    - - Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
  - HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
    - - Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
      - Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

Free Nashville FHA Training

Randall Bedwell — Wed, 26 Aug 2009 16:43:44 +0000

Free FHA Seminar

Tennessee Repeals and Reenacts the Residential Lending, Brokerage and Servicing Act

Randall Bedwell — Tue, 11 Aug 2009 12:52:31 +0000



Tennessee passed a bill repealing and reenacting the Residential Lending, Brokerage and Servicing Act (RLBSA). The reenacted RLBSA establishes pre-licensing education and examination requirements for loan originators; requires loan processors and underwriters acting as independent contractors to obtain a mortgage loan originator license; establishes loan originator continuing education requirements; requires the loan originator’s NMLS unique identifier on all mortgage loan applications, solicitations and advertisements; and establishes a number of additional prohibited acts. The bill also amends requirements with respect to bonds; exemptions, renewals and notification. The bill also amends the Industrial Loan and Thrift Companies act. Under the bill, a lender may not make a residential mortgage loan unless each individual that acts as a mortgage loan originator with respect to the loan has obtained a mortgage loan originator license under the Tennessee Residential Lending, Brokerage and Servicing Act and has been sponsored by the lender. In addition the bill amends requirements with respect to bonds and establishes requirements with respect to the sponsorship of loan originators. The bill went into effect July 1, 2009.

TDFI Issues New Regs for SAFE Act

Randall Bedwell — Wed, 15 Jul 2009 02:01:10 +0000

“The Whole System Is an Evolution”

TDFI Commissioner Gonzales Addresses Mortgage Professionals

By Randall Bedwell

July 14, 2009

FOR IMMEDIATE RELEASE CONTACT: Randall Bedwell, Randall@RandallBedwell.com

FRANKLIN—“The whole system is an evolution,” commented Commissioner Greg Gonzales on the Tennessee Department of Financial Institutions’ response to radical changes in laws regarding mortgage lending in the state. The changes will affect nearly 7,500 mortgage professionals, according to Gonzales, who spoke to a group of over 50 local lenders at the July meeting of the Tennessee Association of Mortgage Professionals.

Gonzales, accompanied by Assistant Commissioner Mike Igney, gave an in depth discussion of the federal S.A.F.E. Act on mortgage companies statewide. The Secure and Fair Enforcement for Mortgage Licensing Act of 2008 or “S.A.F.E. Mortgage Act,” requires states to set minimum licensing requirements for mortgage loan originators including fingerprinting, passing a pre-licensure test, meeting continuing education requirements, and providing assurance of net worth.

“Tennessee now has 822 mortgage companies originating in Tennessee with 7,514 mortgage loan officers. These figures represent about a 50% decrease from 2006.” Gonzales also noted that there have been no bank failures in Tennessee and that customer service issues, foreclosures, and mortgage modification schemes have also kept the department busy protecting Tennessee’s mortgage consumers.

At the heart of Gonzales’ speech was Tennessee’s involvement in the Nationwide Mortgage Licensing System and Registry. Roughly two-thirds of the state’s mortgage companies have now joined the NMLS since Tennessee mandated NMLS registration in February of this year.

The NMLS was developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and has been an effective tool for other states in protecting the public and ensuring integrity in the mortgage lending process for consumers.

In an earlier statement, the commissioner noted that NMLS “will allow the Tennessee Department of Financial Institutions to enhance supervision of the mortgage industry by linking with other states to increase uniformity, reduce regulatory burden, enhance consumer protection, and reduce fraud.”

Licensees are now able to electronically manage a single record in the system to apply for, amend, renew, and surrender licenses in one or more participating states. TDFI recognized that the rapid changes in the mortgage industry demanded an overhauled regulatory framework and quickly joined NMLS.

The S.A.F.E. Mortgage Act also requires Tennessee to mandate mortgage loan originators take 20 hours of prelicensing education and pass a test developed by Pearson VUE, the national education company that administers TCAP tests to Tennessee’s public school children. Further, MLOs are required to take an additional eight hours of continuing education each year after 2010.

Other states have adopted similar measures and have experienced significant declines in the number of mortgage loan originators who decide not to renew their licenses under the new, more stringent licensing arrangement. A good number of felons who have been originating for years, according to many state regulators, are finally caught and denied licenses.

Curriculum and providers will be approved by TDFI by the beginning of 2010–a number of national training companies have already submitted applications to the state to offer either online or classroom instruction. At present, we do not know what formats, online, classroom, or blended, will be approved to satisfy state requirements.

Commissioners Gonzales and Igney pledged their support to the state’s mortgage lenders by seeking to help local mortgage companies, most of who are small businesses with less than a dozen employees, interpret and implement sound lending practices and comply with the myriad of new regulations imposed by federal law. The commissioners also suggested that TDFI may initiate a series of seminars across the state to answer questions that emerge in compliance and training issues during this transitional period.

What is this web log about?

Randall Bedwell — Sun, 19 Apr 2009 00:40:36 +0000

My name is Randall Bedwell and I am a mortgage and real estate industry veteran. I am currently a doctoral candidate in Educational Leadership (Ed.D) at Trevecca Nazarene University. My dissertation is on Tennessee’s prelicensing and continuing education in compliance with the S.A.F.E Act. Please take a moment to review my abstract……

ABSTRACT

Randall J. Bedwell, M.A., M.A.T.

For partial completion of the degree of

Ed.D. in Educational Leadership and Professional Practice

Trevecca Nazarene University

Dr. Karen Lea, Advisor

This study analyzes the overall effects of S.A.F.E. Act educational requirements on mortgage originator licensing in the state of Tennessee. Over the two-year study, I will compare learning platforms (online, classroom, blended) in relation to pass rates, information retention, subject mastery, and adult learning styles. Data collection will be through a weblog and email to a subject group of no less than 1,000 people. I am certificated by the University of California, Irvine, and Institutional Review Board for research with humans and follow UCI IRB Protocols.

Through both qualitative and quantitative research and analysis, I will examine educational delivery methodologies, exam pass rates, and licensee retention levels. Available government data from other states as well as from Pearson Vue will be compared to Tennessee’s data for interpretation and final published report. The study ultimately shows the effectiveness of educational delivery systems on pass rates, licensee retention, and compliance understanding for mortgage originators required to complete education requirements administered by the Tennessee Department of Financial Institutions.