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| Iowa Mortgage Association - Prime Times Mar 12, 2008 In this issue: President's Message Iowa's Delinquency and Foreclosure Numbers Trail the National Average Upcoming Education Seminars 2008 IMA Spring Conference - Work Together For the Future of the Mortgage Industry Chip Into Fun - 5th Annual IMA Golf Event Iowa Legislative Update: Legislative Session Passes Halfway Mark Loan Modifications: Redisclosure Required? RuralHome is successful in providing homeownership to the "hardest to house" Iowa Mortgage Help Will Aid Home Owners Struggling with Mortgage Payments Title Guaranty Second Annual Regional Academies HUD/FHA Update President's Message President's Message Wow, what a difference a quarter can make. It is hard to believe all the changes our industry is going through in such a short period of time. As I said in January, now more than ever, be familiar with your investor or MI partner's website to stay ahead of all the guideline changes. Use this information to help prepare your borrowers and realtors to understand this new mortgage lending environment.  David Horak Unfortunately, along with all of the guideline changes, we are also hearing about more foreclosures. Industry experts predict we will see delinquencies and foreclosures continue to rise throughout the year tapering off late in the fourth quarter. Stay up to date on national and local industry statistics with the IMA website and the National MBA website. As statistics become available your association will have press releases posted to the website addressing highlights in the Iowa and National numbers. We will also keep you up to date with any pertinent legislative updates via email or web postings.Speaking of the IMA website, check out the listing of upcoming events and activities. The spring conference will be Thursday April 3rd in Iowa City. If weather permits we will play golf on Wednesday April 2nd at the Riverside Casino golf course. Contact Darcy Burnett if you are interested in playing.I'm looking forward to seeing all of you in Iowa City in April. I'm also hoping we start seeing signs of spring. I'm tired of all this snow and cold. See you in April. Your President, Iowa's Delinquency and Foreclosure Numbers Trail the National Average Iowa's Delinquency and Foreclosure Numbers Trail the National Average Iowa homeowners are fairing better than most of the country according to a fourth quarter survey by the Mortgage Bankers Association (MBA). Iowa ranked 30th of 50 states in foreclosure starts in the fourth quarter of 2007 (.64% as compared to the national average of .88%). "Iowa's better overall performance reflects a more stable economy and less volatility in home values," said Dave Horak, president of the Iowa Mortgage Association. Iowa also has a much smaller percentage of total loans that are either sub-prime fixed or sub-prime adjustable rate loans which are causing the bulk of the problems right now. In the MBA study, Iowa ranked 38th of 50 states in 90-day delinquencies-an important barometer of potential future home foreclosures. According to the MBA fourth quarter 2007 survey, Iowa moved from 26th in the third quarter of 2007 to 30th in foreclosures started. "Compared to the rest of the country, Iowa is fairing better than most," said Dan Vessely, President of the Iowa Bankers Mortgage Corporation (IBMC) in citing four critical categories from the MBA survey. "More importantly, in the category of seriously delinquent loans, loans past due by three months, Iowa homeowners seem to be in better shape than most of the country," he added. Iowa is at the national average in foreclosure inventory. However, that statistic overlooks Iowa's debtor-friendly foreclosure laws that allow delinquent loans to remain in foreclosure status longer than would be the case in other states. Because of the uniquely long legal process, Iowa foreclosure numbers tend to be adversely inflated by counting the same foreclosures multiple times quarter over quarter. Upcoming Education Seminars Upcoming Education Seminars VA Home Loans March 25 - Johnston and March 26 - Bettendorf There is still time to register for his new half-day seminar. The seminar will provide you with the updates you need to make VA loans. This seminar is designed to:
Lending Compliance Hot Topics April 22 - Johnston This 3-hour seminar will focus on the most frequently cited regulatory violations in the areas of:
Not only will problem issues be identified but the regulatory basis for the requirement will be explained and practical tips for compliance will be discussed. Register online at www.iowama.org.2008 IMA Spring Conference - Work Together For the Future of the Mortgage Industry 2008 IMA Spring Conference - Work Together For the Future of the Mortgage Industry  2008 IMA Spring Conference April 3, 2008 - Sheraton Iowa City Hotel Do not forget to register to attend the 2008 IMA Spring Conference. With sessions on coaching your team, thriving on change, industry updates and an inspirational message, the Spring Conference will provide you with what you need to thrive as a mortgage professional! As always the Spring Conference will also feature an exhibit hall with the latest products and services for the mortgage industry. Your peers, industry vendors, educational speakers and informative sessions will help you be successful in the mortgage industry. We look forward to seeing you at the conference and know you will discover ideas that will foster professionalism and success in your business! By working together we will have a successful future and help our customers. IMA is proud to present the 2008 Spring Conference with full-day of educational and networking opportunities. Registration is available on the IMA website at www.iowama.org/calendar.cfm.Chip Into Fun - 5th Annual IMA Golf Event Chip Into Fun - 5th Annual IMA Golf Event  Iowa Legislative Update: Legislative Session Passes Halfway Mark Iowa Legislative Update: Legislative Session Passes Halfway MarkThis past Friday, March 7 marked the first "funnel" deadline of the Legislative session when House bills must be voted out of House Committees and Senate Bills out of Senate Committees - or be considered dead for the remainder of the session. Appropriations, Ways and Means, and Government Oversight bills are exempt from funnel deadlines. The following list provides an abbreviated "update" on the status of key legislation monitored by the IMA. Bills can be reviewed on the state's legislative web site under "track legislation." Bills still eligible for debate: HF 2142 - Private Cause of Action for Consumer Fraud (will be assigned a new number). This bill would allow consumers a private right of action to sue under the Iowa Consumer Fraud Act - and was opposed by the IBA in its original form. On Wednesday, March 5, 2008, this bill passed the House Judiciary Committee as a "shell" bill, where it was stripped of all contents except for a statement regarding the intent of the Iowa Legislature to address consumer fraud. Presumably since the bill in its original form did not have sufficient votes to pass out of committee, it will either be amended substantially to address concerns of the business community or will be scrapped altogether for the remainder of the 2008 session. SF 2277 - Credit Freeze. This bill would allow a consumer to request a freeze on their credit report from any consumer credit reporting agency - and is substantially similar to credit freeze legislation enacted in 39 other states across the country. A key exception for creditors is included in the bill lenders access to credit reporting information for current or past customer relationships. This bill passed the Senate Judiciary Committee last week, and is now eligible for debate by the full Senate. Another amendment that will be sought by the financial services industry during floor debate will allow the consumer to request a "quick thaw," to expedite the removal of a credit freeze for subsequent loan requests from creditors. HSB 634 - Iowa Division of Banking Policy Bill (will be assigned a new number). Brought by the Iowa Division of Banking, this bill makes several changes to code sections under the jurisdiction of the IDOB. Most notably, the bill closes an existing loophole in chapter 535.8 created by a recent court decision that would apply to loan brokers, closers and others who participate in a mortgage loan transaction but are not actually considered the "lender," and strengthens the testing and bonding requirements for non-depository lenders qualifying as "registrants" under the code section regulating mortgage bankers and brokers. This bill was passed out of the House Commerce Committee on Wednesday, March 5 and is now eligible for debate by the full House SF 2302 - Mortgage Broker Duty of Agency. Brought by the Iowa Attorney General, this proposal, which is supported by the IMA, would subject mortgage broker licensees under Chapter 535B to new duties of: (1) acting in good faith and in the interests of the borrower - and not necessarily the broker, (2) carrying out all lawful instructions of the borrower, (3) disclosing to the borrower all material facts of the transaction, and (4) reasonable care in the loan transaction, along with accounting to the borrower for all the borrower's money received as agent. This bill was amended slightly by the Senate Commerce Committee to require brokers to adhere to similar legal duties as is required for realtors and real estate salespersons by the Iowa Real Estate Commission. Bills "Dead" or no longer eligible for debate: SSB 3107/HSB 594 - Iowa Attorney General's Mortgage Prosecution Fund. This bill would require an additional filing fee of $5.00 for every filed deed and mortgage on real property to create a "homeowners consumer protection fund" to be administered by the Attorney General for the purposes of investigation, prosecution, and consumer education relating to frauds in mortgage lending. The legislative intent of this bill is for the Iowa Attorney General to hire additional legal and investigative staff to exclusively work in the mortgage lending area. Note: Although this bill was not taken up by the House or Senate Commerce Committees prior to the funnel deadline, it could still be "reintroduced" as a Ways and Means bill (exempt from funnel deadlines) because it assesses a "fee" to Iowa citizens. SSB 3039 - Licensure and Regulation of Escrow Closing Agents. This proposal, brought by the Iowa Finance Authority, would require independent residential closing companies to be licensed under supervision of the Iowa Division of Banking. Policy reasons for IFA bringing the bill include lack of supervision, bonding requirements, etc., over these agencies who routinely handle large amounts of money during the real estate closing process. These escrow closing businesses appear to be used more frequently in certain parts of the state, as in many communities real estate transactions are either closed by the local realtor, lender or attorney. Financial institutions, their subsidiaries and attorneys would have been exempt from this bill, but the bill could have an impact for financial institutions using such companies to close real estate loans. SSB 3063/HSB 552 - Iowa Consumer Credit Code Jurisdictional Increase. Brought by the Iowa Attorney General, this bill would have raised the jurisdictional cap on the Iowa Consumer Credit Code from $25,000 to $75,000. The IMA opposed this bill due to the fee and other restrictions the ICCC would place on a much larger pool of loans - particularly loans secured by real property. This bill if passed without amendments would also place state-chartered institutions at a competitive disadvantage to nationally chartered institutions, which are not subject to significant portions of the ICCC. Loan Modifications: Redisclosure Required? Loan Modifications: Redisclosure Required? By Ronette Schlatter, CRCM Compliance Coordinator for the Iowa Bankers Association The Federal Reserve's recent multiple lowering of the Fed Fund's rates have certainly caused a stir on Wall Street, in the media and more than likely, within your existing loan portfolio. Many banks have received requests from loan customers to lower the interest rates on their existing obligations. (Why is it these same customers never come running back to the bank for a rate adjustment increase in a rising rate environment?!?) Such requests leave many lenders questioning how to best accommodate these requests: refinance the loan or modify the existing obligations? What disclosures are needed for each? The Truth in Lending Act (implemented by Reg. Z) allows the lender to make some modifications to existing loans without actually refinancing the loan, which can be an expensive process for the borrower and time intensive for the lender. It is vital to understand when you are modifying a loan versus refinancing according to Reg. Z. Section 226.20 of Reg. Z requires a new Reg. Z disclosure when a "refinancing" occurs. (Similarly, RESPA requires new disclosures for "refinances.") A refinancing occurs when an existing obligation that was subject to Reg. Z is satisfied and replaced by a new obligation undertaken by the same consumer. The concept of "satisfied and replaced" generally occurs when the lender obtains a new note. The same section of Reg. Z also outlines several scenarios which are NOT considered "refinances" including, but not limited to:
The commentary to this same section notes new Reg. Z disclosures are always required when a variable rate feature is added to a plan that previously did not contain a variable rate feature; if the maturity is lengthened; if the payment amount or number of payments is increased beyond that remaining on the existing transaction; or if there is a rescheduling of payments under an existing obligation. Modification agreements are typically entered into based on the assumption that the change is in the customer's best interest. There may be several reasons for this, such as:
The key to the modification process is keeping the existing loan document in place and preparing a brief agreement ("modification") that refers to the existing note and simply changes one or more terms in that note. Lenders are advised to have legal counsel review or draft the modification agreements to ensure that the modified transaction is enforceable under state law and that the bank is properly secured. In most cases all obligated parties on the original obligation must agree to the changes and sign any modification to the loan contract. Both RESPA and Z allow you to charge a fee for making the modification without triggering redisclosure. The fee should, however, be clearly described in your modification agreement and agreed to by the borrower(s). As stated earlier, modifications are not subject to new disclosures under Reg Z. But what if your modification agreement does one of those things that the Commentary states triggers new disclosures? For example, lengthens the loan term or increases the payment amount or number of payments beyond that remaining on the existing transaction or reschedules payments under an existing obligation? Your customer may be requesting a lower rate but may also be requesting to extend his maturity date and thereby lower his monthly payment due to a recent reduction in income. If such is the case, Reg. Z requires re-disclosure, meaning, you must provide a new final TIL statement based on the remaining loan obligation and modified terms. Any fee the lender charges for the modification agreement should be disclosed as a finance charge. But as long as the note is modified, not refinanced, RESPA disclosures are not required. Rescission is also not triggered provided no money is advanced to the borrower(s). Before you begin refinancing all those requests for lower rates, consider the possibility of modification agreements. When done correctly, modifications benefit both the borrower and the lender! RuralHome is successful in providing homeownership to the "hardest to house" RuralHome is successful in providing homeownership to the "hardest to house" By Irene Hardisty, Iowa Finance Authority single family housing director The Iowa Finance Authority's (IFA) RuralHome Community Second program provides homeownership assistance for rural Iowa families making 60% or less area median income. This family income category is frequently characterized as the hardest group to help into home ownership. It is a rare occurrence when a market rate program can be used by these families to buy a home with a mortgage they can afford. However, RuralHome is that rare program. Since inception in June of 2007, 15 Iowa families (10 below 50% AMI and 5 below 60% AMI) have obtained homeownership with the assistance of IFA's RuralHome and FirstHome programs. Many housing professionals may think that putting lower income families in homeownership is setting them up for failure, but that is not what IFA has found. The average housing debt ratio for these 15 families is 21.6% with an average annual income of $28,442. The average home sale price is $64,208.00. These families have purchased homes in Benton, Buena Vista, Cherokee, Harrison, Iowa, Lee, Linn, Mills, Montgomery, Poweshiek and Webster counties. RuralHome is a $3,000, five year, forgivable second lien that is used with either FirstHome or FirstHome Plus (providing an additional grant of $2,500), IFA's first-time home buyer mortgage program which features low rate and no origination fee or discount points. The RuralHome $3,000 forgivable loan may be used for down payment or closing costs including up to $150.00 for pre-closing homebuyer education class. RuralHome must be used for purchase in a rural community of 25,000 or less population. Several MSA counties have qualifying rural areas that can be located using web-tools available here.Over 100 IFA Participating Lenders around the state originate FirstHome and FirstHome Plus mortgages. A list of IFA Participating Lenders or more information about RuralHome may be found at IFA's website or by contacting Sharon Murphy at 515-725-4915,.Iowa Mortgage Help Will Aid Home Owners Struggling with Mortgage Payments Iowa Mortgage Help Will Aid Home Owners Struggling with Mortgage Payments  Miller and Mills said the grant will enable the creation of the "Iowa Mortgage Help" initiative that will increase the capacity of foreclosure-prevention counseling agencies around Iowa and will include a multimedia statewide awareness campaign. The efforts will supplement and expand the work of the "Iowa Foreclosure Hotline" established last September - which will now be called the "Iowa Mortgage Help Hotline." The toll-free number remains 877-622-4866. "The Hotline already has received about 8,000 calls and is handling about 700 cases," Miller said. "Iowa Mortgage Help will increase public awareness of the service and multiply the calls, but it also will multiply the assistance of local housing counseling groups around the state. This is an important cooperative response in Iowa to the mortgage foreclosure crisis." IFA Executive Director Mills said: "We want Iowans to call the Mortgage Help Hotline if they are currently struggling or as soon as they think they may be headed toward financial difficulty. Our counselors have more resources available to help people who are in the early stages of mortgage delinquency. Ideally, we'd like to talk with Iowans before they miss a mortgage payment." Mills said Congress approved $180 million in funding in December for mortgage foreclosure mitigation counseling programs. State housing finance agencies and other eligible organizations around the nation were able to seek the funds on behalf of state and local efforts. In Iowa, Mills said IFA submitted the grant application in partnership with the Attorney General's Office, Iowa Mediation Service (IMS), the Iowa Home Ownership Education Project (IHOEP) and Iowa Legal Aid. The funds will enhance counseling services around the state as well as the Hotline organized by IMS and the Attorney General's Office last fall. The goal of the initiative is to assist as least 7,000 Iowans before the grant expires at the end of the year. A statewide multimedia campaign will launch later this month encouraging financially challenged Iowans to call the Iowa Mortgage Help Hotline for assistance. Hotline operators will gather basic data and will refer the callers' cases to one of eight local counseling agencies that are part of Iowa Mortgage Help. The certified counselors then will gather more in-depth financial information and will determine the level of counseling that is needed. If a caller's situation only requires fairly basic counseling, such as help with managing personal finances, the case will be handled by the local counseling agency. If a caller's situation is more complex - and requires interaction with the mortgage servicer or lender - the caller will likely receive further assistance from Iowa Mediation Service to facilitate a loan modification, if possible. Nationally, research shows that nearly 50 percent of people who are unable to pay their mortgage never contact their lender or seek assistance from a trained counselor. The state officials said the goal of Iowa Mortgage Help is to be sure people get assistance if they need it. Governor Chet Culver said: "I commend the coordinated effort of these state and local agencies. Thanks to their hard work, we are hoping that thousands of Iowa homeowners will realize the best solution to their financial situation." Click here for more information.Title Guaranty Second Annual Regional Academies Title Guaranty Second Annual Regional Academies The second annual Title Guaranty Regional Academies are coming soon to a location near you! This year, we've expanded the program to five sites around the state and we've added a Lender Track. We are approved for six hours of State of Iowa continuing education for mortgage originators and six hours of CLEs for attorneys. Whether you are an abstractor, attorney, closing company or lender, this program has something for you. The speakers will vary slightly by location, but the topics are of interest to everyone in the settlement service industry. The speakers include attorneys Dan Moore, Tim Gartin and Patrick Madigan of the Iowa Attorney General's Office; Karen Oberman with Forsythe Appraisal; and more! Once again we will offer an industry panel with representatives from various industry segments ready to discuss what's happening in Iowa's real estate settlement market. Title Guaranty will host the 2nd Annual Regional Academies at the following sites and dates: HUD/FHA Update HUD/FHA Update Already, the first week of MARCH and HUD has released new information on FHA Mortgage Limits, FHA Modernization and Foreclosure Information. Please visit the sites below for developing and additional information. You can always access all HUD/FHA information at www.hud.gov. FHA Mortgage Limits have increased to $271,050 for a one-family Unit. Click here to obtain information on all Iowa counties.HUD Secretary Alphonso Jackson has addressed the topics of:
Read more about these topics at Secretary Jackson’s Speech web site. The HUD News Newsroom web site has current information on HUD’s Top Stories, Press Releases, Speeches, Op-eds and Letters to the Editor and much more. To remove yourself from this mailing list, click here. |
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