Mortech Blog


Tom Erickson

Recent Posts

Collateral Underwriter Coming Soon

Posted by Tom Erickson on Jan 7, 2015 1:00:00 PM

Fannie Mae had announced plans to release a new risk-assessment tool in late January for appraisals of property used as collateral for their loans.  The Uniform Collateral Data Portal was developed by Fannie Mae in 2012 and has now collected electronic data on over 12 million appraisals and 20 million transactions.  This huge amount of data will be used to help Collateral Underwriter (CU) to analyze the risk that lies within newly submitted appraisals.  The process for CU is as follows:

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Mortgage Industry Bits and Pieces

Posted by Tom Erickson on Dec 29, 2014 2:00:00 PM

The Tax Prevention Act of 2014


The Tax Prevention Act of 2014 has been passed by the House and Senate and has been sent to President Obama for his signature.  He is expected to sign this bill by December 31st, which will retroactively make some 55 provisions law for the calendar year 2014.  There are two major provisions that affect the mortgage industry that are in the proposed law.  The first is that Mortgage Insurance Premiums will again be tax deductible for 2014.  The previous version of this had expired last year---this extends it only for 2014.  The second is that it reinstates protections for distressed homeowners shielding them from having to pay taxes on mortgage debt forgiven in 2014.  Before the exemption was created by Congress, if a lender agreed to let a homeowner with $400,000 in mortgage debt sell their house for $300,000, the IRS would treat the remaining $100,000 of forgiven mortgage debt as income.  This was a double whammy for distressed homeowners during the financial crisis. 


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The New Loan Estimate

Posted by Tom Erickson on Dec 10, 2014 1:00:00 PM

The CFPB has two new disclosures that will replace four disclosures now being used. The Loan Estimate will replace the current Good Faith Estimate and initial Truth-in-Lending form and the new Closing Disclosure replaces the final Truth-in-Lending form and the HUD-1 Settlement statements. This change is effective “on” 8/1/2015---not before. The CFPB has done significant consumer testing, and have “simplified” the forms so that borrowers can more easily understand the information contained therein.

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Mortgage Industry Bits and Pieces

Posted by Tom Erickson on Dec 3, 2014 1:00:00 PM

2105 Loan Limits


The Federal Housing Finance Agency (FHFA) has come out with the 2015 County loan limits for the GSEs.  It has retained the base conforming loan amount of $417,000 for single family dwellings, the differences are for the high cost areas.  FHFA reported that 46 counties across the country did have their county limits raised for 2015, the remaining high cost areas remained at the 2014 level.  A complete list of the changes can be found on the FHFA website


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Pricing Discretion---Fair Lending Risk

Posted by Tom Erickson on Nov 19, 2014 12:48:00 PM

"Pricing discretion" means any judgmental adjustments to standard pricing to a borrower, as listed on rate sheets or given by a pricing engine. Anytime there can be pricing discretions allowed in a Lender’s business practice, there will be a heightened risk of Fair Lending violations.  Managing this risk has become increasingly important since numerous fines have been levied by the Department of Justice for discretionary pricing that was deemed to discriminate against race and ethnicity or their practices caused disparate impacts on minority borrowers.


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HUD Adopts Part of the QM Amendments

Posted by Tom Erickson on Nov 12, 2014 1:19:00 PM

The CFPB recently announced an amendment to its definition of QM that included additional exemptions to the QM rule for certain non-profits and also enacted a cure for the “points and fees” test.


CFPB's final rule amended the “exempted transaction” list to provide that certain interest-free, contingent subordinate liens originated by non-profit creditors would not be counted towards the credit extension limit of 200 transactions that qualifies a nonprofit for the nonprofit exemption.  Specifically, the rule excludes consumer credit transactions if the transaction is secured by a subordinate lien; for the purpose of down payment, closing costs, or other similar home buyer assistance, such as principal or interest subsidies; for property rehabilitation assistance; for energy efficiency assistance; or for the purpose of foreclosure avoidance or prevention. Additionally, the consumer credit contract must not require payment of interest; must provide that repayment of the amount of the credit extended is forgiven either incrementally or in whole, at a date certain, and subject only to specified ownership and occupancy conditions.  The HBA (Home Buyer’s Assistance) program, from NIFA (Nebraska Investment Finance Authority), as most HFA’s, is a perfect example of the exempt transactions that would be included in this amendment.  HUD has also adopted this portion of the amendment, stating that this fits within its mission to provide loans to low and moderate income borrowers.


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Mortgage Industry Bits and Pieces

Posted by Tom Erickson on Nov 5, 2014 2:12:00 PM

FOMC Meeting


The FMOC (Federal Reserve’s Open Market Committee) met for the 7th time this year, with the final meeting of the year scheduled for December 16- 17th.  As expected, they announced that QE3 would be ending at the end of October.  The Quantitative Easing policy was an asset purchasing tool to keep interest rates at historically low levels.  The Fed had been reducing the amount of MBS (mortgage- backed securities) purchases by $10 billion a month from a high of $85 billion.  The final $15 billion will end in October.  The termination of QE3 was justified by the Fed’s statement that t U.S. economic activity is expanding at a "moderate pace" since the Committee's last meeting on September 17.


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The QRM Is Here

Posted by Tom Erickson on Oct 29, 2014 1:53:00 PM

Six Federal Agencies have approved the final rule for risk retention as outlined as the QRM (Qualified Residential Mortgages).  The agencies include the Board of Governors of the Federal Reserve System, the Department of Housing and Urban Development, the Federal Deposit Insurance Corporation, the Federal Housing Finance Agency, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission.  


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Freddie Mac Enhances Home Possible Product

Posted by Tom Erickson on Oct 22, 2014 1:53:00 PM

Freddie Mac recently released some enhancement details made to its “Home Possible” program for loans with closing dates after November 24, 2014.  The enhancements are an attempt to loosen credit. It is actually taking on the characteristics that were once saved for the Home Possible Neighborhood Solution and making them available for all community members.  Hence, the Home Possible Neighborhood Solution program is being retired.


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Mortgage Industry Bits and Pieces

Posted by Tom Erickson on Oct 15, 2014 1:11:00 PM

Fed Minutes


The Federal Open Market Committee (FOMC) released the minutes of their September meeting on October 8th.  As expected, they announced to end their market-friendly bond-buying program known as “quantitative” easing at the end of this month.  The Fed had been purchasing Treasuries and mortgage-backed securities to keep long term interest rates low.  And the Fed showed no inclination to raise the key Federal Funds Rate, currently near 0---the Fed stated that it plans to keep this rate at its current level for a “considerable amount of time” after ending quantitative easing. Janet Yellen, the Fed Chairman, stated a considerable amount of time could mean 6 months.


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