Here are the Q&As from Day 1.

There was a question about Errors and Omission Insurance available for loan originators. In doing research, I see that carrying this type of insurance is a requirement already in some states and in those states, insurance carriers have stepped up to offer the product. I can forsee a point in the future where lenders will require this in all states.

Here is a link to a good FAQ page on the new WA State Domestic Partnership Law with links to the final bill signed into law.

There was a question regarding whether or not we can originate Pay Option ARMs or ARMs with negative amortization in WA State and David W referenced a 2008 law.  Here’s the RCW. Click on “negative amortization” to read more. See 19.144.050:

“A financial institution may not make or facilitate a residential mortgage loan that includes any provisions that impose negative amortization and which are subject to the interagency guidance on nontraditional mortgage product risks and the statement on subprime mortgage lending.”

To get the full answer, we need to refer to “the interagency guidance on nontraditional mortgage product risks…” located here, that was written way back in 2005.   Interesting that when you read the NTM attachment at the bottom of the page, the FRB specifically excludes reverse mortgages but specifically INCLUDES interest only loans. So are we still doing interest only loans in WA State?

DAY 2

I promised a link to the Financial Crisis Inquiry Commission….and a blog post I wrote to them.

There was a question as to whether a person can still add an ”authorized user” to their account to help improve another person’s credit score. Here’s what the folks at FICO have to say about that.

Here’s a link to HUD’s Frequently Asked Questions PDF on the new RESPA changes. This page also has a link to the new HUD Booklet for the consumer.

…and here’s a link to a page on NAMF that has the links to all the state and federal laws for further review. Remember, for the sake of efficiency, it’s important to know the purpose of each law which is stated in the preamble.

DAY 3

Oh my. I found lots of consumer complaint articles about bankrate.com and some revolve around bankrate blaming the lenders for providing inaccurate info.

There was a request for more information on commercial loan modifications and commercial loan defaults locally and nationally.

There was a request to read more about HVCC (the Home Valuation Code of Conduct.)

Cristy was right. There is more discussion about further limiting loan originator compensation structure.  Here’s a nice summary/testimony pdf. This rule has a better than 50% chance of passing due to the current political climate. We’ll have to keep an eye on this.

Well Nik called with his NMLS number so now you know I’ll be able to sleep tonight, and get ready for FRIDAY! Here’s some web surfing music tonight to keep you company from Muse and SSPU.

SHB 2770
Governor Gregoire’s legislation implementing the recommendations of the Homeownership Task Force. This legislation impacts Banks, Credit Unions, the Consumer Loan Act (CLA), and the MBPA. The bill addresses prepayment penalties, negative amortization loans, the federal guidance on nontraditional mortgage products and subprime lending, and makes mortgage fraud a class B felony.
SHB 2770 PDF
SHB 2770 Summary
SHB 2270 Final Bill Report

Interesting highlights from the Final Bill Report:

The DFI must adopt a disclosure summary understandable to the average person that includes:
• the fees and discount points on the loan;
• the interest rate of the loan;
• the broker’s yield spread premium;
• the presence of any prepayment penalties;
• the presence of a balloon payment;
• whether or not property taxes and property insurance is escrowed; and
• other key terms and conditions of the loan.

A residential mortgage loan may not be made unless the summary is provided by a financial institution to a borrower within three days of a loan application. If the terms of the loan change, a new summary must be provided to the borrower within three days of the change or at least three days before closing, whichever is earlier.

Steering
A person subject to licensing under the MBPA or the Consumer Loan Act may not steer, counsel, or direct any potential borrower to accept a residential mortgage loan with a risk grade less favorable than what the borrower would qualify for under the lender’s existing underwriting standards. The licensee must prudently apply the underwriting standards to the information provided by the borrower.

Prepayment Penalties
A financial institution may not make or facilitate the origination of a residential mortgage loan that includes a prepayment penalty that extends beyond 60 days prior to the initial reset of an adjustable rate mortgage.

Negative Amortization
A financial institution may not make or facilitate the origination of a residential mortgage loan
that is subject to the Guidance and Statement if the loan includes any provisions that result in
negative amortization for a borrower.

SB 6471
This legislation amends the CLA and MBPA. All lenders, except those making loans under chapter 63.14 RCW, must have a license under the Consumer Loan Act. Lending is no longer allowed under the MBPA. Read the FINAL BILL REPORT link below. There is a lot of concern and confusion over this change.  More info is forthcoming at the next Mortgage Broker Commission meeting on May 13, 2008.

SB 6471 PDF
SB 6471 Summary
SB 6471 Final Bill Report

SB 6381
Establishes a fiduciary duty relationship between a mortgage broker and his or her client.

SB 6381 PDF
SB 6381 Summary
SB 6381 Final Bill Report

Other links:
Here’s a quick overview from the Wash State Housing Finance Commission.