HUD AUDIT QUESTIONNAIRE SENT TO YOUR BORROWERS TO TEST THE VALIDITY OF THE INFORMATION OF LOAN FILES AUDITED
This is a reminder to all our clients and those doing Federal Housing Administration-insured loans as Direct Endorsement lenders and Third Party Originators. The Department of Housing and Urban Development sends out questionnaires to borrowers on files that are being audited. There are a series of 17 questions plus comments for the borrower to make. It is this attorneys’ opinion it is to spot fraud and noncompliance with FHA loan procedures as set forth in HUD Manual 4060.1 REV-2 and 4155.1
For those of you that are clients and have not been audited by HUD/FHA and would like a copy of the questionnaire email me and I will email it back. If you are not a client or a member of one of the organizations we represent (need membership number) we will send it also as a membership benefit. All others need to purchase with a credit card for $50. Read, learn and update your QC Plan.
HUD CLOSING A SERIES OF FIELD OFFICES. WHAT DOES THIS MEAN TO DIRECT ENDORSEMENT LENDERS?
The small offices that are closing are located in Camden, N.J; Syracuse, N.Y; Orlando; Tampa; Springfield, Ill.; Cincinnati; Flint, Mich.; Grand Rapids; Mich.; Shreveport, La.; Dallas; Lubbock, Texas; Tucson, Ariz.; Fresno, Calif., Sacramento; Calif.; San Diego; and Spokane, Wash.. HUD will retain at least one office in each state. Following the closures, several affected states will still retain more than one office, including California, Texas and New York with three offices each, and Florida and Ohio with two each. (HUD NO. 13-054-4-24-13)
The three in California are already closed. This means you HUD auditors will come from Los Angeles, Santa Ana or San Francisco. It also means our function as your attorneys will be easier and less expensive to represent you on HUD finding issues. Notwithstanding this, you should still have us audit your system for HUD compliance before it is done by HUD. Remember, indemnification of loans can cost you and noncompliance especially with not having a compliance QC manual in place can cost you more.
UPDATE ON DEFINITION OF QUALIFIED MORTGAGES
Review the proposed amendments if you intend doing QM mortgages and keep track for purposes of quality control and to reduce the odds on buy back.
HARD MONEY LOANS RETURN TO CALIFORNIA LEGALLY
In one case, the borrowers (husband and wife) had a business bankruptcy, a home foreclosure the couple paid nearly $10,000 in upfront fees for a mortgage at 10.9% interest with a 35% down payment. The reason? Home prices are rising and they wanted to get a four bedroom home in a nice area with good schools before prices got much higher.
They are using it as a bridge loan and figure they can refinance in one year. Because of Dodd-Frank however, the lenders must consider the equity in the collateral (here 35%) the down payment must be sufficient to have good equity at the time of purchase and definitely the ability to pay according to Dodd Frank. Usually now the subprime lenders are holding their own paper on their books rather than selling them. Currently it is estimated that nationwide the subprime market is about $8 billion total less than half of 1% of the $1.8 trillion in U.S. home loans last year.
Loans seem to be made to primarily higher income borrowers. There are currently two such lenders in Orange County, California. Generally these loans start at a minimum of 7.95% with at least 25% down. (latpa1,a14)
Key here is it is company funds and therefore they are the creditors and not brokers. Remember higher-priced mortgage loans do not include: construction financing; temporary or bridge loans 12 months or less; reverse mortgages and home equity lines of credit. But if you are going back into this business have a very good attorney available to check for compliance very carefully because of all the new laws, regulations and ongoing changes at a regular basis.
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE