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Playing catch up on state-level changes; Rates seem "happy" where they are - for now

Friday, May 23, 2014 - Article by: bcahoone - Global Home Finance Inc - Message

I remember when I first entered the working world, after a few months my HR person asked, "I see that you're not signed up for the company's 401k. Why not?" I replied, "I'd never be able to run that far." A full understanding is important regardless of what you're doing. Yesterday I mentioned that, "Warehouse lenders everywhere are hungry for business, and cutting their rates below the Prime Rate (3.25%) into the 2% range if certain conditions are met." One warehouse vet wrote and reminded me that, "While I agree there are definitely lenders out there doing that, I think you should clarify for what type of companies. Small to mid-size companies aren't going to be able to get that type of pricing. There are companies paying above 5% still. To get the pricing you discussed, lower than 3.25%, you have to be an established company with probably over a $5 million net worth. And you probably have to be able to use the facility a good amount."

Let's catch up on some state-level news in recent weeks, a big concern to any lender operating in more than one state.

Arizonahas made a few modifications to its lending regulations to include updating provisions regarding: purchase money mortgages, loan originators, and escrow agent protection letters. For purchase money mortgages, the new law (HB 2018) states that originations after December 31, 2014, "real property owned by a person engaged in the business of building and selling homes is not exempt from any foreclosure. If real property has a home that was not completed or has a building intended to be used as a home but was not, the property can be used to satisfy the judgment." Under House Bill 2098, a loan originator must be granted a license by the superintendent after completing a twenty-hour education course during the three-year period before the time of application (previously two-year period of time). Also, the new provision states that the applicant must have completed late continuing education for the purposes of satisfying education for the last year that the loan originator was in a renewable status.

Texas'Department of Savings and Mortgage Lending adopted provisions regarding loan status forms. When conditional qualification is given to a mortgage applicant by an originator, the form must resemble Form A under 7 TAC s.80.201(a). Most importantly, written confirmation is needed from the applicant to the originator. Form A is a conditional qualification letter and includes the originators license number, contact information for the applicant, loan information and terms, credit and income review and states at the bottom that the form is not an approval. These provisions went effective on May 1st.

Virginiahas clarified its policy on unallowable origination fees. The purpose is to clarify the Department of Veterans Affairs' policy on the treatment of unallowable fees when lenders charge a loan origination fee that is less than one percent of the loan amount on purchase and cash-out transactions, and less than one percent of the payoff amount on interest rate reduction refinance loans.

Kentuckyrecently amended KRS 426.530which describes the right of redemption of real property that has been sold in pursuance of a judgment or court order. The revisions are effective on July 14, 2014, or 90 days after legislative adjournment.

Georgia has recently updated its mortgage lender and broker licensing requirements. The peach state has exempted employees of certain nonprofit corporations, which promote affordable housing, from mortgage loan originator licensing requirements. The provisional changes state that "employees of bona fide nonprofit corporations, who act as loan originators only for such corporations, and who only offer mortgage loans with terms that are favorable to borrowers, are not required to obtain a mortgage loan originator license." House Bill 750went into effect April 21st.

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