HUD Delays Down Payment Assistance Changes by 90 Days 
On Thursday, HUD issued Mortgagee Letter 19-07, extending the effective date to July 23 for down payment assistance and operating capacity requirements included inMortgagee Letter 19-06, published on April 18. Prior to the issuance of the new Mortgagee Letter (ML), these requirements would have been effective for FHA case numbers issued on or after April 18.

The ML attempts to clarify the parameters of eligible down payment assistance (DPA) sources for FHA-insured loans. The requirements described in the ML have important implications for state/local housing finance agencies (HFAs), as well as DPA programs operated by federally recognized Indian tribes. In the ML, HUD notes that "It has come to FHA's attention that certain Governmental Entities may be acting beyond the scope of any inherent or granted governmental authority" when providing DPA. The new requirements could also potentially leave state/local HFAs susceptible to losses should they fund DPA to lenders that then choose to sell the mortgage and the servicing to another investor. In response to some of the issues raised by market participants, particularly the limits on programs operated by Indian tribes, there is pending litigation against HUD in the U.S. District Court for the District of Utah. HUD agreed to implement a 90-day stay from the date of the ML to allow governmental entities the opportunity to put systems in place to address the new requirements listed within the guidance.

MBA is in constant contact with its partners at HUD and state/local HFAs, and will continue to provide additional updates on these new requirements as they are made available. 

For more information, please contact Dan Fichtler at (202) 557-2780 or Julienne Joseph at (202) 557-2782.

CFPB Intends to Adopt Changes for Civil Investigative Demands
On Tuesday, the CFPB announced its intention to adopt changes to policies governing Civil Investigative Demands (CIDs). This important policy shift is consistent with recommendations made by MBA to address concerns over the Bureau’s use of overly broad CIDs. The new policy will aim to ensure CIDs clearly describe the specific conduct under investigation as well as the provisions of law thought to have been violated. Improved CID clarity will reduce the time and expense associated with responding to CIDs, facilitating a more efficient resolution of Bureau inquires. 

For more information, please contact Justin Wiseman at (202) 557-2854 or Blake Chavis at (202) 557-2930.

MISMO Remote Online Notarization Standards Nearing Completion
Recently the Mortgage Industry Standards Maintenance Organization (MISMO) RON Working Group announced that it is close to finalizing its draft model standards for remote online notarization (RON) implementation. The release of the standards is appropriately timed to coincide with the increased velocity in which states are introducing and adopting legislation that will enable the use of RON. The MISMO standards, along with the MBA-ALTA state model RON bill, are helping to establish a national consensus among state policy makers for RON laws and rules. The MISMO RON Working Group has scheduled a webinar for Thursday, May 2, at noon (ET) to provide an in-depth look at the process and the technical requirements necessary to safely implement RON.

For more information, please contact Janis Davis at (202) 557-2715 or Kobie Pruitt at (202) 557-2870.

MAA Call to Action Urges Delay in New AMC Law in NY; Assembly Banks Committee Chairman Responds with Letter to NY Department of State
This week, Mortgage Action Alliance (MAA) members in New York wrote to the State Assembly Banks Committee Chair, Kenneth Zebrowski, regarding the implementation of the Chairman’s legislation from last year to establish Dodd-Frank-required minimum standards for appraisal management companies (AMCs). The new law is scheduled to go into effect on April 27, 2019, and the New York Mortgage Bankers Association has significant concerns about the NY Department of State’s (NYDOS) extremely narrow interpretation of this law with respect to the licensing and regulation of AMCs. Specifically, NYDOS has not made a decision on the promulgation of rules that are necessary to implement the law, which is now only days away from becoming effective and enforceable. Without a delay or clear written guidance regarding enforcement, AMCs and lenders must immediately stop using unlicensed individuals for non-appraiser services such as broker price opinions, property condition reports and more.  Responding to industry concerns, Chairman Zebrowski wrote to NY Secretary of State Rossana Rosado and cited potential disruption to the real estate market, and requested NYDOS issue a memo stating that it will exercise enforcement discretion for a period of 90 days. 

For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

Register for MBA’s Legal Issues and Regulatory Compliance Conference, May 5 – 8 in New Orleans, LA
MBA’s Legal Issues and Regulatory Compliance Conference is fast approaching, taking place May 5 – 8, 2019, at the Hyatt Regency in New Orleans, LA. The conference has earned a reputation for being the “must attend” annual event, tailored to mortgage compliance and legal issues. There will be over 40 sessions covering regulation, legislation, and litigation. The conference is also a great way for attorneys to satisfy their continuing education or CLE credits, including getting an Ethics credit. To register, go here.