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National Mortgage Professional
Nov 14, 2002

NAMB Capitol CommentMortgagePress.comHOEPA, VA, FHA, mortgage reformReform Hot Topic of 1999 Conference NAMB's effort to enact fundamental mortgage reform highlighted its annual Legislative Conference held in Washington D.C., April 17-20. More than 200 industry leaders from across the country attended the conference which featured key members of Congress, regulators, and congressional staff. Attendees received updates on several issues, including mortgage reform and HUD's recent YSP Statement of Policy. A variety of speakers from both HUD and Congress addressed the group, including HUD Deputy Secretary Saul Ramirez, HUD General Counsel Gail Laster, Senator Wayne Allard (R-CO), Representative Cal Dooley (D-CA), and Representative Bob Ney (R-OH). NAMB members took the pro-broker message to Capitol Hill, visiting nearly 200 Congressional offices, educating legislators on the role of Mortgage Brokers and stressing the need for mortgage reform legislation. The advocacy work continued with NAMB members meeting with officials from the FHA and, for the first time, hosting a VA Industry Roundtable designed to bring together mortgage industry participants and their VA counterparts. The all-day event was attended by representatives from NAMB, MBA, and other trade groups, as well as Freddie Mac and Fannie Mae. The Roundtable session focused on a variety of topics, and provided brokers with a valuable opportunity to offer suggestions to the program's future. White House Unveils Consumer Protection Initiatives In a recent White House briefing, President Clinton unveiled a series of consumer protection proposals intended to safeguard consumer privacy and provide protection against abusive financial practices. While most of President Clinton's initiatives are focused on protecting financial information and preventing credit card abuse, several focus on mortgage lending. In the report, the Administration endorses the joint HUD/FED recommendations on mortgage reform and encourages originators to provide reliable rate, fee, and closing cost information early in the process. The White House also suggested additional disclosures for high LTV mortgages. Other proposals offered by the President would increase civil liability limits for TILA violations and would target "abusive practices" regarding HOEPA loans. The report also suggests regulating the financing of fees in HOEPA loans, restricting prepayment penalties and balloon payments, and lowering the threshold for the triggering of HOEPA. Although the President called upon Congress to implement his initiatives, he did not indicate immediate plans to send legislation to the Hill. NAMB will continue to monitor the status of these proposals, and will pass along additional information should any of the initiatives be introduced in Congress. HUD Withdraws Proposed Interim Rule HUD officially withdrew its interim rule proposing that FHA insurance on new homes be able to exceed 90% loan-to-value ratio if the residence is covered by a qualified one-year builder warranty. Representative Rick Lazio (R-NY), Chairman of the House Banking Subcommittee on Housing and Community Opportunity, and Representative Joe LaFalce (R-NY), ranking member of the House Banking Committee, sent a letter to HUD Secretary Andrew Cuomo requesting that HUD retract its interim rule and re-issue its proposed rule. In their letter to HUD, the Representatives questioned the wisdom of eliminating inspection and warranty standards for new homes purchased with FHA-insured loans. "We understand that, in the past, these standards have provided important consumer protections against structural defects in new homes and have served to minimize financial liabilities to the federal government," the legislators wrote. HUD plans to re-issue the warranty regulation as a proposed rule following a 60-day comment period. VA Issues Rule Modifying Refinance Requirements Under a final regulation that went into effect May 24, the Department of Veteran's Affairs (VA) will not permit refinancing if the existing VA loan is delinquent or the monthly loan payment is not reduced. The rule also bars refinancing for a delinquent home mortgage and requires veterans seeking refinancing loans to meet certain standards. This is consistent with current authority allowing veterans to refinance outstanding VA-guaranteed loans with a new mortgage at a lower interest rate. The purpose of this interest-rate reduction rule is to prevent lenders from packing refinanced VA loans with excessive fees so that the monthly payment goes up, even though the borrower receives a lower interest rate. To receive a copy of the final rule, E-mail [email protected] and write "VA Final Rule" in the subject line.
Nov 14, 2002
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