Welcome to the California Mortgage Bankers Association s Mortgage Quality and Compliance Committee (MQAC) May 26, 2011

Transcription

1 Welcome to the California Mortgage Bankers Association s Mortgage Quality and Compliance Committee (MQAC) May 26,

2 You have entered the call on mute. If you have a question for Susan or CMBA, please direct a question to her only by typing it into the panel to the left of the screen. We will announce new members and open the line for questions at the conclusion of the presentation. 2

3 CMBA, MORTGAGE QUALITY AND COMPLIANCE COMMITTEE Michael R. Pfeifer, Esq., Chair [(714) ] DIAL IN #: Passcode:43784 AGENDA I. Preliminary Remarks and welcome to the committee II. Introduction of New Members III. Member Alerts / Recent Developments / Upcoming Events IV. Discussion of Conference-Call Presentation Topics for Future Meetings V. California Legislative Report, Pat Zenzola, CMBA Lobbyist VI. Lender Assessment of Risk and Controls (LARC) Audit Preparation, Annemaria Allen, The Compliance Group 3

4 CMBA State Mortgage Legislation Update May 2011 AB 935 (Blumenfield) Foreclosures: foreclosure mitigation charges. Status: 05/02/2011-Re-referred to B. & F. Current Location: 05/02/2011-A B. & F. Summary: Existing law sets forth the criteria for procedures for the foreclosure of property, including the filing of various notices with the county recorder, and generally sets forth the duties of the county recorder in this regard. This bill would, until January 1, 2015, for loans already originated as of the date that this bill becomes effective, with some exceptions, prohibit a notice of trustee's sale from being accepted for filing with the county recorder until the mortgage servicer pays a foreclosure mitigation charge of $20,000. It would require the county recorder to keep the moneys in trust until a notice of rescission is filed, at which time the moneys would be returned to the mortgage servicer, or until a trustee deed of sale is filed, at which time the moneys would be transmitted to the Treasurer for deposit in the Foreclosure Mitigation Fund, which would be created by the bill; the interest earned on the moneys would be retained by the county recorder in either case. The fund would be continuously appropriated for distribution by the Treasurer to local agencies for specified purposes. This bill contains other related provisions and other existing laws.

5 CMBA State Mortgage Legislation Update May 2011 AB 1321 (Wieckowski) Mortgages and deeds of trust: recordation. Status: 05/13/2011-Failed Deadline pursuant to Rule 61(a)(3). (Last location was JUD. on 3/21/2011). Current Location: 05/13/2011-A 2-YR. Summary: Existing law authorizes the recording of an instrument affecting the title to or possession of real property, as well as the recording of an assignment of a mortgage or a deed of trust. Under existing law, the recordation of an interest in real property provides notice of that interest to subsequent purchasers and mortgagees. Existing law provides that an unrecorded conveyance of real property is void against a duly recorded interest by a subsequent purchaser or mortgagee, if he or she acted in good faith and paid valuable consideration. This bill would instead require that mortgages and deeds of trust as well as assignments of a mortgage or a deed of trust be recorded within 30 days of the execution of the deed or other document creating a security interest in the real property or within 30 days of execution of the assignment. The bill would further require that either the promissory note or a specified certificate affirming the existence of the promissory note be attached at the time of recordation. This bill contains other related provisions and other existing laws.

6 CMBA State Mortgage Legislation Update May 2011 AB 729 (Leno) Mortgages and deeds of trust: foreclosure. Status: 05/05/2011-Returned to Secretary of Senate pursuant to Joint Rule 62(a). Current Location: 05/05/2011-S Senate. Summary: Existing state and federal law regulate the terms and conditions of mortgages and deeds of trust secured by real property. Existing state law requires, upon a breach of the obligation of a mortgage or deed of trust secured by real property, that the trustee, mortgagee, or beneficiary record a notice of default in the office of the county recorder where the mortgaged or trust property is situated and mail the notice of default to the mortgagor or trustor, among other acts, prior to exercising a power of sale. Existing state law, until January 1, 2013, prohibits the filing of a notice of default on a mortgage or deed of trust, as specified, secured by owner-occupied real property, as defined, until 30 days after specified parties contact the borrower or 30 days after satisfying due diligence requirements in this regard. This bill would prohibit a mortgagee, trustee, beneficiary, or authorized agent from recording a notice of default unless that party makes reasonable and good faith efforts to evaluate the borrower for all available loss mitigation options to avoid foreclosure.

7 CMBA State Mortgage Legislation Update May 2011 AB 729 (Leno) Mortgages and deeds of trust: foreclosure. (cont.) Status: 05/05/2011-Returned to Secretary of Senate pursuant to Joint Rule 62(a). Current Location: 05/05/2011-S Senate. Summary: The bill would include among these requirements informing the borrower of the deadline for applying for a loan modification, which would be prohibited from being earlier than a specified date. The bill would prohibit a mortgagee, trustee, or beneficiary from recording a notice of default on a residential mortgage or deed of trust if a borrower who is eligible for a loan modification submits an application, as specified, unless the mortgagee, trustee, or beneficiary has, in good faith, reviewed the application, rendered a decision on the application, and sent the borrower a denial explanation letter. The bill would provide a process for reviewing a mortgage loan modification application, which would depend, in part, on whether the mortgage servicer, as defined, is participating in the federal Making Home Affordable Modification Program. The bill would except certain borrowers from these requirements. The bill would require that a borrower who requests a loan modification and is denied receive a denial explanation letter stating the reason or reasons for the denial, as specified. This bill contains other related provisions and other existing laws

8 CMBA, MORTGAGE QUALITY AND COMPLIANCE COMMITTEE Monthly Presentation Lender Assessment of Risk and Controls (LARC) Audit Preparation Presented by: Annemaria Allen, The Compliance Group 8

9 LARC Review The FNMA LARC Review is the Lender Assessment of Risk and Controls that FNMA requires FNMA approved Lenders to have internally. As an approved FNMA Lender you will be audited by FNMA so at a minimum you must be prepared for a FNMA LARC review. Here s How

10 Organizational Structure At a minimum know your organizational structure and document everything. Keep all documented items organized electronically and in a hard copy binder ready to present. Organizational Charts Does your Org Chart make sense? Fidelity Bond/E&O Originations Metrics Request Form

11 Processing/Loan Origination It is critical to have an efficient internal reporting system through your LOS systems or whatever proprietary system you may have. Without this not only are you setting yourself up for heavy scrutiny with FNMA but this could also impact you on State level examinations and Call Reporting.

12 Processing/Loan Origination Pipeline reports for various channels Retail Wholesale Correspondent Written Procedures Retail Wholesale Correspondent Processing Functions

13 Wholesale-Broker/Correspondent Wholesale Broker List Wholesale Broker Report Cards Have a Wholesale Broker Approval process Ditto with Correspondent Channels

14 Underwriting Develop your own internal underwriting guidelines Develop underwriting matrices for all products Have an underwriting exception/override policy Have an underwriting exception/override report(s) Know and be able to demonstrate your underwriting authority levels and approval chain

15 Appraisal You Must Develop: Appraiser Approval & Review Policies Appraiser Tracking Reports Appraisal Tracking Reports

16 HVCC/Appraiser Independence You will be required to provide your policy and procedures with respect to Appraiser Independence Guidelines the new HVCC

17 Closing/Post Closing Document how your funding process works and who manages that process Be prepared to provide funding reports Written Procedures How do you manage your trailing documents? Stay on top of the closing agents Brokers Loan Officers Reporting

18 Quality Control Have a current QC plan that meets Agency guidelines and represents what you do! Be prepared to provide your most recent 3 months of QC reports FNMA will audit some of the files that your QC department or outsourced company has reviewed to determine accuracy levels Documentation of monitoring your QC vendor

19 Quality Control Reprocessing Documentation Field Reviews Credit Reports Checklists Quality Control Procedures (this is not your QC plan) Procedures that direct the overall QC and Compliance review functions within the organization Corrective Action Tracking

20 Compliance and Internal Audit You Must Develop: Fair Lending Policy Predatory Lending Policy OFAC Policy Internal Audit Review Plan Internal Audit Significant Finding Report

21 Technology You Must Develop: Disaster Recover Plan Firewall Tests Security Tests

22 Servicing If you outsource this function: Sub-servicing monitoring plan If you do internal servicing: Written policy and procedures Custodial Accounts will be reviewed Servicing QC

23 Thank you! Annemaria Allen The Compliance Group, Inc. 920 W. San Marcos Blvd. Ste. 1 San Marcos, CA

24 We will now take questions for the presenter followed by some committee administration items. If you would like to ask a question, please press the * key followed by the 1 key (*1) on your touch-tone phone now. Questions will be taken in the order in which they are received. If at any time you would like to remove yourself from the questioning queue, press *2. 24

25 Thank you for joining us today. Please mark your calendar for our next call which will be held as follows: Topic: Speaker: Thursday, June 23, :00 a.m. Pacific Dodd-Frank Joseph T. Lynyak, III, Venable 25