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California
In accordance with the California Civil Code, users submitting California HELOCs with no initial draw amount will now receive a WARNING message, instead of a FAIL message.
The California Civil Code allows a prepayment penalty within 5 years from the execution date of the mortgage or deed of trust. A lender may impose a prepayment penalty on any prepaid amount in a 12-month period in excess of 20% of the original principal amount of the loan, but cannot exceed 6 months' interest on the amount prepaid in excess of the 20%. For purposes of the "original principal amount," the system uses the initial draw amount. If no initial draw amount was submitted, the system cannot determine whether the prepayment penalty (or early termination fee) exceeds applicable thresholds (Cal. Civ. Code 2954.9 and 2954.11), and a WARNING message will be issued on the Compliance Review Report.
Enterprise
This rolls back the update made in CER-12914 in the Encompass Compliance Service (ECS) August Rules Release. Users submitting Veterans Affairs (VA) Purchase Money loans to ECS will now continue to receive messages relating to the Qualified Mortgage (QM) Points and Fees Threshold.
Federal
The system-calculated Closing Disclosure Total of Payments amount has been updated to display as rounded to two decimals.
On August 27, 2018, the Bureau of Consumer Financial Protection (CFPB) published updated dollar amounts for several provisions in Regulation Z; specifically amounts for provisions implementing amendments to TILA under the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). To view the CFBP's updates, click here (12 CFR Part 1026).
In accordance with the CFPB's updates, Encompass Compliance Service (ECS) has updated the Qualified Mortgage (QM) Points and Fees Thresholds, the high cost points and fees threshold tests for HOEPA, and the high cost points and fees thresholds for the following states: Colorado, Florida, Illinois, Kentucky, Maryland, Pennsylvania, Texas.
Users submitting loans to ECS will receive thresholds based on the consummation date on the loan:
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Loans with a consummation date on or after January 1, 2018 will receive the revised 2018 thresholds.
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Loans with a consummation date prior to January 1, 2018 will receive the 2017 thresholds.
The Department of Veterans Affairs released a new policy guidance on Interest Rate Reduction Refinancing Loans (IRRRL) disclosures as of February 1, 2018. This update incorporates the revised VA IRRRL recoupment calculations under ATR/QM Review effective for loans closed on and after April 1, 2018.
To view Circular 26-18-1, click here.
CER-11976
South Carolina
Mortgage Brokers licensed in South Carolina can now make loans (act as the lender) with the Origination Type "Correspondent" when the Current Entity Code is "Lender". They can also still make loans if the Table Funded checkbox is selected, as previously allowed.
Create FHA Annual MI Test to Compare Submitted Rate and Term vs Actual Rate and Term
A new Mortgage Insurance (MI) test has been created to compare the submitted monthly MI rate and term to the actual FHA monthly MI rate and term on FHA loans. If they do not match, users will receive an Alert message.
For FHA Loans (203(b), 234(c), or 203(k)) with a Case Assignment Date on or after October 1, 2008, the system will validate whether the annual mortgage insurance premium submitted by the user matches the actual annual mortgage insurance premium, based upon the applicable values of the FHA loan.
For FHA (203(b), 234(c), or 203(k)) Loans with a Case Assignment Date on or after June 3, 2013, the system will validate that the maximum duration permitted for the FHA Annual MIP:
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LTV less than or equal to 90.00%: The annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first.
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LTV greater than 90.00%: FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.
CER-12964
Texas
Create Pass Messages for Texas 2% and 3% Thresholds
Users submitting loans that do not exceed the Texas Constitution 2% and 3% thresholds will now receive PASS messages under the Rule Details on the Compliance Review Report. The Texas Constitution prohibits fees from exceeding 2% and 3% of the principal balance on a non-purchase money loan. (Tex. Const. Art. 16 Sec. 50(a)(6)(E); 7 TX ADC Sec. 153.5)
CER-13026
Update Texas - First Payment Date (Non-Purchase)
The Texas - First Payment Date (Non-Purchase) rule has been updated to use two months, instead of 60 days, to determine whether a Texas Home Equity Loan has exceeded the first payment date threshold. Under the Texas Constitution, the loan must be scheduled to be repaid beginning no later than two months from the date the extension of credit is made. (Tex. Const. Art. XVI Secs. 50(a)(6)(L), (t)(8); 7 TX ADC 153.11).
CER-13018
A new Mortgage Insurance (MI) test has been created to compare the submitted monthly MI rate and term to the actual FHA monthly MI rate and term on FHA loans. If they do not match, users will receive an Alert message.
For FHA Loans (203(b), 234(c), or 203(k)) with a Case Assignment Date on or after October 1, 2008, the system will validate whether the annual mortgage insurance premium submitted by the user matches the actual annual mortgage insurance premium, based upon the applicable values of the FHA loan.
For FHA (203(b), 234(c), or 203(k)) Loans with a Case Assignment Date on or after June 3, 2013, the system will validate that the maximum duration permitted for the FHA Annual MIP:
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LTV less than or equal to 90.00%: The annual MIP will be assessed until the end of the mortgage term or for the first 11 years of the mortgage term, whichever occurs first.
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LTV greater than 90.00%: FHA will assess the annual MIP until the end of the mortgage term or for the first 30 years of the term, whichever occurs first.
Users submitting loans that do not exceed the Texas Constitution 2% and 3% thresholds will now receive PASS messages under the Rule Details on the Compliance Review Report. The Texas Constitution prohibits fees from exceeding 2% and 3% of the principal balance on a non-purchase money loan. (Tex. Const. Art. 16 Sec. 50(a)(6)(E); 7 TX ADC Sec. 153.5)
The Texas - First Payment Date (Non-Purchase) rule has been updated to use two months, instead of 60 days, to determine whether a Texas Home Equity Loan has exceeded the first payment date threshold. Under the Texas Constitution, the loan must be scheduled to be repaid beginning no later than two months from the date the extension of credit is made. (Tex. Const. Art. XVI Secs. 50(a)(6)(L), (t)(8); 7 TX ADC 153.11).
