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Mortgage Lending Bulletin


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Mortgage Lending Bulletin

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Mortgage Lending Bulletin

  1. 1. More Mortgage Info MAY 11, 2010 l Vol. 2, No. 7 ABA RESOURCES Was this forwarded to you? Click here to receive it directly.  Resources & ABA Posts Update to ABAWorks on RESPA Upcoming Events The ABAWorks on RESPA has been updated to reflect certain additions from ABAWorks - RESPA  the April FAQs issued by HUD, and to incorporate various elements of Original Publication Date: clarification. This RESPA Guide is free for members and can be downloaded at April 14, 2010 The implementation of these new regulations is ongoing, so ABA will continue to issue updates to this Guide as HUD issues new guidance ABA will update this ABAWorks and interpretations. ABA welcomes your views and critiques on the Guide's frequently as new guidelines become available. contents. To get updates on the most For more information, contact ABA’s Rod Alba. recent version of the ABAWorks on RESPA, click Supreme Court Declines Review of FLSA Case here and you will receive an e- mail as the updates become available. This week, the Supreme Court of the United States declined to review a decision by the United States Court of Appeals for the Second Circuit that may The most updated version of have a significant impact upon the classification of bank personnel under the the ABAWorks on RESPA Fair Labor Standards Act (FLSA). The case, J.P. Morgan Chase v. Whalen, can be downloaded here. challenged the classification of mortgage loan underwriters as “administrative” employees, making them exempt from the FLSA’s overtime requirements. To ABAWorks – Regulation Z qualify for the FLSA’s “administrative” exemption, an employee must: 1) perform The ABAWorks on Regulation work that is “directly related to management policies or general business Z is designed to help you better operations” and 2) they must “customarily and regularly exercise discretion and understand and make independent judgment.” The Second Circuit found that the position of loan decisions about whether and underwriter was essentially a “production” position because they “produce” one how to offer "higher-priced of the bank’s product – loans – and have limited discretion in carrying out their mortgage loans" and to help duties. The Second Circuit emphasized that “production” work need not lead to you reorganize your the creation of a tangible item, and that a position that is engaged in the compliance framework to take creation of an intangible product such as a loan could be non-exempt. into account the new requirements that apply to all mortgages. Click here. J.P. Morgan Chase (with amicus support from the ABA) petitioned the Supreme Court of the United States to review the decision. The petition for review was denied by the Court on May 3. RESPA and TILA Briefing CD now available. In a separate but related track, the Department of Labor issued an Learn More “Administrator’s Interpretation” regarding the “exempt” status of mortgage loan officers. This opinion was reported in the March 24th edition of this Bulletin. The Department of Labor now takes the position that mortgage loan officers “do not ABA Mortgage Markets qualify as bona fide administrative employees” who are exempt from the Committee Discussion on overtime compensation requirements of the FLSA. RESPA Compliance and more. Listen now For more information, contact ABA’s Rod Alba or Cris Naser. Fannie to Tighten ARMS, Interest-Only Qualifications June is National Homeownership Month.
  2. 2. More Mortgage Info On April 30th, Fannie Mae announced that it will tighten lending standards for To help celebrate, here are adjustable rate mortgages and interest-only loans it backs. Under the new communications tools that you guidelines, eligibility for an interest-only mortgage backed by Fannie Mae will can use to call attention to the require that borrowers now make at least a 30 percent down payment, carry a contributions to homeownership made by credit score of at least 720 and have a 24-month reserve that would cover banks and thrifts. Click here. mortgage payments and other housing expenses in the event of financial adversity. For adjustable rate mortgages, Fannie announced that applicants must qualify for the loan’s initial interest rate plus two percentage points or the maximum interest rate of the ARM. Fannie says it will no longer fund balloon mortgages, except with certain special approvals. Fannie states that their goal is to make sure consumers can sustain their mortgages and remain in their homes over the long term, while still allowing lender partners to offer a range of mortgage products for qualified borrowers. All loans not meeting the new guidelines must be purchased as whole loans on or before August 31, 2010, or delivered into MBS pools with issue dates on or before August 1, 2010. For more information, click here. The Mortgage Lending Bulletin is a service of the American Bankers Association. ABA Members: To unsubscribe and to manage your subscriptions, please visit ABA E-Mail Bulletins and check or uncheck the appropriate boxes.
  3. 3. More Mortgage Info For other inquiries, please contact: Rod J. Alba, Vice President, Mortgage Finance & Senior Regulatory Counsel, at American Bankers Association 1120 Connecticut Ave. NW Washington DC 20036