On July 30, 2008, the Board of Governors of the Federal Reserve System (“Board”) published in the Federal Register (pages 44522 – 44614) its final rule (the “final rule”) amending Regulation Z and its Official Staff Interpretations. This memorandum will address only that section of the final rule that adds new Section 226.36 to provide new protections for all closed-end loans secured by a consumer’s principal dwelling. Section 226.36 is effective on October 1, 2009.
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Regulation Z Amendments to Advertising (Sections 226.16 and 226.24)
On July 30, 2008, the Board of Governors of the Federal Reserve System (“Board”) published in the Federal Register (pages 44522 – 44614) its final rule (the “final rule”) amending Regulation Z and its Official Staff Interpretations. This memorandum will address only those sections of the final rule that amend the advertising requirements of Regulation Z set out in Sections 226.16 (open-end home equity plans) and 226.24 (closed-end consumer credit transactions). These advertising amendments will impact the way creditors advertise open-end home equity plans and closed-end consumer credit transactions for advertisements occurring on or after October 1, 2009.
Mortgage Credit Certificate Program
In the November 28, 2008 issue of the Texas Register (Volume 33, Number 48), the Texas Department of Housing and Community Affairs published notice of its Mortgage Credit Certificate Program. For those clients who qualify and are interested in participating in this program, the Notice published in the Texas Register is reprinted below.
RESPA: Final Rule amends Regulation X effective January 16, 2009
The Department of Housing and Urban Development (“HUD”) has published its final rule amending Regulation X (Federal Register, November 17, 2008 issue, Pages 68204 – 68288). The final rule has two effective dates. Certain sections of the final rule are effective January 16, 2009, and other sections of the final rule are effective January 1, 2010. This memorandum will address those sections of the final rule that are effective January 16, 2009. A subsequent memorandum will address those sections of the final rule that become effective January 1, 2010.
RESPA: Final Rule amends Regulation X (Federal Register, November 17, 2008, Pages 68204-68288)
On November 17, 2008, the Department of Housing and Urban Development (“HUD”) published its final rule amending Regulation X and 24 CFR §203.27 [Single Family Mortgage Insurance]. The final rule has two effective dates. Certain sections of the final rule are effective January 16, 2009, and we will be issuing a memorandum on those sections in the near future. Other sections of the final rule are effective on January 1, 2010, and we will be issuing a second memorandum on those sections at a later date. The purpose of this memorandum is simply to notify you of HUD’s publication of the final rule and to provide you with the web pages from which you may download a copy in either hypertext markup language (HTML) or portable document format (PDF).
Mortgage Broker and Loan Officer Rules
The Finance Commission of Texas (the “Commission”) has adopted amendments to §80.2, concerning definitions; §80.3, concerning licensing – general; §80.5, concerning renewals; §80.6, concerning sponsorship and termination of sponsorship; §80.10, concerning prohibition on false, misleading, or deceptive practices and improper dealings; §80.12, concerning display of license verification and license record changes; §80.13, concerning books and records; §80.18, concerning enforceability of liens; and, §80.23, concerning annual reports. Notice of the Commission’s adoption of these amendments was published in the October 31, 2008 issue of the Texas Register (Vol. 33, No. 44). These amendments were adopted without changes to the text of the proposed amendments published for comment in the August 22, 2008 issue of the Texas Register (Vol. 33, No. 34). See this firm’s August 25, 2008 memo advising you of the proposed amendments and the Commission’s request for comments.
FHA Provides Underwriting Guidance on Converting Existing Homes to Rentals – Mortgagee Letter 2008-25
On September 19, 2008, FHA issued Mortgagee Letter 2008-25 to provide underwriting guidance on FHA insured transactions where a principal residence is being vacated in favor of another principal residence. Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the principal residence being vacated to qualify for the FHA mortgage on the new principal residence, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages.
Revised FHA Down Payment and Maximum Mortgage Requirements – Mortgagee Letter 2008-23
Pursuant to the requirements of the Housing and Economic Recovery Act of 2008 (HERA) that become law on July 30, 2008, FHA is revising its down payment and maximum mortgage requirements effective January 1, 2009, for all new FHA case number assignments on or after that date. A copy of Mortgagee Letter 2008-23 (ML 2008-23) is attached to this memorandum and provides some guidance regarding the revised down payment and maximum mortgage requirements for single family mortgages insured by FHA.
New FHA Mortgage Insurance Premiums – Mortgagee Letter 2008-22
Effective October 1, 2008, for new FHA case number assignments on or after that date, FHA will no longer base its mortgage insurance premiums on a combination of credit bureau score and loan-to-value ratio (Mortgagee Letter 2008-16). The new premiums (upfront and annual) to be implemented for all loans for which a case number is assigned on or after October 1, 2008, are described in Mortgagee Letter 2008-22. A copy of Mortgagee Letter 2008-22 (ML 2008-22) is attached to this memorandum.
Home Equity Lending – Revisions to Interpretations §§153.22, 153.84
The Finance Commission of Texas and the Texas Credit Union Commission (“Commissions”) have jointly revised the following home equity Interpretations: §153.22 (Copies of Documents) and §153.84 (Restrictions on Devices and Methods to Obtain a HELOC Advance) to comply with the December 4, 2007 amendments to §§50(a)(6) and (t)(3), Article XVI, of the Texas Constitution. These revised Interpretations are published in the July 4, 2008 issue of the Texas Register and became effective July 10, 2008.