With a home-equity conversion mortgage, seniors can finance the purchase of a new home without monthly payments
Source: A Reverse Mortgage to Buy a Home? Here’s How – WSJ
Category Archives: Real Estate Lawyer
Veterans Who Have Served Our Country Have Found The Reverse Mortgage Has Served Their Needs | Beth Paterson, CRMP, NMLS #342859 | LinkedIn
The NEW Reverse Mortgage
It is my pleasure to specialize in the origination of Home Equity Conversion Mortgages (HECM) for the benefit of our clients. These are best known as Reverse Mortgages. The type of Reverse Mortgage we offer, and the most utilized product available in Colorado, is the one insured by the Federal Housing Administration (FHA) of the US Department of Housing and Urban Development (HUD) as further discussed by the Federal Deposit Insurance Corporation (FDIC) and as discussed by the Consumer Financial Protection Bureau (CFPB).
- The minimum age for a borrower is 62.
- A non-borrowing spouse under age 62 gets to be on the deed.
- Reverse mortgages are extremely well protected. Guaranteed by HUD; Insured by FHA.
- One of the protections is the requirement that borrowers receive counseling from a third-party HUD Certified Housing Counselor – often at no cost to the prospective borrower.
- No monthly out-of-pocket mortgage payments required.
- The reverse mortgage is due once the home is no longer the primary residence of the borrower(s) or the non-borrowing spouse.
- Out of pocket expenses are limited to property taxes, insurance and HOA fees (when applicable).
- The property is to be kept in good condition.
- The interest rate is not determined by income or credit score.
- The interest rate is based on the program chosen (Fixed Rate or Monthly/Annual Adjustable Rate
- Flexibility on how funds are received (traditional):
- In an interest-bearing line of credit and/or,
- As monthly payments and/or,
- In a lump sum payment and/or,
- In any combination of the above methods.
- There are no restrictions on how the funds may be used.
- The title remains in the borrower’s name. The bank does not own your home. You may sell at any time.
- There is no equity sharing. Your equity is your equity.
- Credit review – The credit review is minimal providing there have been no serious derogatory credit issues, such as too much debt or unresolved credit obligations in the past two years.
- There is no minimum credit score requirement.
- Financial Assessment (FA) – The financial underwriting is minimal. The lender must be assured the borrower has both the ability and the will to pay the property charges. Property charges are real estate taxes, property insurance and home-owners associations, when applicable.
- Under FA, a full or partial set aside account may be required to pay taxes and insurance.
- Closing costs are comparable to other FHA insured home loans.
- There are no mark-up or “junk” fees allowed.
- One may still receive Social Security and Medicare benefits with a reverse mortgage.
- The reverse mortgage is a loan; the proceeds are not treated as income.
- There is no prepayment penalty; the borrower may pay-off the reverse mortgage at any time with no penalty.
- Reverse mortgages are non-recoursable; if more is owed than the value of the property, the lender may not collect the deficient amount from either the borrower or the estate.
- Heirs may sell the property and pay off the mortgage. In the event more is owed on the property than the value of the property, the heirs may purchase the property for 95% of the market value as opposed to paying the full amount of the mortgage.
- Reverses Mortgages are also used for Purchase Money. Click here to learn more.
- Security is provided for the underage 62 spouse. Click here for more information.
DISCLAIMER: This publication does not represent that any of the information provided is approved by HUD or FHA or any US Government Agency.
DISCLOSURE: The information provided herein is not intended to be an indication of loan approval or a commitment to lend. Additional program guidelines may apply. Information is subject to change without notice.
Financially Speaking™ James Spray MLO, | CO LMO 100008715 | NMLS 257365 | Updated May 8, 2022
Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.
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The Basics of Mortgage Lending and Mortgage Servicing
The following is not written as an extensive discussion about the roles of mortgage lenders or mortgage servicers. Rather it is written to provide a brief and very general overview of these two different and separate functions within the residential mortgage industry.
Quoting from the CFPB, “Your mortgage lender is the financial institution that loaned you the money. Your mortgage servicer handles the day-to-day tasks of managing your loan. Your loan servicer typically processes your loan payments, responds to borrower inquiries, keeps track of principal and interest paid, manages your escrow account, and may initiate foreclosure if you miss too many loan payments. Your servicer may or may not be the same company that gave you your loan.” In other words, the mortgage lender may also be the mortgage servicer.
How does the mortgage lender get paid? The mortgage lender may get paid with a combination of an origination fee and the spread between the interest rate paid for the funds it lends and the interest rate charged to the borrower for those funds. Or the mortgage lender may just get paid on the spread between the interest rate paid for the funds and the interest charged to the borrower for those funds.
How does the mortgage servicer get paid? Generally speaking, there are four streams of income for the servicing function.
First, the servicer gets a servicing fee. The servicing fee is typically calculated as a percentage of the outstanding principal balance of the loans serviced. Generally speaking, it is interest on the principal which ranges between one-eighth (0.125) and one-half (0.50) percent and which is retained by the servicer.
Second, the servicer is entitled to keep the “float” on the mortgage payments received. To illustrate: the borrowers remit payments to the servicer on the first of the month, however the servicer is not be required to remit the funds to the lender/mortgagee until the end of the month. The result is that the servicer gets use of the funds for the most of the year with the exception of the few days each month when the servicer must remit to the lender/mortgagee.
Third, the servicer retains any supplementary fees it collects. The promissory note of the mortgage specifies the amount and payment of late fees as well as any other fees or costs related to the collection of late fees.
Finally, the servicer earns revenue from the fees and interest generated by funding mortgage servicing advances.
Financially Speaking™ James Spray, RMLO, CNE, FICO Pro | CO LMO 100008715 | NMLS 257365
Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct for your situation. This information is not legal advice and is for guidance only. You may reproduce this information in whole and not in part, providing you give full attribution to James Spray.
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The QRM Rule: Residential Mortgage Rules
Official Device To Prove Future Income
2014 > Qualified Mortgage (QM) or Qualified Residential Mortgage (QRM) Lending Documentation Requirements and,
Ability To Repay (ATR) Documentation Requirements:
Verified minimum of previous 24 months wage earner employment or,
Confirmed previous 24 months self-employed (no blending of self-employed with wage earner); we’ll call this the Bernake syndrome. The former Federal Reserve chairman, speaking in Chicago told the moderator: “just between the two of us, I recently tried to refinance my mortgage and I was unsuccessful in doing so.”The lender must establish the likelihood of continued employment/income for the next 36 months.
The QM/QRM rule became effective on January 10, 2014. Residential mortgages subject to Reg. Z (1-4 unit owner-occupied homes) require the borrower’s income/assets are to be fully documented and verified.
- Two months of the most recent year to date (YTD) pay advice.
- Wage-earner income must be verified with Federal and State filed 1040’s + all schedules + W-2(s) + 1098(s) + 1099(s).
- Self-employed: Copies of last two years Personal and Business returns including all Schedules, 1099’s, Form 1065 plus K-1, Limited Partner K-1 Forms, sub-chapter S Corporation 1120S plus K-1 Forms, Corporation form 1120 and year to date P&L Statement plus Balance Sheet.
- If income taxes are e-Filed, the entire e-Filed digital filing is required.
- Must be able to reasonably project borrower’s income and debts over the next three years.
Asset and Other Income Documentation
- Previous two months bank statements – all banks, all accounts with all pages including blank pages.
- Current statements of all investment accounts with all pages including blank pages.
- Current statements of all retirement accounts with all pages including blank pages.
- Current leases to prove leasehold income.
- Other documents as may be required to prove income.
Standards
- Payment to income ratio (PTI) – Conventional – 28%
- Debt to income ratio (DTI) – Conventional – 43%
- PTI – Government (FHA, VA, USDA) – 38%
- DTI – Government – 44%
- FICO® Scores 640+*
In the present regulatory climate many lenders impose underwriting rules (referred to as “overlays”) that are more restrictive than required by law or regulation. One set of overlays: bankruptcy, foreclosure, short-sale and deed-in-lieu of foreclosure prevent entry or reentry to the mortgage market for certain time periods as displayed here. Points and fees which may charged to borrowers are defined and limited. For the details, click here.
Exceptions to QRM and ATR
Investment properties are exempt. These are provably non-owner occupied residential properties. The proof is provided with 1040’s and schedules as well as the income shown with bank statements and an accompanying lease agreement. Credit Unions and banks serving underserved communities also have certain exemptions. As well, there are non-QM loans which do not feature low down-payment options or highly favorable rates and terms.
Media outtakes/observations from the industry biased view:
“…lenders are imposing higher than usual credit scores and other tough standards on people applying for government-backed mortgages. The lenders say they’re exceeding the government’s own criteria in a bid to insulate themselves from more financial penalties and lawsuits. And several analyses suggest that millions of potential home buyers are getting shut out as a result.” The Washington Post recently published: Why the next pick for U.S. Attorney General has huge implications for the housing industry.
Critique: For a well thought critical observation of potential serious failures of the discussed reforms, read QRM’s Missed Opportunities for Financial Stability and Servicing Reform by Alan Levitin. Mr. Levitin states in part that “… QRM was (a) missed chance to fix servicing for both investors and consumers.”
*On FICO® Scores, the best rates at the lowest cost are available for borrower with a minimum 740 middle score based on the FICO® models used by lenders which are also used by Fannie Mae and Freddie Mac. With lower scores one may expect a higher rate with additional underwriting overlays such as lower DTI and LTV, more liquid assets and higher down payments among other overlays.
Financially Speaking™ – James Spray, RMLO, CNE, FICO Pro CO LMO 100008715 | NMLS 257365 |Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.
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FICO 9 and Mortgages
For this post, we are simply quoting from other media sources to help our readers understand the new FICO 9 credit scoring model. In spite of what you may have read, the FICO 9 credit scoring model will not help significantly, if at all, with home mortgages. At least not anytime soon. FICO 9 will be utilized sooner by vehicle and credit card lenders.
On August 23, 2014, The Motley Fool published Why New FICO Score Rules Could Be a ‘Game-Changer’ In Helping You Obtain a Loan stating, in part, the following: “According to FICO, the median FICO score for consumers whose only major derogatory references are unpaid medical debts is expected to increase by 25 points.
FICO’s new more lenient model should also benefit collection agencies. Consumers with unpaid medical debts now have an incentive to settle, knowing that FICO will stop including in its calculations any record of a consumer failing to pay a bill, if the bill has been paid or settled with a collection agency.
Auto and Credit Card Lenders Will Be First to use FICO 9
“This is great news for collection agencies,” Rood said. “It provides laggards with an incentive to pay up. Before these changes, you were incentivized not to pay off your debt. The last thing you wanted to do was trigger a new ‘date of last activity’ report for an old debt, say, a debt from 2008. Again, you were just better off not paying it because older debts weighed less heavily against you on your credit report than new debt. The new scoring model will likely be implemented by credit card and auto lenders first. Mortgages typically lag in adopting new scoring models.”
Mortgage Lenders Will Be Last to use FICO 9
The New York Times in their article of August 7, 2014 titled: Credit Scores Could Rise With FICO’s New Model explained it very well. “For consumers to see any benefit, however, lenders have to adopt the new scoring techniques. FICO last introduced a new model, called FICO 8, in 2008. Since then, FICO said that about half of its customers had started using that model.
Mortgage lenders have been slower to adopt new scores, and most are using even older versions, experts said, because Fannie Mae and Freddie Mac are still using them in their own underwriting software. Fannie and Freddie did not say whether they had plans to switch to the updated FICO score that weighs medical collections less heavily. But they both said they were confident in the tools they use.”
Finally, law professor and author James Kwak, states the facts very simply: “…the financial district of the Western societies, Wall Street, and outdated software may very well be the norm not an exception.”
The Take Away
The take away on all this, according to Ted Rood of the Mortgage News Daily is that “(home and mortgage) buyers should keep paying those medical bills and avoid collections to ensure their loan approvals!” This statement was excerpted from the article titled: New Credit Score Model Would be Great for Housing! Too Bad it Won’t be Used.
Final Word
Our regular readers already know of our thoughts on FAKO credit scores and the release of FICO 9 adds yet a new dimension. Consumers purchasing their scores from the myFICO site will get real FICO scores but they are likely not going to be the scores which mortgage lenders use. So what can you do? You can write or call elected officials and ask that they help Fannie Mae and Freddie Mac catch up with the times.
More on FICO 9 from the FICO Blog.
UPDATE: 09/22/15 | GSEs Struggle to Update Credit Scoring Models
Financially Speaking™ James Spray, RMLO, CNE, FICO Pro CO LMO 100008715 | NMLS 257365 |September 23, 2014 | Updated September 22, 2015 Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.Share this:
FNMA Updated Bankruptcy, Foreclosure, and Short Sale Policies
Fannie Mae updated its policies regarding significant derogatory credit events, which in some cases allows more borrowers to reenter the housing market. These updates are reflected in the embedded chart: How long after bankruptcy or foreclosure must you wait to get a mortgage?
- Waiting Period for Mortgage Debt Discharged Through Bankruptcy
The borrower is now held to the bankruptcy waiting period (4 years) and not the foreclosure waiting period (7 years). This is true even if a foreclosure action is subsequently completed to reclaim the property in satisfaction of the debt. This is a significant and favorable change. From the FNMA underwriting guidelines [B3-5.3-07, Significant Derogatory Credit Events — Waiting Periods and Re-establishing Credit (08/07/2019)]: “Foreclosure and Bankruptcy on the Same Mortgage If a mortgage debt was discharged through a bankruptcy, the bankruptcy waiting periods may be applied if the lender obtains the appropriate documentation to verify that the mortgage obligation was discharged in the bankruptcy. Otherwise, the greater of the applicable bankruptcy or foreclosure waiting periods must be applied.”
[At this time FHA/VA/USDA require a two year waiting period following discharge and a three year period post-foreclosure.]
- Short Sale or Deed-in-Lieu Waiting Period
The waiting periods are being updated to establish a standard four year waiting period, with a two year waiting period permitted providing a borrower has extenuating circumstances*.
[FHA/VA/USDA require a three year waiting period following Short Sale or Deed-In-Lieu.]
- Mortgage Debt
As a new policy, charge-offs of mortgage accounts now require a four year waiting period following this derogatory credit (two years if the borrower can demonstrate extenuating circumstances*).
Number one became effective July 29, 2014; two and three are effective for mortgage loans with applications dated on and after August 16, 2014.
How do you know if Fannie Mae owns/owned your mortgage? Click on FNMA Loan Lookup.
Based on past experience, it will take time for the mortgage origination industry to catch up with these new policies. Further, it is likely that some will not accept these policies within their own underwriting guidelines.
*Given the reliance on automated underwriting for compliance purposes, few lenders will delve into the perceived risk of manually underwriting extenuating circumstances for fear of losing the QRM safe harbor. QRM standards were implemented on January 10, 2014. The vast majority of lenders are staying squarely inside the New Rules box, so to speak.
Reference: Fannie Mae Selling Guide Announcement SEL-2014-10
Image Credit: Reuters/Jonathan Ernst
Financially Speaking™ James Spray, MLO, CNE, FICO Pro CO LMO 100008715 | NMLS 257365 |August 10, 2014 | Updated September 5, 2020Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.
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Reverse Mortgages and the Under-Age 62 Spouse
New Rule on Reverse Mortgages
A new rule has been issued which allows that a reverse mortgage (HECM) shall protect borrowers even when one spouse is younger than 62. Both the purchase or traditional reverse mortgage amount will be based on the younger spouse’s age. Given the number of variables, and the complexity with how these new factors work please contact your trusted reverse mortgage loan originator.
For all FHA case numbers issued on or after August 4, 2014 this revolutionary new rule becomes effective. This rule will allow younger spouses of borrowers that no longer live in their home to stay in their home without the threat of foreclosure. In a nutshell, the requirements are this:
- They must have been married when the mortgage was taken,
- Have remained married,
- The surviving spouse shall continue to pay taxes, insurance, and HOA fees (if applicable).
Prior to August 4, 2014, the full repayment of the reverse mortgage was due and payable following the death of the borrower, leaving the surviving spouse whose name was not on the mortgage in the lurch for the debt or forced to sell the home. This change defers that settlement until after the surviving spouse’s death.
This new rule comes at a cost. Lenders factor in the age of the younger spouse when calculating the reverse mortgage payout; in a nutshell, the younger the spouse the longer the loan will be outstanding resulting in the lesser payout.
Reference: FHA Mortgagee Letter: ML 2014-07
Readers of this blog may also wish to read: What Is A Purchase Reverse Mortgage? as well as The New Reverse Mortgage.
Notice: The information provided is not intended to be an indication of loan approval or a commitment to lend. Additional program guidelines may apply. Information is subject to change without notice.
DISCLAIMER – This post does not represent that any of the information provided herein is approved by HUD or FHA or any US Government Agency or Department.
Financially Speaking™ James Spray, MLO, CNE, FICO Pro CO LMO 100008715 / NMLS 257365 | August 2, 2014Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.
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Eliminating Mortgage Insurance

Is it Necessary to Refinance to Eliminate Private Mortgage Insurance?
In short, the value of the property must exceed the loan balance by 20% due to additional payments made such that the principal balance has been reduced to 80% and the request has been made in writing to eliminate the Private Mortgage Insurance (PMI).
The answer depends on a few factors. If the loan type is a conventional mortgage and had a greater than 80% loan to value and was closed on or after, July 29, 1999 the following applies per the Homeowner Protection Act as discussed by the Consumer Finance Protection Bureau (CFPB):
“The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your lender. You can also make this request earlier if you have made additional payments to reduce the principal balance of your mortgage to 80 percent of the original value of your home.”
The payment history must be good and the payments current.
Your request must be in writing to the proper address in an acceptable format such as the RESPA letter.
The lender/servicer may require you to provide an appraisal to prove the value of the property has not declined below value when the loan was funded. Note: This is not to prove that your home value has appreciated.
The lender/servicer may require you certify that there are no junior liens (second mortgage, HELOC, judgment or tax liens).
Send a QRM your servicer if you are unable to locate the PMI disclosure form you received at closing.
If you do not contact your servicer to eliminate the PMI, the PMI is to automatically drop off once the loan has been paid down to 78% of the funded loan.
Click here for the CFPB link on eliminating PMI.
Click here for the August 4, 2015 CFPB update for mortgage servicers.
If you have Lender Paid Mortgage Insurance (LPMI) the only way to eliminate LMPI without selling the property is to refinance. As always, this is a business decision. How much will you save in what period of time by eliminating the LPMI. It’s worth noting that LPMI may be tax deductible (check with your tax advisor to make sure).
Is it Necessary to Refinance to Eliminate FHA Mortgage Insurance Premium?
If the loan is an FHA Insured mortgage it has Mortgage Insurance Premium (MIP). For mortgages with an FHA case number assignment date on or after June 3, 2013, the FHA monthly mortgage insurance can only be terminated by the servicer or holder if the mortgage is paid in full before the maturity date. The exception to this rule is the FHA Streamline Refinance.
Again generally speaking, providing accelerated payments were made such that the unpaid principal balance is 78% or less of the original loan balance, the MIP can be eliminated prior to the originally scheduled cancellation date. For several years prior to the change implemented on June 3, 2013 the mandatory time for the MIP was 84 months.
In short, if you wish to eliminate the MIP prior to the termination date of the MIP, as explained by the CFPB, you’ll find it necessary to refinance.
Can You Refinance to Eliminate Mortgage Insurance?
Providing the property has sufficient equity to eliminate PMI or MIP (20% equity) and there are no junior liens (above discussed), the mortgage loan may be refinanced into a conventional loan eliminating the PMI or MIP. As always, this is a business decision. How much will you save over what period of time by eliminating the PMI or MIP. Next calculate your costs in purchasing another first mortgage. Remember, there is no such thing as a free lunch.
If You Are Being Solicited to Refinance Here’s a Suggestion:
Before investing the time and expense of applying for a refinance, make sure the solicitor is in fact both an NMLS Registered Loan Originator as well as Licensed by the CO Division of Real Estate or, the state in which you reside; if they are, obtain their NMLS Number and their CO License Number as well as their contact information. If they are neither, they are merely a lead generator and get paid only by the number of leads they generate. This doesn’t mean that which they are selling can’t be done; it just means you may wish to be extra vigilant as they may not have your best interests at heart.
A licensed mortgage loan originator has a much higher level of interest in helping to protect your interests. Therefore, you may wish to avoid the lead generator altogether. Discuss your refinance possibility with your State Licensed, NMLS registered loan originator.
The Bottom Line: Before You Pay For an Appraisal
Make sure you are dealing with someone licensed and make sure it makes business sense prior to shelling out several hundred dollars for an appraisal. With the refinance there will also be many more hundreds or perhaps several thousand dollars in new costs to purchase a new mortgage. Not insignificant is how many more months or years the refinance will add to your total cost. Consider as well how long you really will keep the house on which you are contemplating the refinance.
Image credit: Google Images
Financially Speaking™ James Spray, RMLO, CNE, FICO Pro |CO LMO 100008715 / NMLS 257365 | August 8, 2015
Notice: The information on this blog is opinion and information. While I have made every effort to link accurate and complete information, I cannot guarantee it is correct. Please seek legal assistance to make certain your legal interpretation and decisions are correct. This information is not legal advice and is for guidance only. You may use this information in whole and not in part providing you give full attribution to James Spray.
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QWR: The RESPA Letter
Federal Reserve Board Building
QWR: The RESPA Letter
Most reading this post are reading it for a particular reason which is to learn about writing a letter to a mortgage lender and/or servicer regarding a specific problem or situation such as requesting the mortgage servicer report your payments to the credit bureau(s). For some, it may be that your mortgage servicer or bank is reporting incorrect information or you may need specific documentation. For others, perhaps this is being read for informational purposes. In any event, we trust the reader finds this information helpful.
Step 1. Contact your mortgage servicer for the correct address for legal correspondence. You must use the legal (registered) address of the servicer. Some servicers actually have a specific address for a Qualified Written Request (QWR). This is a different address than where you mail the payment or from where you get the periodic statements or notices. This procedure was established per the Real Estate Settlement Procedures Act (RESPA).
Step 2. You may utilize the following template provided by HUD for your QWR. Or you may click here to open and read the information or you may copy and paste the pertinent paragraphs (opening and closing) as show below. Focus your thoughts and keep your letter brief and specific to the topic. 
“Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]
This is a “qualified written request” under Section 6 of the Real Estate Settlement Procedures Act (RESPA).
I am writing because:
- Describe the issue or the question you have and/or what action you believe the lender should take.
- Attach copies of any related written materials (as applicable).
- Describe any conversations with customer service regarding the issue and to whom you spoke.
- Describe any previous steps you have taken or attempts to resolve the issue.
- List a daytime telephone number in case a customer service representative from the legal department wishes to contact you.
Sincerely, [Your name – Printed and Signed]
I understand that under Section 6 if RESPA you are required to acknowledge my request within 20 business days and must try and resolve the issue within 30 business days.”
If you are satisfied with the resolution to your situation, you may wish to compliment the servicer by sending a note to the Consumer Financial Protection Bureau (CFPB or Bureau) via their Comment Form.
- If, on the other hand, you have not received a reply at the end of the allotted 20 business days – Twenty business days is about a month; for your convenience click here for a business day calculator – we suggest repeat the above process and if still no response, we suggest you contact a HUD Certified Housing Counselor (click here for a list of counselors in your area) at little or no cost to you; or an attorney familiar with the QRM/Section 6 RESPA dispute process as discussed in the 2006 Federal Trade Commission Board of Governors of the Federal Reserve System Report to Congress on the Fair Credit Reporting Act Dispute Process.
Step 3. Send your QWR via Certified Mail Return Receipt. Keep copies of your letter and any enclosures as well as your Certified Mail Receipt from the post office and the Return Receipt from your mortgage servicer proving they have received your QRM
Finally, if you are still unable to resolve the situation, there is a complaint process that may get action. We suggest this be your last and not first step as you will then have evidence which will indicate to the Bureau that the servicer is either unwilling or unable to address your situation. Mortgage Complaint Form
There’s a New Sheriff in Town
The following is excerpted from the prepared remarks of Steven Antonakes, Deputy Director of the CFPB which he presented to the Mortgage Bankers Association National Mortgage Servicing Conference in Orlando, Florida on February 19, 2014.
“…My message to you today is a tough one. I don’t expect a standing ovation when I leave. But I do want you to understand our perspective. I would be remiss if I did not share it with you … if you choose to operate in this space (mortgage servicing), the fundamental rules have changed forever. It’s not just about collecting payments. It’s about recognizing that you must treat Americans who are struggling to pay their mortgages fairly before exercising your right to foreclose. We have raised the bar in favor of American consumers and we are ready, willing and able to vigorously enforce that bar.
Ultimately, these profound changes will be good for all Americans, including industry. But please understand, business as usual has ended in mortgage servicing. Groundhog Day is over. Thank you.”
Sheriff – Update
In a June 22, 2016, Press Release, the CFPB said, in part: “In 2013, the CFPB established mortgage servicing rules designed to protect consumers against many of the practices that plagued the mortgage servicing industry during and after the housing crisis.
According to the CFPB, the rules require servicers to maintain accurate records, give troubled borrowers direct and ongoing access to servicing personnel, promptly credit payments, and correct errors on request.”
In addition to sending your RESPA letter, do not hesitate to file a complaint, with the CFPB. Click here for the particular complaint link.
The Bureau’s Enforcement Power – One Example
As an example of the Bureau’s enforcement authority, RealtySouth™, a Berkshire Hathaway Affiliate, was recently fined $500,000.00 for a RESPA violation which amounted to failure to disclose their affiliated business relationship(s) to consumers. This is a typical example of the enforcement action undertaken by the Bureau as one may readily determine with an Internet search. For those who don’t recognize the name Berkshire Hathaway, it is largely owned by one of the world’s wealthiest persons. Clearly, wealth does not buy immunity from the CFPB.
Exceptions to QWR: Those transactions excluded from the QWR are limited to “(1) subordinate lien loans or (2) open-end lines of credit subject to TILA, whether secured by a first or subordinate lien.”* Further, “(a) request does not constitute a QWR if it is delivered to a servicer more than one year after either the date of transfer of servicing or the date that the mortgage servicing loan was paid in full, as applicable.”*
NOTICE: I am not an attorney nor am I providing legal advise. This post is for educational purposes only. The images are for illustration only and not meant to imply in any way an endorsement or authorization by any government agency or authority of this blog or this post.
* Jonathan Foxx, President & Managing Director Lenders Compliance Group
Image Attribution: erickimphotography.com and CFPB
Financially Speaking™ James Spray, RMLO, CNE, FICO Pro | CO LMO 100008715 / NMLS 257365 | Rev. June 16, 2016
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