Bulletin #2012-18 June 1, 2012

Bulletin #2012-18

June 1, 2012

**Clarification All Products* Update on Conventional PUD Questionnaire* FHA Netting Escrows, Refi Authorization* DU Update on Government Loans*

Franklin American Mortgage has updated its on-line Correspondent Lending Manual and product descriptions with the following clarifications and updates.

Clarification

All Products

___________________________________________________________________________

Flood Insurance Clarified flood insurance guidelines to state that properties located in a community that do not have FEMA flood maps are not federally mandated to require flood insurance; therefore, evidence of flood insurance is not required. Properties mapped in a flood zone, but located in a NFIP Non-Participating community are ineligible.

Liability Insurance on Attached Condominiums and PUDs Clarified that the purpose of liability insurance is to protect the legal entity, the Association, which was created when the Declaration/Master deed was recorded. The homeowners' association must maintain a commercial general liability insurance policy for the entire project, including all common areas and elements, public ways, and any other areas that are under its supervision.

Conventional Products

___________________________________________________________________________

Attached PUD Questionnaire Removed the attached PUD requirement for all common areas to be 100% complete and removed the presale requirement to more closely align with Agency guidelines. The form has been consolidated for a more simplified fluency.

1

FHA Products

___________________________________________________________________________

Netting Escrows FHA recently provided direction concerning prohibited and permitted uses of a borrower's escrow account.

This direction will impact: Escrow Netting ? reducing the payoff by the amount of the escrow balance, and Escrow Transfers ? transferring the borrower's escrow balance from an existing loan to a new refinance loan.

As documented in the Code of Federal Regulations (CFR) Title 24 202.5(d), a lender is prohibited from using escrow funds for any purpose other than that for which they were received.

FHA has not authorized the use of escrow funds for purposes other than those stated in the CFR. Their clarification mandates that a reduction of loan principal is NOT an eligible purpose for the use of escrow funds and lenders with an existing loan shall NOT apply escrow funds to reduce the outstanding loan balance in the payoff amount.

Additionally, FHA has indicated that a lender who is servicing the loan and also refinancing the borrower to a new loan may not transfer the borrower's escrow account from the old loan to the new loan.

FAMC will not purchase any FHA loans in which escrow netting or escrow transfers have occurred.

Refinance Authorization Results In order to accurately validate that the proper MIP factor is applied to FHA Streamline Refinances, the Refinance Authorization Results from FHA Connection must be included in the file.

2

FHA and VA Products

___________________________________________________________________________

DU for Government Loans During the weekend of July 21, 2012, Desktop Underwriter (DU) for government loans will be updated with the following items for VA and FHA loan casefile submissions:

VA Bankruptcy and Foreclosure Messaging HUD Mortgagee Letter 2012-13 ? Miscellaneous Underwriting Issues FHA Reserves Calculation on 3 to 4 Unit Properties FHA TOTAL Mortgage Scorecard Version 3.0

Refer to DU for Government Loans Release Notes for more information.

Thank you for your business!

Please contact FAMC Correspondent Underwriting for further clarification of any Underwriting related topics or your Regional Sales Associate about other topics addressed in this bulletin. This information should not be considered as allinclusive guidelines. Please see our online manual and rate sheet for complete guidelines and pricing information.

Phone: 866.326.2677

Web:

3

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download