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RESPA/TIL Changes and Third Party Originations

To: VHDA Originating Agents

Date: October 28, 2009

Re: Procedures related to RESPA and TIL Changes
Third Party Originations

Procedures and Responsibilities Related to RESPA, TIL, Reg Z (HPMLs) Changes

In accordance with VHDA’s Originating Agreement for Single Family Mortgage Loans (VHDA Form No. CD171), the VHDA Originating Agent agrees to comply with all provisions of RESPA, Regulation X, ECOA, Regulation B, FCRA, TILA, Regulation Z, Fair Housing Act, Mortgage Insurance Act and Flood Act and any other applicable federal and state law regulations.

Recent and upcoming federal regulation changes have placed additional requirements for compliance with tolerance levels of APR, Good Faith Estimates and timelines for disclosure and re-disclosure.  VHDA lenders are reminded that it is their responsibility to have policies and procedures in place to ensure compliance with these regulations.  Non-compliance with these regulations may result in request for purchase of the loan, indemnification for potential loss, payment for any loss or penalties incurred by VHDA and/or suspension from VHDA lending.  All disclosures including preliminary Truth in Lending, Good Faith Estimate and any subsequent disclosures must be included in VHDA’s Loan Submission Package.

Third Party Originations

Due to the complexities and potential risk in complying with the recent and upcoming federal regulation changes, VHDA will no longer be able to allow third party origination of VHDA loans effective with loan reservations beginning January 1, 2010.  Only those lenders who have received VHDA approval based upon their financials and who have been issued a VHDA Originator number may originate VHDA loans.  All VHDA lenders must perform all origination duties including processing, underwriting and closing and subcontracting of any loan origination duties is not allowed.  Unfortunately, previously approved origination arrangements with third party originators will no longer be allowed.  Lenders that formerly originated VHDA loans through third party arrangements with approved VHDA lenders must now meet VHDA lender requirements and may submit for lender approval during the November new lender application period.

Thank you for your cooperation during the implementation of these changes. As we work through the implementation of these new regulations, we will continue to asses the impact of the changes and the potential for future alternative origination arrangements.

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