10Sep

Financial Statement Reporting for Proceeds from PPP Loans

September 10, 2020 Spiegel Accountancy Corp.

Spiegel Accountancy Corp.

History of the Paycheck Protection Program

The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the US economy, including $349 billion that was earmarked for the Paycheck Protection Program (PPP) to be administered by the U.S. Small Business Administration (SBA). An additional $310 billion was later authorized for the PPP.

Under the PPP, eligible businesses can apply to an SBA-approved lender for a loan that does not require collateral or personal guarantees. The loans have a 1% fixed interest rate and are due in two years. However, these loans are eligible for forgiveness (in full or in part, including any accrued interest) under certain conditions. For loans (or parts of loans) that are forgiven, the lender will collect the forgiven amount from the U.S. government. A recent bill has extended the repayment term to five years for any portion of the loan not forgiven.

28Aug

CFPB Readiness, Audit Preparedness

August 28, 2020 The Compliance Group

The Content of an Audit

The Consumer Finance Protection Bureau conducts regular audits to ensure that financial institutions come into and maintain compliance with the new mortgage rules. Those rules are according to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and amend several existing regulations, including Regulation Z, X, and B. Our CFPB Readiness Audit Services assist our clients in preparing for this review.

The CFPB maintains content and updates to these rules as well as their official interpretations on the CFPB compliance/guidance page. While being prepared is essential, the right partner can provide a well-versed view of the rules and their interpretations, activities, and information to assist preparation.

The rules the CFPB covers include:

Ability to Repay and Qualified Mortgage Standards (Regulation Z)
Escrow Requirements under Truth in Lending Act (Regulation Z)
High-Cost Mortgage and Homeownership Counseling (Regulation Z & X)
Mortgage Servicing Rules (RESPA) (Regulation X) (TILA) (Regulation Z)
ECOA Valuation for Loans Secured by a First Lien on a Dwelling (Regulation B)
TILA Appraisals for High-Priced Mortgage Loans (Regulation Z)
Loan Originator Compensation Requirements (Regulation Z)

25Aug

4 Key Points to Consider When Transitioning from Best Efforts to Mandatory Delivery

August 25, 2020 Optimal Blue

Making the decision to transition from Best Efforts to Mandatory delivery is a process that begins well before an organization actually takes the leap. As you contemplate the right transition time and strategy for your organization, you will want to conduct a preliminary evaluation to ensure success.

While there are many approaches to a viable hedging strategy, those considering a plan of action should take a moment to review four critical “stepping stones” as you move forward. If all of the criteria are met, only then should you take the next step.

Step #1 – Evaluate Net Worth:

The first step focuses on the organization’s financial health. An appropriate minimum net worth should fall between $1 and $1.5 million, and that is the bare minimum. If you plan to rely on approval from GSE’s and a number of other investor counter-parties, the desired minimum increases by a base of $1 million. The warehouse banks will also vary in their requirements, so it’s best to discuss your plans with them early on.

18Aug

California MBA Statement on New FHFA Fee

August 18, 2020 California MBA

Today, the California MBA released the following statement regarding the FHFA’s announced new 0.5% fee on GSE refinances:

Last week the Federal Housing Finance Agency (FHFA) launched an attack on consumers, homeowners, lenders, and the entire housing and mortgage markets. The announced imposition of a new 0.5% fee on all GSE refinance transactions is an unwarranted, opportunistic, ill-timed, and potentially devastating blow to one of the few economic sectors that has helped support the U.S. economy during the unprecedented health and fiscal crisis we currently face. Adding an average of $1,400 (based on $280,000 loan) to each refinanced loan will certainly boost the coffers of Fannie Mae and Freddie Mac, but hurts homeowners and lenders with no clear indication that the fee will offset any purported risk to GSE portfolios. In fact, that the fee only targets refinance activity (which, thanks to lower rates and the fact that homeowners must be current on their loans to refinance will serve to make the loans more safe) clearly demonstrate that FHFA’s priorities are misplaced and that the fee should be withdrawn immediately.

In California, the situation is compounded with proposals currently moving through our State Legislature. AB 1436 (Chiu) includes many of the same provisions of AB 2501 (Limon), which was soundly defeated in June. Those include extensive forbearance provisions and punitive penalties for missing any provisions of the bill’s implementation, if passed.

“If the California housing market adds the effects of a bill such as this, it will likely lead to significant limits on the access to affordable mortgage credit for California borrowers by disrupting the securitization market that provides needed liquidity for the mortgage market and otherwise discouraging new mortgage lending in the state. Our state already has the most acute housing affordability challenges in the nation, and this bill will exacerbate, not help, that problem,” said Bill Lowman, President and CEO of American Pacific Mortgage and Chairman of the Board of Directors for the California Mortgage Bankers Association.

The California MBA stands with the countless business and consumer groups that have also spoken out against this irresponsible action, and we urge FHFA Director Calabria to immediately reverse this erroneous decision and protect access to affordable credit for all consumers. Working to recapitalize the GSEs and remove them from conservatorship is a laudable goal, but it must not come at the expense of the American people during a once-in-a-century health and economic disaster.

11Aug

Ransomware with Terms of Service

August 11, 2020 CyberCecurity

Mitch Tanenbaum, Partner & CISO, CyberCecurity

So you thought only companies like Microsoft and Google had terms of service. Apparently that is not the case.

I keep talking about the horror that ransomware 2.0 is with hackers stealing the data before they encrypt it and threatening to publish the data if you don’t pay.

That means backups alone are not sufficient to protect you.

Now one of the first players to use ransomware 2.0 against victims is upping the ante by creating terms of service like a legitimate software provider.

Here are their terms:

If you do not respond to their attack within 3 days, they will publish that you have been hacked on their web site. They say that if you don’t start communicating within 3 days, you only have yourself to blame.
They say that negotiating means dialog and finding the “best” solution for both parties. If the “client” is too shy, scared or just can’t negotiate, that is, they say, exclusively the client’s problem.
They say that if you can’t figure out how much it is going to cost you to recover without them, they will help you. It will cost you over 10 million dollars. Not sure how they came up that number, but there you go.

04Aug

Cloud Coverage: Its Always Sunny in the Cloud – Common Myths (Part 2)

August 4, 2020 LoanLogics

David Gitlin, Director of Technology, LoanLogics

I’m back with my second post myth busting common beliefs about the cloud. Part 1 discussed myths surrounding deployment and cost . Today’s post focuses on our final three cloud myths surrounding security, development and scalability.

3. Myth: The Cloud is less secure then traditional hosting Or Cloud providers will be responsible for all aspects of data security
All these points are simply false. Large cloud companies such as Amazon and Microsoft have huge financial resources at their disposable, and can, and do hire the best security experts in the world. Experts that are available 24×7. Few companies or hosting services can afford this level of staffing. The size of the major cloud providers and the resources available to them also enable them partner with third party best of breed security providers. Also, cloud services are built with security baked in rather then bolted on afterwards. Further the cloud is capable of offering cloud native solutions for identity verification and user Sign-Up, Sign-In, and resource Access Control. AWS Cognito is one example of a cloud-native strategy for managing user verification and access rights. The cloud also provides mechanism to automate security tasks not generally available in other environments.

It is true that organizations are still responsible for locking down their own software. And failure to pay attention to security best practices when building or managing security can lead to security issues. Building cloud native software is not a panacea for not following security best practices. Development and DevOps teams are still responsible for securing their code, data access and ensuring that best practices are followed concerning managing users.

4. Myth: Cloud software development is just like development in standard hosting environments or there is nothing special to learn about software development for the cloud
No and No again! As stated above the cloud can be used like an old-fashioned hosting service in the same way you can ignore object-oriented principles and write a procedural application with an object-oriented language. You can, but what purpose would this serve? The impact of cloud computing on application development is itself a complex topic deserving of its own blog entry. The cloud offers unique services that are transformational and highly impactful on how software is developed, deployed, and used. Cloud native software that fully integrates these services is not the same as software developed for other traditional environments. In future blog entries we will explore the impact of the cloud on how software development is performed.

03Jun

What is an Independent Engineering Report?

June 3, 2020 Partner Engineering and Science Inc

by Gage Kellogg , Director Renewable Energy Services, Partner Engineering & Science, Inc.

The Independent Engineer provides the critical technical expertise necessary ensure the successful completion and goal realization of large renewable energy projects. Below are some frequently asked questions regarding what Independent Engineers do, what an IE report is, and who relies upon them.

What is an Independent Engineer?

An Independent Engineer is a term used for the 3rd party representative of an owner or Lender/financier. An Independent Engineer offers their clients a non-biased assessment on the technical, contractual, and financial aspects of large capital renewable energy projects.

What is an Independent Engineer Report?

An Independent Engineer Report (IE Report) is intended to provide the client with a review of the proposed solar project’s contractual documents and an evaluation of the technical design to verify compliance and ability to meet contractual obligations. Essentially, it is a due diligence report to help the project financiers identify and mitigate the possible risks in the proposed renewable energy project.

03Jun

Cost Versus Benefit: Mortgage Education and Training with Debra Killian

June 3, 2020 BeSmartee

by Sabrina Park, Marketing Manager, BeSmartee

Debra Killian, CRMS, founder and president of Charter Oak Lending Group and CLOES.online, shares insights on the value of standardized mortgage education and training, prioritizing reinforcement of learning and retention, and preparing for the future of continuing education (CE) in a remote work culture.

SABRINA PARK: You’ve been in the mortgage business for 26 years as a broker and as a passionate advocate for education. Having written one of the first 20-hour origination courses before the SAFE Act was passed and training thousands of originators through the School of Loan Origination a 24-hour course you wrote for the Mortgage Bankers Association’s (MBA) please share with our audience why you believe education and training to be so important in the industry? What is lacking and how can the system be improved?

DEBRA KILLIAN: Before 2008, when the market crashed. There wasn’t really any standardization of any type of mortgage education. Each state may have had their own versions of curriculum, while others had no requirements at all. I believe Florida required a few hours of education, but short of that, and prior to that, there wasn’t really anything.

16Mar

SB 1447 Seeks to Expand California’s HOBR to Include Non-Owner Occupied Rental Properties

March 16, 2018 California MBA

In 2013, California’s Legislature enacted groundbreaking support for borrowers on owner-occupied properties who could not afford their mortgage payments. The Homeowner Bill of Rights or HOBR, as it became known, included several borrower protections that have become common place throughout the mortgage industry. HOBR’s key protections include: (1) a requirement that, prior to recording a Notice of Default, the loan servicer attempt to contact the borrower to discuss foreclosure prevention alternatives, such as a loan modification; and (2) banned the practice of dual tracking after a complete loan modification application is received, i.e., the loan servicer must put the foreclosure on hold while reviewing that application. Legislators intentionally limited HOBR’s application to owner-occupied properties, excluding second homes, commercial units and rental properties. Despite abuses by borrowers and their attorneys, HOBR has primarily accomplished its goal of connecting borrowers and their loan servicers to discuss options to avoid foreclosure. Senate Bill 1447 hopes to extend HOBR’s protections to owners of one to four unit residential properties, where the tenants have been unable to pay rent as a result of COVID-19. If passed, loan servicers will have to apply similar procedures to applicable rental properties as they currently do on single family owner-occupied properties. If that were all that was required, SB 1447 would probably not disrupt the loan servicing process. However, there are several holes in proposed language that must be closed.

For instance: • When is the Bill effective and will it apply to Notices of Default recorded prior to the statute’s enactment? • While the Bill requires that the owner have a bona fide lease and that the tenant’s ability to pay rent is impacted by COVID-19, there is presently no requirement that the lease be in writing, that the owner provide the servicer a copy of the lease or any evidence that the tenant is not paying rent as a result of COVID. The California Mortgage Association (“CMA”) has proposed amendments to address each of these issues. • The Bill currently only applies to “individual” owners who own no more than three (3) residential properties, with no more than four (4) units each. This language needs to be clarified to only apply to individual “borrowers”, not their successors. In addition, the CMA proposed language that would require borrowers to declare, under penalty of perjury, that they fall under this limit (otherwise, how would the servicer know), that the tenant has a bona fide lease and that the tenant is not paying rent due to COVID-19. • The Bill is intended to go through 2022, which seems excessive. As a result, the CMA has asked that it be reduced to run through 2021. While the CMA will undoubtedly not get everything it is asking for, we are optimistic that, as a result of the proposed amendments, the final language will be more palatable, less open to litigation and easier to implement. CMA’s advocates in Sacramento think that this bill is likely to pass in some form. While the CMA will undoubtedly not get everything it is asking for, we are optimistic that, as a result of the proposed amendments, the final language will be more palatable, less open to litigation and easier to implement.

Thanks, everyone. If you have any questions about SB 1447, HOBR or any proposed laws in California or the Western United States, please feel free to contact Robert Finlay at rfinlay@wrightlegal.net.