TEAM EMPOWERMENT CHATTER: Dec. 27: Reg Z, Fannie changes LLPA prices

 “Much of the stress that people feel doesn’t come from having too much to do. It comes from not finishing what they’ve started.”

 David Allen: Management consultant, trainer, and author


Late last week the Federal Reserve Board approved a new interim rule amending Regulation Z, which implements the Truth in Lending Act (TILA) and which clarifies a previous interim rule issued in September. The September regulations focus on implementing provisions of the Mortgage Disclosure Improvement Act (MDIA), which amended TILA to require mortgage lenders to disclose examples of how a loan’s interest rate or payments can change, and kick in at the end of January. Starting then, “lenders’ cost disclosures must include a payment summary in the form of a table stating the initial rate and corresponding periodic payment and, for adjustable rate loans, the maximum rate and payment that can occur during the first five years as well as a “worst case” example showing the maximum rate and payment possible over the life of the loan. The new interim rule clarifies that creditors’ disclosures should reflect the first rate adjustment for a 5/1 adjustable rate mortgage, and should show the earliest date the consumer’s interest rate can change rather than the due date for making the first payment under the new rate for interest-only loans. The rule also clarifies which mortgage transactions are covered by the special disclosure requirements for loans that allow minimum payments that cause the loan balance to increase” per law firm BuckleySandler. For a copy of the press release, check out RegZ but for a copy of the actual notice go to FedResRegZ


Fannie announced a set of pricing changes that will certainly echo through smaller investors , if they haven’t already. Fannie made changes to the loan level pricing adjustments (LLPA’s), changing LLPA’s for most mortgage loans with LTV ratios at or above 70.01%. “An LLPA will now be charged for mortgage loans with LTV ratios at or below 65% and CLTV ratios between 80.01 to 95%. The CLTV ratio range for loans that have LTV ratios greater than 65% and less than or equal to 75% and CLTV ratios less than 95% has been adjusted. In addition, the LLPAs have changed for the remaining LTV and CLTV ranges (with the exception of CLTV ratios above 95%). LLPAs will remain unchanged for DU Refi Plus and Refi Plus mortgage loans.  FannieChanges 


Thursday MBS prices finished the shortened day worse between .250-.375. MBS prices are worse again this morning between .125-.250, based on China raising its rates (to head off inflation) and the fact that New York is suffering a bout of inclement weather – and we all know how hard it is to come to work after a 3-day weekend. It is a light week for news. Tomorrow we have the S&P/Case-Shiller indices, along with Consumer Confidence. Thursday we have Jobless Claims and the Chicago Purchasing Manager’s numbers. The Treasury is scheduled to auction $35 billion of 2-yr notes today, $35 billion of 5-yr notes tomorrow, and $29 billion of 7-yr notes on Wednesday.

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