InfoBytes, January 14, 2011 - Weekly In-depth review of news & developments in the financial services industry

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Topics In This Issue

• Federal Issues

• Courts

• Firm News

• Miscellany

• Mortgages

• Banking

• Consumer Finance

• Litigation

• E-Financial Services

• Criminal Enforcement Action

Excerpt from "Federal Issues"

HUD Issues Reporting Changes for Lenders in Parent-Subsidiary Structures and Loan Fees. On January 5, the U.S. Department of Housing and Urban Development (HUD) issued Mortgagee Letter 2011-05 announcing changes to the annual audited financial statement reporting requirements for supervised lenders in parent-subsidiary structures and new requirements for reporting loan fees for participants in the Federal Housing Administration’s (FHA) Multifamily Programs. FHA-approved supervised lenders in parent-subsidiary structures may submit the audited consolidated financial statements of a parent company, accompanied by internally prepared consolidating schedules, if one of the two following conditions is met: (i) the subsidiary accounts for at least 40% of the parent company’s assets, or (ii) the subsidiary provides the FHA with an executed corporate guarantee agreement between it and the parent company in which the parent guarantees the ongoing net worth and liquidity compliance of the FHA-approved subsidiary. The FHA-approved lender must also submit its fourth quarter Call Report and a Compliance and Internal Control Report as attachments to its annual audited financial statements submission. In addition, mortgagees participating in FHA’s Multifamily programs are now required to report loan fees earned that exceed 5% of the insured loan amount on each FHA-insured loan over $2,000,000 endorsed during the mortgagee’s fiscal year period covered in its audited financial statements. Loan fees include: (i) origination and placement fees as permitted by the MAP Guide, plus (ii) trade profit, trade premium or marketing gain earned on the sale of the Government National Mortgage Association (GNMA) security at a value above par, even if the security sale is delayed until after endorsement, minus (iii) loan fees applied by the mortgagee to its legal expenses incurred in connection with loan closing. These loan fees should be reported on a separate schedule, and must list certain information, including the loan amount at Initial or Final Endorsement and the total fees earned above 5%. All requirements contained in the Mortgagee Letter are effective immediately.

Please see full newsletter below for more information.

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Published In: Administrative Agency Updates, Consumer Protection Updates, Criminal Law Updates, Finance & Banking Updates, Residential Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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