I want to personally apologize for any delays you might be currently experience and assure you that we are doing everything possible to improve our level of service including,

Overtime
Our staff are working mandatory overtime every day, including Saturdays. We anticipate running a six-day week until response times is within normal parameters.

Aggressive Hiring and Training
In the past 45 days, we’ve increased our customer care staff by 15%. We continue to aggressively recruit, hire and train with new classes graduating every 30 days. Our goal is to have additional staffing increases of 30% deployed within the next 45 days.

Operational Efficiencies
We are evaluating and reevaluating every process looking for ways in which to streamline and increase the level of service we provide to our clients.

I’d like to sincerely Thank You for your continued loyalty and patience. You have our promise that we are doing everything within our power to resolve these issues as quickly as possible so we can continue helping you close more loans.

Best regards,

Thomas Conwell III
President/CEO
Credit Technologies, Inc.

We anticipate this will result in service delays through August 31, 2011, adding approximately one business day to anticipated turn times.

We apologize for these delays and are doing all we can to complete all requests as quickly as possible.

Thank you for your patience, and for choosing Credit Technologies.

The SSA began assigning the nine-digit SSN in 1936 for the purpose of tracking workers’ earnings over the course of their lifetimes to pay benefits. Since its inception, the SSN has always been comprised of the three-digit area number, followed by the two-digit group number, and ending with the four-digit serial number. Since 1972, the SSA has issued Social Security cards centrally and the area number reflects the state, as determined by the ZIP code in the mailing address of the application.

There are currently 435 million numbers available for assignment. However, the current SSN assignment process limits the number of SSNs that are available for issuance to individuals by each state. Changing the assignment methodology will extend the longevity of the nine digit SSN in all states. SSN randomization will affect the SSN assignment process in the following ways:

• It will eliminate the geographical significance of the first three digits of the SSN, currently referred to as the area number, by no longer allocating the
  area numbers for assignment to individuals in specific states.
• It will eliminate the significance of the highest group number and, as a result, the High Group List will be frozen in time and can be used for validation
  of SSNs issued prior to the randomization implementation date.
• Previously unassigned area numbers will be introduced for assignment excluding area numbers 000, 666 and 900-999.

No action is required on your part. We are working with the SSA and repositories to determine what impact if any SSN Randomization will have on SSN alert messages. Please note that for all SSNs issued PRIOR to June 25, 2011, Credit Technologies will still be able to validate SSN information based on state and date ranges.

More information is available from the SSA at ssa.gov/employer/randomization.html along with Frequently Asked Questions or feel free to contact Credit Technologies at 800.445.4922.

The IRS IVES division (responsible for processing all tax transcript requests) is deemed non-essential workers and will be furloughed as a result of any government shutdown.

The IRS requires all requests to be issued via facsimile (signed copy of the 4506T form.) Unbelievably, the IRS is still equipped with paper based fax machines. These machines will quickly empty their paper supplies with no one available to refill them. Although it is expected they have some on-board memory, it will quickly be exhausted and we will no longer be able to transmit transcript requests.

Once the IRS is no longer able to receive orders, we will process and stage all requests received and wait for the IRS to return to work at which point all orders will be submitted in the order received.

We have no way of knowing how much of a delay will be encountered upon resumption of service. Once completed by the IRS, our systems will  forward the completed transcripts approximately 3 minutes thereafter.

Hopefully the budget impasse will be resolved and any interruption in service avoided. We will keep you apprised of further developments.

Thank you for choosing Credit Technologies.

The April 1 updates to

30. Loan originator payment of third party fees – May a loan originator pay some or all of the third party fees of a consumer or otherwise credit the consumer out of his own pocket?

 No. An originator may not pay third party fees out of his or her own pocket. This amounts to varying the loan originator’s compensation based on the terms or conditions of the loan. The Commentary accompanying the rule at section 226.36(d)(1)-5 prohibits such action by loan originators.

This is seemingly in conflict to the Federal Reserve’s repeated position that bona fide, pass-through, third party fees are not counted as compensation under the rule (226.36(d) and (e).) Without regard to the conflict, the Federal Reserve’s interpretation on originators paying settlement service costs is clear – It’s prohibited. Similar restrictions are also contained in the Dodd-Frank Legislation (see pages 764 and 765.)

These restrictions apply in cases where the payments would violate the loan originator compensation rules. Costs associated with applications that do not result in closed loans and compensation to the originator do not appear to be covered under these rules and can therefore be paid directly by the loan originator if so desired. An originator can continue to initially pay for any/all settlement service costs, but must be reimbursed in full by either the consumer or creditor on loans that close in which the loan originator receives any compensation.

Credit Technologies provides multiple ways in which to comply with these new restrictions and still provide our clients the maximum amount of flexibility in processing settlement service costs. These options include,

• Direct Consumer Payment – Via credit card, ACH or check including title checks issued at closing.
• Creditor / Branch Billing - Net terms account, credit card or ACH transaction.
• Loan Originator / Consumer Hybrid Payments - The originator can establish a billing account or place a credit card on-file to initially pay for any/all transactions. This includes credit reporting, 4506T tax services, flood, AVM and any other provided settlement services. Thereafter, the originator has the option of entering the consumer’s credit card to pay for those and any subsequent charges* in compliance with the Act.
• Loan Originator / Creditor or Branch Hybrid Payments – The same functionality listed above also allows the Loan Originator to initially pay for all transactions. The Creditor or Branch can then later reimburse the loan originator on those files that close.

For more information on this, or any Credit Technologies product or service – Please call 800.445.4922 or visit us on the Web at www.CreditTechnologies.com.

*Excludes credit rescoring costs. The Credit Repair Organizations Act and repository regulations prohibit consumers from being charged either directly or indirectly for credit report and/or score improvement.

DISCLAIMER
The opinions expressed are those of Credit Technologies, Inc., were not written or reviewed by an attorney and do not constitute legal advice. As State laws vary widely. The options listed may not be permitted in your venue.  Options may also vary based on account/user settings and Loan Origination Software limitations. As with all regulatory issues, you are strongly encouraged to consult with your compliance / legal staff to determine legality and suitability to your specific operations and venue.

The new RBPD requirements vary from the current FACTA required Notice to Home Loan Applicant and Consumer Score Disclosure requirements in several important ways,

1)     Each risk based pricing disclosure must include the decisioning credit score and a comparative study showing how each consumer’s credit score relates to others using that specific scoring model.

2)     Whereas the existing FACTA notices allowed for combining of joint applicants, the Risk-Based Pricing Disclosures are required to be sent individually, under separate cover. These disclosures cannot be combined with any other non-FACTA documents and/or required disclosures.

3)     A unique disclosure is required in instances where a credit score is not available (form B5.)

Credit Technologies has automated these requirements through our FACTA Compliance Service (FCS.) This includes the existing FACTA disclosure requirements (Notice to Home Loan Applicant and Consumer Score Disclosures) and the new Risk Based Pricing Disclosure requirements (view a sample report.) FCS includes:

• Calculating each consumer’s comparative score and national score average per scoring model utilizing the form B-3 exception method (example contained on page 195 of the final rulemaking)
• Creating the required Risk-Based Pricing Disclosure, Score Disclosure and related required language
• Creating the required Notice to Home Loan Applicant
• Issuing the combined disclosures via First Class US Mail to each applicant individually
• Providing a Certificate of Compliance to each end user for use in the event of audit or investigation
• Maintaining historical records sufficient to satisfy compliance with any lender or agency inquiry or audit as it applies to the above FACTA disclosure requirements

Key Dates:

Starting in December, we will remove the cost of any current FACTA mailing service from the credit report cost and display it as a separate line item entitled “FACTA Notice”.  There is no change in cost; this is simply in preparation for the activation of the FCS service.

December 14^th – You will receive an updated FACTA Compliance Certificate including the RBPD Certification.

December 17^th – We will begin issuing the new Risk-Based Pricing Disclosures on behalf of our clients. The FCS fee will be included in the total cost displayed on the credit report and in the “FACTA Notice” line item on your invoice.  All disclosures will be in your company name and reflect your return address for tracking and for use as a Red Flag detection tool.

That’s it – No action on your part is required to maintain compliance with the new FACTA requirements. For additional information or to learn more about the benefits of becoming a Credit Technologies client, please call 800.445.4922.

Credit Radar is a new automated credit analysis tool that instantly identifies critical credit and score issues without digging through the actual credit report. Credit Radar combines revolutionary credit intelligence into an easy-to-read page that is delivered automatically with every credit report… (View a sample report.)

Gain critical insight into key information alerting you to items that impact approval decisioning, rates/terms and perhaps most importantly, exposure to last minute FNMA LQI problems. Credit Radar gives you the ability to identify mid-score trends resulting from common credit-related events occurring prior to closing.

 When combined with Credit Technologies ≥Comply™ service, Credit Radar provides the early warning component of a FNMA LQI / FACTA Red Flag solution.  

The automated credit assessment tools contained in Credit Radar makes credit report review faster and easier and helps avoid surprises later in the lending process…

“Credit Radar functions as a FNMA LQI Stress-Test, identifying potential FNMA LQI problems up-front at the time of application.”

• Mid-score trend indicator, including Credit Assure projections (* if Credit Assure is active on account.)
• Revolving balance “stress-testing” (a critical FNMA LQI tool)
• Alerts you to authorized user accounts that may impact underwriting
• Identifies disputed accounts prior to FNMA/FMAC submission
• <10 payment remaining installment account alert
• Highlights credit bureau alerts, simplifying FACTA Red Flag compliance

Credit Technologies is providing Credit Radar free of charge to all clients July 10, 2010 through August 31, 2010. Thereafter it’s available at the cost of $0.95 per applicant. For more information on Credit Radar or any other Credit Technologies product or service, please contact your Business Analyst, or call 800.445.4922.

©1990-2010 Credit Technologies and the delta logo are registered trademarks of Credit Technologies, Inc. – All Rights Reserved.  CreditXpert® and Credit Radar are trademarks of CreditXpert Inc.

As expected, FNMA has issued further clarification since our June 1st LQI letter. The LQI FAQs have been updated regarding Undisclosed Liabilities and the use of a “refreshed” credit report. These clarifications are a result of hundreds of requests for guidance from lenders nationwide and from further direct discussions with the FNMA LQI team. Pertinent excerpts from Fannie Mae LQI FAQs and Fannie Mae Lender Tips are provided below with Updates and emphasis noted…

“As part of the qualifying and underwriting process, lenders are accountable for the accuracy of all information in the loan file up to and concurrent with closing, including changes in borrower circumstances.

Q4. How would a lender confirm that undisclosed liabilities are not present in a transaction, through the closing of a transaction?

The lender is responsible for implementing practices to identify undisclosed liabilities in a transaction. It is the lender’s responsibility to develop and implement its own business processes to support compliance with Fannie Mae’s requirements on loans delivered to us. Although many lenders already have such processes in place, Fannie Mae provides lender tips on eFannieMae.com regarding practices that may provide insight as to the presence of undisclosed liabilities. Some examples include: 

• Updated Retrieving a refreshed credit report just prior to the closing date and reviewing it for additional credit lines.
• Updated Direct verification with a creditor that is listed on the credit report under recent inquiries to determine whether a prospective borrower did in fact enter into a financial arrangement with the creditor, which may not be listed on the loan application.
• Running a Mortgage Electronic Registration System (MERS®) report to determine if the borrower has undisclosed liens or another mortgage is being established simultaneously.

Q5. If the lender obtains a new credit report or “refreshes” the current credit report prior to closing and discovers new liabilities or identifies differences in the information, must the loan be re-underwritten with the information from the new or “refreshed” report?

Fannie Mae’s updated policy requires that lenders determine that the borrower has not established additional debt on or prior to the closing date. If additional liabilities are discovered, lenders must consider any such additional debts of the borrower in the qualification.

If the lender is using Desktop Underwriter® (DU®) and identifies differences between the new and/or refreshed credit report and the credit report used when underwriting the loan casefile through DU, the lender must take appropriate action when information that was not considered by DU might result in a recommendation other than that returned by DU.

Examples of situations in which loan casefiles should be resubmitted to DU:

• If additional debt has been incurred and the inclusion of the additional debt would increase the total expense ratio to a level outside the tolerance specified in section B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report, of the Fannie Mae Selling Guide.
• Updated If new derogatory information is detected and/or the credit score has materially changed.

An example of a situation in which the lender should not have to resubmit the loan casefile to DU would be if credit balances have changed slightly but the change in the total expense ratio remains within the DU Tolerances policy (referenced above).

Q6. If the lender pulls a new credit report the day before closing and no differences are found compared with the original credit report, is the lender relieved of representations and warranties for undisclosed liabilities?

No. Although pulling a new credit report may reduce the lender’s risk exposure related to its representations and warranties on undisclosed liabilities, lenders remain responsible for any and all borrower debt up to and concurrent with closing.”

###

 Credit Technologies LQI solutions are in place and currently available. As these guidelines remain subject to lender interpretation, no single solution is applicable for all, as individual lenders will provide additional clarification as to their specific requirements, You have the ability to create a FNMA “Refresh” report utilizing hard or soft inquiries (no FICO score impact) customized to your specific needs (number of bureaus, with/without scores…)

Note – There has been much confusion regarding the use of ”hard” vs. “soft” inquiries. There is no difference as to the content of the report, cost, nor impact on existing FICO scores. FNMA offers no guidance as to the type of inquiry used to create the refresh report however; there is a significant limitation placed on the use of “soft” inquiries. Current repository restrictions limit the use of reports based on soft inquiries, specifically, a report comprised of soft inquires cannot be reissued through any AUS including FNMA DU which may limit the use of certain refresh reports. Credit Technologies provides access to both types of reports on a case-by-case basis allowing you to satisfy varying lender requirements.

The development of our best-practice LQI solutions is based on careful review of the LQI guidelines and direct discussions with the LQI team.

≥Comply provides the bundled resources needed to meet FNMA guidelines along with FACTA and Red Flag requirements in a turn-key, easy to deploy solution including,

• LQI Comparison Report dramatically simplifies compliance with FNMA Undisclosed Liabilities guidelines. Comparative data points include,
• Existing tradelines including public records and collections
• Balances, payment amounts enabling easy recognition of DTI changes
• Inquiries
• FICO scores
• Data Set (borrower names, addresses, Soc Sec, DOB…)
• Level One Authentication – Provides the needed ID verification and fraud detection tools and meets FNMA requirements for the initial validation of applicant social security numbers.
• EasyRed Flag – Simple to deploy detection and response tools, training and support learn more…
• FACTA Notice Compliance Certificate Service – Automates the required FACTA consumer disclosures
• Exclusive access to the LQI STAT Team – Most importantly, as a ≥Comply subscriber, when last minute issues are detected (often within 72 hours of closing) any update, inquiry clearance or rescore requests are handled by our specially trained LQI STAT team and receive the very highest priority learn more…

To add a ≥Comply subscription to your account, please call 800.445.4922, option 1, or simply subscribe via email.

Additional resources,

Fannie Mae LQI Summary

Fannie Mae LQI FAQs

Fannie Mae Lender Tips for Identifying Undisclosed Liabilities

Credit Technologies ≥Comply

© 2010, Credit Technologies, Inc. – All Rights Reserved.

Varying lender interpretations and policies have made compliance difficult for correspondents and brokers. Perhaps most challenging is FNMA’s assertion that the comparison of the initial credit report and the refresh credit report be completed very close to the time of closing.

The following excerpts from FNMA’s LQI Lender Tips and FAQs provide an overview of the guidelines pertaining to undisclosed liabilities and example solutions…

“As part of the qualifying and underwriting process, lenders are accountable for the accuracy of all information in the loan file up to and concurrent with closing, including changes in borrower circumstances.

Lenders must take steps to proactively identify any and all undisclosed liabilities that may affect the loan approval in relation to underwriting guidelines, eligibility parameters, or pricing. It is the lender’s responsibility to develop and implement its own business processes to support compliance with Fannie Mae’s requirements on loans delivered to us. Although many lenders already have such processes in place, Fannie Mae is providing some tips for lenders to consider:

• Refreshing a credit report just prior to closing may uncover additional debt or credit inquiries.
• Credit inquiries listed on the credit report should be investigated to determine whether the borrower did in fact open additional debt resulting in repayment obligations. In some cases, it is possible to obtain a direct verification with the creditor associated with the inquiry.
• Fraud-detection tools are available through multiple vendors that assist lenders in identifying undisclosed mortgages or other potentially fraudulent scenarios.

Q5. – If the lender obtains a new credit report or “refreshes” the current credit report prior to closing and discovers new liabilities or identifies differences in the information, must the loan be re-underwritten with the information from the new or “refreshed” report?

 Fannie Mae’s updated policy requires that lenders determine that the borrower has not established additional debt on or prior to the closing date. If additional liabilities are discovered, lenders must consider any such additional debts of the borrower in the qualification.

 If the lender is using Desktop Underwriter® (DU®) and identifies differences between the new and/or refreshed credit report and the credit report used when underwriting the loan casefile through DU, the lender must take appropriate action when information that was not considered by DU might result in a recommendation other than that returned by DU.  

 Examples of situations in which loan casefiles should be resubmitted to DU:

 •           If additional debt has been incurred and the inclusion of the additional debt would increase the total expense ratio to a level outside the tolerance specified in section B3-2-10, Accuracy of DU Data, DU Tolerances, and Errors in the Credit Report, of the Fannie Mae Selling Guide.

•           If new derogatory information is detected and/or the credit score has materially changed.

An example of a situation in which the lender should not have to resubmit the loan casefile to DU would be if credit balances have changed slightly but the change in the total expense ratio remains within the DU Tolerances policy (referenced above).

 Q6. If the lender pulls a new credit report the day before closing and no differences are found compared with the original credit report, is the lender relieved of representations and warranties for undisclosed liabilities?

 No. Although pulling a new credit report may reduce the lender’s risk exposure related to its representations and warranties on undisclosed liabilities, lenders remain responsible for any and all borrower debt up to and concurrent with closing.”

###

 No single solution is applicable for all as individual lenders will provide additional clarification as to their specific requirements. Credit Technologies provides the ability to create a FNMA “Refresh” report utilizing soft inquiries (no FICO score impact) customized to your specific needs (number of bureaus, with/without scores…)

 In addition and based on our interpretation of the LQI guidelines including direct discussions with the LQI team, Credit Technologies has developed a suite of best-practice solutions that can be customized to your specific needs on a per case basis.

 ≥Comply provides the bundled detection resources needed to meet LQI guidelines along with FACTA and Red Flag requirements in a turn-key, easy to deploy solution including,

• LQI Comparison Report dramatically simplifies compliance with FNMA Undisclosed Liabilities guidelines. Comparative data points include,
  • Existing tradelines including public records and collections
  • Balances, payment amounts enabling easy recognition of DTI changes
  • Inquiries
  • FICO scores
  • Data Set (borrower names, addresses, Soc Sec, DOB…)
• Level One Authentication – Provides the needed ID verification and fraud detection tools and meets FNMA requirements for validation of applicant social security numbers.
• Red Flag – Simple to deploy detection and response tools, training and support
• FACTA Notice Compliance Certificate Service – Automates the required FACTA consumer disclosures

Most importantly, as a ≥Comply subscriber when last minute issues are detected (often within 72 hours of closing) any update, inquiry clearance or rescore requests are handled by our LQI STAT team and receive the very highest priority learn more…

To add  ≥Comply to your account, simply call 800.445.4922, option 1 or send your request us Via email

 Additional resources,

Fannie Mae LQI Summary

Fannie Mae LQI FAQs

Fannie Mae Lender Tips for Identifying Undisclosed Liabilities

Credit Technologies ≥Comply

© 2010, Credit Technologies, Inc. – All Rights Reserved.