Compliance Question of the Week 2025

Question

What is our monetary risk for failing to comply with California’s restrictions on the collection of per diem interest?

Answer

Based on recent California Consent Orders, the risk is substantial.

California Civil Code section 2948.5 and California Financial Code section 50204(o) govern the collection of per diem interest by mortgage lenders in California. The California Department of Financial Protection and Innovation (DFPI) has been issuing strict penalties for repeat offenders who overcharge borrowers per diem interest in regards to the disbursement of loan proceeds at funding. Below are a few recent examples:

In November 2025, the DFPI issued a Consent Order against a licensee for, among other things, overcharging per diem interest on 10 mortgage loans. The DFPI discovered the alleged overcharges during a routine examination and subsequent self-audit. In the Consent Order, the DFPI affirmed that borrower refunds had been made, but also ordered the licensee to pay a $100,000 penalty.

In August 2025, the DFPI entered into a $1.8 million Settlement Agreement with a former mortgage lender and servicer for alleged violations that included per diem interest overcharges after repeatedly finding that the company charged excess per diem interest.

In May 2025, the DFPI issued a Consent Order against another licensee for charging per diem interest for more than one day prior to disbursement of the loan proceeds from escrow. This Consent Order also carried a $100,000 penalty.

AGMB recommends that mortgage lenders doing business in California ensure adequate oversight of and routine self-audits for compliance with per diem interest collection requirements.

Question

Have there been any recent changes to HUD’s Important Notice to Homebuyer (92900B) Disclosure?

Answer

Yes. Effective November 19, 2025, the Federal Housing Administration (FHA) waived its policy requiring mortgagees to provide borrowers with HUD Form 92900-B, Important Notice to Homebuyers. This change is intended to streamline processes and reduce administrative burdens for lenders by eliminating a redundant and outdated form. FHA hopes that this change leads to faster processing times and a less cumbersome experience for the borrower.

The waiver removes the following specific requirements regarding Form HUD-92900-B found in Section II.A.1.a.ii.A.(2) of the Single Family Housing Policy Handbook 4000.1 (Handbook 4000.1):

Providing a copy of the form to the applicant when a mortgage application is received;
Obtaining the borrower’s signature on the form; and
Retaining the executed form in the FHA case binder.

The waiver is effective for cases not yet endorsed. Mortgagees must still comply with all other disclosure obligations under existing statutes and regulations.

The official waiver is located on HUD’s Housing Waivers webpage.

Question

Does California prohibit a person from making an unsolicited offer to purchase a residential property located in certain zip codes of Los Angeles and Ventura counties for less than the property’s fair market value?

Answer

Yes, in January 2025 in response to the devastating California wildfires that month, California’s Governor Newsom issued an Executive Order prohibiting such conduct. Effective November 10, 2025, California enacted California Assembly Bill 851 codifying this prohibition. The law reflects a broader legislative effort to ensure fair treatment of property owners during emergencies and to prevent exploitation of homeowners in real estate transactions.

The new law prohibits a “person” from making an “unsolicited offer to purchase” residential real property in specified zip codes in Los Angeles and Ventura counties that were affected by the January 2025 wildfires.

“Unsolicited offer to purchase” is defined as any offer to purchase a property made by any person by text message, email, telephone call, mail, or other means of communication, unless either of the following conditions are met:

At or before the time that the offer is made, there is public indicia that the owner is willing to sell the property, including, but not limited to:
The property is listed for sale by the owner or their agent on a multiple listing service or in any publicly available marketing platform for the sale of the property.
The owner placed a “for sale” sign on the property, posted in a public place a flyer listing the property for sale, or advertised the property in a print publication.
The offer was made prior to the enactment of this law.

“Person” includes a corporation, firm, partnership, or association existing under or authorized by the laws of this state or any other state, or any foreign country.

The law requires a buyer and seller to execute a written attestation affirming compliance with the law, prior to the transfer of title. The signed attestation creates a presumption that the accepted offer was solicited by the seller or the property, unless there is clear and convincing evidence to the contrary. The attestation must be attached to the deed as a condition of recording the transfer of title.

The prohibition of unsolicited offers is set to last until January 1, 2027, at which time the law will automatically be repealed, providing a temporary safeguard for homeowners in affected areas.

Violations of the law can result in civil penalties in amount of up to $25,000 per violation. A person who violates the law can result in misdemeanor charges, and, upon conviction thereof, may results in a fine of up to $1,000 or imprisonment up to six months.

Additionally, the law grants the seller the right to cancel a contract in violation of the law which right may be exercised with four months of the contract date.

The following zip codes are subject to the law: 90019, 90041, 90049, 90066, 90265, 90272, 90290, 90402, 91001, 91024, 91040, 91103, 91104, 91106, 91107, 91367, 93535, and 93536.

Answer

At or before the time that the offer is made, there is public indicia that the owner is willing to sell the property, including, but not limited to:
The property is listed for sale by the owner or their agent on a multiple listing service or in any publicly available marketing platform for the sale of the property.
The owner placed a “for sale” sign on the property, posted in a public place a flyer listing the property for sale, or advertised the property in a print publication.
The offer was made prior to the enactment of this law.

“Person” includes a corporation, firm, partnership, or association existing under or authorized by the laws of this state or any other state, or any foreign country.

The prohibition of unsolicited offers is set to last until January 1, 2027, at which time the law will automatically be repealed, providing a temporary safeguard for homeowners in affected areas.

Additionally, the law grants the seller the right to cancel a contract in violation of the law which right may be exercised with four months of the contract date.

The following zip codes are subject to the law: 90019, 90041, 90049, 90066, 90265, 90272, 90290, 90402, 91001, 91024, 91040, 91103, 91104, 91106, 91107, 91367, 93535, and 93536.

Question

I saw something in the news about updated guidance from the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) on SAR filings. Are mortgage lenders and brokers still required to file suspicious activity reports (SARs)?

Answer

Yes, mortgage lenders and brokers must still file SARs.

Several years ago, FinCEN issued guidance to financial institutions (including residential mortgage loan originators) regarding filing SARs for repeated or continuing suspicious activity after a 90-day period with a filing deadline of 120 calendar days after the date of the previously related SAR filing. In October 2025, FinCEN issued answers to Frequently Asked Questions (FAQs) to clarify SAR requirements. Among other information, the FAQs explained that financial institutions are not required to conduct a review of a customer or account following the filing of a SAR to determine whether suspicious activity continued. FinCEN explained it recognized the burden that continued SAR filings place on financial institutions. Financial institutions may elect to file SARs in accordance with FinCEN’s continuing suspicious activity guidance, but this is not a requirement.

For financial institutions that elect to file SARs in accordance with FinCEN’s continuing suspicious activity guidance, below is the appropriate filing timeline:

Day 0: detection of facts that may constitute a basis for filing a SAR
Day 30: filing of initial SAR
Day 120: end of 90-day period
Day 150: filing of a SAR for continued suspicious activity

When filing a SAR for continuing activity, the date or date range of suspicious activity (Item 30 on the SAR form) should include the entire 90-day period starting on the date immediately following the filing of the initial SAR or the date following the end of the previous 90-day period.

Question

Is there a new regulation requiring lenders who engage in credit decisions to implement quality control (QC) standards for the use of automated valuation models (AVMs)?

Answer

Yes, various banking agencies issued a final rule last year, Quality Control Standards for Automated Valuation Models, which implemented QC standards for AVMs used in determining the value of an individual’s principal dwelling in connection with a mortgage credit decision. The rule is effective on October 1, 2025 and requires financial institutions to analyze their use of AVMs and validate the use of AVM technology. The rule applies to both open-ended and closed-ended credit, including closed-ended junior liens and HELOCs. These requirements also apply regardless of whether the mortgage originator makes the credit decision itself or in cooperation with a third party.

In short, mortgage originators that engage in mortgage credit decisions must adopt and maintain policies, practices, procedures and control systems to ensure that AVMs used in these decisions adhere to five statutorily defined QC standards designed to:

Ensure a high level of confidence in the quality of the data and the estimates produced;
Protect against the manipulation of data (presumably exceeding responsibility under AIR);
Seek to avoid conflicts of interest;
Require random sampling testing and reviews based on an institutions specific risk profile; and
Comply with applicable non-discrimination laws.

The rule defines “control systems” as “the functions (such as internal and external audits, risk review, quality control, and quality assurance) and information systems that are used to measure performance, make decisions about risk, and assess the effectiveness of processes and personnel, including with respect to compliance with statutes and regulations.”

An AVM is defined as a computerized model used to determine the value of an individual’s principal dwelling collateralizing a mortgage.

The final rule does not set specific requirements for how institutions are to structure these policies, practices, procedures and control systems. This approach provides institutions the flexibility to tailor these QC standards for covered AVMs as appropriate based on the size of the institution and the risk and complexity of transactions for which they will use covered AVMs.

While the rule applies to a mortgage originator’s use of an AVM in determining the value of an individual’s principal dwelling in connection with making a credit decision, it does not apply to the use of an AVM in reviews of the quality of already “completed determinations” of the value of collateral (i.e. appraisals).

The rule would also not apply to AVMs prepared exclusively for commercial use or for portfolio monitoring, advertising or insurance purposes (provided these do not involve credit decisions).

A copy of Appendix B of the Interagency Appraisal and Evaluation Guidelines which contains detailed guidance for institutions seeking to establish policies, practices, procedures, and control systems to ensure the accuracy, reliability and independence of AVMs can be found HERE (page 31).

Question

Are there new regulations restricting the use of trigger leads?

Answer

Yes. Trigger leads involve lenders obtaining a consumer’s credit information (frequently without the consumer’s knowledge or consent) from a credit reporting agency after the consumer applies for a loan, such as a home loan secured by a mortgage, and then soliciting the consumer with loan offers. These unsolicited offers usually come in the form of telephone calls, texts, and/or emails from lenders with whom the consumer did not apply and can be intrusive and overwhelming for consumers.

While previously legal under the Fair Credit Reporting Act (FCRA) if followed by a “firm offer of credit”, the recent enactment of the federal The Homebuyers Privacy Protection Act will curb this practice. The Homebuyer Protection Act amends the FCRA to prohibit consumer reporting agencies from furnishing a trigger lead except in limited circumstances, such as when the third party (i) originated a current residential mortgage on behalf of the consumer, (ii) is the current mortgage loan servicer to the consumer, or (iii) maintains a current specified banking relationship with the consumer (this exception only applies to a depository institution or credit union who holds an account in the consumer’s name). The Act is effective on March 5, 2026.

In addition to the federal legislation, ten states (AR, CT, ID, KS, KY, ME, RI, TX, UT, WI) now have statutes imposing restrictions on how mortgage lenders/brokers may utilize trigger leads in connection with their mortgage activities.

Mortgage lenders and brokers must ensure they act in compliance with applicable laws limiting use of trigger leads.

Question

In furtherance of the numerous recent natural disasters, have there been any recent policy announcements for Properties Located in Presidentially-Declared Major Disaster Areas (PDMDAs)?

Answer

Yes. on June 27, 2025, HUD published Mortgagee Letter 2025-19 Rescission of Mandatory Pre-endorsement Inspection Requirements for Properties Located in Presidentially-Declared Major Disaster Areas (PDMDAs) eliminating pre-endorsement PDMDA inspection requirements. HUD advised such requirements were unnecessary and burdensome.

Previously, FHA required damage inspection reports prior to endorsement for all properties located in PDMDAs (even if no damage occurred). FHA required the inspections to be completed by FHA Roster Appraisers, which sometimes resulted in a lengthy waiting periods and delayed closings.

FHA now defers to a lender’s discretion to determine the property condition and scope of inspections and repairs following a disaster event based on the lender’s own risk management practices and tolerances.

The provisions of the Mortgagee Letter were effective immediately.

Question

Did I miss any recent updates to NMLS and/or are there any pending NMLS updates for which I should be aware?

Answer

NMLS published an update on May 22, 2025 advising that the NMLS Policy Committee approved a new business activity pertaining to “interim servicing,” which is defined as follows:

Collecting a limited number of contractual mortgage payments immediately after origination on loans held for sale but prior to the loans being sold into the secondary market for a period generally not to exceed 120 calendar days.

Mortgage lenders and servicers should review their MU-1 filing on NMLS and ensure their business activities are accurate and up-to-date. State regulators rely on this information for supervision and examination purposes, as well as for mortgage call reporting requirements.

Mortgage companies should also be aware of the following upcoming changes to NMLS:

The Conference of State Bank Supervisors (CSBS), which runs NMLS, will be debuting a new “NMLS Connect”, which is a component of the classic NMLS, but more focused on enhancing the MLO experience. As such, some features of NMLS will appear differently for mortgage loan originators and mortgage companies after September 20, 2025.
- Note: Movement to NMLS Connect requires the removal of unsubmitted MU-4 filings. Any pending, unsubmitted MU-4 filings will be deleted as of September 20, 2025.
CSBS is redeveloping the NMLS Resource Center; the new website will launch in September 2025.
CSBS will implement revised Individual Disclosure questions for MU-2 and MU-4 Individual filings in early 2026. Revised Company Disclosure questions are planned to be implemented at a later time. However, new or changed definitions made in connection with the Individual Disclosures may affect a company’s answers to its current Disclosure questions. Once implemented, Individuals will need to complete the revised Individual Disclosure questions before submitting a filing. Companies should familiarize themselves with the updated Individual Disclosure questions to determine how it may affect responses to Company Disclosure questions (if at all).
Version 7 of the Mortgage Call Report will be implemented in the first quarter of 2026. Servicers will have additional reporting fields, which have not changed from how they were published in the prior request for public comment. Companies should begin to prepare to collect this data.

See the NMLS Modernization website for further information on the above upcoming changes, including a link to a recent CSBS Town Hall presentation and recording.

Question

I understand Fannie Mae revised its quality control (QC) requirements. What’s changed?

Answer

Yes, Fannie Mae recently published Selling Guide Announcement (SEL-2025-04), announcing it revised lender quality control requirements effective September 2, 2025. Some of the updates clarify Fannie Mae’s expectations regarding already existing requirements, while other updates impose new requirements. Among other things, the updates require the following (please note this is not an all—inclusive list of revisions and updates):

For third-party originations:
- Lenders must include a post-closing, random sample of third-party originator loans (these random samplings must be full-file reviews);
- Lenders must supplement the random sample with discretionary targeted samples focused on third-party originations with elevated risks as determined by the lender’s oversight and control processes (discretionary targeted samples may be full-file reviews or component reviews and may be implemented in prefunding or post-closing);
- Lenders must select third-party originator loans for QC reviews at least a monthly;
- Third party-origination defects and findings must be included in monthly reporting to management;

Pre-funding QC reviews – the monthly loan selection must equal, at a minimum, the lesser of:
- 10% of the prior month’s total number of loans closed or acquired, or 10% of the current month’s projected total number of loans to be closed or acquired (if using projections, the lender must perform a reconciliation process to ensure the 10% requirement is met); or 750 loans.

For post-closing QC reviews, lenders must conduct either a 10% random review or a statistically valid sample of all monthly loan production;
Lenders must maintain an established written corrective action plan within their QC Plan for when they identify defect trends through the QC review process.
- The plan must include root cause analysis, responsible parties/key personnel, the expected resolution, and timeframes for implementation and completion;

Lenders must include the following in their QC reports (see the revised Selling Guide for additional requirements for both pre- and post-closing QC reports):
- The report date;
- Sample selection descriptions and calculations used to determine the sample size;
- The rationale for each discretionary and component review;
- Summaries of results for all random, discretionary, and component reviews, including third-party originator reviews;
- Defect rates and trending for the past three months for all defect severity levels using both defect category and subcategory;
- Resolution of specific defects;
- Corrective action plans to address specific defects and defect trends; and
- Tracking of reverification results (including the request date and details for successful and unsuccessful attempts);

Lenders must perform an occupancy assessment for all QC full-file reviews (both pre-funding and post-closing) and for all occupancy types (principal residences, second homes, and investment properties);
Lenders must ensure that they reverify income/employment through the closing date;
A lender must notify Fannie Mae within 30 days of the date of confirmation that one or more defects identified through the QC file review process results in the loan being ineligible as delivered to Fannie Mae.
- “Confirmation date” means the publication date of the QC report identifying the ineligible loan; and

A lender’s QC Plan must include written procedures for reporting the results of the QC file reviews, including maintaining a record of loans self-reported to investors.

Fannie Mae encourages lenders to implement the changes outlined in the updated Selling Guide immediately, but in no event later than the effective date.

Question

How does California Assembly Bill 130 affect originators and servicers of subordinate liens secured by California properties?

Answer

California Assembly Bill 130 was signed into law on June 30, 2025 and forbids mortgage servicers from engaging in the certain “unlawful practices” while servicing subordinate lien mortgages. This portion of the bill addresses “Zombie” subordinate mortgages which are second mortgages homeowners believe were discharged long ago (for example, in a Bankruptcy scenario) only to have the lender appear years later demanding payment and threatening foreclosure. Many times, consumers have not heard from these lenders for several years.

The following practices are deemed unlawful under the new law:

Not providing written communication to the borrower for at least three years;
Failing to provide a transfer of loan servicing notice as required by the Real Estate Settlement Procedures Act (RESPA) or investor/grantor requirements;
Failing to provide a transfer of loan ownership notice as required by the Truth-in-Lending Act (TILA) or investor/grantor requirements;
Conducting or threatening to conduct a foreclosure sale after providing a form indicating the debt had been written off or discharged;
Conducting or threatening to conduct a foreclosure after the statute of limitations expired; or
Failing to provide a periodic statement as required by TILA or investor/grantor requirements

Servicers of subordinate lien mortgage loans in California must ensure that they are fully compliant with federal and California law applicable to the servicing of loans, such as providing borrowers timely servicing transfer notices and periodic statements. Servicers should review their foreclosure procedures to ensure they do not run afoul of California’s new standards.

Question

Has HUD rescinded the requirement for the Supplemental Consumer Information Form to be completed in connection with the loan applications?

Answer

Yes.

In 2023, HUD began requiring lenders to collect information about an applicant’s language preference and any homeownership education and housing counseling the applicant received on the Supplemental Consumer Information Form (SCIF) as part of the loan application. HUD (and Fannie Mae and Freddie Mac) adopted this requirement at their discretion; it is not a statutory requirement.

On June 27, 2025, HUD published Mortgagee Letter 2025-15 rescinding the requirement to provide the SCIF to applicants and to collect the associated information. HUD determined that only 1.2% of FHA applicants completed the SCIF in a manner that provided any potential benefit to the applicants. HUD further stated that removing this requirement is a step toward eliminating policies that increase regulatory and financial burdens on mortgagees.

HUD’s rescission of the SCIF requirement is effective immediately.

Note, Fannie Mae and Freddie Mac still require the SCIF.

Question

Does Fannie Mae require a mortgage lender to maintain a self-reporting component to its quality control (QC) program?

Answer

Yes, self-reporting is a vital component of robust quality control standards and a key factor of Fannie Mae’s mission to promote the stability of the housing market.

Fannie Mae published a Quality Insider titled “The Scoop on Self-Reporting” (August 2024 edition), which sets forth instructions on how to self-report and provides useful tips to assist mortgage lenders with the self-reporting function. For example, Fannie Mae suggested maintaining a log that tracks self-reporting, explained how the most efficient self-reporting is inclusive of all relevant information and supporting documents, and provided a link to a Self-Report Job Aid.

Lenders must self-report a loan to Fannie Mae if they find the loan:

Is in breach of selling warranty;
Is not in compliance with federal or state laws; and/or
Exhibits traits of misrepresentation, fraud, and/or money laundering activities.

Fannie Mae’s Selling Guide (D1-3-06) requires lenders to self-report to Fannie Mae within 30 days of identifying one or more defects that result in the loan being ineligible for sale to Fannie Mae.

Notably, Fannie Mae conducts audits of lenders’ self-reporting during a Mortgage Origination Risk Assessment (MORA) and QC calibration reviews. Fannie Mae noted findings from these reviews for the following:

Lenders’ QC plans did not include procedures to self-report;
Lenders were not self-reporting within the required 30-day timeframe; and/or
Lenders were not self-reporting loans obligated to be self-reported.

It is important to note that Freddie Mac, FHA and VA also maintain requirements surrounding self-reporting in relation to QC. Below are links to their requirements:

Freddie Mac Guide Section 3402.10(b) – includes list of items that must be reported through the Freddie Mac Quality Control Tip Referral Tool in Freddie Mac Loan Advisor and Servicing Gateway. A Seller must notify Freddie Mac within 90 days of the seller’s determination that a quality control finding affects the eligibility of a mortgage sold to Freddie Mac, except that if a finding is related to fraud or possible fraud, a seller must notify Freddie Mac within 60 days of the finding.
FHA / HUD Handbook 4000.1, V, A, 2 – must report all findings of fraud and material misrepresentation immediately. Must report all material findings concerning origination, underwriting, or servicing that the lender is unable to mitigate no later than 90 days after completion of the initial findings report. With the report to FHA, the lender must identify actions it has taken to attempt to mitigate each finding and report any planned or pending follow-up activities.
VA Pamphlet 26-7, Chapter 1, Section 14(f) – must promptly report any violation of law or regulation, false statements or program abuses by the lender, its employees or any other party to a VA loan transaction to the VA Office of jurisdiction. This requirement must be outlined in the lender’s QC Plan.

Question

Do we need to treat business purpose loans sold to Fannie Mae or Freddie Mac differently than business purpose loans NOT sold to the agencies?

Answer

Yes, you should always verify an investor’s guidelines regarding business purpose loans as they vary. The agencies maintain several rules applicable to business purpose loans that many other business purpose loan investors do not require. For example, while the 3% QM points and fees requirement does not apply to any business purpose loans, Fannie Mae and Freddie Mac maintain an overlay whereby all loans sold to Fannie Mae and Freddie Mac need to pass a 5% Points and Fees requirement (regardless of a business purpose).

In addition, while many non-agency investors require a prepayment penalty on business purpose loans, any loan (including business purpose loans) sold to Fannie Mae or Freddie Mac may not contain a prepayment penalty.

Be mindful of business purpose loans in the secondary market as many non-agency investors carry their own overlays and these are inconsistent in the marketplace.

Question

Is there a new disclosure required to be provided to NY mortgage loan applicants within three days of receipt of their application?

Answer

Yes. New York enacted a new law requiring licensed lenders, mortgage bankers, and banking organizations to provide a “What Mortgage Applicants Need to Know” pamphlet to residential mortgage loan applicants no later than the third business day after receiving the loan application. The new law is effective June 11, 2025.

The New York State Department of Financial Services (NYDFS) will develop such pamphlet and post it on its website for use prior to June 11, 2025. The pamphlet will be available in English and the six most common non-English languages spoken by individuals with limited English proficiency in New York. The pamphlet may be provided to the applicant electronically.

The content of the pamphlet will include:

WHAT MORTGAGE APPLICANTS NEED TO KNOW

As an applicant for a residential mortgage you have the right to:

Compare and negotiate the charges of different mortgage brokers and lenders to obtain the best loan possible.
Ask your mortgage broker to explain such person’s responsibilities within the mortgage lending process.
Know how much the mortgage broker is compensated by you and the lender for your loan.
A clear and truthful explanation of the terms and conditions of the
Know if the loan being offered is a fixed or adjustable rate mortgage loan, whether the loan can be transferred or refinanced, know the exact amount of your monthly loan payments, including any projected escrow payments, know the final annual percentage rate (APR) and the amount of regular payments at the loan’s closing.
Ask for loan estimate detailing all loan and settlement charges before you agree to the loan and pay any fees, including without limitation loan application fees, title search and insurance fees, lender’s attorney fees, property appraisal charges, inspections, recording fees. late payment fees, transfer taxes, point and origination fees, escrow account balances, which services a loan applicant can shop for and which they cannot, and you are entitled to receive such estimate within three business days of applying for a loan.
Obtain credit counseling before closing a loan.
Decide whether or not to finance any portion of the points or fees.
Refuse to purchase credit insurance for any mortgage loan.
Have your property appraised by an independent licensed professional and to receive a copy of the appraisal.
Not be subject to deceptive marketing practices.
Ask for the consumer financial protection bureau’s booklet “Your home loan toolkit”.
Receive the following documents, and every document otherwise required to be given to you at closing under federal and New York state law:
1. Loan estimate,
2. Closing disclosure.
Know what deposits and fees are not refundable if you decide to cancel the loan agreement.
Receive in writing the reason for the denial or conditional approval of your loan application.
If refinancing, you may cancel a loan within three days of the closing by providing written notification of cancellation to this licensed lender or banking institution.
Receive the closing disclosure three days before the closing takes
Have any lending disputes resolved in a fair and equitable manner.
A credit decision that is not based upon your race, color, national origin, religion, sex, family status, sexual orientation, disability or whether any income is from public assistance.
File a complaint with the department or the Consumer Financial Protection Bureau if you believe that a mortgage broker or any other entity licensed by the department or the Consumer Financial Protection Bureau has violated any rules, regulations or laws which govern such person’s conduct in working with you to get or process a mortgage loan.
File a complaint with the New York state department of state or the Consumer Financial Protection Bureau if you believe that a real estate broker has violated any rules, regulations or laws which govern such person’s conduct in working with you to purchase a home

Question

Has Fannie Mae changed the requirements regarding Interested Party Contributions and Lender Incentives requirements?

Answer

Yes. On May 7, 2025, Fannie Mae issued Selling Guide Announcement (SEL-2025-03), which, among other items, updated interested party contributions definitions, identified items excluded from maximum financing concessions, clarified treatment of realtor rebates, and revised a requirement for when a lender affiliated with an interested party provides a lender incentive.

Fannie Mae also updated its Single-Family Selling Guide to include the below described changes.

Interested Party Contributions (IPCs) (B3-4.1-02)

IPCs are contributions made by third parties with a vested interest in the transaction that cover costs typically required to be paid by the buyer. Examples of interested parties include the seller, builder, real estate agent, an affiliate of the foregoing, or any party who can benefit from the sale at the highest price and influence the sales price.

Fannie Mae clarified that the following are IPCs:
- Funds paid directly by an interested party to the borrower;
- Funds that flow through a third-party organization, including nonprofit entities, from the interested party to the borrower;
- Funds provided to the transaction on the borrower’s behalf by an interested party, including a third-party organization or nonprofit agency; and
- Funds donated by an interested party to a third party, which then pays some or all of the closing costs for a specific transaction.
Fannie Mae set forth a new list of items that are not considered IPCs:
- A lender credit derived from premium pricing, even if the lender is an interested party to the transaction;
- Gift funds or gift of equity from a seller who is also an acceptable donor provided that:
  - The donor is not a builder, or another interested party, and has no affiliation with any other interested party to the transaction, and
  - All requirements pertaining to gift funds and gift of equity from an acceptable donor as stated in the Selling Guide; and
- A legitimate pro-rated real estate tax credit in places where real estate taxes are paid in arrears; and
Fannie Mae clarified that a realtor rebate, not applied to the transaction (for example, not used towards closing costs), must be treated as a sales concession, regardless of when the rebate is provided.

Lender Incentives (B3-4. 1-03)

Lender incentives are credits such as cash or a cash like options (i.e. gift card) or another item of value that is not a lender credit. Fannie Mae increased the $500 limit on lender incentives to $2,500 and indicated they are permitted provided:

The incentive is not sourced from the transaction (for example, premium pricing);
The borrower qualifies without consideration of the incentive (for example, the incentive cannot be considered borrower assets, used to reduce the payment on an outstanding credit card account, or included in maximum cash back to borrower at closing calculation);
The amount of the incentive does not exceed $2,500; and
There is no repayment is required.

Note: Fannie Mae reiterated that when the lender is, or is affiliated with, an interested party to the transaction, the incentive must be treated as a sales concession.

Effective: Lenders are encouraged to implement these changes immediately, but must do so for all loans with Note dates on and after September 3, 2025.

Question

As nationwide insurance issues continue to complicate agency-required hazard and flood insurance coverage, are there any resources available to lenders to assist with training staff?

Answer

Yes. Fannie Mae’s Learning Center provides Insurance Training to lenders and servicers that is specifically designed to provide an understanding of the key property and flood insurance requirements for one-to-four units, PUDs, condos and co-ops. Specifically, Fannie Mae’s Learning Center offers the following property insurance training modules:

Property Insurance (1-4-Unit Properties)

Evidence of property insurance;
General property insurance requirements for all property types;
Property insurance coverage requirements for one- to four-unit properties;
Determining the required coverage amount for one- to four-unit properties;
Understanding replacement cost value, replacement cost coverage, and actual cash value;
Deductible requirements for one- to four-unit properties; and
Individual property insurance requirements for a unit in a project development.

Note: Fannie Mae’s Learning Center also offers various training modules for property insurance for PUDs, condos, and co-ops.

Flood Insurance

Determining if a property requires flood insurance;
Evidence of flood insurance – all property types;
Determining the required deductible amount – all property types;
Coverage amount requirements for one- to four-unit properties, including PUDs; and
Coverage amount requirements for attached condo and co-op projects.

Please also visit our prior related Compliance Questions of the Week:

What resources are available to assist a mortgage lender with a natural disaster preparation and response?
Does the property insurance selected by borrowers need to be written by an insurer that meets certain credit rating requirements?

Also, in case you missed it, please watch a recent webinar on The Home Insurance Crisis featuring AGMB Partner, Michael G. Barone, Esq.

Question

Is a Fannie Mae Seller/Servicer required to update its Lender Record Information (Form 582) if there are changes to the organization?

Answer

Yes. Fannie Mae’s Lender Record Information (Form 582) provides information necessary to verify that the seller/servicer continues to meet basic eligibility requirements, as well as certifications regarding compliance with Fannie Mae’s requirements. If there are changes to the Lender’s Record Information, the seller/servicer must update Form 582 and provide Fannie Mae with email notification advising of the “Changes to the Lender Organization” mailbox (organization_change@fanniemae.com) within five (5) business days of the occurrence of any of the following:

Any actions pending, starting, or to the seller/servicer’s knowledge, threatened against or involving the seller/servicer that could reasonably be expected to have a material adverse effect on the seller/servicer’s ability to comply with provisions of the Lender Contract, its financial status, servicing operations, or mortgage operations;
A breach of certain agreements, in accordance with A4-1-01, Maintaining Seller/Servicer Eligibility;
Any material and adverse change in the circumstances and qualifications that were in place for Fannie Mae’s consideration at the later of:
- the time of the seller/servicer’s approval in accordance with A4-1-01, Maintaining Seller/Servicer Eligibility, or
- Fannie Mae’s most recent selling operational or servicing quality review; and

Any change, event, or circumstance that has or could reasonably be expected to have a material adverse effect on the lender’s origination of loans, the servicing of Fannie Mae loans, or on the financial or business condition or operations of the seller/servicer, or the ability to comply with the Lender Contract; or

Any change in principal officers, or any change in owners or partners with a direct or indirect interest of 5% or more in the company.

The seller/servicer must also update its Form 582 electronically no later than 90 days after the end of the seller/servicer’s fiscal year.

Reminders:

A seller/servicer must also comply with Fannie Mae’s Report of Changes in a Seller/Servicer’s Organization requirements (A4-1-03), which requires the seller/servicer to provide 60 days’ advance written notice of any proposed major change in its organization to allow Fannie Mae adequate time to provide prior written approval or notice of non-objection or objection, where required. The written notice must include copies of any filings with, or approvals from, the seller/servicer’s state or other regulatory authority.
A seller/servicer is also required to provide immediate written notice to Fannie Mae if a regulatory agency assumes a participatory role in the management of the seller/servicer’s operations.

The seller/servicer must either contact its customer account team for additional guidance on these notices or email the “Changes to the Lender Organization” mailbox (organization_change@fanniemae.com).

Question

Does the property insurance selected by borrowers need to be written by an insurer that meets certain credit rating requirements?

Answer

Yes.

Fannie Mae and Freddie Mac both require the insurance carrier selected by the borrower to meet a specific threshold credit rating category. If the insurance carrier does not meet this threshold then the policy will not be acceptable to either agency.

For example, Fannie Mae requires any property insurance policy for the property securing a first mortgage, including master policies for project developments, to be written by an insurer that meets one of the rating requirements in the following table:

Rating Agency	Rating Category
AM Best Company Rating	“B” or better Financial Strength
Demotech, Inc.	“A” or better Insurance Financial Stability
Kroll Bond Rating Agency	“BBB” or better Insurance Financial Strength Rating
S&P Global	“BBB” or better Insurer Financial Strength Rating

There are exceptions such as those for second mortgages and insurance policies secured by state Fair Access to Insurance Requirements (FAIR) plans.

Freddie Mac has similar but not identical requirements as indicated in the table below:

Rating Agency	Rating Category
AM Best Company	a minimum Financial Strength Rating of “B+”, as reported online at http://www.ambest.com
Demotech, Inc.	a minimum Financial Stability Rating of “A” as reported online at http://www.demotech.com
Kroll Bond Rating Agency	a minimum Insurance Financial Strength Rating of “BBB” as reported online at https://www.kbra.com
S&P Global	a minimum Insurer Financial Strength Rating of “BBB” as reported online at http://www.standardandpoors.com

While HUD and VA do not maintain such requirements, lenders should be proactive in determining requirements of all investors (i.e. non-QM) as many non-traditional insurers have entered the marketplace and their credit rating may not meet the threshold required by the agencies or another applicable investor.

Question

Are there new robocall and texting rules?

Answer

Yes, the FCC announced that the below rules related to robocalls and text marketing will become effective April 11, 2025:

A called party may revoke consent by using any reasonable method, which includes any of the following:
- An automated, interactive voice or key press-activated opt-out mechanism provided during the call;
- A website or telephone number designated by the caller to process opt-out requests; or
- Replying to a text message with words a reasonable person would understand to convey revocation of consent, such as “stop,” “quit,” “revoke,” “cancel,” “opt-out,” or “unsubscribe.
  - The rules explain a texter can choose to use a texting protocol that does not allow reply texts. However, the texter must provide a clear and conspicuous disclosure on each text (i) indicating that two-way texting is not available due to technical limitations, and (ii) providing reasonable alternative ways to revoke consent.

Businesses must honor revocation requests within 10 business days of receipt of the request and cannot designate exclusive means to request revocation of consent.

A texter may reply with a one-time text message confirming receipt of an opt-out request as long as the text only confirms the text recipient’s revocation request. It cannot include any marketing or promotional information or try to persuade the text recipient to reconsider the opt-out.
- If the text recipient consented to several categories of text messages, the confirmation message may request clarification as to whether the opt-out applies to all messages. The texter must stop sending any texts for which consent is required unless the text recipient indicates a desire to continue to receive certain messages. A lack of response must be treated as a revocation of consent for all robocalls and robotexts from the sender.
- The confirmatory text must be sent within five minutes of receipt of the opt-out requestor the sender will have to demonstrate that delay was reasonable.

Question

Are NMLS fees increasing in 2025?

Answer

Yes, as of March 1, 2025, NMLS processing fees increased as follows:

State Licensure

Fee Type	Current Fee	Increased Fee – effective 3/1/2025
Company initial set-up and application processing fee	$100	$120
Company annual processing fee	$100	$120
Branch initial set-up and application processing fee	$20	$25
Branch annual processing fee	$20	$25
Individual initial set-up and application processing fee	$30	$35
Individual annual processing fee	$30	$35
MLO change of sponsorship fee	$30	$35

Federal Registration

Fee Type	Current Fee	Increased Fee – effective 3/1/2025
Institution initial set-up and application processing fee	$100	$120
Institution annual processing fee	$100	$120
Individual initial set-up and application processing fee	$30	$35
Individual annual processing fee if registration occurs between January and June	$30	$35
Individual annual processing fee if registration occurs between January and June	$30	$35
Individual annual processing fee if registration occurs between July and December	$60 (then $0 annual processing fee)	$65 (then $0 annual processing fee)
MLO change of employment fee	$30	$35

The processing fee increase is the first since the launch of NMLS in 2008 and will apply to all industries on NMLS.

Question

What does a lender need to do before enabling a third party originator with access to Desktop Underwriter (DU)?

Answer

A lender may redistribute or enable access to Desktop Underwriter (DU) to its permitted third party originators (TPOs) as part of its standard DU license without prior approval of Fannie Mae. However, prior to enabling such access, the lender must ensure it maintains a written agreement with the TPO in compliance with Fannie Mae’s Consolidated Technology Guide, Desktop Underwriter (DU) Schedule. Further, the lender must make DU available through a secure website portal, which prevents unauthorized access. Lenders must also include the unique NMLS ID assigned to each permitted TPO or subsidiary on all loan casefiles submitted to DU.

Fannie Mae requires a Seller/Servicer to maintain policies and procedures addressing DU redistribution requirements and for monitoring and maintaining the security and proper use of all authentication credentials (both issued to employees and to permitted TPOs and subsidiaries). The policies and procedures should address how the Seller/Servicer:

Provides support, training and oversight of permitted TPOs;

Takes immediate steps to disable authorized authentication credentials for authorized users that cease to be associated with the lender or no longer require such access;

Immediately notifies Fannie Mae of any loss, theft, or unauthorized disclosure or use of an authentication credential;

Periodically reviews and updates authorized users’ access rights;

Revokes or resets authentication credentials as required by Fannie Mae, but in no event less than every 90 days for individuals and annually for systems;

Ensures that authorized users are only performing actions on behalf of the Seller/Servicer.

As part of the annual Lender Record Information (Form 582), lenders must answer a question on whether they redistribute access to DU to any TPOs or subsidiaries. If yes, Fannie Mae will require the lender to submit the names, contact information, and NMLS IDs for permitted TPOs and subsidiaries to Fannie Mae. Fannie Mae maintains a Form 582 –Redistribution of DU Job Aid to assist lenders with completing Form 582

Question

Is there recent guidance for mortgage lenders on elder abuse awareness and prevention?

Answer

Yes, in December 2024, the federal and state regulators issued an Interagency Statement on Elder Financial Exploitation (Statement) to raise awareness and provide strategies to supervised institutions for combating elder financial exploitation, consistent with applicable legal requirements. In addition to listing numerous federal and state resources, the Statement provides the following examples of risk management practices that supervised institutions may use to help identify, prevent, and respond to elder financial exploitation:

Governance and Oversight – including policies and practices, internal controls, employee codes of conduct, open communication among departments, complaint management, and instilling a culture of compliance.

Employee Training – clear, comprehensive, and ongoing employee training related to recognizing and responding to elder financial exploitation can increase a supervised institution’s ability to detect and report elder financial exploitation.

Using Transaction Holds and Disbursement Delays – when legally permissible to do so, this may prevent consumer losses and allow a supervised institution time to investigate and respond to various situations that may involve elder financial exploitation.

Using Trusted Contacts – establish policies and procedures that enable applicants and/or account holders to designate one or more trusted contacts that employees can contact when elder financial exploitation is suspected.

Filing SARs Involving Suspected Elder Financial Exploitation – In certain circumstances, filing a suspicious activity report (SAR) with FinCEN may be necessary.

Reporting to Law Enforcement, Adult Protective Services (APS), and/or Other Entities as Appropriate – timely reporting of elder abuse exploitation increases the likelihood of successful recovery of funds. Voluntarily notifying law enforcement directly of suspected elder financial exploitation and the underlying facts may expedite and assist law enforcement investigation and prosecution.

Providing Financial Records to Appropriate Authorities – in some instances and consistent with applicable law, supervised institutions may expedite documentation requests for Adult Protective Services, law enforcement, or other investigatory agencies for active elder financial exploitation cases.

Engaging with Elder Fraud Prevention and Response Networks – networks can help supervised institutions engage in professional cross-training, multidisciplinary case review and coordination, and community education efforts related to elder financial exploitation.

Consumer Outreach and Awareness – when consumers are informed about specific types of scams and understand perpetrators’ tactics, they are more likely to recognize a scam and are less likely to engage with a perpetrator or lose money. Supervised institutions can support their customers by providing timely information about trending scams and ways to avoid them.

In addition to financial losses, elder financial exploitation can result in increased reputational, operational, compliance, and other risks for supervised institutions. Banks, credit unions, mortgage lenders and other supervised institutions play an important role in combatting elder financial exploitation and supporting their customers who experience these crimes.

Question

What are the top defects and trends the mortgage industry is currently uncovering in Quality Control (QC) reviews?

Answer

In its Quality Insider, “Understand Top Defects to Help Strengthen Loan Qualify” (September 2024 edition), Fannie Mae identified six (6) new defect trends (bolded below), which recently moved into its list of top 10 defects identified during QC reviews.

For loans acquired in Q1 2024, Fannie Mae’s top 10 initial significant defects* in a random sampling were:

Incorrect income calculation – rental income/loss
Monthly payments not properly calculated;
Inappropriate comparable sale(s) selection due to location;
Insufficient assets to close;
Omission of debts documentation missing;
Income misrepresentation;
Incorrect income calculation- base;
Borrower not employed;
Undisclosed liability; and
Failure to adjust comparables.

* Initial significant defects = significant issues cited prior to a final remediation activity

Fannie Mae provided detail on each defect within the Quality Insider and reminded lenders of the importance of remaining current on recent industry defect trends as it allows for a more dynamic QC program, better action planning, and the prevention of similar defects within a mortgage lender’s organization. For instance, mortgage lenders can leverage this data to further develop personnel training to prevent defects. Fannie Mae also advised mortgage lenders to keep a line of sight on defects that decrease in issuance to avoid re-emergence.

Question

What resources are available to assist a mortgage lender with a natural disaster preparation and response?

Answer

With the increase in natural disasters, it is imperative that lenders adequately train applicable staff on where and how to locate disaster guidance and resources so they do not run afoul of investor, agency or other applicable guidelines. Various agencies maintain the following disaster preparation and response webpages:

Fannie Mae Disaster Response – includes Disaster Relief Single Family Selling/Servicing Frequently Asked Questions (FAQs)
Freddie Mac Disaster Relief – includes training and Seller: Disaster Relief Policies FAQ and Servicing: Disaster Relief Policies FAQ
HUD Disaster Resources
VA Guidance on Natural Disasters
FHFA’s Mortgage Loan and Natural Disaster Dashboard – online risk analysis tool intended to give property owners, financial institutions, and other stakeholders better insight into which areas of the country are most likely to incur greater damages from hurricanes, flooding, wildfires, and other types of natural hazards.
Federal Emergency Management Agency (FEMA)’s Disaster Information page – provides a “search by location” tool to identify active and past disaster declarations.

Lenders should develop written policies and procedures addressing disaster response. Such policies should outline requirements when a natural disaster is anticipated as well as for confirming whether a subject property is located in a federal declared disaster area, if and when property inspections are necessary (or a best practice), and other applicable requirements.

Lenders should also consider whether they are properly prepared for situations in which their employees or office locations may be directly impacted by a natural disaster. Lenders must maintain and periodically test their disaster recovery and business continuity plans in this regard.

Question

As a mortgage lender, what sort of training should we be requiring of management and employees?

Answer

Mortgage lenders have a degree of discretion with regard to the frequency and content of compliance training requirements for management and employees. However, training must be kept up-to-date, ongoing and comprehensive.

The CFPB’s Compliance Management Review Examination Procedures indicates:

“Board members should receive sufficient information to enable them to understand the entity’s responsibilities and the commensurate resource requirements.

Management and staff should receive specific, comprehensive training that reinforces and helps implement written policies and procedures. Requirements for compliance with Federal consumer financial laws, including prohibitions against unlawful discrimination and unfair, deceptive, and abusive acts and practices, should be incorporated into training for all relevant officers and employees, including audit personnel.

Examiners should seek to determine whether:

Compliance training is comprehensive, timely, and specifically tailored to the particular responsibilities of the staff receiving it, including those responsible for product development, marketing and customer service.
The compliance training program is updated proactively in advance of the rollout of new or changed products or the effective date of new or changed consumer protection laws and regulations to ensure that all staff is aware of compliance responsibilities.
Training is consistent with policies and procedures and designed to reinforce those policies and procedures.
Compliance professionals have access to training that is necessary to administer a compliance program that is tailored to the supervised entity’s risk profile, business strategy, and operations.”

Mortgage lenders must maintain records of training to demonstrate compliance with the foregoing and ensure management and employees timely and successfully complete training. Note, both federal and state examiners are reviewing training logs.

Training topics and content covered may vary depending on position, but should cover relevant mortgage compliance topics, such as anti-money laundering, fair lending, ECOA, security awareness, privacy, complaint management, UDAAP, RESPA, and TRID. This is not an all-inclusive list.