Hot Secondary Market Issues

1
Hot Secondary Market Issues
By Stephen F.J. Ornstein, Partner Sonnenschein
Nath Rosenthal LLP
2
Section 404 Disclosures

• Enacted in Section 404 of the Helping Families
  Save Their Homes Act of 2009.
• Provision was unexpected and is
  self-implementing it amends TILA.
• Added by Senator Feinstein to help borrowers
  identify the owners of their loans.
• Identity of owner is not necessarily revealed on
  the RESPA Hello-Goodbye letters.

3
What is required to be disclosed?

• No later than 30 days after the sale of the
  mortgage, the new owner or assignee must notify
  the borrower in writing of
• i) the identify, address and phone number of the
  new creditor
• ii) the date of transfer
• iii) how to reach an agent or party having
  authority to act on behalf of the new creditor
• iv) the location of the place where transfer of
  ownership of the debt is recorded and
• v) any other relevant information regarding the
  new creditor.

Violations subject to augmented civil penalties
and private rights of action under TILA
4

• Unresolved Questions including
• What if the assignment of mortgage is unrecorded?
• Do warehouse lenders and providers of repo
• facilities have to give notices?
• Does the disclosure have to be given at every
  step in a multi-step transfer chain?

5
Operation Restart Model RMBS Representations and
Warranties

• Property valuation
• Income/Employment Assets
• Occupancy
• Source of Loan Payments
• Data
• Fraud
• Underwriting
• Mortgage Insurance
• Regulatory Compliance

6

• Borrower
• Downpayment
• No Prior Liens
• Enforceability and Priority of Lien
• Complete Mortgage Files
• No Prior Modifications
• Taxes Paid
• No Damage/Condemnation
• No Mechanics Liens

7

• No Encroachments/Compliance with Zoning
• No Usury
• Certificate of Occupancy
• Loans Current/Prior Delinquencies
• Mortgage Loan Legal and Binding
• Proceeds Fully Disbursed/Recording Fees Paid
• Existence of Title Insurance
• Hazard Insurance
• No Default

8

• (bb) No Rescission
• Enforceable Right of Foreclosure
• No Bankruptcy
• Mortgaged Property is 1-4 Family
• Mortgage Loan Qualifies for REMIC
• Lost Note Affidavit
• Doing Business
• Environmental Laws
• Insurance Coverage Not Impaired

9

• Deeds of Trust
• Mortgage Recorded
• Due-On-Sale
• Leases
• Manufactured Homes
• SP Glossary Georgia Fair Lending
• Higher Cost Product Underwriting
• No High Cost Loan

10
Sample Slide for Section Title

• Type Section Title Here

11
Sample Column Chart Slide

• This is where you will add information about the
  units being represented in the chart.

This is where you can add disclaimer notes about
the data being represented in the chart.
12
Sample Bar Chart Slide

• This is where you will add information about the
  units being represented in the chart.

This is where you can add disclaimer notes about
the data being represented in the chart.
13
Sample Area Chart Slide

• This is where you will add information about the
  units being represented in the chart.

This is where you can add disclaimer notes about
the data being represented in the chart.
14
Sample Stacking Bar Chart Slide

• This is where you will add information about the
  units being represented in the chart.

This is where you can add disclaimer information
about the data.
15
Sample Line Chart Slide

• This is where you will add information about the
  units being represented in the chart.

This is where you can add disclaimer information
about the data.
16
Sample Pie Chart Slide

• This is where you will add information about the
  units being represented in the chart.

This is where you can add disclaimer information
about the data.