May 22, 2009
Commissioner Haraf Issues Order Under Financial Code Section 14201
Order Under Financial Code Section 14201
In response to inquiries about California Code of Regulations, Title 10, Section 30.802, and in an effort to encourage credit unions to implement comprehensive loan modification programs to assist homeowners in paying their mortgage obligations and retaining their homes, I am issuing this order under Financial Code Section 14201.
Notwithstanding the provisions in California Code of Regulations, Title 10, Section 30.802(a)(1)(B), generally requiring mortgage insurance for loan amounts in excess of 80 percent of the appraised value of real property collateral, mortgages granted by California state-chartered credit unions are hereby exempted from such mortgage insurance requirement provided that:
(1) The loan is covered by the federal "Home Affordable Modification Program" or "Home Affordable Refinance Program" or a program that is substantially similar as may be determined by the Commissioner; and
(2) The loan is a modification, workout, or refinance of an existing loan currently held by the credit union. However, the loan to be refinanced shall not include any new funds not already a part of the loan to be refinanced (other than loan points/fees).
The exemption provided by this order may be revoked as to a particular credit union if the Department finds that the credit union is modifying or refinancing loans not in compliance with this order.
This order is effective immediately and will remain in effect until revoked, amended, superseded, suspended, or supplemented by further order of the Commissioner of Financial Institutions.
This order does not waive any limitation, requirement or condition under the Banking Law (commencing with Financial Code Section 99) or the Savings Association Law (commencing with Financial Code Section 5000) or other activities in California by financial institutions that are not chartered under California law.
WILLIAM S. HARAF
Commissioner of Financial Institutions