CFPB Identifies four special audit areas for 2016.

Well, folks, I think you all should read the attached. The CFPB went public with its four primary audit areas, beyond the normal ones disclosed in our Books One, Two, and Three.

  1. COMP PLANS, and yes, looking backwards two or three years as well.
  2. TRID, with no grace period.
  3. MSAs, nothing here to be said. They can be done legally, but it takes a lot of work and commitment by all involved to steer clear of RESPA Violations.
  4. ATR – yes, that pesky part of your QM Policy in Book One. They will evaluate your use of some form of proper ATR test.

No where did they mention exempting anyone from these four areas. No special favors for private money lenders who lend against 1-4 family etc. So, please read the attached.

We still have time to get you set up for the end of this year. Where compliance is involved, sooner is better. Later is foolish. You can reach us at  (800) 656-4584 and we will get to work right away!

CFPB Agenda for 2016 120915

(800) 656-4584 or



Ready for year-end certification?


If your Compliance Program is older than 2014, is what you would consider marginal, or is made up of cut-and-paste, you need to take this last opportunity before 2015 ends to get a fully compliant program into motion.

As you renew your NMLS licenses your Company’s financial reports require you to certify that your compliance program is up to date and remain a priority of management.

If you are still unsure of what is frequently audited, we have developed an audit checklist for your use.  Our checklist is current as of November. Some states have expanded on it but this is what we could consider to be a safe minimum amount of preparation.

We recently expanded staff and can guarantee that any new client who contacts us this week will have the tools to be compliant by the Holidays.

Please let us hear from you. You don’t have to keep worrying about this and you don’t have to suffer the results of a bad audit.

To receive a copy of our Audit Checklist, CLICK HERE.

To call us, dial (800) 656-4584 anytime. Thanks.

Want to see what is on a typical Audit Notice?

This past week I was contacted by several clients who received Audit Letters in the mail. One of them sent me a copy of the Audit Letter to review. 


The Audit Letters are ominous because they are more robust than I have seen in the past and indicate the State is aggressively incorporating federal guidelines. It’s not just about state regulations anymore.  

I think it would be a good idea for you to think about the below, and email me with questions. Some of these things might apply to you.

Here are some examples of just a few of the items included in the eleven page Audit Letter.

  • Emphasis on MLO Employment Contracts and Employee Files, likely to investigate compliance with training and to analyze your W-2 versus 1099 situations
  • List of third party providers to investigate Privacy Act Compliance, possible unreported ABA situations,  and payments between entities
  • Form 941 – Federal Employer Quarterly Tax Return (I told you so)
  • Warehouse Line Agreements – looking for more than one agreement and comparing financials used for line approval with actual books and records
  • Advertising Log with samples back two years
  • Proof of Acceptance of Duties of Managers and Officers
  • Bank Accounts verifying third party payments and CFPB Comp Plan commission compliance
  • Corporate Minutes or LLC Records to establish Compliance as ongoing topic of Management
  • Random spot checks of minimum net worth requirement at any point in time to detected unreported deficiencies in net worth

I have the actual audit letter should anyone want to discuss it.

Call us at (800) 656-4584.

Office Security and the Privacy Act and your Identity Theft Prevention Program……..what to do?


The Financial Services Modernization Act (1999) (“Gramm Leach Bliley”) has two main components that all brokers and lenders should be aware of.

The Financial Privacy Rule regulates collection and disclosure of non-public personal information (“NPI”). The Safeguards Rule regulates the protection of such NPI when it is in your possession.

Lately I have been taking quite a few questions from clients and that leads me to conclude that many brokers and lenders are concerned about the security of data in their office. Good for you!

Thus, this blog post is going to address the Safeguards Rule as it relates to Office Security.

Here is the general idea. All NPI must be protected at all times. This means:

When working at your desk, only have the NPI relevant to the exact files you are actively working on. All other NPI should be off the desk top in a safe drawer.

When you go to lunch, you should lock your office door. If you don’t have an office door to your specific work area then put the  NPI in a file cabinet or desk that locks.

When you go home at night nothing  should be left on desk tops or in shredding boxes (waiting to be shredded) – especially if your office has a cleaning crew.

IF there is a window between your reception area and your work area (think medical office layout) the window must be lockable  or have some sort of protective screen installed.

If you have a door to your production area, it should have an automatic closer on it, and a keypad for employee use for access.

Computers should not be left on at night unless they are password protected.

IF you store files electronically (instead of keeping paper copies) they should be stored on a server locked in a closet or computer room and NOT connected to the internet in any way. Access to that computer must be limited and password protected.

IF you have a staging area for documents to be shredded it must be a locking box.

I hope this helps. The idea is clear.

We have openings for new clients right now. If you want to work with a Compliance Service that is managed by a 26 year Mortgage Banker Veteran and Attorney, call us at 800-656-4584. You won’t believe the value here. We don’t just sell you books and disappear. We are your compliance partner for a full year.

What about that new Special Information Booklet …..the “Toolkit” ….. when do I have to provide?


For many years we have been providing booklets at application and at closing, but the process has escalated to a very serious issue when you are audited. It used to be called the Settlement Costs Booklet. Now it is called the Toolkit. Do you provide the booklet as required?

The booklet must be delivered or placed in the mail no later than three business days after the application is received. We are talking about a qualified application (the “six things test”).

Delivered means handed to, or mailed in physical form in the US Mail, or UPS, or e-mail.  E-mail? Sure, why not? If you e-mail and request a receipt, and send it to an e-mail you know to be valid, it should satisfy Electronic Documents rules.

Lenders are required to deliver or mail the Toolkit not later than 3 days after receipt of an application.  However, in the Federal Register notice announcing the Toolkit’s availability, the CFPB encourages all market participants (such as realtors) “to provide the [Toolkit] to consumers at any other time, preferably as early in the home or mortgage shopping process as possible.”  The Toolkit is designed to be distributed electronically and has interactive worksheets and checklists. So that should end any argument that it had to go in the US Mail, huh. Just be sure you can prove you sent it.

It is not considered delivered if all you do is make it available on your website. You have to go a step further.

By the calls and emails I am receiving, I am discovering that many of you are not ready for TRID yet. If you are not my client, call me at (800) 656-4584 and let’s see what we can do about your compliance program.

Here is a link to the actual Toolkit. Take a look, today.

Filing Suspicious Activity Reports required by AML

SARS 090915

We all know about Anti Money Laundering. No matter what kind of lending we engage in, we must be on guard for suspicious activity. We are required to understand what constitutes suspicious activity (“SAR”) (hence Red Flags etc.) and we are also required by the AML statutes to report certain suspicious activities to FinCen.

Finwhat? The Financial Crimes Enforcement Network. The government clearing house and enforcement arm for AML and other activities. These are the people who collect and distribute suspicious activity reports.

So what constitutes suspicious activity? That is for a different post. When we complete annual AML Training, this is all  explained in detail. If you need a refresher course see pages 19-37 of our Compliance Manual Book One. If you are not my client call me and I will inform you.

First here are some documents I put together to walk you through the Banking Secrecy act Web Site, where you can create an account so when you have a SAR to file, it will be easier and quicker for you .

1 SARS reporting via BSA eFile 090915

YOU MUST FILE so you have two choices as I see it. Do it manually, writing it out and mailing or emailing it; or use the eFile system. I recommend you use the eFfile system.

Next here is the link to get to the BSA Web Site. When asked about your regulator pick your state regulator.

TRID Simplified…….Don’t lose hope…….you can do it…….the key is to keep calm and read on.

My regular clients will know what this is.

First, download the PDF and print it out.

Trid Simplified PDF Presentation 090315

Next, listen to this audio file. It is only 28 minutes long. There are a couple of minor issues, like when I speak of mortgages on mobile homes I needed to say NOT permanently attached. Also someone asked about the requirement for a signature on the Loan Estimate. There is no place for a borrower to sign. You have to be able to prove you provided it once the clock started ticking, and then prove you provided it again prior to “consummation” – according to the days required by the reg. here is the   language relied on  ” The consumer is not required to sign the Loan Estimate. The creditor may add a signature statement and have the consumer sign page 3 of the Loan Estimate in order to Confirm Receipt of the Loan Estimate by the consumer. If used by the creditor, the signature statement must contain the exact language from the model form. (§ 1026.37(n)(1))”

This is a lot easier than reading a 100 page “Quick Guide”……..

So shut up and dance.