CFPB Audit Initiatives for 2022 – be advised!

Well, here we go. Take a really good look at the last one. I already have one client that has received notice of audit. I can tell you it is my opinion that there will be some “fishing” going on. The CFPB will be looking to find justification for all this bluster.

  • Redlining.  Redlining has been a top priority since the Bureau’s inception in 2011 and both the Trump and Biden administrations, and that the CFPB intends to take “fresh approaches,” citing the DOJ’s anti-redlining initiative. 
  • Appraisal bias.  Home valuations have traditionally been based on human judgment and discretion, and additional objective controls are needed.  The CFPB has already held meetings with industry representatives concerning the policies, procedures and controls currently in use to better understand valuation issues.  The Bureau is also partnering with the FHFA and prudential agencies on a long-standing rulemaking for QC standards for automated valuation methods stemming from a requirement in the Financial Institutions Reform, Recovery and Enforcement Act of 1989, which is currently in the pre-rule stage. 
  • Special purpose credit programs (“SPCPs”).   Also a top priority of Director Chopra, the CFPB seeks to promote usage of SPCPs to increase equitable access to credit. 
  • Small business lending.  The CFPB issued a notice of proposed rulemaking that would implement Section 1071 of the Dodd-Frank Act in September 2021, and encouraged public comments, which are due on January 6, 2022. 
  • Limited English Proficiency (“LEP”) consumers.  LEP individuals face unique challenges in learning about and accessing consumer financial products and services because disclosures are generally not available in non-English languages.  The CFPB’s LEP guidance issued in January 2021 sought to provide better guidance to the industry on serving LEP consumers, and in September 2021, the Bureau’s publication of a blog post on how mortgage lenders can better serve LEP borrowers.
  • Focus on unfairness and discrimination in examinations and supervision.  Violations of law will not be tolerated, especially during the pandemic.  In the CFPB’s quest to advance racial and economic equity, the Bureau has now increased resources targeted toward small business lending.  The CFPB will also pursue “other illegal practices outside of ECOA and HMDA,” with the goal of using its authority to narrow the racial wealth gap and ensure markets are clear, transparent and competitive. (What????) 

Call me if you want to discuss. Our number is (800) 656-4584 and my email address is

Nelson A. Locke, Esq.

Our Office in Texas is moving!

A moving truck being driven by cartoon gator.

On Friday, October 29th, 2021, we are moving our office. We will be closed from noon to 6 PM.

We will be operational Monday, November 1st.

The new address is


Locke Law US, LLC



PLANO TX 75024

Our phone number remains the same. It is (800) 656-4584

Our Website remains the same. it is

My email address remains the same. It is

Thanks to all!

Texas no longer requires brick and mortar.

October 12th, 2021

This is GREAT NEWS for any of you Brokers or Lenders out there who have held back from doing business in my great State of Texas!

Texas was still stuck in the dark ages, not allowing you to operate your mortgage business virtually or from your home state. Now, all you need to do is be licensed by the Texas Regulators. The information is contained in Texas Bill 3617 easily located on the web. No more brick and mortar.

However, you may have other reaons for wanting access to an office. If so, call us and we will get you set up.

That’s it for now!

Any questions? Email me at

Nelson A. Locke, Esq

(800) 656-4584

About the Covid Moratorium…..

As you take applications this month and next, be aware of this issue. Plus, be sure you use the Covid disclosure we provide in your initial application package.

“If you’re looking for help with rent and utilities, you’re not alone. The CDC issued a NEW eviction moratorium on August 3, 2021, temporarily halting evictions in counties where COVID-19 is spreading rapidly. 

If you gave your landlord a declaration by July 31, and it’s still true, you are still protected from eviction for unpaid rent until October 3rd, 2021. If you need help and have not submitted a declaration, this new CDC moratorium may help you avoid eviction, but you must take action. Learn more about this new order and the help available to you.” 

(From the Consumer Financial Protection Bureau)

If you have any questions about this, feel free to call us at (800) 656-4584

Nelson A. Locke, Esq.

From Mortgage Banker Magazine…..

E-Closings And Fraud     E-closings are here to stay and while they provide efficiencies in process and ease to the consumer, there is an increased risk of fraud. The makings of another high volume year combined with low interest rates may see an increase in fraud. Have you experienced fraud with your E-closings? Are you aware of the potential risk factors for which fraud may occur?   Let’s briefly explore those risk factors…  

Synthetic Identity Fraud Perhaps a new term to understand, synthetic identity fraud is growing quickly and percent of loss to lenders is growing. This type of fraud involves the use of a social security number (a real one) with a counterfeit identity. With the pandemic came a shift in mortgage lending operations to E-closings or some type of hybrid and adjusting online verification of an applicant’s identity as well as authentication.  

Occupancy Fraud Be wise to investors as we continue to operate in a rather low interest rate time. An increase in fraud has been occurring where investors may pose as the owner occupying the property being purchased.  

Other Types of Fraud Other areas are experiencing forms of fraud: ·       Wire transfer fraud ·       Title fraud ·       Invalid representations by closing agents ·       Significant loan errors ·       Compliance issues  

Overcoming the Obstacles We always face challenges. What preventative tactics can you be doing to help protect your institution? ·       Training – make sure staff is trained to identify red flags and how to address them immediately. ·       Make sure your system can handle address and occupancy verifications. ·       Keep your third-party oversight program strong. ·       Provide tools to educate your customers regarding mortgage fraud.  

Any questions? Call us at (800) 656-4584. This article was reproduced from the web, no financial benefit involved. We recommend you take a look at Mortgage Banker Magazine.

Leaving messages this way got this company sued.

A lawsuit filed in California last week alleges that First California Financial Inc., violated the Telephone Consumer Protection Act (TCPA) when it contacted one Evelyn Ofiteru and others with a pre-recorded message without express written consent as  mandated by the TCPA.

Allegedly, First California Financial left a pre-recorded voice message with Ms. Ofiteru which said the following:

“Just wanted to give you a follow-up call on mortgage interest rates, currently we’re at 2.75% with 0 points, so if you’re interested give me a call back 714 606 8400 and I’ll be happy to go over the options with you. Have a great day.”

According to the lawsuit, the message both constitutes telemarketing, could be clearly identified as a pre-recorded message, and the plaintiff had not given her express written consent to be contacted by prerecorded message.

The plaintiff has brought the suit as a class action “on behalf of herself and all others similarly situated.” The lawsuit defined the class as, “All persons in the United States who, within four years prior to the filing of this action, (1) were sent a prerecorded message  by  or  on  behalf  of  Defendant,  (2)  regarding  Defendant’s goods,  products  or  services,  and  (4)  for  which  Defendant  failed  to secure the called party’s express written consent.”

Might also be a problem with a non-pub number. That is a Privacy Act violation.

Any Questions? Give us a call at (800) 656-4584.

Nelson A. Locke, Esq.

Compliance Services USA

CFPB charging Reverse Mortgage Lender with deceptive advertising practices (UDAP)

The Consumer Financial Protection Bureau (CFPB) on Tuesday announced that it has taken action against Mahwah, N.J.-based reverse mortgage lender Nationwide Equities for advertising practices it describes as “deceptive,” accusing the lender’s materials of violating the Mortgage Acts and Practices Advertising Rule (MAP Rule), the Truth in Lending Act (TILA), and the Consumer Financial Protection Act of 2010 (CFPA).

“[CFPB] today took action against Nationwide Equities Corporation for sending deceptive loan advertisements to hundreds of thousands of older borrowers,” the Bureau said in its announcement of the action. “The Bureau found that advertisements from Nationwide Equities misled consumers about how much money they could receive from a reverse mortgage, the fees and costs associated with the products, and the consequences of nonpayment.”

This marks the first major regulatory action of the CFPB against a reverse mortgage industry participant by the Joe Biden administration.

Our firm provides Advertising Audits and opinions before you publish. It is part of our practice and if you subscribe, you will receive this benefit allowing you to be in better compliance regarding advertising. Advertising is interpreted very broadly. It is an easy area to enforce, because most Brokers and Lenders seem to consistently forget they are subject to specific rules regarding the FTC, Dodd-Frank, and the Safe Act.

Give us a call.

Nelson A. Locke, Esq.

(800) 656-4584

UWM has been sued. Read on…..

April 27, 2021
UWM Faces Class Action Lawsuit Over Broker Ultimatum
United Wholesale Mortgage is facing a Class Action lawsuit that was filed by The Parrish & Goodman Law Firm, on behalf of a large group of independent mortgage brokers from Florida.

The group is looking to earn back their freedom to choose which lender is best for their clients, following the anticompetitive ultimatum that was issued by UWM CEO Mat Ishbia in early March, according to a press release from the firm. “UWM’s leveraged ultimatum is clearly unlawful, unfair and is designed to use UWM’s dominant market share (nearly 35% according to company claims) to limit the consumers’ choice and steer business for their own gain,” according to the release. “This position also runs counter to the actual value provided by mortgage brokers – the ability to shop all lenders and select the company and loan program that provides their clients the best possible rate, experience and process.

In some cases, this ultimatum could create conditions by which consumers will lose access to financing altogether, depending on which lender is offering programs that match their credit profile.”


Nelson A. Locke, Esq.
Compliance Services USA

False Claims Activity is heating up.

NASHVILLE, Tenn. – March 22, 2021 – Laziza Abdullaeva and Aziz Ashurov of Mt. Juliet, Tennessee, agreed to pay $200,000 to settle False Claims Act allegations involving misrepresentations in their purchases of certain properties from the U.S. Department of Housing & Urban Development (HUD), Mary Jane Stewart, Acting U.S. Attorney for the Middle District of Tennessee, announced today. 

On December 30, 2019, relators William Worrall and Jim Gregory filed a qui tam action against Ms. Abdullaeva, Mr. Ashurov and their investment company, Capital Invest, LLC, in the United States District Court for the Middle District of Tennessee. 

Relators alleged that Abdullaeva and Ashurov made false statements that they intended to occupy certain properties they purchased from HUD as a primary residence, but instead resold the properties for a profit and were presently renovating one such property purchased in East Nashville presumably for resale.

The loan originators were also investigated.

Don’t fall for this, the game has changed.

Nelson A. Locke, Esq.

(800) 656-4584

Washington DFI and Contract Loan Processors – here are the DFI rules in a snapshot…….

  1. You will not have to be licensed with DFI under the following scenarios:
    1. You are a W2 employee Loan Processor for a licensed mortgage broker(s). Generally, you must work from a licensed location (main or branch office). See WAC 208-660-300(14)(link is external) for more information.
    2. You are a W2 employee Loan Processor for a loan processing company that has a mortgage broker license. Generally, you must work from a licensed location. See WAC 208-660-300(14)(link is external) for more information.
  2. You must have a license with DFI under the following scenarios:
    1. You must have a loan originator license if you work as an independent contractor Loan Processor (receive a 1099) for a licensed mortgage broker. You must work from a licensed location under the mortgage broker license.
    2. You must have a loan originator license if you work as an independent contractor Loan Processor (receive a 1099) for a loan processing company. You must work from a licensed location under the loan processing company’s mortgage broker license.
    3. You must have a mortgage broker license if you own a processing company that independently contracts (receives a 1099) with licensed mortgage brokers to process loans. Your W2 employees and independent contractors (1099 paid workers) must work from a licensed location. Your independent contractors must be licensed as loan originators.

If you have any questions, give us a call at (800) 656-4584.

Nelson A.Locke, Esq

Regarding that “announcement” today….

Consider United States Antitrust Law

In the United States, antitrust law is a collection of federal and state government laws that regulate the conduct and organization of business corporations and are generally intended to promote competition for the benefit of consumers. The main statutes are the Sherman Act of 1890, the Clayton Act of 1914 and the Federal Trade Commission Act of 1914. These Acts serve three major functions. First, Section 1 of the Sherman Act prohibits price-fixing and the operation of cartels, and prohibits other collusive practices that unreasonably restrain trade. Second, Section 7 of the Clayton Act restricts the mergers and acquisitions of organizations that would likely substantially lessen competition. Third, Section 2 of the Sherman Act prohibits the abuse of monopoly power.

Now, think about Dodd-Frank and the CFPB. And “the rule of unintended consequences”.

Can there be such a thing as negative steering? There is such a thing as the negative commerce clause. If competitors are squeezed out, who gets the loans?

Maybe the most prudent thing for all of us to do, is sit back and watch for a few days.

Don’t act too fast. Rest and Digest.

Nelson A. Locke, Esq

(800) 656-4584

New 1003 now in effect!

Redesigned Form 1003 now required

URLA timeline

Effective March 1, 2021, lenders and brokers must use the redesigned Form 1003 and DU MISMO v3.4 file for all new loan applications. Applications started prior to March 1 can remain in their original DU format and form version.

Some of you have commented that your loan origination system was not prepared. That could be an issue, but if the file was started prior to 3/1/21, your loan origination system should have a workaround for their oversight.

You might want to have some old fashioned manual “new” 1003s around until this settles itself down a bit. Otherwise, data fields won’t match.


Nelson A. Locke, Esq.

Compliance Services

(800) 656-4584

An update on the “W-2 versus 1099” debate……..

On January 6, DOL announced a final rule clarifying the standard for employee versus independent contractor under the Fair Labor Standards Act (FLSA) which will go into effect on March 8, 2021. These new regulations redefine the tests to determine who is an independent contractor and streamline & clarify the tests to determine who is an employee versus an independent contractor. The overall objective of the new regulations is to simplify compliance when determining Independent Contractor Status.

The following issues were addressed in the new rule.

  • The “economic reality test – used to determine if an individual is an independent contractor  who is in business for themselves or, is “economically dependent on the employer” for work (FLSA definition of an employee). If you sponsor an MLO, they are economically dependent on your company.
  • The two “main” factor test – (1) Nature and degree of control over work and (2) Worker profit or loss, based on initiative and/or investment.
  • The amount of skill required to do the work.
  • The degree of permanence of the working relationship between the worker and the potential employer.
  • Whether the work is “part of an integrated unit of production”. A sponsored MLO is integrated.
  • The Biden Administration’s effect on enforcement as a tool to insure collection of payroll taxes.

When you sort through all the tests and commentary our conclusion is still the same. No matter what a state may say about this, a mortgage loan originator sponsored by your company, is an employee. A mortgage loan originator who is sponsored by his own company but does some business with other licensees, is an independent contractor.

If you need some help with converting to W-2, that is part of our overall compliance program. Just give us a call at (800) 656-4584 and we will not only get you in safe harbor compliance wise, we will be there for you all the time as things like this pop up. That way, you keep originating, we keep an eye on your state of compliance.


Nelson A. Locke, Esq

Compliance Services, USA

More about using unlicensed originators.

CFPB slaps 1st Alliance Lending for illegal mortgage-origination practices

The Consumer Financial Protection Bureau (CFPB) has taken 1st Alliance Lending and three of its top executives to court for allegedly engaging in various illegal mortgage-lending practices.

Filed in the US District Court for the District of Connecticut, the lawsuit claims that the Hartford, Conn.-based home lender – with the participation, knowledge, and direction of its managing executives John Christopher DiIorio (CEO), Kevin Robert St. Lawrence, and Socrates Aramburu – violated the Truth in Lending Act (TILA), the Fair Credit Reporting Act (FCRA), the Equal Credit Opportunity Act (ECOA), the Mortgage Acts and Practices—Advertising Rule (MAP Rule), and the Consumer Financial Protection Act of 2010 (CFPA).

1st Alliance originated residential mortgages from 2004 to September 2019, halting its operations in November 2019 due to fraud allegations.

In the course of its mortgage lending business, 1st Alliance allegedly used unlicensed employees – rather than licensed loan officers – to engage in mortgage origination activities. The Bureau said that the activities were in violation of the TILA and Regulation Z, and were illegal under state law.

“1st Alliance’s use of unqualified sales employees to deprive consumers of critical, accurate, and timely loan information was unfair,” CFPB said in the court filing. “The Bureau also alleges that 1st Alliance violated Regulation Z by requiring consumers to submit documents verifying information relating to the consumer’s residential-mortgage-loan application before providing them a Loan Estimate.”

Moreover, CFPB alleges that 1st Alliance employees denied credit to consumers based on information in their consumer report during the same period. And when they did respond to the applications, the company failed to give consumers the “adverse action” notice required under FCRA and ECOA.

1st Alliance also repeatedly violated the MAP Rule and CFPA by misleading representations, omissions, or engaging in practices “concerning whether 1st Alliance’s employees were licensed mortgage-loan originators, whether the consumer had been preapproved or guaranteed for a particular program or term, and whether and on what terms the consumer was likely to obtain refinancing.”

OK, then. Need a great Compliance Company? Call us at (800) 656-4584.

Nelson A. Locke, Esq.

Compliance Services USA

Former Obama Appointee to lead CFPB.

Biden’s CFPB Nominee Signals Return to Bureau’s Original Posture

President-elect of the United States Joe Biden has nominated Federal Trade Commissioner Rohit Chopra to serve as the new director of the Consumer Financial Protection Bureau (CFPB), signaling that the incoming Biden administration aims to return the Bureau to its original enforcement posture.

If you want to protect yourself, call us. (800) 656-4584.

Nelson A. Locke, Esq.

Compliance Services USA