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 nl@lockelaw.us

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

COMPLIANCE SERVICES USA

Locke Law US, LLC

7800 PRESTON ROAD

SUITE 113 – MAILBOX 11

PLANO TX 75024

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

Our Website remains the same. it is http://www.lockelaw.us

My email address remains the same. It is nl@lockelaw.us

Thanks to all!

A few words of advice to MLOs who are changing sponsors…..

If you are an MLO looking to change employers and are currently sponsored by a Mortgage Broker Business or Lender, pay attention to these issues.

1. You must give good notice, and that is usually in your employment agreement. If it is NOT, then reasonableness applies. Which to me means 30 days written notice to insure good customer service and some continuity of planning for both parties. Yes, its an “at will” deal usually, but a contract can change that.
2. Your pipeline and your work in progress belongs to your current sponsor, not you. If you sabotage your sponsor’s pipeline, it is theft.
3. Any leads you obtained while working for your sponsor, belong to your sponsor. So you can’t “take your electronic rolodex” with you unless you ask, and your current sponsor agrees.
4. Don’t have your assistant quit before you, go to work for a new sponsor, and work leads you steal from your prior sponsor. The regulators have seen this before and you are not fooling anyone or avoiding liability.
5. This is important. The person that hires you is equally liable if they know even a scintilla of the facts regarding where you got your leads, or if they allow you to bring purloined files over via the “assistant” ploy. Now, you have a Dodd Frank, conspiracy, and theft issue.
6. Many regulators will pursue not only the dishonest MLO but also the new sponsor that takes them in.
7. Notice I said dishonest? This is a moral turpitude/fraud issue. Means you will be calling me to try and help you save your license.

Just have a conscience, and if you change sponsors, do it with class and do it the way you would want to be treated. Or else. If any of you don’t believe me, I can send you an excerpt from a regulator Administrative Complaint.

Nelson A. Locke, Esq.

800-656-4584

www.lockelaw.us

Brokers – license yourself in Texas!

TEXAS is a broker friendly state.

The regulators here are reasonable and fair.

If you are thinking about expanding your business, and maybe dropping some broker un-friendly states like (you know who you are), you can license yourself fairly quickly.

Compliance Services is now offering a registered agent and office space option to our clients.

Using us you can keep your startup costs low while building your Texas contacts and marketing. 

If you are interested in expanding into the great state of TEXAS, contact us today.  While we serve brokers and lenders nationwide, we are located in the Dallas Metroplex. 

Special invitation to our Florida and California clients. Come on down!

Respectfully,

Nelson A. Locke, Esq

(800) 656-4584

http://www.lockelaw.us

 

 

The LIBOR is being phased out.

Please be aware of this. Your lenders will be migrating loan programs away from the LIBOR and over to other, more “stable” indexes during 2020.

Some states, such as New York, have already asked for brokers and lenders to submit a plan to manage the transition. I have a template we can use if you receive such a request.

For most of you, the transition will be effortless as you do not keep the paper, thus no servicing issues regarding the LIBOR.

If you have any questions, here is a great link for information.

https://www.schwab.com/resource-center/insights/content/libor-phase-out-what-does-it-mean-you

That’s it for now.

Nelson A. Locke, Esq

(800) 656-4584

http://www.lockelaw.us

 

 

 

 

Florida Mortgage Professionals Take Note

July 30th, 2019

Taken from an OFR Audit Letter dated last week.

“For the Examination Period, the Mortgage Brokerage Transaction and Lending Journal, Form OFR-494- 10 or HMDA-LAR; a listing of all applications by Loan Officer; and a listing of all Mortgage Loan Modification Applications.

SPECIFY IF ANY FUNDED/CLOSED LOANS IN THE MORTGAGE BROKERAGE
TRANSACTION & LENDING JOURNAL ARE FOR INVESTMENT/BUSINESS PROPERTIES.”

If you have fooled yourself into believing you could package what would otherwise be a QM or non-QM residential loan into a non-QM loan deeded to an LLC or Corp, be warned.

Nelson A. Locke, Esq.

Compliance Services, USA

800-656-4584

Business Purpose Loan Abuse is about to END

Florida Statute 494 has some changes effective July 1st, 2019 that tighten up the  use of the RESPA loophole for Business Purpose Loans.

Language has been added that makes it a clear violation of FS 494 to misrepresent a residential mortgage loan as a business purpose loan.

Sound familiar? Your client lives in a property either as is full time residence or his second/vacation home. Because of his credit circumstances he cannot qualify for a QM or non-QM loan. So someone suggests he create an LLC, and make it look like an investment. Less required disclosure, higher interest rates and costs to the client. Then when the loan closes the “façade” is stripped away – the borrower is the client not the LLC, he house is his residence, he uses the proceeds to pay off his credit cards, and any cash needed comes and goes between the client and lender, not the LLC.

So what do you need to do? You need to be sure a business purpose loan is exactly that. Most if not all of the proceeds must go into a true business venture. Further, if the business purpose loan involves a RESPA property (residential) then the MLO and his sponsor better have a license. Finally, if in doubt, disclose to a higher level.

These loans will become red flags for audits. Be prepared.

Confused? Ask your compliance team. If you don’t have one, call us at 800-656-4584 and let us tell you how we can help you stay out of trouble.

Nelson A. Locke, Esq.

Compliance Services, USA.

nl@lockelaw.us

 

 

 

 

 

 

 

Private Lending and Licensing – Round Two.

The Florida legislature kicked off its legislative session by introducing Florida Senate Bill 894 and House Bill 935, legislation that could cover private mortgage lenders. The bills, introduced by Sen. Rene Garcia (R-Miami) and Rep. Jeanette Nunes (R-Miami), would eliminate a longstanding business purpose exemption for loans secured by a Dwelling.

 

On January 18, the bill passed the House Insurance and Banking Subcommittee with a 13-1 vote in favor. On January 24, the House Commerce Committee passed the bill on a unanimous vote. The Senate similarly passed the bill on a unanimous vote in the Senate Banking and Insurance committee on January 23. The bills are expected to move through the Florida legislature and have strong bipartisan support.

 

An almost identical bill previously passed through the legislature in May 2017, but was ultimately vetoed by Governor Scott in June. 

 

Florida has been one of the more interesting states from a mortgage licensing perspective. For example, a mortgage lender license is already necessary to make a business purpose loan secured by commercial real estate and 5-or-more unit multifamily residential property if the borrower or guarantor is an individual, or if the lender is considered a non-institutional investor.

 

If the bills become law, they would empower the state Office of Financial Regulation to regulate mortgage loans made for business purposes, require brokers of these loans to be licensed, and allow examination of firms offering or making private loans.

If this is signed into law, it means more audit activity and means that if you are a private lender making business purpose loans, you better call us and let us get you into shape before the regulators start enforcement activity. We will keep you posted. 

Nelson A. Locke, Esq.

Compliance Services USA and Locke Law US

http://www.lockelaw.us

(800) 656-4584

 

Confidentiality – a word of advice to you owners, officers, and directors.

When you communicate with your entity’s attorney, if the communication has to do with legal action or regulator issues – do all you can to protect the confidentiality of the conversation the two of you are having.

If you “cc” an MLO, a processor, or for that matter any other third party other than an attorney, you may unwittingly place confidentiality at risk. You may find that emails which you intended to be private – become the subject of discovery.

All too often I see compromising situations where in the event of litigation or regulator action – your attorney client privilege might be vulnerable.

That’s it for now.

Compliance Services USA

http://www.expertlenderservices.com

(800) 656-4584

 

“She rated us a 2. Said 1 is the highest.”

We just got this from one of our clients. Our clients can go home early and celebrate! The regulators appreciated the robust nature of our client’s concern for doing things right and protecting the consumer in the process.

Thank you to our client – you know who you are. You guys are the greatest!

If the rest of you are nervous I only have two things to say.

1. If you are our client and have been doing as we ask, these are the types of results you will see. So you need not be fearful. Especially if we are doing your post closing QC as part of the package.
2. If you are not our client, you probably need to be fearful. Call us at (800) 656-4584 and let’s see what we can do to get you into that safe place.
3. Finally, audits are in fact increasing.

Nelson A. Locke, Esq

Compliance Services, LLC.

 

 

Discussion of the October 2017 RESPA TILA changes …….

Comments on changes to the 2017 RESPA TILA Rule HERE. 201707_cfpb_Executive-summary-of-2017-TILA-RESPA-rule1

This is a poorly named Rule Change. Compliance is optional from October 2017 to October 2018. Compliance will become mandatory for applications received on or after October 1st 2018. Many are under the impression these changes must be implemented this October. Not so. You can implement changes according to any plan you create before October 2018, but you must have all changes in place October 2018.

Here are the key points and please remember, these are mandatory in October 2018.
1. Choice to use a CD versus an LE when checking tolerances and good faith. This is the creditors choice, not the broker.
2. Servicers will be required to provide consumer disclosures regarding partial payment policy and notice of the closing of an escrow account that was subject to RESPA.
3. You must treat cooperatives as if they were real property and provide the required RESPA TILA disclosures, regardless of how your state classifies cooperatives. Some presently call them personal property and claim they are exempt from these disclosures.
4. Now, Loans to Trusts are subject to all disclosures. Trusts will be treated as if the credit extended to natural (not artificial) persons. This is curious and should be sending a message to those of you who bundle 1 to 4 family units into new LLCs and claim exemption from RESPA-TILA. Small commercial is on the radar for RESPA TILA.
5. There are clarifications regarding construction loans. If there are going to be two phases, you must provide two GFE within three days of receiving the application for the particular phase. If only one transaction, then only one disclosure. There are many clarifications regarding how to allocate costs – see page 5 of the report attached above.
6. Simultaneous closings of a purchase money first and second – allows you to disclose the loans combined. I always recommended this. The law says your client has to understand the big picture. Have you ever seen a client try to add together two sets of GFE or LE or CD?
7. Tolerances now say if overstated, still ok. If understated more than $100, not OK.
8. If you fail to allow a consumer to shop for settlement services, there is ZERO tolerance.
9. Loan Estimate guidance is on pages 7 and 8.
10. Written list of Providers – see page 10 bottom. If you don’t use the special layout for the disclosure, you might lose the safe harbor.
11. SHARING DISCLOSURES – you can do it. Just be sure to correct so that what you send to the seller, for example, is what applies to the seller and NOT the buyer. And vice versa. You can leave the information you want to protect – off the form by providing it as blanks.

Respectfully,

Nelson A. Locke, Esq.
Mortgage Industry Compliance Expert
Attorney and Expert Witness
7800 Preston Road – Suite 118
Plano, TX 75024
Office (800) 656-4584
Cell (305) 951-2785
http://www.lockelaw.us
http://expertlenderservices.com

List of top five violations that result in fines, suspensions, or revocations.

Paying unlicensed mortgage loan originators or their proxies

1. Assistants who are acting as licensed MLOs.
2. Licensed MLOs you sponsor who have you pay their personal, unlicensed LLC or corp.
3. Licensed MLOs you sponsor who have you pay a third party entity in their name.
4. Lead Generators who are unlicensed but gather the type of information necessary to originate a loan – beyond mere contact information or public records.
5. Both the Broker and the MLO are not licensed because they think that as commercial lenders, they are exempt. The problem is the loans they call commercial, are NOT.

Advertising Issues

1. Ignoring SAFE ACT requirements for proper use of NMLS information.
2. Ignoring HUD, VA, and USDA  requirements for government disclaimers.
3. No formal Advertising Book with a log and copies of all advertising
4. The Broker or Lender thinks his business cards and web sites are not advertising so he never audits them for compliance.
5. Not supervising your MLOs. You have rogue MLO with their own web sites and social media. You sponsor him, and you are responsible for everything he does. He can cost you your license. You think its not your duty, and it is.
6. Making NMLS information too hard for a consumer to locate. For example, burying it in the footer, or using 6 point type.
7. CFPB requirement for the use of the word LOAN after the words REVERSE MORTGAGE (UDAAP).

Mortgage Call Reports that are inaccurate.

1. The MCA does not match the Broker’s Loan Journal.
2. The MCA is late or incomplete.

Lack of Evidence of continuity in your Compliance Efforts

1. Failure to update.
2. Failure to miss required annual training.
3. Loan File Audits revealing substantial number of missing documents – no evidence of a complete file.

Making loans on 1-4 family residences without proper disclosures.

1. The loan is masquerading as a commercial loan. The “LLC” scam.
2. The package is missing minimal GFE and Closing Statement Requirements.
3. The Broker fails to do any type of qualifying.

A SPECIAL NOTE about Advertising and Maintenance of Advertising Records: We continue to see small brokers and lenders making mistakes resulting in large fines, suspensions, or revocation. If this happens to you, it can be outside of a regular audit. The different agencies, both state and federal, have staff assigned to watch what happens in print and electronic media form.

You could run an ad, post a flyer, set up a Facebook page, add your name to Linked In ……….. and if you failed to follow DF or the Safe Act requirements, BOOM.

So the first thing I wanted to say is our staff is trained to review client advertising in all forms before it goes live. Just send it via email and wait for our response.

The second thing is to insure you have a proper Advertising Log Book with samples and a dated log.  Do you?

All of this is part of our Compliance Program. It is built into our fee so you are encouraged to take advantage of us.

Any Questions? Call us at (800) 656-4584.

Nelson A. Locke, Esq.

Compliance Services USA

http://www.expertlenderservices.com

 

 

 

Electronic File Storage – things to consider.

I got a call today from a great client of mine who asked about the things to think about when moving to electronic file storage.

Electronic file storage trips about four switches in my mind. I thought this was a really good question, so here is what I recommend.

 

1. Be aware that anytime you convert to file storage that is “off site”, most state regulators require you to advise them in writing of where you are sending the files, and what security precautions you are taking to insure we don’t expose our clients to identity theft or other financial crimes. This means write your regulator BEFORE you move to the cloud. Give them the internet service provider you are using and what security practices the provider has in place, such as firewalls, secure transmission protocols; etc. Then if you are a client of ours, file that letter in Book One behind your records retention policy. Easy to find when the regulator comes knocking.
2. Unless you own the cloud, have your cloud provider return an NDA and Confidentiality Agreement to your company per the guidelines of Gramm Leach Bliley.  You can find a blank NDA in Book One. Keep it in your cloud provider records folder to show you took your records “safeguarding” seriously.
3. If you use a service that offers to pick up your files, scan for you, and then shred, I have two thoughts.  FIRST – Have the file split into two sections, Section A for internal processing notes and comments that might be irrelevant (or harmful) to an audit – and Section B for the actual loan documents stacked top down from closing all the way to inception. SECOND – Have the service provide you with a certificate of safe handling when you allow them to shred your files after they scan them.

Helpful? Give us a call about anything regulatory. We always have time for new clients. Tons of references. Hope to hear from you soon.

Nelson A. Locke, Esq.

Compliance Services USA

(800) 656-4584

http:/www.expertlenderservices.com

 

 

The CHOICE Act – affects CFPB structure and rule making. NOT the need for strong compliance.

By a vote of 233-188, the House of Representatives passed H.R. 10, the Financial CHOICE Act yesterday.  The bill, often referred to as the Dodd-Frank Act replacement bill, includes an overhaul of the CFPB’s structure and authority and makes significant changes to the rulemaking process followed by the CFPB and federal banking agencies.

As passed by the full House, the bill includes several amendments to the version of the bill passed by the House Financial Services Committee on May 4.  One such amendment is the amendment introduced by House Financial Services Committee Chairman, Jeb Hensarling, to strike the provision which purported to repeal the Durbin Amendment.  Based on reports we have seen, it does not appear any of the amendments impact the bill’s provisions dealing with the CFPB.

The bill’s fate in the Senate is very uncertain, with most pundits predicting it will not pass the Senate in its current form.

Scary Reading for Compliance Officers

Folks,

Please take a few minutes and read the article quoted below.

This article uses MoneyGram as an example, but there is a message in here that all of you should heed. Until the time that the President has acted on abuse of power at federal agencies, we are all at risk to some level.

If you document efforts to do your job, and you actually seek out advice and try to the level of best efforts to follow the advice, you can defend yourself. But remember, the buck will stop somewhere.

Here is the article, a compliance recruiting company put this information into the public domain with what I see as their intent to educate and inform. I did not write this but it sure makes sense to me. They did a good job. Nothing more to say.

++++++++++++++++++++++++++++++++++++++++++++++++++++

“When the US government wanted to punish someone at MoneyGram for the company’s role in a $100m wire fraud, law enforcement did not go after the chief executive.

Instead, Preet Bharara, then the top US prosecutor in Manhattan, (who the President just fired) filed a civil lawsuit against Thomas Haider, MoneyGram’s chief compliance officer, seeking to collect a $1m Treasury Department penalty and to ban him from the industry. The 2014 litigation, which was settled earlier this month, was the US government’s first courtroom bid to hold a compliance officer personally responsible for not preventing financial wrongdoing. “Compliance officers find this case very troubling,” said Todd Cipperman, an industry consultant in Wayne, Pennsylvania. “To hold him accountable and not hold other senior executives accountable seems strange and unfair.” Compliance officers — among the corporate world’s least glamorous players — fear they are being sacrificed to the government’s desire to punish individuals for financial industry misdeeds. Earlier this month, Mr Haider agreed to pay a reduced fine of $250,000 — roughly equal to such executives’ typical annual salary — and to accept a three-year employment ban. His case comes as other regulators target the professionals who are responsible for ensuring that their employers remain on the right side of legal and regulatory lines. The UK securities watchdog handed out its first fine to a compliance officer in 2008 and British enforcers stepped up activities in this area in 2015. The Financial Conduct Authority and its predecessor have brought a series of cases where the officer either failed to make sure his or her company was complying with regulations or failed to adequately detect or question potential market abuse. Among them was a high profile £130,000 fine of the former compliance officer of Greenlight Capital, a US hedge fund.

In the US, Finra, the industry regulator in 2014 fined Brown Brothers Harriman’s chief compliance officer $25,000 and suspended him for one month for compliance failures. The Securities and Exchange Commission, which also has acted in several cases, says it will not pursue compliance professionals unless they are involved in wrongdoing, mislead investigators, or are negligent. This has failed to calm industry nerves. “These compliance officers are doing the best they can,” said Jonathan Lopez of Orrick, Herrington & Sutcliffe and a former federal prosecutor in money laundering cases. “It’s a pretty harrowing field to be operating in.” Still, even some who are skeptical of the government’s crackdown say Mr Haider’s failures were notable. His punishment grew out of an investigation by the Treasury Department’s Financial Crimes Enforcement Network, which concluded that MoneyGram had turned a blind eye to consumer fraud on its network of money-moving outlets. For five years beginning in 2004, scam artists defrauded “tens of thousands” of often-elderly customers by posing as relatives in need of emergency aid or by promising large lottery prizes or attractive job offers in return for cash wired via MoneyGram, according to the US Department of Justice. The fraudsters’ co-conspirators included an expatriate Nigerian tribal chief, who owned several MoneyGram outlets. The company signed a deferred prosecution agreement with the DoJ in 2012, conceding that it had criminally aided and abetted wire fraud and failed to maintain an effective anti-money laundering program as required by the Bank Secrecy Act. MoneyGram agreed to the appointment of a court-ordered monitor and surrendered $100m to repay its victims.

The DoJ said the company was guilty of a “systematic, pervasive and wilful failure” to meet its anti-money laundering obligations. Even as annual fraud reports ballooned to 19,614 in 2008 from 1,575 in 2004, MoneyGram failed to close suspect outlets, federal prosecutors said. As compliance chief, Mr Haider was directly responsible for managing MoneyGram’s anti-fraud programs. But on his watch, MoneyGram admitted filing erroneous “suspicious activity reports” with the Treasury Department that identified fraud victims as the fraudster, according to court documents. Since Mr Haider left the company in 2008, its “management, organizational structure, and compliance programs have changed significantly”, MoneyGram said, adding that it “has invested hundreds of millions of dollars in our technology and compliance infrastructure to protect our consumers”. Mr Haider, who did not respond to a request for comment, also failed to close outlets that his subordinates had identified as suspect, according to the settlement filed in US District Court in Minnesota. Among them were four outlets that had received a total of 150 complaints in a six-month period. Mr Haider had been warned about their owner, James Ugoh, a Nigerian tribal chief who had emigrated to Toronto. “Toronto PD also called me — they think this agent is dirty,” read an email Mr Haider received from an internal watchdog.  In 2014, Mr Ugoh was sentenced to more than 12 years in prison after pleading guilty to conspiracy to commit mail fraud, wire fraud and money laundering.”

Respectfully,

Nelson A. Locke, Esq.

Mortgage Industry Compliance Expert

Attorney and Expert Witness

Office (800) 656-4584

Cell (305) 951-2785

http://www.lockelaw.us

http://expertlenderservices.com

 

Update on violations where we are seeing consistent, large fines.

Hi folks, it has been a while since we have shared what we are seeing on Audit Findings and Violation Notices, so here we go with an update.

Before you quickly say, “Well, that’s not us, we don’t this and we don’t that”……..please make sure you understand what the “this and that” actually is. For example, just because you think you don’t advertise does not mean you are not acting in a way that requires keeping an Advertising Log. Business Cards? Social Media? Just a few examples.

Here are the areas that keep popping up. They are in no particular order of importance.

• Hiring a new MLO and asking him to bring his pipeline with him.
• Allowing your MLOs to keep actual loan files (full of NPI) in unsecure places.
• Compensating an MLO you sponsor by paying his/her “company” directly
• Failure to compensate a former MLO employer for expenses related to a file he/she transferred to you lawfully
• When an MLO leaves, marking the entire pipeline as withdrawn, and then re-assigning it to one of your other employees without concern for the MLO that left you and their rights to commissions
• Evading a lawful requirement to with hold payroll taxes
• Comp plans that can encourage steering
• Failure to make a real, good faith effort, to keep your MCR as accurate as possible
• Having a loan journal that does not match what you file on your MCR
• Allowing non-compliant pirate web sites and social media to exist just because “they are not yours”
• Keeping your archived loans off premises without advising your regulator first, and insuring the off site facility is GLB compliant

If your head is spinning, hire us. Let us sort this out for you. ALL OF THIS IS COVERED IN OUR PROGRAM. We have hundreds of clients, our clients get great results when audited, our fee is super reasonable, so give us a chance to take these pressures off your mind.

Respectfully,

Nelson A. Locke, Esq.

Compliance Services USA

(800) 656-4584

http://www.expertlenderservices.com

 

 

 

 

HMDA, ECOA, Adverse Action Notices, and Broker Shops. Revised 10/16/17.

Hi Folks, the two subjects captioned above have been driving us nuts so we dug deeper to determine what the best advice might be. Many of our clients, especially the Brokers, feel they are exempt from both subjects. Turns out, maybe not. If I do the “lawyer thing” and sound a bit vague it’s because it is hard to interpret these masterfully written regulations. We do our best to understand them for you. We look to see where the evidence tips the scale before deciding which approach to recommend. We always take the approach that should keep you out of trouble. Sometime that means more work for you. But it’s far better than an “administrative action” for failure to comply.

Plus, it might make you a better lender or broker because you will have more of your OWN data to evaluate for opportunities or trends.

First, let’s look at HMDA. This language has changed. It now includes reference to taking applications (the six item threshold) which all brokers and most lenders do. It also establishes unit thresholds that are low enough to now include many smaller broker shops. For more on HMDA reporting: NondepCriteria04

Now let’s look at pre-quals. Pre-quals don’t affect HMDA at all, but they do affect your compliance with ECOA. Please don’t be quick to say you don’t make credit decisions. You probably are making them and just don’t realize it; for example, the client you decline after reviewing the pre-qual because you KNOW they can’t meet your lender’s guidelines. It would be foolish to take a full app when you know it can’t be successful and it would waste the client’s time and money. Your decision is based on your Lender’s guidelines. Most of you do this.  Here you need to decide how you internally want to classify your pre-quals assuming they NEVER reach the six-item threshold that turns them into an indisputable application. After our research, we prepared the attached to guide you regarding pre-quals. It’s not “all or none”. Look HERE.  When do you need to issue an Adverse Action Notice

Hope this is helpful.

Respectfully,

Nelson A. Locke, Esq.

Mortgage Industry Compliance Expert

Attorney and Expert Witness

Office (800) 656-4584

Cell (305) 951-2785

http://www.lockelaw.us

http://expertlenderservices.com

 

Commercial Mortgage Broker Program

Commercial Mortgage Brokerage Program   

For Residential Lenders and Brokers who want to add another source of revenue

 

With interest rates rising in the residential sector all of us should develop additional sources of revenue that do not rely on traditional residential lending.

 

State and Federal Regulators are tightly focused on residential mortgage lending. They are largely unfocused on small commercial lending.

 

Commercial loans are largely exempt from Dodd-Frank. This means less paperwork, easier compliance, and an earning potential that falls outside of the CFPB Originator Compensation Rule.

 

We have developed a program for small Lenders and Brokers that will allow them to originate commercial mortgages with confidence. It includes the necessary documentation to present your deal professionally. It includes the federal policies and procedures that commercial lending requires. Our firm is attorney owned with clients in 13 states and because of this – we have funding sources for you.

 

We are offering this package at $750. Limited time offer.

 

To learn more, send us an email at nl@lockelaw.us

If you prefer, call us at (800) 656-4584.

Mention the word COMMERCIAL.

 

Respectfully,

Nelson A. Locke, Esq.

Compliance Services, USA

7800 Preston Road – Suite 118

Plano, TX 75024

 

http://www.lockelaw.us