Some good Q&A for you Mortgage Brokers to read…….

Q: Can an Alta Settlement Statement REPLACE the use of a HUD-1 or a Closing Disclosure?

A: ALTA has developed standardized ALTA Settlement Statements for title insurance and settlement companies to use to itemize all the fees and charges that both the homebuyer and seller must pay during the settlement process of a housing transaction. Settlement statements are currently used in the marketplace in conjunction with the federal HUD-1. The ALTA Settlement Statement is not meant to replace the Consumer Financial Protection Bureau’s Closing Disclosure, which went into effect on Oct. 3, 2015. Four versions of the ALTA Settlement Statement are available.

Q: Do we need to use a Closing Disclosure for non-agency loans?

A: The final rule applies to most closed-end consumer mortgages.  It does not apply to home equity lines of credit, reverse mortgages, or mortgages secured by a mobile home or by a dwelling that is not attached to real property (in other words, land).  The final rule also does not apply to loans made by a creditor who makes five or fewer mortgages in a year.

Q: Who has to prepare the CD?

A: Under the final rule, the creditor is responsible for delivering the Closing Disclosure form to the consumer, but creditors may use settlement agents to provide the Closing

Disclosure, provided that they comply with the final rule’s requirements for the Closing Disclosure.20  The final rule acknowledges settlement agents’ longstanding involvement in the closing of real estate and mortgage loan transactions, as well as their preparation and delivery of the HUD-1.  The final rule avoids creating uncertainty regarding the role of settlement agents and also leaves sufficient flexibility for creditors and settlement agents to arrive at the most efficient means of preparation and delivery of the Closing Disclosure to consumers.

Q: What about a HECM? Is it a LE or a GFE?

A: Reverse mortgage transactions subject to RESPA.  (1)(i) Time of disclosures.  In a reverse mortgage transaction subject to both § 1026.33 and the Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.) that is secured by the consumer’s dwelling, the creditor shall provide the consumer with good faith estimates of the disclosures required by § 1026.18 and shall deliver or place them in the mail not later than the third business day after the creditor receives the consumer’s written application.

Q: I’m a Mortgage Broker Business. Can I do my own disclosures?

A:  If a mortgage broker receives a consumer’s application, either the creditor or the mortgage broker shall provide a consumer with the disclosures required under paragraph (e)(1)(i) of this section in accordance with paragraph (e)(1)(iii) of this section.  If the mortgage broker provides the required disclosures, the mortgage broker shall comply with all relevant requirements of this paragraph (e).  The creditor shall ensure that such disclosures are provided in accordance with all requirements of this paragraph (e).  Disclosures provided by a mortgage broker in accordance with the requirements of this paragraph (e) satisfy the creditor’s obligation under this paragraph (e). If provided by the creditor, copies of the creditor disclosures MUST be kept in the mortgage broker’s files to show an auditor that the rule was complied with.

Q: I only do foreign national loans, am I exempt from TRID?

A: Not if the property is a 1-4 family dwelling and not if the buyer is a human person. There could be some crossover here to commercial lending, but most of what I have seen is probably TRID lending. I have seen a lot of issues here, sham entities.

Q: I only make ten or fewer loans a year with my own money. Do I need a Lender’s License?

A: Probably – YES. And if all you do is create entity after entity to act as your lender, and you own each entity, that is a probable sham and is probably avoiding the licensing rules of Dodd-Frank and your state regulator. Folks, the regulators are smart enough to see though this kind of conduct. If you hold yourself out to lend money, even in as small way as a business card, or using an agent ( a lawyer, a mortgage broker) who brings you borrowers, YOU ARE ACTING AS A LENDER.

I am also attaching an ALTA Training Webinar to the blog. The blog can be found at nltrainingsite. You guys should look at this ALTA Webinar. Very good information.

trid-webinar-82715

Happy Holidays to all! We will be working right up to Friday afternoon, so feel free to call. And we are here next week. Regulators never sleep so we won’t either.

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

 

If in doubt, get a license.

I am being barraged by questions regarding commercial lending and the need or not to be licensed. The area is not as grey as you may think. The problem is many commercial lenders disguise what would otherwise be a RESPA loan on a 1-4 family – by using LLCs. These lenders and brokers are completely ignoring the legal doctrine of beneficial ownership. And many times these lenders and brokers actually believe that no auditor or regulator has ever seen this scheme before. Really?

Auditor Auditee 022015

I believe that the best business practice for any person originating any kind of mortgage residential or commercial – is to obtain the proper license first.

RESPA is applicable to all “federally related mortgage loans,” except as provided under 1024.5(b). “Federally related mortgage loans” are defined as:  1.A loan secured with a first or subordinate lien on residential property  2.Where a one to four family unit is located  3.Where a properly qualified manufactured home is located or to be constructed 4. Where the loan is made by a proper creditor, lender, or dealer 5. If the loans are insured by an agency of the federal government 6. If the loan is intended to be sold to HUD, FNMA, FHLMC, USDA, or the VA 7. If the loan is a home equity conversion mortgage or reverse mortgage subject to federal regulations.

A true commercial loan is a mortgage loan made on a property that is NOT residential (a 1-4 family unit) and where there is NO possibility the true owner or beneficial owner might occupy the property either as a primary or as a secondary. That goes for citizens or legal aliens or consumers of any kind – if the property is a RESPA property that is going to be used by them it will not matter who you call the borrower or how you try to hide the true ownership. A 1-4 family might fall into an exception but the overwhelming position will be that if it is a 1-4, it is a RESPA loan requiring licensing.

To provide a resource for you that will put all this information on one blog entry, I am providing the following list of state requirements.

The following states may require licensing to originate commercial mortgage real estate loans.

One more time – commercial mortgage loans means a loan secured by real estate that is not a residential 1 to 4 family dwelling.

These states require licensing. Arizona California Illinois North Dakota Nebraska Nevada (Company and LO) South Dakota (Company and LO)

These states show that a license may be required. That means get a license. District of Columbia North Carolina

These states require a license to broker these types of loans. Michigan (Real Estate Broker) – Brokering Only Minnesota (Limited Real Estate Broker) – Brokering Only New York (Real Estate Broker)- Brokering Only New Jersey (Real Estate Broker)- Brokering Only

Regarding FLORIDA – “Most” commercial companies are exempt in Florida providing the property is not a 1-4 family unit or the entity is not a sham LLC. The word “most” is the issue. This is a regulator grey area.

Business Purpose Residential Mortgage Loans – The famous Reg Z exemption 226.3: Brokers and Lenders often refer to non-owner occupied business purpose residential mortgage loans as commercial loans. The following states may require licensing: Alabama, Arizona, California, Colorado, Florida, Idaho, Illinois, Louisiana, Michigan, Minnesota, Nevada, New Jersey, North Dakota, Oregon, Rhode Island, South Dakota, Texas, Utah, and Vermont.

Here’s my take. Get a license. It increases your credibility and avoids you being pulled into a situation where the regulator believes you needed a license to originate or make the loan. If the regulator believes it, you will lose the argument. Of course, this is just my opinion.

Respectfully,

Nelson A. Locke, Esq.

Mortgage Industry Compliance Expert

Office (800) 656-4584

http://www.lockelaw.us

http://expertlenderservices.com

 

 

 

Foreign Nationals and RESPA TRID

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January 2nd 2016,

Yes it is true, I cannot stay away from the office for very long. Good for you, huh.

During the past quarter we were engaged by several mortgage companies that  specialize in loans to Foreign Nationals. they also offer federally related loans, but foreign national loans are a specialty.

So I decided to create a one  page summary of when you need to apply RESPA and TRID, and when you can revert to the old way of using a HUD-1 and maybe a classic GFE.

Foreign National Guidelines 100315

Happy New Year everybody!

Nelson A Locke, Esq.

(800) 656-4584

http://www.expertlenderservices.com