I am probably not the only licensing lawyer who has had some of her clients go out of business. In probably every state, the number of licensed mortgage brokers and lenders is down. Many of them have gone out of business or placed their license in “inactive” status until the market turns around.
This is your opportunity to find those referral sources – realtors, builders, buyers, and sellers who no longer have a mortgage professional to whom they will automatically turn if they know of someone who needs a mortgage. This is your chance to contact everyone who you heard was referring business to your competitors and try to get a relationship started.
And of course, stay in contact with everyone who already is a referral source to you. They need to know you are still in business, ready to serve their needs. Don’t forget the borrowers you already have done business with. Although there is little loyalty between mortgage brokers and their customers, you can increase your retention rate if you keep your name in front of people that you have already helped and liked you.
There are business opportunities even in a recession. I hope you take advantage of them and keep yourself in business.
Wednesday, February 25, 2009
Wednesday, February 18, 2009
New Pennsylvania Regulations
Pennsylvania has some new regulations that are about to come into effect.
The first regulation requires that you submit to the PA Banking Department a copy of your internal procedure regarding how you will perform an analysis of how the borrower will repay the mortgage loan at the fully-indexed rate. The procedure must state, at the minimum, that you will verify and document the borrowers' income and fixed expenses, that you will not rely on the sale or refinance of the house to repay the loan, and that you will not ignore facts or circumstances that raise a red flag that the borrowers may not be able to repay the loan. Your procedure can also use other factors to determine whether the borrowers can repay the loan. If the loan is FHA or VA, there is a presumption that the borrowers can repay. All records, worksheets and supporting documentation used in the ability to repay analysis must be kept in the borrowers' loan file. A copy of your internal procedure must be emailed to the PA Banking Department by March 20, 2009.
Also taking effect on March 20, 2009, is a regulation that requires that, within 3 days after you take an application, you need to send the borrowers a new disclosure. The disclosure must state:
1. whether the lender will be escrowing for taxes and homeowners' insurance;
2. that you cannot lock-in the interest rate;
3. whether the loan contains an adjustable rate, negative am, prepayment penalty, or a balloon payment.
If the terms of the loan change so that the initial disclosure is incorrect, you must re-disclose as soon as you know of the change. If the lender is providing the borrower with this disclosure, then you do not need to provide it. The borrower is supposed to sign it within 10 days after you send the disclosure. You must keep a copy in the borrowers' file.
The first regulation requires that you submit to the PA Banking Department a copy of your internal procedure regarding how you will perform an analysis of how the borrower will repay the mortgage loan at the fully-indexed rate. The procedure must state, at the minimum, that you will verify and document the borrowers' income and fixed expenses, that you will not rely on the sale or refinance of the house to repay the loan, and that you will not ignore facts or circumstances that raise a red flag that the borrowers may not be able to repay the loan. Your procedure can also use other factors to determine whether the borrowers can repay the loan. If the loan is FHA or VA, there is a presumption that the borrowers can repay. All records, worksheets and supporting documentation used in the ability to repay analysis must be kept in the borrowers' loan file. A copy of your internal procedure must be emailed to the PA Banking Department by March 20, 2009.
Also taking effect on March 20, 2009, is a regulation that requires that, within 3 days after you take an application, you need to send the borrowers a new disclosure. The disclosure must state:
1. whether the lender will be escrowing for taxes and homeowners' insurance;
2. that you cannot lock-in the interest rate;
3. whether the loan contains an adjustable rate, negative am, prepayment penalty, or a balloon payment.
If the terms of the loan change so that the initial disclosure is incorrect, you must re-disclose as soon as you know of the change. If the lender is providing the borrower with this disclosure, then you do not need to provide it. The borrower is supposed to sign it within 10 days after you send the disclosure. You must keep a copy in the borrowers' file.
Wednesday, January 21, 2009
Massachusetts Surety Bonds
If you haven’t obtained one yet, you are now overdue in complying with Massachusetts’ requirement that all mortgage lenders and brokers have a surety bond (you should have had it by December 31, 2008). If you are applying for a new license, the surety bond is part of your application.
The amount of the bond is different for lenders and brokers but for lenders, it is based on your volume of business in Massachusetts. If you are a lender, and the volume of the loans you have closed is reported on your Annual Report for the previous year as between $0-$49,999,999, then you must have the minimum bond of $100,000. If your closed loan volume is between $50,000,000 and $249,999,999, then your bond must be in the amount of $250,000. If you closed loans with a dollar volume of $250,000,000 or more, then you need a $500,000 surety bond.
For mortgage brokers, the amount of the bond is $75,000, regardless of how many Massachusetts loans you brokered in the previous year.
Those licensees who hold both a lender and a broker license need two bonds, a lender bond in the amount that corresponds to its closed loan volume and a $75,000 broker bond.
Both lenders and brokers will be required to submit Continuation Certificates each year to confirm that the surety bond is in effect and that it is in the proper amount.
The amount of the bond is different for lenders and brokers but for lenders, it is based on your volume of business in Massachusetts. If you are a lender, and the volume of the loans you have closed is reported on your Annual Report for the previous year as between $0-$49,999,999, then you must have the minimum bond of $100,000. If your closed loan volume is between $50,000,000 and $249,999,999, then your bond must be in the amount of $250,000. If you closed loans with a dollar volume of $250,000,000 or more, then you need a $500,000 surety bond.
For mortgage brokers, the amount of the bond is $75,000, regardless of how many Massachusetts loans you brokered in the previous year.
Those licensees who hold both a lender and a broker license need two bonds, a lender bond in the amount that corresponds to its closed loan volume and a $75,000 broker bond.
Both lenders and brokers will be required to submit Continuation Certificates each year to confirm that the surety bond is in effect and that it is in the proper amount.
Thursday, January 8, 2009
It's Annual Reports Season Again
I’ve already received my first annual report form and I know from my calendar system that other states have early annual reporting requirements. Most states require an annual report to be filed, some states require semi-annual reports. The vast majority of the annual reports require information about loans that you closed in the previous year. There are also reporting requirements in some states requesting information about the loan officers that you hired and fired in the last quarter or last year.
If this is your first year filing an annual report in a particular state, it may take you awhile to gather the information that the report asks for. So don’t wait until the last minute to review the report to see what information you need to find. If you have filed a report in prior years, you should have your computers and files stored in such a way that you can access the needed data in minutes (if you don’t, maybe you want to update your technology).
Some of the annual reports require financial information in their format, not your accountants’ format, which means that you are spending a lot of time manipulating the numbers to conform to the categories that your state has on its form. If this is not your area of expertise, hire an outside specialist to handle it for you. Your time is better spent closing loans than puzzling how to complete a form.
If this is your first year filing an annual report in a particular state, it may take you awhile to gather the information that the report asks for. So don’t wait until the last minute to review the report to see what information you need to find. If you have filed a report in prior years, you should have your computers and files stored in such a way that you can access the needed data in minutes (if you don’t, maybe you want to update your technology).
Some of the annual reports require financial information in their format, not your accountants’ format, which means that you are spending a lot of time manipulating the numbers to conform to the categories that your state has on its form. If this is not your area of expertise, hire an outside specialist to handle it for you. Your time is better spent closing loans than puzzling how to complete a form.
Monday, December 15, 2008
Delaware Loan Originator Licensing Requirements
Delaware has sent out a letter to its licensees informing them of how it will comply with the federal SAFE law in connection with mortgage loan originators.
The first step you would have noticed is that, unlike in prior years, when you renewed your Delaware company license, the application asked for the names and addresses of the loan originators that you employ. In the future, on a quarterly basis, you will be required to report any newly hired mortgage loan originators.
If a loan originator is currently employed by a licensed Delaware lender or broker, the loan originator will be required to submit a license application through the Nationwide Mortgage License System (NMLS) by March 31, 2009. The loan originator will be allowed to keep originating while the license application is pending, once the application is timely submitted.
If you hire a loan originator after January 1, 2009, that originator must first submit a license application through the NMLS immediately upon beginning employment (he/she can’t wait until March 31, 2009). Once the application is submitted, the loan originator may start to originate loans until a decision on his/her license application is made.
If your loan originator is already on the NMLS because of licensing in another state, he/she doesn’t need to create a new record. A simple amendment to the MU4, adding Delaware as a new state, is all that is required. Delaware is not yet requiring fingerprinting, credit reports, education hours or a national test yet. But if your loan officer answers ”yes” to any of the disclosure questions, he/she must send in additional information, giving all of the details about the problem that caused the “yes” answer.
There will be a $280.00 application fee which must be paid through the NMLS with a credit card or through electronic debit from a checking account. Once the loan originator license is approved, another $250.00 license fee will be required. There will also be annual assessment fees and annual NMLS processing fees.
Delaware has not announced when it will transition company licensing to the NMLS. The above information is for the licensing of individual loan officers only.
The first step you would have noticed is that, unlike in prior years, when you renewed your Delaware company license, the application asked for the names and addresses of the loan originators that you employ. In the future, on a quarterly basis, you will be required to report any newly hired mortgage loan originators.
If a loan originator is currently employed by a licensed Delaware lender or broker, the loan originator will be required to submit a license application through the Nationwide Mortgage License System (NMLS) by March 31, 2009. The loan originator will be allowed to keep originating while the license application is pending, once the application is timely submitted.
If you hire a loan originator after January 1, 2009, that originator must first submit a license application through the NMLS immediately upon beginning employment (he/she can’t wait until March 31, 2009). Once the application is submitted, the loan originator may start to originate loans until a decision on his/her license application is made.
If your loan originator is already on the NMLS because of licensing in another state, he/she doesn’t need to create a new record. A simple amendment to the MU4, adding Delaware as a new state, is all that is required. Delaware is not yet requiring fingerprinting, credit reports, education hours or a national test yet. But if your loan officer answers ”yes” to any of the disclosure questions, he/she must send in additional information, giving all of the details about the problem that caused the “yes” answer.
There will be a $280.00 application fee which must be paid through the NMLS with a credit card or through electronic debit from a checking account. Once the loan originator license is approved, another $250.00 license fee will be required. There will also be annual assessment fees and annual NMLS processing fees.
Delaware has not announced when it will transition company licensing to the NMLS. The above information is for the licensing of individual loan officers only.
Wednesday, December 3, 2008
New HUD-1 and GFE forms
This is not a licensing issue but I thought I’d give out some information on the compliance front. HUD has announced that it is requiring new Good Faith Estimate (GFE) and HUD-1 and HUD-1A forms. The new HUD-1 forms have references back to the GFE so savvy consumers can compare the two documents. Although the new forms won’t be required until January, 2010, you should take a look at them:
http://www.hud.gov/content/releases/goodfaithestimate.pdf
http://www.hud.gov/content/releases/hud-1.pdf
http://www.hud.gov/content/releases/goodfaithestimate.pdf
http://www.hud.gov/content/releases/hud-1.pdf
Friday, November 14, 2008
Don’t Forget Loan Originators on the NMLS Must Renew Their Licenses
Mortgage companies who are on the NMLS have probably paid attention to their notices to renew the company license through the NMLS. But how many of you have reminded your loan originators to renew their licenses?
Although the renewal process is started on the NMLS, each state has its own follow-up requirements. For instance, in Mississippi, Rhode Island, and Washington, loan originators must submit proof that required continuing education has been completed. In Vermont, loan officers must submit their certification that they do not owe any Vermont taxes and that they do not owe child support. The other states on the NMLS do not require anything from loan officers after they have completed their NMLS renewals.
In order to renew, you must log in to the NMLS, go to Renewals, attest that your record has not changed (did you change employers, did your employer move their offices?), then renew and pay.
Connecticut does not renew until next year and New York is renewing outside the NMLS system. So, check with your state and make sure to renew if it is required.
Although the renewal process is started on the NMLS, each state has its own follow-up requirements. For instance, in Mississippi, Rhode Island, and Washington, loan originators must submit proof that required continuing education has been completed. In Vermont, loan officers must submit their certification that they do not owe any Vermont taxes and that they do not owe child support. The other states on the NMLS do not require anything from loan officers after they have completed their NMLS renewals.
In order to renew, you must log in to the NMLS, go to Renewals, attest that your record has not changed (did you change employers, did your employer move their offices?), then renew and pay.
Connecticut does not renew until next year and New York is renewing outside the NMLS system. So, check with your state and make sure to renew if it is required.
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