Honoring America’s Veterans: Are Veterans Missing Out on Special Real Estate and Mortgage Programs?

Veterans Day - Remember our veteransTo all who have served and all who continue to give their time and effort to defend the freedoms of this great country; to all who have fought and continue to fight for our friends, allies and defenders of freedom and liberty worldwide, a sincere and heartfelt thank you from the Real Estate Institute family.

On days like today, our thoughts naturally turn to things we can do to help our veterans. For those of you in the real estate and mortgage professions, helping is easier than you might think! In fact, it all begins with a simple question: “Have you ever served in the United States Armed Forces?” That simple question will help you identify those clients and/or borrowers that are entitled to special benefits that their service has earned them. However, the unfortunate fact is that many professionals in our industry don’t make a habit of asking this question; they assume veterans will simply volunteer the information. Frequently, however, that’s not the case. Some vets might not be aware that there are, in fact, special programs for those who have served and may view their veteran status as irrelevant to the transaction at hand. Others may feel that modesty dictates that they don’t simply volunteer the information, and still another group of veterans may be trying to adjust to civilian life once again and avoid mentioning their service unless asked directly. I strongly encourage you to ask every client who walks through your door about their veteran status. Not doing so could actually cost you new relationships, and/or result in veterans not being aware of programs such as:

The VA-guaranteed mortgage loan

VA loans have arguably the most attractive terms of any mass-market loan product available today. These loans generally require no down payment (100% financing) for both purchase and refinance loans, including cash-out transactions! The rates are typically lower than those on conventional financing – especially so in the lower FICO bands – and unlike FHA loans, there are no monthly mortgage insurance premiums associated with VA loans. There is an upfront fee (called the funding fee) charged to the veteran at closing; this fee can vary between 0.5% and 3.3%, depending on the loan’s characteristics. It can always be financed into the loan, even if doing so causes the LTV to exceed 100%, and the fee is waived for any eligible veteran with a service-connected disability.

Finally, unknown to many, VA does NOT have a maximum loan amount, so “jumbo” loans are eligible as well! Note, though, that some investors may not offer jumbos, and the ones that do typically demand a minimum down payment equal to 25% of the portion of the purchase price exceeding $417,000 or the “county loan limit” for the county in which the property is located.

More information is available at http://www.benefits.va.gov/homeloans/

Special down-payment assistance through the state’s housing finance agency

Many states have special programs, available through their housing finance agency (HFA), that entitle veterans to levels of down-payment assistance that are above and beyond what is offered to non-veterans. For example, the Illinois Housing Development Agency (IHDA) offers a program called Welcome Home Heroes, which entitles qualified veterans to up to $10,000 in down payment assistance.  This assistance can be used in conjunction with VA, FHA, USDA or conventional financing, and eligible veterans can also use the Mortgage Credit Certificate (MCC) program offered by the federal government to reduce their tax liability by up to $18,000 over the life of the loan.

Visit your state’s HFA website for details on what’s available in your state.  For information on the Illinois program, visit http://www.ihda.org/homeowner/gettingLoan.htm#WelcomeHomeHeroes.

Reduced costs for settlement services and insurance

Many companies that provide services associated with the real estate and mortgage industries – like title and escrow companies, home inspectors, contractors and insurance agents – will give special discounts to those who have served our country in the armed forces. Be sure to ask your providers what discounts are available for your veteran clients/borrowers to get them the best deals possible.

It’s important for us to remember – on Veterans Day and every day – that our men and women in uniform stand willing to give their last full measure of devotion so that we may continue to enjoy the freedom earned by the generations of those who went before them; freedom that was bought and paid for with the blood, sweat, tears, dedication and lives of countless American and allied soldiers. By doing our small part to make their lives better – starting with a simple question – we can show them the respect, dedication and honor they deserve.

 


 

For over 20 years, Real Estate Institute has been providing convenient, high-quality pre-license, continuing education and exam preparation programs. Each year, over 20,000 real estate, mortgage, insurance and legal professionals choose our school.  For more information visit, www.InstituteOnline.com or call 800-995-1700.

Why Loan Originators Will Regret Missing the NMLS Uniform State Test Deadline

5 to 12 clockIf you are like most mortgage loan originators, you’ve questioned the value of taking the Stand-Alone Uniform State Test (UST). You’re probably thinking, “I originate in only one state and have no plans to expand. Why bother?” Based on the consequences, you should seriously reconsider.

It does make sense that you’d have these thoughts.  Not long ago, over 80% of the state-licensed MLOs had only one license. It just didn’t seem worth it to take the time to prepare for the test and pay more fees.

However, just because you only originate in one state doesn’t mean you always will. Here are the questions that you need to ask yourself:

-       What if something happens and my plans change?

-       What if I take a new position with a company that originates in multiple states?

-       What if I move? (Most people who live in Chicago are asking this question after 44 days of snow this winter!)

-       What if I decide not to take the Uniform State Test?

There are harsh consequences if you don’t register for the Stand-Alone UST before the deadline. Starting April 1, 2014, if you want to become licensed in any state that has adopted the UST, you won’t have a choice. You will be required to take a new National Test Component. This time, the National test will have 125 questions. Based on the failure rates, it wasn’t easy the first time and it isn’t any easier now. The safer play is to take the Stand-Alone UST. It’s only 25 questions. With some test prep, you should ace it and have no regrets.

Time is running out. All you need to do is open a test window by March 31, 2014. You don’t have to take the test by this date. You have up to 180 days after you open the test window. Don’t miss this opportunity. The reality is that 39 state regulators have already adopted the UST, and more will follow suit. If there’s a chance that you might do business in another state, register for the test.

Once you pass, you can relax and let the chips fall where they may. If you move or want to expand your business, you’ll be one step closer to satisfying that state’s requirements.

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Real Estate Institute has helped thousands of licensees pass their exams. Click here to learn more about Stand-Alone UST test prep.  A new National Test Component prep program is also available. It has been updated based on the 2014 NMLS Content Outline and includes the 2014 rule changes. Try our free online practice tests.

Click here to register for the Stand-Alone UST with the NMLS. You must schedule your test with Prometric.

TODAY'S THE DAY - New Ability-to-Repay and Qualified Mortgage Rules Are In Effect!

Well, today is the day we’ve all been anxious about for the past year; the CFPB’s new Ability-to-Repay and Qualified Mortgage rules have gone into effect.  Mortgage brokers – do you know how your funding lenders are going to handle non-QM loans, if at all?  Are you prepared to review points-and-fees upfront to avoid the need for last minute changes or – worse – fatal compliance issues within the rubrics of your funding lenders?  Mortgage bankers, do you have a plan to handle loans that “fall out” of QM because of issues with points-and-fees calculations or investor interpretations?  Tammy Butler over at Optimal Blue has some excellent advice on having a “Plan B” for the mortgage bankers and depositories out there.  You can check out her latest blog here.

For those of you doing VA loans, the VA issued a circular yesterday indicating that all TILA requirements regarding ATR/QM will apply to VA loans until the VA has issued its own ATR/QM regulations, which it anticipates doing “in the near future.”  Note that any loan that is NOT a QM but meets VA eligibility requirements will still be guaranteed by the VA.

Remember that HUD’s FHA QM definition – implementing rebuttable presumption and safe-harbor thresholds for FHA loans – also goes into effect today.  HUD released a summary of that rule back on December 11 and you can find the actual text of the rule in the Federal Register.

Finally, I’m interested in hearing about your experiences with ATR/QM as we venture into this brave new world together!  If you have any difficulties – or good experiences – that you’d like to share as these new applications make their way to the closing table, feel free to leave a comment below. (Just keep it clean!) or send me an email.

Happy originating!

Peter

CFPB Finalizes Rules on New RESPA & TILA Disclosures

As widely expected, the Consumer Financial Protection Bureau (CFPB) today issued the final rules to implement the “unified disclosures” required under the Dodd-Frank Act.  Rules will go into effect on August 1, 2015. Readers who have been following this blog will recall that getting to this point has been a relatively long and in-depth process, with the agency issuing several draft documents and soliciting comment from the public and industry in a process it named “know before you owe.”

The big surprise today, however, was the length of time the agency gave to industry to implement these new requirements.  A 20-month implementation period comes as a surprise, especially in light of the compressed time period the industry has been working under to implement the oft-amended ability-to-repay and qualified mortgage rules.

In a very brief overview of the final rule (I’ll be getting much more in-depth into it over the next few months to prepare next year’s CE course), it becomes apparent the reasoning behind the extended implementation widow becomes apparent:

  • There is no exemption from the rule given to small creditors, despite heavy involvement from the Independent Community Bankers of America and various State Community Bankers Associations.
  • The fairly controversial provision in the proposed rule requiring borrowers to receive the new Closing Disclosure (replacement for the current HUD-1 and final TIL disclosure) three days before closing was not removed from the final rule – over the objections and warnings of many industry trade groups.

Such a long window of preparation is likely to make beleaguered technology vendors struggling with the QM/ATR implementation – such as LOS providers like Ellie Mae and Calyx – as well as compliance consulting companies, loan pricing engines and mortgage law firms, breathe a long sigh of relief.

You can find a narrative description of the disclosure initiative, as well as links to the final disclosures and the rule itself, at:

http://www.consumerfinance.gov/blog/a-final-rule-that-makes-mortgage-disclosure-better-for-consumers/

Additionally, the CFPB will be publishing the rule in the Federal Register as required by law.

Happy originating,

Peter

Top 5 Tips NMLS Wants Loan Originators to Know About CE Season

Today, NMLS sent approved course providers these tips for you to get through the season successfully:

  1. Review Your Course Completion Record.  The redesigned course completion record provides a complete history of every course completed by an MLO since 2009.  The record also tracks federal and state PE/CE compliance for every license that an MLO is approved for: a green checkmark next to a license type means the MLO is PE/CE compliant; a yellow caution symbol means education is required.   If an MLO does not have a requirement for CE in a given year, the record will say “No Federal CE Requirements” or “No State CE Requirements.”  (And if there is no requirement, the MLO does not need to take a course for that year for that license).   Directions for how to view the record are available at the NMLS Resource Center.
  2. Remember the Successive Year Rule: MLOs are prohibited by the SAFE Act from taking the same CE course in successive years (two years in a row).  If the same course is taken two years in a row, the course may appear on the course completion record with zero credit hours applied, and the MLO will have to complete another CE course.
  3. PE Does Not Count as CE: If an MLO has a CE requirement but completes a PE course instead, NMLS will not count the course as meeting the annual CE requirement and the MLO will be prevented from filing for renewal.
  4. Make Use of the State-Specific PE/CE Education Charts: The most current State Specific PE/CE Education Charts are dated October 1, 2013.  Each state agency has a chart which includes information on PE and CE requirements, any specific or unique information about the agency, and each agency’s annual CE deadline. This year’s documents also include information on the Uniform CE Policy and Q&A’s about the new course completion record.
  5. Credit Bank on Time: One of most frequently call/e-mail topics of the renewal period is from MLOs inquiring about missing course credit. Courses appear on the MLO’s record immediately following the successful completion of the credit-banking process (there is no delay).  Here are the main reasons why a course will not appear on the record:
  •  The provider is banking a large number of MLOs and an individual was missed.
  • The credit-banking process was initiated but not finished (usually because the fees were not paid and the roster expired).
  • The MLO did not have or did not provide a correct NMLS ID number.
  • The course provider did not report within seven calendar days of the course end date.

NMLS-approved CE is offered by Real Estate Institute. The successive year rule is not a concern. All of our courses are new for the 2013 CE season. Fast credit banking is a top priority. Our students are reported within seven days of their course completion (usually the next business day). Click here for information about CE courses.

As a reminder, NMLS initiated SMART deadlines. The CE deadlines for 2013 are as follow:

SMART Deadline: Friday, December 20
At-Risk-to-Miss Renewal Deadline: Friday, December 27
Guaranteed to Miss Renewal Deadline: Tuesday, December 31
*Note: Some agencies may have an earlier deadline.

NMLS Issues Continuing Education Reminder

On Friday, August 23, the Nationwide Mortgage Licensing System & Registry (NMLS-R) sent a reminder to all state-licensed mortgage loan originators (MLOs) who have not completed continuing education in 2013. Individual MLOs must complete eight hours of NMLS-approved CE annually. The SAFE Act requires three hours of federal law, two hours of ethics, two hours of non-traditional mortgage lending and one hour of elective credit.  Some states also have state-specific education requirements that must be met. See the NMLS 2013 State-Specific Education Requirements Chart for details.

NMLS also reminds MLOs that:

  • You may not complete the same CE course as last year.
  • Pre-license education courses do not count toward CE.  However, MLOs do not need to take continuing education in the same calendar year in which they took an NMLS-approved 20-hour pre-license course.
  • Most state regulators will prevent you from submitting an application for license renewal if you have not completed CE.

In 2014, new rules will go into effect and will impact every MLO.   Real Estate Institute’s all-new 2013 CE courses will prepare MLOs to understand these changes and remain compliant.

Loan Originators May Face Delayed Renewal-Are Your Fingerprints Expiring?

As we approach the loan originator license renewal period this year, PLEASE check your fingerprint expiration date inside the NMLS system.  Fingerprints expire every three years per FBI rule, and there WILL be states that will require a refreshed criminal background check for renewal this year.  We don’t have a comprehensive list of states that will be requiring updated criminal background checks (or credit checks) at this point, but the NMLS will be releasing its state-by-state renewal requirements list in the upcoming weeks.  Please make sure to check that list (we’ll link to it on this blog and at www.InstituteOnline.com as well) when it’s released so you are not surprised by a requirement that you cannot quickly satisfy because of expired fingerprints.

IF your fingerprints are expired and you are licensed in a state that will require an updated CBC (criminal background check), please do not wait until the last minute to be re-printed.  Reviewing CBCs is a time consuming process for state regulators – many states only have one person to review these reports – and you don’t want to be forced into a delayed renewal because you waited until the deadline to be re-fingerprinted.

More thoughts from the AARMR conference to come both here and in our all-new 2013 CE courses.

Thanks for reading, and happy originating!

Peter

CFPB Posts Video Summaries of New Mortgage Rules

As part of its industry education initiative, the Consumer Financial Protection Bureau today released video summaries of the new mortgage rules.  For the small-business owners and compliance professionals out there, these videos provide a good, plain-English resource for interpreting the rules and viewing them through the same lens as the issuing regulator.  (Honestly, I wish that more regulators would take the approach that the CFPB is taking – it would make our jobs a tiny bit easier.  Whatever your opinion on the many issues surrounding the rules themselves, kudos to the CFPB for taking an innovative approach in getting information out there.)

Use these videos, along with the various written summaries and compliance guides that the CFPB continues to release, in your compliance planning.  We’ll go in-depth into some of these rules in our 2013 CE courses here at the Real Estate Institute as well.  Keep in mind that, although these videos and the compliance guides are useful, they are not a substitute for knowledge of the actual rules themselves.  As always, we encourage you to seek advice from competent legal counsel on any questions of law that may arise in your business.

A playlist containing all of the videos, as well as an option to watch them all in one session, can be found by clicking this link.

Real Estate Institute’s new CE courses will be available soon. More information about NMLS-approved Continuing Education courses, Pre-License courses and Test Prep is available at http://www.InstituteOnline.com.

Happy Originating!

Peter

FANNIE AND FREDDIE LIMITED TO QUALIFIED MORTGAGES

In response to a directive last week from the Federal Housing Finance Agency, both Fannie Mae and Freddie Mac today issued bulletins indicating that they will only purchase qualified mortgages when the Ability-to-Repay rule goes into effect on January 10, 2014.  EFFECTIVE WITH APPLICATIONS TAKEN ON OR AFTER JANUARY 10, 2014, both Fannie and Freddie will rely on selling lender Representations and Warranties that all loans purchased are, in fact, qualified mortgages or are otherwise exempt from the ability-to-repay rule (i.e. the loan is secured by an investment property).

Aren’t ALL loans eligible for sale to the GSEs automatically Qualified Mortgages?  Why is this a big deal?

While there is a “GSE Exemption” in the QM rule that grants loans eligible for purchase by Fannie and Freddie QM status for the next 7 years (or until the GSEs are no longer in receivership, whichever occurs first), those loans still must meet certain overarching guidelines.  In order to ensure that this happens, Fannie Mae and Freddie Mac are making the following changes to their product eligibility guidelines effective with applications taken on or after January 10, 2014 (note that individual lenders/investors may modify their product guidelines before this date, so be sure to watch for bulletins for those that you do business with):

  • Loans that are not fully amortizing will be ineligible for purchase (i.e. interest-only loans) except for investment properties
  • Loans with terms longer than 30 years will be ineligible for purchase
  • Loans with points and fees greater than 3% of the loan amount (or that exceed limit for small-balance loans, if applicable) will be ineligible for purchase, except for investment properties

The elimination of the interest-only and other odd products will only impact a small percentage of the GSEs’ business (based on recent origination trends), but the points-and-fees restriction could have a large impact on originators – ESPECIALLY those with affiliated business relationships – because of the way that “points-and-fees” are calculated under the rule.

We’ll be discussing the Ability to Repay and Qualified Mortgage rule in depth in our CE courses this year, so be sure to get your spot reserved early!  We’ll be publishing our CE schedule for 2013 later this month.

In the meantime, you can find the bulletins from Fannie Mae and Freddie Mac and some good information on compliance with the QM/ATR rule from the CFPB at the links below.

See you in class!

Peter

Fannie Mae Lender Letter LL-2013-05

Freddie Mac  Industry Letter 5/6/2013

CFPB Ability to Repay and Qualified Mortgage Rule: Small Entity Compliance Guide

NMLS Rolls Out Uniform State Test

The Nationwide Mortgage Licensing System and Registry (NMLS) has announced that the Uniform State Test (UST) will be available for enrollment beginning 4/1/2013.  As I mentioned in a previous blog post, the goal of the UST is to eliminate the need for Mortgage Loan Originators to take two tests to obtain a license under any state regulatory agency that adopts the UST program.  Although we’ve known for a year now that the NMLS was planning this initiative to streamline the licensing process (and save states the time and money involved in maintaining their own individual tests), the details have just recently become available.  Here are the critical ones you need to know:

WHICH STATE AGENCIES ARE PARTICIPATING IN THE UNIFORM STATE TEST PROGRAM?

As of this writing, the following state regulatory agencies have signed on to the UST program effective on the following dates.

State agencies allowing test enrollments beginning 4/1/2013:

Delaware New Hampshire
Georgia North Carolina
Idaho North Dakota
Indiana Department of Financial Institutions* Pennsylvania
Iowa Rhode Island
Kentucky South Dakota
Louisiana Utah Department of Financial Institutions*
Maryland Virginia
Massachusetts Washington
Michigan Wisconsin

*NOTE: Indiana Secretary of State and Utah Department of Real Estate have not elected to participate in the UST program at this time.  Licensees applying to these agencies will still be required to pass a State Component Test in order to become licensed.

Agencies allowing test enrollments beginning 7/1/2013:

Alaska
Kansas
Nebraska
Vermont

The NMLS will add agencies to this list as they sign on to the UST program.  An up-to-date list can be found by going to the NMLS Resource Center and following the links on the right-hand side of the page.

WHAT IF MY STATE AGENCY WAS NOT LISTED?

If you wish to become licensed by a state agency that has not adopted the UST, you must continue to take their State Specific Component Test. If you will be taking the National Compnent Test on or after 4/1/2013, your National Component Test will include the UST.  However, the required State Specific Component Test (for a state agency that has not adopted the UST) will need to be taken separately in order to become licensed by that state agency.

HOW DO I ENROLL FOR THE UNIFORM STATE TEST, AND WHAT IS THE FORMAT?

There is no way to enroll for the Uniform State Test until 4/1/2013.  Once that date has arrived, you will open a testing window by enrolling through the NMLS system as you would any other test.  To my surprise, the NMLS did elect to offer the UST as a stand-alone test for those who have already passed the National Test Component.  Enrollment for the stand-alone UST will only be available for the one-year period running 4/1/2013 – 3/31/2014.  After that time, any individual who has not passed some version of the UST (either the stand-alone or the National Test Component with UST) will have to enroll for (and pass) the National Test Component with UST if they want to obtain a license from any state regulatory agency that has adopted the UST.

The cost to take just the UST (which will consist of 25 questions, all of which are scored) will be $33.00.  The questions will NOT be state-specific, but rather will relate to topics that are fairly uniform across all states; many will be based off of the SAFE Act model state law created in 2008.  The full text of that law in PDF format can be found here.  If you’d like to look at the UST content outline from the NMLS, click this link.

WHAT IF I’VE ALREADY PASSED A STATE TEST IN ONE OF THE STATES LISTED?

You will continue to be able to do business as usual.  You will not need to take the UST, unless you wish to obtain a license from one of the state agencies that have adopted the UST program after the exam becomes available.

WHAT IF I’M CURRENTLY SCHEDULED TO TAKE A TEST OR HAVE AN OPEN ENROLLMENT WINDOW?

If you’re currently scheduled to take a test, or have an open enrollment window to schedule a test, you will need to take the test as-scheduled and before the end of your enrollment window or you will lose the funds you have paid to open that enrollment window.  Failure to show for a scheduled exam will also close the enrollment window.  There is no way to switch an enrollment window from a State Specific Component Test to the UST once that enrollment window has been opened and during the time it remains open.

WHAT IF I NEED TO TAKE THE NATIONAL TEST COMPONENT?

After 4/1/2013, all NEW enrollments for the National Test Component will include the UST.   The National Test Component with UST will consist of 125 questions, 115 of which will be scored. There will not be an option to take the National Test Component without the UST.  The price for all National Test Component enrollment windows opened on or after 4/1/2013 will increase to $110.

All enrollment windows for the National Test Component opened prior to 4/1/2013 will be for the existing National exam and will not include the UST.  The cost for this will remain at $92.

Until 4/1/2013, there will be no way to open an enrollment window for the National Test Component with UST.  After 4/1/2013, there will be no way to open an enrollment window for the National Test Component without the UST.  The existing National Test Component will be administered until the last enrollment window closes.

WHERE DO I FIND MORE INFORMATION?

All pertinent information relating to the UST can be found at the  NMLS Resource Center under the TESTING tab.  You can locate the UST Implementation Information page from there.

Real Estate Institute offers UST exam prep programs. Free practice tests are also available.

Happy originating!

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