Why It’s Important for Newly Licensed Brokers to Tackle 45-Hour Post-License Education NOW

Two hands in chains

Even with our normal lives on hold, there’s still license renewal education to be tackled by many.

The amended Real Estate License Act includes a new 45-hour Post-License education requirement for new Illinois real estate Brokers (licensed after August 8, 2019). After the state’s announcement of this new requirement, new Brokers were in a holding pattern until the curriculum was released by the Division of Real Estate. (If you find yourself craving more details—the kind of stuff schools like us love—you can read the 45-hour curriculum notice from the IDFPR.) Then, it was a waiting game until March 1, when the department began licensing courses. Fast forward to the end of March, and now Real Estate Institute is among the first education providers with approved courses.

This may lead Brokers to wonder whether they should complete the education now or wait until sometime closer to their renewal deadline.

Requirements for Brokers Licensed on or after Aug. 9, 2019

45 credit hours of Post-License education, consisting of three 15-credit-hour courses:
    • Applied Brokerage Principles – 15 credit hours
    • Risk Management & Discipline – 15 credit hours
    • Transactional Issues – 15 credit hours

Brokers must complete at least 1 hour of Sexual Harassment Prevention training before renewing their licenses, which is included in the Risk Management & Discipline course.

Each course requires its own 50-question final exam, which must be administered by the education provider delivering the course. (No exam exemptions for live training or online distance education.)

License Renewal Deadline for Brokers Licensed BETWEEN Aug. 9, 2019 – Nov. 1, 2019

To remain active, Brokers must normally complete their required education and renew their licenses before expiration (by April 30 of even-numbered years). However, Brokers have an extended license renewal deadline of September 30, 2020, which is part of IDFPR’s response to the COVID-19 pandemic. The entire 45-hour Post-License education program must be completed prior to the extended renewal date for this group of Brokers.

What Happens if You Wait to Complete 45-Hour Post-License Education?

Whether your license renewal deadline is in 2020 or later, Illinois license law requires new Brokers to have additional supervision until they complete their 45 hours of Post-License education. Until Post-License is complete, a licensee’s Designated Managing Broker must:

  • Directly handle all earnest money
  • Directly handle contract negotiations
  • Approve all advertisements involving the newly licensed Broker

The additional oversight on newly licensed Brokers’ business activities could slow things down when we shift into our new normal, which will presumably include an upswing in real estate transactions during the spring and summer months. Completing this education now while there may be a lull in business could put new Brokers on better footing once the market picks up.

Now is the time for learning that allows you to chip away as time permits (like when your kids are e-learning or when you’re considering deep cleaning your refrigerator and need a reason to procrastinate). You’ll be able to break free from these restrictions once you’ve satisfied this education requirement.

Real Estate Institute is pleased to offer ALL ONLINE 45-hour Post-License education so Brokers can work from the comfort and safety of their homes, anytime! Easy financing is also available if you’re feeling the economic crunch.

Be well. Be safe. Be productive!


Real Estate Institute has been a leader in real estate education for over 25 years. Our team of experts is standing by to answer your questions about your requirements, our continuing education or post-license courses and the renewal process. Please don’t hesitate to contact us online or at 800-995-1700.

Are COVID-19 Losses Covered by Insurance?

Coronavirus surgical mask doctor wearing face protective mask against corona virus banner panoramic medical professional preventive gear.

Along with the obvious public health concerns, the COVID-19 pandemic raises several questions about insurance. Will my health insurer cover testing? Can my business make a claim for lost income?

Although the answers from carriers, regulators and courts might change as the situation evolves, here’s how some of the most common insurance products are expected to respond to coronavirus-related losses.

Health Insurance

Federal and state governments will pay for lab tests associated with COVID-19. However, hospitals might charge their own fees for collecting specimens and can pass those expenses along to consumers. For health plans regulated by the Illinois Department of Insurance, emergency care from an out-of-network provider (including ambulatory services and hospital care) must be billed as if it were from an in-network provider. Similarly, patients at an in-network facility who are treated by an out-of-network provider can’t be charged higher copayments (assuming no qualified in-network provider is available at the facility). In an effort to promote social distancing, telehealth services from medical providers must be covered as if they were part of an in-office visit.

Life Insurance

Purchasers of life insurance may have been asked to disclose recent travel to other countries. If a consumer misrepresented this information on an application and contracted a terminal case of COVID-19 while in a high-risk area, the insurer might be able to deny death benefits. Otherwise, life insurance policies generally don’t have exclusions that would pertain to the present crisis. Policies with a cash-value component might decrease in value due to the pandemic’s impact on the economy but are usually subject to a minimum guarantee.

Workers Compensation

Workers compensation insurance pays for medical care and a portion of lost wages when an employee becomes injured or ill as a result of his or her job duties. Although eligibility differs by state, compensation for illnesses generally only applies when job duties or work environments made employees significantly more susceptible to illness than the general population. Historically, for example, ill workers have received benefits after being exposed to hazardous chemicals but not when catching the flu from a co-worker. Whereas most workers are unlikely to qualify for workers compensation due to COVID-19, hospital workers (and perhaps grocery store employees) might qualify due to their elevated exposure. Time will tell.

Commercial General Liability Insurance

This insurance is intended to respond when a member of the public is harmed by a business’s work or by unsafe conditions at an insured location. Although some coverage might exist if a customer were to contract the virus from someone at a business, it’s possible that the insurance would only respond in cases of negligence (such as a business continuing to remain open to the public after being ordered to close). Although some policies might provide benefits regardless of fault, those amounts are generally limited to no more than a few thousand dollars.

Business Interruption Insurance

This insurance compensates businesses for lost income and extra expenses when they’re forced to shut down through no fault of their own (including by emergency order of the government). Unfortunately for policyholders, coverage is typically dependent on “direct physical loss” or damage to property, such as a fire at either the insured’s business or a neighboring building. Interruptions that result in lost income but aren’t caused by a “direct physical loss” or property damage are generally excluded. Although COVID-19-related lawsuits have already been filed against insurers based on this language, carriers might still be able to deny claims based on other parts of the policy. For example, since the early 2000s, most business interruption policies specifically exempt losses due to viruses and bacteria.

As in all cases regarding claims, policy language can differ from product to product and carrier to carrier. Insurance professionals should carefully read the applicable coverage forms before advising the public about a specific loss.


Real Estate institute offers insurance continuing education approved by the Illinois Department of Insurance. Thousands of Illinois insurance producers complete our webinar, classroom and self-study continuing education courses each year. 

What You Need to Know About Illinois Broker License Renewal in 2020

junge Frau beobachtetThe Illinois Department of Financial and Professional Regulation (IDFPR) recently e-mailed Brokers, announcing that these licensees are officially “In Renewal,” which means the department is now accepting online license renewal applications.

If you didn’t receive this e-mail announcement, you may need to update your contact information with the state to receive future notices. To easily update or add your e-mail address, click here.

Remember, you cannot renew your real estate license until you complete required education.

Step 1 – Complete Continuing Education or Post-License

Brokers licensed before February 1, 2018 must complete 12 hours of core/elective continuing education (CE). The specific CE requirements have changed for the 2020 renewal and include two new required courses: 4-Hour Core and Sexual Harassment Prevention training. All Real Estate Institute’s CE courses are compliant with new requirements. To learn more about the recent education changes.

Brokers licensed from February 1, 2018 through November 1, 2019 are renewing for the first time and must complete a Broker Post-License program (instead of continuing education).

Brokers licensed after November 1, 2019 were issued licenses that expire on April 30, 2022 – so no action is required at this time. However, there are compelling reasons to complete a Broker Post-License program sooner, rather than later. Call us to learn more!

No matter when you were licensed, it’s important to retain documentation of your course completions. When licensees complete courses with Real Estate Institute, we promptly report their completions to the IDFPR.

Step 2 – Submit Your New License Application

After you have completed your CE or Post-License education requirement, you must renew your license with the IDFPR. There are two ways to renew your license:

  1. Renew Online – The IDFPR permits online license renewal applications to be submitted up to 90 days before the license expires. This option allows you to complete the entire renewal application and pay online. Click here to apply online.
  2. Mail Your Application – The application can be completed online, printed and mailed with payment. If you use the paper application, we strongly recommend that you send it to the IDFPR via USPS Certified Mail so that you receive confirmation of delivery. Delivery confirmation will be critical in the event of a delay in license renewal. It will likely take the IDFPR several weeks to process your paper application.

Step 3 – Print Your New License

Once the IDFPR has processed your license renewal application, you should receive an e-mail indicating that your new license is available. Upon receiving this e-mail, you may log in and download or print a copy of your license. Note: Brokers are required to carry a printed or electronic copy of their license.


Real Estate Institute has been a leader in real estate education for over 25 years. Our team of compliance experts is standing by to answer your questions about your requirements, our continuing education or post-license courses and the renewal process. Please don’t hesitate to contact us online or at 800-995-1700.

IDFPR Announces Broker 45-Hour Post-License Requirements and Curriculum

House model on wood table. Real estate agent offer house, property insurance and security, affordable housing concepts

The Real Estate License Act was recently amended, and newly licensed brokers have different education requirements, depending on the date of license issuance. Yesterday the IDFPR Division of Real Estate announced details about the new 45-hour Post-License curriculum that will enable schools to begin developing courses to satisfy the requirement.

Requirements for Brokers Licensed BETWEEN Aug. 9, 2019 – Nov. 1, 2019

  • 45 credit hours Post-License education, consisting of three 15-credit-hour courses:
    • 15 hours of Applied Brokerage Principles
    • 15 hours of Risk Management/Discipline
    • 15 hours of Transactional Issues
  • Brokers must complete at least 1 hour of Sexual Harassment Prevention training before renewing their licenses, which will be included in one of the above courses.
  • Each course requires its own 50-question final exam, which must be administered by the education provider delivering the course. (No exam exemptions for live training or online distance education.)

License Renewal Deadline

  • To remain active, Brokers must renew their license before expiration (by April 30, 2020).
  • Due to delays in the 45-hour curriculum announcement, the IDFPR may grant an extension until November 1, 2020 to complete the Post-License education requirement. They will continue to evaluate whether this is necessary, based on the actual availability of these courses. For now, Brokers should plan to complete their post-license requirement as soon as courses become available.
  • There is no extension for the 1-hour Sexual Harassment Prevention training. This portion of the education requirement must be completed for the April 30, 2020 license renewal deadline.

Course Availability

The announcement indicates that the department will begin licensing courses on March 1, 2020.  With the course requirements only published yesterday, it will take education providers time to review, plan, create and receive state approval for all three new 15-hour courses. Therefore, it’s unlikely that education providers will be able to create quality courses and acquire the required approvals so quickly.

Real Estate Institute has been offering an opportunity for brokers to pre-register for the 45-Hour Post-License program at a discounted price. This will give these students immediate access to the program once it is approved by the IDFPR.


Real Estate Institute has been a leader in real estate education for over 25 years. Our team of experts is standing by to answer your questions about your requirements, our continuing education or post-license courses and the renewal process. Please don’t hesitate to contact us online or at 800-995-1700.

NAR Announces Changes to Code of Ethics Training

Code of Ethics

On November 11, the National Association of REALTORS® announced changes to their Code of Ethics training requirement. These changes were recently approved by the presidential advisory group (PAG) and the NAR Leadership Team.

This news has created a flurry of social media comments and questions from REALTORS® trying to understand the changes.

Here are key changes that were announced:

  • Code of Ethics training required for REALTORS® will be required every THREE years rather than every two years. The deadline for the current enforcement period has been extended to December 31, 2021 (was December 31, 2020).
  • After December 31, 2021, only courses and equivalencies provided by local, state or national REALTOR® associations can satisfy the Code of Ethics training requirement.
  • There will be changes to the learning objectives.

What does this mean for Illinois real estate brokers?

This will not impact the upcoming April 30, 2020 broker license renewal (and April 30, 2021 managing broker license renewal). Historically, nearly all local REALTOR® associations have allowed their members to satisfy this training requirement by completing Code of Ethics training with state-licensed education providers. The National Association of REALTORS® has indicated that this practice may continue through December 31, 2021.This seems reasonable, given the large number of brokers (throughout the country) who have already completed Code of Ethics training from state-licensed education providers and intended to satisfy the requirement for the current enforcement period.


Real Estate Institute has been a leader in real estate education for over 25 years. Our team of experts is standing by to answer your questions about your requirements, our continuing education or post-license courses and the renewal process. Please don’t hesitate to contact us online or at 800-995-1700.

CE Survival Guide – Major Changes to Illinois Real Estate Continuing Education

Life belt in the air

July 1, 2019 is an important day for Illinois real estate licensees.

Starting July 1, Brokers, Managing Brokers and Residential Leasing Agents are subject to new continuing education requirements. It’s been over a decade since we’ve seen major changes like this!

In January 2018, the Real Estate License Act was amended with significant updates that “modernize” education and renewal requirements. While some changes took effect right away, much of the implementation was deferred until now, so the IDFPR had time to develop transition plans. These plans included approving schools and courses that satisfy the new requirements.

Here are the facts you need to know to survive your next real estate license renewal.

FACT 1: Core A and Core B Continuing Education Courses Have Been Retired

Until today, most Brokers and Managing Brokers had to complete 12 hours of Core and Elective CE before renewing their license. That included the following:

  • 3-Hour Core A (Required Subjects)
  • 3-Hour Core B (Legal Subjects)
  • 6-Hour Elective or Core B

Now, all Core A and Core B courses are no longer available. (The course approvals have expired, for all schools). The subjects that were formerly categorized as Core B may still be offered as Electives at a school’s discretion.

FACT 2: You Probably Need to Complete a New “Core” CE Course

The former Core A and Core B requirement has been replaced by a single “Core” curriculum requirement. Brokers and Managing Brokers must now complete:

  • NEW 4-Hour Core (Required Subjects)
  • 8-Hours of Electives

Residential Leasing Agents only need to complete a special 6-Hour core course (and no electives).

If you already completed some or all of your CE for the current renewal period, you may be exempt from the new requirement.

If it’s your first license renewal, you’ll need to complete 30 credit hours of Post-License education instead of continuing education.

FACT 3: Online Distance Education Is the New Self-Study

As part of the new requirements, Core continuing education courses may only be completed in an interactive format. This includes classes, webinars and online distance education courses. The good news is that all courses completed in an interactive format do not require a final exam.

The Core credit cannot be earned with self-study courses, whether book-based or online (such as PDFs). This means that only Electives may be completed in the traditional self-study format.

Effective January 1, 2020, every Illinois professional licensed by the IDFPR, including real estate licensees, must complete at least one hour of sexual harassment prevention training before renewing their license. The training must be provided by a division-approved education provider.

This means that all real estate licensees must be sure that their CE (or Post-License education) includes this training in order to renew. This first impacts Brokers and Leasing Agents who renew their licenses in 2020.

There are more changes on the horizon. If you need someone to throw you that life preserver by reviewing your transcript or helping you navigate these new waters, Real Estate Institute is available to guide you to a successful license renewal. Here’s another resource that provides a summary of the major education changes.


Real Estate Institute has been a leader in real estate education for over 25 years. Our team of experts is standing by to answer your questions about your requirements, our continuing education courses and the renewal process. Please don’t hesitate to contact us online or at 800-995-1700.

 

Are Final Exams Required for Upcoming Real Estate License Renewal?

Last year, some important amendments to the Real Estate License Act took effect. While most of the changes were subtle, there was an impact for Illinois Real Estate Managing Brokers. As the license renewal deadline approaches for Managing Brokers, our customer service team has been fielding lots of questions about the changes. Here is the key question and answer…

Do the license law changes impact your 2019 Managing Broker license renewal?

Yes, but not in a significant way.

Although the amended license law made some changes to curriculum and the way courses can be offered, the real impact of those changes won’t be felt until the next license renewal period. That’s because the state needed to finalize administrative rules that describe how those changes will be implemented. The proposed rules (which may be final by the time you read this) defer the impact of the changes to avoid confusion about requirements during this renewal period.

However, the Illinois Department of Financial and Professional Education (IDFPR) determined that some aspects of the amended license law were very clear and could be implemented in advance of the rulemaking process. This contradiction led to some confusion among licensees.

How does this impact Managing Broker Continuing Education?

The current two-year Managing Broker renewal period began May 1, 2017, and ends April 30, 2019. As a reminder, most Illinois Managing Brokers must complete 24 credit hours of continuing education that includes: 12 hours of core and elective CE (via self-study, online distance education, classes or live webinars) plus 12 hours of interactive Broker Management CE (via classes or live webinars) before renewing their licenses.

You may be pleased to learn that if you attend a live, interactive CE course via classroom or webinar, you are no longer required to complete a final exam for that course. Keep in mind that you must attend the entire course. (Attending review classes for self-study CE courses is not permitted.) This applies to core, elective, and Broker Management CE.

When it comes to core and elective CE, attending live training is not for everyone, especially with the requirement to complete 12 hours of interactive Broker Management CE. You may be looking for another way to avoid taking a final exam. If you’re feeling a little adventurous and willing to try something new, “online distance education” may interest you. This new interactive course delivery method became available in 2018 as a result of the amended license law.

odeprosandcons28229
Online distance education is a modern approach to self-study that has some pros and cons depending on your perspective.

No one relishes the idea of taking a test. It’s important to know that although a final exam is not required with online distance education courses, there must be interactivity, which includes quizzes/knowledge checks along the way to make sure you’ve gone through the entire course.

Note: The state does not permit the 12-credit-hour interactive Broker Management CE course to be completed in an online distance education delivery method.

In summary, the course format you choose will determine whether a final exam is required.

The IDFPR will soon begin accepting license renewal applications, so it’s important that Managing Brokers complete their required CE now.


Real Estate Institute has been a leader in real estate education for over 25 years, offering top-rated Continuing Education and Pre-License courses in multiple formats: Classroom, Live Webinar and Online Distance Education. Real Estate Institute’s team of experts is standing by to answer questions about your requirements, our courses and the renewal process. Please don’t hesitate to contact us at 800-995-1700.

 

Four Things Illinois Managing Brokers Should Do in 2019

To do list for businessman in notebook on office table. Grey background top viewThe new year is upon us, and it’s time to work on your annual business plan if you haven’t already done so. As a sponsoring or managing broker, you will certainly do many important things this year, but be sure not to lose sight of these basic strategies and responsibilities.

Establish Stronger Connections With Your Team

Whether you manage just a few agents or oversee the operation of a large organization, it’s important to build relationships with your team. Good working relationships often lead to better focus, collaboration, talent development and other positive outcomes that will help your company grow. Perhaps more importantly, effective communication with your team will help your office remain compliant with real estate license laws, rules and regulations.

One easy way to put this into practice is team meetings. Ideally, you can maintain a regular schedule of well-attended, in-person meetings that offer valuable interactions for everyone. But in the modern workplace, it may be challenging to drive attendance at in-person meetings, so don’t be afraid to use an online meeting app that enables you to collaborate virtually.

At each meeting, be sure to spend time on at least one key compliance issue. For example, you can help your sponsored agents understand rules and regulations surrounding advertising. While your office policy will dictate what styles and forms of advertising are acceptable to your brokerage, it is important to remind your agents about the do’s and don’ts of marketing. Educating your agents by using examples of appropriate and legal advertisements vs. inappropriate forms of advertising will help them understand what it takes to be compliant and successful while also protecting you and your firm.

Remember that Certain Responsibilities Should Not Be Delegated

It’s important to know what you do well and what can be delegated to others who can do it more efficiently or cost effectively. However, from a compliance standpoint, certain responsibilities should not be delegated to others.

As the real estate industry continues to embrace the concept of teams within brokerages, it can be tempting for a managing broker to delegate some of his/her responsibilities to a “team leader.” But the law is clear that this is not always permissible. Specifically, a managing broker must:

  • Have a written independent contractor agreement or employment agreement with each team member.
  • Compensate each team member. Sponsored licensees are only allowed to receive compensation from their sponsoring broker.
  • Monitor team advertising. Teams may advertise under the team name, but the name of the sponsoring brokerage must be included in all advertising.

Get Ready For Branch Location Changes

This year, the IDFPR’s Division of Real Estate will implement recent license law amendments, including elimination of the requirement for licensed real estate businesses to obtain an additional license for each of their branch office locations.

More details are coming soon, but we’ve received a lot of questions about how this change might impact an organization’s management structure. Similar to the current regulations, the individual who supervises the “main office” may supervise additional locations or designate another managing broker to supervise sponsored licensees at the remote location(s). Brokerages will be required to provide the IDFPR with details about the additional locations where they conduct business, but it won’t be necessary to have a separate license. Instead, these details will be managed through the IDFPR’s online services portal.

Update Your Policy Manual

Lastly, be sure to review and update your policy manual at least once per year. It’s important to incorporate policies into your manual as you become aware of new laws and rules that affect real estate brokerage. For example, you should consider including policies related to sexual harassment. You may want to address scenarios related to interactions with colleagues, customers, and clients. The appropriate information (and training – possibly at a team meeting), may help to prevent harassment and various types of discrimination. Additionally, taking reasonable steps to prevent harassment may help to limit a company’s liability if a claim is ever filed against your company or management team.


Real Estate Institute has been a leader in real estate education for 25 years, offering top-rated Continuing Education and Pre-License courses in multiple formats: Classroom, Live Webinar and Online Distance Education. Real Estate Institute’s team of experts is standing by to answer questions about your requirements, our courses and the renewal process. Please don’t hesitate to contact us at 800-995-1700.

Naughty or Nice: What Will 2019 Bring for Mortgage Professionals?

Naughty Boston Terrier has eaten the door

“It was the best of times, it was the worst of times.”

If you’re like me, the famous opening sentence to Dickens’ A Tale of Two Cities
calls to mind memories of droning college lectures on Victorian literature that made you yearn for more pleasant surroundings such as the DMV or dentist chair, but it’s also a fitting description of today’s housing and mortgage markets. Given that we’re nearing the end of 2018, it makes sense to use this month’s blog post to take a look at the current state of the mortgage market and some trends to consider as we enter the new year, so here goes.

All real estate is local – except when it’s not

My favorite thing about my job is that I get to travel the country and talk with people across the spectrum of the mortgage business, from MLOs to regulators, and discuss the market with them. While often there are a few common topics of concern raised across different locations, this year was the first in a long time when MLOs in every single region of the country ranked the same two issues in order as the biggest impediment to growth: Lack of inventory and rising mortgage rates.

Of course, those issues are very closely related, as homeowners with low interest rate loans put off potential moves while the refinance market craters at the same time. The good news for mortgage professionals (according to CoreLogic data from July of this year) is that 41% of renters in the 100 hottest housing markets plan to buy a home in the next year, and with unemployment at multi-decade lows and wages beginning to show steady growth, they’re in a good position to follow-through on those plans. Unfortunately, that same data tells us that only 11% of homeowners plan to sell in the same time period, leading to the likelihood that inventory concerns will persist into 2019. While new construction may alleviate some of the pressure, it should remain a seller’s market for much of the next 12 months, even if rising interest rates do lead to a slowing of home price growth.

The incredible shrinking margin

Independent mortgage banks have had (to put it bluntly) a terrible year when it comes to origination profits. In the third quarter, IMBs recorded an average profit of just $480 per loan, which is slightly better than the $118 per loan loss posted in the first quarter, but down year-over-year. Given typical fourth quarter struggles, 2018 is on pace to be the worst year for origination margins since the crash of 2008.

The good news is that companies that own mortgage servicing rights (MSRs) are seeing strong value from them. This should continue, as MSRs tend to be a very stable investment in rising interest rate environments because loan payoffs decrease as refinance volume falls. Perhaps the most important line in the linked article above: “Including all business lines (loan production and servicing), 71% of the firms studied posted a pretax profit in the third quarter. Without servicing, that percentage would have dropped to 52%.” Unfortunately, that does not bode well for IMBs that only participate in the origination side of the business, so look for this winter to bring another wave of consolidation among that segment of the business to the benefit of the larger IMBs that service AND to mortgage brokers who aren’t faced with banker levels of overhead expenses.

Land of opportunities

Fear not, mortgage originators! While the ride is certainly choppy and likely to become more so in 2019, there ARE opportunities to grow your business over the next 12 months. The first thing you need to do, however, is accept that we’re not in Kansas anymore. If you’ve been operating in the confines of the Fannie/Freddie box and/or relying on refinances for more than 20% of your income, there are some things you can do NOW to set yourself up for success:

  1. Get out of your comfort zone. Examine the full suite of products your company offers. Read and memorize guidelines and niches! As volume and profits shrink, the credit box is expanding. To date, much of this guideline expansion has been in the jumbo QM loan market, but I expect the non-QM market to pick up significantly at all loan levels as we go through the winter. This will be the first “slow period” in a long while where the refinance market is almost all needs-based (cash-out, divorce settlements, etc.), and lenders will need to find ways to fill the refi void. If you’re the market-watching type, keep an eye on companies like Verus Mortgage Capital and Neuberger Berman as they continue to bring non-QM securities to market. If investor appetite increases for these mortgage-backed securities, expect more companies to jump into the non-QM pool with both feet. The key is to know your product offerings inside and out, be able to explain them to consumers and referral sources and lend responsibly. (State regulators will be watching.)
  2. Get back to basics. When purchase business accounts for 80% of residential originations, you can’t afford to be lax in maintaining your referral sources and looking for new ones, especially among real estate agents. No, this doesn’t mean you should consider violating RESPA’s prohibition on referral fees. What it DOES mean is that you need to be in regular contact with those who trust you and add value to their business instead of just bringing doughnuts, asking for referrals and taking them for granted. How do you add value? One of the easiest ways is to show them how your expanded product selection and knowledge can translate into more closings for both of you. With technology tools like social media and CRM platforms, there really is no excuse for not getting your name out there (in a compliant manner, of course). Don’t let others eat your lunch; market yourself like it’s 1999.
  3. Go where the business is. Work on a strategy to penetrate sectors of the market that are either underserved or outperforming (or both). Wondering where to start? Think inventory shortages. If people are remaining in their homes because their next “dream home” isn’t available, that doesn’t mean they’re satisfied with the status quo. In fact, renovation spending has been on the rise for a while now. Combine that with the fact that there’s almost $6 billion in tappable equity available, and renovation lending becomes a very attractive option to add to your suite of products. If you’re not able to go that route, consider finding ways to service the most consistently expanding demographic in home purchases: the Hispanic population. This doesn’t mean that you need to be multilingual (though there are certainly myriad opportunities to service the Limited English Proficiency – or LEP – market for those who are), but it does mean that you may need to brush up on underwriting guidelines for situations that arise more often in this community like gift funds, non-occupying co-borrowers, wage earners with multiple employers and multifamily dwelling considerations. Also, please consult management about fair lending considerations that may arise here so that you can do things the right way.

More market information

If you like forecasts and economic news, there’s certainly no shortage of it this time of year. Here are three of my must-reads:

  1. Freddie Mac 2019 Market Outlook
  2. Fannie Mae Research and Insight
  3. NAR National Housing Forecast

As the year comes to a close, I want to thank all of you for your support of Real Estate Institute and my monthly ramblings. It’s because of you that I look forward to coming to work every day and pursuing my passion for residential finance and education. I wish you all a safe and happy holiday season, and I’m looking forward to continuing this journey in 2019!

Happy Originating,

Peter



Real Estate Institute offers top-rated Mortgage Loan Originator Continuing Education and Pre-License courses in all three formats: Classroom, Live Webinar and Online, Self-Study. These courses were designed BY loan originators FOR loan originators covering topics you need to know to navigate today’s ever-changing lending landscape.

Sign, Sign, Everywhere a Sign

Dart_on_FireThey say that every person needs a passion and/or a hobby. I have two, one of which is regulatory compliance in mortgage lending. Unfortunately, that doesn’t make any of the various approved lists of hobbies for men, which is likely why I’m often found alone next to the bar or canape table at cocktail parties. (However, my other passion, darts, does make several of the lists, so there’s that.)

Thankfully, there is a support group where people like me can get their daily dose of various and sundry compliance scenario questions to mull over and comment upon. It’s an email listserv called RegList, and it has some of the most brilliant compliance minds in the country on it. In fact, if your job description includes anything related to mortgage compliance, I recommend you join us; membership is currently FREE, and we even get together for the occasional cocktail at various industry conferences (canapes optional). Just remember, what happens in compliance stays in compliance.

Recently, there was a question posted to the group that got me thinking about how much MLOs really understand about the requirements and timelines for TRID disclosures. It involved a situation where the borrower received a revised loan estimate four business days prior to closing (the last day that a revised LE can be provided under TRID) but did not SIGN the LE until the next day, which is the same day they received the Closing Disclosure.

The ultimate question was, can a borrower SIGN a revised LE on the same day they RECEIVE the initial CD, and the reason I’m discussing it here is there’s a very real possibility that you’ll encounter this exact scenario on one of your files.

To answer this question, we need to look to Section 1026.19(e)(4)(ii) of Regulation Z, which states, in part, “the creditor shall not provide a revised version of the… [Loan Estimate] … on or after the date on which the creditor provides the… [Closing Disclosure]. The consumer must receive any revised version of the…[Loan Estimate]…not later than four business days prior to consummation.” (All emphasis mine.)

Here’s where I think MLOs and others who are not interacting with the rule on a daily basis may get confused: The words PROVIDE and RECEIVE are NOT synonymous with the word SIGN. In fact, Section 1026.37(n) of Regulation Z and the official commentary to this section of the rule make it clear that a signature is not required on the Loan Estimate! The creditor is free to include a signature line for the consumer to “confirm receipt” of the disclosure or NOT to include it at its sole discretion.

Yes, as a matter of course, virtually all creditors elect to use the version of the form with the signature line because it enables them to more easily track timelines and sell loans to certain investors. However, from a pure compliance perspective, it makes no difference when – or indeed even IF – the borrower actually signs the document. Thus, as long as the creditor can prove that the borrower RECEIVED the revised LE at least four business days prior to closing, providing the CD on the same day the borrower signs the revised LE is compliant so long as the CD meets all other timing requirements. Keep in mind that, if you’re providing these disclosures electronically, you must comply with all requirements in the federal E-SIGN Act regarding consent and delivery.

This is just another example of why our compliance management systems (CMS) are so important. While some investors may initially be unwilling to purchase the loan described above simply because of the signature date on the revised LE, being able to provide proof that the LE and CD were DELIVERED in accordance with Regulation Z requirements may save you from a dreaded buyback or unsaleable loan scenario.

Happy originating,
Peter


Real Estate Institute offers top-rated Mortgage Loan Originator Continuing Education and Pre-License courses in all three formats: Classroom, Live Webinar and Online, Self-Study. These courses were designed BY loan originators FOR loan originators covering topics you need to know to navigate today’s ever-changing lending landscape.