PPACA Proposed Rules Poised for Roll Out

On Monday, the federal government will be publishing proposed rules that would implement several major sections of the new health care law. The Patient Protection and Affordable Care Act (PPACA) rules essentially explain how the U.S. Department of Health and Human Services will be interpreting some of the law’s relatively broad language. This is arguably the biggest piece of health insurance news since the Supreme Court’s ruling on the law earlier this year.

Some of the important topics mentioned in the rules are as follows:

  • The kinds of care that will need to be covered by most health plans and most health insurance policies.
  • The requirement to offer health insurance to all applicants regardless of health status.
  • The circumstances under which health insurance companies can vary their rates.

Once the rules are officially published, interested parties (including health insurance producers) will have until Christmas to submit questions/comments to the department.  For online submissions, use the following link:  http://www.regulations.gov/#!home.

Can You Expect a Hike in the Fannie/Freddie Guarantee Fee in Your State?

The Federal Housing Finance Agency (the agency tasked with overseeing the Fannie and Freddie conservatorship) has announced that it intends to hike the guarantee fee on all loans sold to the agencies secured by properties in the states with the highest cost of foreclosure.  Those states are:  Illinois, Florida, Connecticut, New Jersey and New York.  This fee hike would go into effect in 60-90 days (it needs to be formally published in the Federal Register first for public comment), and means that loan originators will likely see a worsening in pricing on loans made on properties in these states in roughly 45 days.  Once the notice is published, you’ll have a chance to comment on the proposal at www.regulations.gov.  It’s worthwhile to make your voice heard, so take a few minutes and give them your thoughts on the matter!  You just need to wait until after the notice is officially published.

Happy originating!

ILLINOIS MORTGAGE LOAN ORIGINATORS: Do You Engage in Loan Modification Activities?

Just a reminder that the state of Illinois has amended the Residential Mortgage License Act to impose a registration requirement on all state-licensed Mortgage Loan Originators who also engage in loan modifications.  If you are engaged in any loan modification activities on properties located within Illinois, you must register with the state by completing a one-question questionnaire on the IDFPR’s website.  The URL for the questionnaire is  http://www.obre.state.il.us/MLOSurvey/.

If you perform loan modification activities, you MUST register online by the deadline of December 22, 2012.  There are no additional fees or requirements above and beyond registration.

**Also, Illinois now considers loan modifications a licensable activity.  In order to perform loan modifications on properties located in the state of Illinois, you must hold a valid Mortgage Loan Originator license or be otherwise exempt from licensure. **

The Residential Mortgage License Act defines loan modification as “for compensation or gain, either directly or indirectly offering or negotiating on behalf of a borrower or homeowner to adjust the terms of a residential mortgage loan in a manner not provided for in the original or previously modified mortgage loan.”  (Amended via HB 4521, effective August 3, 2012)

Last Chance for Illinois Attorneys to Report MCLE Credits

Illinois attorneys with last names beginning with A through M are running out of time to report their continuing legal education compliance.  According to the MCLE Board, attorneys who did not complete the required credits by June 30, 2012 are automatically given a “grace period” until September 30, 2012.  If this applies to you, one of two late fees applies:

  1. $100 if the attorney reported non-compliance by July 31, 2012; or
  2. $150 if the attorney failed to report compliance, non-compliance or a valid exemption by July 31, 2012.

Attorneys using the September 30, 2012, grace period can report and pay the appropriate late fee online. To access the MCLE Board online reporting system, click here and complete the steps by September 30, 2012.

Real Estate Institute is approved by the Illinois MCLE Board as an Accredited CLE Provider. If you need last-minute CLE, click here to view a list of online/on-demand presentations. Discount packages are also available for the new 6-hour Ethics requirement and the entire 30-credit-hour requirement (including Ethics).  For a free presentation preview, please click here.

Illinois Leasing Agent Renewal Deadline Approaching

July 31, 2012, is the deadline for all Illinois Residential Leasing Agents to renew their licenses. Leasing Agents must complete an IDFPR-approved 6-credit-hour continuing education course before license renewal.  The renewal occurs every two years (in even numbered years). However, if you were licensed during the current renewal period (first-time renewal), you are not required to complete continuing education but must complete the renewal application and submit the fee.

Once you have completed your CE requirement, active licensees must fill out a renewal application and pay the renewal fee. The state allows you to renew as follows:

  • Online with a credit card
  • By mail

Real Estate Institute has created a special six credit-hour course including topics specifically meaningful to residential leasing. The course is offered in a self-study format, allowing you to study at your own pace before taking the required exam near your home or office. Click here for more information. You can view the course book online and begin immediately. If you have questions about your renewal requirements, you may call the knowledgeable customer service representatives at Real Estate Institute at 800-995-1700 or call the IDFPR at 217-782-3414.

For additional resources, click the links below.

Frequently Asked Questions: Click here.

IDFPR Renewal: Click here.

GFE/TILA RULES PROPOSED BY CFPB - Big Changes to Disclosure and Settlement Statement

The Consumer Financial Protection Bureau submitted the much-awaited proposed rule revamping the current GFE/TIL disclosure and HUD-1 settlement statements.  The rule will be published in the Federal Register in the next few days, and the rule will be open for public comment until November 6, 2012, (September 7, 2012 for the section dealing with APR calculation changes).

If you want to view the proposed disclosures (which I recommend you take some time to do), you can find them at the links below.

  1. New GFE/TIL combined disclosure: http://files.consumerfinance.gov/f/201207_cfpb_loan-estimate.pdf  
  2. New settlement statement: http://files.consumerfinance.gov/f/201207_cfpb_closing-disclosure.pdf  
  3. The full text of the rule  can be found at: http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_integrated-mortgage-disclosures.pdf

At this point, I’ve only done a cursory review of the disclosures and the rule itself (it’s 1,099 pages and was just published yesterday), so I’m not going to do an in-depth analysis yet.  However, here are some off-the-cuff highlights of the changes:

  • There is a signature line on the new combined GFE/TIL disclosure (YES!!!!)
  • There is a signature line on the new combined GFE/TIL disclosure (there are some things that bear repeating; this is one of them.)
  • A line has been added to the cost disclosure that estimates total cash-to-close!
  • The lender cost-of-funds has been added to the settlement statement, although it is now called “Approximate Cost of Funds” or ACF.  (In my opinion, this is completely useless information for borrowers because they cannot possibly affect the lender’s cost of funds, nor does the cost of funds generally have any real-world impact on their loan terms, but I don’t work for the Bureau and they don’t consult me.)
  • There is a new carve-out exemption to the need to re-disclose three business days before closing if the reason for the change in terms results from the final walk-through on a purchase transaction or if the changes are minor (result in less than $100 in increased cost.)  However, if redisclosure is required (if the change does not meet the carve-out provisions), it must be done three business days before closing; the exemption to allow for an at-closing redisclosure  for a last-minute change is eliminated.
  • HELOCs and reverse mortgages are exempt from these specific disclosure requirements.
  • Lenders who make fewer than five residential mortgage loans per year are also exempt.
  • Providing any sort of loan estimate prior to application (in other words, a non-binding cost estimate that is not done on the official form) will now require the use of a disclaimer.
  • The CFPB is soliciting comments on who should be responsible for providing the settlement disclosure – the settlement agent or the lender.  Either way, it appears the lender will be responsible for the accuracy of the form.
  • Lenders will be responsible for keeping electronic copies of all loan estimates and closing disclosures, although the CFPB is considering exempting “smaller lenders” from this provision.

After I’ve had the time to read and digest the APR calculation changes (it appears that virtually all costs will affect APR) and the balance of the rule, I’ll put together a post with more in-depth analysis.  I’m sure we’ll also have some good conversations during our CE courses this year!

****On a separate note, the Bureau also issued a proposed rule implementing the Dodd-Frank changes to HOEPA.  The new high-cost test will measure APR against the Average Prime Offer Rate instead of the Treasury yield, and the triggers will be 6.5% over the APOR (1st lien loans) and 8.5% over the APOR (subordinate lien loans); additionally, the points and fee triggers for high-cost loans will be reduced to 5% of the loan amount (you Illinois readers are already familiar with this limitation because it’s been a state law for years).  Also, remember that Dodd-Frank requires that PURCHASE MONEY LOANS AND HELOCS BE SUBJECT TO HIGH-COST REQUIREMENTS.

Happy originating!


Just a quick reminder that updated MU2 and MU4 application forms have been implemented in the NMLS.  States have begun to add an “UPDATE RECORD” license item to your NMLS record that must be cleared before you can renew.  Your regulators are either suggesting or requiring that these updates be completed by August 1, 2012.


1)      Log-in to NMLS and click the “Composite View” tab.  Then click “View Individual” and “View License/Registration List.”

2)      If you have license items that require action, there will be a number other than zero in the “License Items” column.  Click the number and you will be shown which items have been placed on your record.

3)      If you see the UPDATE RECORD license item, follow the instructions available from the NMLS on what needs to be updated.  Instructions for updating an individual record can be found here. Submit the filing and get on with your day; the amount of time required is minimal, so why not do it now while it’s fresh in your mind?

ALL state-licensed MLOs must do this in order to renew.  You must complete these steps even if you are holding an “Approved/Inactive” license and wish to maintain that status for 2013.


The MU1 and MU3 forms have also been updated.  If you are a company owner/branch manager/compliance manager and are responsible for maintaining your company or branch license, you will need to follow the instructions contained in the “Company Filing Form” found here.

Updating your NMLS record is just one important step toward successful renewal. Here’s another: Continuing Education.  Your ALL-NEW 2012 CE course is almost ready, and this course is worth waiting for!  We’ll provide essential knowledge covering the CFPB’s updated compensation proposals, Bank Secrecy Act, fair lending, credit scoring and much MORE.  Contact us at 800-995-1700 for updates or visit http://www.instituteonline.com/NMLS-Approved-Continuing-Education.asp

What Every Managing Broker Needs to Know About Their 2013 Renewal

Do you have a Managing Broker (471) license? Have you started thinking about your 2013 renewal requirements?  If so, you may be finding it difficult to determine the education requirements.  How much CE do you really need? 12 hours? 15 hours? 18 hours? What about Broker Management CE?

So how do you figure it out? We checked in with the IDFPR to be sure.  We confirmed that these are the requirements.

 Education requirements for your 2013 Managing Broker license renewal:

How did you
become a
Managing Broker?

& Elective

Broker Management Requirement

Deadline for education completion and license renewal

Passed the Broker to Managing Broker Proficiency Exam

18 hours*

12 hours
of live instruction

April 30, 2013

Completed the 45-hour Broker to Managing Broker Transition Course

18 hours*

for 2013 renewal

April 30, 2013

Initial applicant through
45-hour Managing Broker Pre-License course and state exam

12 hours*

12 hours
of live instruction

April 30, 2013

* Any continuing education credit earned after April 30, 2010, can be counted toward your 2013 continuing education requirement.

Now that you know what your education requirements are, you’re ready to get started.  Let us know if we can help. More information is available at the following links:

Real Estate Institute: http://www.instituteonline.com/Illinois-Real-Estate-Continuing-Education-Managing-Broker.asp

 Illinois Department of Financial and Professional Regulation: http://www.idfpr.com/dpr/re/BrokerMgBrokerTransitionChart.pdf

HUD Rescinds "Disputed Item" Guidance for FHA-insured Mortgages

Last week, the Department of Housing and Urban Development issued Mortgagee Letter 2012-10 which rescinded the guidance that was published March 1 in ML 2012-03.  I wrote about those updates as part of a larger post dealing with the MIP changes that were front-and-center at the time.

The guidelines, which many complained (rightfully so, in my opinion) would add undue stress to FHA’s targeted demographics and further strain the housing market, were scheduled to go into effect on July 1.   They would have required borrowers with disputed credit accounts in excess of $1,500 to resolve all of the disputes before a loan could be eligible for FHA insurance.  Further, the guidelines would have required all collection accounts to be paid off if the aggregate balance of the accounts exceeded $1,000.  As you’ve likely seen in your origination business, a healthy number of applicants for FHA-insured mortgages show some older, unresolved collections exceeding that $1,000 amount.

This is welcome news to those of us who work with borrowers using the FHA product.  Yes, the volume of FHA-insured purchase and credit-qualifying refinance loans has dropped since the recent MIP changes took effect, but HUD still captures a large market share, and artificially limiting homeownership opportunities for creditworthy borrowers with older blemishes on their bureaus is just bad policy.  It’s refreshing that HUD came to that realization before July 1and took these actions, although we do expect them to “provide further clarification” on disputes and collection accounts again in the future.

The full mortgagee letter detailing the credit guidance rescission (but leaving other guidance intact) can be found here.

Happy originating!

Real Estate Broker Management CE Now Available!

Real Estate Institute is pleased to announce that its new Broker Management Continuing Education (BMCE) course has been approved by the Illinois Department of Financial and Professional Regulation.

State law requires Managing Broker licensees to complete a live, 12-hour Broker Management CE course before their renewal deadline on April 30, 2013. Self-study coursework is not permitted to satisfy this requirement. The only Managing Brokers who are exempt from this requirement are:

  • Attorneys who are currently registered to practice in Illinois.
  • Broker licensees who transitioned to Managing Broker by taking a 45-credit-hour transition course.

Real Estate Institute’s two-day BMCE class is led by experienced real estate professionals and trainers and provides a dynamic, interactive classroom experience.   This class will apply the law to real-life situations Managing Brokers are likely to experience in their practice.

Course topics include:

  • How to protect your earnings in a highly regulated business environment
  • How to create, manage and enforce office policies
  • How recent amendments to the license law affect you
  • The benefits and obligations that accompany your new license status

 The state-required exam will be given at the end of the last class session and scored immediately.  Students will leave with their exam results.

 This course is offered as a live class at our school and soon will be offered at locations throughout Chicagoland.  Click here for the upcoming class schedule.

For more information about real estate continuing education, please call 800-995-1700 or visit our website.