Renewal Deadline Approaching for Real Estate CE Instructors

June 30, 2012, is the deadline for all Illinois real estate CE instructors to complete their required education. The Association of Illinois Real Estate Educators (AIREE) conference taking place on June 1 is approved by the IDFPR for instructor renewal.   Hot topics included in the program are:

  • Foreclosure: Victoria Ogunsanya, staff attorney at the Lawyers Committee for Better Housing (LCBH) in the Affordable Housing Project, focuses on the foreclosure process, time frames, tenant rights and interesting cases that LCBH has been involved in.
  • Fair Housing: Professor Allison Bethel, Director of the Fair Housing Clinic at John Marshall Law School, discusses recent fair housing cases, updates on fair housing and the importance of spreading awareness of discrimination in housing.
  • Legislative Update: Scott Toban, founder of Toban Legal & Consulting, shares valuable insight on the “Community Association Manager License Act,” regulations targeting brokerage of short sales and initiatives of the Bureau of Consumer Financial Protection.
  • IDFPR Update: Jill D. Johnson, IDFPR Real Estate Coordinator, provides an update on the division since her appointment, disciplinary issues, examiner matters and the recent license transition.

For more information about AIREE, call 877-290-3458 or visit

Will the European Implosion Impact U.S. Mortgages?

I’m not generally one to say “I told you so” from an economic perspective (because there are plenty of things I get wrong), but for those of you who took my mortgage CE course last year and remember the fantastic discussions we had on Europe…


  • Today, it’s widely expected that Greece will send a letter to the EU essentially reneging on the austerity measures they agreed to in order to get their last two rounds of bailout money.  Even mainstream economists are beginning to predict a greater than 75 percent chance that Greece will abandon the euro in the next year or so after a true hard default on its sovereign debt.  (I wonder if the letter will begin “Dear John.”)
  • In case you missed it, French voters booted President Nicolas Sarkozy over the weekend and elected the Socialist candidate, François Hollande.  Although the vote was much closer than expected even a week ago, the result indicates a possible (likely?) lurch to the left in French economic policies, which doesn’t bode well for budget balancing measures that, in all honesty, are needed to keep France on a sustainable economic path.  Remember, French credit ratings were cut across the board earlier this year, and S&P is already indicating it could happen again soon.  To add insult to injury, the major agencies are slashing credit ratings on European banks (many of them French) faster than Zorro does one of his cool trademark “Z”s.
  • Speaking of Zorro, Spain’s unemployment rate topped 21 percent in the first quarter of 2012, and the rate for people under 25 years of age is over 50 percent.  The austerity plan enacted in Spain by Prime Minister Mariano Rajoy only passed by one vote in the Spanish parliament in 2010.  With Greece likely telling the EU to take a hike, how much longer can Spain hold the line, especially in a hot Spanish summer with unemployment rates that frequently lead to civil unrest?
  • For the euro area as a whole, unemployment was 10.9 percent and has been steadily trending higher for an extended period.  A number of euro countries are already in recession, and it doesn’t look good for the continent as a whole going forward.  Even the German economic numbers, long the bedrock of Europe, are now showing signs of weakness.


As the least contagious guy in the leper colony, U.S. Treasuries (and mortgage bonds) should see continued favor among investors, at least until the big picture in Europe becomes a little clearer.  Global equity markets are (quite rightfully) getting jumpy about the economic situation on that continent.  Beyond that, however, there are concerns here at home, with recent economic reports indicating a weakening economy.  Although there is still positive job creation, the April unemployment report showed only 115,000 jobs created, well below the 150,000 – 165,000 needed to keep up with people entering the workforce.  There was some strength shown in upward revisions of February and March numbers, but expect the markets to be focused like a laser beam on anything jobs-related over the next few months.  Adding to the headwind in equities, it appears that China may also be heading for a recession

At the end of the day, all of this uncertainty should keep U.S. mortgage rates low in the short to medium term.  Remember, though, that we have our own set of issues to deal with to get back on a sustainable path.  Use this opportunity to refinance anyone that you can, but don’t take your eyes off the prize.  Remember, rates WILL increase.  When they do, the refi market will evaporate faster than a thimble of water in a Mojave Desert summer.  Don’t lose contact with your real estate referral sources.  Now is the time to stay in touch with old partners and cultivate new ones, as your competition is probably focusing exclusively on refinances.

Happy originating!

Mortgage Lending Gets Personal

Hello, friends!  It’s been a while since I’ve posted to this blog, but I hope to be a more frequent communicator over the next few months as exciting things happen in the Mortgage Education Division for 2012 – starting with the NMLS approval of a brand-new CE class/webinar.  When that approval is in, we’ll be sure to share all of the details, as I’m looking forward to spending time with all of you again!

 CFPB and ECOA News Coming Soon

I fully planned for this post to cover the CFPB’s recent bulletin putting our industry on notice that fair lending (specifically ECOA) is going to continue to take center stage in examinations and with enforcement actions.  However, due to some recent experiences, I’ve decided to put that off until next week.  Today, if you’ll allow me, I’d like to reflect on the more personal side of our business.

 When the Going Gets Tough

As many of you know, aside from my course development and instruction career at Real Estate Institute, I maintain an active origination business; mainly because I need more stress in my day-to-day life.  I’m currently involved in one of “those loans,” full of roadblocks, detours and unforeseen underwriting conditions. (Yes, even those of us who teach the business for a living have them occasionally.)  This loan has required me to go back to the borrower and their employer(s) multiple times to get everything in order, have conversations of varying levels of pleasantry with attorneys and real estate agents, and generally has left me wishing I would have pursued a career in something less stressful, such as manual defusing of nuclear weapons.  Although I’d be the happiest MLO in the world if I never ran across another loan like this, it has given me cause for reflection, and that’s never a bad thing.

 When we get one of these Tales From the Crypt files, it’s tempting to play possum, letting calls go to voicemail, putting off emailing and otherwise becoming an invisible person.  It’s only natural to want to delay unpleasant news, both to save us from dealing with an uncomfortable phone call and the client from angst.  In doing so, we’re forgetting a key element – that there is another person on the other end of the transaction with real emotions who is often literally staring at the phone waiting for a call from us.  Think of your life as a teenager when you were first navigating the complex world of personal relationships.  Remember how it felt the first time you got a call from someone you were interested in?  EUPHORIA!!  Now… remember how it felt the first time you didn’t get a call from someone you had been seeing and were really into.  “Devastating” doesn’t even begin to address the range of emotions.  “Why isn’t this person calling?  What doesn’t this person want me to know?  WHAT’S GOING ON?!?!?!?!”  Well, that’s the mortgage business in a nutshell.  It’s easy to deal with the files that have one underwriting condition – heck, anyone could do that.  It’s how we deal with the surprises, the roadblocks, the bumps and the sinkholes that define who we are as originators, who we are as people and why we deserve to be paid well for what we do.  Remember, bad news isn’t like good scotch – it doesn’t get better with age.  Those of you who master the art of communication in both good times and bad and are able to manage expectations of everyone in the transaction will truly set yourselves apart from your competition.  It’s not easy, but the most rewarding things in life never are.

 Pause for One of the Good Guys

In closing, I’d like to take a moment to ask all of you to keep one of the good guys in our industry in your thoughts and prayers.  Dustin Hughes, President of Northwest Mortgage Advisors in Portland, Oregon, has been an industry leader since the mid-1990s and an inspiration to many, many people in our business.  I’ve only had the pleasure of meeting Dustin twice, but I was simply amazed both times by his character, energy and love of life, and I personally know many, many others who have been positively influenced by this amazing person.  As some of you may know, Dustin is battling Stage 4 glioblastoma (brain cancer), and the battle is getting tougher.  I’m a firm believer in the power of positive energy, and I’m sure that Dustin and his family could use as much as they can get at the moment.  Dustin is chronicling his battle with this disease (and continuing to inspire people) on his blog at, and you can also find information and lend support on the Facebook group “Hughes’ Troop.”

IDFPR Releases Transition Application and Renewal Questions and Answers

This week, the Illinois Department of Financial and Professional Regulation (IDFPR) posted frequently asked questions to help all real estate licensees complete the transition and renewal process.  There is also important information about what will appear on the “License Look Up” webpage on the IDFPR website after the transition deadline.  Although all salesperson and broker licenses expire on April 30, 2012, your license will continue to show “active” while the IDFPR finishes processing the transition/renewal applications.  This may take up to 30 days.  Click here to view the IDFPR FAQs.

Real Estate Institute also has comprehensive transition and continuing education frequently asked questions.  To view our transition FAQs, click here.  To view our continuing education FAQs, click here.

Why Can’t I Pay My License Transition Fee Online?

Good question! Every day, hundreds of Illinois real estate licensees call to ask us about this. The IDFPR created different application and payment processes for the two transition options: Proficiency Exam and Transition Education. 

Transition by Proficiency Exam
Licensees who transitioned with the Proficiency Exam are allowed to submit their payment online because the state was automatically sent their results. As a reminder, this state-based exam is no longer available.  The last date to take the exam was March 15.

Transition by Transition Education and Exam
For the 30 and 45 credit-hour transition courses, the IDFPR does not accept online applications and payments.  Why, you ask?  Schools are not permitted to report transition course completions directly to the IDFPR.  Instead, students are responsible for providing proof of their course completion to the state.  This means you must mail a paper transition/renewal application with your fee and course certificate of completion. 

If you wish to mail the application to the IDFPR immediately, you may visit our website to print a copy of the required license transition application:

Additional instructions with answers to frequently asked questions about the license transition and renewal process are available here:

Have You Completed All 3 Steps to Transition Your Real Estate License?

If you are an Illinois real estate salesperson transitioning to the new broker license, make sure you complete ALL three simple steps, or you will lose your license on May 1.

  1. ENROLL. If you have not done so already, immediately sign up for the 30-credit-hour transition course.  This course can be completed by self-study. (You are exempt from CE for this renewal period.)
  2. TEST. Schedule your proctored exam. Spaces are filling up fast.
  3. SUBMIT.  You must submit your transition and renewal application, including fees and certificate to the IDFPR.  It must be postmarked by April 30.

Remember, there is no “late transition.” If you miss the deadline, you will no longer be able to earn referrals or commissions and will need to start the licensing process all over again.  That means having to complete a 90-credit-hour broker pre-license program.  Don’t pass up transitioning to broker status. Luckily, you still have a few more weeks.  There’s still time!

Upcoming Deadline for New Brokers to Complete Post-License Requirement

New Illinois real estate brokers licensed between May 1, 2011 and January 31, 2012 must complete a state-approved post-license course by April 30, 2012.  Continuing education is not required during the first renewal period.

Post-license is a two-part course. You must first complete the 15-credit-hour Post-License Topics course (self-study or live). Upon completion of the Topics course, you must attend a 15-hour Applied Real Estate Principles course.  This must be a live interactive class or webinar.

Course topics include:

  • Working with buyers and sellers
  • Foreclosures
  • Advertising regulations
  • Agent safety
  • Laws related to disclosures and real estate practices

Time is running out to complete this state requirement before the deadline.  If you have questions, please call the Real Estate Institute.

Attention, Brokers! Are You Sure You Need to Renew Your License Now?

You may have received a Broker renewal application from the Illinois Department of Financial and Professional Regulation (IDFPR).  DO NOT SEND IN THIS APPLICATION if you are a Broker who plans to transition to the new Managing Broker license.  Managing Brokers do not renew their license until next year (April 30, 2013).  However, your deadline for transitioning to the new Managing Broker license remains April 30, 2012.  Make sure your transition application and fee are postmarked no later than April 30. 

If you are a Broker and do not transition to Managing Broker, you must complete the 12-credit-hour continuing education requirement and submit the renewal application and fee by April 30, 2012. By renewing as a broker, you will also lose your right to manage other licensees or sponsor your own license.

If you are unsure about your remaining requirements, please call the Real Estate Institute. You’ll speak with trained experts who have access to extensive resources.  We’ll review your license status and help you stay on the right track.


This morning, HUD released mortgagee letter 12-04, formally announcing the MIP changes discussed in our last blog post.  There is one addition that I need to tell you about, and it only deals with FHA STREAMLINE REFINANCES.


If you are originating a streamline refinance and paying off an existing FHA loan that was endorsed for insurance on or prior to May 31, 2009, the UFMIP on the new loan will decrease to 0.01% of the new base loan amount, and the annual MIP (paid monthly) will decrease to 0.55%.  Some industry groups have already lodged an inquiry with HUD as to why the May 31, 2009, date was chosen.  If we get an answer to that question, I’ll be sure to let you know. 

Additionally, the effective date for the increases to the up-front and annual MIP that was discussed in our last blog post has been changed.  The first increase for all loans will now be effective with case numbers assigned on or after APRIL 9, 2012, and the additional increase for high-balance FHA loans will now be effective with case numbers assigned on or after JUNE 11, 2012.

Let’s get the word out!  Pick up the phones, close some loans, and (as always) happy originating!

IMPORTANT – Upcoming FHA MIP and Underwriting Changes

MIP Changes

In order to continue stabilizing the mutual mortgage insurance fund, and due to requirements in the payroll tax extension bill passed at the end of 2011, HUD has announced the following MIP increases for forward mortgages:

Effective with case numbers assigned on or after APRIL 1, 2012:

1)      The up-front mortgage insurance premium will increase from 1.00% to 1.75%, regardless of loan term

2)      The annual premium will increase by 0.10% for all loans.  A summary of the new premiums is below:

Loan terms greater than 15 years Loan terms of 15 years or less
LTV > 95%:    currently 1.15%   NEW: 1.25% LTV > 90%:     currently 0.50%  NEW: 0.60%
LTV </= 95%: currently 1.10%  NEW: 1.20% LTV </= 90%: currently 0.25%  NEW: 0.35%

3)      Additionally, the annual MIP will increase by an additional 0.25% for loans over $625,500 effective with case numbers assigned on or after JUNE 1, 2012.

Underwriting Changes

On March 1, 2012, HUD published mortgagee letter 2012-3 (dated February 28th), containing some significant underwriting changes regarding self-employed borrowers, disputed credit accounts and identity-of-interest (non-arms length) transactions.  A copy of the mortgagee letter can be found here.  The underwriting changes detailed in this letter are effective with case numbers assigned on or after APRIL 1, 2012, so plan accordingly.  As usual, these updates do not apply to non-credit qualifying streamline refinances or HECM (reverse) mortgages. 

Friendly reminder: FHA requires mortgagees to have an active loan application for both the borrower and property before requesting a case number (see Mortgagee Letter 2011-10).


1)      Self-employed borrowers MUST show a year-to-date P&L (Profit-and-Loss) and Balance Sheet if more than one calendar quarter has elapsed since the filing of the most recent tax return (annual or fiscal-year).  This requirement applies regardless if the loan is AUS-approved or not.

2)      If the income used to qualify the borrower exceeds the average of the previous two years’ tax returns, an audited P&L or a signed quarterly tax return obtained from the IRS must also be provided.  Again, this applies regardless of AUS decision.


1)      Disputed accounts will no longer trigger an automatic review by an underwriter if BOTH of the following requirements are satisfied:

     a.   The outstanding balance of all disputed accounts is less than $1,000
     b.   Two years have elapsed since the date of last activity listed on the credit report for all disputed accounts

2)      If the aggregate dollar amount of disputed accounts exceeds $1,000, all of the disputed accounts must be resolved.  In other words, the accounts must be paid in full at or before closing or a payment agreement must be in effect on the account(s) and the borrower must show that three months of payments on the payment agreement(s) has been made in a timely manner.

3)      Disputed accounts resulting from identity theft or fraudulent or unauthorized use of credit cards can be excluded from the $1,000 limit if the borrower provides documentation of the circumstances (a police report, for example). The lender must also include documentation that the account(s) in question are verified as not the borrower’s debt in the final case file.

4)      If the aggregate total of collection accounts exceeds $1,000, ALL collection accounts must be resolved (paid in full or a payment agreement established with a minimum of three months of timely payments).  If the total of collection accounts is less than $1,000, they are not required to be resolved/paid.

5)      FHA continues to require all judgments to be satisfied or an acceptable payment agreement established (with 3 months of on-time payments) before a loan can be insured.


The  definition of “family member” has been expanded to include brothers, sisters, step-brothers, step-sisters, uncles and aunts.