NMLS Reminders for a Successful CE Season

Red bow on finger

According to the NMLS, the number-one question they receive from Mortgage Loan Originators is, “Do I need to do CE?” If you’re not sure, you should log into NMLS to review your education requirements. Your Course Completion Record will indicate whether you still need to earn Continuing Education this year. The NMLS has prepared a quick guide to help you navigate your record.

The 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.
  • Nearly half of all state agencies have a state-specific CE requirement. See the
    NMLS 2016 State-Specific Education Requirements Chart for the number of hours and other requirements.

  • Several state agencies have early CE or renewal deadlines. Check the state-specific education requirements chart for details.

Real Estate Institute offers top-rated 2016 CE courses in all three formats: Classroom, Live Webinar and Online, Self-Study. Try our courses and find out what it’s like to take CE that’s relevant and interesting.


Breaking_NewsIn a surprise move, the IDFPR Division of Banking has rescinded the Mortgage Loan Originator (MLO) education rule it proposed in late April, which called for an additional three hours of Illinois-specific pre- license education and an additional three hours of Illinois-specific continuing education annually. The Division of Banking also confirmed plans to move ahead with adopting the Uniform State Test (UST) for loan originator license applicants in Illinois, effective June 1, 2016. For those unfamiliar, the UST covers general state-level regulatory information applicable in most states and is included as a part of the National Component of the SAFE exam that all potential licensees must pass.

Illinois State Test Component Removed Effective 6/1/2016


  • If you are currently licensed as a mortgage loan originator in Illinois, this has no impact on you. You may continue to originate as you have been doing.
  • If you are not yet licensed in Illinois but have already passed BOTH the National Component AND the Illinois State components of the SAFE exam, your Illinois license application will not be affected by this change. Whether or not you have actually filed the application, you do not have any additional requirements and may apply for licensure at any time if you have not already done so.
  • If you are not yet licensed in Illinois AND you have passed the National exam with UST (meaning you enrolled for and passed the National SAFE exam AFTER April 1, 2013), you will be able to apply for an Illinois MLO license on or after 6/1/2016 (do not apply before this date). This situation also applies to anyone who enrolled in and passed the STAND-ALONE UST, which was available in 2013 and early 2014.
  • If you are not yet licensed in Illinois AND you have not passed the Illinois exam AND you enrolled for and passed the National SAFE exam WITHOUT UST (you enrolled for the National exam BEFORE April 1, 2013), you have two options:

    Option 1: Enroll in the Illinois State Component exam BEFORE June 1st, 2016 and pass that exam on your first take OR;

    Option 2: Enroll for and pass the current version of the National exam with UST. Yes, this will require you to re-take the full national component, as there is no longer a stand-alone UST option.

If you have any questions about which exam(s) you have taken and passed, you can find that information by logging into the NMLS (on the State side), clicking the “COMPOSITE VIEW” tab at the top right, then clicking “View Individual” at the top center and finally clicking “Testing Information” on the left navigation bar. You can also contact the NMLS Call Center at 855-665-7123 with questions about your status.

Refer to the IDFPR press release announcing this change.

Real Estate Institute has helped thousands of LOs pass the SAFE exams with Prep-to-Pass. Our recently updated test prep program includes the most recent NMLS content outline revisions. Try sample practice tests for free at our website.

Is the CFPB Finally Listening on TRID?

TRID maze
According to the folks over at National Mortgage Professional Magazine, the CFPB has quietly begun drafting a Notice of Proposed Rulemaking. For those unfamiliar with the process, this is the first step in issuing a new or revised administrative rule, and typically opens the door for public comments on the topic at hand before the rule is actually drafted/released.

In this case, the topic at hand is the TILA-RESPA Integrated Disclosure Rule – or TRID – which totally revamped the mortgage disclosure process beginning in October of 2015. Since the new rules took effect, lenders have been struggling to comply with what they believe the CFPB wants, which in some areas is still unclear as the CFPB has not issued formal written guidance on many topics.

While there are positives that have come out of TRID – namely the effectiveness of the simplified Loan Estimate form that replaced the GFE for most transactions – there also have been many speedbumps. For example, many technology providers lagged behind in releasing updates to origination, document preparation and other software, which led to lenders issuing non-compliant Loan Estimates and Closing Disclosures. In fact, recently Moody’s estimated that up to 90% of loans originated in the first few months of the rule’s effective date contained at least one TRID-related defect.

A large mortgage lender – W.J. Bradley – closed its doors in March after being unable to sell a large number of loans with TRID compliance issues. This event, along with consistent industry prodding for help in understanding CFPB expectations through formal written guidance may have led to Director Cordray’s decision to revisit the rules.

While the NMP article indicates a “possible TRID rewrite,” I wouldn’t expect a massive overhaul of the key components that we’re becoming accustomed to in the origination community – namely the Loan Estimate and Closing Disclosure. Instead, what I believe is likely to happen is a clarifying tweak to some of the more confusing areas of the regulation, such as the sections dealing with construction and other non-traditional lending products, and (fingers crossed) significantly more written industry guidance to help us understand what we need to do to comply with CFPB expectations. If this is the case, that should make the secondary market (especially in the nonconforming space) much more comfortable in purchasing loans, which should result in an easing of credit availability and – one would hope – a reduction in loan turn-times which skyrocketed industrywide after October 1, 2015. It also may lead to a long-term reduction in compliance costs, which would make many small and midsized players in our industry very, very happy.

More on this as it develops. Until then, happy originating!


Here Come the Changes! Fannie Mae Sets Release Weekend for Desktop Underwriter™ 10.0

Here Come the Changes! Fannie to release DU 10.0

Well, we finally know a *LITTLE* more about Fannie’s plan to release the brand-spanking-new version of Desktop Underwriter™ (DU™).

If you took Real Estate Institute’s live Mortgage continuing education class last year, you heard me talk about Fannie’s plans to revamp and update their underwriting engine to take into account “new and improved” (*your mileage may vary) credit report data that the mortgage industry has not previously utilized. The data to which I’m referring is called trended credit data, and it incorporates much more information about consumers than most of you have ever seen before.

Right now, our mortgage credit reports are basically “snapshot” reports – that is, they show the consumer’s payment history, current balance, credit limit, dates opened, etc. That data is updated typically once per month from each reporting account, and what we know about our customer is what is reported on that day from that creditor. Thus, if Joey Bagadonutz is someone who pays off his credit cards in full each month, but his outstanding balance on the day the account reports to the bureaus is $3,500, we see that balance as $3,500 with no indicator of how long it has been that high. Now, imagine that the limit on Joey’s account is $4,000. Our current underwriting algorithms see him as a SIGNIFICANT CREDIT RISK because of his credit utilization. Not good for Joey.

With trended data, not only will we be able to view the outstanding balance and limit, we’ll be able to see how much Joey has paid on his accounts each month for the past two years! For a guy like Joey who pays his account in full, this is fantastic; we’ll be able to really dig into his excellent credit history beyond today’s “well, he’s never been late.” Thus, Joey gets a better risk evaluation, which leads to a better rate, which leads to happy Joey, pink unicorns, rainbows and Santa Claus! Can’t get any better than this, right?

Well, if you’re Joey, yes.

However, if you’re someone who carries a balance each month, not so much. Let’s say you’re working with Bubba Buysalot on a purchase of a new home. Bubba is a guy who has 6 open credit cards, is under 50% utilization on all of them, and has never missed a payment. In today’s credit world, our algorithms see him as a TOP-TIER RISK LEVEL because of his utilization and payment history. Good for Bubba. Now, with the new trended data, we dig deeper and see that Bubba has made just the minimum payment on all six accounts and his balance over time has been increasing. Now, Bubba is no longer a top-tier borrower. He gets a worse risk evaluation (due to the fact that those who make minimum payments default on debt at a rate 3 to 5 times higher), which leads to a higher rate or a declined loan, which leads to sad Bubba, rain clouds, bee stings and Lucy pulling away the football when he tries to kick it.

You can see both sides of this coin, right? Deeper information and improved risk assessment is good for creditors, Fannie Mae and MBS investors, but it’s not good for every applicant.

OK. So WHEN is this new version of DU coming out? Good question. According to Fannie’s preview document released at the end of January, we can expect the rollout to occur on the weekend of June 25, 2016. We also can expect a series of training webinars and informational communications in the months leading up to the roll-out date. As of right now, all we really know is that this new release will evaluate trended credit data, as well as simplify the process for applicants with multiple financed properties. We’ll learn a lot more when Fannie issues the release notes sometime later this month. It will be interesting to see if they also incorporate some of the other changes they’ve been working on, such as creating a way for DU to evaluate borrowers with non-traditional credit histories, or if those will be relegated to a future release.

Now that you have this knowledge, it’s time to get out there and start educating your prospective borrowers about it, especially those who are sitting on the fence about purchasing a home. While you’re at it, start informing your referral sources, too! I’m sure there are gaggles of real estate agents and financial planners out there who’d like to know about these changes well in advance.

More to come when the Release Notes are, well, released. Until then…

Happy Originating!


Real Estate Institute is an NMLS-Approved Course Provider, #1400102. Each year, thousands across the country choose Real Estate Institute for its mortgage pre-license, SAFE test prep and continuing education programs. If you have questions about your education requirements, our compliance experts are available at 800-995-1700 from 8 a.m. – 6 p.m. (Central Time), Monday through Friday.

Mortgage Originators – The Changes Aren’t Over Yet

Magnifying-glass-showing-changeWe all knew this was coming (and, honestly, given the increasing importance of Mortgage Industry Standards Maintenance Organization (MISMO) standards in keeping our loan-level data compliant, is probably long overdue) but just when we thought we might be getting a breather from front-end form changes for a while…

The Uniform Residential Loan Application (you know it as the 1003) is undergoing a facelift. According to Fannie and Freddie, the redesign should be complete by the summer of 2016. It will likely come with a nice trial period before its use becomes mandatory. Given the expanded dataset that is being phased-in in the coming years with the CFPB’s updated HMDA rule, expect to see the government monitoring information section expanded, along with a re-aligning of the data fields to more closely match information used in evaluating applications under current GSE underwriting guidelines. In fact, this project is probably very closely related to the significant updates that Fannie has told us will be coming to Desktop Underwriter next year.

You can bet that we’ll have more information on this for you as the new form is released. Until then, drink a cup of Auld Lang Syne to TRID, and here’s to a great 2016!

Happy Originating,



TRID Deadline ExtendedIn response to what the CFPB claims was a “technical error in the regulatory process” – but likely has everything to do with continued concern from creditors about their ability to implement and guarantee compliance with the new disclosure rules by August 1 – the effective date of the new Loan Estimate and Closing Disclosure has been delayed two months to October 1, 2015.

Many lenders are calling TRID the biggest change in the mortgage industry since the 1960s. Understanding the new TILA-RESPA integrated disclosures is critical for anyone working with the real estate industry, from loan originators to real estate agents, to real estate attorneys.

Real Estate Institute has been offering courses for mortgage loan originators that provide an in-depth look at the disclosure changes for a year. The newest course designed to prepare Illinois attorneys who support both buyers and sellers of residential real estate has been very popular. New TRID course content for Illinois real estate agents will be released this summer.


What Mortgage Companies Need to Know About Advertising to Stay Out of Trouble

Gavel_Regulation NSurely you’ve seen the recent headlines. The Consumer Financial Protection Bureau (CFPB) is cracking down on mortgage companies for unfair and deceptive advertising practices. These companies are incurring multi-million-dollar fines for improper advertising.  Understanding the rules is critical. Here’s an overview of what you need to know about REGULATION N: Mortgage Acts and Practices (Advertising) to stay out of the headlines.

Regulation N Defined

Regulation N is a CFPB regulation that is intended to ensure that mortgage credit is not advertised in a misleading manner and that there are no material misrepresentations made – either explicitly or implicitly – about any term or mortgage credit product in a commercial communication (advertisement).

Under Regulation N, it is unlawful to:

  • Misrepresent the amount of interest a consumer will be charged, including any misrepresentations of, or failure to disclose, negative amortization.
  • Misrepresent the APR, simple interest rate, periodic rate or any other rate. (This is also prohibited separately in Regulation Z.)
  • Fail to disclose whether separate payment of taxes or insurance is required or misrepresent the extent to which those payments are included in the consumer’s mortgage payment or loan amount.
  • Misrepresent the existence, amount or duration of a prepayment penalty.
  • Using the word “fixed” to describe an ARM, unless the term “Adjustable Rate Mortgage” is clearly used before the term fixed and it is obvious that the loan is an ARM.  (For example, you can’t advertise a “five-year fixed” unless that really is a loan that amortizes over five years with no rate change.  You can, however, advertise “an adjustable rate mortgage with an initial fixed rate period of five years after which time the interest rate may adjust once per year.”
  • Misrepresent the type of mortgage credit product.  For example, it is illegal to lead a customer to believe that a balloon loan is a fully-amortizing mortgage.
  • Misrepresent the amount of the loan, or the amount of cash or credit available to the consumer, including claiming that no payments are required in a reverse mortgage.  (The payment is made when the loan matures, and the borrower can also make payments at any time during the term.)
  • Advertise or imply that the mortgage company or loan product is sponsored by or affiliated with the government.
  • Insinuate that the advertisement in question is coming from the borrower’s current servicer when it is in fact not.
  • Tell consumers that they are pre-approved or guaranteed for a loan when that is not true.
  • Promise a refinance or loan modification unless that refinance or modification has actually been underwritten and approved and cannot change.

Finally, under Regulation N, all advertisements must be retained by the lender for a period of 24 months after their last publication or broadcast.

Helpful Hint for Prospective MLOs

If you’re thinking of becoming a loan officer, you will need to know Regulation N for the National SAFE mortgage loan originator exam. This is the licensing test that prospective loan officers need to pass to become a state-licensed mortgage loan originator. For more help preparing for the NMLS / SAFE test, try out these free practice tests.


Real Estate Institute encourages all readers to consult with a qualified attorney on all matters of law or regulation, as no blog post can or should be a substitute for competent legal counsel.



If you’ve taken Real Estate Institute’s 2014 CE class, you know there have been some questions raised regarding the borrower providing documentation to the creditor before receiving the new Loan Estimate under the rules that take effect on August 1, 2015.  Specifically, the question was how pre-approvals would be conducted given the language in Section 1026.19(e)(2)(iii) of Regulation Z going into effect next year, which states:

“The creditor or other person shall not require a consumer to submit documents verifying information related to the consumer’s application before providing the disclosures required by paragraph (e)(1)(i) of this section.” (Referring to the Loan Estimate.)

The official comments to the rule further state:

“A mortgage broker may ask for the names, account numbers, and balances of the consumer’s checking and savings accounts, but the mortgage broker may not require the consumer to provide bank statements, or similar documentation, to support the information the consumer provides orally before the mortgage broker provides the disclosures required by § 1026.19(e)(1)(i).” (Comment 19(e)(2)(iii) to the TILA-RESPA Rule)

As our instructors have mentioned in class, I wrote a letter to the Consumer Financial Protection Bureau some months ago asking for clarification on this section of the rule.  Specifically, I was concerned about the CFPB’s interpretation of the word “required” and whether a lender or broker would be in violation of the rule if we went through the typical pre-approval process as it exists in 2014.

I’m pleased to report that I received a call from Jeff Riley at the CFPB and had a lengthy discussion with him about this issue.  Jeff provided verbal clarification* that it is permissible for creditors/brokers to REQUEST information and documentation from the borrower prior to providing a loan estimate, including at the pre-approval stage.  However, the borrower cannot be REQUIRED to provide documentation before a creditor (or broker on behalf of a creditor) provides a loan estimate, nor can the collecting any of the six pieces of information that constitute an application be intentionally delayed until the borrower provides the documentation.  Put simply, if borrowers verbally provide you the six pieces of information (name, income, Social Security number, subject property address, estimate of value of the subject property and the desired loan amount), you must provide a loan estimate within three business days even if they refuse to furnish any documentation to substantiate what they verbally disclose.

What’s the takeaway here?  Carry on with your pre-approvals as you normally would after August 1, 2015.  Obtaining documentation from the borrower in order to issue a pre-approval would not appear to put you in violation of the TILA-RESPA rule (although I would certainly avoid giving the impression through verbal or non-verbal clues that any documentation is “required” or “mandatory”).  Also, if borrowers want to give you all of the required information verbally, don’t stop them from doing so until you’ve seen documents, as that would be a violation of the rule.

*NOTE – Verbal clarification is NOT official staff guidance or an official interpretation of the rule by the CFPB.  I encourage all readers to consult with a qualified attorney on all matters of law or regulation.  I am not an attorney (nor do I play one on TV), and no blog post can or should substitute for competent legal counsel.

Happy originating!


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.


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.