Loan Originators – It’s that time of the season, and Real Estate Institute is going National!

Don’t blink! You read that correctly – this is not a drill! Real Estate Institute is going nationwide by the end of this year. That means mortgage loan originators (MLOs) will soon be able to satisfy all their state-specific continuing education (CE) requirements through our top-rated NMLS-Approved mortgage courses.

The courses we offer aren’t your typical boring textbook-led snoozefest. Actual loan originators designed the material for loan originators like you. Our industry veterans turned instructors will make sure you’re engaged, present, and interested in what’s being delivered to you. We know it’s required for you to satisfy your CE requirements, and we’re not trying to waste your valuable time.

We offer our 7-Hour Core or 8-Hour Comprehensive SAFE CE courses in three formats: Classroom, Live Webinar or Online-Self Study.

This year’s topics will include:

  • All NMLS-required compliance topics
  • Cybersecurity concepts and challenges
  • The MLO Compensation rule
  • ARM lending review
  • Title commitments and common issues arising with property vesting

Cybersecurity – A HUGE threat!

Is your company protected? In 2020, it was reported by Mortgage Professionals America (MPA), that cyber-attacks on mortgage professionals were on the rise during COVID-19. Our 2021 CE course will dive into the critical topic of cybersecurity. We’ll cover concepts you need to know and challenges to overcome as you navigate the ever-changing world of data protection. Are you aware that all companies in the mortgage industry must have a written plan to ensure data security under the Gramm Leach Bliley Act? Do you know how your company’s information security plan relates to, and supplements, the Red Flags Rule plan required by the Federal Trade Commission (FTC) under Fair and Accurate Credit Transactions Act (FACTA)?

In both of our Core and Comprehensive courses, we’ll discuss all of this in addition to the shifting regulatory expectations of the Consumer Financial Protection Bureau (CFPB), Federal Financial Institutions Examination Council (FFIEC), and your state regulators.

You’re required to do it, why not choose Real Estate Institute?

So, as we all know, you have to satisfy your CE requirements, and with that said, wouldn’t you want to do it with the best? Don’t waste your time taking a boring CE class that will have no takeaway. Let our top-notch instructors who not only know the entire profession like the back of their hands, but actively practice the profession deliver you engaging content. You’ll get real-world experience and knowledge in an ever-evolving industry that you cannot get anywhere else. We said we deliver, so let us prove it, and develop a long-lasting relationship for all your CE requirement needs.     

Register today!

If you enroll today in our 7-Hour Core or 8-Hour Comprehensive SAFE CE course, you will be taking advantage of our Early-Bird Special! You pay $98 today vs. the regular price of $149. We also have our Online Self-Study program that is only $64 with the Early-Bird Special. Both offers end on Friday, August 20, 2021, so don’t wait and miss out! We will notify you once all state-specific courses are available.

Still not sold? Read what our alumni who continue to come back to us year after year are saying:

“Instructor was fabulous and very knowledgeable. His experience as a Mortgage Lender provided excellent insight on the business of mortgage lending and his real-life examples validated the learning materials.” – Elida

“I use Institute Online for all my CE Courses whether for Real Estate or Mortgage and it is always top notch. This is the first time I took the Flex Managing Broker and it was outstanding. The Instructors were very good and very knowledgeable. I will be back for my next CE Course!” – Elizabeth

“Considering the “boring” subject matter and the fact that I’ve taken the same classes a million times over my 36-year mortgage career, I thought the teacher made it pretty interesting and he seemed to sincerely care about the subject matter…and the history and future of the mortgage business. Kudos to him!” – Alison

Read what even more of our alumni are saying via Trustpilot.

If you have any questions, please give us a call at 800-995-1700 or visit us online and enroll with us today! Also, don’t forget to follow us on Facebook, LinkedIn and Instagram to stay up to date with course offerings, news and discounts! #ChooseREI

There’s a New Kind of Fraud in the World of Mortgage

Employment and income fraud is nothing new to Mortgage Loan Originators. If you’re in the business long enough, you’re likely to encounter at least one client whose account of their income and employment proves to be, shall we say, less than truthful. The good news is that advances in mortgage technology and process automation since the crash of 2008 have made it more difficult for borrower income and employment fraud schemes to succeed.

New Hire Scams

If you’ve studied mortgage fraud, you know that it is constantly adapting to changing market conditions. Given the unprecedented nature of the past 12 months in the mortgage industry – and indeed the entirety of global society – it should come as no surprise that fraudsters have been looking for new angles of attack on the financial system. One such scam that hasn’t received a lot of publicity (yet) is a new twist on the old employment fraud trick, and it’s targeting HR departments at mortgage companies of all sizes in an attempt to gain access to sensitive borrower data.

Simply put, criminals know that our companies have been dealing with volume-related operational constraints, especially in the underwriting and processing arenas, and most have been in the market to quickly hire new talent to reduce turn times. So, they’re creating resumes with falsified employment history and applying for open positions in the processing and underwriting departments of residential mortgage lenders. They’ve brushed up on buzzwords and industry terminology in the hopes that they can get through the interview process (which itself has changed dramatically and is now largely virtual in many firms) and start work which will give them access to borrower financial and personal information that they can either use to commit identity theft or sell to others to do the same. I have personally heard from multiple people that have either been victimized by it or work for companies whose names are listed in bogus work histories on resumes.

What Can I Do to Protect Myself?

Step 1: Awareness

If you’re an owner, sales manager, ops manager or HR professional at a company that is hiring, the first thing you need to do is immediately alert your recruiting and hiring team about the scam.

Step 2: Verification

If you’re not already doing so, your company needs to verify ALL recent work history for applicants you intend to hire. Just make sure to do it in a manner that is compliant with employment law and regulation in the state(s) in which you’re hiring. (Remember that some states prohibit collection of previous salary/compensation information in the hiring process, so don’t request copies of W-2s or paystubs where prohibited.)

Step 3: Control

Finally, if you have not already done so, please implement tight team and/or role-based access control measures for your Loan Origination System (LOS) so that only those employees with a legitimate reason to access a borrower file may do so. If you’re unsure about how to do this, please consult your LOS provider and/or an IT security company that can help. Given the massive regulatory focus on data and cybersecurity, you can’t afford not to do this even if you’re a small company and/or not currently hiring; just remember to update your Gramm Leach Bliley Act safeguards policy when you’ve rolled out any changes.

I hope that 2021 is treating you well and I look forward to seeing you for CE later this year.

Happy originating!
Peter


Real Estate Institute offers NMLS-approved Mortgage Loan Originator Pre-License and Continuing Education courses in three formats: Classroom, Live Webinar and Online. These courses were designed BY loan originators FOR loan originators covering topics you need to know to navigate today’s ever-changing lending landscape. Please don’t hesitate to contact us online or at 800-995-1700 with any questions about loan officer training or requirements. 

I Want to Be a LOAN OFFICER When I Grow Up!

As someone whose mortgage career is north of 20 years old, I can say with certainty that this statement doesn’t find its way into a lot of first grade classrooms on career day. Nevertheless, roughly 304,000 people in the United States have found their way into this segment of the financial services industry, a large number in my specialty of residential mortgage lending. There are many ways that people come to a career in lending, from academic studies to career fairs to pure chance (like me!) If you’re taking the time to read this blog post, you’re likely considering joining the ranks of residential mortgage professionals (called “Mortgage Loan Originators”, or “MLOs”) and are looking for more information on the business. So, let’s discuss some key factors you’ll want to consider when making your decision. If you decide to move forward, allow me to be the first to welcome you to the business and I hope to meet you personally should you decide to choose Real Estate Institute for your required education.

A career in mortgage can be lucrative

As of this writing, the mean annual wage for Loan Officers is $76,270 according to the Bureau of Labor Statistics. Many people make much more than this, some make less, but the mean income is very solid for a career that doesn’t require an advanced degree. Keep in mind that many Loan Officers work on commission only and don’t receive a base salary. If you accept employment at a company with this pay structure, you’ll have the highest earnings potential but might take a year or two to realize it.

Mortgage lending can offer more flexibility than other career paths

Like any job, you’ll have to put in the hours to reap the rewards. In the mortgage business, however, you might be able to structure your working hours around family and other commitments. Need to see your kid off to school in the morning? Start work later in the day. Want to take a vacation? Technology has made it much easier to work remotely, so bring the office with you. Keep in mind that it’s common for MLOs to work weekends, especially during peak homebuying season.

It’s a great place if you’re a people person

At the heart of it, being an MLO is very much a people-oriented, sales career. The great thing is, you’ll be selling MONEY (which everybody needs) and showing people how to achieve and maintain the American dream of homeownership. If the thought of talking to people who aren’t your friends or family makes you queasy, however, becoming an MLO is probably not the right career path.

Technology is making the job easier but not replacing it

Let’s face it, there are a lot of industries where automation is reducing the number of available positions. While it may be easier for consumers to shop for a loan online today, they overwhelmingly still want to talk through their options with a real, live person who has their best interests at heart. Today’s mortgage professionals are expected to adhere to a higher ethical standard than ever before, but their jobs are not going away. In fact, the Bureau of Labor Statistics projects 3% growth in the number of MLOs over the next 10 years.

If you’re still interested in a career as an MLO after reading this, keep in mind that you’ll very likely need to take pre-license education and an exam, as well as pass a criminal and credit check to work in the business. The good news? We can help with the education and testing piece!


Real Estate Institute offers NMLS-approved Mortgage Loan Originator Pre-License and Continuing Education courses in three formats: Classroom, Live Webinar and Online. These courses were designed BY loan originators FOR loan originators covering topics you need to know to navigate today’s ever-changing lending landscape. Please don’t hesitate to contact us online or at 800-995-1700 with any questions about loan officer training or requirements. 

The Mortgage Industry in the Era of COVID: 2020 Storylines and A Look Ahead to 2021

A calculator with the 2021 on the display

To say that 2020 was an eventful year for the mortgage industry could be the biggest understatement in history. A global pandemic that decimated many sectors of the economy fueled record low mortgage rates which, in turn, drove record high volume. Add to that the fact that lockdowns in many areas forced people to start working from home as pipelines were bursting at the seams and you have a recipe that gave everyone from frontline Mortgage Loan Originators to underwriters to ops and secondary-marketing managers heartburn.

So, as the dust settles on the strangest year of our lives, let’s take a look at some of the industry storylines that may not have received a lot of mainstream media attention and what they might mean for the future.

Technology Takes Center Stage

The mortgage industry has traditionally been slow to adopt to technological advances. For example, although the Federal E-SIGN Act became law in 2000 and Freddie Mac and Fannie Mae have been allowing electronic signatures on loan documents since 2005, they didn’t gain much traction with originators until just a few years ago. The pandemic prompted a very fast re-imagining of the entire loan process with a focus on limiting personal contact. This forced many companies – and states – to confront the issue of various forms of electronic notarization, up to and including full RON (Remote Online Notarization). As of this writing, 29 States have allowed some form of electronic notarization either permanently or temporarily.

What to look for in 2021:
Continued pressure on state legislatures from industry groups like the Mortgage Bankers Association to make temporary provisions permanent and expand RON to additional states.

Working from Home Requires More Than a Laptop

In addition to the enormous IT staff challenges to rapidly equip a largely in-office workforce for remote work, compliance and licensing professionals in many states had to deal with regulatory requirements that MLOs complete their work at a licensed branch location. To their credit, many of these states worked quickly to provide temporary regulatory relief of in-office work requirements where possible, but long-term questions remain.

What to look for in 2021:
A state-based regulatory system is one of the strengths of the modern non-depository financial services sector; what works in Texas may not work in Massachusetts, Oregon or Iowa and states have the freedom to address their own concerns in their own ways. That being said, should the demand for remote work continue for an extended period of time (or permanently), some states – especially those that license branch offices – will need to reevaluate their licensing regulation to ensure it remains effective and relevant to the current situation. Additionally, companies and MLOs in certain areas may need to determine whether it’s necessary to obtain a branch license for an individual originator’s home. Finally, with the constant threat of wire fraud (attempts up 62% in 2020) and other issues, expect a continued intense regulatory focus on cybersecurity. Now is a good time for your company to do a full review of your policies and procedures to ensure proper data integrity and security.

Servicing Lessons Learned From the Last Financial Crash Are More Relevant Than Ever

One of the cornerstones of the response to COVID-19 is a temporary moratorium on foreclosures on most Federally-related mortgage loans via the FHFA and HUD in addition to many state-level moratoria on foreclosures and evictions. Given the shift to a truly borrower-centric approach to handling distressed loans after the financial crisis of 2008, servicers are well-positioned to provide the support necessary to mortgagors who have taken advantage of the many loan forbearance options available to them via the CARES Act.

What to look for in 2021:
While deadlines for exiting/resolving forbearance have changed several times, one thing is certain: at some point, borrowers will need to resume making timely payments on their mortgage loans. Servicers will need to dust off their loss mitigation playbooks and provide loan modifications to a segment of the borrower population that has returned to work but with a long-term reduction in income. Additionally, there will undoubtedly be many borrowers who won’t be able to reinstate their loans even with a modification. It is likely we will see some form of federal relief to assist these individuals in their transition to alternative housing similar to post-2008 programs. As forbearance programs end, economists and financial analysts will be focused on how the expected increase in foreclosures and deeds-in-lieu will affect available housing inventory (which has been extremely tight in many places) and potentially slow the rate of appreciation.

In addition to the storylines discussed here, 2021 is going to bring a new administration with new priorities and new people leading critical entities affecting housing policy such as HUD, the CFPB, Treasury and (very likely) the FHFA. Expect a realignment of policies relating to fair lending, affordable housing and the ongoing conservatorship of Fannie Mae and Freddie Mac (which will also be getting a new CEO). We’ll certainly be keeping an eye on what transpires and will be ready to discuss critical issues in upcoming blog posts, courses and speaking engagements.

In the meantime, from our family to yours, have a wonderful and safe holiday season and a happy new year.

Peter


Real Estate Institute offers NMLS-approved 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. Please don’t hesitate to contact us online or at 800-995-1700 with any questions about loan office training or requirements. 

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.

Changes to Illinois Mortgage Advertising Rules – Effective Immediately

Tunnel of media, images, photographs. Tv, multimedia broadcast.

Gov. Bruce Rauner has signed into law the bill known as SB 2615, which amends the Residential Mortgage License Act of 1987 and makes minor changes to advertising requirements. The bill, which passed both houses of the Illinois Legislature unanimously, removes the need for mortgage companies licensed by the IDFPR to use the phrase “Illinois Residential Mortgage Licensee” in all advertisements.

As of August 10, 2018, mortgage advertisements in Illinois “must reference the Nationwide Multistate Licensing System’s Consumer Access Website” (www.nmlsconsumeraccess.org). In addition, all mortgage advertisements must now include the company’s NMLS unique identifier.

Now is a good time for companies to do a thorough review of their advertising policies and procedures to ensure continued compliance with state and federal advertising requirements. As always, MLOs are reminded that social media pages and posts promoting their employment are considered advertisements and must be compliant with all relevant laws. (We’ll discuss this further in our comprehensive CE class this year.)

Thanks to the folks at the Greater Midwest Lenders Association (www.GMLAonline.org) for spearheading this legislative effort to standardize Illinois advertising law with those found in many other states.

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.

Reg Relief a Reality – Now What?

Blue_Sky_CloudsOn May 24, the President signed the Senate bill known as the Economic Growth, Regulatory Relief and Consumer Protection Act (S.2155). You may have read a previous article I wrote that summarized the key points in this piece of legislation. However it’s worthwhile to reexamine them here before using a proven scientific method to predict what will happen next in the world of mortgage regulation.

Keep in mind that, while there are some significant provisions in this bill that benefit both consumers and the mortgage industry, the regulatory structure and disclosure regimes you’re used to at the federal level have not been affected. The CFPB is still the CFPB (albeit with a radically different approach to its mission under Acting Director Mulvaney), TRID is still TRID and the answer to the ultimate question of life, the universe and everything is still 42.

So, without further ado, here are the five parts of this much larger bill that are likely to affect originators and mortgage compliance professionals.

  1. Transitional MLO licensing. Without a doubt, this is the most important change for anyone on the front lines of our business, and one that the Mortgage Bankers Association has been advocating since the SAFE Act went into effect. The provision gives MLOs who work for depositories a 120-day window to originate loans after transitioning to a nonbank while securing their state license, meaning they would not need to lose valuable work time and income fulfilling the licensing provisions before speaking to consumers. This same 120-day grace period will also apply to currently licensed originators who wish to obtain a license in another state. 
  2. A small bank exemption from expanded HMDA reporting. Banks that originate fewer than 500 HELOCs and closed-end mortgages in a year have been exempted from reporting the expanded HMDA data points that went into effect with originations after January 1, 2018. Despite what you may have heard, this does NOT exempt these institutions from Regulation C altogether, merely from reporting the new data points such as disaggregated demographic information. This provision does not make any changes for other institutions, including nonbanks. 
  3. Eliminating the need for an additional 3-day waiting period when the APR decreases. Before you jump for joy at this one, the legislative language applies directly only to High-Cost mortgage loans. Although given the current leadership at the Bureau, it is likely to clarify through regulation or official interpretation that the same provision applies to loans that are not High-Cost as well (the Bureau has taken that position informally since TRID was enacted).

  4. Allowing consumers to freeze their credit reports without cost. This provision is a direct result of the massive Equifax data breach that shook the country in 2017. While credit freezes (that stop anyone from accessing a consumer’s credit file) have been around since the passage of the Fair and Accurate Credit Transactions Act, there has been a cost associated with them. Removing this cost will likely lead to more consumers placing freezes on their reports (and more MLOs needing to ask clients to unfreeze them to proceed with an application). Under the law, the bureaus are also required to inform consumers that these no-cost freezes are available.

  5. Providing Qualified Mortgage protection to bank portfolio loans. Depository institutions with assets under $10 billion receive QM protection on loans that they retain in portfolio without needing to follow all the documentation requirements in Appendix Q of the Qualified Mortgage rule. Before you start reliving 2007 however, keep in mind that such loans will still require verification of applicant income and assets, comply with prepayment penalty restrictions in the QM rule and not carry any interest-only or negative amortization features.

Where do we go from here?

While Congress is likely done with financial regulatory issues (at least for this session), the CFPB is, of course, under no pre-midterm election pressure. In fact, they’re scheduled to reexamine the QM Rule in 2018 due to the mandatory five-year review period specified in the Dodd-Frank Act. We know through various speaking engagements by Acting Director Mulvaney that this process is likely to lead to significant changes to the rule, although the scope and extent of those changes are not yet known. One of the areas of the rule that seems ripe for change is the 43% Debt-to-Income requirement exemption given to loans eligible for sale to Fannie Mae and Freddie Mac. Remember, this exception is temporary and is currently scheduled to sunset in January 2021. Thus, if not extended or made permanent, Fannie and Freddie loans would begin to be subject to the 43% DTI cap for QMs at that time. This could have a big effect on the marketplace by moving otherwise qualified loans out of the conventional conforming space and into FHA (adding risk to taxpayers), so look for this to be one of the focal points in an amended QM rule.

While we’re on the topic of regulation, remember the United States has a dual regulatory system where both federal and state governments have a say in regulating many financial services entities. It’s very likely that, as the CFPB pulls back on certain regulations, some states will move to continue or tighten them. Thus, compliance managers and MLOs alike need to remain focused on statehouses across the country for potential changes affecting rules in states in which they are licensed. This is especially true if there are leadership changes at the state level as a result of the off-year election results in November.

See you next month!


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.


3 Tips for a Successful (and On-Time) MLO License Renewal

Hand writing the text: Time to RenewIt’s difficult to believe that another year has come and gone, and the license renewal period for Mortgage Loan Originators is now in full-swing. While this time of year generally involves visions of turkeys, football and sugarplums dancing in heads, let’s not forget that our careers also need some tending to prior to the end of the year. Here are some tips to make sure that the Grinch doesn’t steal your ability to originate loans in 2018.

  1. DON’T WAIT UNTIL DECEMBER 31!
    While it’s true that the federal SAFE Act sets a December 31 deadline for an on-time renewal application, waiting until the last minute won’t give the licensing agency time to process and approve your application before January 1. Some states will not allow you to originate new business (even with a timely renewal request) until your application has been formally approved, meaning that you will not be able to take applications or review loan terms with new clients until this happens; doing so could land you in hot water with your regulator and face discipline for unlicensed activity. Other States (like Georgia) have earlier deadlines for submitting on-time renewal requests, so please make sure you know the requirements for each state in which you’re licensed. For those of you in Illinois, the IDFPR will only guarantee that your renewal request will be processed before January 1 if you submit it by December 1.

  2. COMPLETE YOUR EDUCATION EARLY

    Most states will not let you submit a license renewal request through NMLS unless you’ve completed your continuing education requirement. Seems simple enough, right? Just do the education on December 30th and renew on the 31st! Unfortunately, to quote a recent nationwide commercial sensation, “That’s not how this works.”

    Course providers have seven days from the day you complete your education to report your hours to NMLS. This means that the latest you can complete education (in most states) and still be guaranteed a timely renewal is December 23. Note that Real Estate Institute will report all course completions until 1:00 PM on Friday, December 29 to allow some extra time, but even WE don’t recommend waiting that long! The good news is, If you need to get your education done, we have options to meet your needs through the end of the year.

  3. REMEMBER TO CHECK YOUR NMLS RECORD AHEAD OF TIME

    When logging in to NMLS, the “individual dashboard” will tell you how many licenses you have that are eligible for renewal, and how many you are prevented from renewing (generally because of issues like outstanding education or a required fingerprint submission). You’ll need to address any “deficiencies” prior to being able to submit for renewal, and you can find out what those are by clicking on the number of licenses that cannot be renewed. (This will take you to the renewal page, where you’ll have to click “attest and pay” to see a list of licenses that are not eligible.)

    Don’t wait until the last minute to check your record; allow yourself time to address any issues that may come up. This is ESPECIALLY true for those of you licensed in many states, as it’s easier than you think to forget a state-specific education requirement.

If you follow these three tips, you should have an easy and pain-free license renewal, not to mention a more enjoyable holiday season. As always all of us at Real Estate Institute appreciate your time and business, and we wish you the best for a successful 2018.

Happy Holidays!

Peter

How CFPB’s Amendment to TRID Affects Your Business

TRID mazeThe Consumer Financial Protection Bureau (CFPB) finalized an amendment to the TILA/RESPA Integrated Disclosure Rule (TRID) that has been in effect since October of 2015. While the rule makes no changes to the Loan Estimate or Closing Disclosure forms or their timelines for delivery, there are some items in the amendment that may affect your business processes, and we’ll take a quick look at them here.

  1. Information sharing with parties to the transaction: The new rule makes it clear that the borrower’s Closing Disclosure may be shared with other parties to the transaction (i.e. the real estate agent and the seller.) This codifies long-established practice in many States, and removes uncertainty that was thrown into the mix when the original TRID rule was promulgated. The CFPB is working on additional specific guidance on providing separate CD forms to the borrower and seller. NOTE: this Federal regulation will not change practices in any State that might explicitly prohibit such sharing of information at the state level.
  2. Housing Assistance / HFA Loans: In the final rule, the CFPB provides guidance that certain loans made by housing finance agencies and other non-profit housing groups will retain their partial disclosure exemption from the TRID rule even when recording fees and transfer taxes are charged to the borrower. The CFPB hopes that this will increase the number of these transactions that receive the exemption, thereby increasing the number of such loans made.
  3. Co-Op Loans to be Covered by TRID: The new rule extends the scope of TRID to cover all loans made on cooperative housing units (“Co-Ops”), where the buyer is technically buying into the Corporation running the housing project instead of purchasing real property in the traditional sense. Co-ops are quite prevalent in the New York metropolitan area, as well as elsewhere on the East Coast, and this change will probably have more impact on general business processes than the others listed here.
  4. Tolerance for Total of Payments Disclosure: Under the old TIL disclosure, the total of payments box was calculated specifically using the finance charge. With the roll-out of TRID, the marriage between finance charge and this disclosure was removed, but no accuracy tolerances were put in place. This rule changes that by adding an accuracy tolerance to the total of payments disclosure that mirrors the one that has been in place for the finance charge itself.

Finally, the CFPB also put out another request for comment on a proposal to address when creditors specifically may use a Closing Disclosure (instead of a Loan Estimate) to determine if a charge was disclosed in good faith. The uncertainty around acceptable situations for this has created what many compliance officers call the “black hole” – especially when closings are delayed. See the CFPB Website for more information.

The mandatory compliance date for all provisions of the rule listed above is OCTOBER 1, 2018.

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.

FHA Lowers Mortgage Insurance Premiums Again

OLYMPUS DIGITAL CAMERAToday, HUD released Mortgagee Letter 2017-01, announcing a reduction in the FHA annual mortgage insurance premium by 20-25 basis points across the board and eliminating MI surcharges on loans over $625,500 in high-cost areas. This announcement, sure to please originators across the country, comes on the heels of the FHA Mutual Mortgage Insurance Fund (MMIF) once again reaching its statutory-mandated reserve of 2% in 2016.

The premium cut goes into effect with closings/disbursements on or after January 27, 2017. This is a slight departure from typical FHA policy changes which are usually implemented by the date the case number is obtained. Note, the UPFRONT MI Premium (UFMIP) is not changing and remains at 1.75% for forward mortgages.

The new annual premiums, effective January 27th, are highlighted below.

Happy originating!

Peter