CAMPs REAL TIME LEGISLATIVE INFORMATION UNDER THE DOME

Monday, October 20

I was reminded this week that Halloween is only a few days away, and we need to start to prepare at our house. As most of you probably know, my daughter got married a few years ago on Halloween because it is her favorite holiday. So, we are starting to decorate for this great day … are you?
I want to thank all of you out there who have sent me a referral in the last 30 days. As you know, I can now do loans in all 50 states. So if you have a customer that is moving out of state, or you get a referral from someone out of state and cannot do the loan, please send them to me and I will take care of them. Customer service and helping the customer are my best attributes. E-mail me at namb.ceo@namb.org today.

NAMB+ offers each member discounts on all types of products that can help you in your business. One of these discounts is from Meridian One, and they have a great program for NAMB members. They have a great UPS program that can save you money.
Make the most out of your NAMB membership and take advantage of competitive rates available on shipping services with UPS, including 50 percent off select services for up to four weeks after you enroll.* Whether you need your documents or packages to arrive the next day or are looking for the most affordable shipping option, UPS understands the importance of reliability, speed and cost. See how UPS discounts can help your bottom line:

• Up to 36% on UPS Air letters including UPS Next Day Air 
• Up to 32%
 on UPS Air packages (1 lb.+)
• Up to 34% on UPS International imports and exports 
• Up to 24%
 on UPS Ground shipments

Savings begin at 70% on UPS Freight shipments over 150 lbs. 50% on UPS Next Day Air, UPS Next Day Air Saver, UPS Worldwide Express export, UPS Worldwide Saver export, and UPS Worldwide Expedited export shipments for up to four weeks after you enroll.*

You can receive these discounts even if you already have a UPS account. Remember, the more you ship, the more you can save with UPS. To enroll and start saving immediately, visit www.savewithups.com/namb or call 1-800-MEMBERS (1-800-636-2377), Monday-Friday from 8:00 a.m.-6:00 p.m. EST. Make sure you tell them that you are an NAMB member. Visit www.savewithups.com/namb for specific services and discounts. Introductory Program discounts will be applied to accounts for Week One through Week Four on the UPS Savings Program. Week One includes the date that discounts are applied. Weeks are calculated Sunday through Saturday.
Members should also visit www.NAMBplus.com and see the other programs that are available to members. We have negotiated special programs and discounts for many different companies, so go and spend some time on the Web site and maybe you can start saving money today.
NAMB’s education programs are about to go global. Our current President-Elect Rocke Andrews is also chairman of the Education Committee. He had been contacted by a group of mortgage professionals in Dubai to go there and teach a class to prepare them to take their certification tests for the Certified Residential Mortgage Specialist (CRMS) and Certified Mortgage Consultant (CMC) designations. They are interested in using the NAMB certification program for credibility and professionalism in their mortgage transactions. WOW!
Our Government Affairs Committee Chair Rick Bettencourt was in Iowa this week and it went very well. I would like to request that if your NAMB state affiliate has set the dates for their state conference for 2015, please send it to me so we can advertise it for you on our Web site and we can start making arrangements for either NAMB President John Councilman or myself to attend.
Until next week!

Donald J. Frommeyer, CRMS, CEO
NAMB—The Association of Mortgage Professionals
namb.ceo@namb.org www.joinnamb.com

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We are halfway through October and I’m so happy to say we FINALLY have fall weather. There were sprinkles on my car earlier today. I’m thinking about all things pumpkin now…scones, bread, pie, latte, beer. Speaking of pumpkins, I’m keeping my fingers crossed for the Orange and Black. Just two more games for those rooting for the SF Giants!

Mark your calendars! CAMP’s business building Sales & Marketing Event will be held January 28 to January 30, 2015 in Universal City. This will be one event you will not want to miss. We are working on an amazing agenda for you! I will be sending out more information as it comes up. Keep your eye on the Echo and Facebook for more information.

NAMB is seeking your help so they may tell your story. The CFPB is looking for data from the mortgage industry in order to make favorable adjustments to the stringent regulatory changes that are currently in place. Now is not a time to say, “My voice doesn’t matter.” They need your input in a survey that shouldn’t take more than 5 or 10 minutes of your time. You can estimate your numbers if you cannot remember the exact numbers.  Here is the link:  https://www.surveymonkey.com/s/NAMB_cfpb

The major data points we would like to see are:

  • TOTAL number of Loans closed in YTD.
  • TOTAL Dollar Volume of your loans YTD.
  • TOTAL amount of Mortgage rebates that you gave to the customer to help pay their closing costs YTD. This amount will be the sheet price of the loan, minus your Lender Comp, minus any hits and this would be the net amount that you would have given back to the customer to help pay fees and reduce closing costs.

Each survey participant will receive the video webinar, Getting More Business With Realtors presented by Maximum Acceleration. In addition, Mortgage Educators will be giving away 5 8-hr NMLS classes to be used for 2014 or 2015.

The bottom line is CAMP is working with NAMB to keep the lines of communication open with our regulators. Together we can improve the state of housing and do what is best for the consumer and small business mortgage professionals. It doesn’t matter if you are a mortgage broker or a mortgage banker, CAMP/NAMB is here for you…the mortgage professional.

State Legislative update:

There were several bills that we were watching which have been signed by Governor Brown. It appears that each of these bills will not go into effect until January 1, 2015. Everything else will be quiet on the State legislative front until February of 2015. Here are the bills that were signed into law:

  • AB 1700 Reverse Mortgage Notifications. Requires a 7 day waiting period from the date of counseling before taking an application;
  • AB 1730 Mortgage Loan Modification. Amends existing law prohibiting anyone from collecting fees until the service is completed. Requires civil penalties for any violation and authorizes state and local officials to commence civil action to recover the penalties.
  • AB 2018 Real Estate Fictitious Business names. Authorizes real estate brokers to allow a salesperson to apply for a fictitious business name. This relates to the use of team names.
  • AB 2540 Real Estate Licenses. Authorizes the Real Estate Commissioner to prescribe the format and content of the application for a RE salesperson license. Requires the applicant to provide valid contact information such as email addresses.

SB 1459 Mortgage Loan Originators: Educational requirements. Establishes a requirement of two hours California state specific codes and laws to be included in the initial 20 hours education requirement and one hour of state specific in the mandatory 8 hours of CE. This will move California closer to adopting the UST. There are currently 45 states already participating in the UST.

Upcoming Chapter Events:

Online Training:New CAMP Benefit

Do you hate to sit in an all-day class? Are you too busy to give up just One day of your time? Do you still need your NMLS CE? Check out our new CAMP benefit, Online Training: CAMP members now receive discounted rates for online NMLS training.

Click Here for More Details

Live Chapter Continuing Education:

San Gabriel Valley Chapter on Wednesday, October 22, 2014. Contact Jesse Hernandez at JHernandez@ires.com for more details.

Greater Sacramento Chapter is pleased to be hosting a live 8 hour NMLS class here in the Sacramento area onTuesday, October 28, 2014. We are welcoming back Ginger Bell from Strategic Compliance Partners to teach this class once again. This fulfills the yearly 8 hour continuing education requirement for Mortgage Loan Originators. The price (including lunch) is $99 for CAMP members and $139 for non-members. Please be sure to register ASAP to save your spot. Registration link and additional information here: Click Here

North Bay Chapter will be holding a final NMLS training class on Tuesday, December 2, 2014. This will be held in Petaluma. More details to follow but you can contact Rick Reith at 415-740-8834 for more info.

CAMP Statewide Calendar

If you would like me to include upcoming events please send me an email

Until next week,

Michelle Velez, President

California Association of Mortgage Professionals

shellvelez@gmail.com  I  thecampsite.org

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CFPB Provides Guidance on the New Loan Estimate

Posted: 07 Oct 2014 01:35 PM PDT

Marc Patterson

On October 1, 2014, the CFPB staff and Federal Reserve Board co-hosted a webinar that addressed questions about the Final TILA-RESPA Integrated Disclosure Rule that will be effective for applications received by creditors or mortgage brokers on or after August 1, 2015.  The webinar focused on the Loan Estimate and addressed specific questions regarding the content of the Loan Estimate form that relate to corresponding provisions of the Closing Disclosure.   Many of the issues covered were in response to questions received by the CFPB from mortgage industry stakeholders and technology vendors who need additional information in order to facilitate the development of compliance and quality control procedures and software.

The webinar is the third in a planned series to address the new rule.  In the initial webinar, the CFPB staff provided a basic overview of the final rule and new disclosures.  In the second webinar, the CFPB staff focused on core operation issues such as the receipt of an application, assumptions, fee tolerances, record retention, and timing for the initial and revised Loan Estimates.

According to the CFPB staff, this webinar and the ones that will follow will be in the format of a spoken Q&A.  Although the CFPB staff does not plan to issue written Q&A, the staff believes this approach will help facilitate clear guidance on the new rules in an accessible way.  As we have stated before, industry members would prefer formal written guidance.  Among other concerns, the CFPB approach presents challenges to the ability of hearing impaired individuals to benefit from the guidance.

During the webinar the CFPB staff provided a high-level overview of the rule and answered more than thirty technical questions.  Below is a summary of select questions of interest addressed by the CFPB staff.  The topics covered include: (1) brokered transactions, (2) origination charges, (3) calculating cash to close, and (4) the adjustable payment and adjustable interest rate tables.

Q: Does the creditor have to disclose an itemization of the amount financed with the Loan Estimate?

No.  A creditor would not disclose an itemization of the amount financed with the Loan Estimate and Closing Disclosure.    The CFPB also advised that some disclosures are required to be made only on the Closing Disclosure and not the Loan Estimate.  These include some of the fed box disclosures, such as the amount financed and the finance charge.  These disclosures are required to be on the Closing Disclosure pursuant to sections 1026.38(o)(2) and (o)(3), but are not required to be included on the Loan Estimate.  However, note that even for the Closing Disclosure, the amount financed is not itemized.  Section 1026.38(o)(3) requires that only the amount financed itself (which is calculated in accordance with section 1026.18(b)) be disclosed.

Q:  When the sale price of the property is not yet known, does the creditor disclose a label other than “sale price” for the sale price on the Loan Estimate?

No. The label should state the sale price, and the label does not change when the creditor uses an estimated sales price as described in commentary  section 1026.37(a)(7)-1.  For transactions without a seller, such as a refinance, because there is no sale, the estimated value of the property is disclosed in place of the sales price, and labeled “property value” with “property” abbreviated as “prop.”

Q:  If a broker is issuing a Loan Estimate but does not know the creditor, may the broker put its name on the form in place of the creditor’s?

 

No.  Section 1026.37(a)(3) requires the name and address of the creditor, and a broker would not place its name and address where the name of the creditor is unknown .  Commentary section 1026.37(a)(3)-2 addresses situations where the mortgage broker is making the disclosure and the creditor has not yet been determined.  The comment provides that the broker must make a good faith estimate to disclose the name of the creditor, but when the name of the creditor is not known at the time the Loan Estimate is required to be delivered or placed in the mail, the mortgage broker may leave the creditor’s name blank.  This does not allow the mortgage broker to substitute its name for the creditor’s name.

Q: Section 1026.37(a)(12) indicates that the creditor must disclose a unique loan ID number.  If the creditor is unknown:

(A) Is the broker required to generate and disclose a unique ID number?

No.  A broker would not be required to generate and disclose its own unique loan ID in a Loan Estimate, and assuming the creditor’s unique ID is not available to the broker, the disclosure may be left blank.   The loan ID number must be a unique identifier that should be determined by the creditor.  However, the rule does not prohibit creditors from outsourcing this function, and creditors could allow brokers to assign and generate unique IDs on their behalf.  Creditors could also provide the unique loan ID to brokers in advance of the disclosures for them to include it on the Loan Estimate.

(B) Is the creditor required to disclose its own unique loan ID once there is a creditor for the loan?

Yes.  The creditor is required to include a unique loan ID on any subsequent disclosures it provides, such as revised Loan Estimates or the Closing Disclosure.  The creditor is ultimately responsible for the disclosures and that includes providing its own unique loan ID.

Q: If a creditor charges an origination fee that is a percentage of the loan amount, but it is not a “point paid to the creditor to reduce the interest rate,” may the creditor identify it as a point in some way to preserve its tax deductibility for the consumer? 

No.  Section 1026.37(f)(1)(i) provides that only points paid to the creditor to reduce the interest rate may be labeled as points.  The Loan Estimate form is meant to provide accurate disclosures to consumers, not to document eligibility for tax benefits or other purposes.

Q:  Can the alternative cash to close table be used for multiple loan transactions without a seller? 

Yes.  The alternative table can be used where there are multiple loan transactions without a seller.  To the extent there are multiple transactions, each loan covered by the rule will have a separate Loan Estimate and Closing Disclosure.  At consummation, each Closing Disclosure will indicate the cash due to or from the consumer for each loan.  In the rare scenario, involving a cash out refinance and a subordinate lien consummating at the same time, the settlement agent can total the cash due to and the cash due from the consumer across all of the loans to determine the final amount that is payable to or due from the consumer.  This is a change from the existing use of the HUD-1-A form.

Q: Are the adjustable payments and adjustable interest tables disclosed for a fixed rate loan?

The adjustable payments table (APT) is used only when there are adjustable payment features.  If there are no such features in the legal obligation the APT table is not disclosed.  Accordingly, the APT table will only be disclosed if the fixed rate loan has adjustable payment features.  The adjustable interest rate (AIR) table is only disclosed when interest rates can change, which would be contrary to the definition of a fixed rate loan.  Therefore, the AIR table should never be disclosed with a fixed rate loan.

Q:  Does the creditor need to disclose on the Loan Estimate that it will transfer servicing if the transfer is not immediate, but will happen at some later point in time during the life of the loan? 

Yes.  The creditor must disclose on the Loan Estimate that it will transfer servicing if the creditor’s intent at the time the Loan Estimate is issued is to transfer servicing at some point during the life of the loan.  Section 1026.37(m)(6) requires disclosure of a statement of when the creditor intends to service the loan or transfer the loan to another servicer.  This means that a creditor is required to disclose whether it intends to service the loan directly or transfer servicing to another servicer at any time after consummation.  A creditor complies with the rule if the disclosure reflects the creditor’s intent at the time the Loan Estimate is issued.

Q:  Does the creditor need to disclose on the Loan Estimate that it will transfer servicing if the transfer is to the creditor’s subsidiary or affiliate?

Yes.  The creditor must disclose that it will transfer servicing, even if the transfer will be to a subsidiary or affiliate, if that is the creditor’s intent at the time the Loan Estimate is issued.  As with the previous question, Section 1026.37(m)(6) requires a creditor to disclose a statement of whether the creditor intends to service the loan directly or transfer servicing to another servicer.  A creditor’s subsidiary or affiliate is another servicer for the purposes of this requirement if it is a person responsible for receiving scheduled periodic payments from a borrower.

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Happy Columbus Day!
Just when you think that the week is going to be slow, everything starts to happen. To me, some of the best information this week is that Fleetwood Mac is going on tour with all of the original members of the band back together. I cannot wait to see

how close they are going to come to Indianapolis so I can get my tickets. This was one of the bands I listened to growing up, so this is kind of special to me.
I was very excited to attend the first committee meeting of the Equal Opportunity Committee this week. Chairwoman Wendy Bernard has put together a very dynamic group of people for this committee, and they are putting a very intensive agenda for them to achieve this year. This is going to be a very interesting committee, and I want to thank them for allowing me to tag along.

To all members, make sure that you are going into your NAMB membership and updating your e-mail and mailing address. I have received several upset e-mails stating that they stopped getting NAMB information and my Monday Morning Messenger only to find out that they changed companies, moved or have changed their e-mails and we did not have their current address. It is YOUR responsibility to keep this updated with your current information. And while you are at it, go check out the NAMB+ Web site and see what membership benefits you can get. Log on to www.NAMBPLUS.comtoday.
This week, Rick Bettencourt, the current Government Affairs Chair will be going to Iowa for the Mortgage Professionals of Iowa Annual Convention. Rick will be talking about what the GA Committee is doing to gather information for our presentation to the Consumer Financial Protection Bureau (CFPB). Go towww.surveymonkey.com/s/NAMB_cfpb and take the survey for us and for all of you. This is very important, and we need everyone to complete this. The CFPB wants to get 5,000 responses and we do too. Please do your part today. Don’t wait. Do it today!
And one final note about the Lending Integrity Seal of Approval. There has been some discussion as to why are we pushing this so much each and every week. Well, I had a discussion with a reporter and he ran an article about NAMB’s Lending Integrity Seal and the response that he got was really interesting. He said that the feedback was asking how do they locate these lending professionals. He directed them to the Lending Integrity Web site to locate these individuals. He said that he interviewed a few of these Lending Integrity Professionals in his area and found that it was something prestigious for them to have and they had customers calling them and asking if they had the Seal. I am sure that is really a plus.
So don’t delay … if you are a mortgage originator, have an NMLS number and are a member of NAMB, go and sign up today. Go to www.NAMB.org and become a member and you will be eligible to sign of for the Lending Integrity Seal of Approval.
This week looks like a busy week again.

Until next week!

Donald J. Frommeyer, CRMS, CEO
NAMB—The Association of Mortgage Professionals
namb.ceo@namb.org www.joinnamb.com

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Last week we took part in another webinar on the TILA-RESPA Integrated Disclosure rule. A recording of the webinar is now available.

Check out the video of the webinar:
consumerfinance.gov/regulatory-implementation/tila-respa

Please note that registration is required to view the recording.

This was the third in a series of webinars to address the new rule as creditors, mortgage brokers, settlement agents, software developers, and other stakeholders work to implement it over the next year. This session focused on questions related to the Loan Estimate Form.

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NAR Issues CFPB Warning

October 9, 2014 | CFBP  |  Leave a Comment

This may seem a little odd, but the National Association of Realtors have issued a warning to the CFPB about mini-correspondent lending regulations.

HERE IS THE LINK FOR THE NAMB SURVEY – CLICK HERE!

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The CFPB released an updated mortgage rules Readiness Guide to include the new TILA-RESPA Integrated Disclosure rule. This update offers financial institutions and other industry participants valuable guidance on how to evaluate their readiness for complying with the mortgage rule changes.

Check out the latest mortgage rules Readiness Guide
consumerfinance.gov/regulatory-implementation/title-xiv

The updated guide incorporates changes made to Regulation Z, the implementing regulation for the Truth in Lending Act (TILA), and to Regulation X, the implementing regulation for the Real Estate Settlement Procedures Act (RESPA). The guide now contains changes to final rules issued through August 1, 2014 covering both RESPA and TILA.

Thank you,
The Consumer Financial Protection Bureau

P.S. We hope you’ll familiarize yourself with the rules we’ve issued and the related available resources.

 

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Wednesday, October 8, 2014

Don’t you just love October? The weather is cooling and wait….no it’s not! It’s still extremely warm. Another thing that is hot is the Giants. I’m sorry, but I have to put in a plug for the Orange and Black! I have to say, they really have a way of keeping you on the edge of your seat.

CAMP is happy to announce we have a location for our Sales & Marketing Event coming up in January 2015. We are working on an amazing line up of speakers and exhibitors. This will be one event you will not want to miss out on. I will be sending out more information in the upcoming Echo newsletters as well as setting up the event on Facebook.

Are you wondering why you should be a member of CAMP or know people that should be members but are not, watch out for the Scott and Michelle Road Show. Both Scott Griffin and myself will be touring the state to talk about the benefits of CAMP and what we are working on for you. Watch Michelle’s Echo for more details. We will in Southern California in November.

NAMB is looking for your input. As I mentioned before, the CFPB wants to see specific data to help in their rule-making process.

NAMB’s Government Affairs team met with the CFPB to discuss mortgage brokerage compensation, the 3% cap on points and fees, and loan origination compensation. The CFPB provided excellent industry insight and guidance into several of the key areas plaguing mortgage originators and mortgage brokerage entities.

Clearly, the CFPB is a data driven organization and NAMB is determined to show them that the mortgage broker model is extremely effective in mitigating upfront costs for consumers. CAMP is supportive in this effort and we are also determined to show them that thousands of small businesses are being adversely impacted due to the limitation on entity revenue.

Please help us help you! Click on the link below and answer the survey monkey. It’s only a few questions and should not take you much more than 5 minutes to complete. If you don’t have exact numbers, please provide us with your best estimate.

Click Here to Take NAMB’s Survey

Upcoming Chapter Events:

Silicon Valley CAMP presents Think Outside the Box: Non QM Loans? Friday, October 10, 2014 at Three Flames Restaurant, Banquet Room, 1547 Meridian Avenue, San Jose, CA. Registration is not required.

San Francisco Peninsula CAMP presents End of Summer Salsa Kick-off Event for networking and amazing Salsa tasting. This is a Free event on Wednesday October 15, 2014 at Dominic’s @ Oyster Point, 425 Marina Point Blvd, South San Francisco, CA. Contact Donna Aldrich at donna@donnaaldrich.com with any questions. You can click the link here to RSVP: Click Here to RSVP
East Bay CAMP presents Perfect your Presentation Skills with Kitty Cole, Wednesday October 15, 2014 from 4pm to 6:30 pm at Arch Mortgage Insurance Company, 3003 Oak Road, First Floor Training Room, Walnut Creek, CA . Don’t forget to bring your referral partners! For more information, contact Bob Schwab at bschwab@rpm-mtg.com or 925-330-6588

Greater Sacramento Chapter is hosting a mix and mingle at the lovely Scott’s Seafood on the River on Thursday, October 16, 2014. We will have plenty of appetizers on a first come, first serve basis. There is ample parking, and a gorgeous view of the river! Please be sure to event with other industry counterparts. While this is a FREE event, PLEASE do us a favor and register in advance. It greatly helps us with the party planning. Registration link is here: Click Here

Online Training:

New CAMP Benefit

CAMP members now receive discounted rates for online NMLS training.  Click Here for Provider and Discount Information

Live Chapter Continuing Education:

Inland Empire Chapter on Thursday, October 9, 2014 at PRMG Training Room, 1265 Corona Point Court, Corona CA.  Lunch is provided. Must register by 10/6/14. Register and pay at www.ieCAMB.com

San Francisco Peninsula Chapter on Thursday, October 16 at Opera Plaza, 601 Van Ness Avenue, Training Room, San Francisco, CA. Contact Donna Aldrich at donna@donnaaldrich.com for more details.

San Gabriel Valley Chapter on Wednesday, October 22, 2014. Contact Jesse Hernandez at JHernandez@ires.com for more details.

Greater Sacramento Chapter is pleased to be hosting a live 8 hour NMLS class here in the Sacramento area onTuesday, October 28, 2014. We are welcoming back Ginger Bell from Strategic Compliance Partners to teach this class once again. This fulfills the yearly 8 hour continuing education requirement for Mortgage Loan Originators. The price (including lunch) is $99 for CAMP members and $139 for non-members. Please be sure to register ASAP to save your spot. Registration link and additional information here: Click Here

North Bay Chapter will be holding a final NMLS training class on Tuesday, December 2, 2014. This will be held in Petaluma. More details to follow but you can contact Rick Reith at 415-740-8834 for more info.

CAMP Statewide Calendar

If you would like me to include upcoming events please send me an email

Until next week,

Michelle Velez, President

California Association of Mortgage Professionals

shellvelez@gmail.com  I  thecampsite.org

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Help NAMB Tell Your Story

The CFPB Wants To See Data

  NAMB Government Affairs Update 2014 Mortgage Survey

Recently the Government Affairs team met with the CFPB to discuss mortgage brokerage compensation, the 3% cap on points and fees, as well as loan origination compensation. The CFPB provided excellent industry insight and guidance into several of the key areas plaguing mortgage originators and mortgage brokerage entities.

It is obvious the CFPB is a data driven organization and NAMB is determined to show them that the mortgage broker model is extremely effective in mitigating upfront costs for consumers. We are also determined to show them that thousands of small businesses are being adversely impacted due to the limitation on entity revenue.

So, here we are. Your industry needs your help. Your industry needs you to participate and respond to this survey to the best of your ability.

If you don’t have exact numbers, please provide us with your best estimate.

Take the NAMB Survey HERE

https://www.surveymonkey.com/s/NAMB_cfpb  

The major data points we would like to see are:

  1. TOTAL number of Loans closed in YTD.
  2. TOTAL Dollar Volume of your loans YTD.
  3. TOTAL amount of Mortgage rebates that you gave to the customer to help pay their closing costs YTD.  This amount will be the sheet price of the loan, minus your Lender Comp, minus any hits and this would be the net amount that you would have given back to the customer to help pay fees and reduce closing costs.

Each survey participant will receive the video webinar, Getting More Business With Realtors presented by Maximum Acceleration. In addition, Mortgage Educators will be giving away 5 8-hr NMLS classes to be used for 2014 or 2015.

Here is the bottom line, NAMB has open lines of communication with our regulators and will continue to work with them to improve the state of housing and do what is best for the consumer and small business mortgage professionals.

Just remember, It does not matter if you are a mortgage broker or a mortgage banker, NAMB is here for you…the mortgage professional.

For more information on NAMB’s Government Affairs projects or on how you can get involved, contact Rick Bettencourt anytime at governmentaffairs@namb.org.

Please share this with your colleagues. Thank you for your time and support.

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CFPB Provides Guidance on the New Loan Estimate

Posted: 07 Oct 2014 01:35 PM PDT

Marc Patterson

On October 1, 2014, the CFPB staff and Federal Reserve Board co-hosted a webinar that addressed questions about the Final TILA-RESPA Integrated Disclosure Rule that will be effective for applications received by creditors or mortgage brokers on or after August 1, 2015.  The webinar focused on the Loan Estimate and addressed specific questions regarding the content of the Loan Estimate form that relate to corresponding provisions of the Closing Disclosure.   Many of the issues covered were in response to questions received by the CFPB from mortgage industry stakeholders and technology vendors who need additional information in order to facilitate the development of compliance and quality control procedures and software.

The webinar is the third in a planned series to address the new rule.  In the initial webinar, the CFPB staff provided a basic overview of the final rule and new disclosures.  In the second webinar, the CFPB staff focused on core operation issues such as the receipt of an application, assumptions, fee tolerances, record retention, and timing for the initial and revised Loan Estimates.

According to the CFPB staff, this webinar and the ones that will follow will be in the format of a spoken Q&A.  Although the CFPB staff does not plan to issue written Q&A, the staff believes this approach will help facilitate clear guidance on the new rules in an accessible way.  As we have stated before, industry members would prefer formal written guidance.  Among other concerns, the CFPB approach presents challenges to the ability of hearing impaired individuals to benefit from the guidance.

During the webinar the CFPB staff provided a high-level overview of the rule and answered more than thirty technical questions.  Below is a summary of select questions of interest addressed by the CFPB staff.  The topics covered include: (1) brokered transactions, (2) origination charges, (3) calculating cash to close, and (4) the adjustable payment and adjustable interest rate tables.

Q: Does the creditor have to disclose an itemization of the amount financed with the Loan Estimate?

No.  A creditor would not disclose an itemization of the amount financed with the Loan Estimate and Closing Disclosure.    The CFPB also advised that some disclosures are required to be made only on the Closing Disclosure and not the Loan Estimate.  These include some of the fed box disclosures, such as the amount financed and the finance charge.  These disclosures are required to be on the Closing Disclosure pursuant to sections 1026.38(o)(2) and (o)(3), but are not required to be included on the Loan Estimate.  However, note that even for the Closing Disclosure, the amount financed is not itemized.  Section 1026.38(o)(3) requires that only the amount financed itself (which is calculated in accordance with section 1026.18(b)) be disclosed.

Q:  When the sale price of the property is not yet known, does the creditor disclose a label other than “sale price” for the sale price on the Loan Estimate?

No. The label should state the sale price, and the label does not change when the creditor uses an estimated sales price as described in commentary  section 1026.37(a)(7)-1.  For transactions without a seller, such as a refinance, because there is no sale, the estimated value of the property is disclosed in place of the sales price, and labeled “property value” with “property” abbreviated as “prop.”

Q:  If a broker is issuing a Loan Estimate but does not know the creditor, may the broker put its name on the form in place of the creditor’s?

 

No.  Section 1026.37(a)(3) requires the name and address of the creditor, and a broker would not place its name and address where the name of the creditor is unknown .  Commentary section 1026.37(a)(3)-2 addresses situations where the mortgage broker is making the disclosure and the creditor has not yet been determined.  The comment provides that the broker must make a good faith estimate to disclose the name of the creditor, but when the name of the creditor is not known at the time the Loan Estimate is required to be delivered or placed in the mail, the mortgage broker may leave the creditor’s name blank.  This does not allow the mortgage broker to substitute its name for the creditor’s name.

Q: Section 1026.37(a)(12) indicates that the creditor must disclose a unique loan ID number.  If the creditor is unknown:

(A) Is the broker required to generate and disclose a unique ID number?

No.  A broker would not be required to generate and disclose its own unique loan ID in a Loan Estimate, and assuming the creditor’s unique ID is not available to the broker, the disclosure may be left blank.   The loan ID number must be a unique identifier that should be determined by the creditor.  However, the rule does not prohibit creditors from outsourcing this function, and creditors could allow brokers to assign and generate unique IDs on their behalf.  Creditors could also provide the unique loan ID to brokers in advance of the disclosures for them to include it on the Loan Estimate.

(B) Is the creditor required to disclose its own unique loan ID once there is a creditor for the loan?

Yes.  The creditor is required to include a unique loan ID on any subsequent disclosures it provides, such as revised Loan Estimates or the Closing Disclosure.  The creditor is ultimately responsible for the disclosures and that includes providing its own unique loan ID.

Q: If a creditor charges an origination fee that is a percentage of the loan amount, but it is not a “point paid to the creditor to reduce the interest rate,” may the creditor identify it as a point in some way to preserve its tax deductibility for the consumer? 

No.  Section 1026.37(f)(1)(i) provides that only points paid to the creditor to reduce the interest rate may be labeled as points.  The Loan Estimate form is meant to provide accurate disclosures to consumers, not to document eligibility for tax benefits or other purposes.

Q:  Can the alternative cash to close table be used for multiple loan transactions without a seller? 

Yes.  The alternative table can be used where there are multiple loan transactions without a seller.  To the extent there are multiple transactions, each loan covered by the rule will have a separate Loan Estimate and Closing Disclosure.  At consummation, each Closing Disclosure will indicate the cash due to or from the consumer for each loan.  In the rare scenario, involving a cash out refinance and a subordinate lien consummating at the same time, the settlement agent can total the cash due to and the cash due from the consumer across all of the loans to determine the final amount that is payable to or due from the consumer.  This is a change from the existing use of the HUD-1-A form.

Q: Are the adjustable payments and adjustable interest tables disclosed for a fixed rate loan?

The adjustable payments table (APT) is used only when there are adjustable payment features.  If there are no such features in the legal obligation the APT table is not disclosed.  Accordingly, the APT table will only be disclosed if the fixed rate loan has adjustable payment features.  The adjustable interest rate (AIR) table is only disclosed when interest rates can change, which would be contrary to the definition of a fixed rate loan.  Therefore, the AIR table should never be disclosed with a fixed rate loan.

Q:  Does the creditor need to disclose on the Loan Estimate that it will transfer servicing if the transfer is not immediate, but will happen at some later point in time during the life of the loan? 

Yes.  The creditor must disclose on the Loan Estimate that it will transfer servicing if the creditor’s intent at the time the Loan Estimate is issued is to transfer servicing at some point during the life of the loan.  Section 1026.37(m)(6) requires disclosure of a statement of when the creditor intends to service the loan or transfer the loan to another servicer.  This means that a creditor is required to disclose whether it intends to service the loan directly or transfer servicing to another servicer at any time after consummation.  A creditor complies with the rule if the disclosure reflects the creditor’s intent at the time the Loan Estimate is issued.

Q:  Does the creditor need to disclose on the Loan Estimate that it will transfer servicing if the transfer is to the creditor’s subsidiary or affiliate?

Yes.  The creditor must disclose that it will transfer servicing, even if the transfer will be to a subsidiary or affiliate, if that is the creditor’s intent at the time the Loan Estimate is issued.  As with the previous question, Section 1026.37(m)(6) requires a creditor to disclose a statement of whether the creditor intends to service the loan directly or transfer servicing to another servicer.  A creditor’s subsidiary or affiliate is another servicer for the purposes of this requirement if it is a person responsible for receiving scheduled periodic payments from a borrower.

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