Feature Article #1

Fiduciary Duties for Mortgage Brokers and LOs

In October of 2007, Andrea Negroni wrote an article for Mortgage Banking Magazine titled “Mortgage Brokers–What Fiduciary Duties Exist?” Negroni provides a framework for mortgage brokers to begin learning about case law already on the books where courts have imposed fiduciary duties on brokers.
The National Association of Mortgage Brokers has been quite insistent that brokers […]

mf | June 20th, 2008 | Continued

Feature Article #2

Reverse Mortgage Loan Originations Caught up in New State Law Changes

This memo was sent to me by a member of the National Reverse Mortgage Lenders Association:
Member Alert: NRMLA Trying to Resolve Licensing Issues in Washington State
June 2, 2008
Washington state recently passed legislation (SB 6471) that may impact non-depository lenders, as well as the correspondents, subsidiaries and affiliates of depository lenders who make reverse mortgage loans […]

mf | June 17th, 2008 | Continued

Feature Article #3

Mortgage Industry Codes of Ethics

Read the Code of Ethics from these three trade organizations.  Don’t worry; it will be a very fast read.

National Association of Mortgage Brokers
National Association of Mortgage Women
For the Mortgage Banker’s Code, follow this link and click on “cannons” from the menu on the left.
What’s missing?
Could some of these phrases be re-worded?  If so how? 
For example from […]

mf | June 14th, 2008 | Continued

Feature Article #4

Solutions to the Mortgage Lending Crisis

The mortgage industry crisis is a gift.  Mortgage lending can emerge from this mess and transform itself. I have been co-writing about predatory lending and the ambiguous professional status of retail mortgage salespeople for over 7 years. The industry has traded consumer respect for massive profits.  It does not matter where you work: banker, broker, credit union, consumer […]

mf | June 13th, 2008 | Continued

Feature Article #5

What the Space Shuttle Challenger Disaster Can Teach Us About the Current Mortgage Lending Crisis

In this mortgage ethics article about allegiance to rule-following, I will compare the mortgage industry crisis with a classic business ethics case study.
The space shuttle Challenger accident has frequently been used as a case study in the study of engineering safety, the ethics of whistleblowing, communications, and group decision-making.  With Challenger, an O-ring eroded on earlier shuttle launches. […]

mf | June 13th, 2008 | Continued

About this Site

The National Association of Mortgage Fiduciaries was formed primarily to educate and guide mortgage lenders into fiduciary status. We recognize that the mortgage lending industry is undergoing dramatic change.  The current global economic crisis which began with the subprime meltdown in 2007 has historic roots in mortgage lending securitization and the eventual relaxation of underwriting […]

Mortgage CE Classes at First American Renton

Other Recent Articles

A Critical Analysis of the New Good Faith Estimate

With this blog post I’d like to introduce a new contributing author on the NAMF blog. Bradley Allen, CFP, of Coast Capital Management has been at the forefront of the fiduciary movement for mortgage brokers and loan originators in Washington State. His comments and ideas articulate a future vision of the mortgage brokerage industry where higher […]

4Jan2009 | BradleyAllen | 0 comments | Continued

Incliment Weather

With snow forecast for this week, please check our schedule page for updates to our continuing ed class schedule.  We may decide to move our City University classes to another location if City U closes or opens late.  Students who are prepaid will receive an email update the day before. Check this website the day […]

17Dec2008 | mf | 0 comments | Continued

DFI Speaks Out on Loan Modifications

From the Washington State Department of Financial Institutions:
DFI Advises Homeowners To Verify The Licenses Of Anyone Offering Loan Modification Services Before Hiring Them
OLYMPIA – The Washington State Department of Financial Institution’s Consumer Services Division advises homeowners who are delinquent on their mortgage to be cautious about using the services of someone offering to help them […]

15Dec2008 | mf | 37 comments | Continued

Fee for Service

In Washington State, SB 6381 mandates Fiduciary Duties for mortgage brokers and the LOs working under mortgage brokers.  At the end of the bill, there is a small but powerful addition.  Brokers/LOs can now charge a fee for service.
Before this law passed, the only way brokers/LOs could earn a fee is when a loan closed (with […]

19Oct2008 | mf | 20 comments | Continued

The Milgram Experiments

During the subprime meltdown of 2007, many mortgage brokers and LOs defended their decision to sell subprime loans saying “The lenders were the ones that provided the loans. We were only selling what we were told to sell.”  As wholesale lenders fell, the blame shifted to Wall Street. “It was Wall Street’s fault for creating […]

19Oct2008 | mf | 17 comments | Continued

Informed Consent Process

This UW link provides a brief explanation of the informed consent process in medicine.  Is it possible to use these elements to build an informed consent process for the practice of mortgage lending?
From the UW: 
What are the elements of full informed consent?
the nature of the decision/procedure
reasonable alternatives to the proposed intervention
the relevant risks, benefits, and uncertainties related […]

19Oct2008 | mf | 17 comments | Continued

Informed Consent for Mortgage Lending

In Part 4, of a 6-part series, the Mortgage Professor states, as follows:
“In sum, regardless of why borrowers refinance, the question of whether they receive a net benefit from it is for borrowers alone to answer. Loan providers do not have the information needed to second-guess them.”
He goes on to say that
“on the other hand, borrowers […]

19Oct2008 | mf | 22 comments | Continued

The Meaning of Fiduciary Duties

The president of the National Association of Mortgage Brokers made a speech before Congress on March 27, arguing that “NAMB remains opposed to any proposed law, regulation or other measure that attempts to impose a fiduciary duty, in any fashion, upon a mortgage broker or any other originator.” NAMB’s president goes on to explain why […]

8Oct2008 | mf | 17 comments | Continued

MILA’s Bankruptcy

The bankruptcy trustee in charge of MILA’s Chapter 11 case says there is evidence that MILA’s founder and CEO allegedly collected $32 million from MILA during the years before its demise, “improperly draining the Mountlake Terrace company’s assets as its fortune declined.”
From the Seattle Times:
“I think the executives at MILA knew by 2004 that this bubble was bursting and […]

6Oct2008 | mf | 42 comments | Continued

Quarterly MARI Report

MARI has released their quarterly report on mortgage fraud. Scan the PDF here.
What systems did your company have in place to detect mortgage fraud during the bubble run-up of the past several years?
What systems does your company have in place today?
If a loan processor spots potential fraud taking place by an LO at your company, […]

18Sep2008 | mf | 40 comments | Continued

From CR: Fraud in the 2008 Vintage

From Calculated Risk:

If you haven’t yet had a chance to read this article by John Gittelsohn in the Orange County Register about a real estate sale that was financed by Wells Fargo in January of this year, please do so now. And if you were, like most people, working on the assumption that lenders and […]

16Sep2008 | mf | 39 comments | Continued

Over One Thousand Felons Originating in Florida

The Miami Herald has complete a thorough and frightening investigation into rampant mortgage fraud taking place in Florida. They found that over 1000 convicted felons obtained a loan originator license, even after submitting background checks to the state in order to receive their license. 
The Herald has a full website devoted to their investigation located here.
What’s […]

16Sep2008 | mf | 38 comments | Continued

Mortgage Fraud Part 3: Recent Developments

Before we use to rely on automated underwriting systems and credit scores we had humans who would carefully underwrite mortgage loan files. During the caveman human underwriter days, loan originators and loan processors knew that underwriters could make or break a file. An underwriter had god-like power to grant or deny the American dream. They […]

16Sep2008 | mf | 43 comments | Continued

Mortgage Fraud Part 2: Case Studies

We’re lucky to be living far, far away from the mortgage fraud happening in other parts of the United States, right?  Not so fast. In part two of this three part series, we’ll take a look at some mortgage fraud cases in Washington State.
Case Study: Century Mortgage; How to succeed in a down market and earn six […]

16Sep2008 | mf | 41 comments | Continued

Mortgage Fraud Part 1

Fraud is generally defined as the “intentional misrepresentation of the truth in order to deceive another.” Chris Swecker, Assistant Director of the FBI’s Criminal Investigative Division, defines mortgage fraud as any form of material misstatement, misrepresentation or omission relied upon by an underwriter or lender to fund, purchase or insure a loan.
Before 9/11, mortgage fraud […]

16Sep2008 | mf | 36 comments | Continued

Mortgage Fraud 2008: Bellevue

This story is from the Seattle Times. A federal indictment has been issued for a Bellevue loan officer and his assistant. 
A former loan officer at a Bellevue mortgage company and his assistant have been indicted on a charge of conspiracy to commit wire fraud in a scheme that prosecutors say involved using straw buyers to purchase […]

16Sep2008 | mf | 41 comments | Continued

Loan Modification Fees: Is it Justifiable for a Fiduciary to Charge for a Free Service?

Mortgage brokers and loan originators have become curious in learning about loan modifications. When I ask why, they say that they’re hearing there’s good money to be made doing loan mods.  What? Wait a second. I thought loan modifications were done by the lender for free.
More and more spam is popping up in my spam bin targeted at LOs and […]

3Sep2008 | mf | 43 comments | Continued

National Loan Originator Licensing coming….For ALL LOs

Tucked inside the Foreclosure Rescue Bill signed by the President yesterday is a provision calling for all loan originators to be licensed.  Bankers, brokers, consumer loan lenders, and credit unions; it doesn’t matter where you work.  If you’re an LO you must pass a competency test that will be developed by the National Conference of […]

31Jul2008 | mf | 45 comments | Continued

FHA Training Resources

I’ve been fielding many calls this summer asking for ideas on how to train staff on originating FHA loans.  Here’s my advice:
If you’re newly approved by FHA, your very best option is to take the class taught by HUD called “FHA Lender Training.” These classes are typically three full days: Day 1 Processing, Day 2 […]

31Jul2008 | mf | 0 comments | Continued

S.A.F.E. Mortgage Licensing Act

Today I’m following the passage of bill HR 3221, the Foreclosure Prevention Act of 2008. I believe from this point, it will go back to the House for their approval of the Senate’s revisions. There are a lot of provisions inside the bill, but this one caught my eye:
Inside is a provision for the S.A.F.E. […]

10Jul2008 | mf | 1 comment | Continued

Indymac Wholesale

ML Implode is reporting that there’s an announcement forthcoming tomorrow morning about the fate of Indymac Wholesale and it doesn’t sound good.
Surely no one reading this blog will be surprised but it does eliminate a player in the wholesale lending game.

7Jul2008 | mf | 0 comments | Continued

National Loan Originator Licensing

The “Federal Housing Finance and Regulatory Reform Act of 2008? is here.  Read the PDF if you’re feeling ambitious or here is the summary of the Dodd amendment. There’s a section inside Senator Dodd’s amendment that will give us national loan originator licensing. On page 34, the definition of a loan originator is as follows:
LOAN ORIGINATOR
A) IN GENERAL
The term […]

18Jun2008 | mf | 20 comments | Continued

Distressed Property Law

Mortgage Brokers and Loan Originators are exempt from becoming a “Distressed Home Consultant” when helping Distressed Homeowners refinance, unlike real estate agents who are subject to increased liability under the new Distressed Property Law.  My question is, SHOULD mortgage brokers and loan originators be exempt?  Please read this blog post and share your opinion.  I […]

18Jun2008 | mf | 49 comments | Continued

WA State Cracks Down on Title Insurance Company Inducements

Mortgage brokers, loan originators, and real estate agents have all been warned NOT to accept any inducements from title insurance companies.  Giving OR receiving an item of value in exchange for a referral of a federally related loan is already illegal under RESPA. However, HUD auditors do not routinely wander around inside real estate offices […]

18Jun2008 | mf | 44 comments | Continued