Comments on: FERA

By: Elisa Wu

Elisa Wu — Mon, 01 Mar 2010 00:47:51 +0000

I like the changes, at least there is a law added to watch those unethical and unprofessional conducts and will protect consumer benefits much efficiently.

By: Daniel Mulvehill

Daniel Mulvehill — Fri, 26 Feb 2010 21:23:09 +0000

In reading theis articel and the implementtion of the Fraud act 5/20/10 , with over 35 years of Mortgage lending fraud has always been an unforseeabel loss that really effects the bottom line to andy lender. If the profile convict new that they would be severly punished they wouldn’t be so stupid to committ these offenses, but it appears there is preception amongst the crimnals that if they get a short term sentence, they will be back, so minium terms may scare some juvinle offenders away.Thee are several segments to this law and it will be impossible to prevent ffuture losses, but the more defenses set up and they strat prosecuting the people most closest to this such as contractors, lawyers and public servents, ther should definatley be a reduction in the furture cases.Simply stated we need to get back to the 80’s in offering mortgae financing and set the standards that grew this great profession and all of it’s professional affiliations.

By: Kimberly Petersn

Kimberly Petersn — Thu, 31 Dec 2009 18:36:26 +0000

I have noticed the lenders requiring alot more documentation from the borrowers, ie: letters of explanations, additional bank documents, payroll information etc. Lending has definately tightened up and everyone is being very careful which I think is a good thing.

By: Karen Tuff

Karen Tuff — Thu, 31 Dec 2009 04:16:33 +0000

I believe the new law will set a national precedence for compliance. I have become aware of states such as AZ (ie. no 1099 individuals – brick and mortar state)that do not require their LO’s to be licensed and will have their first test opportunity starting in July 2010. My understanding is that since they have to be W-2 employees of their broker’s company, they have been “out of the loop” from the study required for “other” states’ LO licensing requirements. This law may put all parties involved as LO’s and Brokers on the same page and learn the ethical, non-fraud practises and consequences (of fraud)to prevent a future meltdown when lending guidelines loosen once again.

By: Pauline Martin Ferber

Pauline Martin Ferber — Thu, 31 Dec 2009 00:42:32 +0000

I am glad to see this new law go into effect. As for the loan originators who were doing loans in an ethical and professional manner it will only be an asset. As for those originators who wee not honest and ethical with the people with whom they dealt, it will soon weed out the ones who cannot stand the heat.

By: Harold Burton

Harold Burton — Wed, 30 Dec 2009 23:12:19 +0000

FERA comes at a time when new laws where needed in ever area of
our business. The unscrutinized lending practices contibuted to the demise of our economy. As all of us have seen in this state, the fly by night originators have run for cover. No more of the funny business that went on in the past. Everyone is aware of how many falsely prepared loans where made to individuals who could not remotely afford there payments.
I really feel the broad effects of the new laws will ultimately have a positive effect on the entire finacial market. The high penalties for originating falsely across the board should bring high integrity to many finacial institutions.
To bad good faith meant so little in the past.

By: Kelly Fiscus

Kelly Fiscus — Wed, 30 Dec 2009 22:36:09 +0000

I think things are about the same, we just have to provide a little more documentation.

It is also nice to see a 10 year vs 5 year, seems like the penalties are stiffer too.

By: Chris Yanke

Chris Yanke — Wed, 30 Dec 2009 20:02:55 +0000

I am happy for the changes in these laws currently but I do see some potential for future problems. The 10 year statute would be cause for concern given that lending has changed so radically in recent times that if one were to prosecute for crimes that took place 4 years ago it only seems like it would make a bureaucratic nightmare to determine if the lending practices at the time precipitated the event, or was it an outright attempt to mislead both bank and buyer. I do like that the nature of compliance audits has created a uniform product that will provide a “re-begining” point for this industry.

By: Kelly Fiscus

Kelly Fiscus — Wed, 30 Dec 2009 18:37:36 +0000

I have not noticed any major changes other than it takes longer to get loan approval. In the past when putting together a loan, I have always asked the client to produce full documentation including complete bank statements (yes all pages), W2 and income tax returns. I have shied away from no income and no assets loans, as well as stated incomen and assets loans, and have passed them on to other people. Call me old fashion it just seemed it was way to easy to misrepresent the “facts”.

Basicly, I have to check and double check to make sure I have all the required documentation before submitting the loan. Also it takes longer to explain to the client WHY I need so much information.

By: Todd Morgan

Todd Morgan — Wed, 30 Dec 2009 08:55:39 +0000

I have to admire the intent and scope of FERA although it would have been nice if they could have reworked the acronym to FEAR somehow. This legislation should put the fear in anyone who has been doing any fraudulent origination the last 5 years (we all know there were enough doing fradulent things to mar loan originators’ and brokers’ reputation because of it,)- and the beauty is that they have another 5 years to sweat their misdeeds before the statute of limitations on them expires expires. Not only has the long arm of the law extended it’s reach but the penalties have enough bite in them to ruin anyones life for good.

The way they have combined and expanded pacthwork additions with already existing legislation is in such a fashion as to cast a much bigger net for fraud in general. Hopefully getting serious about redressing the fraud that has been done in the past and imposing harsh enough penalties to more effectively discourage future fraud will help improve the reputations of those of us who have always done things correctly and are still in business after the fraudsters have been found identified and punished.

As for changes I’ve seen since May 2009 it’s difficult for to me to distinguish the changes this might have had seperately from all the other changes occurring concurrently. Without a doubt everything has gotten much stricter across the board with respect to verifying documentation and anything put on the 1003. We’ve had a compliance department for about two years or more now and they have been very good about keeping us up to date on the changes as they happen. I am concerned about the hindrences of trying to comply with with all of this overlaying regulation and new procedures interferring with my ability to give my clients a good experience and hope things ease up or at least become more stream lined in the future.

By: Arash Fiuzi

Arash Fiuzi — Wed, 30 Dec 2009 07:58:54 +0000

This is too little too late. Most of this regulation has been rendered obsolete because lenders have found themselves on the hook for so many bad loans that they are weeding out fraud themselves. Bankers pretty much just watch what other banks do and they do the same. If some one loans to a person with no income, job or asset verifiation then they follow suit. If someone decides not to loan money to a hard working qualified individual because guidelines change then they will do that too. Its risk mangement by spectatorship and consensus.

By: James Haechler

James Haechler — Wed, 30 Dec 2009 06:59:15 +0000

All I’m doing now is Reverse Mortgages and our company has a large compliance dept. There’s no room for mistakes. I’m held accountable for my actions and understanding the ever changing laws. With the Federal Goverment involved and the laws continually changing everyone is running scared always trying to decipher the new laws. I get e-mails a couple times a week with something new about a law thats been changed or something being tweeked. For me I’m glade we have such a large compliance dept to ask questions. My loans get done right and incompliance.

By: Jason Brock

Jason Brock — Tue, 29 Dec 2009 23:08:34 +0000

FERA:
It is a shame that FERA must be enacted now at such a late point of the game. As recent as a few years ago I can remember Congress encouraging loans to be made to all American Families. It is Greed of a few bad loan officers or bankers that make legislation like this a part of all of our lives now. I am glad that there are safety nets out now to catch people who do fraudulent work in my industry.

By: Jerrod Goode

Jerrod Goode — Mon, 28 Dec 2009 05:56:13 +0000

I feel fraud enforcement is and will be good for the industry. The timeframe for loans are a bit longer now, but if clients are being protected I have no problem with that. I think all good LO’s will adjust and continue to provide quality service.

By: Yvette

Yvette — Fri, 18 Dec 2009 17:43:08 +0000

I agree with Jan, However, I know that a big bank that I just worked for as well as an underwriter did a lot of the behind the scenes verification of documentation that was sent in. It is very hard to have fraudulant loans there. The process takes a long time. Do not expect to get a file underwritten there in 2 weeks, more like 60 days. The reason it is taking so long is because the are very conservative and scared because of all of the fraud that has taken place and all of the losses they have incurred.

I think LO’s just need to educate their clients (Realtors, buyers) that the process is taking a lot longer than in the past years. If we tell them that it is also for their protection they will understand. I have not had a problem as of yet with explaining the longer time frames because of the law.

By: Tim

Tim — Tue, 15 Dec 2009 06:32:41 +0000

Let me assure you that money laundering is still being tried.

One thing that scam participants seemingly appear to neglect is that escrow is in the information business and when collaboration with law enforcement is enacted you will find that your next signature will be with your defense attorney. In addition, not withstanding escrow participating in the fraud, it is very hard to fool escrow firms that have closed thousands of transactions and have seen nearly every scam tried out there. Real estate is fertile ground for charlatans, unethical loan officers, agents, escrow, notaries, attorneys, get rich quick seminar speakers and so on—it is nothing new.

Lastly, if scam artists and fraudsters want to try to screw our communities and perpetrate housing fraud causing losses to our neighbors and neighborhoods and banks, please try to close your transactions because you won’t know you are being observed.

By: Jan Mundt (Henriksen)

Jan Mundt (Henriksen) — Mon, 14 Dec 2009 18:42:54 +0000

Being in the mortgage industry for the past 29 years in the capacity as a processor, closer, underwriter & originator; I believe FERA should have been implamented years ago along with regulating loan originators. The “no income/no asset” loans is a prime example of “poor quality lending” which opened the door for fraudulant products. In my opinion, these loans were a receipe for disaster in combination with non-regulated inexperienced loan originators. Homeownership was considered a luxury and the responsibility of the banking institutions is to be assured of their credit quality. A mortgage application should tell a story with appropriate documentation to support the accuracy of the story. With all the investigations which uncovered fraud, false statements, money laundering etc. and eventually led to the “mortgage crisis”, I’m not surprised the documentation/regulation pendulum is swinging in the other direction. By getting back to “basic lending” practices of the 80’s, required documentation & due diligence, may be the only way of regaining consumer confidence necessary to start lending again.

By: Launce Macomber

Launce Macomber — Sun, 13 Dec 2009 22:48:10 +0000

Since I am very new to mortgage business and working only in the reverse mortgage field, I have not seen any impact from the new laws/regulations. I have no doubt there was substantial abuse and the need to tighten up was there. I only hope that this hasn’t been a “knee jerk” reaction and will ultimately cost far more to administer than the benefits provided, or, perhaps more importantly will slow down the mortgage process to the detriment of legitimate lenders and their clients.

By: Ken Ritter

Ken Ritter — Thu, 10 Dec 2009 22:08:48 +0000

Since May of this year I have found that many of my lenders want additional information from the borrower that they did not require in the past. In the past the lenders seemed to be satisfied with just the “basics” of the borrower’s financial information, now they are requiring all pages of each document that the borrower is submitting. On the originator level I honestly do not see much of a change other than making sure that all the documents are in the file, in their entirety. The once 2″ thick file has not gone to 7″’s. I do however thing that this will clean up the process and weed out the offices that are submitting fraudulent files.

By: Richard Martin

Richard Martin — Fri, 04 Dec 2009 02:39:34 +0000

So the justice department now can prosecute mortgage companies and individuals as Bank fraud which can carry seriously stiff penalties and with the extension of the statute of limitations increased from five to ten years federal prosecuters will have more time to work and develop their cases.
Now the Federal government can expand their ability to prosecute Mortage fraud and securities fraud or any fraud related to any of the Governments Relief Programs this seems to be part of the general direction to try to limit fradulant statements and claims and to to regulate and clean up the loop holes and to combat Mortgage Fraud in general. From where I sit working with the Senior Programs it looks like welcome involvement but I do not know how the Mortgage Industry im general is responding to all this new legislation.

By: Teresa Gallaher

Teresa Gallaher — Wed, 02 Dec 2009 16:54:48 +0000

I have found that lenders are now requiring additional documentation and/or more complete information on income and assets especially than they did in years past. We now have to provide all pages of assets rather than the summary page, and income is being computed on the most conservative basis, especially when dealing with a self employed borrower. I have also had a situation where an incorrect ss# was input sometime in the past when pulling credit, so it shows a one number difference on the history page of the report. We have had to provide documentation of the error even though every other document shows the correct ss#.
I feel on the originator level nothing much has changed for me, however I believe those individuals that were bending the truth should be very concerned. All the media on this topic has really put a black mark on originators as to imply we were all providing false information. That is frustrating, however, I do believe in the long run this will clean up some things that should never have been happening.

By: Mila Usher

Mila Usher — Thu, 26 Nov 2009 00:58:29 +0000

Thanks, Jillayne.
I will check with them and see what I can find. I also just read the article on the SAFE Act and now understand.

By: Jillayne Schlicke

Jillayne Schlicke — Thu, 26 Nov 2009 00:14:46 +0000

Hi Mila,

No, the reason you now have to get a broker license is not because of this law. It’s because of the SAFE Mortgage Licensing Act. The industry is always constantly changing.

Your company should have a compliance person in charge of making sure all the loan originators and mortgage brokers are following state and federal law.

Many mortgage companies subscribe to All Regs. Maybe you can ask your company for their user name and password. I’m not sure if you can use your company’s logon or if you need your own.

By: Mila Usher

Mila Usher — Wed, 25 Nov 2009 23:48:02 +0000

Personally I have not noticed any changes with my banks mortgages, due to this law. However my question is.. Is the reason why I now have to get a mortgage brokers license due to this law? All I do is take an application, if its approved I take the approval back to my client. So much keeps changing in this industry do to one law or another that I am not sure which law is responsible for which change. It is my opinion that half of the laws and regulations repeat themselves inside each other. Is there a manual out there with all of the new laws and regulations that I can get ahold of?