New SAFE MLO Test with Uniform State Component Plus More LO Pre-Education to Start April 1

Washington State has adopted the new uniform SAFE loan originator licensing exam and our state will begin delivering this new exam April 1, 2013.  Read more here.

This means loan originator candidates will take just one exam instead of a federal exam and then another Wa State specific exam.

In moving to the Uniform State Exam, Washington State Dept of Financial Institution has adopted new rules to increase the number of pre-licensing hours of education for new loan originators.

The way it is today:
20 Hours of Pre-Licensing Education (to prepare you for the National Exam)
2 of which are Wa State Law (to prepare you for the Wa State Exam)
OR
some course providers offer the 20 hour class plus a separate 2 hour class on Wa Law.

The way it will be April 1, 2013 for Wa State LO candidates:
22 hours of Pre-Licensing Education (to prepare you for the National, Uniform State Exam)
4 of those hours on Wa State Law
OR
some course providers will offer the 20 hour class plus a separate 4 hour class on Wa Law.

How I will do it:
I have a stand alone 20 Hour Pre-Licensing class which is approved for all 50 states.
I have a stand alone 2 Hour Pre-Licensing Wa Law class.
I will write a separate 4 hour course on Wa State Law for new LO students who will be able to take this course as of April 1st to meet the new requirement.

The national exam will be tougher than it is today and we should always expect standards for licensing, pre-education, continuing education, and exams to continue to rise.

I sent detailed feedback to Wa DFI with my recommendations for even more classroom time needed for people who are brand new to the industry, and I also recommend less classroom time for people who currently work for a depository bank and just need to take the class and pass the test to make a switch to a non-bank lender or mortgage broker.  But I don’t get to make the rules.

At the present time I teach a 2 day class. In 2010 I taught the pre-licensing class as a 3-day class and had many, many requests to squeeze it all into 2 days.  Two, 10-hour days and soon, Two, 11-hour days is just plain nuts for a brand new person yet most new people do not want to take 3 days off from their existing job/life to take the course.  Arguably expenses for a trainer are higher with a 3 day course. Think room rental fees and lost opportunities to make money elsewhere on that third day.  So I will keep the class as a 2-day class for now but it is definitely a LOT of info to cover in 2 days.

Recommended reading:

SAFE 20-Hour Pre-Licensing and Exam Prep

Why some loan originators are not passing the national exam

FAQ about the pre-licensing class

 

 

 

Jillayne Schlicke: Inman’s 2013 Most Influential Thought Leaders

DSCN0334Inman Real Estate News announced their list of Real Estate’s Most Influential Thought Leaders for 2013 and Jillayne Schlicke of CE Forward and The National Association of Mortgage Fiduciaries was on the list! What an honor to be named alongside many of the people whose work I admire and read on a daily basis. Thanks so much to Brad Inman and everyone at Inman Real Estate News for this fantastic shout out!

Teaching Realtor Clock Hour Classes: Three Steps

I’m writing this post because I am often asked how to get started teaching Realtor clock hour classes.  There are a million ways to answer this question.  Do you want to know what the state requirements are? I can easily point you in the direction of Washington State’s required forms but the form won’t tell you how to get up and running. This form will tell you how to get yourself approved as an instructor.  Getting up and running is a different question and that’s the question I will answer in this post.  I have found that the best way to help people is to start at the end.

What’s your end game? Do you want to teach Realtor clock hour classes because you want to make a lot of money? Maybe you don’t care about the money because you have some other job where you already make pretty good money but instead want to use the classes as a way to get in front of Realtors so you can show them how awesome you are…so they will refer business to you.  I have found the latter to be the most common reason why people want to begin teaching Realtor clock hour classes. But let’s talk about money first.

Money

There isn’t a whole lot of money in teaching live classes because…well…because there are so many vendors who are willing to teach low quality CE classes for free.  There are also many large companies willing to send one of their full time employees to teach classes and at conventions for free. These instructors have full time jobs in management, sales, law, tech, etc., and teach classes or at conventions as a public relations maneuver for free, or for a very, very low fee. There’s a word for it. I call it sales-ucation.  Big conventions only pull out big paychecks for the big name draw convention speakers.  I’m assuming you’re not a big name convention keynote speaker if you’re reading this article so I’m going to tell a secret to the rest of you who are not sales-ucation speakers.  There always IS a budget of some sort and they always WILL pay you something—if you ask.

Money, continued
Three Puzzle Pieces: Teaching, Writing, Warm Butts

If you are looking to teach Realtors as a career, AND you can write your own classes you’re on your way. The last piece of the puzzle will be—how are you going to get warm butts in chairs?  You need to be able to do all three: Teach a kick-ass awesome class, constantly write new material, and have a marketing machine that delivers students into the classroom.  Most people who want to teach….want to teach and that’s it.  They want to walk into a classroom filled with students and walk out with a paycheck.  If that’s all you want to do, your value to a real estate school is really, really low.  But that’s okay, and there are real estate schools out there who may hire you but don’t expect to be paid much per hour or per class.

Vendors and The Numbers Game

Maybe you’re a vendor and…well, now don’t be offended if I call you a vendor.  You might be thinking…..I’m a loan originator! I’m an appraiser! I’m an attorney! I’m an escrow officer!  I hate to be the one to break the news to you but to a Realtor you’re just another vendor. Check your ego over there on the edge of the computer screen and don’t get offended if I call you a vendor.  So vendors typically want to use the classroom as a way to grow their business.  It’s a numbers game.  You get in front of X number of Realtors each month will translate into X number of referrals which will translate into X number of leads which will translate into X number of deals which will translate into X number of closed transactions which, on average, will net you X number of before-tax dollars per month.

This is a great strategy and it is doomed to fail. I will hire no one to work at my company if all Realtors are to you is a dollar sign or a lead in a grand master plan. People aren’t objects.  Students aren’t there to be used and even if you (please don’t) teach your class for free, the Realtors are still paying with their time.  Their time is valuable and if all you are doing is a sales song and dance about how much you know and how awesome you are you will fail.  This is what gives Realtor clock hour classes a bad name.  Instructors are in the classroom to help people learn.  They are not there to sell.

Magic is Mystery

So here’s the magic. As a vendor, I know you want deals. Everybody knows you want deals but if you go in there with your deal-wanting pants on, everybody’s going to know it. Instead, you need to approach teaching like a good book.  Nobody goes right to the end of a good book to find out what happened. It’s a mystery. That’s what makes reading so enjoyable.  If you really want to find success in the classroom, and by success I mean meeting your math goals in the previous paragraph, you need to let go of the outcome and instead focus on teaching an awesome, kick-ass class.  A class better than any class they’ve ever had from your competitor.  If you teach an awesome class, they will call you. You get to pick and choose who you want to work with. That’s right. At the end of a 4 hour class, you will know which Realtors you want to work with and which Realtors you don’t want to work with.

The Good News

Title insurance, mortgage lending, home inspections, escrow, all of these vendors have reputations for delivering “free” classes that are god-awful boring. That’s the good news. The bar for free vendor classes has been set terribly low.  All you have to do is to teach even a marginally decent class and they’ll think it’s the best class they’ve ever taken.

So what’s the difference between a god-awful boring class and a kick-ass awesome class? A class where the instructor DOES NOT lecture.

It’s Hard But It’s Also Easy

The most difficult thing for most all clock hour instructors to get their heads wrapped around is that your mouth doesn’t have to be moving the entire time. Unless you attended a fancy prep school in your younger days, most of us attended school where the teacher did most of the talking and we think we have to do that to teach Realtors.  That “teacher knows everything” archetype is embedded in our psyche.  That’s not what adult learners want from their clock hour instructors. Adult learners want to get involved with their learning and that means you don’t have to be the one talking all the time.  This is hard but also easy.

Step 1

The first step is to get into the right Instructor Development Workshop.  Find out who is in charge of the workshop, who is teaching it, how long they’ve been teaching Realtor clock hour classes and how familiar they are with the facilitation model of adult learning.  There are many IDWs out there.  Some are cheaper than others, some are online. You do get what you pay for. Shop around and ask questions.  Will the instructor answer all your questions about getting up and running during the workshop? Will the instructor help you fill out your state-required paperwork? Will the instructor give you the opportunity to try out the facilitation style of learning so you can get a feel for how it really works?  Find the very, very best Realtor clock hour instructor you know who teaches a lot of interactive, fun classes and ask that person for a recommendation on where to take an IDW.

Step 2

The second step is to figure out if you’re a writer.  If you don’t know how to write classes, don’t want to write classes, or don’t have time to write, then you’ll need to hook up with a real estate school that already has classes written that you can use but remember, no school is going to let you teach their material for free. There will always be a fee involved but you can let the students pay that fee if you don’t want to pay it.  Real estate schools like mine can also help you write something completely unique and brand new.  The class must be written to allow the instructor to give the students lots of things to do. The old-style class just gives the instructor lots of things to SAY.  That is a recipe for a boring class.   Just mailing a set of powerpoint slides to the Dept of Licensing won’t cut it. They want specific learning objectives. Real estate schools know how to write classes that the Dept of Licensing will approve.

Step 3

The third step is to figure out how you’re going to get warm butts in chairs.  The easiest way vendors think they will meet this goal is to offer free classes.  Unfortunately when you teach for free you are telling the Realtors what you have to teach them has no value.  Unless YOU own the real estate school and you own your own courses, you OR the students will be paying another real estate school a fee to use their school and courses. Having your own school is also an option but you still haven’t solved the warm butts in chairs problem.  So until then, make a list of possible marketing partners such as a local Association of Realtors or other vendors that also sell to Realtors.  Whatever real estate school you’ll be working with can also help you with marketing ideas.  You can have a great class and know how to teach an interactive class and then end up with nobody showing up.  The marketing piece is crucial to meeting your goals. Marketing takes time and money.  Just sending out a flyer to your email database of 500 Realtors might net you 5 students. If all you have is emails, you need BIG numbers to net 10 students.  If you don’t even have a database of Realtors you’ll need to buy one or partner with someone who has one.

Other Options

In closing, teaching Realtor clock hour classes is a big time commitment.  Not everyone can meet that time commitment, but they still want to attempt to meet their goals. Another option, without actually taking the time commitment needed to be an instructor, is to just sponsor a clock hour class through your local Realtor association. You bring in some healthy food like fruit and protein bars (can we ditch the donuts and muffins and bagels? All those simple carbs are increasing the LDL cholesterol levels of Realtors as I write this.  Enough of that crap already) and then you have a few moments to address the audience.  This is an option for you to create some face time but that’s all it is. Most vendors don’t stay for the whole class.  Drop and go is the status quo and I’m sure the ROI is not very high.  But it DOES make you feel like you’re accomplishing something if a “feeling” is the goal.

For those who want to learn how to facilitate instead of just “teach.”
For those who want help creating an interactive class

For those who want to exceed their goals instead of just meet them…

Call me.

Jillayne Schlicke
206-931-2241

LATE CE Classes are now available for 2012-2013 license renewal

3247Late CE Classes are now available for loan originators who did not renew their license at the end of 2012 and need to take the required CE class in order to renew.

NAMF Approved Course Provider 1400068

LATE CE 8 Hr SAFE LO CE #3247
LATE CE 1 Hr Wa Law CE #3246

This is a live, instructor lead class. There is no end-of-course test required in order to earn your continuing education certificate.  Attending the class and participating is the only requirement.  Read more about the course content here

2013 schedule

Jan 7
Jan 17
Jan 24
Feb 1
Feb 13
Feb 26

To register click through from the schedule page
OR
call Jillayne 206-931-2241
OR
email Jillayne:
jillayne at ceforward dot com

 

To the Students from the Nov 2, 2012 LO CE class at Alaska USA Mortgage, Everett

here are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here is a link to our new federal mortgage regulator the Consumer Financial Protection Bureau.

Here’s the new Wells Fargo lawsuit accusing FHA of mortgage fraud with their FHA loan program.

…and the Morgan Stanley lawsuit alleging racial discrimination in their subprime lending practices during the bubble.

Somebody asked for information on the National Mortgage Settlement.

Here’s the story about Wa Fed asking BOA to buy back bad Countrywide loans.

Here’s an example of how to properly disclose your LO licensing info on facebook.

Here’s the Indictment of Shawn Portmann.

To the Students from the Oct 23, 2012 LO CE class at Rockwell Bellevue

here are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here is a link to our new federal mortgage regulator the Consumer Financial Protection Bureau.

Here’s the new Wells Fargo lawsuit accusing FHA of mortgage fraud with their FHA loan program.

…and the Morgan Stanley lawsuit alleging racial discrimination in their subprime lending practices during the bubble.

Somebody asked for information on the National Mortgage Settlement.

Here’s the story about Wa Fed asking BOA to buy back bad Countrywide loans.

Here’s an example of how to properly disclose your LO licensing info on facebook.

Pat asked for more reading material on real estate commission rebates as a business model.  This is protected as a form of doing business. Read more here at the DOJ website.

 

To the Students from the Oct 17, 2012 LO CE Class at ORT Lynnwood

here are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here is a link to our new federal mortgage regulator the Consumer Financial Protection Bureau.

Here’s the Seattle Weekly story on the local Shawn Portmann mortgage fraud case. And here’s the latest: Shawn Portmann Pleads Guilty.

Here’s the new Wells Fargo lawsuit accusing FHA of mortgage fraud with their FHA loan program.

…and the Morgan Stanley lawsuit alleging racial discrimination in their subprime lending practices during the bubble.

Here is the press release posted on 40 companies served w/consent orders for harming homeowners in WA State via foreclosure rescue fraud scams.

I’ve been looking for USDA delinquency stats….and I think I found them here. 

—–
Google Translate link 

Here’s the Language Line link.

To the Students from the Oct 10, 2012 LO CE Class at Rockwell Bellevue

There are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here is a link to our new federal mortgage regulator the Consumer Financial Protection Bureau.

There was a request for more info on China buying residential mortgage backed securities. I couldn’t find any articles from 2012 on this topic but I DID find one from 2007.  Wow. If we were pushing RMBS in 2007, I’m sure China has many reasons to not be very happy with us right now.  You saw the FHA default rates from loans originated during that time. Yikes!

Here is an article I wrote a year ago titled “Stop Blaming the CRA for the Meltdown.” You, too can wow your relatives at Thanksgiving with the facts when they try to blame the government for forcing banks to make loans to minorities.  WRONG 🙂

Alright….now it’s time for the various and assorted local legal cases.

Michael Hellickson lost his real estate license for the next 10 years.

I was unable to find a local fraud case in the name of Tom Love. If whoever asked about this one has more info….does he go by a different name?…let me know and I’ll keep searching.

Here’s the Seattle Weekly story on the local Shawn Portmann mortgage fraud case. And here’s the latest: Shawn Portmann Pleads Guilty.

Escrow closer behaving badly…..Hartman Escrow taken down by DFI.

Here is the press release posted late yesterday on 40 companies served w/consent orders for harming homeowners in WA State via foreclosure rescue fraud scams.

And here is Jim Siwek’s local HUD OIG website page w/his contact info.

THANKS for a great class today everyone! I know you have a choice where you take your CE class. Thank you all so much for choosing my company.  🙂

To the Students from the Sept 26, 2012 SAFE LO CE Class at Rockwell Bellevue

Here’s the quote from the Mortgage Bankers Association:  “We have caused extraordinary damage.”

There are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here are a couple of articles on the differences between financial planners and the duties they owe to clients.

There was a question about how mortgage company branch managers are paid and will their compensation change under Dodd Frank. Here’s a PPT slide deck in PDF form that runs through the changes.

Here’s a link to amazon describing the Malcom Gladwell book “Outliers.”

To the Students from the Sept 20, 2012 LO CE class at Guild Mortgage/Centerpoint Kent

Hi Everyone,

Here’s the follow up from class today.

Here’s the Seattle Weekly story on the local Shawn Portmann mortgage fraud case. And here’s the latest: Shawn Portmann Pleads Guilty.

Here’s the quote from the Mortgage Bankers Association:  “We have caused extraordinary damage.”

There are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

There were questions on why the new GFE is requiring a “lender cost of funds” disclosure. All the comments that I’m reading are asking the CFPB to eliminate this requirement.

Great film recommendations:

A Separation

Gone Baby Gone

Hotel Rwanda

An Education

Margin Call

Inside Job

Inglorious Bastards

Here’s the NYTimes story on the local maternity leave Fair Housing case. though the new mom was on paid maternity leave, HUD makes it clear that even if the maternity leave is unpaid….”The Fair Housing Act protects borrowers from being discriminated against based on maternity leave if the borrower can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for a loan.”

And here’s the latest mortgage fraud report from the FBI.

 

To the Students from the Sept 18, 2012 class at ORTC Lynnwood

Hi Everyone,

Here’s the follow up from class today.

Here’s the Seattle Weekly story on the local Shawn Portmann mortgage fraud case. And here’s that story where the Feds are asking Shawn for that giant bag of money.

Here’s the quote from the Mortgage Bankers Association:  “We have caused extraordinary damage.”

There are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s the article on FHA’s solvency. What’s the plan if the FHA mortgage insurance fund runs out of money?

Here’s a great 60 Minutes episode on the Countrywide Whistleblower. It will only take you about 10 min to watch it. It’s a good segment.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

There was a great question on how many loans a person can make if that person does not hold an LO license? The question is in regards to a person who owns a lot of real estate and wants to sell the real estate and do owner financing, maybe selling all the investment property at the same time.  The answer is not completely clear. For example, under the Consumer Loan Act, see number (3).This only talks about a homeowner making a loan on his/her individual residence. Under the MBPA, the answer is  similar.

Great film recommendations:

A Separation

Gone Baby Gone

Hotel Rwanda

An Education

Margin Call

Inside Job

Inglorious Bastards

Here’s the NYTimes story on the local maternity leave Fair Housing case. though the new mom was on paid maternity leave, HUD makes it clear that even if the maternity leave is unpaid….”The Fair Housing Act protects borrowers from being discriminated against based on maternity leave if the borrower can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for a loan.”

And here’s the latest mortgage fraud report from the FBI.

Here’s the case we were trying to think of right at the end of class…someone running for public office that got into trouble at a former employer/title company.  Here it is. 

UPDATE:
Shawn Portmann Pleads Guilty...this news broke as I was driving out of the parking lot today.

To the Students from the Sept 10, 2012 LO CE class at Yakima Assoc of Realtors

Hi Everyone,

Thanks for coming to class today! Here are the follow up Q&As.

We talked about a website where we can look at the various lenders in our state and their FHA default rate. It’s called Neighborhood Watch. Click on “early warnings” in the upper left hand side to get started.

Here’s the news story that talks about how women end up paying more for their mortgage loan because we tend to not shop (What? Not shop????LOL.)  Instead we’re more trusting.

Here’s more info on how to send your own comments and feedback about the proposed new Good Faith Estimate/TIL form.

Here is Rhonda Porter’s Facebook Page. Go to the ABOUT section to see how she properly discloses her licensing information.

Thanks for coming to class!

To the Students from the Sept 4 and 5, 2012 Pre-Licensing class

Hi Everyone,

Here are some links to things we talked about over the last two days.

Here is a link to the Exam Candidate Handbook. (Look for link that says MLO Testing Handbook.)

The following question came up regarding the new Good Faith Estimate and RESPA: Can the adjusted origination charge be a positive or negative number?
In the RESPA Roundup handout, see pages 3 and 5.

Here is more reading material on the three normative moral theories.

Here is a link to our new federal mortgage regulator the Consumer Financial Protection Bureau.

Thanks for coming to class and good luck with your exam!

 

To the Student from the July 20, 2012 LO CE Class at Absolute Mortgage

Hi Everyone,

Here’s the follow up from class today.

Here’s the Seattle Weekly story on the local Shawn Portmann mortgage fraud case.

Here’s the CFPB enforcement action against Capital One.

There are always two bottoms to a housing market. Here’s a great article that explains the first (new construction home starts) and the second bottom (home values.

Here’s the 60 Minutes episode on the Countrywide Whistleblower. It will only take you about 10 min to watch it. It’s a good segment.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here’s the NYTimes story on the local maternity leave Fair Housing case. though the new mom was on paid maternity leave, HUD makes it clear that even if the maternity leave is unpaid….”The Fair Housing Act protects borrowers from being discriminated against based on maternity leave if the borrower can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for a loan.”

And here’s the latest mortgage fraud report from the FBI.

Thanks for a fun class today!

To the Students from the July 17, 2012 SAFE LO CE Class at Rockwell Bellevue

Hi Everyone,

Here’s the follow up from class today.

Here’s the HUD link to the Neighborhood Watch website where you can see the FHA delinquency rate of WA State lenders. Click on “early warnings” upper left hand side of the site to get started.

Here’s a link to the NMLS Consumer Access website.

Here’s the 60 Minutes episode on the Countrywide Whistleblower. It will only take you about 10 min to watch it. It’s a good segment.

Here’s the news story that talks about how women end up paying more for their mortgage loan because we tend to not shop (What? Not shop????LOL.)  Instead we’re more trusting.

There was a question about the licensing requirements for real estate brokers in WA state. Here’s that page from DOL.  It doesn’t talk about felony convictions but in other sections the license requires fingerprinting and a background check.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Here’s the NYTimes story on the local maternity leave Fair Housing case. though the new mom was on paid maternity leave, HUD makes it clear that even if the maternity leave is unpaid….”The Fair Housing Act protects borrowers from being discriminated against based on maternity leave if the borrower can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for a loan.”

And here’s the latest mortgage fraud report from the FBI.

Thanks for a fun class today!

Regulators propose new mortgage disclosure forms

Goal is ‘restoring trust in the mortgage market’

BY ANDREA V. BRAMBILA

TUESDAY, JULY 10, 2012.

Inman News®

DSCN0334After a year and a half of research and review, the Consumer Financial Protection Bureau released simplified mortgage disclosure forms Monday that it hopes will make it easier for borrowers to understand the terms and costs of their loans and therefore be a step toward “restoring trust in the mortgage market” after the housing bubble.

As part of the bureau’s “Know Before You Owe” mortgage project, the bureau received tens of thousands of comments and conducted 10 rounds of testing with consumers and industry participants over the course of 18 months to come up with the proposed forms.

The public has until Nov. 6, 2012 to comment on most of the proposal. The bureau will review the comments before issuing the final rule, the CFPB said.

Consumers currently get two disclosure forms whenever they apply for a mortgage, and two more at the closing table.

Loan applicants get one loan disclosure form aimed at satisfying Truth in Lending Act requirements (the “TILA” form), detailing loan terms like annual percentage rate (APR).

Another form — the good faith estimate, or GFE — is required by the Real Estate Settlement Procedures Act (RESPA), and is intended to help borrowers evaluate their complete loan package, including closing costs like title insurance.

At closing, consumers get another TILA disclosure detailing the terms of their mortgage, and a HUD-1 Settlement Statement itemizing additional closing costs.

Lenders and groups representing consumers and the real estate industry have complained that having two sets of loan disclosures is confusing to borrowers.

The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act tasked the bureau with creating a single, unified form for loan applicants — a Loan Estimate — and a single, unified form for homebuyers closing a deal — a Closing Disclosure— that satisfy both TILA and RESPA requirements.

“When making what is likely the biggest purchase of their life, consumers should be looking at paperwork that clearly lays out the terms of the deal,” said CFPB Director Richard Cordray in a statement.

“Our proposed redesign of the federal mortgage forms provides much-needed transparency in the mortgage market and gives consumers greater power over the exciting and daunting process of buying a home.”

According to the bureau, the new forms are simpler than the old forms, and allow consumers to compare the estimated and final terms and costs of different loan offers more easily. The forms also highlight key costs associated with a loan, including interest rates, monthly payments, the loan amount, and closing costs and how these might change over the life of the loan.

“Overall, I think the form is a vast improvement over the existing Good Faith Estimate and the existing Truth in Lending disclosure,” said Jillayne Schlicke, CEO of real estate continuing education company CE Forward Inc. and founder of the National Association of Mortgage Fiduciaries.

“The old Truth in Lending form is absolutely awful. The two things borrowers care most about are nowhere on the old form, that is, the loan amount and … their interest rate. Instead, the government gives us the bizarre things like ‘amount financed,’ which is not the loan amount, and APR, which is not the loan rate.”

The Dodd-Frank Act holds loan originators to a higher standard, she added.

“For example, before the real estate meltdown, loan originators could give borrowers the disclosure forms and that was it. It’s different now. Loan originators need to make sure that the borrowers understand what’s on the form,” she said.

The proposed forms will “help loan originators discharge their duties,” she said, because they will also be able to more easily understand the terms outlined within.

“With the old Truth in Lending form, many loan originators — not all — could not properly explain what was on that form,” she said.

Schlicke teaches prelicensing courses on mortgage lending law to prospective loan originators. She said her students love the proposed forms “hands down,” though, at first glance, they “kind of freaked out” about a couple of items on the forms, she said.

One was the “total interest percentage,” which spells out the total amount of interest that the borrower will pay over the loan term as a percentage of the loan amount. The sample figure in the form is just above 69 percent.

It helps the borrower see “if you made Payment One all the way to Payment 360, that’s a huge sum of money. I don’t think the average random consumer is visually aware of that when they sign their loan docs,” Schlicke said.

“I really like that feature,” because it helps the consumer make a more informed decision, which is “really what disclosure forms are all about,” she added.

The other item that gave her students pause was the lender’s “approximate cost of funds.”

“It helps the borrower see that banks make money by charging interest,” Schlicke said.

“The bank may have received the money at 1 percent but is lending to us at 4 percent, so that’s the bank’s profit margin right there.”

The proposed forms also warn consumers about some risks, such as prepayment penalties and negative amortization, which is an increase in the loan balance should the borrower make payments that don’t cover the interest owed.

Under a proposed rule that explains how the forms should be filled out and used, lenders would be required to give consumers a Loan Estimate within three business days of their loan application and a Closing Disclosure at least three business days before closing on a loan. The rule would also limit the circumstances under which consumers would be required to pay more for closing costs than was stated on their Loan Estimate.

“This will allow consumers to decide whether to go ahead with the loan and whether they are getting what they expected,” the bureau said.

In a letter to the bureau about a year ago, the Mortgage Bankers Association said the loan disclosures proposed by CFPB at the time were inconsistent with tolerance requirements currently in place under RESPA, which limit how much some loan fees can differ from initial estimates.

The MBA declined to comment specifically on the new proposed rule Monday, noting the rule comes in at more than 1,000 pages.

“We welcome the CFPB’s efforts to simplify mortgage disclosures so that borrowers have the most complete picture of the terms and costs of the mortgage they are applying for or signing for. It is critical we give borrowers all the information they need in an easy to digest way,” said David Stevens, the association’s president and CEO, in a written statement.

“Changing the disclosures will also impose massive change on the industry, who will need to implement the new forms, rules and processes into their mortgage processing, so we will be working with the CFPB to make sure the forms, and the rules surrounding them, are best for borrowers and lenders alike.”

American Land Title Association CEO Michelle Korsmo called the rule “a step in the right direction,” but said the groups was disappointed that the bureau has proposed keeping tolerances in place.

“Regrettably, the bureau continues to use a tolerance concept that has resulted in consumers receiving inflated estimates and prevents title and settlement agents from competing fairly with one another,” Korsmo said in a statement.

Currently, settlement agents are required to provide the HUD-1 and lenders are required to provide the TILA form. In the proposed rule, the CFPB asks for comment on who should be responsible for providing the new, unified Closing Disclosure, proposing that either the lender be responsible for delivering the form or that the lender rely on the settlement agent to provide the form, but with the lender remaining accountable for the accuracy of the form.

“ALTA believes lenders should continue to have responsibility and liability for preparing the part of the disclosure related to the loan costs, while settlement agents should continue to have responsibility and liability for preparing the part of the disclosure related to the settlement costs,” Korsmo said.

“We should remember title insurance and settlement companies didn’t cause the housing crisis and didn’t take advantage of consumers and investors. Consumers deserve an independent, third-party at the settlement table and this rule should ensure this role remains in the real estate transaction.”

Diane Cipa, general manager of title insurance firm The Closing Specialists, said she had not had a chance to read through the new proposed rule, but considered the last version of the new disclosures she had seen “workable.”

“As an old timer in this business I know we have to adapt and go with the flow. The RESPA 2010 changes to the HUD and GFE have proven to be wonderful tools for keeping the lending process honest. Will the new disclosures be an improvement? I doubt it,” Cipa said.

“I expect loads of confusion as an industry which is weary of the whirlwind of changes to laws and regulations tries to conform. We’ll try, though, and I expect in the end we’ll succeed. We have to. I am simply hopeful that the consumer will be better served in the end. I know that’s the goal of CFPB and that’s our goal, too.”

Also Monday, the CFPB proposed a rule that would expand consumer protections mortgage loans considered “high cost” based on their interest rates, points and fees, or prepayment penalties. The rule would ban balloon payments generally and would completely ban prepayment penalties. It would also ban fees for modifying high-cost loans and limit late fees as well as fees charged when consumers ask for a statement that tells them how much they need to pay off their loan.

The rule would require some loan applicants receive housing counseling, including those applying for high-cost mortgages and first-time buyers whose loans permit negative amortization. The rule would also require all applicants be provided with a list of housing counseling agencies.

The public will have 60 days, until Sept. 7, 2012, to comment on most of the proposed rule. The bureau will issue the final rule in January 2013.

 

****
This article appeared on Inman News July 10, 2012

 

To the Students from the June 26, 2012 LO CE Class

Hi Everyone,

Here’s the follow up from class today.

I promised more details on the Community Reinvestment Act. “The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act….”  More here.

There was a request for information on local HUD-Approved Housing Counseling Agencies.  Here’s a good Wa State link to start with: Homeownership.WA.gov  Scroll down to the bottom where it says “What to do if you’re late with your payments.”  And see the HUD link.

Here’s the 60 Minutes episode on the Countrywide Whistleblower. It will only take you about 10 min to watch it. It’s a good segment.

Here’s a link to where I get all my cool graphs and charts.  Many thanks to Bill McBride who runs Calculated Risk.

Wow, you guys are so smart!

Here’s the NYTimes story on the local maternity leave Fair Housing case. though the new mom was on paid maternity leave, HUD makes it clear that even if the maternity leave is unpaid….”The Fair Housing Act protects borrowers from being discriminated against based on maternity leave if the borrower can demonstrate that she intends to return to work and can otherwise continue to meet the income requirements to qualify for a loan.”

And here’s the latest mortgage fraud report from the FBI.

 

 

 

 

 

SAFE LO CE Classes Booking for Summer and Fall, 2012

Hi Everyone,

The summer and fall schedules are posted here.

I’d like to bring the SAFE LO CE Continuing Ed class to more cities this summer and fall. I will always offer the class in Snohomish and King County every month but I’d also like to come to Kitsap, Thurston, Skagit, Spokane, Yakima, Clark, and any other county that wants to host a class. If you have a training room at your office or you know of a great training room in your city, give me a call –> 206-931-2241.

I’ve taught the brand new 2012 LO CE class a few times now and the new end-of-course evaluations are posted at the bottom of this page.  I’m looking forward to seeing all of you again this year!

Remember, it’s okay to use the same course provider every year. The COURSE must be new every year and my course will meet your annual education requirement for LOs licensed in WA State.

Thank you for choosing my company for your CE classes year after year! I know you have a choice and I’m very grateful to have the opportunity to do what I do every day.

To the Students from the June 14, 2012 LO CE Class

Hi Everyone,

Here’s the follow up from class:

Here’s the Supreme Court Case info on Freeman v. Quicken Loans.

There was a request for links to the graphs and charts we looked at today. Here you go. The menu is on the right hand side.

There was a question about the home ownership rate falling to below 65% and did that include non-owner occupied homes or just owner occupied? The data is from the U.S. Census Bureau and it’s for owner occupied homes.  Here’s the graph and the article that came with it.

The CFPB is continuing to take comments on the proposed changes to LO Compensation. Here’s the press release. And here’s the formal proposed rule.

 

All New SAFE LO CE Course Now Available for 2012!

NAMF’s LO CE course for 2012 has received approval from the NMLS.

8 Hr SAFE Comprehensive NMLS Approved Course Number C-2904

1 Hr WA State Law CE NMLS Approved Course Number C-2901
Note: If you took the CE course from me last year, this is an all new course.  There is no rule against using the same course provider every year. Instead, LOs may not take the same course year after year. The 2012 course is all new with a new course number!
All course providers are required to develop courses that meet the following criteria under the SAFE Mortgage Licensing Act:

3 Hours Federal Law
2 Hours Ethics, Consumer Protection, Fraud, Fair Housing
2 Hours Non-Traditional Lending
1 Hour Undefined: CFPB Proposed Rules on LO Compensation
also included at no extra cost:
1 Hour WA State Law

For 2012 we will cover the following topics:

CFPB whistleblower hotline, unfair-deceptive-abusive acts, QRMs, proposed new Good Faith Estimate/TILA disclosure, risks in originating non-traditional loans, CFPB criteria for advertising and counseling borrowers who select non-traditional loans such as ARMs. During the Ethics section we will learn how LOs are at legal risk of violating consumer protection laws by when providing an inferior standard of care, we will tackle the dilemma of purchasing leads from companies that advertise unethically, we will also learn about recent Fair Housing case studies, mortgage fraud trends and the new SARS reporting requirements for non-bank lenders.

But wait! There’s more! We will ALSO cover the new proposed new CFPB rules on loan originator compensation methods including:

Proposed rules on creditor paid compensation v. broker paid
Compensation in relation to steering
Pricing concession loopholes
Three proposed permissible point bank rules
Compensation based on proxy
Higher standards for depository bank LOs to become “qualified” under Dodd-Frank.

For a schedule of upcoming classes visit this page.

If you’d like to arrange for small or large group CE classes at your office or in your city, call Jillayne at 206-931-2241 or email: Jillayne at gmail.com

The Moral Terrain of Mortgage Lending

General ethics applies to everyone in all spheres of life; in contrast, professional ethics is usually memorialized by written code and is intended to apply only to those individuals who have been identified as professionals in their field.  For example, in the legal industry, both lawyers and paralegals are considered professionals and must abide by certain written ethical codes, while legal secretaries and law clerks are not considered professionals and are not held to the same professional standards (although certainly the employers they work for can require it).  In the healthcare industry physicians owe specific moral duties that are captured by various ethical codes; in contrast, orderlies and certain other lower level functionaries are not considered professionals and do not have to abide by these codes of ethics, although they follow directives that are patterned after the applicable codes.

The essence of professional status requires one to take a licensing exam which tests substantive knowledge and codified standards of practice. Currently, the mortgage origination industry is in a state of transformation because, although loan originators working under a mortgage broker and non-depository lender must pass licensing exams, loan originators who work for depository banks are not required to do so.  A brief historical review of standards of practice indicates that the designation of mortgage originator is moving towards a clearly identifiable status as a profession.  We in the industry can now move mortgage originators clearly into professional status by implementing competency exams for all LOs and disciplinary procedures, once a code of ethics with sanctions is formally put into place. Until then, we revert to using general ethics in the workplace.

General ethics attempts to provide a rational framework for answering the paramount moral question “What ought I do?”  We all struggle with this question every day in all contexts, and we attempt to find answers through emotion, intuition, authority figures, religion, and hopefully, reason.  In answering these questions, we attempt to construct common and objective frameworks of values in order to solve these problems in a consistent fashion.  This gives our lives coherence and unity as we strive toward ethical ideals.  In contrast, the problems of professional ethics in a business setting, emerges from highly unique structural domains and thereby carry with them modified sets of values.  For example, in the criminal justice system there are specific players that play specific roles in that structure and the overlying value for lawyers is to protect the constitutional rights of clients. In the healthcare industry physicians have duties of informed consent to patients, and while doing no harm to the patient, they must also respect patients’ rights to self-determination.

We infer that anyone who is officially designated as a professional also has fiduciary duties toward his client.  Fiduciary duties arise in any circumstance where one person has greater authority, power, or knowledge than their client. This carries with it the duties to act in the highest good faith and to never put one’s own interests above the interests of any client with regard to the subject matter of their contractual arrangement.  Being designated as a professional carries correlative burdens and benefits.  One benefit is that a professional has greater industry prestige and greater earning power. A corresponding burden of this fiduciary duty is that there is a greater responsibility to protect the interest of clients.

At this point in time, we cannot assume a mortgage originator is a) a professional (which triggers a different set of ethical considerations than general ethics and b) is a fiduciary and as such owes duties of the highest good faith to his client.  Furthermore, this would imply that the mortgage originator also has the affirmative duty to ensure his subordinates are also protecting those fiduciary duties.  In some states, laws have been passed that designate a mortgage brokers and the loan originators licensed under the broker to owe fiduciary duties to their clients but this is not the case in all 50 states for all loan originators no matter where they work. Instead we would classify loan originators as an emerging profession.

It is not clear that an individual not officially designated as a professional owes fiduciary duties to clients, though many courts have held loan originators to a fiduciary standard during the last decade as borrowers attempted to balance the scales of justice after becoming victims of predatory lenders.  (See “Mortgage Brokers-What Fiduciary Duties Exist? By Andrea Lee Negroni, Mortgage Banking Magazine Oct 1, 2007.) Typically non-professionals deal at arm’s length with their clients. In this case, consumers do not expect that their mortgage loan originator is not self-interested in their dealings, which necessitates the need for broker shopping in order to get the best deal, yet many borrowers did believe the loan originator was working on behalf of the borrower when no such duty existed.

If a mortgage originator does not have professional status that results from national competency examinations and being held to a code of ethics with sanctions, then there is no good reason for a consumer to expect any kind of special duties above and beyond those prescribed by law.  The expectation again is that both parties are operating at arm’s length and the consumer must be held accountable for his choice in mortgage originators.  In situations where the mortgage originator does not have official professional status, the operative rule continues to be “caveat emptor.” In contrast, in situations where the mortgage originator has official professional status, the operative rule shifts to “caveat venditor.”

Frequently, all professionals face conflicts between professional obligations and their own personal senses of morality.  For example, a pharmacist may have to respect his clients wish to purchase a Plan B Emergency Contraception even though he is personally opposed on moral grounds.  While we do not intend to provide any definite answers to these sorts of conflicts that occur, we can offer some account of some of the moral considerations that go into thinking through these sorts of conflicts.

There are two ways that professionals can approach ethical problems.  One is called holism and the other is called separatism.  Holism is an approach that implies that one has an absolute set of standards that applies to all contexts and domains of one’s life.  In contrast, separatism means that a moral agent separates and isolates the moral domains of his life.  He does not have one single set of moral standards that applies in all contexts.  He may have a different set of standards for strangers, a different set of standards for home, and an even different set for work, especially because there may be a written code of ethics at work to which he must abide.

For example, many states have consumer protection statues within their mortgage loan originator licensing laws requiring a duty of honesty to all parties.  By becoming a loan originator that person agrees to abide by that absolute rule.  In comparison, that very same person, in his personal life, may have adopted a rule concerning telling the truth that allows occasional deviations if the consequences so warrant.  This person then is adopting the strategy of separatism because he is rigidly separating moral domains of his life with different moral rules.  Another individual, however, could follow the approach of holism by maintaining an absolute rule of lying in all contexts of his life if it is in his best interest to do so.  If one’s professional, ethical standards are vague and ambiguous, it is difficult, if not impossible to be a separatist.  This is so because there is no clear rational way to separate one’s professional moral obligations from one’s general moral obligations.  This, then, throws one into a holist approach, which leads to subjectivism and thereby risks an “anything goes” policy.  Moral chaos ensues.

Due to what we believe was a deficient motivational structure, rampant violations and the resulting public outcry, mortgage originators are now facing severe externally-imposed federal regulations which are quickly worsening the situation of a typical mortgage originator and business owner.

The National Association of Mortgage Broker Code of Ethics, while it mandates that members shall conduct business in a manner reflecting honesty, does not go far enough in clarifying what honesty means.  This allows a wide number of interpretations of honesty and unfortunately, because there is no precise definition of honesty there is no objective standard to which members can be held.  This is the very problem in this industry. Because code provisions are expressed with great ambiguity they are susceptible to moral subjectivism, which means that ultimately just about anything goes and the “anything goes” policy has caused huge amounts of political and legal machinery to gear up to create external regulations of our industry.  Laws come with far more serious sanctions than we would mandate through continuing education, disciplinary proceedings with retraining, and so forth, which we believe will be less efficient and will decrease industry profits.  The mortgage lending industry has a choice: We can either proactively, internally regulate ourselves with the attempt to educate, train, and improve the moral fiber of mortgage originators, or else we will risk constant and even greater external regulation by various legal bodies.

We believe the best way to elevate the moral fiber of any industry is to develop and provide an ethical structure of motivation for our industry that is not dependent on external rewards or punishments but instead helps loan originators develop a system of internal rewards based on ethical virtue, duty, and consequences.

NAMF is writing such a code. Contact Jillayne Schlicke for more information: 206-931-2241

Portions of the above article were originally published in Mortgage Originator Magazine in 2001 and authored by Kevin Boileau, Ph.D., and Jillayne Schlicke, M.A.

2012 LO Continuing Ed Classes Coming Soon!

Hi Everyone!

Loan Originator continuing ed classes to be taken during calendar year 2012 are on the way! The WA State Law CE course has been submitted and I’m working on your brand new 8 hour course this weekend.  Just like last year, former students are able to receive an early student discount when you take your class during June, July, and August but once September rolls around, prices will go back up.  When the courses have received official approval, I will begin scheduling classes to take place across the greater Seattle/Puget Sound Region. If you want me to teach a class at your office or in your city, give me call –> 206-931-2241 or send an email to jillayne at ceforward dot com and we’ll talk.  The most popular training days of the week are T, W, and Th and the dates at the beginning of the month are very popular and get booked up fast.  Looking forward to seeing you all again this year! ~ Jillayne

LATE CE Courses for LOs Now Available

NOW AVAILABLE: LATE CE for LOs who missed the Dec 2011 renewal deadline.
Call 206-931-2241 for more info or check our schedule page for live classes.

This is the required course needed during 2012 to renew an expired LO License

LATE CE 8 Hr SAFE Comprehensive NMLS Approved Course Number 2716 (approved in all 50 states)
LATE CE 1 Hr WA State Law CE NMLS Approved Course Number 2715
 
Course Description:
4 Hours Federal Law
2 Hours Ethics, Consumer Protection, Fraud, Fair Housing
2 Hours Non-Traditional Lending
1 Hour WA State Law
In this course we will review the Federal Reserve Board’s rules on loan originator compensation prohibitions and the Dodd-Frank Reform Act including the new Consumer Financial Protection Bureau, LO compensation limits coming under Dodd-Frank, and definitions of non-standard loans, high risk loans, and qualified residential mortgages (QRMs).  In addition we will:

Learn why overages and yield spread premiums have been deemed unfair
Become aware of how unethical business practices can result in legal consequences
Understand the new “duty of care” required by loan originators
Learn about the most recent HUD Fair Housing proposed protected class

Schedule of upcoming classes
End of Course Evaluations

“Because the participants were far more experienced than me, I learned a great deal.”
“Very informative about the upcoming law changes. Loved the ethics case studies.”
“Kept my interest for the whole 8 hours. Good case studies, which I enjoyed the most because they tie the federal law changes together with the reasons WHY we have the new laws.”
“Case studies are an added benefit.”
“Fantastic, interactive class. Loved learning more about the FRB and Dodd Frank Act.  The coming changes are crazy and our industry has to get our head wrapped around them ASAP. Glad I came to class.”
“Excellent discussion/lecture mix with group time and case studies showing us real court cases that resulted in our new laws.”
“Jillayne is excellent in explaining the issues and keeping participants on track/on topic.”
 .

To the Students from the Dec 14, 2011 LO CE Class at Rockwell Bellevue

Here’s a link to the graphs and charts I used at the beginning of class with all the delinquency numbers.

Here’s a great article on the Eurozone crisis….and be sure to read Calculated Risk daily for Eurozone updates.

Here is the consumer access page of the NMLS

Do you want to give the CFPB input on the new GFE/TIL? Here’s your chance.

More on Short Sale Fraud from Fannie Mae.

…and info on how to contact Jim Siwek from the HUD OIG office.

More reading material on QRMs

There was a great 60 Minutes episode this past Sunday that featured interviews with EVPs of Countrywide who were whistleblowers.

and it was recommended by a student that we check out the documentary film House of Cards.

Here is mandatory reading material for those who still are clinging to the myth that the Community Reinvestment Act and Fannie/Freddie are responsible for the meltdown.

Here’s that article I mentioned about women paying more for a mortgage v. men because women tend to be more trusting.

Shawn Portmann article here.

More film recommendations:

Inside Job
—-
Margin Call

—–

Roger shared a Seattle Times link that provides access to graphs and charts on our local economy.

Here’s more info on how homeowners can apply for free legal aid from the WA State Bar Assoc.

Info on homeowners underwater can be found here.

 

To the Students from the Dec 8, 2011 LO CE Class at Sterling

 

We talked about a great 60 Minutes episode this past Sunday that featured interviews with EVPs of Countrywide whistleblowers.

Todd mentioned a book called The Creature from Jekyll Island...

Here’s the WA State Foreclosure Fairness Act and here’s the new WA State Foreclosure Resource GuideThis is a VERY GOOD PDF for distressed homeowners.

Here’s a link to the WA State Bar Association where financially struggling homeowners can apply for free legal aid.

There was a request for information on early payment default within the Alt-A market

AND we also wanted to check on the default rate of USDA loans…looks like it’s under 2 percent!

There was a question about bank fraud and shouldn’t we hold the bankers accountable for the mess? YES indeed, there are folks out there who agree with that.  Read what Bill Black has to say about this topic here.

Here’s a great article on the Eurozone crisis….and be sure to read Calculated Risk daily for Eurozone updates.

Here is the consumer access page of the NMLS

Do you want to give the CFPB input on the new GFE/TIL? Here’s your chance.

More on Short Sale Fraud from Fannie Mae.

…and info on how to contact Jim Siwek from the HUD OIG office.

More reading material on QRMs

Here’s an interesting study I read last night about investors and their contribution to the housing bust.