Category: Featured
Mortgage Folks: Stop Blaming Fannie, Freddie and the CRA for the Meltdown
Hi Everyone, When the topic of blame comes up, lots of us in the mortgage lending industry always seem to want to point towards someone else instead of taking a look at our own role as loan originators, processors, underwriters, and so forth. One thing I constantly hear is how it was the fault of [...]
View Post8 Hour SAFE Comprehensive Continuing Ed Course Plus 1 Hour WA State Law CE
8 Hr SAFE Comprehensive NMLS Approved Course Number 2146 1 Hr WA State Law CE NMLS Approved Course Number 2089 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 [...]
View PostFederal Reserve Board Rules on LO Compensation Prohibitions Aim to End Predatory Lending
Under the final Federal Reserve Board’s loan originator (LO) compensation rule, effective April 1, 2011, an LO may not receive compensation based on the interest rate or loan terms. This will prevent LOs from increasing their own compensation by raising the consumers’ rate. LOs can continue to receive compensation based on a percentage of the [...]
View PostSecondary Marketing Fraud Question from an Anon Caller
Question from an anonymous phone caller: “I work at retail bank. When rates were dropping, I asked my processor to lock several FHA loans. All the paperwork to lock was completed and sent to management. Management did not lock the loans, hoping to ride the wave down and earn extra yield for the bank….rates rose [...]
View PostWhy Some LOs are Not Passing the National LO Exam
The first time “pass” rate of the national loan originator exam has fallen to 69 percent. This is an indication that the test is not too easy. A high pass rate means an exam is too easy. A low pass rate means an exam is too hard. The numbers that tell a different story are [...]
View PostLO Compensation Limits Coming in 2011!
In order to understand all the whining taking place by loan originators (LOs) about compensation limits under the Dodd Frank Wall Street Reform Act as well as the Federal Reserve Board that go into effect in 2011, it’s important to lay down some background for consumers. During the predatory lending days (which I like to fantasize [...]
View PostWho is and Who is Not Passing the New Loan Originator Exam
I’ve had a chance to meet many loan originators during the past 5 months while teaching the required 20 Hour SAFE Comprehensive Pre-licensing and Exam Prep Course. Currently, loan originators in WA State who have not been previously licensed are going through the licensing and testing phase which includes the required 20 Hour Course, mandated [...]
View PostMortgage Lead Generation Firms Continue to Violate Federal and State Laws
So here we go again. Now that mortgage rates are headed up, the deceptive lead generation ads are crawling back onto the web. Here’s a great example from a Google ad: FHA Refinance 4.0% Fixed $160,000 FHA mortgage for $633/mo. No SSN req. Calculate payments now! MortgageRefinance.LendGo.com When clicking through, the lendgo.com lead generation site asks [...]
View PostLOs Who Attack Realtor Commissions Might Want to Look Inward
I was just asked to proof a very agressive manifesto penned by a mortgage broker who was attacking the, in his words, “outrageous” commissions Realtors make when helping people buy and sell a home. It made me wonder why the LO was so angry with Realtors in general. Any Realtor who reads the article in its [...]
View PostThe Financial Crisis Inquiry Commission is Interviewing the Wrong People
The Financial Crisis Inquiry Commission is currently interviewing bank CEOs in order to examine the cause of the current financial crisis. So far, it sounds like the bankers are very concerned about their bonuses and are shirking off the cause of the financial crisis as a nothingburger. We keep hearing the bankers say “We need to pay out big [...]
View PostParamount Equity Consent Order
Paramount Equity has settled their case with the Washington State Department of Financial Institutions. Read the Consent Order here. The Statement of Charges outlined many, many violations of state and federal law: Using the term “mortgage bank” in their radio ads. Paramount Equity is not a bank and they are not permitted to use the [...]
View PostFiduciary 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 [...]
View PostReverse 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 [...]
View PostMortgage 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? [...]
View PostSolutions 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 [...]
View PostWhat 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 [...]
View PostAre Mortgage Loan Originators Professionals?
When I ask the question “Are loan originators professionals?” to a group of loan originator students in ethics classes, almost everyone says “yes.” Anyone can do their job in a professional manner (adjective,) but not everyone is a Professional (noun.) Is your barista at Starbucks or the person who bags your groceries a professional? If [...]
View PostWA State Legislative Changes: SHB 2770, SB 6471, SB 6381
The Washington State Legislature has passed three new laws that will go into effect June 12, 2008. SHB 2770 Governor Gregoire’s legislation implementing the recommendations of the Homeownership Task Force. This legislation impacts Banks, Credit Unions, the Consumer Loan Act (CLA), and the MBPA. The bill addresses prepayment penalties, negative amortization loans, the federal guidance [...]
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