Fiduciary Duties
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 [...]
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 [...]
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 | 20 comments | ContinuedInformed 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 [...]
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 [...]
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 | 28 comments | ContinuedLoan 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 [...]
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 [...]
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 [...]
WA 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 on nontraditional [...]
I agree with you about moving towards a more professional acceptance of the fiduciary responsibility - it will make more ...
The protection for the consumer from goverment is welcome, of couse, the time consumed would be a function of direct ...