Comments for National Association of Mortgage Fiduciaries

Comment on WA State Cracks Down on Title Insurance Company Inducements by Catherine Rawlins

Catherine Rawlins — Tue, 18 Nov 2008 00:05:29 +0000

There must have been some particulary serious violations that prompted this law. Wouldn’t it have been easier just to make all title/escrow company owners take a 30 hour class on RESPA?

Like the other comments above…my choice of which company to use for a refinance transaction has always been based on the quality of service and competitive fees. The playing field has always been level in my community.

It seems like the State has bigger problems to worry about right now.

Comment on The Giant Pool of Money, by TAL and Chicago Public Radio by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 23:46:56 +0000

Really this all gets down to a lack of ethics among every participant who chose to play the game. It is also frightening to realize that the entire world’s economy could be brought down by a systemic failure of oversight by the very systems that were designed to protect us.

There will be no easy answers or solutions. And, it will be years before we fully recover.

I will be very thankful if I still have a job in the mortgage industry a few months from now.

Comment on Update on the May 7 Mortgage Broker Commission Meeting and SB 6471 by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 22:30:39 +0000

Any fee, assessment or tax that is based on gross receipts is just plain WRONG. (i.e. the B & O tax). WAMB fell down flat on their faces on this issue. If the state can get the correspondent lenders to pay up, what makes us think that the lower level mortgage brokers won’t be next. This is a law that never should have been passed.

Comment on WA State Legislative Changes: SHB 2770, SB 6471, SB 6381 by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 22:07:56 +0000

The changes brought by legislation in the State of Washington have been beneficial to the consumer with the exception of the SB6471 which just seems to have added more costs and confusion to the realm of correspondent lenders. I still don’t understand this law.

It looks like the latest DFI version of the disclosure form is going to the one we use. I like it and I know my clients will like it too…But, I wonder if we have use this AND the new RESPA Good Faith Estimate together if we won’t inundate the consumer with repetive information.

Fiduciary responsiblity for loan officers raises the bar of professionalism for our industry. It will be interesting to see of their are lawsuits that are filed regarding a Mortgage Broker’s failure to act as a fiduciary. Has anybody heard of one being filed yet?

Comment on National Loan Originator Licensing coming….For ALL LOs by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 21:33:42 +0000

I double checked with DFI on the licensing issue and that was their “take” on the national licensing law.

Comment on National Loan Originator Licensing coming….For ALL LOs by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 21:32:10 +0000

Loan officers who work for banks, credit unions and savings & loans do not have to be “licensed” but only “registered” under the current law. That means they do not have to take courses or pass an exam.

The bank lobbyists have a much bigger budget than does the National Association of Mortgage Brokers.

Comment on MILA’s Bankruptcy by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 21:23:39 +0000

If the charges are true, Layne Sapp will spend some time behind bars. There are corporate governance regulations in place that regulate such behavior, i.e. the CEO’s of Enron and Worldcom.

Even in such a era of deregulation, you cannot steal from your corporation.

My questions is… what is the Board of Directors involvement and responsibility in all of this?

Comment on HUD Audits A Plus by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 21:11:27 +0000

I remember being approached a couple of years ago by A+ mortgage as a possible recruit to their program. Their organizational structure was very much like Amway with the top management earning cuts of LO’s commissions. There was no incentive to offer products that were good for the consumer…

So, I wouldn’t consider working as a manager for them until their corporate structure was revamped. They should hire Denise Swafford. She’s got the right answers for action and it is exactly what I would recommend too.

Comment on Distressed Property Law by Catherine Rawlins

Catherine Rawlins — Mon, 17 Nov 2008 20:54:51 +0000

When this legislation was passed the situation was much different than it is now. First of all, the declining home prices are putting a lot more homeowners into the “distressed” category. Secondly, the extreme tightening of underwriting standards is preventing many of them from seeking refinancing which would have been the most beneficial avenue for most.
Now we are seeing a host of “loan modification” programs being offered. Some are real… some are not. My email is bombarded with offers for me as a Loan Originator to buy leads for loan modifications.
So… who’s going to do all these loan modifications? And, aren’t those people doing them giving advice to distressed property owners. All financial institutions should have been covered under this law.

Comment on Fiduciary Duties for Mortgage Brokers and LOs by PGG

PGG — Mon, 17 Nov 2008 20:25:47 +0000

When the issue of fudicial responsibility began coming to the forefront I felt a sense of relief. I guess I was taught this business from the old school and always believed that it was my duty to provide borrowers with the knowledge of how the mortgage process works. Part of this process is to explain the good faith estimate line item by line item and exactly how the charges apply and who benefits from payment. I have always educated the borrower to understand how I am compensated either by charging a flat loan fee with par pricing or lender paid premium which would result in higher rate to borrower. I too would show rate sheets to borrowers. I believe my clients appreciated being an informed party to the transaction.

Comment on From CR: Fraud in the 2008 Vintage by John Mayfield

John Mayfield — Sat, 15 Nov 2008 22:54:53 +0000

Before reading Tanta’s article, I kept thinking, ‘Why didn’t the appraiser get a copy of the P&S before doing the appraisal?’ When sending in an appraisal request for a purchase, I always fax the P&S with it (as required by my appraiser). Good to know, I was not the only one thinking that, thank you Tanta.
My other concern is the Spanish speaking clients. Where are the laws to protect them? My wife is a notary and she refuses to notorize documents if there is not clear conversations between them as they may not realize what they are signing! Look at the borrowers, they did not realize the taxes and insurance was not included. A few at fault there, certainly the loan officer but also the escrow signer who should have been able to communicate that to them at closing. Great scenario for a bad deal.
I just hope they get to keep their home. It seems nice, clean and upkept.

Comment on Mortgage Fraud 2008: Bellevue by John Mayfield

John Mayfield — Sat, 15 Nov 2008 22:32:02 +0000

This is the kind of information that consumers need to hear and read about more often.
I am sure that eager homeowners who really want to sell their homes would jump at the offer. Unfortunately, most consumers don’t know enough about the market to be savvy enough to see through this scheme.

Comment on Quarterly MARI Report by John Mayfield

John Mayfield — Sat, 15 Nov 2008 22:26:22 +0000

My company has quite a bit in place to protect me, them and the consumer. We first have to use an in house processor. As of lately, that processor will have to verify the VOE to make sure that is accurate.
We also have a compliance department. Once credit is pulled for a borrower, we by law have 3 days to get disclosures out. The compliance department makes sure we do this or are subject to not getting compensated for the loan. They also review the app, GFE & TIL. If they see any discrepancies by borrower or LO, we are contacted and it has to be fixed to proceed.
I hear alot of grumbling about how strict our compliance department is, but personally I have praised their efforts. I am confident in what I do as a profession and feel the compliance department protects everyone. I would not work anywhere else.

Comment on Over One Thousand Felons Originating in Florida by John Mayfield

John Mayfield — Sat, 15 Nov 2008 22:13:59 +0000

This all makes WA look really good. Florida is a mess! The NMLS will be great step in rehabilitating Florida but it seems to me that they need to protect their consumers better. As a consumer, you assume that the person you are giving all of your most valuable information to is trustworthy, especially when it comes to finances. LO’s should all have to go through a thorough background check along with the Mortgage brokers. What really got me was that LO (Smith) who lied but regulators had missed the 30 day period, had to issue him a license. I say, no they did not! That law needs to be erradicated.
Florida needs to send their lawmakers to states that have successfully executed the proper system in protecting homeowners and take it back to Florida and do it. It will take time but will definately clean it up.

Comment on Mortgage Fraud Part 3: Recent Developments by John Mayfield

John Mayfield — Sat, 15 Nov 2008 21:37:08 +0000

Why did our industry gradually lose its lack of consistant standards. . . all due to the unchecked greed in the market. It is about time we go back 15-20 years as Kevin said. We had a great economy then and we can have it again. In order to do this we all must work together to help build and restore trust to the consumers by promoting financial literacy and consumer awareness. LO’s can do this by taking the time and going over every line item on the 1003, GFE & the TIL.

Comment on Mortgage Fraud Part 2: Case Studies by John Mayfield

John Mayfield — Sat, 15 Nov 2008 21:24:15 +0000

What really gets me, is how in the world did they think up these schemes? I must be really naive because if you would have told me this was happening, I would not have believed it.
I am glad for King 5 news and the DFI, these crooks hurt the business for those of us who are compliant to the law.

Comment on Informed Consent Process by Shawn

Shawn — Sat, 15 Nov 2008 01:52:39 +0000

The more your articles have made me think about it, the more I come to the conclusion that I cannot be sure the client understands unless there is some form of borrower qualification that involved them becoming educated and proving it by passing a test.

The basis for this thinking comes from Robert Kirosaki in his calls for financial education though the explination of changes in the IRS code in 1974 - ERISA - which laid the groundwork for IRA’s and 401ks and the move away from pensions. On the surface it seemed like a victory for the worker, but absent the accompaning financial education, it’s proven to have dire consequences.

Comment on Informed Consent for Mortgage Lending by Shawn

Shawn — Sat, 15 Nov 2008 01:45:28 +0000

Perhaps we’re not aiming at this problem from all the angles we could? Why not put some burden of the privledge of owning a home with a mortgage on the home buyer?

If you want to drive a car, you must be licensed and insured. To be licensed, you must pass a test. To pass the test, you must become study and become educated. If you don’t get to be on someone else’s insurance plan who effectively has more income and track record than you, then you’re going to pay a higher rate for insurance.

Comment on Fee for Service by Shawn

Shawn — Sat, 15 Nov 2008 01:34:54 +0000

I have to back track some on my previous post stating I was already performing fee-for-service as the service for me was a successful loan close. I do not intend to charge fee-for-service. If one is going to provide value-add like credit coaching, then that might be best handled with another entity and does not require lending licenses, and can have a more structured fee schedule for services provided.

I’ve seen these sorts of fees used in commercial mortgage brokering, and they do not appear to be about actual income, but distinguishing serious borrowers from not. Usually the fee is deducted from the points received by the broker on loan close, but in the event the loan does not close, it is typically not refunded, and this is a very contentious issue as sometimes these fees are huge.

Comment on The Milgram Experiments by Shawn

Shawn — Sat, 15 Nov 2008 01:25:22 +0000

I’m not sure the millgram experiments are relevant to the blame shifting. Greed is what’s at the core of fraud and unethical practices. The reward wasn’t acceptance or approval by authority, though it could have been a secondary motivator for those looking to advance in mid to large sized organizations, it was cash.

The blame shifting behavior seems much better explained as passing the buck, and it reminds me of the behavior of children who are unable to accept any blame for their part in a wrong doing, but saying that does not automatically paint all brokers who sold sumprime loans as having done wrong. The way this is being portrayed is that fraud and unethical behavior is/was so widespread as to be unavoidable. In reality, I’m believe we’ll end up discovering that the mess was caused in large part by a concentration of bad apples throughout the system, and that the whole bunch of us involved in the mortgage lending industry are not rotten.

I’m not sure what an experimental mortgage product is, but I agree with Leslie that I would not sell a product I couldn’t understand or explain, and that I couldn’t compare and contract against other related products.

Comment on The Meaning of Fiduciary Duties by Shawn

Shawn — Sat, 15 Nov 2008 00:59:05 +0000

I think this article brings to light the confusion around what exactly a fiduciary responsiblity will be in the mortgage industry. Is it a monetary obligation? To get the client the best “price”, or is it to make sure the consumer is making an informed decision? Or both??

If we look at doctor’s, well they’re obligated not to harm you, but how many of them take much of any time to truly explain much of anything? I realize this is a stereotype as I’ve found doctor’s more than willing to participate when I engage.

If Fiduciary duties are what it takes to not be thought of like used cars salesmen (sorry!) and to not be put up as the poster children for the housing collapse, then I’m prepared - what ever it means in pratice.

Comment on Fiduciary Duties for Mortgage Brokers and LOs by Shawn

Shawn — Sat, 15 Nov 2008 00:45:46 +0000

Some very thoughtful comments! I’m also a relatively new broker, but I conduct my business essentially as fee for service already. I tell all my borrowers upfront I make x% of their loan amount. It’s up to them how they pay it either out of pocket or in higher interest rates or a combination. Where possible, I show them the rate sheets. A practice discoraged by my wholesale suppliers, but necessary for my methodology. This may not be the recipe for huge volumes or margins, but I sleep well at night and so do my clients.

Comment on Solutions to the Mortgage Lending Crisis by jae cavner

jae cavner — Fri, 14 Nov 2008 03:33:05 +0000

I’m not really sure if there are any surefire fixes for the current situation we are all in, but I do have an idea that could possibly help.
> the financial institutions could renegotiate interest rates with the homeowners that are falling behind in their mortgage payments, this would still allow for a positive cash flow and allow the homeowners to stay in their homes. at some point the mortgage holder should realize that reduced income is more desirable than a vacant foreclosed home in a down market

Comment on What the Space Shuttle Challenger Disaster Can Teach Us About the Current Mortgage Lending Crisis by jae cavner

jae cavner — Fri, 14 Nov 2008 03:11:25 +0000

I believe and I think it has been proven that arrogance, complacency and denial are the key factors that caused the Challenger disaster, the same could be stated as reasons for the current mortgage crisis. had proper oversight and ethical guidelines been in place it is possible that this financial mess could have been avoided

Comment on Are Mortgage Loan Originators Professionals? by Jillayne Schlicke

Jillayne Schlicke — Fri, 14 Nov 2008 03:10:11 +0000

Hi Jae,

Thanks for stopping by the NAMF website.

Anyone can do their job in a professional manner.

In order to become part of a professional group of people there are far higher standards.

Professionals get together and set forth a set of standards that they would all objectively agree to abide by.

Loan originators are classified as an emerging profession because they are missing this last step.

Think of the bar association’s very long, prescriptive code of ethics or even the Realtor organization’s Code of Ethics which is over 100 years old. Loan originators are missing this piece.