New WA State Laws

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
—

 

 

 

To the Students from the March 29-31 Prelicensing Class in Bellevue, WA

Hi Everyone,

Here are the Q&As from Day 1.

There was a question about Errors and Omission Insurance available for loan originators. In doing research, I see that carrying this type of insurance is a requirement already in some states and in those states, insurance carriers have stepped up to offer the product. I can forsee a point in the future where lenders will require this in all states.

Here is a link to a good FAQ page on the new WA State Domestic Partnership Law with links to the final bill signed into law.

There was a question regarding whether or not we can originate Pay Option ARMs or ARMs with negative amortization in WA State and David W referenced a 2008 law.  Here’s the RCW. Click on “negative amortization” to read more. See 19.144.050:

“A financial institution may not make or facilitate a residential mortgage loan that includes any provisions that impose negative amortization and which are subject to the interagency guidance on nontraditional mortgage product risks and the statement on subprime mortgage lending.”

To get the full answer, we need to refer to “the interagency guidance on nontraditional mortgage product risks…” located here, that was written way back in 2005.   Interesting that when you read the NTM attachment at the bottom of the page, the FRB specifically excludes reverse mortgages but specifically INCLUDES interest only loans. So are we still doing interest only loans in WA State?

DAY 2

I promised a link to the Financial Crisis Inquiry Commission….and a blog post I wrote to them.

There was a question as to whether a person can still add an “authorized user” to their account to help improve another person’s credit score. Here’s what the folks at FICO have to say about that.

Here’s a link to HUD’s Frequently Asked Questions PDF on the new RESPA changes. This page also has a link to the new HUD Booklet for the consumer.

…and here’s a link to a page on NAMF that has the links to all the state and federal laws for further review. Remember, for the sake of efficiency, it’s important to know the purpose of each law which is stated in the preamble.

DAY 3

Oh my. I found lots of consumer complaint articles about bankrate.com and some revolve around bankrate blaming the lenders for providing inaccurate info.

There was a request for more information on commercial loan modifications and commercial loan defaults locally and nationally.

There was a request to read more about HVCC (the Home Valuation Code of Conduct.)

Cristy was right. There is more discussion about further limiting loan originator compensation structure.  Here’s a nice summary/testimony pdf. This rule has a better than 50% chance of passing due to the current political climate. We’ll have to keep an eye on this.

Well Nik called with his NMLS number so now you know I’ll be able to sleep tonight, and get ready for FRIDAY! Here’s some web surfing music tonight to keep you company from Muse and SSPU.

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 mortgage products and subprime lending, and makes mortgage fraud a class B felony.
SHB 2770 PDF
SHB 2770 Summary
SHB 2270 Final Bill Report

Interesting highlights from the Final Bill Report:

The DFI must adopt a disclosure summary understandable to the average person that includes:
• the fees and discount points on the loan;
• the interest rate of the loan;
• the broker’s yield spread premium;
• the presence of any prepayment penalties;
• the presence of a balloon payment;
• whether or not property taxes and property insurance is escrowed; and
• other key terms and conditions of the loan.

A residential mortgage loan may not be made unless the summary is provided by a financial institution to a borrower within three days of a loan application. If the terms of the loan change, a new summary must be provided to the borrower within three days of the change or at least three days before closing, whichever is earlier.

Steering
A person subject to licensing under the MBPA or the Consumer Loan Act may not steer, counsel, or direct any potential borrower to accept a residential mortgage loan with a risk grade less favorable than what the borrower would qualify for under the lender’s existing underwriting standards. The licensee must prudently apply the underwriting standards to the information provided by the borrower.

Prepayment Penalties
A financial institution may not make or facilitate the origination of a residential mortgage loan that includes a prepayment penalty that extends beyond 60 days prior to the initial reset of an adjustable rate mortgage.

Negative Amortization
A financial institution may not make or facilitate the origination of a residential mortgage loan
that is subject to the Guidance and Statement if the loan includes any provisions that result in
negative amortization for a borrower.

SB 6471
This legislation amends the CLA and MBPA. All lenders, except those making loans under chapter 63.14 RCW, must have a license under the Consumer Loan Act. Lending is no longer allowed under the MBPA. Read the FINAL BILL REPORT link below. There is a lot of concern and confusion over this change.  More info is forthcoming at the next Mortgage Broker Commission meeting on May 13, 2008.

SB 6471 PDF
SB 6471 Summary
SB 6471 Final Bill Report

SB 6381
Establishes a fiduciary duty relationship between a mortgage broker and his or her client.

SB 6381 PDF
SB 6381 Summary
SB 6381 Final Bill Report

Other links:
Here’s a quick overview from the Wash State Housing Finance Commission.