8 Hour SAFE Loan Originator Continuing Education 2015

+

8 Hour Comprehensive Loan Originator Continuing

Education 2015

CE Forward, Inc. DBA

Nat’l Assoc of Mortgage Fiduciaries

Jillayne Schlicke

+

CE Forward, DBA NAMF

NMLS Approved Course Provider

C-1400068

8 Hr LO Continuing Ed

C-5327

1 Hr WA State CE

C-5317

Instructor:

Jillayne Schlicke

+

Module 1

Introductions

TURN OFF CELL PHONES & laptops

ALL AUDIBLE ALERTS OFF or please turn the phone completely off or leave it in your car

Photo ID

Please complete the sign-in sheet.

I NEED YOUR MLO NUMBER to report your attendance to the NMLS. Pls put your MLO number on the form.

New this year:NMLS Rules of Student Conduct

Please read and sign. A copy of the NMLS Rules are in your course packet

Photo ID is mandatory

+Welcome!

Cell phones and laptops off while class is in

session.

Breaks

Bathrooms

Coffee

Lunch

Side conversations

+

Agenda

Introductions

Objectives

Boundaries

Federal Law

Non Traditional Lending

Ethics

Consumer Protection

Fair Housing

Fraud

Evaluations

Certificates

Close

+Section 2 Federal Law

CFPB Rules: TILA/RESPA Integrated

Disclosure Rule Implementation

Module 2.1 TRID

Loan Estimate

Closing Disclosure

The new Integrated Disclosures must be provided by

a creditor or mortgage broker that receives an

application from a consumer for a closed-end credit

transaction secured by real property on or after

August 1, 2015

+Section 2 Federal Law: TRID

Module 2.2 TRID Implementation

Existing GFE and HUD1 are used for loan

applications received prior to Aug 1, 2015

Records retention: 3 years

Rules in effect Aug 1, 2015 regardless of whether or

not a loan app has been taken, which we will talk

about in greater detail this morning:

imposing fees

Intent to proceed

Written estimates

Requiring additional documents


Module 2.2 TRID Implementation

What transactions are exempt from the new TRID

rules?

HELOCS

Reverse Mortgages

Mobile home not attached to real property

Partial exemption for transactions associated with housing

counseling assistance programs for low income consumers.

Creditors originating these^ types of loans must

continue to use the existing forms required by law.

+Section 2 Federal Law: TRIDModule 2.3 General Req. for the Loan Estimate

The creditor is generally required to provide the Loan

Estimate within three-business days of the receipt of

the consumer’s loan application.

If any information necessary for an accurate disclosure

is unknown, the creditor must make the disclosure

based on the best information reasonably available at

the time the disclosure is provided to the consumer,

and use due diligence in obtaining the information.

Creditors are permitted to issue revised Loan

Estimates only in certain situations such as when

changed circumstances result in increased charges


Module 2.4 The Loan Estimate

Handout: See Sample Loan Estimate

Page 1: General information, loan terms, projected

payments and costs.

Page 2: Closing Cost Details

Page 3: Additional Information About The Loan

+ Section 2 Federal Law: TRID

Module 2.4 The Loan Estimate

Small Group Assignment

Break into small groups and review the Loan Estimate. Discuss, elect a

group leader and share your answers w/the class:

Q: Who prepares the early disclosures at your company at this time: Loan

originators or some other person at your company? Why?

Q: Will that change on August 1, 2015?

Q: Do you believe that allowing/requiring loan originators to prepare the

disclosures and re-disclosures could be considered a possible red flag

during a state DFI or CFPB audit?

Q: What are the most important or significant elements in the new Loan

Estimate?

Q: Do you believe disclosing the “Total Interest Percentage” will help the

borrower make a better decision? Take off your LO hat and look at this

section from the perspective of an average borrower.


Module 2.5 Delivery of The Loan Estimate

Generally, the creditor is responsible for ensuring

that it delivers or places in the mail the Loan

Estimate form no later than the third business day

after receiving the consumer’s application

Modify/waive the seven-business-day waiting period

after receiving the Loan Estimate? Only with a bona-

fide personal financial emergency

Mortgage brokers taking loan apps may provide the

Loan Estimate….However the creditor is responsible

for any errors.



Within three business days:

For these other purposes, business day means all

calendar days except Sundays and the legal public

holidays specified in 5 U.S.C. 6103(a), such as New

Year’s Day, the Birthday of Martin Luther King, Jr.,

Washington’s Birthday, Memorial Day, Independence

Day, Labor Day, Columbus Day, Veterans Day,

Thanksgiving Day, and Christmas Day.



Definition of a Loan Application

1. The consumer’s name;

2. The consumer’s income;

3. The consumer’s social security number to obtain a credit

report;

4. The property address;

5. An estimate of the value of the property; and

6. The mortgage loan amount sought.

The Bureau has revised the definition of application to remove

the seventh “catch-all” element of the current definition under

Regulation X, that is, “any other information deemed necessary

by the loan originator.”



Group Discussion:

Why do you believe the CPFB eliminated the

seventh “any other info deemed necessary?”

How will the elimination of the seventh item effect

how you disclose your fees?



If the creditor determines within the three-business-

day period that the consumer’s application will not or

cannot be approved on the terms requested by the

consumer, or if the consumer withdraws the

application within that period, the creditor does not

have to provide the Loan Estimate. However, if the

creditor does not provide the Loan Estimate, it will not

have complied with the Loan Estimate requirements

under Regulation Z if it later consummates the

transaction on the terms originally applied for by the

consumer.



Large group discussion:

Who sees problems with not providing the Loan

Estimate?

Is your company currently sending out early

disclosures in this scenario?

If not, will it be worth the cost in time and money to

send out the early disclosures in this scenario after

Aug 1, 2015?


Module 2.6 Good Faith Tolerances

Generally, if the charge paid by or imposed on the

consumer exceeds the amount originally disclosed on

the Loan Estimate it is not in good faith, regardless of

whether the creditor later discovers a technical error,

miscalculation, or underestimation of a charge.

However, a Loan Estimate is considered to be in good

faith if the creditor charges the consumer less than the

amount disclosed on the Loan Estimate, without

regard to any tolerance limitations.



Group Discussion:

Do you believe the transition to tighter control over

closing cost estimates has helped the industry?

How do you think tighter controls over closing cost

estimates is viewed from the perspective of the

average consumer?



Are there circumstances where creditors are allowed

to charge more than disclosed on the Loan Estimate?

What charges may change without regard to a

tolerance limitation?(§ 1026.19(e)(3)(iii))

When is a consumer permitted to shop for a service?

What charges are subject to a 10% cumulative

tolerance?

HANDOUT: GOOD FAITH REUQUIREMENT AND

LOAN TOLERANCES

+P and I 761.78 x 360 =

274,240.80

274,240.80

- 162,00.00

= 112,240.80

ADD interim interest 262.00

= 112,502.80

Divided into 162,000 =

69.45%



Good Faith Tolerances

Page 12


Module 2.7 Revisions and Corrections

When are revisions or corrections permitted for Loan Estimates?

What is a “changed circumstance”?

What are changed circumstances that affect settlement charges?

What if the changed circumstance causes third party charges subject to a

cumulative 10% tolerance to increase?

What are changed circumstances that affect eligibility?

May a creditor use a revised Loan Estimate if the consumer requests

revisions to the terms or charges?

May a creditor use a revised Loan Estimate if the rate is locked after the

initial Loan Estimate is provided?

May a creditor use a revised Loan Estimate if the initial Estimate expires?


Module 2.7 Revisions and Corrections

NOTE: Creditors are not required to collect all six pieces

of information constituting the consumer’s application

prior to issuing the Loan Estimate.

However, creditors are presumed to have collected this

information prior to providing the Loan Estimate and may

not later collect it and claim a changed circumstance.

For example, if a creditor provides a Loan Estimate prior

to receiving the property address from the consumer,

the creditor cannot subsequently claim that the receipt of

the property address is a changed circumstance.


Module 2.8 Timing for Revisions

What is the general timing requirement for providing a

revised Loan Estimate?

Are there any restrictions on how many days before

consummation a revised Loan Estimate may be

provided?

May a creditor revise a Loan Estimate after a Closing

Disclosure already has been provided?

What if a changed circumstance occurs too close to

consummation for the creditor to provide a revised Loan

Estimate?


Module 2.9 Closing Disclosure

Handout: Sample Closing Disclosure

The rule requires creditors to provide the Closing Disclosure three

business days before consummation.

Definition of “consummation”

Consummation may commonly occur at the same time as closing or

settlement, but it is a legally distinct event. Consummation occurs

when the consumer becomes contractually obligated to the

creditor on the loan, not, for example, when the consumer

becomes contractually obligated to a seller on a real estate

transaction



Page 1: General info, loan terms, payments, and costs at closing

Page 2: Loan costs and other costs

NOTE: Items that are required to be disclosed even if they are

not charged to the consumer (such as Points in the Origination

Charges subheading) cannot be deleted.

Page 3: Calculating cash to close, summaries of transactions, and

alternatives for transactions without a seller

Page 4: Additional information about this loan

Page 5: Loan calculations, other disclosures and contact information



Q: What percentage of closing/escrow signing appointments do

you attend with your clients?

Q: What are the strengths and weaknesses of the new Disclosure?

Q: Do you think it will be helpful having the new Loan Estimate and the

new Closing Disclosure forms match so clients can compare the two

documents?

Q: What are some good reasons for the new rule requiring receipt of the

Closing Disclosure three days prior to consummation?

Q: The new Closing Disclosure repeats many of the same content

disclosed on the Loan Estimate. Why do you think regulators did this?

Q: Do you believe this form will reduce the number of consumer

complaints?


Module 2.10 Delivery of Closing Disclosure

What are the general timing and delivery requirements for

the Closing Disclosure

How must the Closing Disclosure be delivered?

When is the Closing Disclosure considered to be received if it

is delivered in person or if it is mailed?

Can a settlement agent provide the Closing Disclosure on

the creditor’s behalf?

Who is responsible for providing the Closing Disclosure to a

seller in a purchase transaction?

When does the creditor have to provide the Closing

Disclosure to the consumer?



Creditors must ensure that consumers receive the

Closing Disclosure no later than three business days

before consummation.

This requirement imposes a three-business-day

waiting period, meaning that the loan may not be

consummated less than three business days after the

Closing Disclosure is received by the consumer. If a

settlement is scheduled during the waiting period, the

creditor generally must postpone settlement, unless

a settlement within the waiting period is necessary to

meet a bona fide personal financial emergency.



May a consumer waive the three- business-day waiting

period?

The creditor is prohibited from providing the consumer with a

pre-printed waiver form.

Does the three-business-day waiting period apply when

corrected Closing Disclosures must be issued to the

consumer?

When must the settlement agent provide the Closing

Disclosure to the seller?

Are creditors ever allowed to impose average charges on

consumers instead of the actual amount received?

HANDOUT: 3-Day Closing Disclosure Reference Chart


Module 2.11 Revisions and Corrections to


When are creditors required to correct or revise

Closing Disclosures?

What changes before consummation require a new

waiting period?

Disclosed APR becomes inaccurate

Loan product changes

Prepayment penalty is added


Module 2.11 Revisions and Corrections to


Are creditors required to provide corrected Closing

Disclosures if terms or costs change after

consummation?

Is a corrected Closing Disclosure required if a post-

consummation event affects an amount paid by the

seller?

Are clerical errors discovered after consummation

subject to the re-disclosure obligation

Do creditors need to provide corrected Closing

Disclosures when they refund money to cure tolerance

violations?


Module 2.12 Additional Requirements and

Prohibitions

Are there any limits on fees that may be charged prior

to disclosure or application?

Yes. A creditor or other person may not impose any fee on a

consumer in connection with the consumer’s application for

a mortgage transaction until the consumer has received the

Loan Estimate and has indicated intent to proceed with the

transaction. This restriction includes limits on imposing:

Application fees;

Appraisal fees;

Underwriting fees; and

Other fees imposed on the consumer.



Prohibitions

A consumer indicates intent to proceed with the transaction

when the consumer communicates, in any manner, that the

consumer chooses to proceed after the Loan Estimate has

been delivered, unless a particular manner of

communication is required by the creditor. This may include:

Oral communication in person immediately upon delivery

of the Loan Estimate;

Oral communication over the phone, written

communication via email, or signing a pre- printed form

after receipt of the Loan Estimate.

A consumer’s silence is not indicative of intent to

proceed.



Prohibitions

A fee is imposed by a person if the person requires a consumer

to provide a method for payment, even if the payment is not

made at that time. For example:

A creditor or mortgage broker requiring the consumer to

provide a check to pay for a processing fee before the

consumer receives the Loan Estimate, even if the check is

not to be cashed until after the Loan Estimate is received

and the consumer has indicated an intent to proceed.

A creditor or mortgage broker requiring the consumer

to provide a credit card number for a processing fee

before the consumer receives the Loan Estimate, even

it the credit card will not be charged until after the

Loan Estimate is received and the consumer has

indicated an intent to proceed.



Prohibitions

Large Group Discussion:

At this time, many mortgage companies collect credit

card information to be charged at a later time for the

appraisal. How do you/your company plan on

making sure the appraiser is paid?



Prohibitions

The TILA-RESPA rule does not prohibit a creditor or other

person from providing a consumer with estimated terms

or costs prior to the consumer receiving the Loan

Estimate.

However, if a person (such as a creditor or broker)

provides a consumer with a written estimate of terms or

costs specific to that consumer before the consumer

receives the Loan Estimate, it must clearly and

conspicuously state at the top of the front of the first page

of the written estimate “Your actual rate, payment, and

costs could be higher. Get an official Loan Estimate

before choosing the loan.”



Prohibitions

There are other restrictions on the form of this statement to

assure it is not confused with the Loan Estimate:

Must be in font size no smaller than 12-point font.

May not have headings, content, and format substantially

similar to the Loan Estimate or the Closing Disclosure.

The Bureau has provided a model of the required statement in

form H-26 of appendix H to Regulation Z:



Prohibitions

A creditor or other person may not condition providing the

Loan Estimate on a consumer submitting documents

verifying information related to the consumer’s mortgage

loan application before providing the Loan Estimate.

For example:

A creditor may ask for the sale price and address of

the property, but may not require the consumer to

provide a purchase and sale agreement to support

the information the consumer provides orally before

the creditor provides the Loan Estimate.



Prohibitions

A mortgage loan originator may ask for the names,

account numbers, and balances of the consumer’s

checking and savings accounts, but the mortgage

loan originator may not require the consumer to

provide bank statements or similar documentation

to support the information orally provided by the

consumer before the creditor provides the Loan

Estimate.

(this applies to all LOs: depository bank,

non-bank lender, mortgage broker)


Module 2.13 Special Info Booklet

Your Home Loan Toolkit

Creditors must provide a copy of the special information booklet to

consumers who apply for a consumer credit transaction secured by

real property, except in certain circumstances

If the consumer is applying for a HELOC the creditor (or mortgage

broker) can provide a copy of the brochure entitled “When Your

Home is On the Line: What You Should Know About Home Equity

Lines of Credit” instead of the special information booklet.

The creditor need not provide the special information booklet if the

consumer is applying for a real property-secured consumer credit

transaction that does not have the purpose of purchasing a one-to-

four family residential property, such as a refinancing, a closed-end

loan secured by a subordinate lien, or a reverse mortgage.

+ Break into small groups and read the new “Toolkit.”

Discuss the following within your small group. Then elect a

group leader and participate in the large group recap:

How do you plan to use the “Your Home Loan Toolkit?”

After a homebuyer completes the toolkit, do you believe he or she

will have a better understanding of:

the most important steps you need to take to get the best

mortgage

your closing costs and what it takes to buy a home

a few ways to be a successful homeowner

What might happen if the rule were changed to require the

homebuyer be provided with the toolkit before or at application

instead of three days after application, as part of a huge stack of

other disclosures?

Do you currently counsel your homebuyers about these things^ and

if so, what are the implications of the CFPB providing the toolkit to

the consumer as compared to having the loan originator provide this

type of counseling with their clients?


Module 2.14 Broker to Mini-Corr

Handout: Consumer Financial Protection Bureau Issues

Guidance Regarding Brokers Shifting To “Mini-

Correspondent” Model

The CFPB is concerned that some mortgage brokers may

be setting up arrangements with investors in which the

broker claims to be a “mini-correspondent lender,” when in

fact the broker is still essentially just facilitating a

transaction between a borrower and a lender


Module 2.15 Public Consumer Complaints

Consumers Can Now Opt-In to Share Complaint

Narratives in CFPB’s Public Database

Consumers must opt-in to share their story

Personal information will be removed from narratives

Companies can choose a response to publish

Consumers can opt-out at any time

Complaints must meet certain criteria to qualify for

narrative publication


Module 2.16 CFPB Enforcement: Deceptive

Advertising

CFPB Takes Action Against Mortgage Companies

For Misrepresenting U.S. Government Affiliation

CFPB Orders Amerisave To Pay $19.3 Million For

Bait-And-Switch Mortgage Scheme

CFPB Takes Action Against NewDay Financial for

Deceptive Mortgage Advertising and Kickbacks

+Section 2 Module 2.17

RESPA

Assignment: Break into small groups and

discuss the RESPA: Lighthouse Title.

Answer each question in your small group

and then elect a group leader and share your

answers with the rest of the class.

+Section 3 Non-Traditional Lending

Definitions

Non-Traditional v. Non-Standard

Suitability Discussion

Case Study I

Case Study II

Consumer Complaints on Reverse Mortgages

Snapshot of Reverse Mortgage Complaints

+Section 4 SARS/AML

FinCEN

FinCEN Advisory on Promoting a Culture of

Compliance

Small Group Discussion/Large Group Recap

Anti-Money Laundering Case Studies

+ Module 4.2: FinCEN Advisory on Promoting a Culture of Compliance

A financial institution can strengthen its BSA/AML compliance culture by ensuring that:

1) its leadership actively supports and understands compliance efforts;

2) efforts to manage and mitigate BSA/AML deficiencies and risks are not compromised by revenue interests;

3) relevant information from the various departments within the organization is shared with compliance staff to further BSA/AML efforts;

4) the institution devotes adequate resources to its compliance function;

5) the compliance program is effective by, among other things, ensuring that it is tested by an independent and competent party; and

6) its leadership and staff understand the purpose of its BSA/AML efforts and how its reporting is used.

+ Section 4 SARS/AML

Module 4.3 Company Culture

What specific conclusion can we draw from FinCen’s findings?

What are the implications of failing to file a SAR/AML report?

How does your company frequently share SAR/AML compliance case studies

with you?

How would you translate the function of compliance into visual form if you

were explaining it to a brand new employee or a consumer who knows nothing

about our industry?

I will bet your company has told you many times that compliance, in 2015 is

costing your company a lot of money. Do you know what percentage of the

cost of each loan is devoted to compliance at your firm?

What evidence supports (or does not support) a new way of thinking about

compliance we’ll call, “Compliance 2.0” where mortgage companies create an

organizational culture that supports transparence and responsibility for

compliance at all levels throughout the organization?

+Section 4 SARS/AML

Module 4.4 Anti-Money Laundering Cases

Edmonds Man who Operated Illegal Money Transmitting

Business Sentenced to Two Years in Prison

Former Bellevue Developer Sentenced to 4+Years in Prison

for Tax Evasion

Couple who Fled to Eastern Europe During Bank Fraud

Investigation Enter Guilty Pleas

Former Pierce County Hard Money Lender Sentenced to

Prison for Mortgage Fraud Scheme

+Section 5 Ethics and Consumer Protection

What do you remember from past ethics classes?

What is ethics?

Are we professionals, retail salespeople, or are we an

emerging profession?

Law = have to

Ethix = should, ought


Module 5.2 Code for an Emerging Profession

Are you currently a member of a mortgage industry trade association? If yes:Have you known your association to every deny membership to an individual or company due to violating its ethical code?

If yes:Is there an ethics committee and if so, what do they do? Do they report to the membership on their actions?

If no:Why not?

Would you voluntarily choose to follow the 2015 Draft Model Code of Ethics we’ve been working on in our LO CE classes?

Handout: 2015 Draft Model Code of Ethics

+Ethics


Module 5.3 Applied Professional Ethics

Group One:

Members of the ethics committee

Group Two:

Mortgage company accusing a competitor of

being unethical

Group Three:

Mortgage company that may or may not have

violated the code of ethics.


Module 5.3 Applied Professional Ethics

Break into your assigned groups.Read the ethics case study.

GROUP ONE: Ethics CommitteeGo on your afternoon break while groups two and three plan their presentation.

GROUP TWO: G2MortgageDiscuss the case, elect a group leader and summarize your reasoning to the ethics committee.

GROUP THREE: Do It Rite LoansDefend your company’s actions.

After hearing both sides, Group One, the ethics committee, stays in the classroom and solves the case while groups two and three take their afternoon break. After the break, the ethics committee elects a chairman to announce the findings.

+Section 5

Fair Housing

1968 Civil Rights Act

1968 Fair Housing Act~

Protected Classes:

Race

Color

Religion (Creed)

Sex

National Origin

Familial Status

Sexual orientation added in 2012 to Fair Lending

Disability

58

Intent v. Effect

Realtors and lenders

have great power to

affect neighborhoods

+Section 5 Module 5.5

Fair Housing/Fair Lending

CASE STUDIES

Maternity Leave/Pregnancy

Deaf Persons

Disability

National Origin

Redlining

+Section 5.6 Mortgage Fraud

Intentional misrepresentation of a fact in relation

to a mortgage loan. Had the lender known of the

fact, the lender might not have made that loan.

Fraud for housing

e.g.; borrower lies about occupancy

Fraud for Profit

Individuals acting together in a group to send

many loans through one or more lenders and

most of them default leading to large losses.

+ Section 6 Mortgage Fraud

Module 5.6

HANDOUT

Fannie Mae Housing Industry Forum

Common Mortgage Fraud Red Flags

HANDOUT

IRS

Examples of Mortgage and Real Estate Fraud

Investigations – Fiscal Year 2015

+Section 5 Mortgage Fraud

Module 5.6

Discussion:

What are the broad effects of mortgage fraud?

What patterns or themes emerge from the

reports?

What could be invented to drastically reduce

mortgage fraud?

Motivation

Opportunity

Rationale

+

Evaluation Forms

Required by NMLS

Anonymous/name not required

Course name: LO CE

+Certificates

Attendance will be reported to the NMLS within 7 days or less

I will pay your NMLS “credit banking fee”

$1.50/hour/student = $13.50 including your WA 1 Hr CE

I will send you an email with confirmation.

Do not lose your certificates

+

THANK YOU!!

Jillayne Schlicke

206-931-2241

[email protected]

ceforward.com

mortgagefiduciaries.com