8 Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course Participant Guide

Transcription

1 8 Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course Participant Guide Presented by the Florida Association of Mortgage Brokers School 8 Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course Instructor s Manual - A copy written course of Florida Association of Mortgage Brokers Education Foundation, inc. and the FAMB School. August 2010 All Rights Reserved.

2 8 Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course Presented by the Florida Association of Mortgage Brokers 1292 Cedar Center Drive, Tallahassee, FL (850) ~ Fax (850) ~ famb@famb.org Contact person: Executive Director, Frank Cicione, CMC, CRMS Your Instructor Is: Contact Information: Course Description: Course Syllabus and Timing This eight hour FAMB course is designed to provide attendees with detailed overviews of the integrated disclosure rule; 2014 Amendments to Florida Statute 494; a review of sections of the Florida Administrative Rule; the Dodd Frank Mortgage Rule Readiness Guide; Loan Originator Compensation; CFPB s Mortgage Examination Procedures; Qualified Mortgage Rules including FHA and the proposed VA Rule; proposed disclosures; FINRA s Anti Money Laundering Program; Red Flag Rules and Social Media Compliance. Course Objectives: Goals and Purpose: This course is designed to prepare attendees for the integrated disclosure rule, changes to Florida Statute 494 and review document retention requirements in Rule 69V40; Review federal rules required to be followed in order to stay compliant, loan originator compensation, exam requirements recommended by the CFPB and recent enforcement actions taken by the CFPB; Review and Discuss the Qualified Mortgage Rule, the FHA Qualified Mortgage, the Proposed VA Qualified Mortgage and High Cost Mortgage Rules and Analyze requirements regarding Anti Money Laundering, Red Flag Rules and Social Media Compliance. Required Course Material: Textbook: 8 Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course, Author Florida Association of Mortgage Brokers School The course will be presented in sequence to the textbook. Completion Expectations: Lecture attendance, active small group discussions, and active participation. Policies: Once class commences, you may not leave to make phone calls.

3 Beepers and cell phones should be on silent mode. The course consists of 17 modules which are listed below with a description of each module. There are also learning objectives for each module, teaching methods and an estimated time of completion. All 17 modules invite course discussion and interaction. 8 Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course Table of Contents Learning Objectives Teaching Methods Segment of Time (min.) 1 Hour CE Elective Quiz Textbook; Lecture; PowerPoint 5 Category Module 1: Introduction Module 2: The Loan Review the rule and Loan Textbook; Lecture; PowerPoint 10 Estimate Estimate Form Module 3: The Closing Review the rule and Closing Textbook; Lecture; PowerPoint 10 Disclosure Disclosure Form Module 4: 2014 Review amendments Textbook; Lecture; PowerPoint 10 Amendments to FS494 Module 5: FL Admin. Review FL. Administrative Rule Textbook; Lecture; PowerPoint 15 Rule 69V 40 and Quiz Review 69V 40 and Check Quiz Answers BREAK Check messages, answer questions 10 3 Hour CE Federal Law Category Module 6: Introduction Quiz Textbook; Lecture; PowerPoint 5 Module 7: Dodd Frank Mortgage Rules Readiness Guide Module 8: Loan Originator Compensation Review the Mortgage Rules Readiness Guide and Discuss 2014 Rules Discuss Loan Originator Compensation Requirements and Discuss CFPB Policy on Mini Correspondents Textbook; Lecture; PowerPoint 25 Textbook; Lecture; PowerPoint 20 BREAK Check messages, answer questions 10 Module 9: CFPB In depth discussion of Textbook; Lecture; PowerPoint 50 Mortgage Examination Procedures examination procedures BREAK Check messages, answer questions 10 Module 10: Recent CFPB Enforcement Actions and Quiz Review In depth discussion of recent CFPB Enforcement Actions; Review Quiz Textbook; Lecture; PowerPoint 50 BREAK Lunch; check messages; prepare for second half of session 10 2 Hour CE Nontraditional Quiz; Review of Qualified Textbook; Lecture; PowerPoint 50 Category Module 11: Qualified Mortgage; FHA/VA Mortgage Requirements; Overview of FHA Qualified Mortgage and Proposed VA Qualified Mortgage Requirements BREAK Check messages, answer questions 10 Module 12: High Cost Loan Requirements and Florida Requirements for Non Institutional Investors; Review Quiz Discuss High Cost Loan Requirements; Homeownership Counseling Requirements including Florida requirements for non institutional investor loans and Quiz Review Textbook; Lecture; PowerPoint 50 BREAK Check messages; Answer Questions 10

4 2 Hour CE Consumer Protection Category Module 13: Quiz Module 14: Anti Money Laundering Quiz Textbook; Lecture; PowerPoint 5 Discuss and review requirements to comply with FINRA s Anti Money Laundering Program Textbook; Lecture; PowerPoint 45 BREAK Check messages; Answer Questions 10 Module 15: Red Flag Rule Review Red Flag Rule requirements to prepare Company specific Plan Textbook; Lecture; PowerPoint 25 Module 16: Social Media Compliance; Quiz Review Module 17: End of Course Assessment Review FFIEC s Social Media Compliance Requirements and Quiz Review Q&A session focusing on comparing and contrasting business methods based on compliance requirements Textbook; Lecture; PowerPoint 25 Textbook; Lecture; PowerPoint 10 Total Time: 480

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27 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information) Date Issued The date the Loan Estimate is mailed or delivered to the consumer. ( (a)(4)) Applicants Applicants includes the name and mailing address of the consumer(s) applying for the loan. Use each Applicant s name and mailing address if there are multiple Applicants. An additional page may be added to the Loan Estimate if the space provided is insufficient to list all of the Applicants. (Comment 37(a)(5) 1) Property Property is the address of the property p y( (which must include the zip code) that will secure the transaction. If the address of the Property is unavailable, use a description of the location of the property, for example a lot number. Always use a zip code. (Comment 37(a)(6) 1) Personal property such as furniture or appliances that also secures the credit transaction may be, but is not required to be included as Property. An additional page may not be appended to the Loan Estimate to disclose a description of personal property. (Comment 37(a)(6) 2) Sale Price or Appraised Value or Estimated Value If the loan is for a purchase money mortgage, use Sale Price. ( (a)(7)(i)) If personal property is included in the Sale Price of the Property, use that price without any reduction for the appraised or estimated value of the personal property. (Comment 37(a)(7) 2) If the loan is for a transaction without a seller, use Appraised Value or Estimated Value. (Comment 37(a)(7) 1) Loan Term Loan Term is the term of the debt obligation. Describe the Loan Term as years when the Loan Term is in whole years. For example 1 year or 30 years. (Comment 37(a)(8) 1.i, 1.ii) For a Loan Term that is more than 24 months but is not whole years, describe using years and months with the abbreviations yr. and mo., respectively. For example, a loan term of 185 months is disclosed as 15 yr., 5mo. For a Loan Term that is less than 24 months and not whole years, use months only With the abbreviation mo. For example, 6 mo. or 16 mo. (Comment 37(a)(8) 2) Disclose in the Loan Terms table: Loan Amount (if the amount is in whole dollars, do not disclose cents) ( (o)(4)), Initial Interest Rate, Initial Monthly Principal & Interest amount, Any adjustments to these amounts after consummation, Whether the loan includes a Prepayment Penalty, and Whether the loan includes a Balloon Payment. ( (b)) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 23

28 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information) The Projected Payments table shows estimates of the periodic payments that the consumer will make over the life of the loan. Creditors must disclose estimates of the following periodic payment amounts in the Projected Payments table: Principal & Interest; Mortgage Insurance; Estimated Escrow; Estimated Total Monthly Payment; and Estimated Taxes, Insurance, & Assessments, even if not paid with escrow funds. The Projected Payments table also describes whether taxes, insurance, and other assessments will be paid with funds in the consumer s escrow account. ( (c)(2)) The Costs at Closing table shows: Estimated Closing Costs are calculated in the same manner as the Total Closing Costs disclosed on page 2 of the Loan Estimate. (See section below) The Total Closing Costs are also itemized to show from page 2 of the Loan Estimate: The total of the Loan Costs table, The total of the Other Costs table, and Lender Credits in the Total Closing Costs subheading. ( (d)(1)(i)) The estimated amount of cash the consumer will be expected to pay at closing is also shown as Estimated Cash to Close. This amount is the same as the Estimated Cash to Close, from the Calculating Cash to Close table on page 2 of the Loan Estimate. ( (d)(1)(ii)) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 24

29 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Page for more detailed information regarding Slide # 25 and 26) Up to four main categories of costs are disclosed on page 2 of the Loan Estimate: 1. A good faith itemization of the Loan Costs and Other Costs associated with the loan. ( (f) and (g)) 2. A Calculating Cash to Close table that shows how the amount of cash needed at closing is calculated. ( (h)) 3. For transactions with adjustable monthly payments, an Adjustable Payments (AP) Table with relevant information about how the monthly payments will change. ( (i)) 4. For transactions with adjustable interest rates, an Adjustable Interest Rate (AIR) Table with relevant information about how the interest rate will change. ( (j)) The items associated with the mortgage are broken down into two general types, Loan Costs and Other Costs. Generally, Loan Costs are those costs paid by the consumer to the creditor and third party providers of services the creditor requires to be obtained by the consumer during the origination of the loan. ( (f)) Other Costs include taxes, governmental recording fees, and certain other payments involved in the real estate closing process. ( (g)) Items that are a component of title insurance or are for conducting the closing must include the introductory description of Title. ( (f)(2)(i), (g)(4)(i)) If State law requires additional disclosures, those additional disclosures are made on a document whose pages are separate from, and not presented as part of, the Loan Estimate. (Comments 37(f)(6) 1, 37(g)(8) 1) The amounts disclosed in the Loan Costs and Other Costs table are rounded to the nearest whole dollar. The daily amount of Prepaid Interest and the monthly amounts for the items in the Initial Escrow Payment at Closing in the labels are not rounded, but the calculated amounts for those items are rounded to the nearest whole dollar. ( (o)(4)) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 25

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31 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information regarding Slide # 27 and 28) Contact information, a Comparisons table, an Other Considerations table, and, if desired, a place for the consumer to sign to acknowledge receipt of the Loan Estimate are disclosed on page 3 of the Loan Estimate. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 27

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36 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information regarding Slide # 32 33) General information, the Loan Terms table, the Projected Payments table, and the Costs at Closing table are disclosed on the first page of the Closing Disclosure. ( (a), (b), (c), (d)) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 32

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38 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information regarding Slide # 34 35) The number of items in the Loan Costs and Other Costs tables can be expanded and deleted to ensure that the Loan Costs and Other Costs tables fit onto page 2 of the Closing Disclosure. ( (t)(5)(iv)(A)) However, items that are required to be disclosed, even if they are not needed (such as Points in the Origination Charges subheading), cannot be deleted. (Comment 38(t)(5)(iv) 1) The amounts paid by the consumer, seller and others for each item are disclosed. For items paid by the consumer or seller, the amount that is paid at or before closing is also entered into the applicable columns. ( (f)) To the extent that an individual item is paid by different parties to the transaction and both at and before closing, the amounts associated with an item can be entered in multiple columns. ( (f)) The Loan Costs and Other Costs tables can be disclosed on two separate pages of the Closing Disclosure. ( (t)(5)(iv)(B)) When used, these pages are numbered page 2a and 2b. (Comment 38(t)(5)(iv) 3) For an example of this permissible change to the Closing Disclosure, see form H 25(H) of appendix H to Regulation Z. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 34

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40 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information regarding Slide # 36 37) On page 3 of the Closing Disclosure, the Calculating Cash to Close table and Summaries of Transaction table are disclosed. For transactions without a seller, a Payoffs and Payments table may be substituted for the Summaries of Transactions table and placed before the Alternative Calculating Cash to Close table. (See Figure 40; form H 25(J) of appendix H to Regulation Z) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 36

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42 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information regarding Slide # 38 39) On page 4 of the Closing Disclosure, a Loan Disclosures table is shown with the heading Additional Information About This Loan. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 38

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44 (See TILA RESPA Integrated Disclosure Small Entity Compliance Guide, Pages for more detailed information regarding Slide # 40 41) Disclose Loan Calculations, Other Disclosures, Questions, Contact Information, and, if desired by the creditor, Confirm Receipt tables on page 5 of the Closing Disclosure. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 40

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47 Definitions. As used in ss , the term: (12) Indirect owner means, with ihrespect to direct owners and other indirect owners in a multilayered lil organization: i (a) For an owner that is a corporation, each of its shareholders that beneficially owns, has the right to vote, or has the power to sell or direct the sale of, 25 percent or more of voting security of the corporation. (b) For an owner that is a partnership, each general partner and each limited or special partner that has the right to receive upon dissolution, or has contributed, 25 percent or more of the partnership s capital. (c) For an owner that is a trust, the trust and each trustee. (d) For an owner that is a limited liability company: 1. Each member that has the right to receive upon dissolution, or that has contributed, 25 percent or more of the limited liability company s capital; and 2. If managed by elected managers or appointed managers, each elected or appointed manager. (e) For an indirect owner, each parent owner of 25 percent or more of its subsidiary. (16)(15) Loan origination fee means the total compensation from any source received by a mortgage broker acting as a loan originator. Any payment for processing mortgage loan applications must be included in the fee and must be paid to the mortgage broker. Section 36. Subsection (4) is added to section , Florida Statutes, to read: Investigations; complaints; examinations. (4) To reduce the burden on persons subject to this chapter, the office may conduct a joint or concurrent examination with a state or federal regulatory agency and may furnish a copy of all examinations to an appropriate regulator ifth the regulator agrees to abide by the confidentiality provisions i in chapter 119 and this chapter. The office may also accept an examination from an appropriate regulator. Section 37. Paragraph (y) of subsection (1) of section , Florida Statutes, is amended, and paragraph (m) of that subsection is reenacted, to read: Administrative penalties and fines; license violations. (1) Each of the following acts constitutes a ground for which the disciplinary actions specified in subsection (2) may be taken against a person licensed or required to be licensed under part II or part III of this chapter: (m) In any mortgage transaction, violating any provision of the federal Real Estate Settlement Procedures Act, as amended, 12 U.S.C. ss et seq.; the federal Truth in Lending Act, as amended, 15 U.S.C. ss et seq.; or any regulations adopted under such acts. (y) Pursuant to an investigation by the Mortgage Testing and Education Board acting on behalf of the registry, being found in violation of Nationwide Mortgage Licensing System and Registry Rules of Conduct. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 43

48 Loan originator license renewal. (3) If a licensed loan originator fails to meet the requirements of this section for annual license renewal on or before December 31 but meets such requirements before March 1, the loan originator s license status shall be changed to failed to renew pending review and renewal by the office. A nonrefundable reinstatement fee of $150 shall be charged in addition to registry fees. The license status shall not be changed until the requirements of this section are met and all fees are paid. If the licensee fails to meet the requirements of this section and pay all required fees before March 1, such license is expired and such loan originator must apply for a new loan originator license under s Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 44

49 Mortgage broker license renewal. (3) If a licensed mortgage broker fails to meet the requirements of this section for annual license renewal on or before December 31 but meets such requirements before March 1, the mortgage broker s license status shall be changed to failed to renew pending review and renewal by the office. A nonrefundable reinstatement fee of $250 shall be charged in addition to registry fees. The license status shall not be changed until the requirements of this section are met and all fees are paid. If the licensee fails to meet the requirements of this section and pay all required fees before March 1, such license is expired and such mortgage broker must apply for a new mortgage broker license under s Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 45

50 Mortgage broker branch office license. (3) A branch office license must be renewed annually at the time of renewing the mortgage broker license under s A nonrefundable branch renewal fee of $225 per branch office must be submitted at the time of renewal. To renew a branch office license, a mortgage broker must: (a) Submit a completed license renewal form as prescribed by commission rule. (b) Submit a nonrefundable renewal fee. (c) Submit any additional information or documentation requested by the office and required by rule concerning the licensee. Additional information may include documents that may provide the office with the appropriate information to determine eligibility for license renewal. (4) The office may not renew a branch office license unless the branch office continues to meet the minimum requirements for initial licensure under this section and adopted rule. (5) If a licensed branch office fails to meet the requirements of this section for annual license renewal on or before December 31 but meets such requirements before March 1, the branch office s license status shall be changed to failed to renew pending review and renewal by the office. A nonrefundable reinstatement fee of $225 shall be charged in addition to registry fees. The license status shall not be changed until the requirements of this section are met and all fees are paid. If the licensee fails to meet the requirements of this section and pay all required fees before March 1, such license is expired and such branch office must apply for a new mortgage broker branch office license under this section. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 46

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52 Mortgage lender license renewal. (3) If a licensed mortgage lender fails to meet the requirements of this section for annual license renewal on or before December 31 but meets such requirements before March 1, the mortgage lender s license status shall be changed to failed to renew pending review and renewal by the office. A nonrefundable reinstatement fee of $475 shall be charged in addition to registry fees. The license status shall not be changed until the requirements of this section are met and all fees are paid. If the licensee fails to meet the requirements of this section and pay all required fees before March 1, such license is expired and such mortgage lender must apply for a new mortgage lender license under s Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 48

53 Branch offices. (3) A branch office license must be renewed at the time of renewing the mortgage lender license. A nonrefundable fee of $225 per branch office must be submitted at the time of renewal. To renew a branch office license, a mortgage lender must: (a) Submit a completed license renewal form as prescribed by commission rule. (b) Submit a nonrefundable renewal fee. (c) Submit any additional information or documentation requested by the office and required by rule concerning the licensee. Additional information may include documents that may provide the office with the appropriate information to determine eligibility for license renewal. (4) The office may not renew a branch office license unless the branch office continues to meet the minimum requirements for initial licensure under this section and adopted rule. (5) If a licensed branch office fails to meet the requirements of this section for annual license renewal on or before December 31 but meets such requirements before March 1, the branch office s license status shall be changed to failed to renew pending review and renewal by the office. A nonrefundable reinstatement fee of $225 shall be charged in addition to registry fees. The license status shall not be changed until the requirements of this section are met and all fees are paid. If the licensee fails to meet the requirements of this section and pay all required fees before March 1, such license is expired and such branch office must apply for a new mortgage lender branch office license under this section. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 49

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56 69V Mortgage Brokerage Files. (1) Each mortgage broker shall maintain a file for each mortgage broker transaction. The files shall be maintained in a central location and in an alphabetical or numerical sequence. (2) Each file shall contain at least the following: (a) Mortgage broker agreement pursuant to Section , F.S.; (b) Copy of signed closing statement or documentation of denial or cancellation of the mortgage loan application; and (c) A copy of the good faith estimate of costs pursuant to Section (3)(c), F.S. (3) Supporting documentation shall be maintained for all expenses or fees paid by the licensee on behalf of the client indicating the amount and the date paid. A canceled check maintained in a separate file shall be considered proof of payment of fees and expenses. (4) If the mortgage broker issues to the client a written commitment for the loan on behalf of the lender then the following must be maintained in the file: ()A (a) copy of the written commitment issued dby the mortgage broker; and (b) A copy of the written commitment provided by the lender. (5) If the mortgage broker issues to the client a written lock in for the loan on behalf of the lender then the following must be maintained in the file: (a) A copy of the written lock in issued by the mortgage broker; and (b) A copy of the written lock in provided by the lender. (6) If the mortgage broker receives a mortgage loan application, then the mortgage broker shall maintain a copy in the file. (7) If the loan is funded by a noninstitutional investor then the file must also include the following: (a)1. A copy of the appraisal or opinion of value of the mortgage property and a signed and dated acknowledgment by the noninstitutional investor of receipt of the appraisal or opinion of value, or 2. A copy of a waiver of the appraisal dated and executed by the noninstitutional investor. (b)1. A receipt acknowledging that the noninstitutional investor has been furnished with title insurance or a legal opinion of title, or 2. A written waiver thereof. (c) On a junior mortgage, documentation that the noninstitutional lender has been furnished with a statement showing the balance owed and status of the liens that will be superior to the lien being funded by the noninstitutional investor. (d) A signed and dated acknowledgment by the noninstitutional investor of receipt of the recorded mortgage or other instrument securing a note or assignment. (e) If applicable, documentation that said licensee has disclosed that it is acting (directly or indirectly) as a borrower or principal in that transaction. (8) In addition to the foregoing specific documentation, all documentation originated, received, or related to the mortgage loan from the application through the final disposition must be maintained for three (3) years from the date of the original entry. Original entry means the date the documentation was originated by the mortgage broker or received by the mortgage broker. For each broker transaction, files and documentation shall be maintained and remain complete for three (3) years from the date of original entry of the last document in the file. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 52

57 (9)(a) The penalty for failure to maintain files and required documentation (incidental and isolated clerical errors or omissions shall not be considered a violation) shall be: 1. If the licensee has numerous instances of incomplete files and missing documentation, the fine shall be $300. For the purpose of this rule, numerous shall mean at least three (3), and a percentage equal or greater to 20% of the files examined. 2. If the licensee fails to maintain files and documentation such that an audit trail of all mortgage transactions is provided, the penalty shall be a fine of $1,000 and a six month suspension of the licensee. (b)1. The failure to provide a good faith estimate of costs shall be a fine of $250 per file. 2. Providing a commitment to a client without first obtaining a written commitment by the lender shall be a fine of $250 per file. 3. Providing a lock in for a loan without first obtaining a written lock in by the lender shall be a fine of $250 per file. 4. The total fine under paragraph (9)(b) shall not exceed $2, per administrative complaint in addition to other penalties. (c)1. The penalty for failure to provide a disclosure required in subsection (7) above shall be a fine of $250 per file. 2. The penalty for gross negligence in maintaining documentation required in subsection (7) shall be revocation. 3. The penalty for failure to provide a noninstitutional investor with the documentation required in subsection (4) herein shall be a fine of $250 per file up to an aggregate of $2,500 per administrative complaint in addition to other penalties. (10) For purposes of Section , F.S., a violation of the above rule, other than subsection (7) and subparagraph (9)(a)2. above shall be considered a minor violation. Any portion of this section that is deemed to be a minor violation for a first offense shall be a notice of noncompliance. Rulemaking Authority (4) FS. Law Implemented , , , FS. History New , Amended , , , Formerly 3D , Amended Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 53

58 69V Mortgage Lender Files. (1) Each mortgage lender shall maintain a file for each mortgage loan application received. The files shall be maintained in a central location and in an alphabetical or numerical sequence. (2) Each file shall contain the following: (a) A copy of the good faith estimate. (b) The original mortgage loan application, or copy thereof, containing the disclosures set forth in subsection (1), F.S. (c) Copy of the closing statement as required by subsection (3), F.S., or documentation demonstrating that the mortgage loan application was cancelled or denied. (d) Copy of any written lock in agreement, if issued, containing the requirements set forth in Section , F.S. (e) Copy of any written commitment, if issued, containing the disclosures set forth in Section , F.S. (f) Copy of written disclosures of any conflict of interest as required by Section , F.S. (3) Each mortgage lender shall maintain supporting documentation of all expenses or fees paid by the mortgage lender. The supporting documentation shall indicate the name and address of the person paid, the amount and date of the payment, and a description of the products or services purchased. Invoices from third parties involving multiple loans, maintained in a central file, need not be copied and placed in each individual loan file. A cancelled check maintained in a separate file shall be considered proof of payment of fees and expenses. (4) If the mortgage lender sells a mortgage loan to a noninstitutional investor then each file must contain the following: (a)1. A copy of the appraisal or opinion of value of the mortgage property and a signed and dated acknowledgement of receipt of same by the noninstitutional investor; or 2. A copy of a waiver of the appraisal or opinion of value dated and executed by the noninstitutional investor. (b)1. A receipt acknowledging that the noninstitutional investor has been furnished with mortgagee s title insurance, or a legal opinion of title by an attorney licensed in Florida, pursuant to subsection (1)(b), F.S.; or 2. A written waiver thereof with the wording required by subsection (1)(b)3., F.S. (c) On a junior mortgage, a copy of the statement furnished to the noninstitutional investor showing the balance owed and the status of the liens that will be superior to the liens being recorded in the favor of the noninstitutional investor in this loan transaction. (d) A copy of the written disclosure to the noninstitutional investor if the mortgage lender is directly or indirectly acting as a borrower or principal in the transaction. (e) A signed and dated acknowledgement by the noninstitutional investor of receipt of the recorded mortgage or other instrument securing a note or assignment, or a signed acknowledgement by the licensee attesting that the aforementioned documentation was delivered to the noninstitutional investor. However, the mortgage lender may hold such documents in its possession for the use and benefit of the noninstitutional i i linvestor if: Instructor Note: (See 69V (4)(e) (7) for more detailed information) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 54

59 (8)(a) The penalty for failure to maintain files and required documentation (incidental and isolated clerical errors or omissions i shall hllnot be considered d a violation) i shall hllbe: 1. If the mortgage lender has numerous instances of incomplete files and missing documentation the fine shall be $300 for a first offense. For the purpose of this rule numerous shall mean at least three incomplete files and a percentage equal or greater than 20% of the files examined. 2. If the mortgage lender fails to maintain an audit trail of all mortgage transactions, the penalty shall be a fine of $1,000 and a six month suspension of the license of the mortgage lender. (b) The penalty for failure to provide or maintain a copy of the good faith estimate of costs shall be a fine of $250 per fl file up to an aggregate of $2,500 per administrative complaint in addition to other penalties. (c)1. The penalty for failure to provide a noninstitutional investor with the documentation required in subsection (4) herein shall be a fine of $250 per file up to an aggregate of $2,500 per administrative complaint in addition to other penalties. 2. The penalty for gross negligence in maintaining documentation required in subsection (4) shall be revocation of the license. (d) Repeat violations of the requirements of this rule shall subject the licensee to the maximum penalties under Section (2), F.S. (9) For purposes of Section , F.S., a violation of the above rule, other than subsection (4) and subparagraph (8)(a)2. above, shall be considered a minor violation. Any portion of this section that is deemed to be a minor violation for a first offense shall be a notice of noncompliance. Rulemaking Authority (4) FS. Law Implemented , , , , (8), , , , FS. History New , Amended , , Formerly 3D , Amended Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 55

60 69V Mortgage Brokerage and Lending Transaction Journal. (1) Each mortgage broker and mortgage lender shall maintain a Mortgage Brokerage and Lending Transaction Journal, which hshall hllinclude, at least, the following information: (a) Name of applicant; (b) Date applicant applied for the mortgage loan; (c) Disposition of the mortgage loan application. The journal shall indicate the result of the lending transaction. The disposition of the transaction shall be categorized as one of the following: loan funded, loan denied, or application withdrawn. (d) Name of lender, if applicable. (2) The journal shall be maintained on Form OFR , Mortgage Brokerage and Lending Transaction Journal, or a form substantially similar. (3) In lieu of maintaining Form OFR , a mortgage lender or mortgage broker may maintain the Home Mortgage Disclosure Act loan/application register, Form FR HMDA LAR, found at 12 C.F.R., part 203, Appendix A (2010) if all lending transactions are recorded on this form. The form is hereby incorporated by reference and may be accessed through the Government Printing Office website (4) The Mortgage Brokerage and Lending Transaction Journal shall be maintained in the principal office or in each branch office where the transactions are originated. The Mortgage Brokerage and Lending Journal shall be kept current. The failure to initiate an entry to the Mortgage Brokerage and Lending Transaction Journal within 7 business days from the date the transaction was entered into, shall be deemed to be a failure to keep the Mortgage Brokerage and Lending Transaction Journal current. (5) The penalty for failure to maintain the Mortgage Brokerage and Lending Transaction Journal or to keep the same current (incidental or isolated clerical errors or omissions shall not be considered a violation) shall be the issuance of a notice of noncompliance for a first offense. Any subsequent finding of a violation of this rule during an examination or investigation shall be a fine of $500. The penalty for intentional or continued violations of this rule shall be a fine of $500 and suspension of the license. (6) Form OFR is incorporated by reference in subsection 69V (1), F.A.C. Rulemaking Authority (4) FS. Law Implemented , , FS. History New , Amended , , Formerly 3D , Amended , , Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 56

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82 Quiz Get a Grip on The Qualified Mortgage, Ability to Repay and Loan Officer Compensation 3-Hour CE Federal Law Category 8. Per HMDA, Regulation C, how often must institutions compile HMDA data? a. Weekly b. Monthly c. Quarterly d. Annually 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 78

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86 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course 3-Hour CE Federal Law Category CFPB Dodd-Frank Mortgage Rules Readiness Guide Summary of the Rules Ability-to-Repay and Qualified Mortgage Standards (Regulation Z) Escrow Requirements under Truth-In-Lending Act (Regulation Z) High-Cost Mortgage and Homeownership Counseling (Regulation Z) (Regulation X) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance - 82 Ability to Repay and Qualified Mortgage Standards (Regulation Z) The CFPB amended dregulation Z, which himplements the Truth in Lending Act (TILA). Regulation Z currently prohibits hb a creditor from making a higher priced mortgage loan without regard to the consumer s ability to repay the loan. The final rule implements Sections 1411 and 1412 of the Dodd Frank Wall Street Reform and Consumer Protection Act (Dodd Frank Act), which generally require creditors to make a reasonable, good faith determination of a consumer s ability to repay any consumer credit transaction secured by a dwelling (excluding an open end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establish certain protections from liability under this requirement for Qualified Mortgages. The final rule also implements Section 1414 of the Dodd Frank Act, which limits prepayment penalties. Finally, the final rule requires creditors to retain evidence of compliance with the rule for three years after a covered loan is consummated. This rule is effective January 10, Escrow Requirements under Truth in Lending Act (Regulation Z) The CFPB issued a final rule that amends Regulation Z (Truth in Lending Act) to implement certain amendments to the Truth in Lending Act made by the Dodd Frank Act. Regulation Z currently requires creditors to establish escrow accounts for higher priced mortgage loans secured by a first lien on a principal dwelling. The rule implements statutory changes made by the Dodd Frank Act that lengthen the time for which a mandatory escrow account established for a higher priced mortgage loan must be maintained. The rule also exempts certain transactions from the statute s escrow requirement. The primary exemption applies to mortgage transactions extended by creditors that operate predominantly in rural or underserved areas, together with their affiliates originate a limited number of first lien covered transactions, have assets below a certain threshold, and together with their affiliates do not maintain escrow accounts on extensions of consumer credit secured by real property or a dwelling that are currently serviced by the creditors or their affiliates (subject to certain exceptions). This rule is effective June 1, High Cost Mortgage and Homeownership Counseling (Regulation Z) (Regulation X) The CFPB issued this final rule to implement the Dodd Frank Wall Street Reform and Consumer Protection Act s amendments to the Truth in Lending Act and the Real Estate Settlement Procedures Act. The final rule amends Regulation Z (Truth in Lending Act) by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protections Act of 1994 (HOEPA), revising and expanding the tests for coverage under HOEPA, and imposing additional restrictions on mortgages that are covered by HOEPA, including a pre loan counseling requirement. The final rule also amends Regulation Z and Regulation X (Real Estate Settlement Procedures Act) by imposing certain other requirements related to homeownership counseling, including a requirement that consumers receive information about homeownership counseling providers. This rule is effective January 10, Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 82

87 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course 3-Hour CE Federal Law Category CFPB Dodd-Frank Mortgage Rules Readiness Guide Summary of the Rules Mortgage Servicing Rules (RESPA) (Regulation X) (TILA) (Regulation Z) ECOA Valuations for Loans Secured by a First Lien on a Dwelling (Regulation B) TILA Appraisals for Higher-Priced Mortgage Loans (Regulation Z) 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance - 83 Mortgage Servicing Rules (RESPA) (Regulation X) (TILA) (Regulation Z) The CFPB amended d Regulation X, which h implements the Real Estate Settlement Procedures Act of 1974, and implemented a commentary that sets forth an official i interpretation to the regulation. The CFPB also amended Regulation Z, which implements the Truth in Lending Act and the official interpretation to the regulation, which interprets the requirements of Regulation Z. These final rules implement provisions of the Dodd Frank Act regarding mortgage loan servicing. Specifically, the Regulation X final rule implements Dodd Frank Act sections addressing servicers obligations to correct errors asserted by mortgage loan borrowers; to provide certain information requested by such borrowers; and to provide protections to such borrowers in connection with force placed insurance. Additionally, this final rule addresses servicers obligations to establish reasonable policies and procedures to achieve certain delineated objectives; to provide information about mortgage loss mitigation options to delinquent borrowers; to establish policies and procedures for providing delinquent borrowers with continuity of contact with servicer personnel capable of performing certain functions; and to evaluate borrowers applications for available loss mitigation options. Further, this final rule modifies and streamlines certain existing servicing related provisions of Regulation X. The Regulation Z final rule implements Dodd Frank Act sections addressing initial rate adjustment notices for adjustable rate mortgages, periodic statements for residential mortgage loans, prompt crediting of mortgage payments, and responses to requests for payoff amounts. This final rule also amends current rules governing the scope, timing, content, and format of disclosures to consumers regarding the interest rate adjustments of their variable rate transactions. These rules are effective January 10, ECOA Valuations for Loans Secured by a First Lien on a Dwelling (Regulation B) The CFPB amended Regulation B, which implements the Equal Credit Opportunity Act (ECOA), and the Bureau s official interpretations of the regulation, which interpret and clarify the requirements of Regulation B. The final rule revises Regulation B to implement an ECOA amendment concerning appraisals and other valuations that was enacted as part of the Dodd Frank Act. In general, the revisions to Regulation B require creditors to provide to applicants free copies of all appraisals and other written valuations developed in connection with an application for a loan to be secured by a first lien on a dwelling, and require creditors to notify applicants in writing that copies of appraisals will be provided to them promptly. This rule is effective January 18, TILA Appraisals for Higher Priced Mortgage Loans (Regulation Z) The CFPB issued a final rule to amend Regulation Z jointly with the Federal Reserve Board, FDIC, FHFA, NCUA, and OCC. This rule implements new appraisal provisions in the Truth in Lending Act (TILA) that were added by the Dodd Frank Act. The rule requires creditors to obtain a full interior appraisal by a certified or licensed appraiser for non exempt higher risk mortgage loans (HPMLs). HPMLs are mortgages with an annual percentage rates that exceed the average prime offer rate by a specified percentage. The rule also requires a second such appraisal at the creditor s expense for certain properties held for less than 180 days. Exemptions include qualified mortgages, reverse mortgages, bridge loans, construction loans and certain manufactured homes. In addition, the rule requires creditors to provide the consumer a copy of all written appraisals performed in connection with the HPML at least 3 days prior to closing. This rule is effective January 18, Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 83

88 Loan Originator Compensation Requirements (Regulation Z) The CFPB amended Regulation Z to implement amendments to the Truth in Lending Act made by the Dodd Frank Act. The final rule implements requirements and restrictions imposed by the Dodd Frank Act concerning loan originator compensation; qualifications of, and registration or licensing of loan originators; compliance procedures for depository institutions; mandatory arbitration; and the financing of single premium credit insurance. The final rule revises or provides additional commentary on Regulation Z s restrictions on loan originator compensation, including application of these restrictions to prohibitions on dual compensation and compensation based on a term of a transaction or a proxy for a term of a transaction, and to recordkeeping requirements. The final rule also establishes tests for when loan originators can be compensated through certain profits based compensation arrangements. At this time, the Bureau is not prohibiting payments to and receipt of payments by loan originators when a consumer pays upfront points or fees in the mortgage transaction. Instead the Bureau will first study how points and fees function in the market and the impact of this and other mortgage related rulemakings on consumers understanding of and choices with respect to points and fees. The amendments to (h) were effective on June 1, All other provisions of the rule will be effective on January 10, 2014, unless further Bureau action changes the effective date. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 84

89 Developing an Implementation Plan 1. Evaluate the current products or services you offer to consumers to determine applicability: Do you offer mortgage loans to consumers? Do you offer any of the following mortgage products: Home equity lines of credit secured by a dwelling (i.e., HELOCs)? Mortgages that qualify as higher priced mortgages under section of Regulation Z? Mortgages that t qualify as high cost h mortgages under section of Regulation Z? Loans that are intended to meet the criteria for Qualified Mortgages under section of Regulation Z? Second mortgages that meet the requirements of or of Regulation Z? Do you service mortgage loans or own servicing rights? Do you own mortgage notes that you have sold servicing rights to? 2. Based on the products you offer to consumers, determine which regulatory amendments impact your current products. What are the requirements that apply for each of your products? Do you qualify for any exemptions? (Refer to the Small Entity Compliance Guides [links on page 21] or the rules themselves for additional information on exemptions) Have you discussed which rules apply and any potential exemptions with your compliance counsel, as applicable, or regulator? lt 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 85

90 3. Have you developed an implementation plan? Have you performed gap analysis to determine what business, operational, and automated transaction processes need to change as a result of the new rules? Has the plan been approved by senior management and the board (or similar oversight functions), as appropriate? Has the plan been developed in consultation with or reviewed by key stakeholders, such as legal, compliance, and information technology? Does it contain key milestones, dates for completion of required steps for compliance, and progress reports? How are you tracking progress? Who reviews progress reports? Does the plan include an audit review? Have testing procedures been defined? How are results and progress tracked? Does the plan identify the responsible parties for developing the plan, ensuring adherence to the plan, and future compliance? Is progress reported to senior management or the board (or similar oversight functions), as applicable? Is your plan on schedule? If not, has the deviation from schedule been approved by the board, or similar oversight function, or senior management, as appropriate, and discussed with regulators? Are all aspects of your plan scheduled to be completed prior to the rule effective dates? Have you discussed your implementation plan with your regulators and compliance counsel, as applicable? Have discussions with regulators resulted in any changes to your implementation plan? Do you have contracts with any third parties related to mortgage activities? If so, have you discussed and evaluated their implementation plan? Do you have a back up plan should the vendor not fully implement the necessary changes prior to the effective dates? Additional questions regarding this topic can be found in the below section titled, Third Party and Vendor Management. 8-Hour SAFE Comprehensive 2014 Mortgage Loan Originator Course: The Road to Compliance 86