The Compliance Group's Thoughts & Analysis

Weighing The Impact Of The CFPB’s Proposed Servicing Rules

admin — Thu, 26 Apr 2012 17:16:57 +0000

Industry reaction ranges from cautiously positive to skeptical.
By Phil Hall

Earlier this month, the Consumer Financial Protection Bureau (CFPB) announced that it was considering new rules that would govern mortgage servicing practices. The CFPB offered its proposal under the banner of “no surprises, no runarounds.”

“The rules under consideration by the bureau are aimed at tackling two underlying servicing problems: lack of transparency and lack of accountability,” the CFPB said in a statement announcing the proposal. “In recent years, many borrowers have complained that they did not receive the information they needed to help them avoid foreclosure. Other borrowers’ troubles worsened because they found it difficult to get answers from their servicers. The rules under consideration are designed to make servicer mistakes rare and quickly fixed, and to ensure that struggling homeowners get the information they need to find alternatives to unnecessary foreclosures.”

Within the mortgage banking industry, few people were surprised by the CFPB’s announcement.

“New rules were inevitable,” says John Vella, chief operating officer at Los Angeles-based Equator LLC. “After 2006 and considering the scrutiny placed on the mortgage industry, especially the servicing business, there was going to be an attempt to standardize rules across the board.”

“Some of this is really important,” says Thomas J. Pinkowish, president of Community Lending Associates in Essex, Conn. “Consumers have been hurt by what most will agree is neglectful servicing. But these are very complicated issues. If the CFPB rules focus on situations where servicer neglect exacerbated the delinquency problem and caused more fees and problems for borrowers, that’s where it is of value.”

But are these problems happening today? According to the CFPB, the rules being proposed would include the creation of “clear monthly mortgage statements” for borrowers; advance warnings to borrowers of interest-rate adjustments; the option for avoiding “costly force-placed insurance”; “good-faith attempts” by servicers to contact delinquent borrowers who are on the road to foreclosure; and “direct and ongoing access” to a “foreclosure prevention team.”

On the whole, industry experts do not question the bureau’s intentions.

“It is really difficult to say that anything here is a bad idea,” says Marcy Ford, executive vice president and managing partner at the Farmington Hills, Mich., office of Trott & Trott. “It could have a lot of benefits – not only for consumers, but also for helping to restore faith in mortgage servicers as a whole.”

Yet Ford adds that many servicers are a few steps ahead of the CFPB. “A lot of mortgage servicers probably already moved in this direction,” she says. “For a lot of them, these are not a surprise.”

Adam Leitman Bailey, a New York real estate attorney and law professor at New York University, concurs.

“This would have been a fantastic idea five years ago, when banks were giving out more mortgages than they could handle,” he says. “But most of these things are not real problems today. Take inaccurate statements, for example – I’m not seeing it. We have thousands of clients, and we’re not seeing anyone having problems with what their bills say. These people know what they’re getting before buying – we’re not seeing banks taking advantage of buyers.”

“Servicers do not want delinquent loans,” says Pinkowish. “I think there is a bias in here. Servicers don’t try to create foreclosures.”

Indeed, Vella wonders if the CFPB is cognizant of the situation facing servicers in regard to uncooperative or hostile borrowers.

“It takes two people to do a deal,” he says. “This is a two-way street: Borrowers also have to be responsive to servicers. It is in the servicers’ best interest to contact borrowers, because servicers and investors do not profit if there is a foreclosure.”

Ann Rutledge, founding principal at New York-based R&R Consulting, observes that the consumer plays a more profound role in this environment.

“The CFPB really should think of ‘consumer’ as a consumer of financial services, in general, and not just as a consumer of financing,” she says. “In today’s world, it’s hard to find a borrower who isn’t also a lender in some related sense – buying a house on credit means creating a loan asset for someone to invest in for retirement. To properly assess the attributes of the mortgage-backed securities they’re investing in, investors have a compelling need for standardization of servicer data that the Big Four trustees provide. It’s the other side of the coin in consumer protection that, right now, does not exist and, as far as I know, has not been raised as an issue.”

And speaking of the other side of the coin, there is the apprehension that the proposed new rules might also require plenty of coins out of the borrowers’ pockets.

“This may increase costs,” says Dr. Gregory Price, chairman of the department of economics at Morehouse College in Atlanta. “It may reduce abuses, but it will increase the cost of servicing.”

“Ultimately, the borrowers will have to pay higher fees to obtain credit,” predicts Annamaria Allen, president and CEO of The Compliance Group, based in San Marcos, Calif. “This will impact the affordability of a loan. Whenever you have increased disclosure requirements, you have increased compliance costs. In many cases, it may prevent loans. Our box has already shrunk so much that lenders, investors and servicers don’t want to deal with high-risk loans.”

The CFPB expects to pursue the conversation on new servicing rules when it publishes a notice of proposed rulemaking this summer, which will be followed by a public comment period. The CFPB expects the rules to be finalized by Jan. 21, 2013.

Phil Hall is editor of MortgageOrb. He can be reached at hallp@mortgageorb.com.

Link to online article
http://www.mortgageorb.com/e107_plugins/content/content.php?content.11376

The Compliance Group 2011 Expansion More than Doubles Companywide, Quality Control Up 87%, Compliance & Licensing Up 55%

admin — Fri, 30 Mar 2012 17:24:08 +0000

The Compliance Group 2011 Expansion More than Doubles Companywide, Quality Control Up 87%, Compliance & Licensing Up 55%

San Marcos, Ca, March 28, 2012 – Leading mortgage compliance services provider, The Compliance Group, Inc. (TCG), in 2011 saw its business grow by 120% over 2010, marking its highest year-over-year growth since its founding by industry veteran Annemaria Allen in 2000. The metro San Diego-based residential lending compliance services firm’s 2011 highest growth business units included Quality Control (87%) and Compliance and Licensing (55%).

TCG serves the independent mortgage banker, including correspondent, wholesale and retail originators; financial institutions’ mortgage lending units, including both banks and credit unions; and mortgage brokers. Its services span lenders’ pain points throughout quality control (QC) and multi-jurisdiction compliance lifecycles, including licensing through TCG’s proprietary patent-pending LicenseTracker®. LicenseTracker is a web‐based application that enables mortgage businesses, branches, and loan originators to maintain and track state and federal agency licensing deadline mandates.

“2011 was clearly a watershed year for The Compliance Group, which validated our firm’s original commitment to mortgage lending quality and compliance a dozen years ago,” said The Compliance Group founder and president Annemaria Allen. “We’ve made strategic decisions and implemented service delivery realignments over the last 12 months that reflect where we see lenders’ mission critical needs emerging.”

For example, Allen explained, TCG rolled its licensing services unit into its compliance unit, reflecting the impact of Dodd-Frank and the SAFE Act on lenders and brokers. It is imperative to complement compliance with licensing due to the many compliance variables that surround licensing through these regulations. Strategizing a company’s licensing structure with complex compliance requirements is critical to the growth and longevity of a company. Compliance services by TCG encompass monthly outsourcing compliance support; Agency, FHA and multi-state audit preparation; and Fair Lending reviews and loan file reviews, including documents/disclosure review by state.

TCG’s QC division conducts post-funding file reviews on all loan programs, FHA branch audits, trending analysis, fraud reviews, and early payment default reviews. Under this division, TCG also performs QC reviews for consumer loans and QC Servicing reviews.

“I’d credit our 2011 growth and early 2012 successes to the fact that compliance is the one controllable factor where lenders know they must focus. Yes, marketing and relationship building are the bread and butter of origination, but compliance is the heartbeat of a sustainable mortgage lending and securitization lifecycle,” she said.

The Compliance Group supports lenders’ most critical origination compliance challenges including: RESPA, TILA, ECOA, privacy, HOEPA, HMDA, multi-state requirements, procedural checklist creation, policy and procedure writing and staff training.

About The Compliance Group (www.TheComplianceGroup.net):

The Compliance Group (TCG) is a leading nationwide financial services risk management organization focused solely on its clients’ compliance success. TCG has helped hundreds of financial institutions mitigate risk and losses with its proprietary, patent-pending technology and its core business solutions of Quality Control, and Compliance and Licensing. Founded by Annemaria Allen in 2000, TCG has built upon her deeply experienced understanding of compliance and risk management to bring peace of mind to the financial services industry.

TCG’s LicenseTracker® (www.LicenseTracker.net), is a patent pending, web‐based application, to help mortgage businesses, branches, and loan originators maintain and track required state and federal agency licensing deadlines and continuing education requirements.

TCG technology is complemented by its experts’ keen attention to delivering results the right way – with integrity, quality, transparency, reliability and customer care. Its appreciation for relationship building allows TCG to assist its clients in understanding the complexity of compliance, developing their strengths in areas of risk while turning compliance and quality control into a profitability strategy.

For more information, contact annemaria@thecompliancegroup.net.

Media Contact:
Kerri Milam
DepthPR
Kerri@DepthPR.com
404.378.0850

TCG Enters Referral Partnership

admin — Sat, 18 Feb 2012 00:30:48 +0000

Titan Lenders Corp. and The Compliance Group, Inc. Enter Referral Partnership, Delivering Enterprise Quality Control Solutions for Mortgage Lenders

Tue, 14 Feb 2012 14:03:37 -0500 EST

DENVER, Colo., Feb. 14, 2012 (SEND2PRESS NEWSWIRE) — Mortgage fulfillment outsource services expert, Titan Lenders Corp. (Titan), and leading mortgage compliance services provider, The Compliance Group, Inc. (TCG), have entered a referral partnership to serve mortgage lenders’ compliance, quality control and multi-state licensing needs. Titan and TCG enable lenders to focus on sustaining profitable businesses that respond with agility to regulatory fluctuations.

The continuing onslaught of regulatory mandates issued at an unprecedented rate requires lenders, investors, and servicers to invest in best practices related to data quality, loan production, and compliance. They must adopt unfamiliar practices rapidly or suffer the threat of penalties and buy backs. Data integrity and accuracy are defining factors in short and long-term risk mitigation, regulatory compliance, and subsequently, profitability. Further, as MERS begins to operate under OCC data reconciliation requirements, the gap between origination and servicing will shrink. Mortgage lenders need expertise on these issues with minimal additional overhead.

“Our industry is eager to rebound, but game-changing rules are now in play, forcing lenders to become champions of data quality and best practices,” said Titan president Mary Kladde. “Through the Titan – TCG referral partnership, lenders can access loan quality expertise and services to ensure the hard work of loan origination is not derailed by avoidable compliance mishaps.”

By combining TCG’s loan origination quality control service capabilities with Titan’s completely represented and warranted domestic outsource fulfillment services, mortgage lenders gain access to a seamless quality-oriented workflow that virtually ensures loan salability.

“Through our referral partnership with Titan Lenders Corp., we have jointly created a loan quality and compliance resource for mortgage lenders, enabling them to grow at a time when regulations are hamstringing other lenders,” said TCG president Annemaria Allen. “Although not every mortgage lender can afford well-qualified internal compliance resources, the new quality-focused mortgage lifecycle makes it absolutely necessary to have an internal compliance program, including written policy and procedures for every law that applies to your company.”

The Compliance Group supports lenders’ most critical origination compliance challenges including: RESPA, TILA, ECOA, privacy, HOEPA, state and multi-state requirements, procedural checklist creation, and staff training.

About The Compliance Group:
The Compliance Group (TCG) is a leading nationwide financial services risk management organization focused solely on its clients’ compliance success (www.TheComplianceGroup.net). TCG has helped hundreds of financial institutions mitigate risk and losses with its proprietary, patent-pending technology and its core business solutions of Compliance, Quality Control and Licensing. Founded by Annemaria Allen in 2000, TCG has built upon her deeply experienced understanding of compliance and risk management to bring peace of mind to the financial services industry.

TCG’s LicenseTracker® (www.LicenseTracker.com), is a patent pending, web-based application, to help mortgage businesses, branches, or loan originators maintain and track required state and federal agency licensing deadlines.

For more information, contact annemaria@thecompliancegroup.net.

About Titan Lenders Corp.:
Titan Lenders Corp. (www.TitanLendersCorp.com) is one of a specialized few providers of mortgage back office fulfillment services, a not-well-understood facet of mortgage lending that includes closing, funding and post closing services. Community banks, credit unions, mortgage bankers and brokers, and warehouse line lenders use outsource providers strategically to minimize compliance risks in a time-sensitive error-averse environment. Fluctuations in mortgage lending volume also lead some mortgage lenders to outsource their entire back office operation and secure predictable “per transaction” pricing rather than maintaining an inflexible static in house staff.

Titan Lenders Corp.’s patented, proprietary web-based software Cerberyx (CBX) supports a full suite of fulfillment services, including: funding, compliance, closing, post-closing, purchase review for correspondents and warehouse lenders, trailing documents, MERS management, FHA insuring, and document management (imaging). CBX’s flexible rules-based architecture allows Titan clients to define field level decision trees, priorities, checklists and process management specific to an investor product variance or a cross-investor climate.

State Licensing Update 10/01/09

admin — Fri, 09 Oct 2009 06:40:51 +0000

Licensing Update 10/01/2009

ALABAMA

NMLS Transition Deadline: December 31, 2009

Alabama has rescinded their FHA exemption for lenders. Section 5-19-31 of the Alabama Consumer Credit Act was amended to remove the exemption as to licensing for “an approved mortgagee under the provisions of the National Housing Act”. As to a result, the amendment removes what has been commonly referred to as the “HUD Exemption” under Alabama law. This will require mortgage companies that operated under this exemption to obtain a license by November 21, 2009.

Brokers – Will need to be licensed under the Mortgage Broker license and the Brick and Mortar requirement has been rescinded, however, the licensed location must be commercial and cannot be a residence.

Lenders – Will need to be licensed under the Consumer Credit License – this license is for lenders, however, brokering is also allowed.

Alabama will begin accepting submissions through NMLS on 10/01/2009. However, current company licensees can obtain access and complete all necessary MU Forms prior to that date. The deadline for current licensees to transition their license onto NMLS is 12/31/2009.

MLO, Owners, Managers, & Officers – Education Requirements must be met prior to 12/31/2009. *Reciprocity for education applies; contact your Education provider for details.

MLO’s in Alabama have until June 1, 2010 to complete and submit a Form MU4 through the NMLS.

The NMLS Unique Identifier of individual originating a residential mortgage loan shall be clearly shown on all residential mortgage loan application forms, solicitations, or advertisements, including business cards, websites, and any other documents as established by rule.

ALASKA

NMLS Transition Deadline: October 31, 2009

ARIZONA

MLO’s and Responsible Individuals must complete the AZ Continuing Education requirements prior to December 31^st of each calendar year.

DISTRICT OF COLUMBIA

NMLS Transition Deadline: October 31, 2009

KENTUCKY

Any individual who applies for registration after November 1, 2009 must meet and follow all SAFE Act Requirements.

MLO License Renewal must be completed by November 30, 2009. Credit Report submission via the NMLS is scheduled for November 30, 2010. Continuing Education for all individuals is due by November 30, 2009. *Reciprocity for education may apply; contact your Education provider for details. NOTE: Your Processors are required to be licensed as a MLO in the State of Kentucky.

MISSOURI

The FHA Exemption has been rescinded and is no longer available. All mortgage lenders and brokers must be licensed to conduct business in Missouri. This state is a brick and mortar state and the license application is the “broker license.”

NEVADA

Effective October 1, 2009 Nevada is now requiring a bond in the amount of $50,000.00 for all licensed mortgage brokers (AB486). Mortgage bankers are not required to carry a bond at this time, but it is coming.

There is a new license application for Loan Modification Consultants, Foreclosure Consultants and Covered Service Providers. These applicants must apply with a bond in the amount of $75,000, if the applicant/licensee’s trust account exceeds $50,000.00 over a six month period, a $100,000 bond is required (AB150).

NORTH DAKOTA

MLO’s (W-2); MLO’s Loan Processors, and U/W acting as Independent Contractors must be fully licensed prior to September 30, 2009.

OKLAHOMA

The FHA Exemption has been rescinded and is no longer available. All mortgage lenders and brokers must be licensed to conduct business in Oklahoma. The license application is the “broker license.” This license has rescinded their brick and mortar requirement; therefore, no physical location is required for the broker license.

PENNSYLVANIA

Pennsylvania rescinded their brick and mortar requirement August 2009. [WAITING FOR PA TO CALL BACK TO PROVIDE THE REG/RULE/ACT THAT RESCINDS THE B&M] Additionally, they are requiring a bond regardless of whether or not you are an FHA MortgageeA.

Lenders

SURETY BOND. Provide an original Surety bond in the appropriate amount (see below) furnished by a surety company authorized to conduct business in Commonwealth of Pennsylvania. The name of the principal insured on the bond must match exactly the Full Legal Business Name of applicant.

Amount Anticipated or Actual Amount of PA Mortgage Loan Originations

$100,000 $29,999,999.99 or less

$200,000 $30,000,000 – $99,999,999.99

$300,000 $100,000,000 – $249,999,999.99

$500,000 $250,000,000 or more

MLO’s will be responsible for maintaining an individual surety bond ONLY if their employer is a business that is not required to be licensed by virtue of the MLA and elects not to maintain the required surety bond on behalf of its licensed MLO. Should the MLO require individual bonding, the determination of the amount of the surety bond required will be the amount of mortgage loan originations secured by Pennsylvania real property in a calendar year. For initial mortgage originator applicants, the amount of the bond will be determined by the anticipated amount of mortgage loans secured by Pennsylvania real property originated in the first calendar year of licensing.

SOUTH CAROLINA

Licensing Change – Currently Mortgage Lenders/Bankers are not required to be licensed to originate and fund 1^st mortgage loans in South Carolina. Effective January 1, 2010 this exemption is gone. A new licensing process through the NMLS will be required. Because of the discontinuance of the exemption and the effective date of the new licensing being the same date, it is virtually impossible to be licensed on January 1, 2010, therefore, the State is allowing a 90 day window 1/1/2010 through 3/30/2010 for all new applicants to perform lending activities until their license is issued as long as there has been an application submitted and is pending approval.

LO’s will also need to be licensed, however, without the company license an LO normally cannot be licensed, therefore, the state will be issuing a provisional license to LO’s until the company is licensed.

Effective January 1, 2010, any licensee with a Supervised Lender License will no longer be allowed to make, service, or originate any type of mortgage loan.

TENNESSEE

Effective July 31, 2009 Tennessee has rescinded their FHA exemption registration. Any licensee with an exemption will be allowed this exemption until July 31, 2010. After that all licensees will need to be licensed through the Tennessee Department of Financial Institutions as a mortgage broker or banker

UTAH

MLO: Commencing October 1, 2009 through April 30, 2010, an applicant for a new license may not take the Utah examination to satisfy the national portion of the examination. During this period, an applicant for a new license must take two separate tests: (a) the Utah portion of the existing Commission-approved Utah examination; and (b) the national portion of the NMLS examination.

Beginning May 1, 2010, an applicant for a new license must take both the Utah portion and the national portion of the examination through NMLS.

All MLO licensees must take and pass the NMLS national portion of the licensing examination by December 31, 2010.

All existing Utah-approved mortgage courses for pre-licensing education expire December 31, 2009. As of January 1, 2010, 60 hours of pre-licensing education is required, as follows: (a) 40 hours approved by the Utah Commission and Division according to the Utah outline for state course curriculum; and (b) 20 hours approved by NMLS according to the NMLS&R outline for national course curriculum.

WASHINGTON (CLL)

Bond Change – Effective January 1, 2010 the bond amount for the Washington Consumer License will be reduced. It is currently in the rulemaking process, however, the bond requirements should be as follows:

WAC 208-620-320 What is the amount of the bond required for my consumer loan license? (1) Loans not secured by real estate. For licensees making loans not secured by real property, the penal sum of the bond is one hundred thousand dollars for each office up to five locations. For each additional branch office over five, the amount of the bond must be increased by ten thousand dollars. (2) Loans secured by real estate. For a licensee making loans secured by real property, the penal sum of the bond is four hundred thousand dollars.)) The bond amount is based on the annual dollar amount of loans you originate. See the following chart:

1. Zero to five million in loans originated: $30,000

2. Five million to fifteen million: $50,000

3. Fifteen million to thirty million: $100,000

4. Thirty million and above: $150,000

WAC 208-620-325 What will my bond amount be in the first year of licensing? Your initial bond amount will be based on either your prior year’s loan origination volume or thirty thousand

dollars, whichever is greater. See the bonding chart in WAC 208-620-320.

WAC 208-620-327 How often will my bond amount change? Your bond amount may change annually depending on your volume of loan origination.

IF AN INDIVIDUAL IS AN EMPLOYEE (W-2) OF A WASHINGTON STATE-LICENSED CONSUMER LOAN COMPANY, THE MLO LICENSE IS VOLUNTARY UNTIL JULY 1, 2010!

The MLO license is required for Individuals originating loans for licensed Mortgage Brokers, whether as an employee (W-2) or independent contractor (1099), Independent contractor loan originators representing exempt Mortgage Brokers and Consumer Loan companies, Independent contractor Loan Processors representing licensed or exempt Mortgage Brokers and Consumer Loan Companies.

2009 MLO Licensing Requirements: (July 31, 2009-December 31, 2009) Pass NMLS Tests (both State specific and National component) prior to obtaining a license, Complete 20 hours of Pre-Licensing Education in order to renew in 2010. The education must be completed prior to December 31, 2009. (Pre-Licensing Education is deferred until renewal.)

2010 MLO Licensing Requirements: (January 1, 2010-June 30, 2010) Pass NMLS Tests (both State specific and National component) prior to obtaining a license, Complete 20 hours of Pre-Licensing Education.

TNG Real Estate Radio Show

admin — Fri, 09 Oct 2009 06:22:56 +0000

This was an interesting event I did in August of 2008. I was asked by the CMBA to stand in for them and do an event to raise money for the Susan G. Komen foundation for breast cancer. The event was entitled “I Survived Real Estate in 2008!” I believe the event raised approximately 40,000.00. Before the event I did a radio show with Bruce Norris, The main sponsor for the event. I’ve attached the link. I Survived Real Estate in 2008

Loan Modifications in California and SB94

admin — Sun, 26 Jul 2009 06:44:11 +0000

Well, here we have it folks…

SB94 now has an urgency provision which means it will take effect immediately if signed into law (instead of Jan 1, 2010). The bill is in the Assembly Appropriations Committee.

In a nut shell this bill will do the following:

Prohibit until January 1, 2013, any person, including a real estate licensee from demanding or receiving any preperformance compensation, as specified, requiring any security as collateral for final compensation, or taking a power of attorney from a borrower, and would make a violation of that prohibition a misdemeanor or subject to specified fines.
Disclosure requirements and foreign language disclosure requirements.
Certain exemptions would apply – but most loan modification companies would not qualify for any of the exemptions.
All advertisements be sent to the Commissioner.

Stay tuned for more information on this bill.

Coming Soon

admin — Sun, 24 May 2009 05:54:58 +0000

Come back soon for details on specials!

Hello friends!

admin — Tue, 05 May 2009 16:09:11 +0000

Welcome to our new and improved website. Feel free to look through the pages of our main website and new blog. We will be adding new and in-depth analysis of mortgage compliance issues shortly. Thank you for your interest and be sure to contact us for all your mortgage compliance needs.