JAN 3, 2013

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Compliance Matters

Words to the Wise About CFPB

JAN 3, 2013 4:20pm ET
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A WORD ABOUT THE CFPB PERSON THAT OVERSEES YOUR MORTGAGE BUSINESS IN THE WEST

FACTS

Edwin L. Chow helped plan and build the structure, staffing, policies, procedures, and processes of the Consumer Financial Protection Bureau. He is the regional director of the CFPB West Region office in San Francisco and is responsible for directing the agency’s consumer protection examination and supervision activities with respect to regulated depository financial institutions with assets over $10 billion and their affiliates, as well as non-depository financial services companies in the states of Alaska, Arizona, California, Colorado, Hawaii, Idaho, Kansas, Montana, Nebraska, New Mexico, Nevada, North Dakota, Oklahoma, Oregon, South Dakota, Utah, Washington, Wyoming, and the territory of Guam. He supervises all the agency’s managers and staff in these areas and continues to assist the CFPB headquarters offices and other regional offices with building out their policies, programs, systems and operations. He graduated from San Francisco State College with a B.S. in Small Business Management and an MBA in Finance. So he should be around for quite a while and is quite literate with all the policies and regulations having created a large part of them himself.

MORAL

In other words, toe the mark or his people may tow it for you.

CFPB AND HOW YOU CAN COME ON ITS RADAR SCREEN

FACTS

As you are aware consumers can now file complaints against mortgage companies on-line. They are also investigated promptly. The complaint then is sent to the mortgage company with a request to respond within 15 days. Do not ignore it. The problem will only escalate if you do ignore it

Take appropriate action. Call the consumer to try and resolve it or respond to the CFPB.  But definitely respond to the CFPB. This response is sent to the consumer and the consumer is given the opportunity re respond to the company’s answer. The CFPB allows you to give it four types of response.

  1. Close the complaint in writing to CFPB with a payment to the consumer.
  2. Close the complaint in writing with no payment to the consumer.
  3. Close the complaint with an explanation or
  4. Close the complaint with no explanation.  (not recommended) 

Failure to respond within the 15 days guarantees further investigation. If the borrower/consumer disputes the company response the CFPB may investigate you further so be sure it is complete and where possible use documents to rebut. The documents can help resolve matters quickly as where the consumer states he or she did not receive a Mortgage Loan Disclosure Statement of a Good Faith Estimate and you produce one signed by the borrower.

The important thing to remember is RESPOND IN 15 DAYS.

MORAL

Remember, since the consumer can file the complaint on line, more consumers will complain as the CFPB becomes more widely known.  Therefore, do not ignore it. If you need assistance call us.

A REMINDER ABOUT MORTGAGE LOAN ORIGINATOR COMMISSIONS UNDER THE DODD-FRANK ACT AS WELL AS SERVICERS CHARGING LATE FEES AND DEROGING CONSUMER REPORTS

(Some of you still seem a little confused on this subject.)

MORAL

What does this mean to you, the loan originator or the broker responsible to the California Department of Real Estate (or your state regulator), CFPB and the Federal Trade Commission? It means if you fail to comply Chow, the DRE or the FTC will come looking for compliance and for discipline that can cost you your license and/or money. Note the fact the originator must receive a fixed percentage based on loan amount. This in my opinion means if the fixed amount by the broker or creditor paying its own originators is one point, then the originator cannot go to another lender that will give him a higher percentage. If this is done, the originator and especially the creditor/broker/owner had better be able to prove the loan was better for the consumer. Even then, the regulation, as I read this, still does not allow for the higher compensation at all.  One point is one point regardless of the creditor. 

If you have a different opinion, I would like to know about it and the legal authority that backs that opinion. Mine is based on the CFPB regulation.

A REMINDER ABOUT FHA CONNECTION SYSTEM CHANGES

FACTS

Effective Jan. 28, lenders will be prohibited from receiving a case number if the loan officer name and NMLS ID number are not correctly entered at case number assignment. In addition, lenders registering a new third party originator in the FHAC Sponsored Originator Registry must include the TPO’s NMLS ID number, full corporate address and EIN number in order for registration to be successful. 

All FHA-approved lenders are reminded of their responsibility to provide FHA with accurate information regarding their NMLS unique identifier numbers as required, which includes individual NMLS ID numbers for all loan officers that originate FHA loans.  Please note, the Sponsored Originator Registry will recognize if the geographic location of the TPO is currently one of five states which are exempt from registering their companies with NMLS.  Individual loan officers should not be registered as TPOs unless they are set up as a sole proprietorship or otherwise are incorporated as a legal entity. All lenders are strongly encouraged to review and update TPO information in the Sponsored Originator Registry for TPOs that they have already registered in FHAC.

MORAL

A word to the wise. If we audit you, we will check for accuracy on TPO for those of you doing wholesale.  The reason: HUD auditors will most certainly check and violate you if the information is not accurate.

Comments (6)
If in sales, you have to make money, if working for a broker, you have to make enough for them and you, as long as there is a yield spread, customers will get the short end of the stick. If your secondary market needs to make money, LO's will never get FNMA/FHLMC true pricing.
Posted by jomama | Friday, January 04 2013 at 2:24PM ET
jomama, What are you saying? It does not matter if you work for a broker or a bank there is YSP in a sense. The bank prices their loans with their intended yield and then turn around and sell the loan making more money on it that is not disclosed to the consumer. Brokers on the other hand disclose ALL the money they earn to consumers. Brokers disclose way more info than banks to consumers, which confuses them more. I'm not sure if you are saying consumers get the short end of the stick working with brokers, but you could not be more wrong if that is the case. I am a broker and I beat bank rates all the time and provide superior service as well.
Posted by D | Monday, January 07 2013 at 1:04PM ET
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