If the consumer pays a loan originator organization, the organization is allowed to pay a commission to the individual loan originator who originated the transaction.
If you are a loan originator organization and receive compensation directly from the consumer, you may still pay compensation to the individual loan originator for the transaction. In this case, neither you nor the individual loan originator may receive compensation from the creditor in connection with the transaction.
You may base the amount of the compensation that you pay to the individual loan originator on the amount of compensation that you receive, but not on any other transaction term or proxy for any other transaction term.
If you are an individual loan originator, you may receive such compensation. (12 CFR § 1026.36(d) (2) (i) (C))
MORAL
First they say you can’t and now they say you can, what are you going to do? Sounds like an old song, doesn’t it? But remember, it is not Jan. 1, 2014 yet so it can change yet again, can’t it? With this, those that are using independent contractors (hopefully legally and with good contracts with the “magic words” in them, can do borrower paid as well as lender paid compensation.
SELLER POINTS EXCLUDED FROM THE 3% POINTS AND FEES IN THE QUALIFIED MORTGAGE RULE
FACTS
CFPB has ruled that
Seller points are those points that the creditor imposes on the seller. CFPB has also decided lender-paid items on behalf of the borrower should not be included in points and fees, except for compensation to the mortgage broker. (on92213)
MORAL
So just because you call it seller points, does not mean it is. It must be a creditor imposed charge on the seller.
SOME JURISDICTIONS REQUIRE NEW CRIMINAL BACKGROUND CHECKS FOR ORIGINATORS TO RENEW LICENSE FOR 2014
FACTS
The state mortgage regulators in Connecticut, Delaware, Florida, Hawaii, Idaho, Massachusetts, Missouri, Montana, Nebraska, New York, North Carolina, Puerto Rico, Rhode Island and Utah will require a new criminal background check as a prerequisite to the 2014 license renewal process for mortgage loan originators. If an individual’s prints on record in NMLS are more than three years old, the MLO will be required to obtain new fingerprints in order to submit a criminal background request.
MORAL
Do not get in trouble.
ARIZONA ATTORNEY GENERAL SUES MORTGAGE COMPANY FOR TAKING ADVANTAGE OF SPANISH SPEAKING PEOPLE NEEDING LOAN MODIFICATIONS
FACTS
Arizona Attorney General Tom Horne has filed a consumer fraud lawsuit against Phoenix-based Making All Homes Affordable LLC, its owner and manager Albert Figueroa and salesperson Steve Villanueva.
The complaint alleges that the company targets Spanish-speaking consumers who need to modify their home mortgages, misleads consumers into believing they will obtain principal and interest reductions on their home mortgages by using their program. MAHA, in its radio advertisements that are presented in Spanish by Figueroa himself, tells consumers that if they meet with a representative at their office in Phoenix, then MAHA will determine whether they are eligible and qualified for a reduced mortgage.
According to the lawsuit, when consumers met with MAHA they were told they were eligible and qualified for specific principal and interest rate reductions when, at the time the company made the representations, the company had no knowledge as to whether the consumer’s particular lender
would agree to such reductions. The State alleges that MAHA told consumers that they were eligible and qualified for certain principal and interest rate reductions, but did not obtain such reductions, even after consumers paid approximately $1,700 each for the MAHA program.
The lawsuit also alleges that Figueroa, working with an Arizona business named Diversified Home Solutions LLC, engaged in a fraudulent scheme to obtain payment from a MAHA client by recording a fraudulent Deed of Trust against the client’s property for a non-existent debt that Figueroa claimed was owed to Diversified Home Solutions.
The lawsuit requests that the court issue orders against MAHA, Figueroa and the other defendants to prevent them from violating the Arizona Consumer Fraud Act and to require them to provide refunds to consumers who have paid MAHA, as well as civil penalties and the State’s costs and fees in bringing the lawsuit. (azag91813)
MORAL
In this attorney’s opinion, someone could be looking at criminal prosecution for filing a false instrument (deed of trust). If forged then it gets worse for the perpetrator.
AMERICUS MORTGAGE CORP., FORMERLY KNOWN AS ALLIED HOME MORTGAGE CAPITAL, SUED BY THE UNITED STATES OVER FRAUD LOANS INSURED BY HUD-FHA
FACTS
On Sept. 10, 2013 a federal judge rejected a request by a mortgage firm to dismiss a lawsuit accusing it of defrauding the U.S. government. U.S. District Judge George Hanks said that Americus Mortgage Corp., formerly known as Allied Home Mortgage Capital, would have to face the lawsuit, which alleges that the company misled the government into believing its loans qualified for insurance through the Department of Housing and Urban Development’s Federal Housing Administration.
The government can also pursue claims against Allied CEO Jim Hodge and compliance director Jeanne Stell, the judge ruled. "The government has adequately alleged a fraudulent scheme by the defendants to deceive HUD through the use of shadow branches and induce it to insure loans that it otherwise would not have insured, and that HUD had to pay out on those loans," Hanks wrote. "The complaint further supports an inference of fraud by outlining the level of control Hodge maintained."
The government alleged that while operating as Allied, the company falsified records, intimidated former employees into silence and represented shoddy loans as qualified for insurance through FHA.
It also alleged that Allied employed “quality control” staff in the U.S. Virgin Islands who did not know what a mortgage was.
According to the government, 32% of the 112,324 FHA loans Allied made between 2001 and 2010 defaulted, costing HUD
more than $34 million. (mpa91313; U.S. ex rel. Belli v. Americus Mortgage Corp et al, U.S. District Court, Southern District of Texas, No. 12-02676)
THE INFORMATION CONTAINED HEREIN IS NOT LEGAL ADVICE. AN ATTORNEY SHOULD BE CONSULTED IF YOU DESIRE LEGAL ADVICE.
