Mortgage brokers that decide to become mini-correspondent lenders had better be aware of the audit process
The regulator plans to look at such things as:
- Is the entity using a "bona fide warehouse line of credit"
- Are the sales of loans on the secondary market "bona fide transfers" or in fact are the table-funded transactions or the equivalent of table funded transactions.
- To determine whether a mortgage transaction is a bona fide transfer of a loan obligation in the secondary market, the CFPB will look to the "real source of funding" and the "real interest of the funding lender."
- Is the creditor doing the loan using a bona fide warehouse line of credit or is it only selling the loan to one entity and that is the same entity giving it the warehouse line of credit?
- Is the entity funding the loan still brokering loans?
- Is it brokering loans to the same entity that gave it the warehouse line of credit?
- Does the creditor have more than one warehouse line of credit?
- Does the creditor have more than one investor to whom it sells loans?
- Does the mini-correspondent lender underwrite the loans?
These are but a few of the items to be audited by the CFPB in its checking the validity of the entity being a lender.
Mortgage brokers, you should be careful what you wish for. Remember even if you convert to a "true lender" the warehouse lender requires "personal guarantees" whereas being a broker does not require this and your personal assets are better protected.
In case you missed it, CFPB back in November 2013 released a clarification regarding its stance on split commissions between loan officers. This change of opinion makes many previous split-commission structures a potential violation under the current CFPB regulations. If you have a
The CFPB just loves to make changes or add more regulations or clarify things to make it easier to understand?
