Compliance (50%)

Required Conduct Mortgage Loan Originators

-Obligated to make reasonable efforts to secure a loan that is reasonably advantageous to the borrower considering all circumstances, including interest rates, charges and repayment terms

Required Disclosures to Investors

-Required to provide to private investors before investor pays any money into a transaction: a. Independent statement of value of property b. Copy of the preliminary title report c. Disclosure statement that includes: -Name and address of owner of subject property -Info on ability to repay -Legal description or address of subject property -Improvements or utilities of property -Terms and conditions of the mortgage loan -Terms and conditions of all liens on property -Statement whether licensee is acting as principal or agent

Examinations

-Superintendent may conduct examinations at his or her discretion, but at least once every 5 years

Cease and Desist Orders

-A cease and desist order issued by the Superintendent is effective immediately upon service and is enforceable until removed by the Superintendent or a reviewing court

Fees and Charges Mortgage Brokers and Mortgage Bankers

-Appraisal and credit report fees may not be commingled with other monies of mortgage broker -Mortgage brokers may not charge application fees for mortgage loans of less than $200,000, unless a signed, written agreement -Mortgage broker required to immediately deposit all moneys received from a borrower into an escrow account -If mortgage broker requires an advance or fee to be paid in connection with an application for a loan, a written agreement must be issued a. Advances or fees must be immediately deposited into trust account

Counseling Requirements for Reverse Mortgages

-Before accepting an application for a reverse mortgage loan: a. Provide borrower with list of at least 5 housing counseling agencies, including 2 agencies by phone b. Receive from borrower a certificate that borrower has received counseling -Counseling must be provided by independent third party -Counseling must occur within 6 months prior to the date the loan originator accepts the loan and 10 days before loan closing

Mortgage Recovery Fund

-Established for the benefit of any person aggrieved by the harmful acts or conduct of a mortgage loan originator -In order to make a claim against the Recovery Fund, a consumer must: a. Obtain a judgement against a licensee within 5 years of being harmed b. Apply to the Department for payment from the Fund within 2 years -Licensee has 35 days from the date of receipt of a notice of a claim in which to contest the claim -Licensee has 30 days from notice of the Superintendent's decision to pay claim

Disclosures and Agreements

-If mortgage broker or banker licensee requries a fee to be paid in connection with an application for a mortgage banking loan or mortgage loan, there must be a written agreement a. Agreement must contain: -Payment of fee -Disposition of fee -Whether loan is closed or not -Conditions on which fee may be returned to customer -Upfront fees or third party fees held in trust account

Reverse Mortgages

-Lender provides funds to the borrower and takes a security interest in the borrower's primary residence -Loan not repaid until: a. Borrower dies b. Sells residence c. Stops using dwelling as his or her primary residence -Must be 62 years old -Attorney General prosecutes all violations -Due and payable if: a. Borrower fails to occupy the property for longer than 12 months b. Property is not the principal residence of at least one other borrower

Required Conduct Mortgage Brokers and Mortgage Bankers

-Licensee must truthfully account for funds belonging to a party to a mortgage loan transaction and only disburse funds in accordance with agreements -All appraisal and credit report fees kept separate from operating funds of a licensee in a trust account -Reasonable background investigation should be conducted for any potential employee before he or she is hired a. Record of investigations kept for at least 2 years after termination

Disclosure for Blank Spaces

-Licensees are prohibited from allowing any document related to a transaction to be signed when it includes blank spaces a. Certain exemptions: -Statement that authorizes mortgage broker, banker, commercial mortgage banker or escrow agent to fill in spaces that you left blank

Advertising

-May not advertise in any manner, false, misleading, or deceptive statement in regards to rates, terms, conditions for mortgage loan -Rates and charges must be stated in a clear and concise manner -Must be done in the name of the employing entity -If license is in name of a natural person, nothing in advertisement or solicitation can imply that the license is the name of another person or entity -Does not include business cards, radio and television advertising directed at national or regional markets

Prohibited Conduct and Practices Mortgage Loan Originators

1. Accept any money or documents in connection with an application for a mortgage loanw hile acting on his or her own behalf 2. Employed by more than one mortgage broker or banker 3. Collect compensation as real estate broker or salesperson unless properly licensed 4. Receive or disburse money in servicing or arranging a mortgage loan 5. Accept any assignment of the borrower's wages or salary 6. Require a person to obtain property insurance in an amount that exceeds replacement cost of improvements 7. Knowingly withhold or destroy any books, records, or information relating to the loan originator's business operations

Prohibited Conduct and Practices Mortgage Brokers and Mortgage Bankers

1. Make or negotiate a loan that is less than the minimum amount or is not secured by a mortgage or deed of trust a. $5,000 for mortgage brokers b. $10,000 for mortgage bankers 2. Employed by more than 1 licensee 3. Collecting compensation for rendering services as a real estate broker or salesperson unless properly licensed