State Law Changes on Licensing, Advertising, Foreclosures, Attorney's Fees, Etc.

Regions, BB&T, Chase, Wells Fargo… the list goes on. They aren’t the first, and won’t be the last, but the Department of Justice tells us that Salt Lake City’s, “Primary Residential Mortgage Inc. and SecurityNational Mortgage Co. have agreed to pay $5 million and $4.25 million, respectively, to resolve allegations they violated the law by underwriting government-backed mortgages that did not meet requirements.” PRMI spread the word that, “PRMI does not admit liability in its agreement with the Department of Justice. PRMI fully cooperated with the inquiry and has agreed to a $5,000,000 settlement, in order to avoid the expense, uncertainty and inconvenience of litigation. This settlement does not affect PRMI’s HUD approved mortgage status. PRMI will continue to offer FHA-insured loans, consistent with its goals to help expand homeownership opportunities for communities across the nation.”

Multi-state lenders must not only follow Federal changes in residential lending rules and regulations, but must also adhere to state changes. And they just don't stop, adding to the cost and complexity of lending - which of course impacts consumers. Some changes are more technical than others, but let's see what some of the states have been up to lately.

Illinois House Bill 4648 covers user direction for disclosure of digital assets, terms-of-service agreements, custodian compliance and immunity. The Revised Uniform Fiduciary Access to Digital Assets Act applies to fiduciaries acting under a will or power of attorney, a personal representative acting for a decedent, a guardianship proceeding, a trustee acting under a trust, and a custodian if the user resides in Illinois or resided in Illinois at the time of death.

California has passed Assembly Bill 1650 which amends its real estate licensee advertising requirements to require additional disclosures. Effective January 1, 2018 the licensee is required to disclose on all solicitation materials his or her name, license identification number and unique identifier assigned to that licensee by the Nationwide Mortgage Licensing System and Registry if that licensee is also a mortgage loan originator. In addition, the commissioner may adopt regulations identifying the materials in which this information must be disclosed.

California has passed Senate Bill 983 which amends provisions regarding foreclosure attorney's fees that may be charged prior to the mailing of notice of sale pursuant to a power of sale contained in a mortgage or otherwise at any time prior to the decree for foreclosure. Section 2924c of the California Civil Code has been amended to allow collection of fees based upon the following schedule: If the unpaid principal sum secured is one hundred fifty thousand dollars ($150,000) or less, then the trustee's or attorney's fees are authorized to be in a base amount that does not exceed three hundred fifty dollars ($350).

Are lawyers having fun yet? If the unpaid principal sum secured exceeds one hundred fifty thousand dollars ($150,000) then fees are authorized to be in the base amount of three hundred dollars ($300), plus one-half of 1 percent of the unpaid principal sum secured exceeding fifty thousand dollars ($50,000) up to and including one hundred fifty thousand dollars ($150,000) plus one-quarter of 1 percent of any portion of the unpaid principal sum secured exceeding one hundred fifty thousand dollars ($150,000) up to and including five hundred thousand dollars ($500,000), plus one-eighth of 1 percent of any portion of the unpaid principal sum secured exceeding five hundred thousand dollars ($500,000).

California has amended Sections 1785.16.2 and 1788.18 of the Civil Code to further protect consumers who may be a victim of an identity theft crime. The act requires a debt collector to cease collection activities and to complete a review prior to resuming collection activities where a debtor provides to the debt collector certain items alleging that they are a victim of an identity theft crime.

California has passed Assembly Bill 2566 which amends Section 1185 of the Civil Code with respect to identity documents a notary public may rely on when making the determination that a person making an acknowledgement is the person described. Existing law allows a notary public to reasonably rely on a passport issued by a foreign government and stamped by the United States Citizenship and Immigration Services of the Department of Homeland Security. This provision has been repealed and amended to authorize the acceptance of a valid consular identification document issued by a consulate from the applicant's country of citizenship or a valid passport from the applicant's country of citizenship.

California has passed SB 657, effective 1/1/17, which updates the California Residential Mortgage Lenders Act to include in the definition of '"Lender'", a person who "Is not a natural person and engages in the activities of a loan processor or underwriter for a residential mortgage loan but does not solicit loan applicants, originate mortgage loans, or fund mortgage loans unless the person is also a lender under paragraph (1)." It also includes as a person who "Is a natural person and an independent contractor who engages in the activities of a loan processor or underwriter for a residential mortgage loan as described in subdivision (c) of Section 50003.6 but does not solicit loan applicants, originate mortgage loans, or fund mortgage loans unless the person is also a lender under paragraph (1)." SB 657, in addition to maintaining the existing requirement that a licensee shall continuously maintain a minimum tangible net worth of $250,000, now authorizes the Commissioner, at his or her discretion, to require a lender to continuously maintain a net worth greater than $250,000 but not to exceed the net worth required of an approved FHA lender.

California has passed SB 1150 which amends the California Civil Code to provide foreclosure protection to a person claiming to be the successor in interest of a deceased borrower. SB 1150 prohibits a loan servicer from recording a notice of default in the event a person, not a party to the loan or promissory note, notifies the loan servicer that the borrower has died and claims to be a successor in interest to the borrower. The loan servicer may not record the notice of default until the servicer requests reasonable documentation of death from the claimant and requests reasonable documentation demonstrating the claimant's ownership interest in the real property and provides the claimant a reasonable amount of time to procure and provide such documentation. When a loan servicer receives reasonable documentation of the status of the claimant as a successor in interest as well as evidence of the claimant's ownership interest in the real property, then the claimant is a successor in interest.

The Maine Department of Professional and Financial Regulation adopted provisions that will help to unify the Bureau of Financial Institutions and Bureau of Consumer Credit Protection's Alternative Mortgage Transactions joint rule with the CFPB's Regulation D. The rule authorizes creditors and financial institutions to make mortgage loans with adjustable rates and finance charges, limits adjustments to interest rates and finances charges and how they may be made; prevents change in the interest rate of a balloon mortgage at renewal, and forbids prepayment penalties on alternative mortgage loans.

The Texas Finance Commission amended provisions, effective on September 8, 2016, under its chapter regarding Regulated Lenders and Credit Access Businesses. The purpose of the rule changes is to update rules regarding the licensing of regulated lenders, and to make technical corrections. The adopted rule changes relate to contact information, transfers, criminal history review, definitions, and recordkeeping. If a transfer of ownership occurs, the transferee must submit either a license transfer application or a new license application on transfer of ownership under this section. No regulated loan license may be sold, transferred, or assigned without the written approval of the OCCC, as provided by Texas Finance Code, §342.163.

Massachusetts has recently amended its statutory provisions, effective as of July 29, 2016, relating to Mortgage Lender Community Investment. The criterion by which the Commissioner is to evaluate a mortgage lender's performance has been expanded to include loss mitigation efforts. Specifically, the Commissioner will consider the mortgage lender's attempts to work with delinquent mortgagors to resolve delinquencies. While the service test set out in 209 CMR 54.23 has not changed, the application of the provision has been narrowed. It now excludes mortgage lenders that have made fewer than one hundred home mortgage loans in Massachusetts in the last calendar year from its scope.

Rates? They may not move much until another Fed meeting comes along. Yesterday the fixed-income MBS markets were mostly unchanged although the 10-year did hit a high yield of 1.63%, worse .125 in price. There wasn't any substantive news to move rates.

There isn't much scheduled news for today either: a couple Fed speakers, same-store sales, and the ISM-New York Business Conditions Index for September. And it's hard to be excited about the 9PM, one scheduled vice-presidential debate will be held between Tim Kaine and Mike Pence at Longwood University in Farmville, VA. In the early going the 10-year is sitting around 1.62% with agency MBS prices a shade better than Monday evening.

Jobs and Announcements

In retail news Homestar Financial, a Georgia-based mortgage banking firm, continues its rapid development throughout the Southeast, Mid-Atlantic and Midwest and is seeking qualified Retail Branch Managers and Loan Officers in Florida. With over 80 offices, Homestar is a leader in the Southeast in Conventional, USDA, FHA, VA, Construction Perm, and Jumbo loans, and recently received the "Excellence Award" from USDA along with being the #1 FHA Purchase lender in Georgia for the third straight year. Volume for 2016 has already eclipsed 2015's $891 million: Q2 2016 production volume is up 60% over Q2 2015. Employee count has increased 30% from 2015, and Homestar's servicing portfolio has grown by 10% in 2016. "Homestar is a company that is focused on closing loans for originators and compensating them for what they accomplish." Contact John Berry, Division Manager, for a confidential conversation. NMLS #1095018 Branch NMLS #70864 Georgia Residential Mortgage Licensee #17368 Branch #39354 MLO FL# LO21222.

In the reverse mortgage channel, American Advisors Group (AAG)'s retail operations are growing "due to the success of our new ad campaign featuring Tom Selleck. We're currently hiring for aProcessing Manager-position will be located in Orange, CA, overseeing 10 employees in a high volume processing environment. Requires 3 years' experience as a Processing Manager and 4 years of FHA experience. We also need an Underwriting Manager-- position will be located in Orange, CA, overseeing 15 employees in a high volume environment. Requires 3 years' experience as an Underwriting Manager and 4 years of FHA experience (must be DE certified). If you're looking for an excellent career growth opportunity, competitive compensation/benefits package and long-term stability, please submit your resume to esanchez@aag.com."

Compliance and social media finally go hand and hand. LO SocialBot Enterprise Edition auto-posts compliant social media content to loan officers' social media. Companies have full review and release safeguards and real-time social media monitoring. Real-time 'Social Phishing' alerts compliance when any LO posts a trigger term on any social media platform. LOsocialbot also provides pre-scrubbed content which is automatically posted according the schedule set by each LO with proper licensing and compliance verbiage. Categories include Credibility Boosters, Fun Real Estate News, Rate Market Commentary and Flash-Posts. The average LO is getting 71,000 potential impressions per year on Facebook alone, making LOSocialBot the only compliance driven system they're thankful to have. Auto-posting is also available on Twitter, LinkedIn, Google+ and Pinterest. Enterprise rollouts are being scheduled for November. Contact Jason Lutz for more info."

In wholesale news, AFR is on the move... and staffing up! "AFR Wholesale's recent announcement of MyLoanCenter has created an incredible buzz with our new white-label technology solution that streamlines the way our brokers communicate with their customers. AFR Wholesale is looking for experienced Account Executives with an aptitude for technology and growth. As one of the nation's premier wholesale providers, AFR provides Broker and Correspondent channels as well as On-Demand Processing. AFR's Government and Conventional loan programs have been enhanced with a new, state of the art technology platform which delivers an exceptional Client experience. Remote based 'work from home' opportunities exist across the country. If you are an Account Executive looking to combine your relationship building skills with our new loan platform, apply now at: Wholesale Account Executive NJ and Remote ."