We have provided an updated HMDA policy and procedure. Note that the LAR (Loan Application Register) gets replaced by the HMDA portal. You no longer need to make your LAR available to the public in a lobby area, because the public can review the data through the CFPB's analysis. Most companies in a Metropolitan Statistical Area (MSA) will report, because all you need is 25 decisioned loans to trigger mandatory reporting.

Almost all reporters will use software to cull data from the LOS, and render it in an uploadable format. We have provided links to the FFIEC and CFPB's tools for this. In addition, we recommend that you utilize your NMLS call reporting process as a way of scrubbing data on a quarterly basis to avoid a massive job on March 1.

Download the file here - 2-42 2018 HMDA Policies and Procedures

Based on a regulator and investor request, we added a section to include the reporting of serious appraiser issues, like fraud or other malfeasance, to state or federal regulators. We had previously stated that the maximum extent of disciplinary action was removal from the approved appraiser list. 

Download updated AIR Policy here

Due to feedback from regulators, and the general confusion on the difference between a pre-qualification, a pre-approval and qualification, we have enhanced the policy and procedures on pre-qualification. 

We recommend that you ALWAYS issue a positive pre-qualification, even if it's for $50, or if it is contingent on the prospect achieving certain benchmarks, such as a minimum credit score, debt payoff, income from a job, or saving adequate cash. In this way you avoid the awkward proposition of issuing a denial when the prospect didn't actually apply.

Distinguish this from a qualification request, where your prospect requests a letter for a specific property, and you cannot achieve the qualification. THIS MUST BE REPORTED. 

Here is the updated policy and procedure 11-27-2017 Updated Pre-Qualification Policy and Procedure

We spend a lot of time trying to uncover fraud. Several recent incidents remind us that it's not quite straightforward when you have to report it. Here's the updated reporting procedure.

A number of regulators have begun to request these as part of the licensing or renewal process. Some of our customers are mystified, but the idea is simple: think about your business and the risks you face, and those you are exposed to by your customers and counter parties.  Click to download the update here.

Also read the article here

​A number of inquiries from regulators has prompted some clarifications. 
​
Privacy Act
Regulation P, also known as Gramm-Leach-Bliley, gets addressed in the privacy policy in your compliance manual. YOU NEED TO INSERT YOUR ACTUAL COMPLETED PRIVACY POLICY THAT YOU SEND OUT FROM YOUR LOS BEFORE YOU SEND THIS TO INVESTORS OR REGULATORS.
 
This policy addresses your policy for information sharing, but also refers to the Safeguarding of Customer Information, the second important provision of Reg P/GLB. The procedures and specific policies for this are addressed in your 2.90 Information Security and FACTA Red Flags Plan. 

We re-organized the Privacy Section of the Compliance Module to reflect a request one client had from Fannie Mae to address the scope and disposition of consumer information. You can download the policy here and replace it in your module.

2-47 Privacy Act Policy

OFAC and PATRIOT Act Policy
An investor requested clarification/expansion on the OFAC policies. Remember that we check for OFAC Clearance in a number of ways, and the high-level compliance policy, by itself, may not answer the investor's concerns. Specfically:
 
In the 2-0 Compliance Module
 
2-47-21 Customer Identification Procedures
2.72 Employment, Screening and Compensation Practices 
 
In the 1-0 and 1-A Quality Control Plan
 
1-40 Anti-Money Laundering (AML) and Suspicious Activity Reports (SAR)

To help with simplifying the response to investors by simply using the policy listed in the 2-0 Compliance Module, we updated the OFAC/PATRIOT Act Policy. You can download it here:

2-47-2 PATRIOT Act and OFAC Policies and Procedures
 
Business Plans and "Business Plans" 
You may recognize that many states require a "business plan" as part of the licensing approval process. It is important to know that there are two different meanings for this, and we were reminded of this by Virginia's Licensing Process.

1. Marketing Business Plan - which describes your strategies for attracting customers, growing or expanding your business, and any innovative advertising, compensation or branching strategies.
2. Operating Business Plan - which details how you will manage and compensate loan officers, supervise processors and operate your branch, For companies which are larger than single office sole operators - anyone with a remote office, basically - to satisfactorily respond to these requests you really need the complete mortgage correspondent or mortgage banker packages, which address supervising and management specifically. Your marketing business plan will not (and should not) address these, but should reference them, and be available for inspection. 

Here is a sample response to the request:

• Update your business plan to include your marketing plans for Virginia, but send them your origination and processing policies and procedures, ensuring that they contain your correct compensation plan for Virginia.
• Then, in the Marketing Plan, simply state "originators will be paid according to the company's loan officer compensation plan, and processors are paid salary based upon the agreed upon salary rate."
• If you will be using contract processing services, please include that information, and then also include your vendor management plan for third party service providers, as well as your SAFE Act policies. 

​Michigan Requesting Policy Clarification with Respect to In-Home Loan Applications
Michigan has a requirement that customers receive notification of the products you offer, the process for getting a loan, and that the customer can always apply. This brochure is assumed to be made available to customers when they come to your office. When a loan officer visits a customer in his home, there is no assumption of compliance; you must provide affirmative proof the customer receives that. 

We made some changes to the Advertising Compliance Policy. You may download it here:

2-34 Advertising and 7-10 Social Media Policy

By Request Only - California Servicing Loss Mitigation - Homeowner's Bill of Rights (HBOR) - Lender licensees, even if they don't service, must have this policy in place. ​

• AML Audits are due in August
• MERS Policy Template
• TRID Checklist Updates
• Internal Training Programs 
• Reverse Mortgage Disclosure
• Fair Lending Pricing Concession Procedure

AML Self-Audit Checklist
For companies who adopted their AML policies in August 2012, when the FinCEN rule became effective, this serves as your reminder to initiate the review. You can use the Self-Audit Checklist we give you, as long as the sole-principal isn't the one who completes it. It doesn't have to be a vendor, but it must be completed by a third party, according to FinCEN rules.

The article is here. The checklist is here

MERS Policy Template
This type of policy is usually reserved for customers who are servicing mortgages, but we have seen a number of correspondents tagged for this request during renewal. If you do need it, please feel free to download it.

The article is here. The download is here.

TRID Checklist Updates
We know that you have had TRID up the wazoo, but this update to your processing/underwriting/QC checklist can help with catching LE and CD errors. Most of the errors result from COC items, so the checklist includes change dates. 

This is the processing/underwriting/QC Checklist
This is the closing document checklist

Internal Training Programs 
With many state audits, companies are failing to include documentation and benchmarks regarding internal training programs. As you may know, we include non-NMLS compliance training as part of the managed service, but we also provide the assessment and certification of existing training that has already been taken so that certain personnel (Loan Officers, especially) don't have to take training twice. 

Here is the training policy

Reverse Mortgage Disclosure
We recently had a client report that a state auditor was asking for information regarding how their reverse mortgage consumers knew who to complain to, among other things. We thought that was a pretty good case study in creating a disclosure. 

The article is here

Fair Lending Pricing Concession Procedure
With the increased scrutiny of loan originator compensation, pricing disparities in the customer's favor don't really trigger an alert for comp, but they could for fair lending. 

Here is a sample policy. 

Secondary Market Investors, Regulators Requesting Mortgage Electronic Record System® Quality Assurance Plan

MERS® has been functioning in place for many years, eliminating many cumbersome, expensive and ineffective procedures to effect and track the transfer of individual mortgages in the secondary market. It drew much unwanted attention during the foreclosure crisis, as legal challenges resulting from the inferred opacity of the system - because you can't ascertain the holder of the mortgage/note from county recorders offices - seemed to threaten the very basis of the business model. Having survived, for now, many of the issues which arose during the crisis are now filtering their way to the front lines. Market participants who once did very little more than assign a MERS® ID now find themselves having to fulfill other obligations. 

First among these is Quality Assurance. While adding another series of checks and balances to our quality control process seems like another burdensome cost of doing business, a rational approach allows us to understand that we actually conduct this audit as a regular part of our business. We just need to prove we do it. This involves two steps:

1.) Recording our MERS® steps
2.) Having a plan that identifies the person who keeps the records and submits the information

As a MortgageManuals.com Customer, you can download for free here or if the link is broken, here:
​https://mortgagemanuals.sharefile.com/d-sa058d7258194ff3a