Some of the Big tress in the forest Mortgage lending Some of the Big tress in the forest

What is a loan originator Generally speaking, in the Habitat setting, loan originators are staff and volunteers who interface directly with the applicant and discuss loan terms and/or the applicant’s financial qualification requirements, or provide the applicant guidance in completing the application.

What activities do not constitute loan originator activitgies Solely clerical or administrative tasks, including number crunching Front desk personnel who just accept applications without discussion about the loan Underwriting or other functions performed by Board members who only review documents and do not engage with the applicant Home visits, o long as no loan terms or financial qualification requirements are discussed

IN new Mexico, we don’t have to be licensed, but what are the requirements HFHI requires L.O. to take the national and state specific online training Must have a criminal background check, credit report and information related to any civil, criminal, or administrative decision Affiliate must determine that the individual meets financial responsibility, character, & general fitness standards, according to Board-approved policy. (no felonies in 7 years and no felony involving fraud, dishonesty, breach of trust, or money laundering. Online courses must be taken each year – both national and state.

What is an application? An application can be oral, written or electronic. In Habitat, our application includes two phases: the homeownership assessment including the home visit and the final loan assessment phase. An application is deemed complete when the affiliate receives six items of information: applicant’s name, monthly income, social security number, property address, an estimate of the value of the property, and the mortgage loan amount sought.

Two Paths to compliance Affiliates originating 5 or fewer mortgages may continue to use the Good Faith Estimate (GFE) and HUD-1. Affiliates originating more than 5 mortgages must use the newer Loan Estimate (LE) and Closing Disclosure (CD). If you originate 5 or fewer mortgages you may use the LE and CD, but it probably easier to stay with the more familiar GFE and HUD-1. Title companies can do the HUD-1 for you but they cannot do the CD for you.

Closing costs In cases where the affiliate uses a single title insurance company, the affiliate must either purchase the owner’s title insurance on behalf of the buyer or allow the buyer to shop for their own title insurance. In New Mexico, title insurance rates are set by the Superintendent of Insurance so title insurance premiums will be the same from any company.

Prohibited Activities Kickbacks – Affiliate refers homebuyers to an attorney. As a “thank you”, the receive discounted legal services Unearned fees – A settlement agent charges for document preparation although the documents were prepared by affiliate and the affiliate has already included a fee for that service. Title insurance company sale conditions – A buyer makes an offer to a person selling a home and mentions a specific title company that will handle the closing. The seller requires the buyer to change to another title company.

Prohibited Activities (Continued) Disclosure Fees – Charging a fee for any RESPA or Truth in Lending Disclosures

Permitted and prohibited Fees Permitted PAYMENTS Prohibited For services actually performed For Activities not conditioned on referrals That bear a reasonable relationship to value of goods or services received For normal promotional and educational activities Giving or Receiving a thing of value in exchange for referral business Direct or indirect kickbacks Payments that exceed the reasonable value of service provided

Disclosures – Must be provided at 3 points in the process Receiving of the application (or within 3 days if mailed) Toolkit Loan Estitmate Affiliated Business Arrangement If Applicable Servicing Disclosure Statement At Closing Closing Disclosure Escrow Statement

Disclosures – Must be provided at 3 points in the process (Continued) After Closing Annaul Escrow Statement Lenders provide an Annual Escrow Account Disclosure Statement disclosing all transactions involving the escrow account in the previous year and projecting transactions for the next year. Notice of Servicing Transfer Disclosure (if applicable) If the processing of borrower’s mortgage payments is transferred to different companies, Respa requires the old and the new companies to provide a Notice of Servicing Transfer to the borrower when a mortgage is transferred. Note: Must be received no later than 4 business days prior to closing (Sun. & holidays excluded)

Good Faith estimate – for affiliates who close on 5 or fewer mortgages per year Must be received within 3 business days of a loan application Helps borrowers compare their GFE with their HUD-1

Truth-In-lending disclosure statement Annual Percentage Rate Finance Charge The amount financed Total of payments (the amount the consumer will have paid after making all the scheduled mortgage payments