The winning edge: Keeping up with ever-changing mortgage rulesWayne LeeMortgage broker regulation
Mortgage brokers, today, are confronted with two realities. The
first is that our industry continues to be strong thanks to a
sustained low interest rate environment, one that has been
unprecedented in our nation's history. These are indeed good
times--not just for the mortgage industry, but also for the
hundreds of thousands of Americans who are attaining the dream of
homeownership and reaping financial rewards.
The second reality is more challenging. Across the nation, at
both the federal and state levels, lawmakers and regulators are
creating new rules that are sometimes complex. This makes it more
difficult, but certainly not impossible, for brokers to stay
abreast of the very laws that govern their business.
From the financial reporting provisions of the Patriot Act and
the constantly fluctuating rules of RESPA, to new Truth-in-Lending
disclosure requirements and anti-predatory lending legislation, it
is more important than ever for brokers to make a conscious and
persistent effort to keep up with the ever-changing mortgage rules.
This is especially true since many of the new regulations carry
penalties that can be assessed to the broker.
Thankfully, not all of this is doom and gloom. First, the spirit
of much of this legislation is good. Anti-predatory lending
legislation, for example, can provide important protections for
consumers, while helping ensure that unscrupulous individuals do
not taint the reputation of the mortgage lending industry at
large.
From a compliance standpoint, it's also becoming much easier for
mortgage brokers to stay abreast of rapidly changing laws and
regulations by using the technology and professional association
resources available to them. Information technology (the Internet),
your affiliation with state and national mortgage broker
associations, and the information- and education-sharing programs
of wholesale mortgage lenders are all tools that are available to
help you prosper in the strong, vibrant business climate our
industry has been enjoying.
Here are three things you can do to make sure that you continue
to play by the rules:
1. Get wired and surf regularly
Recent surveys of the mortgage brokerage industry reveal,
amazingly, that only 35 percent of mortgage brokers utilize the
Internet for industry information and loan originations. This lag
in adopting information technology is most prevalent among small
independent brokers. Apart from not having the obvious loan
production productivity enhancements that information technology
provides (automated LOS, instant access to daily rate sheets,
credit reports and pre-qualification tools), unwired brokers have
no ability to instantly research, receive and respond to new or
changing laws and regulations that govern their business activity.
So, if you are not wired to the Internet, get wired.
Working online gives you round-the-clock access to a variety of
Web sites that specialize in the very latest information on
mortgage lending laws, regulations and procedures.
It is a good habit to visit four or five key Web sites at least
once a week to stay abreast of mortgage lending laws, regulations
and procedures. Here are some you might try:
†The National Association of Mortgage Brokers Web site (www.namb.org) contains three
important Web pages that provide brokers important information
about federal and state fair lending and broker licensing laws and
regulations.
A. The NAMB Government Affairs page provides the latest news and
information on RESPA reform, privacy, FHA/VA, fair lending,
telemarketing and the Patriot Act. This site is located at www.namb.org/government_affairs/government_affairs_home.htm.
B. The NAMB Fair Lending Resource Center Web page tracks the
introduction, movement and outcome of state fair lending bills. It
is located at
www.namb.org/government_affairs/fair_lending/fair_lending_resource_center.htm.
You must be an NAMB member to access this resource.
C. The NAMB State Licensing Resource Center Web page provides
state-by-state broker licensing legislation tracking, as well as
up-to-date licensing requirements for each state. This site is
located at
www.namb.org/government_affairs/state_licensing_resource_center.htm.
Again, NAMB membership is required to access this resource.
†The Mortgage Bankers Association of America's Predatory
Lending Clearinghouse Web page (www.mbaa.org/resources/predlend/main.html)
provides links to recent federal, state, local, Fannie Mae and
Freddie Mac news, regarding predatory lending, as well as federal,
state and local regulatory and legislative updates.
It is advisable to check your state mortgage broker
association's Web site on a weekly basis for updates relative to
state fair lending and broker licensing laws and regulations. Many
of these state association Web sites allow brokers to ask questions
and seek clarification, regarding state laws and regulations.
Look to your wholesale mortgage lenders for insight into the
most up-to-date information and rules of disclosure. At Argent
Mortgage Company, for instance, we help independent mortgage
brokers stay informed through both our publication, The Edge, and
our mortgage broker Web site at www.argentmortgage.com.
There is one caveat in using the Internet to stay on top of the
fast-changing fair lending regulatory environment: a multitude of
broker group Web sites and chat rooms run by independent operators.
Many of these sites and chat rooms contain information or
discussions relative to fair lending rules, regulations and
procedures. You will often find varied interpretations and advice
from other brokers. As a result, it is always a good exercise to
compare conflicting information with that published on reputable
mortgage industry Web sites. Remember, you should use this
information for education purposes, but you must always consult
your own legal counsel when making decisions about new laws and
regulations.
2. Associate yourself
If you are not a member of NAMB or your state mortgage broker
association, you are missing a good resource for staying on top of
new and changing laws. Virtually all broker associations have a
code of ethics, which includes pledges to conduct business in
compliance with all applicable laws and regulations. They have a
vested interest in keeping their members up to date on laws and
regulations. Through their regular membership publications,
conferences and workshops, as well as e-mail bulletins (another
reason why it is important to be wired), associations are
exceptionally adept at making sure you know about all the current
rules, regulations, procedures and forms you need to keep a winning
business edge. In addition, many associations provide their members
Internet capabilities for clarifying and asking questions about
lending laws and regulations.
3. Choose Your Lender Wisely
In these times of regulatory change, your wholesale lender
decisions should not be made hastily. Not all lenders are the same,
and some are more risk averse and careful than others. Very often
the more careful lenders manage their risk by making sure
independent brokers have the same information about lending laws
and regulations they do.
While they may sometimes seem complex, the new rules and
regulations being created today are helping shape our industry and
certainly have an impact on the daily work of mortgage brokers. By
getting wired, utilizing the Internet, associating yourself and
choosing your lenders wisely, you are far more likely to be
familiar with the latest mortgage rules and continue to be in a
position to succeed in this remarkable business environment.
The preceding article is not intended to provide legal
advice with regard to any specific lending related laws or
regulations. Brokers should always consult qualified legal counsel
to ensure accurate interpretation of applicable laws and
regulations governing mortgage lending.
Wayne Lee is president of Orange, Cali.-based Argent
Mortgage Company. He may be reached at (800) 561-4072 or via e-mail
at
[email protected].
