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].