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New initiative looks to turn brokers into lenders

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Mortgage Professional America | 03 Dec 2013, 06:06 AM Agree 0
A new initiative has vowed to ease the transition of "emerging bankers" as many brokers look to transform their businesses
  • 2Bsquare | | 03 Dec 2013, 09:06 AM Agree 0
    Kind of puts a crimp in the CFPBs plan to offer full disclose to the consumer if every broker becomes a lender.
  • John | | 03 Dec 2013, 09:21 AM Agree 0
    does not help in funding FHA mortgages - correct?
  • Griff | | 03 Dec 2013, 09:37 AM Agree 0
    2Bsquare If CFPB wanted full disclosure they would set up the disclosure docs to be identical between broker and banking. Let me break it down for you, brokers would not have to count fees in the 3% that banks don't and would not show income on the disclosures that banks do not.
  • gheinecke | | 03 Dec 2013, 09:51 AM Agree 0
    must have a cash net worth in the company not personal of $2,500,000 to do FHA on a warehouse. Still a pretty nasty hit and for many an unreachable target to warehouse FHA. Third party processing companies are not included in the 3%. I see a string transition to third party processing or opening one through an "unrelated" relationship.
  • John | | 03 Dec 2013, 09:56 AM Agree 0
    Gheinecke - That makes sense - any idea of what qualification an entity must have to be a "processing company" (license etc.)? - I know it must be unrelated to not count in the 3%
  • Larry | | 03 Dec 2013, 11:56 AM Agree 0
    John: Contract processors must be licensed as a MLO in each State they wish to process mortgages. This change was made about a year or two ago.
  • Traci | | 03 Dec 2013, 12:45 PM Agree 0
    Along with Larry's correct comment about contract processor's being licensed, there is a lot of additional liability attached to each mortgage. I researched the pros and cons of becoming a banker, and it is not a viable option for me - an small 1 MLO shop.

    Has everyone seen the new FinCEN requirement that 1 MLO shops MUST now outsource their AML?? Another hard costs to absorb while at the same time being mindful of the 3% Fees and Cap Rule.
  • Larry | | 03 Dec 2013, 12:51 PM Agree 0
    Traci: I'm having a brain hiccup... what does AML stand for?
  • John | | 03 Dec 2013, 12:51 PM Agree 0
    O.K. - but just to be clear on contract processing - do I need to ask the "contract company owner" if all their processors are lic. as MLOs?
  • Traci | | 03 Dec 2013, 01:00 PM Agree 0
    Larry, that's the Anti-Money Laundering compliance that we had to undertake last year. I just renewed by annual Certificate 2 weeks ago, to now find out I must outsource it!!
  • Traci | | 03 Dec 2013, 01:02 PM Agree 0
    John, you might want to check with NMLS or your state's SEC attorney...but I think they each must be licensed...but I'm not 100% certain.
  • Larry | | 03 Dec 2013, 01:09 PM Agree 0
    Thanks Traci! I have my AML policy in place although I had a brain freeze for a second. I did not hear of a requirement to out source it. Also, have you heard of how mortgage level pricing adjustments will factor into the 3% fee cap? If they are netted out then my business is toast. I'm in the midwest and it will affect every deal that I do other than gov'y business. Still waiting on a position from the government on that one.
  • Traci | | 03 Dec 2013, 01:31 PM Agree 0
    Larry, this is 1 source and I had my AML Cert company also verify same thing:

    FinCEN Responds to IMMAAG request for Administrative Ruling

    If you are a one-person shop this update is of particular concern to you - it addresses an issue about how AML monitoring must be accomplished in one person (one state licensed MLO) shops

    You will have to find someone to provide independent testing and monitoring of your Anti-Money Laundering Program. It can not be you because you have to be the AML Compliance Officer.

    Last I heard there were still many unresolved issues affecting the 3% Rule. I've eamiled Marc Savitt, Pres of NAIHP for more info and I'll be glad to share that when I hear back from him. I'm in rural Arkansas and my mortgages sizes are $50K-$150K. I ran the QM test on 50 purchase mortgages and would have to eat $5,300 in fees total!!! I'm with you, if the require LLP to be netted, I'll have to close too. It's just another way to push small brokers out and give business to my person opinion.
  • Larry | | 03 Dec 2013, 01:44 PM Agree 0
    Thanks Traci! I would very much appreciate any info that you come upon. My email address is
    Thanks again!
  • gheinecke | | 03 Dec 2013, 01:53 PM Agree 0
    Each state has licensing requirements. WE ANSWER TO SC CONSUMER AFFAIRS. I HAVE AN E MAIL IN but they are so busy since we are not the only entity they regulate that I couldn't even guarantee they reply. In short you probably could have a unrelated third party be paid but they have to take continuing education and pay for some type of license. GH
  • Larry | | 03 Dec 2013, 02:01 PM Agree 0
    I know for a fact that the processors need to be licensed in any state that they are processing a mortgage. Just call a established company and they will confirm. Have a great night all!
  • Traci | | 03 Dec 2013, 02:02 PM Agree 0
    Larry, are you a 1 MLO shop or do you have at least 2 or more? I'll be glad to email you what IMMAAG sent me in full detail if you're a 1 person shop. And I'll certainly be glad to forward any info I get giving further details about the 3% rule!
  • Larry | | 03 Dec 2013, 02:07 PM Agree 0
    one man shop!
  • gheinecke | | 03 Dec 2013, 02:21 PM Agree 0
    Larry you are not alone!
    Strongly consider the warehouse lines.
    If you like you can E mail me at
  • Nick | | 03 Dec 2013, 02:52 PM Agree 0
    Loan Processors don't need to be state-licensed if they are supervised and monitored by a registered mortgage officer or a state-licensed mortgage originator. And those must processors must stick to clerical and support duties and constant evaluation and training. They do need a lic. if they are an independent contractors (non-supervised). I don't know if this applies for every state such as New York and a couple others, but this is the language used in the new uniform state test for all states that are early adopters.
  • Aslam | | 04 Dec 2013, 10:06 AM Agree 0
    I m in process of becoming Mini correspondent and non of the warehouse bank or lender have asked me to out source AML. We dont need Banker license again depends on your state.
  • Colleen | | 11 Dec 2013, 11:15 AM Agree 0
    Contract mortgage processors do have to be licensed in virtually every state. And yes any processor working on your file for a contract company has to be licensed. the licensing requirements do vary state to state. In some states there is a separate license for processors/underwriters. If I can help with other questions on contract processing please let me know.
  • John | | 11 Dec 2013, 01:30 PM Agree 0
    I am from Michigan, my questions are: 1. what requirements are there for a "processing company" to earn a fee (on the HUD-1) for mortgage processing (special lic. etc.)? 2. if the processors for that company are w2 employees do they (as individuals) need to meet any specific requirements?
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