Nov. 24: Letters on Property Inspection Waivers, new phishing scam; state law changes & affordable housing fees

The CFPB, uh, the Bureau of Consumer Financial Protection (BCFP), hasn’t gone away, nor has the myriad of federal, state, and local laws and regulations governing banks and non-depository lenders. Unfortunately, in their cutbacks, lenders often reduce non-income producing staff – the staff that focus on federal, state, and local laws and regulations. Not to say that loan officers don’t, but you know…

State lending laws keep on changing. Let’s see what’s new and play a little catch up.

This week Santa Cruz County (CA) addressed fees encountered by builders of affordable housing. “Developers may soon lose the ability to choose between including affordable units along with housing projects or paying in-lieu fees in unincorporated Santa Cruz County. On the other hand, developers soon could be able to pack more housing units onto lots than would otherwise be allowed, and take advantage of cost-saving perks through an expanded incentive known as the density bonus.”

The Colorado Department of Regulatory Agencies, Division of Real Estate, has adopted a provision regarding pre-licensing education requirements. Effective as of November 14, 2018. applicants for licensure as a Colorado mortgage loan originator must successfully complete twenty hours of pre-licensing education within three years of the date of application for licensure.

Don’t forget that in Texas, all state agencies automatically cease to exist every twelve years unless they are continued by the legislature. The Texas Sunset Commission has recently released its report, which recommends abolishing the Texas Department of Savings and Mortgage Lending (SML) and transferring its regulatory duties to the Texas Banking Department. The Texas Mortgage Bankers Association, the Texas Bankers Association, and the Independent Bankers Association of Texas have all taken public positions opposing consolidation of these agencies. Key arguments against consolidation include: 1) there is no tax payer benefit, as the department is completely self-funded by the regulated entities, which have mostly indicated that they do not desire this change, 2) consumer protection responsiveness frequently suffers with larger agencies focused on broader agendas, 3) Banking Department current fee schedules are equal to, or higher than, SML fees, with no commitment for projected cost savings to go to those paying the required fees.

South Carolina has recently enacted House Bill 4628 regarding the state’s Telephone Privacy Protection Act (“SCTPPA”). The Bill defines “telephone solicitations” and lays out a list of restrictions that apply to solicitors.

Restrictions include time of day, required identification of solicitor including name, company, telephone number and address and true reason for the call without misrepresentation regarding the origin and nature of the call or text message. In situations where a live telephone solicitor is not available to speak with the consumer answering a telephone solicitation call within two seconds of the completed greeting, the telephone solicitor must play a prerecorded identification and opt-out message. Any request not to receive telephone solicitations must be honored for at least five years from the time the request is made.

Finally, A telephone solicitor may not initiate, or cause to be initiated, a telephone solicitation to a telephone number on the National Do Not Call Registry maintained by the federal government pursuant to the Telemarketing Sales Rule.

The South Carolina Department of Consumer Affairs adopted miscellaneous provisions under its Consumer Protection Code, which include public complaints and requests for information, delinquent notification filing and fee payment, and filing and posting maximum rate schedules. These provisions are effective immediately.

The provisions discuss the two ways in which the public may access the department of consumer affairs. It also states the public may make requests for including any final order, decision, opinion, rule, regulation, written statement of policy or interpretation formulated, adopted or used by the Administrator on the discharge of his functions or any other matter to which the public has access by the Freedom of Information Act.

The provisions then disclose the Department’s penalties regarding delinquent notification filings and fee payments. Finally, the provisions discuss the filing and posting of maximum rate schedules.

Effective as of August 28 Missouri has enacted provisions regarding its Fiduciary Access to Digital Assets Act. The Act allows fiduciaries to access electronic records of an account holder. The account holder may allow or prohibit the disclosure or his or her digital assets to a fiduciary in a will, trust, or other record.

The bill also specifies that a health savings account may be created if the trustee of a trust consisting of trust property less than $250,000 concludes that the trust property is insufficient to justify the cost of administration. The trustee must also provide notice to qualified beneficiaries upon this determination. Under the previous provision, the amount of the trust property must have been less than $100,000. The term “directed trust” has been defined in the new provision and the term “trust protector” is further defined within this section. The bill also adds a no-contest clause in a trust instrument in certain circumstances.

Maryland has passed House Bill 1511, effective October 1, 2018, which modifies a provision of its regulations regarding mortgage brokers finder’s fees. Previously, a mortgage broker who obtained more than one mortgage loan on the same property within a 24-month period could charge a finder’s fee only on “so much of the loan as is in excess of the initial loan.” Under HB 1511 “a mortgage broker obtaining a mortgage loan with respect to the same property more than once within a 24-month period may charge a finder’s fee if the fee is not in excess of 8% of the initial loan amount when combined with the finder’s fee charged on the initial loan and on any other finder’s fee collected during that 24-month period.”

Maryland has passed House Bill 1297 which makes wide ranging changes to its Financial Consumer Protection Act. Among the sections amended include Section 12-114.1 which prohibits an unlicensed person from making a covered loan, meaning a loan subject to Section 12-103(A)(3) or (C) of the act; Section 12-303 which applies to a loan of $25,000.00 or less made for personal, family, or householder purposes; and Section 12-314 which prohibits a person from lending $25,000.00 or less if the person directly or indirectly charges an interest rate prohibited by law, or if the transaction violates the Federal Military Lending Act, or if the person is not licensed under or exempt from the Maryland Consumer Loan Law Licensing Provisions.

Additionally, amendments to Section 12-402.1 allow a lender, on or after January 1, 2019, to make a loan under the provisions of this subtitle so long as, among other things, the lender makes a written election in the agreement specifying that this subtitle will govern the loan.

The Tennessee Department of Commerce and Insurance, Division of Regulatory Boards, Collection Service Board has adopted provisions regarding the standards of practice for debt collectors. The new provisions address, among other things, the acquisition of location information from 3rd parties, communications in connection with debt collection, harassment or abuse, and unfair practices.

The standards define a debt collector, requirement of identification and state that he or she is attempting to confirm or correct location information and may only identify his/her employer if expressly requested. The debt collector cannot state that the consumer owes a debt, may not communicate with the 3rd party more than once unless requested to do so. If the consumer is represented by an attorney, may only communicate with that attorney unless the attorney consents to direct communication with the consumer. Further, a debt collector may not communicate with the consumer at his or her place of employment if the debt collector has reason to know that the employer prohibits the consumer from receiving such communication.

The standard also specifies what is considered harassment, abuse and unfair practices.

Connecticut has amended its provisions regarding foreclosure mediation sessions effective as of October 1. Under the new provisions, the requirement that a mortgagor represented by counsel attend the first foreclosure mediation session in person has been eliminated. It is sufficient for the mortgagor’s counsel to appear in lieu of the mortgagor at this initial session so long as the mortgagor remains available during the mediation via telephone.

Phishing scam & Cybersecurity note

Thank you to Vicki Thompson with AmeriHome who sent, “I thought you might like to know about IRS Newswire IR-2018-226 which addresses serious malware posing as tax transcripts being sent to businesses by the IRS. ‘… in the past few weeks, the scam masqueraded as the IRS, pretending to be from ‘IRS Online.’ The scam email carries an attachment labeled ‘Tax Account Transcript’ or something similar, and the subject line uses some variation of the phrase ‘tax transcript.’ These clues can change with each version of the malware. Scores of these malicious Emotet emails were forwarded to recently…’” Thank you Vicki!

Every IT person knows this, but the financial markets are increasingly susceptible to cyberattacks because there are abundant points of entry and so many market players, according to a report from SWIFT and BAE Systems. The securities market is especially vulnerable because of the complexity of interactions, as well as the large number of participants and different systems involved, the report said.

Property Inspection Waivers

From MLO vet in Nevada comes, “PIWs are available, and they are appreciated by borrowers. I provide the most complete property info with the DU/LP AUS submission so that my client has the best chance to obtain a PIW. My bet is that most don’t bother to do the best, and don’t receive the PIW, or perhaps the lender just does not want to use the PIW. Banks and lenders own AMCs.  Why would a bank waive an appraisal, when the appraisal will make money for the bank’s affiliate?

“I see the same thing happening with credit reports. Credit report fees have increased dramatically. But in some cases, banks own credit reporting companies. Banks require multiple layers of credit report addendums, and every single addendum makes more revenue for the bank owned credit company. Banks, builders, and lenders also own title companies. The bank or even large mortgage banking pushes use of their in-house/owned title co. Those fees are typically higher than a local escrow/title co. Again, the bank or large lender/investor makes more money. The originator has less work. Who pays? The consumer.”

Aaron Ninness contributed, “I was reading your Fannie Mae section regarding PIWs and can’t help but think that Fannie themselves are ‘way off’ on the reasoning that PIWs weren’t executed. The idea that borrowers wanted an appraisal to confirm value might be accurate, but for only a few.

The real issue with a PIW is training and overlays. We are continually finding files that had a PIW in the findings and was just missed. In many cases the underwriter is aware, but by the time the file is on their desk reviewing the details the appraisal has been ordered and the fee paid. And for those that sell to multiple correspondent lenders who have overlays on the allowance of a PIW, an originator doesn’t want to lose any time. We are, after all, still programmed to a day when 14 business day turn times for a $1,000 was normal for an appraisal.

“Companies will need to make a conscious decision to train on PIW use, as well as Fannie should be doing a better job of training on when a PIW is even offered. They have a matrix available from the recent change where they outline when properties are eligible yet most originators have never seen the complete matrix itself.

“And finally, originators need to stop being lazy. Read your findings. That’s right. Run DU and read the approval. For those files that don’t offer a PIW and it is a ‘vanilla’ file, you can try something crazy like ‘Running LP’ to get a Fieldwork Waiver there. Consumers will take the option of a waiver if they knew they had an option. Realtors will be overjoyed to remove another objection from their contract and will want to work additionally with a lender who generally offers these PIWs at higher rates. We even see loans won at higher rates than competitors because we can take the appraisal off the table. PIWs are a huge tool and I suspect they will be an even more invaluable offering come the next spring buying season.”

(Thank you to Susan B. for this one. Warning: PG for language.)

Have you ever been guilty of looking at others your own age and thinking, “Surely I can’t look that old!” Well…you’ll love this one.

My name is Alice, and I was sitting in the waiting room for my first appointment with a new dentist. I noticed his DDS Diploma on the wall, which bore his full name.

Suddenly I remembered a tall, handsome, dark-haired boy with the same name had been in my school class some 40 years ago. Could he be the same guy that I had a secret crush on way back then?

Upon seeing him, I quickly discarded any such thought. This balding, gray-haired man, with the deeply lined face, was way too old to have been my classmate.

After he examined my teeth, I asked him if he had attended Monta Vista High School.

“Yes”, he said. “I am a Matador!” He gleamed with pride.

“When did you graduate?” I asked.

He answered, “In 1973. Why do you ask?”

“You were in my class,” I exclaimed.

He looked at me closely, then this ugly, old, bald, wrinkle faced, fat-assed, gray haired decrepit son of a b–ch asked me……….

“What did you teach?”

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Rob Chrisman