Louisiana Office of Financial Institutions

1
Louisiana Office of Financial Institutions

• Orientation to the
• Louisiana Secure and Fair Enforcement of Mortgage
  Licensing Act of 2009
• Or
• Louisiana S.A.F.E. Residential Mortgage Lending
  Act
• Updated08-10

2
SAFE Residential Mortgage Lending Act

• LSA-R.S. 61081 through 61099
• Enacted effective July 31, 2009
• Provides for licensure of mortgage originators,
  brokers, and lenders
• Amended effective August 15, 2010

3
Residential Mortgage Lending Act

• Subdivided into three parts
• PART I. GENERAL PROVISIONS
• Definitions
• Prohibitions
• Promulgation of Rules
• PART II. LICENSURE, REGISTRATION,
  CERTIFICATION
• Licensure Requirements
• Applications
• Recordkeeping OFI Rule RML 01-01
• Examination and Investigation of Complaints
• Suspension and Revocation of Licenses and
  Registrations
• PART III. RESIDENTIAL MORTGAGE LOANS
• Fees and Charges
• Mortgage Loan Origination Agreements
• Criminal Penalties
• Part IV. Reverse Mortgage Loans
• Requirements
• Counseling
• Commitment and cooling off period

4
Residential Mortgage Lending Act

• Who must be licensed
• Originators
• (including contract processors and underwriters)
• Brokers
• Lenders
• Wholesale Lenders
• which are not otherwise exempt

5
Definitions

• Mortgage Loan Originator means an individual
  who for compensation or gain or with the
  expectation of compensation or gain takes a
  residential mortgage loan application or offers
  or negotiates terms of a residential mortgage
  loan.

6
Definitions

• Mortgage Broker or Residential Mortgage Broker
• any person who, directly or indirectly, for
  compensation or expectation of compensation,
  negotiates, places, or finds, or offers to
  negotiate, place or find a residential mortgage
  loan for another person
• includes FHA loan correspondents and lenders who
  table fund loans

7
Definitions

• Mortgage Lender or Residential Mortgage Lender
• any person who, directly or indirectly,
  originates or makes, or offers to originate or
  make, a residential mortgage loan for another
  person

8
Definitions

• Residential Mortgage Lending Activity
• any activity, including electronic activity,
  engaged in for compensation or with the
  expectation of compensation in connection with a
  residential loan transaction including
  origination or funding, negotiation or placement,
  or offering to negotiate,place or fund a
  residential mortgage loan for a person

9
Definitions

• Residential Mortgage Loan
• Any loan primarily for personal, family, or
  household use that is secured by a mortgage, deed
  of trust, or other equivalent consensual security
  interest on a dwelling as defined in Reg Z or
  residential immovable property upon which is
  constructed or intended to be constructed a
  dwelling as defined in Reg Z

10
Residential Mortgage Loan

• Now covers all loans secured by a persons
  dwelling including
• Mobile home loans without a security interest in
  the land
• Motor homes used as the persons dwelling
• Boats if used as the persons dwelling
• Vacant land if to be used to construct or move a
  persons residence on it

11
Definitions

• Registered Mortgage Loan Originator
• An individual who meets the definition of a
  mortgage loan originator and is an employee of a
  depository institution or a subsidiary that is
  either owned and controlled by a depository
  institution and regulated by a federal banking
  agency or an institution regulated by the Farm
  Credit Administration and is registered with, and
  maintains a unique identifier through, the
  Nationwide Mortgage Licensing System registry.

12
R.S. 61084

• No person, directly or indirectly, shall engage
  in a residential mortgage lending activity
  without complying with the Louisiana S.A.F.E.
  Residential Mortgage Lending Act or rules and
  regulations promulgated pursuant to thereof

13
R.S. 61086

• Beginning July 31, 2009, unless otherwise exempt,
  no person shall engage in residential mortgage
  lending activity without first obtaining and
  maintaining annually
• A license and registration as a mortgage loan
  originator, or a license as a mortgage lender or
  broker
• A unique identifier in the NMLSR

14
R.S. 61086

• The following persons shall have until July 31,
  2010 to obtain a license in compliance with the
  Act
• A person whose activities were not subject to the
  licensing provisions of this Act on July 30, 2009
• A person engaged in residential mortgage lending
  activities which was subject to an exemption
  provided by this Chapter on July 30, 2009

15
Originator Exemptions

• Registered mortgage loan originators, when acting
  for a depository institution
• An individual who offers or negotiates terms of a
  residential mortgage loan with or on behalf of an
  immediate family member
• A licensed attorney who negotiates the terms of a
  residential mortgage loan on behalf of a client
  as an ancillary matter to the representation of
  the client unless the attorney is compensated by
  a lender, a mortgage broker, or other mortgage
  originator including any agents of such

16
Originator Exemptions

• Any individual who performs only real estate
  brokerage activities and is licensed provided
  they are not compensated by a lender, mortgage
  broker, or other mortgage originator or any of
  their agents
• Any individual engaged solely in extensions of
  credit involving timeshares
• Individuals who are employees of a retailer of
  manufactured or modular homes performing only
  clerical duties which receive no compensation or
  gain from a mortgage broker or lender
• An individual who offers or negotiates terms of a
  mortgage loan secured by a dwelling that is owned
  by and serves as the individuals residence

17
Originator ExemptionsLoan Processor or
Underwriter

• An individual engaging solely in loan processor
  or underwriting activities, who does not
  represent to the public, through advertising or
  other means including the use of business cards,
  stationary, brochures, signs, rate lists, or
  other promotional items, that such individual can
  or sill perform any of the activities of a
  mortgage originator.
• Defined as a person who performs clerical or
  support duties as an employee at the direction of
  and subject to the supervision of a person
  license or exempt from the Act.

18
Originator ExemptionsLoan Processor or
Underwriter

• Clerical or Support Duties include subsequent to
  receipt of an application
• Receipt, collection, distribution, and analysis
  or information common for the processing or
  underwriting of a residential mortgage loan
• Communicating with a consumer to obtain the
  information necessary for the processing or
  underwriting of a loan, to the extent that such
  communication does not include offering or
  negotiating loan rates or terms, or counseling
  consumers about residential loan rates or terms

19
Originator ExemptionsLoan Processor or
Underwriter

• DO NOT APPLY TO
• Independent contractor loan processors or
  underwriters
• They must obtain an originator license and a
  unique identifier issued by the NMLSR

20
Mortgage Broker/Lender Exemptions

• Depository Institutions or direct or indirect
  subsidiaries including their employees
• Exempt from licensure
• Still subject to requirement of Part III

21
Direct Indirect Subsidiaries Depository
Institutions

• Proposed definitions
• Direct Subsidiary - any firm, corporation,
  association, trust, or legal entity which is 100
  percent owned by a bank, savings bank, savings
  and loan association, or credit union.
• Indirect Subsidiary - any firm, corporation,
  association, trust, or legal entity which is 100
  percent owned by a direct subsidiary as defined
  above, and any firm, corporation, association,
  trust, legal entity, partnership, or limited
  liability company which is 100 percent owned by a
  bank, savings bank, savings and loan association,
  or credit union, and one or more direct
  subsidiaries as defined above.

22
Mortgage Broker/LenderExemptions

• Mortgagees which are the former owner of the
  dwelling or residential immovable property
• Insurance company or agent which holds a current
  producer license and brokers loans exclusively to
  an insurer
• Both still subject to Part III of Act

23
Mortgage Broker/LenderExemptions

• Licensed Attorneys
• When activity is incidental to providing legal
  services
• Exempt from licensure
• Still subject to Part III

24
Mortgage Broker/LenderExemptions

• Any not for profit 501(c) corporation making
  loans to promote home ownership or improvements
  for the disadvantaged
• Exempt from licensure
• Still subject to Part III

25
Mortgage Broker/LenderExemptions

• Any Real Estate Investment Trust
• Small Business investment Companies licensed by
  SBA
• Both Still subject to Part III

26
Requirements for Licensing

• Fingerprints and fee for background check
• Personal history and experience submitted through
  the NMLSR
• Authorization and fee for obtaining a credit
  report
• Information required for owners, members, or
  partners
• For corporation each 10 or greater shareholder

27
Requirements for Licensing

• Demonstrate financial responsibility, character,
  and general fitness to warrant a determination
  that the applicant will operate honestly, fairly
  and efficiently within the purposes of this
  Chapter.
• Complete 20 hours of pre-licensing education
  approved by NMLSR also a minimum of each of the
  following
• 3 hours of federal law and regulations
• 3 hours of ethics including fraud, consumer
  protection, and fair lending
• 2 hours of training relating to non-traditional
  mortgage marketplace
• Pass a written examination with both national and
  state components
• Obtain and maintain a surety bond
• Originators may be covered by a Surety Bond
  obtained by their employer

28
Restrictions on granting Licenses

• Paid all fees due to OFI
• Never had a mortgage related license revoked in
  any governmental jurisdiction
• Never convicted, pled guilty, or nolo contendere
  to a felony involving fraud, dishonesty, breach
  of trust, or money laundering
• Not convicted, pled guilty, or nolo contendere to
  any felony within the last seven years

29
Surety Bond / Deposit

• Each applicant for licensure must provide one of
  the following in amount which determined by loan
  volume
• Surety Bond based upon loan volume from the
  previous year
• 0 to 99,999,999 bond amount of 25,000
• 100,000,000 or greater bond amount of 50,000
• Employer may obtain coverage for employees
• Pledged deposit in federally insured institution
  located in Louisiana in the amount of Surety Bond
  otherwise required
• For initial license bond or deposit must be at
  least 25,000

30
Nationwide Mortgage Licensing System and Registry
(NMLSR)

• Effective June 18, 2007 Act 36 of the 2007
  legislature authorized the Office of Financial
  Institutions participation in a nationwide
  online licensing system.
• The licensing system collects application data
  from individuals and companies and submit it to
  each jurisdiction (state) where they are licensed
  or applying for a license.

31
Nationwide Mortgage Licensing System and Registry
(NMLSR)

• Office of Financial Institutions began utilizing
  the system on August 1, 2008.
• Beginning August 1, 2008, all application filings
  and notifications with OFI were required to be
  made through the licensing system.

32
Nationwide Mortgage Licensing System and Registry
(NMLSR)

• All persons utilizing the nationwide licensing
  system shall be required to pay user fees in
  addition to any applicable license, renewal,
  notification, or late fees.
• The Commissioner may share any information
  disclosed to the system with any state or federal
  regulatory agencies having authority over
  residential mortgage lending activities

33
Application Fees

• Mortgage Broker, Lender 400
• Each Branch (other than main office) 100
• Renewal Fee 300
• Originators 100
• Renewal Fee 100

34
RENEWALS

• Renewals in the NMLSR begin November 1st each
  year. Licensees must attest to the accuracy of
  their records.
• Late after December 31st and before March 1st
• Broker/Lender late fee 200
• Originator late fee 50
• Licenses Expire January 1 unless all requirements
  satisfied before March 1

35
Requirements for Renewal

• Must continue to meet all requirements for
  obtaining a license
• Must satisfy the continuing educational
  requirements
• Must be in compliance with all uncontested orders
  or consent agreements including payment of fees,
  penalties, or refunds
• NOTE failing to meet requirements will result in
  license expiring on December 31

36
LSA-R.S. 61089

• No residential mortgage lender or originator may
  conduct lending activities under any name other
  than in their current record on the NMLSR
• Commissioner must be notified prior to changes
  in name or location and pay 100 fee
• Must notify Commissioner of office closure within
  30 days
• A late notification results in an additional 100
  late fee

37
LSA-R.S. 61089 B.

• Whenever employment of an originator changes,
  Commissioner must be notified within 30 days
• Employer and Employee must give notification
  through NMLSR
• Employee must pay 50 transfer fee to change
  sponsorship of their license to another broker or
  lender
• Failure to notify within 30 days results in a
  100 late notification fee per occurrence
• Upon leaving employment remove relationship and
  sponsorship through NMLSR

38
R.S. 61090

• No license may be sold or transferred
• No person shall acquire control (51) of licensee
  without obtaining prior written approval of OFI
  after submitting an application and 300 fee
• Failure to obtain approval constitutes operating
  without a license and subjects the acquirer to
  the associated penalties

39
R.S. 61090

• A mortgage broker can only broker loans to a
  mortgage lender
• Brokering to a Broker is prohibited

40
R.S. 61090

• Licensees may only engage in residential mortgage
  lending through natural persons licensed as a
  mortgage broker, mortgage lender, or originator,
  or who are exempt from Part II

41
NET BRANCHING

• Prohibited by LSA-R.S. 61090 G.
• Except as provided by Rule
• OFI in process of drafting rule currently
  allowing
• net compensation of branch employees only
• all contracts, leases, accounts must be in name
  of licensed
• employer indemnification agreements not
  permissible

42
Restrictions on Employment after denial or
revocation

• No person who has been denied a license or had a
  license revoked whether they failed to request an
  administrative hearing or the decision was
  affirmed in an administrative hearing, may be
  employed as a processor of mortgage loans or hold
  a position responsible for the operation of the
  principal place of business or any branch

43
R.S. 61090 (I)

• No person licensed pursuant to the Residential
  Mortgage Lending Act, R.S. 61081 et seq., shall
  engage in or be financially compensated for any
  loan transaction in which such person, for a fee,
  commission, or other valuable consideration, is
  acting as a licensee under the Louisiana Real
  Estate License Law, R.S. 371430 et seq., in
  connection with the same residential loan
  transaction.

44
RECORD RETENTION

• Requirements set forth by Rule and Policy
• See http//www.ofi.louisiana.gov

45
EXAMINATIONS FEES

• Fee not to exceed 400 per location visited
• Due within 30 days of assessment
• Late fee of up to 50 per day not paid timely
• Other expenses may apply where records must be
  reviewed at an out-of-state location.

46
Suspension Revocation of License

• After an opportunity to be heard in
  Administrative hearing, Commissioner may revoke
  or suspend license of person who
• Violates any of the provisions of this Chapter or
  any Rule or Regulation promulgated, or any order,
  including but not limited to a cease and desist
  order or subpoena
• Violates any provision of a voluntary consent
  agreement
• Has knowingly provided or caused to be provided
  false or fraudulent information or financial
  statements or withheld information which would
  have resulted in denial of license
• Refuses to permit examination of books and
  records or fails to furnish required information

47
Suspension Revocation

• Fails to maintain records required after given
  written notice
• Continues in office any individual with power to
  direct management or policies of a licensee upon
  conviction of any felony
• Violates any provision of a regulatory or
  prohibitory statute and has been found to have
  violated such by the governmental agency
  responsible for determining such
• Misrepresents or conceals material facts or makes
  false promises to influence an applicant or
  mortgagor
• Knowingly engages in any transaction, practice,
  or course of business which perpetrates a fraud
  upon any person in connection with the making,
  purchasing, sale or brokering of any mortgage
  loan.

48
Suspension Revocation

• Misrepresents or conceals material facts terms,
  conditions, etc. of a transaction to which he is
  a party, pertinent to an applicant or mortgagor
• Failure to account for or deliver personal
  property which has come into their hands which is
  not their property or which they are not entitled
  to retain
• Fails to disburse without cause any funds in
  accordance with any agreements with a residential
  mortgage loan
• Fails to pay any fee or assessment imposed by the
  Chapter or Rule
• Violates written restriction or conditions of
  license
• Fails, after notice without lawful excuse, to
  obey any order or subpoena issued by the
  Commissioner
• Commissioner discovers any fact or condition that
  currently exists which if it had existed at the
  time of the original application, would have
  warranted denial of the application

49
Reapplication upon revocation

• A person whose license has been revoked for any
  reason may not reapply for a license until at
  least five years have elapsed from the date of
  the order of revocation, unless the commissioner,
  in his sole discretion, prescribes an earlier or
  later date

50
Immediate Suspension

• The Commissioner may order an immediate
  suspension of the license of any person who
• Fails to maintain bond or pledged deposit
• Commits serious violations of the Act such that,
  in the opinion of the Commissioner, the public
  safety and welfare demand emergency action
• Submits a check covering the fee for any
  application, notification, examination, late fee,
  or penalty which is returned by the licensees
  depository institution

51
Immediate Suspension

• Is convicted of a felony which would have
  prohibited issuance or renewal of the license
• Has license suspended or revoked in another
  jurisdiction

52
Appeal of Immediate Suspension

• A person for whom a license has been suspended
  shall have thirty days from the date of the order
  to request a hearing in accordance with the
  Administrative Procedure Act
• Failure to timely request a hearing shall
  constitute a waiver of appeal rights regarding
  the suspension

53
Fines Penalties

• Upon being found guilty of violating any
  provision of the RMLA or Rule brokers, and/or
  originators may be fined
• Up to 1,000 per violation
• Up to 1,000 per day the person acts as a
  residential mortgage broker, lender, or
  originator without complying with the RMLA or any
  rules promulgated thereunder
• Refunds may also be ordered for any unauthorized
  fee or charge

54
Prohibitions

• It shall be a violation for any person engaged in
  residential mortgage lending activity subject to
  this Chapter to
• Directly or indirectly employ any scheme, device,
  or artifice to defraud or mislead borrowers,
  lenders, or any person, when such person or
  individual knew or should have known that such
  was defrauding or misleading
• Engage in any unfair or deceptive practice toward
  any person
• Obtain property by fraud or misrepresentation

55
Prohibitions

• With intent to defraud, solicit or enter into a
  contract with a consumer providing for payment of
  an unlawful fee or commission to a person subject
  to this Chapter even though no loan is actually
  obtained for the consumer
• Solicit, advertise, or enter into a contract for
  specific interest rates, points, or other terms
  when the person or individual knew or should have
  known that such terms are not actually available
  at the time of soliciting, advertising, or
  contracting.

56
Prohibitions

• Conduct any business covered by this Chapter
  without holding a license or knowingly assist or
  aid and abet any person in the conduct of
  business under this Chapter without a valid
  license as required
• As determined by the commissioner, structure a
  residential loan transaction in such a manner as
  to circumvent the provisions of this Chapter
• Fail to comply with this Chapter or rules or
  regulations promulgated under it, or fail to
  comply with any other state or federal law,
  including rules and regulations issued
  thereunder, applicable to any residential
  mortgage lending activity

57
Prohibitions

• Make in any manner, any false or deceptive
  statement or representation with regard to the
  rates, points, or terms or conditions for a
  residential mortgage loan when such person or
  individual knew or should have known that such
  was false or deceptive, or engage in bait and
  switch advertising
• Negligently make any false statement, or
  knowingly and willfully make any omission of
  material fact, in connection with any information
  or reports filed with a governmental agency or
  the NMLSR, or in connection with any
  investigation conducted by the commissioner or
  any other governmental agency

58
Prohibitions

• Make any payment, threat, or promise, directly,
  to any person or appraiser of a property for the
  purpose of influencing the independent judgment
  of the person in connection with a residential
  mortgage loan, or influencing the independent
  judgment of the appraiser with respect to the
  value of the property
• Collect, charge, or attempt to collect or charge,
  or use or propose any agreement purporting to
  collect or charge any fee prohibited by this
  Chapter
• Engage in loan processing or underwriting
  activities as an independent contractor without
  obtaining a license to act as a residential
  mortgage loan originator

59
Prohibitions

• Fail to truthfully account for monies belonging
  to a party to a residential mortgage loan
  transaction
• Represent to the public through advertising or
  other means of communicating or providing
  information including the use of business cards,
  stationary, brochures, signs, rate lists, or
  other promotional items, that such an individual
  can or will perform any activities of a mortgage
  loan originator, while such individual engages in
  activities solely as a loan processor or
  underwriter

60
Forfeiture of Compensation

• R.S. 61092 G.
• Any person who acts as a mortgage broker, lender,
  or originator without complying with licensing
  provisions shall be subject to forfeiture of
  compensation attributable to residential mortgage
  lending activity conducted after August 15, 2001
• This shall not impair the validity of note or
  mortgage

61
Public InformationR.S. 6103 B. R.S. 61092 J.

• The Commissioner may make public the following
• Orders Requiring Refunds
• Civil Money Penalty Assessments
• License Suspension
• License Revocation
• Application Denials
• Consent Agreements
• Status of Applications, legal action taken
  pertaining to them, and legal grounds for taking
  such action

62
Continuing Education

• Each licensed originator must take 8 hours of
  NMLSR approved continuing education each year
  prior to renewal
• 3 hours of education pertaining to federal laws
  and regulations
• 2 hours of ethics, which shall include
  instruction on fraud, consumer protection, and
  fair lending issues
• 2 hours related to lending standards for the
  nontraditional mortgage product marketplace
• 1 hour any other course approved by NMLSR

63
Testing Requirements

• All licensed originators must obtain a passing
  grade on both the National and State Components
  of the test developed by the NMLSR
• All new applicants on or after July 31, 2009 must
  obtain a passing grade on both components of the
  test before obtaining a license
• Originators which were licensed on or before July
  30, 2009 must obtain a passing grade on both
  components by December 31, 2010

64
Testing RequirementsState Component Exemption

• Originators which obtained a passing grade on or
  after January 1, 2004 on the Louisiana
  pre-licensing test previously administered by PSI
  Exams
• Will be exempt from taking the state component of
  the test but must obtain a passing grade on the
  national component by December 31, 2010
• A passing score is 75 correct answers

65
Testing RequirementsFailing Grades

• An individual may retake one or both of the
  components of the test up to three consecutive
  times after waiting at least thirty days between
  tests
• After failing three consecutive tests the
  individual must wait at least six months before
  taking a test again

66
Requirement toRetake Examinations

• An originator who fails to maintain a license for
  a period of five years or longer will be required
  to obtain a passing grade on both components
  prior to obtaining a license

67
Prepayment Penalties

• Are limited as follows
• 5 of unpaid principal during first year
• 4 of unpaid principal during second year
• 3 of unpaid principal during third year
• 2 of unpaid principal during fourth year
• 1 of unpaid principal during fifth year
• No prepayment penalty allowed after fifth year

68
Prepayment Penalties Continued

• No prepayment penalty may be charged or collected
  if all or part of the prepayment of all or part
  of the outstanding loan is made from insurance
  proceeds received for damage to the property
  securing the loan in connection with a
  Gubernatorial declared disaster

69
AllowableUp Front Fees By Brokers

• Appraisal
• Title Search
• Credit Report
• Actual cost of Loan Prospector or Desktop
  Underwriter fees not to exceed 25
• Licensed brokers may collect up to a 500
  application fee provided
• Prior to collecting the consumer is provided a
  written disclosure of the amount of the fee and
• The application fee shall be refundable at any
  time prior to ordering any service required by
  the lender or is the lender is unable to approve
  the loan after all requested documentation has
  been provided

70
AllowableUp Front Fees By Brokers (cont)

• amount collected cannot exceed good faith
  estimate of actual cost
• any portion which exceeds actual cost must be
  refunded to borrower or credited to their account
  at closing

71
Originator Requirements

• Originator is required to sign the initial
  application and include their NMLSR unique
  identifier
• Originator may only originate loans for one
  employer

72
Lender Fees

• Lenders prohibited from collecting advance
  expense fees for third party settlement services
  that exceed Good Faith Estimate of actual cost
• Any portion of excess collected over actual cost
  must be refunded or credited to borrower at
  closing

73
Lender Fees (cont)

• Licensed lenders may collect up to a 500
  application fee provided
• Prior to collecting the consumer is provided a
  written disclosure of the amount of the fee and
• The application fee shall be refundable at any
  time prior to ordering any service required by
  the lender or is the lender is unable to approve
  the loan after all requested documentation has
  been provided
• NOTE RESPA and TILA prohibit until disclosures
  are given

74
Limits on Fees and Charges

• Late Fees limited to 5 of unpaid amount
• Collection fees limited to 25 when referred to
  an attorney
• NSF the greater of 5 of the amount of check or
  25

75
Prohibition on Finance ofSingle Premium Insurance

• No mortgage lender shall finance or include in
  the loan amount any single premium credit life,
  dismemberment, health and accident, mortgage life
  and disability, involuntary unemployment, or debt
  cancellation insurance sold in connection with a
  residential mortgage loan transaction
• Financing of Single Premium Private Mortgage
  Insurance Not Prohibited

76
Exceptions To Prohibition on Finance of Single
Premium Insurance

• The prohibition on financing of single premium
  credit insurance does not apply to the following
• Loans with a principal balance of 50,000 or less
• Loans where the portion of the original principal
  balance attributable to the insurance premiums is
  scheduled to be fully amortized no later than the
  coverage expiration date of the insurance
  product.

77
Request for Payoff Amount

• Must be provided with 5 days of written request
  of consumer
• Consumer entitled to one statement per year at no
  charge
• thereafter, lender may charge a reasonable fee
  provided that the fee is disclosed to the
  consumer before furnishing the statement

78
Mortgage Loan Origination Agreement

• Must be provided by broker within 3 days of the
  initial application
• Must describe the nature of brokers relationship
  with borrower and the manner in which they will
  be compensated
• name, address, phone number, and NMLSR unique
  identifier of originator
• name, address, phone number, and unique
  identifier of mortgage lender (mortgage broker)

79
Mortgage Loan Origination Agreement

• Failure to provide a copy of the agreement
  subjects broker to a refund of any brokerage fees
  collected

80
Criminal Penalties

• Broker or lender knowingly collects excessive
  advance expense deposits
• Any person who knowingly provides false or
  misleading information on an application
• Any licensee or registrant who fails to disburse
  funds belonging a borrower
• Any lender, broker, or originator knowingly
  operating without a license

81
Criminal Penalties

• Upon Conviction for these, person may be
  sentenced to
• a fine of not less than 500 nor more than
  1,000, imprisonment not exceeding one year, or
  both

82
Reverse Mortgage Loans

• Reverse mortgage loan means a nonrecourse loan
  secured by immovable property that meets all of
  the following criteria
• Loan provides purchase money proceeds for the
  acquisition by a borrower of a domicile to be
  inhabited by the borrower as his principal
  domicile or cash advances to a borrower based
  upon the equity or the value in a borrowers
  inhabited principal domicile.
• The loan requires no payment of principal or
  interest until the entire loan becomes due and
  payable.

83
Reverse Mortgage Loans

• Conventional reverse mortgage loan means a
  reverse mortgage loan other than a program
  reverse mortgage loan
• Program reverse mortgage loan means a reverse
  mortgage loan offered or intended to be insured
  by FHA

84
Reverse Mortgage Loans

• Prepayment in whole or part shall be permitted
  without penalty at any time during the term of a
  reverse mortgage loan
• If the reverse mortgage loan provides for
  periodic advances, they may not be reduced in
  amount or number based upon any adjustment in
  interest rate

85
Reverse Mortgage Loans

• A reverse mortgage may become due and payable
  upon one of the following
• Property securing loan is sold or title to the
  home is otherwise transferred
• Any fixed maturity date agreed to by borrower and
  lender
• An event of default specified in loan documents
  occurs

86
Reverse Mortgage Loans

• This first page of any mortgage securing a
  reverse mortgage loan shall contain the following
  statement in ten-point bold face type
• This mortgage secures a reverse mortgage loan.

87
Reverse Mortgage LoansRequired only for
conventional reverse mortgages

• Counseling prior to acceptance of a final and
  complete application or assessing any fees,
  lender must receive certification that the
  borrower has received counseling
• Lender may not pay any counseling fees without
  first informing the consumer that it may create a
  conflict of interest
• Lender must provide borrower with names of at
  least five nonprofit counseling agencies approved
  by HUD

88
Reverse Mortgage LoansRequired only for
conventional reverse mortgages

• Cooling off period At least seven (7) calendar
  days prior to closing a reverse mortgage loan,
  the lender shall provide the borrower with a loan
  term sheet or commitment letter outlining the
  proposed terms of the loan and informing the
  borrower that they are not obligate to proceed
  with the loan transaction.

89
Reverse Mortgage Loansduties to elders

• Elder means any person sixty (60) years of age or
  older
• Lender must provide a notice to borrower of what
  should be discussed with a counselor

90
Items counselor required to discuss

• How unexpected medical or other events causing
  the borrower to move out of their home earlier
  than anticipated will impact the cost of the
  reverse mortgage
• Extent to which borrowers financial needs may be
  better met by other options
• Whether the borrower intends to purchase an
  annuity or other financial or insurance product
  with proceeds
• Effect of repayment of loan on other residents of
  the domicile after borrowers are deceased or
  permanently abandon the domicile
• Borrowers ability to finance routine or
  catastrophic home repairs especially if
  maintenance is a factor that may determine when
  the loan becomes payable

91
Items counselor required to discuss

• The impact that a reverse mortgage may have on
  the borrowers tax obligations and the
  eligibility for government assistance programs,
  and the effect that losing equity in the domicile
  will have on the borrowers estate and heirs
• Ability of borrower to refinance alternative
  living accommodations, such as assisted living or
  long-term care, after equity is depleted
• If meeting with counselor is prior to meeting
  with a lender then counselor shall give the
  notice of the items listed above that are
  required to be discussed with the borrower.