8 Hour SAFE Loan Originator Continuing Education 2015

+
8 Hour Comprehensive Loan Originator Continuing
Education 2015
CE Forward, Inc. DBA
Nat’l Assoc of Mortgage Fiduciaries
Jillayne Schlicke

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CE Forward, DBA NAMF
NMLS Approved Course Provider
C-1400068
8 Hr LO Continuing Ed
C-5327
1 Hr WA State CE
C-5317
Instructor:
Jillayne Schlicke

+
Module 1
Introductions
 TURN OFF CELL PHONES & laptops
 ALL AUDIBLE ALERTS OFF or
please turn the phone completely
off or leave it in your car
 Photo ID
 Please complete the sign-in sheet.
 I NEED YOUR MLO NUMBER to
report your attendance to the NMLS.
Pls put your MLO number on the
form.
 New this year:
NMLS Rules of Student Conduct
 Please read and sign. A copy of the
NMLS Rules are in your course
packet
Photo ID is mandatory

+
Welcome!
Cell phones and laptops off while class is in
session.
Breaks
Bathrooms
Coffee
Lunch
Side conversations

+
Agenda
Introductions
Objectives
Boundaries
Federal Law
Non Traditional Lending
Ethics
Consumer Protection
Fair Housing
Fraud
Evaluations
Certificates
Close

+ Section 2 Federal Law
CFPB Rules: TILA/RESPA Integrated
Disclosure Rule Implementation
Module 2.1 TRID
 Loan Estimate
 Closing Disclosure
 The new Integrated Disclosures must be provided by
a creditor or mortgage broker that receives an
application from a consumer for a closed-end credit
transaction secured by real property on or after
August 1, 2015

+
Section 2 Federal Law: TRID
Module 2.2 TRID Implementation
 Existing GFE and HUD1 are used for loan
applications received prior to Aug 1, 2015
 Records retention: 3 years
 Rules in effect Aug 1, 2015 regardless of whether or
not a loan app has been taken, which we will talk
about in greater detail this morning:
 imposing fees
 Intent to proceed
 Written estimates
 Requiring additional documents

+
Module 2.2 TRID Implementation
 What transactions are exempt from the new TRID
rules?
 HELOCS
 Reverse Mortgages
 Mobile home not attached to real property
 Partial exemption for transactions associated with housing
counseling assistance programs for low income consumers.
 Creditors originating these^ types of loans must
continue to use the existing forms required by law.

+ Section 2 Federal Law: TRID
Module 2.3 General Req. for the Loan Estimate
 The creditor is generally required to provide the Loan
Estimate within three-business days of the receipt of
the consumer’s loan application.
 If any information necessary for an accurate disclosure
is unknown, the creditor must make the disclosure
based on the best information reasonably available at
the time the disclosure is provided to the consumer,
and use due diligence in obtaining the information.
 Creditors are permitted to issue revised Loan
Estimates only in certain situations such as when
changed circumstances result in increased charges

+
Module 2.4 The Loan Estimate
 Handout: See Sample Loan Estimate
 Page 1: General information, loan terms, projected
payments and costs.
 Page 2: Closing Cost Details
 Page 3: Additional Information About The Loan

Module 2.4 The Loan Estimate
 Small Group Assignment
Break into small groups and review the Loan Estimate. Discuss, elect a
group leader and share your answers w/the class:
 Q: Who prepares the early disclosures at your company at this time: Loan
originators or some other person at your company? Why?
 Q: Will that change on August 1, 2015?
 Q: Do you believe that allowing/requiring loan originators to prepare the
disclosures and re-disclosures could be considered a possible red flag
during a state DFI or CFPB audit?
 Q: What are the most important or significant elements in the new Loan
Estimate?
 Q: Do you believe disclosing the “Total Interest Percentage” will help the
borrower make a better decision? Take off your LO hat and look at this
section from the perspective of an average borrower.

Module 2.5 Delivery of The Loan Estimate
 Generally, the creditor is responsible for ensuring
that it delivers or places in the mail the Loan
Estimate form no later than the third business day
after receiving the consumer’s application
 Modify/waive the seven-business-day waiting period
after receiving the Loan Estimate? Only with a bona-
fide personal financial emergency
 Mortgage brokers taking loan apps may provide the
Loan Estimate….However the creditor is responsible
for any errors.

 Within three business days:
 For these other purposes, business day means all
calendar days except Sundays and the legal public
holidays specified in 5 U.S.C. 6103(a), such as New
Year’s Day, the Birthday of Martin Luther King, Jr.,
Washington’s Birthday, Memorial Day, Independence
Day, Labor Day, Columbus Day, Veterans Day,
Thanksgiving Day, and Christmas Day.

 Definition of a Loan Application
1. The consumer’s name;
2. The consumer’s income;
3. The consumer’s social security number to obtain a credit
report;
4. The property address;
5. An estimate of the value of the property; and
6. The mortgage loan amount sought.
The Bureau has revised the definition of application to remove
the seventh “catch-all” element of the current definition under
Regulation X, that is, “any other information deemed necessary
by the loan originator.”

Group Discussion:
Why do you believe the CPFB eliminated the
seventh “any other info deemed necessary?”
How will the elimination of the seventh item effect
how you disclose your fees?

If the creditor determines within the three-business-
day period that the consumer’s application will not or
cannot be approved on the terms requested by the
consumer, or if the consumer withdraws the
application within that period, the creditor does not
have to provide the Loan Estimate. However, if the
creditor does not provide the Loan Estimate, it will not
have complied with the Loan Estimate requirements
under Regulation Z if it later consummates the
transaction on the terms originally applied for by the
consumer.

Large group discussion:
Who sees problems with not providing the Loan
Estimate?
Is your company currently sending out early
disclosures in this scenario?
If not, will it be worth the cost in time and money to
send out the early disclosures in this scenario after
Aug 1, 2015?

+
Module 2.6 Good Faith Tolerances
Generally, if the charge paid by or imposed on the
consumer exceeds the amount originally disclosed on
the Loan Estimate it is not in good faith, regardless of
whether the creditor later discovers a technical error,
miscalculation, or underestimation of a charge.
However, a Loan Estimate is considered to be in good
faith if the creditor charges the consumer less than the
amount disclosed on the Loan Estimate, without
regard to any tolerance limitations.

+
Group Discussion:
Do you believe the transition to tighter control over
closing cost estimates has helped the industry?
How do you think tighter controls over closing cost
estimates is viewed from the perspective of the
average consumer?

+
Are there circumstances where creditors are allowed
to charge more than disclosed on the Loan Estimate?
What charges may change without regard to a
tolerance limitation?(§ 1026.19(e)(3)(iii))
When is a consumer permitted to shop for a service?
What charges are subject to a 10% cumulative
tolerance?
HANDOUT: GOOD FAITH REUQUIREMENT AND
LOAN TOLERANCES

+
P and I 761.78 x 360 =
274,240.80
274,240.80
- 162,00.00
= 112,240.80
ADD interim interest 262.00
= 112,502.80
Divided into 162,000 =
69.45%

 Good Faith Tolerances
Page 12

Module 2.7 Revisions and Corrections
When are revisions or corrections permitted for Loan Estimates?
What is a “changed circumstance”?
What are changed circumstances that affect settlement charges?
What if the changed circumstance causes third party charges subject to a
cumulative 10% tolerance to increase?
What are changed circumstances that affect eligibility?
May a creditor use a revised Loan Estimate if the consumer requests
revisions to the terms or charges?
May a creditor use a revised Loan Estimate if the rate is locked after the
initial Loan Estimate is provided?
May a creditor use a revised Loan Estimate if the initial Estimate expires?

+
Module 2.7 Revisions and Corrections
NOTE: Creditors are not required to collect all six pieces
of information constituting the consumer’s application
prior to issuing the Loan Estimate.
However, creditors are presumed to have collected this
information prior to providing the Loan Estimate and may
not later collect it and claim a changed circumstance.
For example, if a creditor provides a Loan Estimate prior
to receiving the property address from the consumer,
the creditor cannot subsequently claim that the receipt of
the property address is a changed circumstance.

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Module 2.8 Timing for Revisions
What is the general timing requirement for providing a
revised Loan Estimate?
Are there any restrictions on how many days before
consummation a revised Loan Estimate may be
provided?
May a creditor revise a Loan Estimate after a Closing
Disclosure already has been provided?
What if a changed circumstance occurs too close to
consummation for the creditor to provide a revised Loan
Estimate?

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Module 2.9 Closing Disclosure
Handout: Sample Closing Disclosure
The rule requires creditors to provide the Closing Disclosure three
business days before consummation.
Definition of “consummation”
Consummation may commonly occur at the same time as closing or
settlement, but it is a legally distinct event. Consummation occurs
when the consumer becomes contractually obligated to the
creditor on the loan, not, for example, when the consumer
becomes contractually obligated to a seller on a real estate
transaction

+
Page 1: General info, loan terms, payments, and costs at closing
Page 2: Loan costs and other costs
NOTE: Items that are required to be disclosed even if they are
not charged to the consumer (such as Points in the Origination
Charges subheading) cannot be deleted.
Page 3: Calculating cash to close, summaries of transactions, and
alternatives for transactions without a seller
Page 4: Additional information about this loan
Page 5: Loan calculations, other disclosures and contact information

Q: What percentage of closing/escrow signing appointments do
you attend with your clients?
Q: What are the strengths and weaknesses of the new Disclosure?
Q: Do you think it will be helpful having the new Loan Estimate and the
new Closing Disclosure forms match so clients can compare the two
documents?
Q: What are some good reasons for the new rule requiring receipt of the
Closing Disclosure three days prior to consummation?
Q: The new Closing Disclosure repeats many of the same content
disclosed on the Loan Estimate. Why do you think regulators did this?
Q: Do you believe this form will reduce the number of consumer
complaints?

Module 2.10 Delivery of Closing Disclosure
What are the general timing and delivery requirements for
the Closing Disclosure
How must the Closing Disclosure be delivered?
When is the Closing Disclosure considered to be received if it
is delivered in person or if it is mailed?
Can a settlement agent provide the Closing Disclosure on
the creditor’s behalf?
Who is responsible for providing the Closing Disclosure to a
seller in a purchase transaction?
When does the creditor have to provide the Closing
Disclosure to the consumer?

Creditors must ensure that consumers receive the
Closing Disclosure no later than three business days
before consummation.
This requirement imposes a three-business-day
waiting period, meaning that the loan may not be
consummated less than three business days after the
Closing Disclosure is received by the consumer. If a
settlement is scheduled during the waiting period, the
creditor generally must postpone settlement, unless
a settlement within the waiting period is necessary to
meet a bona fide personal financial emergency.

May a consumer waive the three- business-day waiting
period?
The creditor is prohibited from providing the consumer with a
pre-printed waiver form.
Does the three-business-day waiting period apply when
corrected Closing Disclosures must be issued to the
consumer?
When must the settlement agent provide the Closing
Disclosure to the seller?
Are creditors ever allowed to impose average charges on
consumers instead of the actual amount received?
HANDOUT: 3-Day Closing Disclosure Reference Chart

Module 2.11 Revisions and Corrections to
 When are creditors required to correct or revise
Closing Disclosures?
 What changes before consummation require a new
waiting period?
 Disclosed APR becomes inaccurate
 Loan product changes
 Prepayment penalty is added

Module 2.11 Revisions and Corrections to
 Are creditors required to provide corrected Closing
Disclosures if terms or costs change after
consummation?
 Is a corrected Closing Disclosure required if a post-
consummation event affects an amount paid by the
seller?
 Are clerical errors discovered after consummation
subject to the re-disclosure obligation
 Do creditors need to provide corrected Closing
Disclosures when they refund money to cure tolerance
violations?

Module 2.12 Additional Requirements and
Prohibitions
 Are there any limits on fees that may be charged prior
to disclosure or application?
Yes. A creditor or other person may not impose any fee on a
consumer in connection with the consumer’s application for
a mortgage transaction until the consumer has received the
Loan Estimate and has indicated intent to proceed with the
transaction. This restriction includes limits on imposing:
 Application fees;
 Appraisal fees;
 Underwriting fees; and
 Other fees imposed on the consumer.

Prohibitions
 A consumer indicates intent to proceed with the transaction
when the consumer communicates, in any manner, that the
consumer chooses to proceed after the Loan Estimate has
been delivered, unless a particular manner of
communication is required by the creditor. This may include:
 Oral communication in person immediately upon delivery
of the Loan Estimate;
 Oral communication over the phone, written
communication via email, or signing a pre- printed form
after receipt of the Loan Estimate.
A consumer’s silence is not indicative of intent to
proceed.

Prohibitions
 A fee is imposed by a person if the person requires a consumer
to provide a method for payment, even if the payment is not
made at that time. For example:
 A creditor or mortgage broker requiring the consumer to
provide a check to pay for a processing fee before the
consumer receives the Loan Estimate, even if the check is
not to be cashed until after the Loan Estimate is received
and the consumer has indicated an intent to proceed.
 A creditor or mortgage broker requiring the consumer
to provide a credit card number for a processing fee
before the consumer receives the Loan Estimate, even
it the credit card will not be charged until after the
Loan Estimate is received and the consumer has
indicated an intent to proceed.

Prohibitions
 Large Group Discussion:
 At this time, many mortgage companies collect credit
card information to be charged at a later time for the
appraisal. How do you/your company plan on
making sure the appraiser is paid?

Prohibitions
 The TILA-RESPA rule does not prohibit a creditor or other
person from providing a consumer with estimated terms
or costs prior to the consumer receiving the Loan
Estimate.
 However, if a person (such as a creditor or broker)
provides a consumer with a written estimate of terms or
costs specific to that consumer before the consumer
receives the Loan Estimate, it must clearly and
conspicuously state at the top of the front of the first page
of the written estimate “Your actual rate, payment, and
costs could be higher. Get an official Loan Estimate
before choosing the loan.”

Prohibitions
 There are other restrictions on the form of this statement to
assure it is not confused with the Loan Estimate:
 Must be in font size no smaller than 12-point font.
 May not have headings, content, and format substantially
similar to the Loan Estimate or the Closing Disclosure.
 The Bureau has provided a model of the required statement in
form H-26 of appendix H to Regulation Z:

Prohibitions
 A creditor or other person may not condition providing the
Loan Estimate on a consumer submitting documents
verifying information related to the consumer’s mortgage
loan application before providing the Loan Estimate.
For example:
 A creditor may ask for the sale price and address of
the property, but may not require the consumer to
provide a purchase and sale agreement to support
the information the consumer provides orally before
the creditor provides the Loan Estimate.

Prohibitions
 A mortgage loan originator may ask for the names,
account numbers, and balances of the consumer’s
checking and savings accounts, but the mortgage
loan originator may not require the consumer to
provide bank statements or similar documentation
to support the information orally provided by the
consumer before the creditor provides the Loan
Estimate.
(this applies to all LOs: depository bank,
non-bank lender, mortgage broker)

Module 2.13 Special Info Booklet
Your Home Loan Toolkit
 Creditors must provide a copy of the special information booklet to
consumers who apply for a consumer credit transaction secured by
real property, except in certain circumstances
 If the consumer is applying for a HELOC the creditor (or mortgage
broker) can provide a copy of the brochure entitled “When Your
Home is On the Line: What You Should Know About Home Equity
Lines of Credit” instead of the special information booklet.
 The creditor need not provide the special information booklet if the
consumer is applying for a real property-secured consumer credit
transaction that does not have the purpose of purchasing a one-to-
four family residential property, such as a refinancing, a closed-end
loan secured by a subordinate lien, or a reverse mortgage.

+  Break into small groups and read the new “Toolkit.”
Discuss the following within your small group. Then elect a
group leader and participate in the large group recap:
 How do you plan to use the “Your Home Loan Toolkit?”
 After a homebuyer completes the toolkit, do you believe he or she
will have a better understanding of:
 the most important steps you need to take to get the best
mortgage
 your closing costs and what it takes to buy a home
 a few ways to be a successful homeowner
 What might happen if the rule were changed to require the
homebuyer be provided with the toolkit before or at application
instead of three days after application, as part of a huge stack of
other disclosures?
 Do you currently counsel your homebuyers about these things^ and
if so, what are the implications of the CFPB providing the toolkit to
the consumer as compared to having the loan originator provide this
type of counseling with their clients?

Module 2.14 Broker to Mini-Corr
 Handout: Consumer Financial Protection Bureau Issues
Guidance Regarding Brokers Shifting To “Mini-
Correspondent” Model
 The CFPB is concerned that some mortgage brokers may
be setting up arrangements with investors in which the
broker claims to be a “mini-correspondent lender,” when in
fact the broker is still essentially just facilitating a
transaction between a borrower and a lender

Module 2.15 Public Consumer Complaints
Consumers Can Now Opt-In to Share Complaint
Narratives in CFPB’s Public Database
 Consumers must opt-in to share their story
 Personal information will be removed from narratives
 Companies can choose a response to publish
 Consumers can opt-out at any time
 Complaints must meet certain criteria to qualify for
narrative publication

Module 2.16 CFPB Enforcement: Deceptive
Advertising
 CFPB Takes Action Against Mortgage Companies
For Misrepresenting U.S. Government Affiliation
 CFPB Orders Amerisave To Pay $19.3 Million For
Bait-And-Switch Mortgage Scheme
 CFPB Takes Action Against NewDay Financial for
Deceptive Mortgage Advertising and Kickbacks

+
Section 2 Module 2.17
RESPA
Assignment: Break into small groups and
discuss the RESPA: Lighthouse Title.
Answer each question in your small group
and then elect a group leader and share your
answers with the rest of the class.

+
Section 3 Non-Traditional Lending
 Definitions
 Non-Traditional v. Non-Standard
 Suitability Discussion
 Case Study I
 Case Study II
 Consumer Complaints on Reverse Mortgages
 Snapshot of Reverse Mortgage Complaints

+
Section 4 SARS/AML
FinCEN
FinCEN Advisory on Promoting a Culture of
Compliance
Small Group Discussion/Large Group Recap
Anti-Money Laundering Case Studies

+ Module 4.2:
FinCEN Advisory on Promoting a Culture of Compliance
A financial institution can strengthen its BSA/AML compliance
culture by ensuring that:
1) its leadership actively supports and understands compliance
efforts;
2) efforts to manage and mitigate BSA/AML deficiencies and risks
are not compromised by revenue interests;
3) relevant information from the various departments within the
organization is shared with compliance staff to further BSA/AML
efforts;
4) the institution devotes adequate resources to its compliance
function;
5) the compliance program is effective by, among other things,
ensuring that it is tested by an independent and competent party;
and
6) its leadership and staff understand the purpose of its BSA/AML
efforts and how its reporting is used.

+ Section 4 SARS/AML
Module 4.3 Company Culture
 What specific conclusion can we draw from FinCen’s findings?
 What are the implications of failing to file a SAR/AML report?
 How does your company frequently share SAR/AML compliance case studies
with you?
 How would you translate the function of compliance into visual form if you
were explaining it to a brand new employee or a consumer who knows nothing
about our industry?
 I will bet your company has told you many times that compliance, in 2015 is
costing your company a lot of money. Do you know what percentage of the
cost of each loan is devoted to compliance at your firm?
 What evidence supports (or does not support) a new way of thinking about
compliance we’ll call, “Compliance 2.0” where mortgage companies create an
organizational culture that supports transparence and responsibility for
compliance at all levels throughout the organization?

+ Section 4 SARS/AML
Module 4.4 Anti-Money Laundering Cases
 Edmonds Man who Operated Illegal Money Transmitting
Business Sentenced to Two Years in Prison
 Former Bellevue Developer Sentenced to 4+Years in Prison
for Tax Evasion
 Couple who Fled to Eastern Europe During Bank Fraud
Investigation Enter Guilty Pleas
 Former Pierce County Hard Money Lender Sentenced to
Prison for Mortgage Fraud Scheme

+ Section 5 Ethics and Consumer Protection
 What do you remember from past ethics classes?
 What is ethics?
 Are we professionals, retail salespeople, or are we an
emerging profession?
 Law = have to
 Ethix = should, ought

Module 5.2 Code for an Emerging Profession
Are you currently a member of a mortgage industry trade
association? If yes:
Have you known your association to every deny
membership to an individual or company due to violating
its ethical code?
If yes:
Is there an ethics committee and if so, what do they do?
Do they report to the membership on their actions?
If no:
Why not?
Would you voluntarily choose to follow the 2015 Draft
Model Code of Ethics we’ve been working on in our LO
CE classes?
Handout: 2015 Draft Model Code of Ethics

Module 5.3 Applied Professional Ethics
Group One:
Members of the ethics committee
Group Two:
Mortgage company accusing a competitor of
being unethical
Group Three:
Mortgage company that may or may not have
violated the code of ethics.

Module 5.3 Applied Professional Ethics
Break into your assigned groups.
Read the ethics case study.
GROUP ONE: Ethics Committee
Go on your afternoon break while groups two and three plan
their presentation.
GROUP TWO: G2Mortgage
Discuss the case, elect a group leader and summarize your
reasoning to the ethics committee.
GROUP THREE: Do It Rite Loans
Defend your company’s actions.
After hearing both sides, Group One, the ethics committee,
stays in the classroom and solves the case while groups two
and three take their afternoon break. After the break, the ethics
committee elects a chairman to announce the findings.

+
Section 5
Fair Housing
1968 Civil Rights Act
1968 Fair Housing Act
~
Protected Classes:
Race
Color
Religion (Creed)
Sex
National Origin
Familial Status
Sexual orientation added in
2012 to Fair Lending
Disability
58
Intent v. Effect
Realtors and lenders
have great power to
affect neighborhoods

+
Section 5 Module 5.5
Fair Housing/Fair Lending
CASE STUDIES
 Maternity Leave/Pregnancy
 Deaf Persons
 Disability
 National Origin
 Redlining

+
Section 5.6 Mortgage Fraud
 Intentional misrepresentation of a fact in relation
to a mortgage loan. Had the lender known of the
fact, the lender might not have made that loan.
 Fraud for housing
 e.g.; borrower lies about occupancy
 Fraud for Profit
 Individuals acting together in a group to send
many loans through one or more lenders and
most of them default leading to large losses.

+ Section 6 Mortgage Fraud
Module 5.6
HANDOUT
Fannie Mae Housing Industry Forum
Common Mortgage Fraud Red Flags
HANDOUT
IRS
Examples of Mortgage and Real Estate Fraud
Investigations – Fiscal Year 2015

+
Section 5 Mortgage Fraud
Module 5.6
Discussion:
What are the broad effects of mortgage fraud?
What patterns or themes emerge from the
reports?
What could be invented to drastically reduce
mortgage fraud?

Motivation
Opportunity
Rationale

+
Evaluation Forms
Required by NMLS
Anonymous/name not required
Course name: LO CE

+
Certificates
Attendance will be reported to the NMLS within 7 days or less
I will pay your NMLS “credit banking fee”
$1.50/hour/student = $13.50 including your WA 1 Hr CE
I will send you an email with confirmation.
Do not lose your certificates

+
THANK YOU!!
Jillayne Schlicke
206-931-2241
jillayne@ceforward.com
ceforward.com
mortgagefiduciaries.com

8 Hour SAFE Loan Originator Continuing Education 2015

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