- Survival Guide for the SML Audit

The Survival Guide for the SML Audit is a “one of a kind course” dealing with what you can expect when the SML State Auditors visit you, your books, and your records.  The state auditors will be there to determine if you are in full compliance with Federal and State Law and Regulations. 

This unique course developed by Alliance Academy Consulting Services Division contains critical information that you need to get it right and stay out of trouble! 

We walk you through the same system the SML department uses in their Audits.  Get ready now with this course before its too late!  This is critical information for all Mortgage Brokers, Loan Officers, and Processors.

Please check the calendar for the course listings. 

Approved for 8 Hours Core Continuing Education

Friday, January 26, 2007 - Coffee Shop Computer Security

ANSWER:  Watch out!  Some internet cafes offer "leased" time on public internet-connected computers.  The entire system is under control of the cafe owner.  Security is uncertain at best.  Hackers might rig the computers to record everything.  I wouldn't do any personal business on any public computer.

Using your own laptop is much safer.  Banks establish a secure connection to your computer when you log in, using SSL (Secure Sockets Layer).  These setups are automatic.  They use 128-bit encryption, which is currently unbreakable.

HOWEVER....You should ensure that you're not giving away personal files.  Windows makes it easy to share folders on a home network.  On public internet access, those shared folders become security holes.  Anyone using the same access point, such as a hotspot, may access what’s in your shared folders.

Whether you're in a wireless hotspot or a hotel room, disable file sharing. 

• Click Start>>Control Panel.  Double-click Network Connections.  
• Right-click your connection and select Properties.
• Select the General tab.
  
• Clear the checkbox labeled "File and Printer Sharing for Microsoft Networks.”  Then click OK. 
  
• To ensure that the new setting takes hold, restart your laptop.

Finally, use basic security including a firewall, antivirus software and a few anti-spyware programs.  They are your best protection against the likes of keyloggers, which track your keystrokes.

For more information on internet security issues and much more, check out Kim Komando's website.  She has lots of helpful information.

Thursday, January 25, 2007 - New Lower Title Insurance Rates in TX

Thursday, January 18, 2007 - Credit Report Fees Increasing Soon

There is an upcoming policy change affects two major credit reporting agencies that are passing on fees for reissuing credit reports.  Effective January 1, 2007, both Equifax and Experian will begin charging all credit resellers a fee each time a credit report is reissued. 

UPDATE:  Experian has announced a new start date for the reissue fee of February 1, 2007 and Equifax announced a new start date of April 1, 2007. 

• Reissue fees will vary from approximately $0.85 to $3.80 depending upon the credit agency, credit reseller and type of report (individual vs. joint).
• TransUnion has not announced a reissue fee policy at this time (12/20/06).

A "reissued" credit report can be described by the following: 

• When a credit report re-pull is requested outside of your office or your Loan Origination System (LOS), it indicates another lending institution is ordering a re-pull.
• When a credit report is pulled through your LOS and then later re-pulled into an Automated Underwriting System (AUS). Note: Freddie Mac's LP and Fannie Mae's DU are excluded from this rule.  
• If a credit report is pulled into your own LOS and then later re-pulled into another lending institute's LOS.

Again, this is an industry-wide policy change and you should discuss the effects on your credit report billing directly with your credit provider.

Wednesday, January 10, 2007 - Important Change to the Licensing Process in Texas

Is someone you know getting ready to get their Loan Officer or Mortgage Broker license?  There is an important update to the application procedure that you need to know about.

Promissor, who proctors the pre-license exams, is no longer offering the digital fingerprinting function as a part of the exam process . 

Statewide, the Department of Public Safety has contracted with a company called Identix to offer convenient, reliable, affordable applicant fingerprinting.  Because of this, it is not necessary for Texas Department of Savings and Mortgage Lending’s in-state applicants to submit separate fingerprints with their application.

Instead, once the SML Department has processed your application, a “Fast Pass” certificate will be mailed to your home address.  This certificate will contain all the necessary information and instructions to contact Identix, set an appointment, and have your fingerprints submitted directly to the DPS and FBI and the results forwarded to the department. 

The SML Department believes that utilizing this system will reduce the number of fingerprint rejections and the time required to conduct a background investigation. 

If you have any further questions about this, you may contact Identix through their website, https://tx.iisfingerprint.com or the SML Department.

It is our understanding that at this time, if you already had your fingerprints done with Promissor, they will be accepted.

Wednesday, January 3, 2007 - Protecting Your Identity and Business

Did you know that as soon as you pull a mortgage credit report for your borrower, the information is instantly sold to lead generating sites that these are people who are in the market to finance a house?

It’s hard to believe that the people you are paying to order the credit reports are turning around and selling your borrower off as a “hot lead!”

It’s true.  While the data you’ve collected about the loan application is not shared with the lead sites, the borrower’s name and contact information are sold.

You need to educate your borrowers and let them know that they may receive lots of enticing calls for mortgages and they should BEWARE.  I’ve heard countless stories from loan officers that lost applicants because the borrower got a phone call from someone who bought the lead and turned around and promised a drastically lower rate and/or fees.

Unfortunately, by the time the borrower gets to the closing table, the deal is never what was promised.

As if that wasn’t enough, people also can be victimized by identity theft this way.  When they entered into the application with you, the borrower knew and trusted you with their private identity information.  However, they can get suckered into the process with someone who they don’t know or trust and that person could steal their identity.  It has happened!

The best way to have your identity and borrower protected is to have them opt out of unsolicited credit card and mortgage offers, and to take their name off of direct marketing lists.

They can log on to www.optoutprescreen.com  or call 1-888-5-OPTOUT.

You should too!

Monday, January 1, 2007 - FHA Requires W-2 Employees

FHA recently updated Handbook 4060.1 Rev-2 “FHA Title II Mortgagee’s Approval Handbook” to provide guidance regarding the employment status and compensation of employees who are involved in the origination and/or underwriting of FHA loans.

Below are excerpts from Section 2-9(A) of the handbook relevant to W-2 employees:

An approved mortgagee must employ trained personnel that are competent to perform their assigned responsibilities.

Employees are those individuals who are under the direct supervision and control of an FHA approved mortgagee and where the individuals are exclusively employed by the FHA approved mortgagee in the mortgage lending and real estate fields.  The mortgagee must demonstrate the essential characteristics of the employer-employee relationship upon inquiry by the department.

Compensation of employees may be on a salary, salary plus commission, or commission only basis and includes bonuses.  All compensation must be reported on Form W-2.

Employees who perform underwriting and loan servicing activities may not receive commissions.

Additionally, the following excerpt from Section 2-13 of the handbook is related to this topic and addresses outsourcing:

A mortgagee may contract out certain administrative and clerical functions that do not materially affect underwriting decisions or increase the risk for FHA.  However, the mortgagee is still responsible for the quality of the mortgages and must ensure compliance with program requirements and RESPA requirements.  The management, underwriting, and loan originator functions may not be contracted out.

The revised Handbook should be reviewed in its entirety and is available through hudclips found on HUD’s website.  You may find it by selecting “Handbooks and Notices,” then “Housing Handbooks,” and then run a search for “4060.1”

http://www.hudclips.org/sub_nonhud/cgi/hudclips.cgi

Monday, January 1, 2007 - New Tax Deduction Will Make Housing More Affordable

Borrowers closing loans to purchase homes in 2007 who have annual household incomes of $100, 000 or less will be able to get a low down payment mortgage and deduct the full cost of their mortgage insurance premiums on their federal tax return.  Make up to $110,000 and you'll be permitted to deduct part of your mortgage insurance.  Any more than that and, unfortunately, you're out of luck on this one.

Unlike a mortgage, which you'll probably pay for decades, private mortgage insurance can come to a relatively quick end.  You can usually cancel it when you have at least 20% equity in the value of your home.

Remember: The mortgage insurance contract must be issued in 2007, and currently only 2007, unless they extend it.

Myths and Facts About "Piggyback" Loans

Some loan originators have been promoting "split" loan structures such as 80-10-10 loans where the home buyer puts 10 percent down, borrows another 10 percent through a second mortgage (with a higher interest rate) and finances 80 percent through a conventional mortgage. For many typical home buyers, a single mortgage with cancelable private mortgage insurance (PrivateMI) makes more sense than 80-10-10 loan deals.

Following are some myths and facts about 80-10-10 loans:

Myth: An 80-10-10 loan is a better financing option for home buyers than a single loan with PrivateMI.

Fact: For many home buyers, a single mortgage with PrivateMI makes more sense than so-called "piggyback" loans. PrivateMI enables home buyers to put down as little as 3 percent and even less for qualified borrowers, while an 80-10-10 structure requires a 10 percent down payment. Once enough equity is achieved along with a good payment history, PrivateMI can be canceled.

Myth: 80-10-10 loans are less costly than a loan with PrivateMI, because homeowners do not have to pay PrivateMI premiums.

Fact: PrivateMI generally costs less over the life of the loan. When comparing costs between a single mortgage loan with PrivateMI versus an 80-10-10, the loan with PrivateMI typically results in lower monthly payments and lower life-of-loan costs. When cancellation is factored in, the savings are even greater.

Fact: 80-10-10 loans often have balloon payments which cloud the financial horizon. While originators of 80-10-10s typically amortize the second "10" over 30 years to minimize monthly costs, they "call" the mortgage after 5, 10 or 15 years. This results in a balloon payment that most borrowers will have to pay either by tapping their home equity or by obtaining a new loan, often at less favorable terms.

Myth: 80-10-10 loans are a good financial choice because the interest on both loans is tax deductible.

Fact: Home equity and family wealth grow faster with PrivateMI. Equity accrues faster using a loan with PrivateMI than with an 80-10-10 since more of each monthly payment goes toward reducing the principal balance (due to lower interest costs). 80-10-10s create a second lien at origination, meaning that borrowers will find it more difficult to tap their home equity for other things such as college tuition, furniture or home improvements.

Furthermore, payments on the second mortgage do not stop until the loan is paid in full, while PrivateMI payments can be canceled when enough equity is accrued. Borrowers also may receive a refund of PrivateMI premiums, depending on the payment plan selected at origination.

Myth: Homeowners can pay lower interest using an adjustable rate 80-10-10 loan.

Fact: A single mortgage loan with PrivateMI is more predictable than a piggyback loan with an adjustable rate. Many 80-10-10 structures use introductory adjustable interest rates to keep down costs. However, when interest rates rise, homeowners find that their total monthly mortgage payment increases as well. In contrast, a single mortgage loan with PrivateMI represents a fixed cost.