Wednesday, March 5, 2008 - Doug Foster Appointed Commissioner of Texas Savings & Mortgage Lending Department

Pictured Left to Right:  Doug Foster, SMLD Commissioner, Jerry Rutledge, DREI, CREI, President Alliance Academy, Rachel McNamara, Vice President Alliance Academy, Gary Ackright, Texas Finance Commissioner.

We are pleased to announce that Doug Foster has been appointed as the new Commissioner of the Savings and Mortgage Lending Department.

Doug has been with the department for nearly 23 years, most recently as the Director of Examinations.  He has also served twice as the Acting Commissioner when former Commissioners Jim Pledger and Danny Payne resigned.

Commissioner Foster is well respected within the department and the mortgage broker industry for his honesty, integrity and capability.

Commissioner Foster spoke recently at the Dallas Association of Mortgage Brokers (DAMB) monthly meeting.  He presented a Texas Mortgage Market Update as well as providing the latest information about mortgage licensing in Texas.

Mortgage Broker Annual Reports, which were due at the end of March, included over 5600 filings completed.  Yet, 1500 had not filed their annual reports, of which it’s estimated that 750 of those are still active.  The Commissioner suggested, the rest are probably inactive “drop-outs.”  Failure to file an annual report could result in licenses being revoked.

In the Auditing/Compliance division of the Department, they are making changes to allow for an increase in their speed of responses.  Audits and enforcement cases are moving much faster now, which means they are examining more mortgage brokers.

Regarding loan production trends in Texas, the Department has released the following statistics based on Annual Reports.  In 2007, Texas Brokers generated 163,500 loans totaling $25,900,000.  That is down from 2006, when we generated 251,700 loans for a total of $38,460,000.  We hit a peak in 2003 during the refi boom, originating 341,100 loans totaling $49,130,000

Wednesday, November 21, 2007 - IS YOUR ENTITY LICENSED IN TX? IF NOT YOU ARE GUILTY OF UNLICENSED ACTIVITY!

IS YOUR ENTITY LICENSED IN TEXAS?

IF NOT YOU WILL BE GUILTY OF UNLICENSED ACTIVITY!

A message from Harry Dinham, NAMB Past President

While at the Mortgage Broker Advisory Committee last week comments and concerns were raised about the lack of applications for the entity license. I believe the number that the commissioner mentioned was 140. Every licensed mortgage broker who doesn't operate as schedule C under their personal tax returns must obtain an entity license.

There are more than 5,000 brokers licensed in the state and only 140 have submitted applications for entity licenses. This application must be submitted prior to January 1, 2008 when these changes take effect. Below you will find the SML department's language from their website. Please don't delay too long because if you continue to operate under a company name without the entity being licensed after January 1, it will be considered unlicensed activity.

If a broker operates with a company name, those companies now have to be licensed. No one (mortgage broker or loan officer) can be individually licensed without their companies licensed (if they have one). In order for the company entity to become licensed, the entity must designate an individual licensed as a mortgage broker as its designated representative and pay an application fee in an amount not to exceed $175. That designated representative must the sole proprietor if the company is a sole proprietorship, be an officer of the corporation if it is a corporation, a manager of the limited liability company if it is a limited liability company, or if the company is a limited partnership the designated representative must be a general partner, an officer of a general partner that is a corporation, or a manager of a general partner that is a limited liability company.

Not later than the 10th day before a mortgage broker begins doing business under an assumed name, the broker shall file with the Commissioner a copy of an assumed name certificate for each assumed name under which the mortgage broker intends to conduct business and pay a $25 registration fee for each assumed name. A loan officer may not conduct business under any assumed name that is not the registered assumed name of the sponsoring broker.

Licensees must notify the Commissioner not later than the 10th day after the date of any change of the person's name and pay a fee of $25 for the name change and issuance of an amended license certificate.

A business entity licensed under this chapter shall notify the Commissioner of any change of its designated representative and pay $25.00 for each change.

Harry H Dinham, CMC

Monday, November 19, 2007 - URGENT INFO ABOUT TX CASHOUT LAWS - Effective Dec 4

As you may know, Constitutional Amendment HJR 72, which amends the Texas home equity provisions in Article 16, Section 50 of the Texas Constitution, approved by the voters on November 6, 2007, will take effect on December 4, 2007 (the date of the official vote canvass by the governor confirming statewide majority approval).

1. The revised 12-day notice cannot be used for TX home equity loans closing prior to December 4, 2007.

2. For Texas home equity loans that will close on and after December 4, 2007, and for which the pre-December 4, 2007 12-day notice was provided prior to December 4, 2007, we recommend that the revised 12-day notice required by HJR 72 be given to the owner of the homestead on or after December 4, 2007, and that the loan not close until a new 12-day notice period has expired.

Yes, that means that if you don't close and fund your loan by Dec 3^rd, you will need to re-disclose on Dec 4^th and wait another 12 days. So the loan cannot close until the 15^th, which is a Saturday meaning, you can't close really until Monday the 17^th. WATCH YOUR LOCKS!!!!

PRE-CLOSING - The updated laws go on to say that along with that required final version of the HUD 1 day prior to closing, you must also provide a final loan application (1003)

POST-CLOSING - The law also was amended to say that a borrower must receive a copy of the SIGNED final loan application and all executed documents SIGNED by the owner at closing related to the loan.

Friday, September 14, 2007 - NEW MORTGAGE BROKER ANNUAL REPORTING REQUIREMENTS.... PLAN NOW!!!!

The following recaps both the current and new requirements so that you will have time to collect the data you will be required to report:

First Lien 1-4 Family Residential Mortgages.  You must provide the total number of loans and the total amount of the loans you funded during calendar year 2007 for the following categories:

~  FHA loans
~  VA loans
~  Conventional – FannieMae/FreddieMac conforming loans
~  Jumbo Loans – loans above conforming loan limits / non-conforming loans
~  Tax lien or “Super” lien loans (new requirement, previously captured under “Other” loans)
~  All other 1-4 family residential loans not reported above
High Cost Loans (Loans with interest rates greater than 12%) will no longer be collected as a separate category.

FOLLOWING IS THE NEW REQUIREMENT!

Non-Traditional Loans The information you enter in the above categories will be automatically totaled for you by the online system.  The following sub-categories of loans should already be represented in the totals above but must be broken out into individual categories so that additional analysis and reporting can occur:

~  Negative amortization / pay option loans
~  Loans with NO escrow accounts or unimproved taxes
~  Any ARM with a margin of greater than 3%
~  Reverse mortgage loans

Points to remember when completing your annual reporting requirement:

~  You MUST file the annual report before March 1st to avoid an administrative penalty and possible license suspension.
~  The annual report must be filed online; there is no paper form available.
~  The password is the first six numbers (no dashes) of your social security number.
~  You CANNOT change addresses using the annual report.
~  Each individual mortgage broker MUST file an annual report, even if another mortgage broker is including figures at a company level.
~  The total amount of each loan funded must be included, not the commission earned on the loan.
~  You will receive a confirmation page when you submit your completed annual report that includes the year being reported as well as the date and time you submitted your report.
~  Newly legislated requirements that go into effect in late 2007 or early 2008 will not affect your calendar year 2007 annual report submissions, which are due on or before February 28, 2008. 

Additional requirements will be established and implemented for your calendar year 2008 loan production filing, due on or before February 28, 2009, to include, for example, second lien reporting.

If you have any questions, do not hesitate to contact the department’s Division of Licensing via email at licensing@sml.state.tx.us or telephone at 512-475-1350 or 877-276-5550.

Saturday, September 1, 2007 - New Closing Disclosure in Texas!!!!

Many of you may know, but if you don't this is a big wake up call!

Effective September 1, 2007 and pursuant to the revisions of the Texas Finance Code as required by House Bill 716, each mortgage lender, mortgage banker, or licensed mortgage broker/loan officer shall provide to each applicant for a home loan, this written notice at CLOSING for full verification and execution by EACH loan applicant to help fight mortgage fraud.

The SML Auditors will be enforcing this in full force beginning Jan. 1, 2008.

WHO THIS AFFECTS:

1. Mortgage Lenders

2. Mortgage Bankers

3. Licensed Mortgage Brokers and Loan Officers

HOW TO COMPLY:

1. Provide the disclosure to the title company for signature AT CLOSING!!! Do not rely on the lender to send this disclosure. It may take a while for all of the lenders to "catch on." (No this cannot be done with your initial disclosures because the law says to have it signed at closing.)

2. Follow up with the title company to make sure it was signed.

3. Get a copy of the signed disclosure for your archived file (when you request the copy of the signed HUD-1).

Friday, August 31, 2007 - New Mortgage Pre-License Requirements

• Mortgage Broker applicants with no previous mortgage license will need 90 Core Hours. 
• Mortgage Broker applicants with a loan officer license will be required to complete 30 Hours Core.
• Application and renewal fee stays the same at $375, plus the other costs.
  

Tuesday, June 5, 2007 - New CHARM Booklet coming in October

Wednesday, February 21, 2007 - SML Department - Examiner Support Letters

Monday, February 19, 2007 - Texas Disclosures and Point 5.4

• First, it should not allow "Company" to be an option because the state does not license companies.  It only licenses individuals under the Texas Mortgage Broker License Act.  Allowing this to be an option encourages people to be out of compliance, but for now, Point is still allowing it.  The two options should be Mortgage Broker or Loan Officer. 
• GLITCH:  Only the use of "Loan Officer" will work for inserting the name of the licensed individual!  If you check Company OR Mortgage Broker, it puts the company name in on the disclosure instead of the individual.  It didn't work in 5.3 either.
  
• SOLUTION:  Always check loan officer and make sure that your Master File Templates are saved that way too.

• This is still not included in point, but you can download it here in English and Spanish.

• Again, this is still not included in point, but you can download it here for you to use, as needed.
  

• The generic prequalification letter that is available in Point WILL NOT meet the guidelines of what is required by the state.  Please make sure you are using the correct format.

• Not that everyone out there is doing high cost loans, but surely a refresher might be good.  Might want to just have them handy in case you ever come across the need for the document.
• Here is the disclosure in English and Spanish.

Saturday, February 10, 2007 - 2006 Texas Annual Reports - EARLY DEADLINE THIS YEAR!

Each mortgage broker is required by law (Section 156.213 of the Mortgage Broker License Act) to file an annual report with the Texas Department of Savings and Mortgage Lending. This report must include loan and other information regarding you, the mortgage broker, and all loan officers you sponsor. Each mortgage broker is required to complete this report even if no loan activity occurred during the calendar year. This report must be received by the department no later than February 28 for the proceeding calendar year's production activity.

Failure to complete and file this report within the designated time period will serve as a basis for disciplinary action including, but not limited to, the assessment of administrative penalties and possible suspension of the mortgage broker's license.

What data will you need to access the report?

1. Mortgage Broker License Number
2. Your Pin number, which is the first six numbers of your social security number without a dash.  For example, if your social security number is 123-45-6789, enter 123456)
3. List of your current loan officers, their license numbers, and branch offices
4. Breakdown of your total loan production
   1. First Liens Only
   2. 1-4 Family Residential Only
   3. Categorized:  Quantity and Loan Amounts
      1. FHA
      2. VA
      3. Conventional - FNMA/FHLMC Conforming
      4. Conventional - Non-Conforming or Jumbo
      5. Other Loans relating to first lien 1-4 family residential (Hard Money, etc.)
      6. Texas High Cost Loans

Then it will take you to a screen where you will confirm the following records of the department:

1. Company Information
2. Sponsored Loan Officers
3. Active Branch Offices
4. Loan Production Details
   
   1. List the number and total dollar amount of first lien 1-4 family residential home loans originated (and closed) in Texas or secured by Texas property during calendar year in the following categories of loans.
   2. Include the loans originated and closed by you as a licensed mortgage broker and all the licensed loan officers that you sponsor.
   3. If your company employs more than one mortgage broker, each broker must file a separate report including information about the loan officers he or she sponsors.
   4. Do not use total company origination information unless you are the only licensed mortgage broker in the company.
   5. Show only total loan information for yourself and the loan officers you sponsor.
   6. If you had no loan origination activity during the calendar year you are reporting, enter "0" in the box.
   7. Do not break data out by originator.
   8. Include in your totals the actual loan amount, not just earned fees from the loan.