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    State_Federal.doc State_Federal.doc Document Transcript

    • Required Federal Law Course Time: 7.5 hrs Learning Objectives: I. Acquire a working knowledge of the basic purpose and provisions of each law and related regulations. II. For each law, know whom it protects and what responsibilities and restrictions it places on the mortgage broker. III. Know the penalties for non-compliance with these laws. IV. Attain a working knowledge of the relevant forms used in the real estate transaction. Federal Legislation I. Equal Credit Opportunity Act (ECOA) .50 hour A. Purpose B. Who ECOA applies to C. Who ECOA protects - Protected classes D. Regulation B – Requirements and restrictions i. Taking applications ii. Evaluating applications iii. Extension of credit iv. Consumer notification requirements a) Right to copy of appraisal b) Notification of adverse action v. Information for monitoring purposes E. Penalties for violation i. Pattern or practice of discrimination (DOJ) ii. Individual cases of unfair discrimination a) Office of Thrift Supervision (OTS) b) Comptroller of Currency (OCC) c) Federal Reserve Board (FRB) d) Federal Deposit Insurance Corporation (FDIC) e) National Credit Union Association (NCUA) f) Federal Trade Commission (FTC) II. Fair Credit Reporting Act (FCRA) 0.25 hr A. Purpose B. Who FCRA governs C. Provisions i. Right to credit report ii. Prescreening & trigger lists iii. Right to correct inaccuracies iv. Explanatory statements v. Lender’s responsibility to disclose identity of credit bureau vi. Adverse action disclosure requirements III. Fair & Accurate Credit Transactions Act (FACT) 0.25 hr
    • A. Amendments to and reauthorization of FCRA B. Free credit report requirements C. Mortgage lender disclosure requirements D. Identify theft provisions IV. Real Estate Settlement Procedures Act (RESPA) 1.75 hrs A. Purpose B. Loans/transactions covered C. Provisions i. Required disclosures to borrowers a) Costs of settlement b) Affiliated business arrangements c) Lender servicing and escrow requirements ii. Timing of required disclosures and who is responsible a) At time of loan application a. Information Booklet b. Good Faith Estimate c. Mortgage Servicing Disclosure Statement b) Before Closing/Settlement a. Affiliated Business Arrangements b. HUD-1 Statement of Settlement c) At Closing/Settlement a. HUD-1 completed b. Initial Escrow Statement (or within 45 days after closing) d) After Closing/Settlement a. Annual Escrow Statement b. Servicing Transfer Statement (if applicable) iii. Prohibited practices a) Sect. 6 – Loan servicing b) Sect. 8 – Kickbacks, fee-splitting, unearned fees a. Restrictions b. Penalties for violation c) Sect. 9 – Seller required title insurance a. Prohibitions on seller b. Penalties for violation d) Sect. 10 – Escrow limitations a. Lender limits and required annual analysis b. Penalties for violation D. Enforcement i. HUD and Regulation X a) Procedure b) Fines c) Injunctive relief ii. Individual law suits
    • iii. Filing a RESPA complaint V. Truth In Lending Act (TILA) of 1968 1 hr A. Consumer Credit Protection Act i. Purpose ii. Who TILA protects B. Regulation Z i. Provisions ii. Disclosures at Closing iii. Advertising a) Guidelines and restrictions b) Trigger Terms and related requirements C. Home Ownership Equity Protection Act (HOEPA) - restrictions i. Refinancing guidelines ii. Home equity loans D. Enforcement and Penalties VI. Home Mortgage Disclosure Act (HMDA) 0.25 hr A. Purpose B. Prohibited practices: Red-lining C. Required borrower data VII. Community Reinvestment Act (CRA) 0.25 hr A. Purpose B. Prohibited practices: Red-lining C. Requirements for financial institutions VIII. Gramm-Leach-Bliley Act (GLBA) (aka Financial Modernization Act) 0.25 hr A. Purpose – Consumer privacy B. Requirements i. Who is covered ii. Written policy requirements C. Enforcement IX. Fair Housing Act .50 hr A. Title VIII – Protected classes B. Penalties C. Enforcement X. Sherman Antitrust Act 0.25 hr A. Purpose B. Blockbusting C. Price fixing D. Penalties XI. Telemarketing and Consumer Fraud and Abuse Prevention Act 0.5 hr
    • A. Purpose B. Deceptive telemarketing rules C. Penalties XII. U.S. Patriot Act 0.25 hr A. Anti-money laundering i. Purpose ii. Program requirements B. Consumer identification program (CIP) C. Mortgage broker’s role XIII. Anti-Wire Fraud and Mail Fraud (Title 18 U.S.C.), and COCCA 0.75 hr A. Provisions and prohibited conduct B. Penalties XIV. Federal Trade Commission Act 0.25 hr A. Unfair methods of competition XV. What’s New – Recent Laws and Regulations 0.5 hr Required State Law Course Time: 12.0 hrs Learning Objectives: I. Acquire basic knowledge of the history and creation of law and related regulations. II.Acquire a working knowledge of the basic purpose, provisions, and penalties for non-compliance of each law and related regulations. For each law, know whom it protects and what responsibilities and restrictions it places on the mortgage broker. III. Acquire basic knowledge of the essential elements of the Colorado contract as they relate to the mortgage industry. IV. Understand the basic foreclosure process. Content Outline: I.Creation of law 1.0 hr A. Sunrise Review Process 1. Submit application-must establish reason for registration or licensing of trade to protect the public health, safety, or welfare of the public 2. DORA review of the proposal & recommendation to regulate professional or occupational group 3. Introduction of bill to require registration or licensing 4. CAMB submitted Sunrise Application to DORA June 2004 requesting State registration of mortgage brokers. 5. DORA submitted written report to the Colorado General Assembly
    • October 14, 2005 B. Legislative Process 1. Introduction of bill into house or senate-purpose of bill defined 2. Bill becomes law-Governor signs bills into law C. Executive Branch-elected positions 1. Governor a. Offices of the Governor 1) Boards, Commissions and Director model 2. Lieutenant Governor 3. Secretary of State a. Requires all companies in Colorado to be registered 4. Attorney General 5. Colorado State Treasurer D. State Government Department Agencies 1. Department of Regulatory Agencies (DORA) a. Executive Director appointed by the Governor b. Communication of consumer rights and industry professional’s responsibilities c. Consistent application of professional standards, education, licensing and enforcement of real estate license law regulations. d. Connection of regulatory activities and economic development E. Divisions 1. Division of Real Estate-licensing, education & enforcement agency a. Director of Division of Real Estate 1] Mortgage brokers 2] Real Estate brokers 3] Appraisers 4] Subdivision Developers F. Boards, Commissions and Director Model 1. Mortgage Broker Program a. Director model a. Oversees mortgage brokers 2.Real Estate Commission a. Composed of five members appointed by the Governor b. Three members are brokers with not less than five years experience, one consumer and one subdivision expert c. Appointed for three-year term d. Oversees real estate brokers 3. Board of Real Estate Appraisers a. Composed of seven members appointed by the Governor, confirmed by the State Senate
    • b. Three appraisers, two consumers/public members, one mortgage lender, one county assessor b. Board members serve staggered three year terms c. Oversees appraisers 4. Division of Insurance a. Oversees title companies and insurance industry II Laws and Regulations 1.0 hr A. Colorado Revised Statutes (C.R.S) 43 titles 1. Real Estate & Mortgage related titles in Colorado Revised Statutes b) Title 5- Consumer Credit Code, is amended by the addition of a new article (House Bill 02-1259, Section 1) Article 3.5 Consumer Equity Protection Act 1) Purpose a] Protection of consumers’ home ownership equity 2) Provisions & restrictions on mortgage broker a] 5-3.5-102 Protection of obligors b] Limitation of balloon payment c] No call provision d] No negative amortization e] No increased interest rate upon default f] Limitations on mandatory arbitration clauses g] No advance payments h] Limitations on prepayment fees (a)First thirty-six months only (b)No prepayment fees for certain refinancing (c)Lender must offer choice i] 5-3.5-103 Restricted acts and practices 1. No lending without cautionary notice 2. No lending without due regard to repayment 3. Refinancing within a one-year period j] No refinancing certain low-rate loans k] Restrictions on covered loan proceeds to pay home improvement contracts l] No financing of credit insurance m] No recommending default n] No fee for payoff quote o] 5-3.5-104 Reporting to credit bureaus 1] Lender or its servicer shall report at least quarterly both favorable and unfavorable payment history information 3) Enforcement – liability as stated in C.R.S. 5-3.5-201
    • a] The Attorney General and any obligor may enforce this article. c) Title 6-Consumer & Commercial Affairs, is amended by a new paragraph (House Bill 02-1259, Section 3) 1. Purpose 2. Provisions a] Article 1, Colorado Consumer Protection Act i. 6-1-105 (1) A person engages in a deceptive trade practice when they violate Section 38-40-105, CRS ii. 6-1-110, is amended by the addition of a subsection House Bill 02-1259, Section 4) iii. Restraining orders-injunctions, assurances of discontinuance iv. District attorney may, in addition to any other remedies, apply for and obtain, in the court that has previously issued an injunction, a further injunction against continuing to participate in the business of originating mortgage loans for up to five years. b] Article 4-Property and Casualty Insurance c] Article 11-Title Insurance Code of Colorado d) Title 10-Insurance 1. Purpose 2. Provisions a] Article 4-Property and Casualty Insurance 1] Part 110.6-Homeowner’s insurance definition 2] Part 114-Requirements on hazard insurance coverage for loans secured by real property 3] Part 116-Use of credit information 4] Part 117-Loss history information report-notice to insured- definition b] Article 11-Title Insurance Code of Colorado 1] Part 108-Prohibitions e) Title 12- Professions & Occupations 0.50 hr 1. Purpose 2. Provisions a] Article 61–Real Estate 12-61-101 to 12-61-811 1] Part 1-Brokers & Salesperson aa) 12-61-113.2 ii) Definitions a] Employing Broker, Independent, and Associate b] Settlement Services ii) When permitted iii) Reporting Affiliated Business Arrangements to RE Commission iv) “Sham” Affiliated Business Arrangements v) Division of Insurance
    • 2] Part 7-Real Estate Appraisers aa) USPAP Conduct Rule bb) Advisory Opinion cc) Broker Price Opinion (BPO) 3] Part 8-Brokerage Relationships 4] Part 9-Mortgage Broker Licensing Act 12-61-901 to 12-61-915 2 hrs aa) Section 12-61-902, C.R.S. - Definitions bb) Section 12-61-903, C.R.S. amended Revised-license required effective January 1, 2008 i] Who is required to be licensed-conversion of registration to license-must be licensed in Colorado regardless of whether or not licensed in another state ii] Shall apply for license renewal every three years iii] How to become licensed-criminal history check iv Post a bond v] Renewal fee vi] Education requirements on or after January 1, 2009 complete pre-licensing course and examination approved by the director of at least nine hours of classroom instruction vii] Independent testing services to develop, administer and grade the exam viii] Director shall issue or deny a license within 21 days after receiving criminal history record check, completed application, E & O, application fee, and proof of the posting of the surety bond cc)12-61-903.5. Errors & Omissions insurance-require Director to determine terms and conditions of coverage required dd) 12-61-904 (Amended). Exemptions for licensing ee) 12-61-904.5. Broker’s relationship to borrower- rules ff) 12-61-905. Powers and duties of the director gg) 12-61-905.5. Disciplinary Actions-grounds-procedures-rules hh)12-61-905.6. Hearing-administrative law judge-review-rules ii) 12-61-905.7. Subpoena-misdemeanor jj) 12-61-907. Bond required of $25,000 kk)12-61-908. Fees set by director ll) 12-61-910. Violations-injunctions mm)12-61-910.4. Nontraditional mortgages-consumer protections nn) 12-61-911. Prohibited conduct-fraud-misrepresentation-conflict of interest-rules oo) 12-61-911.5. Acts of Employee-mortgage broker’s liability
    • pp) 12-61-912. Dual status as real estate broker or salesperson- requirements qq) 12-61-913. Written contract required-effect rr) 12-61-914. Written disclosure of fees and costs-contents-limits on fees-lock-in agreement terms-rules within three business days ss) 12-61-915. Fee, commission, or compensation-when permitted- amount f) Title 38-Property-Real and Personal 1. Purpose 0.25 hr 2. Provisions a] Article 25.5-State and Local Tax Liens b] Article 29-Title to Manufactured Homes c] Article 35-Conveyancing and Recording 1] Part 125-Closing and settlement services-disbursement of funds-“Good Funds” law i. Available for immediate withdrawal as a matter of right ii. Available for immediate withdrawal as a consequence of an agreement of a financial institution iii. Failure to comply with the provisions of this section shall be deemed a deceptive trade practice d] Article 40, is amended by the addition of a new section (House Bill 02- 1259, Section 2) 1] Purpose- protects consumer, creditor, lender or an agent of the lender 2] Provisions & restrictions on mortgage broker i. 38-40-101. Mortgage broker fees-escrow accounts- unlawful act-penalty ii. 38-40-102. Disclosure of costs-statement of terms of indebtedness iii. 38-40-105. Prohibited acts by originators of certain mortgage loans e] Penalties for non-compliance with this article 1] Court may refuse to enforce contract 2] A violation shall be deemed a deceptive trade practice in Section 6-1-105, (1) (uu), CRS f] Safety clause (House Bill 02-1259, Section 5) this act is necessary for the immediate preservation of the public peace, health & safety B. Mortgage Broker Rules – To teach entire rule 2.0 hrs 1)Emergency Rules and Permanent Rule Process a) Emergency rule becomes permanent rule. b) Division issues emergency rule to be able to act in interim 2) Reasonable Inquiry and Tangible Net Benefit, Rule 3-1-1 3) Errors and Omissions Insurance for Mortgage Brokers, Rule 1-3-1 4) Mortgage Broker Disclosures, Rule 5-1-2 a) Good Faith Estimates
    • b) Compensation Disclosure c) Colorado Lock-in Disclosure Form 5) Mortgage Brokers Duty to Respond and Provide Requested Documents for Investigations, Rule 3-1-26 6) Prepayment Penalties, Rule 3-1-4 7) Maintaining current contact information required for licensing, Rule 3-1-3 8) Mortgage Broker Contracts Rule 5-1-1 9) Mortgage Broker Advertising Rule 8-1-1 C. Rules on the Horizon: 1) Coercing and Intimidating a Real Estate Appraiser 2) Dual Status as a Real Estate Broker and Mortgage Broker D. Mortgage broker is required to keep records of the disclosures for a period of four years E. Director Position Statements 0.25 hr 1. Non-Traditional Mortgage Products and Documentation Types a) Purpose b) Provisions c) Broker responsibility d) Penalty 2. Mortgage Broker Contracts a) Clarification of the uncertainties regarding mortgage broker contracts F. Colorado Real Estate Commission Rules 0.25 hr 1. Rule E-22-Inducements from settlement producers prohibited 2. Published in Real Estate Manual a) Purpose b) Provisions 1. Reasonable Value Defined 2. Customer Entertainment 3. Office Space Accommodation 4. Noncompliance Penalties 5. Licensing required 6. Applicability of Colorado Mortgage Broker Law regarding State Financial Institutions. III. Essential Elements of a Colorado Buy-Sell Contract 1.5 hrs A. Section 1-Mutual Assent 1. Offer 2. Acceptance B. Section 2-Names and signatures of the Parties C. Section 2.3-Dates and Deadlines D. Section 2.2-Description of the Property
    • E. Section 4-Sale Price and Payment Provisions F. Section 4.1-Consideration 1. Earnest money G. Section 4.3-Seller Concessions Section 4.4.1-New loan Section 4.4.2-Change to new lender after approval Section 4.4.3-Loan limitations: conventional, FHA, VA, Bond Section 4.4.4-Good Faith Estimate H. Section 5-Financing Conditions and Obligations Section 5.1-Loan Application Section 5.2-Loan Conditions Section 5.3-Credit Information and Buyer’s New Loan Section 5.4-Equity Loan Review I. Section 6-Appraisal Provisions Section 6.2.2, 6.2.3 & 6.2.4-Conventional, FHA, VA Section 6.3-Cost of Appraisal J. Section 7-Evidence of Title Section 7.1-Exceptions Section 7.3-Survey/Improvement Location Certificate Section 7.4-Common Interest Community Documents K. Section 8-Title Survey Review L. Section 9-Lead Based Paint M. Section10-Property Disclosure Inspection, Insurability and Buyer Disclosures N. Section 11-Methamphetamine Laboratory Disclosure O. Section 12-Closing 1. Delivery of deed 2. Hour and place of closing documents P. Section 13-Transfer of Title Q. Section 14-Payment of Encumbrances R. Section 15-Closing Costs, Documents and Services S. Section 16-Prorations T. Section 17-Possession Date U. Section 19-Insurance; Conditions of, Damage to Property and Inclusions V. Section 25-Additional Provisions W. Section 30-Notice of Acceptance, Counterparts a. Buyer signature b. Seller signature X. Section 31-Counter; Rejection Y. Broker’s Acknowledgments and Compensation Disclosures 1. Buyer’s Agent 2. Seller’s Agent 3. Transaction-Broker 4. Change of status Z. Closing Instructions
    • IV. Foreclosure Process & Regulations 2 hrs A. Foreclosure action-procedure C.R.S. 38-20-108 thru 116 B. Colorado Foreclosure Protection Act 1. 6-1-1103. Definitions 2. Foreclosure Consultants a. 6-1-1104. Foreclosure consulting contract 1) Notice Required by Colorado Law 2) Notice on Cancellation b. 6-1-1105. Right of cancellation c 6-1-1106. Waiver of rights-void d. 6-1-1107. Prohibited acts e. 6-1-1108 Criminal penalties f. 6-1-1109 Unconscionability 3. Equity Purchasers a. 6-1-1111.Written contract required b. 6-1-1113. Cancellation c. 6-1-1114. Notice of Cancellation d. 6-1-1118. Criminal penalties C. Short Sale Addendum V. Resources for Federal and State Laws and Regulations 0.5 hr A. RESPA B. TILA C. DORA www.dora.state.co.us/real-estate D. Colorado Revised Statutes www.michie.com/colorado E. Colorado Mortgage Broker Forms http://www.dora.state.co.us/real-estate/mortgage/MBForms.htm F. Colorado Foreclosure Hotline 1-800-601-HOPE and Coloradoforeclosurehotline.org G. Sign up for Newsletters and E-Mail updates www.dora.state.co.us VI. How to File a Complaint 0.25 hr A. The Division of Real Estate requires a complaint form be completed B. You can file on-line or print off form and submit a physical package to the Division VII. Updates 0.50 hr