Comergence Safeact Slideshow.Pp

David Reinholtz is an active participant in every aspect of the mortgage and real estate industry. His twenty five years of top production, business development, training, and public speaking along with an earnest delivery makes David an authentic leader who impresses every audience. David is a sales and marketing expert who speaks and trains professionals in every industry. trained tens of thousands of loan officers, mortgage brokers, real estate agents and others through The Close More University Seminar Series, LoanOfficerSchool.com Classes, Correspondence and On Line Learning, and countless private engagements and David has personally training events throughout the country. David is the Founder and CEO of LoanOfficerSchool.com, an approved education provider for The Conference of State Bank Supervisors and The National Mortgage Licensing Systems' (NMLS) required pre-licensing education and continuing education .

Part of H.R. 3221, of the Housing and Economic Recovery Act of 2008 Title V - S.A.F.E. Mortgage Licensing Act (Secure and Fair Enforcement for Mortgage Licensing Act of 2008) Establishes National Mortgage Licensing Requirements and Standards Every mortgage originator, in the United States, must be either registered and/or be licensed and registered What is the S.A.F.E. Act?

Let’s Cover the Facts • Starting August 1, 2009, any individual who takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan application must be licensed or registered as a Mortgage Loan Originator • The S.A.F.E. Act requires a system of licensure to be in place by August 1, 2009 in all states. • Transitioning existing loan originators onto this system will be implemented at a different timeframe beginning August 1, 2009

Provides for one source for licensing and registration of residential mortgage originators Establish minimum standards to be met and maintained annually for MLO’s Issue a unique identifier – your lifetime # required on all 1003’s OBJECTIVE

APPLIES TO: – ALL residential mortgage loan originators – Depository institutions’ employees will be Registered – Non-depository companies’ employees and contractors will be licensed – NO exemptions or exceptions have been identified at this time WHO?

Definition of MLO “ State-licensed Loan Originator” A State-licensed Loan Originator is loan originator who is not an employee of a depository institution, subsidiary owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.

Definitions of Loan Originator “ Registered Loan Originator” A Registered Loan Originator is an individual who meets the outlined requirements and definition of a loan originator, and is an employee of a depository institution or a depository institution regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.

Registered Loan Originator The S.A.F.E. Act requires the Agencies to jointly develop and maintain a system for registering residential mortgage loan originators who are employees of Agency regulated institutions, including national and State banks, savings associations, credit unions, and Farm Credit System institutions, and certain of their subsidiaries.

Must register with NMLS Receive Unique Identifier Number Submit fingerprints to the Nationwide Mortgage Licensing System and Registry (NMLS) for submission to the FBI for a criminal background check Provide authorization for NMLS to obtain an independent credit report . Applicant has demonstrated financial responsibility, character and general fitness Applicant has met either a net worth or surety bond requirement or paid into a State fund, as required by the State State-licensed Loan Originator

6. Complete 20 Hours of Pre-License Education (PE) (State may require additional PE) 7. Successfully pass Federal and State tests with minimum 75% passing grade 8. Complete Federal requirement of 8 Hours of Annual Continuing Education (CE) 9. Each mortgage licensee must submit to NMLSR a Report of Condition 10. State-licensed MLOs must meet any additional state licensing requirements State-licensed Loan Originator

Must register with NMLS Receive Unique Identifier Number Submit fingerprints to the Nationwide Mortgage Licensing System and Registry (NMLS) for submission to the FBI for a criminal background check Registered Loan Originator

Minimum Standards Standards for licensing or registration: Applicant must never have had a Loan Originator license revoked in ANY jurisdiction. Applicant has not been convicted of, pled guilty or no contest to a felony in a domestic, foreign or military court (1) during the 7 years prior to application (2) at ANY TIME preceding application date if felony involved an act of fraud, dishonesty or a breach of trust or money laundering.

State-Licensed Loan Originators An individual MAY NOT engage in the business of being a loan originator WITHOUT FIRST: * obtaining, and maintaining annually * a license and registration as a State licensed loan originator * obtaining a unique identifier This includes CONTRACT PROCESSORS and CONTRACT UNDERWRITERS including those who work for temp agencies

State-Licensed Loan Originators Background Check * Applicant must furnish: Personal history and experience, including authorization for System to obtain: Independent credit report Information on any administrative, civil or criminal findings by any governmental jurisdiction

State-Licensed Loan Originators Minimum Standards Applicant has demonstrated financial responsibility, character and general fitness such as to command the confidence of the community and to warrant a determination that the loan originator will operate honestly, fairly, and efficiently. Applicant has completed the pre-licensing education requirement. Applicant has passed a written test . Applicant has met either a net worth or surety bond requirement or paid into a State fund, as required by the State.

State-Licensed Loan Originators Mortgage Call Reports Each mortgage licensee must submit to NMLSR a Report of Condition Annually Report of Condition – criteria of this report has yet to be developed by NMSLR.

20 Hours of Pre-Licensure Education is Required for ONLY State-Licensed Loan Originators Requirements

State-Licensed Loan Originators Pre-Licensing Education *Must complete a minimum of at least 20 hours of education to include: * 3 hours Federal law & regulations *3 hours ethics, to include fraud, consumer protection and fair lending issues; and *2 hours training regarding non-traditional loan products. * All courses will be reviewed and approved by NMLSR *Several States have elected for additional PE requirements

State-Licensed Loan Originators Section Standards for State License * Originator must continue to meet minimum standards *Continuing Education required to be completed each year by December 31st: * 3 hours Federal law & regulations * 2 hours ethics, to include fraud, consumer protection and fair lending issues; and * 2 hours training on non-traditional loan products.

State-Licensed Loan Originators Testing of Loan Originators Test will be written and in two (2) parts – Federal and State Everyone will take the same Federal portion Each State will develop State portion. If you originate in different States, you must take the specific State portion for EACH State. If you originate in 50 states you must take 50 separate exams.

State-Licensed Loan Originators Minimum Competence - Passing score – not less than a 75% - Initial Retests – can retake exam up to 3 consecutive times with at least 30 days between each test. - If you don’t pass after the 3rd retest, must wait 6 months before taking again. -If license is not maintained for 5+ years, must retake the exam. -Do not take the 20 hours pre-license education before exam.

Who is Overseeing All of This? Conference of State Bank Supervisors “ CSBS” The nationwide organization for state banking. American Association of Residential Mortgage Regulators “ AARMR” The national organization representing state residential mortgage regulators.

Nationwide Mortgage Licensing System Registry A mortgage licensing system developed and maintained by the Conference of State Bank Supervisors for the State licensing and regulation of State-licensed loan originators and the registration of registered loan originators. NMLSR

Both a “Registered Loan Originator” and a “ State-licensed Loan Originator” require registration as a loan originator as well as maintenance of a unique identifier through the Nationwide Mortgage Licensing System and Registry. Required Registration

All State-licensed mortgage loan originators must take and pass the national test component and state component for each state licensed in • Test questions = 100 – 90 scored – 10 unscored/pretest Passing score = 75% Testing

Test questions = 55-65 – 45-55 scored – 10 unscored/pretest • Passing score = 75% State Test Components Basics

Both National and State Components – All new licensees: July 31, 2010 – All existing licensees: December 31, 2010 – Several states have elected to have earlier deadlines SAFE Deadlines for Testing

Content Outline Federal mortgage-related laws (35%) General mortgage knowledge (25%) Mortgage loan origination activities (25%) Ethics (15%) PLUS THE STATE TEST What will the Test Cover?

A. RESPA B. Equal Credit Opportunity Act (Reg. B) C. Truth-in-Lending Act (Reg. Z and HOEPA) D. SAFE Act E. Other Federal laws and guidelines 1. Home Mortgage Disclosure Act (HMDA) 2. Fair Credit Reporting Act 3. Privacy protection / Do Not Call 4. FTC Red Flag Rules (Fair and Accurate Credit Transactions Act of 2003) Federal mortgage-related laws (35%)

A. Mortgage programs 1. Conventional/conforming 2. Government (FHA, VA, USDA) 3. Conventional/nonconforming (Jumbo, Alt-A, etc.) a. Statement on Subprime Lending b. Guidance on Nontraditional Mortgage Product Risk B. Mortgage loan products 1. Fixed 2. Adjustable 3. Balloon 4. Other (home equity [fixed and line of credit], construction, reverse mortgage, interest-only) General mortgage knowledge (25%)

C. Terms used in the operation of the mortgage market 1. Loan terms 2. Disclosure terms 3. Financial terms 4. General terms General mortgage knowledge (25%) Continued

A. Application information and requirements 1. Application accuracy (truthfulness) and required information (e.g., 1003) a. Customer b. Loan originator c. Verification and documentation 2. Suitability of products and programs 3. Disclosures a. Accuracy b. Timing Mortgage loan origination activities (25%)

B. Qualification: processing and underwriting 1. Borrower analysis a. Assets b. Liabilities c. Income d. Credit report e. Qualifying ratios (e.g. housing, debt-to-income, loan-to-value) 2. Appraisals 3. Title report 4. Insurance: hazard, flood, and mortgage Mortgage loan origination activities (25%) Continued…

C. Specific program guidelines 1. VA, FHA, USDA 2. Fannie Mae, Freddie Mac 3. Other (e.g., Mortgage insurance, HUD) D. Closing 1. Title and title insurance 2. Closing agent 3. Explanation of Fees 4. Explanation of documents 5. Funding Mortgage loan origination activities (25%) Continued..

E. Financial calculations used in mortgage lending 1. Interest per diem 2. Payments (principal, interest, taxes, and insurance; mortgage insurance, if applicable) 3. Down payment 4. Loan-to-value (loan-to-value, combined loan- to-value, total loan-to-value) 5. Debt-to-income Ratios 6. Temporary and Fixed interest rate buy-down (discount points) 7. Closing costs and prepaid items 8. ARMs (eg., fully indexed rate) Mortgage loan origination activities (25%) Continued..

A. RESPA B. Gramm-Leach-Bliley Act C. Truth-in-Lending Act D. Equal Credit Opportunity Act E. Appraisal F. Fraud detection, reporting, and prevention G. Ethical behavior Ethics (15%) 1. Consumers 2. Appraisers 3. Underwriters 4. Investors 5. Warehouse lenders 6. Real estate licensees 7. Closing agents 8. Employers

Written by subject matter experts Reviewed, edited, and approved by committees Created from content outline categories and subcategories Supported by reference materials How Are Test Questions Created?

Test Question Format No trick questions No questions with multiple correct answers No questions without a correct answer No strong wrong answers All questions are 4-option multiple choice No short answer, fill in the blank or t/f questions Only one correct answer and 3 incorrect options No “All of the above” or “None of the above”

Why are some questions not scored? Un-scored questions are being “sampled.” The goal is to put only questions that meet high quality standards.

They do not affect a candidate’s score They are not marked in any visible way to the test-taker They are scattered randomly throughout the test Un-Scored Questions:

The national test has 90 scored and 10 un-scored questions. Every versions of the test has the same number of questions. For fairness, different forms of the national test are all of equal difficulty. Questions appear in random, on your testing terminal for each user. Test Forms

A candidate does not have to complete education prior to enrolling or taking a test. Before enrolling, a candidate must have a unique NMLS ID number (must either already have made a filing or created a base record). A candidate must request and pay for an enrollment in NMLS before scheduling a test session Each enrollment period is open for 180 days that the candidate must schedule to take the test. Test Enrollment Basics

Next Step: Scheduling a Test 2009 Fee Schedule National Component - $92 Each Unique State Component - $69 Scheduling a Test

To schedule, must have an NMLS ID number 500 test centers for candidates to choose from After selecting a state on “Find a Test Center” page, a list of all test centers in that state will appear Schedule online or over the phone Basics of Test Scheduling

All tests are available at all test centers (i.e. candidate may take FL test component in CA) • Group appointments available (That’s pressure!) Basics of Test Scheduling

Test Center Entering the Test Center • Arrive 30 minutes prior to test time • Must bring a current, government-issued ID with candidate’s photo and signature. • Will be photographed; finger or palm print may be taken • Candidate may not bring anything into testing room (may be asked to show empty pockets) • All belongings such as notes, cell phones, watches, wallets must be placed in locker • Basic calculator (not financial calculator) and scratch paper are provided • Must read and agree to the Rules of Conduct

National Component 2.5 hours test time (150 minutes) 15 minutes allotted for tutorial (before test) 15 minutes allotted for optional survey (after test) Total seat time = 3 hours 100 questions in 150 min. = 1.5 min. per question Test Time

State Test Components 1.5 hours test time (90 minutes) 15 minutes allotted for tutorial (before test) 15 minutes allotted for survey (after test) Total seat time = 2 hours Approx. 60 questions in 90 min. = 1.5 min. per question State test lengths vary from 55 to 65 total questions Test Time

At the end of the test session, candidates will: See test scores on computer screens Receive a paper copy of score report These scores do not become official until they are entered in NMLS Within 48 hours of completing a test, candidates will receive an email informing them that their official scores are now ready to be viewed in NMLS Score Reports

Must wait 30 days between each test taking attempt May create an enrollment and schedule an appointment, but can’t take the test prior to the end of prescribed wait time After every fourth failed attempt, a 180 day wait time is instituted What if I Fail the Test?

Some states that had valid tests prior to the passage of the SAFE Act may elect to certify their state tests In these cases, candidates who previously passed that state’s test may not be required to take the SAFE state test component Candidates must check with their state regulators All candidates, however, must take and pass the national component State Test

Founded in 2007 Perform third party originator background checks Run by mortgage professionals, each with 20+ years of experience Goals: Restore credibility/confidence in our industry Eliminate redundant applications for brokers Cut costs and repetitive processes for lenders Speed up approvals for both parties Who is Comergence?

In today's environment, it's important for consumers to know who they are doing business with and who can be trusted That starts by setting a higher standard of integrity Demonstrating that you are following these standards is paramount to the customers and lenders you represent Our accreditation program accomplishes this and much more: With one click a consumer gets a thorough report about your company Never lose a loan again because of lack of confidence Just as referrals provide the best credibility – TMP status is a valid, trustable 3rd party reference The mortgage business is no longer about the best rates and fees, but WHO CAN I TRUST? What is the Trusted Mortgage Professional?

Example website and report card

Our certificate displayed on your website Never fill out a broker application again LO license and status tracking Growing number of lenders charging an application fee – You save $$ Never lose another loan because of a LACK OF CONFIDENCE AT THE POINT OF SALE What are the benefits of membership?

Becoming a Trusted Mortgage Professional accomplishes what the NMLS fails to do – which is to promote you! One-time application fee WAIVED IF YOU USE CODE NMLSWEB at checkout. Save nearly $300! Monthly membership fee of $19.00 Proves your better than a bank loan officer Compete against anyone - especially those companies who do not have this designation! What is the investment?

Please Visit LoanOfficerSchool.com for our NMLS testing study guide and sample test question manual. 866.623.1250

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