Most people in the mortgage industry seem to have missed this must read document.

Seller Paid Items, Denial, Change of Circumstance, Important Dates, Escrow Account Information, Loan Summary, among other topics.

The document answers questions like;

• Can items be listed as POC on the GFE?
• Are loan originators permitted to process a loan without all six pieces of information included in the definition of an application?
• May the originator require the borrower to sign consents to verify employment, income or deposits prior to issuing a GFE?
• Does a loan originator have to show an appraisal fee (or other fee) paid to a third party on the GFE and HUD-1 even if the loan originator wants to cover 100% of the fee?
• If at the time a GFE is issued it is known that the seller will pay settlement charges typically paid by the borrower, how are the charges disclosed on the GFE?

Do you know the answers to these questions?

I think you may be surprised at some of the answers.

As a mortgage professional this information is vital to your work and understanding the information can help you stay in compliance.

Here is a link to the full HUD document.
HUD RESPA Q&A

I hope this information is helpfull to you. If you are a loan originator, or branch manager looking for better home please visit my home page – www.netoriginator.com -  for information on the opportunity our company offers. We are a full service mortgage lender operating in 30 states.

There are conflicting definitions of what a net branch is.

HUD, various state legislative bodies, and the mortgage industry do not always agree on what a net branch is.

The big differences seem to be between the generic use of the term that is used throughout the mortgage industry and legislative bodies that have passed laws that at first glance seem to be against a net branch operation.

The generic term for net branch usually means that a branch manager’s compensation is determined by the (Net Profit) profitability of the branch office that they are managing. States have no law against this and HUD has specifically stated that this is a legitimate form of compensation.

The legislative definition that some States, and HUD have focused on details situations that are not legal.

• Paying originators and others working in the branch as 1099 contractors  instead of as W-2 employees of the company.
• The branch maintaining it’s own set of books and bank accounts instead of all monies being managed and dispersed by the parent company.
• Branch personnel and activities not being managed and supervised by the corporate office.
• Profits or income from the branch paid to an LLC or other entity instead of all compensation being paid by W-2 to to company employees.

The majority of companies that offer branch management opportunities today use the term “Net Branch” in the generic meaning and most follow all state and federal rules of operation.

For more information on our Net Branch Opportunity visit our FAQ or Contact Us pages.

As Texas moves towards full compliance with new national licensing laws,  Douglas Foster
Commissioner of the Texas Department of Savings and Mortgage Lending announces:

HUD has just release the final rules on the required net worth requirements for mortgage  lenders to keep their HUD approval.

If your net branch company is currently a HUD approved lender the new HUD rule will increase the minimum net worth by 4 times. The old net worth requirement was $250,000, the new one is $1,000,000 plus 1% of volume for mortgage lenders that generate over $25,000,000 per year (meaning all companies with production of over $2,000,000 a month).

Some estimates say that at least 25% of current lenders will not be able to meet the new net worth requirements.

If you ware currently with a net branch group or are considering joining one, you need to make sure that the company is financially able to stay in business.

Net Branch – FHA – HUD

I always welcome comments, questions, and subscribers!

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

In a memo dated April 9,2010 that was sent to all participating lenders the agency said:

This message is to notify you that program funding for the Single Family Housing Guaranteed Loan Program will likely be exhausted by the end of April, 2010.

Once funding is exhausted, the Agency will not issue Conditional Commitments “subject to receipt of appropriated funds.”  This is because it is not certain when additional funding will be available.

Limited funding may become available for disaster areas declared in 2008, or in disaster areas declared for Hurricanes Katrina and Rita.  Limited funding may also become available as prior Agency commitments are de-obligated, however, such funding will be very limited.

We apologize for any inconvenience this may cause you.  Should you have any questions, you may contact the Single Family Housing Guaranteed Loan Division at (202)720-1452.

The agency ran out of funds in March last year (the funding year for Government programs ends in September) but the gap in funding was filled by the stimulus program.

Many end investors are already cutting off new applications. If you are a loan officer you need to check with your company’s secondary department or the investor that you have a broker relationship with to see if they are going to continue to accept applications.

It could be the end of the USDA Rural housing program for the rest of the year.

Net Branch – USDA Rural Housing

I always welcome comments, questions, and subscribers!

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

The deadline is upon us for the increase in the upfront mortgage insurance for FHA loans.  All net branch manager, loan officers, processors and independent owners need to be aware of this information.

From HUD:
Lenders are reminded that effective for FHA loans for which the case number

is assigned on or after April 5, 2010, FHA will collect an upfront mortgage

insurance premium of 2.25 percent. This policy change will increase premiums

for purchase money and refinance transactions, including FHA-to-FHA credit-

qualifying and non-credit qualifying streamlined refinance transactions. For

more detailed information on this premium increase, please see Mortgagee

Letter 2010-02 at:

http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/10-02ml.pdf

Lenders should make every effort to order case numbers early in the week of

March 29, 2010, since it is possible that case numbers requested on Friday or

Saturday may not be assigned prior to April 5, 2010, and therefore, be

subject to the higher premium.

If your branch is sitting on loans you need to register them now for your borrowers to take advantage the current lower upfront mortgage insurance premium.

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

One of the reasons is that current and pending legislation is making it harder for small independent mortgage shops to survive.

As our mortgage lending environment continues to change more mortgage lending professionals are switching to the net branch business model because of the ability become part of a much larger company and still have the flexibility manage their day as an entrepreneur.

New net worth requirements from HUD, higher E&O costs and requirements, higher employee costs, fewer loan programs, and fewer investors all make running a small independent shop more difficult and being part of a national company offering net branch opportunity more attractive.

The non origination costs for an independent mortgage office can be a huge drain on their budget.

By non origination costs I mean anything that is not directly related to generating business. Compliance, payroll, accounting, licensing, equipment, office space, etc. Its a long list of tasks and responsibilities.

Joining a larger company is a cost effective way to leverage these costs.  If the owner / manager handles all of these responsibilities they are taking time and energy away from loan production. Being part of a larger company that has a system in place for handling these administrative tasks frees up the managers time to focus on income producing – business development activities.

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

HUD has extended the deadline for correspondent lenders (mortgage brokers) to provided their audited financials.

The big problem is that the extension period is useless. It’s a 30 day extension.

Since HUD has a proposed rule change in the works that will eliminate the approval for Loan Correspondents (Brokers) There is almost a 100% chance that  the financial audits will not be necessary.

Financial Audits for HUD are expensive and time consuming. They cost thousands of dollars and must be completed by a CPA.

Doesn’t any one at HUD know that it is tax season. Extending a deadline from March 31, 2010 to April 30, 2010 for work that a CPA has to complete will not help the Mortgage Broker  Companies one bit.

They are still going to have to pay to have the audits completed.

I can hear the call to the broker’s CPA – Hi Bob, Great news! HUD has extended the deadline to April 30 for our financials. Since they are preparing to eliminate the requirement you might not have to do them for me this year.

Bob laughs uncontrollably for 10 minutes and then tell the Broker that audits take 60 – 120 days to complete and since HUD as of today still says you have to have them you will have to pay for one even though HUD has said that the Audit will more than likely be unnecessary.

The NAMB brain trust was in DC last month. Did anyone at HUD bring up this extension idea with them for input? Does anyone at HUD know a CPA?  Does anyone at HUD know that it is tax season? Does anyone at HUD care?

Net Branch – HUD – FHA

I always welcome comments, questions, and subscribers!

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

The Texas Department of Savings and Mortgage Lending issued a statement about the departments new rules for considering information in a loan officers credit report as part of the application process.

The department could deny a loan officer license if you have any of the following on your credit report.

• Bankruptcies filed within the last 10 years;
• Current outstanding judgments (except judgments solely as a result of medical expenses);
• Current outstanding tax liens or other government liens;
• History of and current collection accounts;
• Foreclosures within the past three years;
• Three or more accounts more than 90 days past due;
• Multiple Social Security Numbers attached to the individual’s name;
• Consumer provided comments;
• No credit history for the individual;
• Credit items the individual is appealing, if noted in the report; and
• Outstanding child support.

According to the memo credit scores will not be part of the decision but the department “may look at systemic, long-term financial irresponsibility as a reason to further investigate the information received before a final licensing decision is made. No single item listed above will serve as grounds for ineligibility, but several will cause further investigation and each decision will be made on a case by case basis.”

To read the memo CLICK HERE and read “Credit Check Processing through the NMLS – February 2010″

I always welcome comments, questions, and subscribers!

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

Texas Mortgage Net Branch Opportunity

Net Branch Managers should full understand the new rules and how they may change the way you operate your branch and how you hire new loan officers.

Many loan originators under their current state banking laws do not need to be licensed. Some states have only required loan officers who are mortgage brokers to be individually license while loan officer working for mortgage lenders were exempt from individual licensing.

With the new NMLS everyone – brokers and lenders will be required to be individually licensed. If you have been originating in more than one state you will have to have a loan officers license for each state and your office will also have to be licensed to operate in each state.

If you are hiring new loan officers for your branch you need to review the new laws to make sure that the prospective originator will qualify under the new rules.

As a net branch manager your compliance department at your national headquarters should also be able to help you with these issues. That is one of the benefits to being part of a national company. You have a full service compliance department to assist you.

Do not wait for the new laws to go into effect before you understand how they could change the way to operate your mortgage branch.

Click Here to visit the NMLS website to look up the new requirements for your state.

I always welcome comments, questions, and subscribers!

If you would  like to know more about our net branch partner program visit our Frequently Asked Questions page.

Mortgage Net Branch Licensing Information