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This
will be the first article in a series of
practical compliance issues faced by both Loan
Officers and their Owners. I want to explore
real world situations and how people can stay in
compliance with the maze of laws that seemingly
regulate almost our every breath.
First off, in getting the attention of the
applicant, hopefully you didn't author a little
flyer which contained any violations by
utilizing Truth In Lending 'triggering terms'
like: 10% down or $1000 down or 90% financing.
Or these: Monthly payments less than $250 on all
our loan plans, or Pay $23.44 per $1000 amount
borrowed, or $210.95 per month. Or these: Up to
four years to pay, or 48 months to pay, 30-year
mortgages available. Or even these: Financing
costs less than $300 per year, or Less than
$1200 interest, or $2.00 monthly carrying
charge. All of these terms, if used, would
require further TIL advertising disclosures to
include APR, or you would be in violation! Did
you?
On the other hand, some statements about credit
terms are too general to trigger additional
disclosures. Examples of terms that do not
trigger the required disclosures are: "No
downpayment" "Easy monthly
payments" "Loans available at 5% below
our standard APR" "Low downpayment
accepted" "Pay weekly"
"Terms to fit your budget"
"Financing available." Therefore doing
a simple little flyer to hand out, isn't as
simple, easy, and basic as you might think. This
40 year old law can be confusing as rocket-science
if you're not careful. Do you know the
difference? There's a lot of reading you need to
do.
Maybe, in consideration of you getting a few
referrals, you sometimes give out a small Thank
You gift (fruit basket, ball game tickets, Home
Depot gift certificate, etc.) to somebody that
sent you a referral. Doing so is unlawful. Even
giving them a stick-of-gum is a RESPA
Section 8 unlawful kickback violation! Lately
the 'RESPA Police' are out there in full force.
Being added to the HUD investigator forces
aggressively is the FBI, Insurance Commissioner
investigators, the various State Attorneys
General, plus many retired law enforcement
personnel - you can't fly under the radar!
You need to understand the 33 year old RESPA
Section 8 statute front and back. Again, not
simple, you might need a rocket scientist to
help you understand this complex area. Even more
careful studying is necessary.
Considering privacy issues are in the evening
news on the television almost every week lately,
The GLB Act would be timely to focus on. Now
that you've got the 1003, this 2 year old law
really kicks into high gear. Sending ordinary
e-mail back and forth to your customer, with any
sort of personal information in it, becomes a
GLB violation unless you utilize a minimum 8
character password protected e-mail system.
It also goes without saying, e-fax or any sort
of public fax system is out, even sending faxes
to the customer via their employer's fax is a
big mistake. Any of their loan file make it's
way home to your processor or to the
originator's home office? Those pieces of paper
all need to be locked away, and secured from the
possible prying eyes of your ex-husband or
ex-wife, spouse, boy friend, girl friend,
children, housekeeper, parents, neighbor who
comes over for coffee, babysitter, etc. And, so
does the computer that they might get on too;
must all be password protected! Closed and
locked in a file cabinet, locked room door, and
(of yea) a fire sprinkler system throughout the
house (like you see in commercial office
buildings, hotels, and available to the State
Fire Marshal 24/7 for inspection) is also
necessary, or you're in violation. You nearly
need to be a lawyer to keep-up and do the right
thing.
I often read and hear people frequently say this
business isn't difficult, it real simple just
put one foot in front of another - it's all
logical and practical common sense things.
Wrong! It's very technical and boy oh boy you
better pay close attention, or you can get in a
lot of trouble. It's far more than selling and
cashing big commission and bonus checks. I say
those that say things like "it's
simple", simply don't know what it is
they don't know. The tonage of things you
need to know, could stop a herd of charging
buffalo. Think about it.
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