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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