It is a given the gravy-train is drying up, so as they're scrambling for business, more and more mortgage loan brokers blunder around out of their area, and stumble over loan applicants across State lines - in States where they are not licensed to conduct business. For some unknown reason, clueless mortgage brokers incorrectly think they can refer their lead to a licensed mortgage person in that other distant State and receive (compensation) "something of value" when the referral's loan closes with that other loan broker!

Although they probably don't truly know the significant extent to which they're watched, they DO know they are in a highly regulated and legislated industry - like: the Real Estate Procedures Act (RESPA) enforced by the U.S. Department of Housing and Urban Development; the Truth-in-Lending Act, the Equal Credit Opportunity Act and the Fair Credit Reporting Act, each enforced by the Federal Trade Commission; Gramm Leach Blilthy Financial Modernization Act of 1999 – Privacy Statement, Home Mortgage Disclosure Act, Equal Housing Opportunity, Fair Lending Notice Housing Discrimination Act 1977, and various individual State laws and regulations applicable to mortgage lending activities such as Treasury, IRS, Federal Reserve Board, FASB, EEOC, Federal Wage & Hour Act, individual State licensing authorities, etc. – and of course State & Federal civil and criminal statutes as well ... yet they think this "co-broker" thingy is perfectly OK.

Not only is this 'co-broker' activity (between two States) is likely a violation of State licensing laws within the other State (where the applicant lives), but it is certainly a violation of RESPA Section 8 and a Felony in 99.9% of the time (yes I know there are exceptions, but they for certain don't know what those are)!

Now, these clueless mortgage brokers, also almost always get upset when it's pointed out to them (when they ask a licensed mortgage broker in another State to do one for them), that what they are doing is called (by lawyers) "soliciting to conspire with another to commit a felony" when they solicit other mortgage brokers to engage in such an illegal activity. Sadly, it happens all to often. Those of us who regularly read a variety of industry trade papers, see large fines and jail time levied against them all the time for this and other similar unlawful activities!

Just in case we're describing you or somebody you know - in addition to checking with your State licensing authority, here's where you can read all about the Federal law which effects this, it's the RESPA Anti-Kickback statute: http://www.hud.gov/offices/hsg/sfh/res/resp2607.cfm
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Many new loan originators are now taking a different approach to finding loan programs that fit their potential borrower. A new originator now posts a loan scenario on various mortgage discussion boards, calls all the account executives that will answer their phone, or asks someone in their office this question: "Who can do ......?" This approach, as defined by one new loan officer, is called the "shotgun" approach, because if you ask enough people your question, you will eventually get someone to come forward to tell you "I can do it!" The new loan originator says this approach is the BEST way to find answers fast because they are too busy to find them on their own. My response to that is if you INVEST the time, you will make more DIME!

I would like to offer you an alternative to the "shotgun" approach that I believe is better for you. If you want to be in the mortgage business long term, you should build yourself a FOUNDATION of KNOWLEDGE. Just like building a home, you must first start your mortgage career with building yourself a good foundation. Your goal as a mortgage professional should be to know as many loan programs as possible and know where they come from. For example, have you EVER gone to efanniemae.com to READ the guidelines and analyze them? Have you ever gone to FHA.gov or freddiemac.com to read their guidelines? Do you know who the top ten subprime lenders are? Have you ever sat down to analyze a subprime lender's product matrix or read their guidelines? If a lender like GMAC provides your mortgage company an underwriting manual, have you ever sat down and read it? Yes I understand this takes time, but so does getting a degree at any College. I am challenging you to become a student of the mortgage business and to learn how to teach yourself how to find information on any loan scenario instead of relying on others. Instead of seeking out others for answers to your loan scenarios or searching through mortgage discussion boards for the answer to your loan scenario, FIND them yourself through the ideas I provided above. Here are some other resources you can also use to find which lender provides various product niches.

1) www.weirdloans.com is designed to give you information on various lenders and their niches.

2) The Buyers Guide located at www.nationalmortgagenews.com is designed to give you contacts on various lenders, their phone numbers & websites.

3) You can "google" or "yahoo" your way to many wholesale lender websites. You would be surprised by what you may find that way.

4) There is a magazine I receive monthly called The Scotsman Guide, and there's no cost! (they have a website www.scotsmanguide.com). They have charts and matrixes on many different lenders. Call one or more of the lenders listed to see if your loan fits.

5) You can subscribe to many mortgage magazines and read the ads of those that advertise. When I first started, I picked up old copies from others in the business and read everything I could.

6) You could call three A.E's in your marketplace that do certain types of loans and ask for assistance or a referral to someone that they think could possibly help you with your specific loan scenario. Then ASK them where they got THEIR information.

7) If you still need an answer fast, you can always call Secret! on his 900# who I am certain has the answer at his fingertips. Article provided by Mark Weber, Correspondent AE - GMAC Bank mark_weber@gmacm.com
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