This course will instruct mortgage loan originators on a number of regulations that they will have to comply with while taking part in their mortgage loan origination activities. Rules, such as those implemented by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are set in place to protect the interest and well-being of consumers who apply for mortgages to purchase or refinance their properties. To ensure that their business practices satisfy the regulations adopted by federal laws, mortgage loan originators need to keep current on the guidelines published by entities such as the Consumer Financial Protection Bureau (CFPB).
Topics and Learning Objectives
This course consists of four sections:
- Federal Mortgage-Related Laws
- Ethical Practices and Common Fraud Schemes
- The Fannie Mae HomeStyle® Renovation Loan
- Fair Housing in Today's Market
Total study time: 8 credit hours
Module 1: Federal Mortgage Related Laws
Study Time: 3 clock hours (150 minutes of federal law)
- The Truth in Lending Act (55 minutes)
- The Real Estate Settlement Procedures Act (20 minutes)
- The Equal Credit Opportunity Act (ECOA) (45 minutes)
- Privacy of Consumer Financial Information (GLBA) (20 minutes)
- E-Sign Act (10 minutes)
Each year, the NMLS receives feedback from various agencies on problems and errors occurring in the mortgage industry. This feedback is then incorporated into your annual continuing education requirements. This module will cover a variety of conduct issues related to federal laws that are among the most frequently cited by examiners as industry problems.
When you have completed this section, you will be able to:
- identify the required disclosures to be given to consumers under the Truth in Lending Act.
- define the fees that qualify or are exempt from the TILA definition of finance charges.
- describe the delivery time requirements for the Loan Estimate and the Closing Disclosure.
- list the tolerance limitations on certain fees and whether those charges are made in good faith by the creditor.
- identify advertisement trigger terms that require additional disclosures
- explain the steps a creditor will take to ensure the consumer has the ability to repay the transaction.
- paraphrase RESPA's regulations on prohibited kickbacks and unearned fees.
- reproduce the categories that creditors may and may not consider when evaluating the creditworthiness of an applicant.
- outline what actions under ECOA will require an adverse action notification disclosure to be sent to an applicant.
- describe a consumer's right to receive written items of valuation that were created in connection with their loan application.
- recognize a financial institution's responsibility to provide a clear and conspicuous notice to costumers regarding their privacy policies and practices.
- outline how consumers must give their consent to receive electronic versions of their records.
Module 2: Ethical Practices and Common Fraud Schemes
Study Time: 2 clock hours (100 minutes of ethics, fraud, and consumer protection)
- Ethical Mortgage Lending Practices (50 minutes)
- Mortgage Fraud (50 minutes)
In this section we will review ethics in mortgage lending and how they affect the mortgage industry. We'll discusses ethical practices and consumer protection responsibilities of the mortgage loan originator, and outline various ethical standards as they relate to a compliance approach of ethical lending. This section will provide you with checklists of possible red flags of mortgage fraud.
The second half of this section will outline a variety of mortgage fraud schemes. Many of the cases outlined in this section cost millions of dollars in losses for lenders, resulted in property foreclosures, and caused stress for those who were victims of these schemes. Some of these dubious plans involved mortgage loan originators and others in the industry, while others were perpetrated by loan applicants who recruited unsuspecting buyers. Reviewing various types of fraud that occurred in our industry may help you recognize it if a suspicious application ever crosses your desk.
When you have completed this section, you will be able to:
- list and explain the fiduciary duties of a loan originator.
- recognize unethical behavior in mortgage advertising, daily business, and processing of loans.
- list the various red flags to potential money laundering or fraud.
- identify specific types of mortgage fraud from case studies and examples.
Module 3: The Fannie Mae HomeStyle® Renovation Loan
Study Time: 2 clock hours (100 minutes of non-traditional mortgage)
In this module, we are going to explore mortgage rehabilitation loan products. This includes the FHA 203(k) Rehab Loan, the Fannie Mae HomeStyle® Rehab loan, and alternatives. We will discuss aspects of each program and how they compare to each other.
At the end of this module, you will be able to:
- recognize the HSR qualifications for borrowers and property types.
- describe how a lender can apply with Fannie Mae to offer the HomeStyle Renovation loan.
- outline the steps necessary for a HomeStyle Renovation loan, from beginning to final inspection.
- utilize the Maximum Mortgage Worksheet to apply for a HomeStyle Renovation loan.
- compare the HSR loan to the FHA's 203(k), Streamlined 203(k), and Energy Efficient Mortgage.
Module 4: Fair Housing in Today's Market
Study Time: 1 clock hour (50 minutes of elective topics)
In this module, we will cover fair housing laws designed to protect consumers, your company, and yourself from discriminatory lending practices. Specifically, we are going to explore relevant provisions of fair housing and take a look at a few issues found in fair housing Law.
At the conclusion of this module, you will be able to:
- identify discriminatory practices in the mortgage industry.
- list the protected classes of individuals protected by fair housing.
- define what is required to comply with fair lending in the mortgage industry.
NMLS ID Required
You must have an NMLS ID to receive credit for this course. You will need this number before you begin the course.
If you already have an NMLS ID but don't remember what it is:
- Login into NMLS
- Click on the Composite View tab.
- Click View Individual on the sub-header row.
- The number that appears in parentheses after your name is your NMLS ID number.
If you do not have an NMLS ID and need to obtain one, use the instructions available in the NMLS Resource Center