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.
In the first module of this course we'll discuss the federal laws that regulate the mortgage industry. Our attention will first be focused on the Truth in Lending Act (12 CFR Part 1026 [Regulation Z]). The second topic focuses on the Real Estate Settlement Procedures Act (12 CFR 1024 [Regulation X]). These two federal laws are designed to protect the consumer when going through the process of applying for and obtaining credit.
The second module is written with a focus on consumer protection and proper mortgage advertising practices as defined by the CFPB's Mortgage Acts and Practices Advertising Rule (MAP Rule), the advertisement regulations of TILA and RESPA, and the FTC Advertising Rules. In this module you'll be provided with a better understanding of laws that protect consumers from untruthful mortgage advertising.
The third module will review the compliance requirements of the Bank Secrecy Act in regards to Anti-Money Laundering and the reporting of Suspicious Activity. It is designed to fulfill the training requirements of the Bank Secrecy Act (BSA) 31 CFR § 1010 and § 1029.
The fourth and last module covers unique mortgage product solutions for unique customers. We'll cover several non-traditional mortgages such as the 203(k) rehabilitation loan from FHA, several energy efficient loan products, and Fannie Mae's HomeReady® Mortgage Program.
Topics and Learning Objectives
This course is broken down into several learning topics. At the end of the course a 25-question final exam will be given. The topics included in this course are:
- Federal Laws That Regulate Lending – TILA and RESPA (150 minutes)
- Ethical Mortgage Advertisement Practices (75 minutes)
- Complying With the BSA/AML SAR Filing Requirements (25 minutes)
- Non-traditional Mortgage Products (100 minutes)
- Final exam (20 minutes)
Total study time: 7 clock hours
Module 1: Federal Laws that Regulate Lending – TILA and RESPA
Title I of the Consumer Credit Protection Act, known as the Truth in Lending Act (TILA), was first enacted in 1968. The provisions of TILA are implemented by Regulation Z. The Real Estate Procedures Act was enacted in 1976, and its provisions are implemented by Regulation X. These two federal laws help consumers better understand the financial terms they are obligating themselves to. TILA requires creditors to issue a good faith estimate of costs associated with the credit being offered, while RESPA discloses the costs of settlement services and prohibits unethical kickbacks between mortgage licensees. This module will outline both of these federal regulations.
Module 1 Objectives
When you have completed this module, you will be able to:
- Describe the transactions that are exempt from Truth in Lending Act regulations.
- Explain the purpose of the Real Estate Settlement Procedures Act
- Review what is and is not considered to be a permissible finance charge.
- Outline the Truth In Lending Act regulations regarding open-end credit and closed-end credit.
- Identify the kinds of promotions the TILA consider to be advertisements, including prohibited acts when advertising mortgage services.
- Summarize the acts that would require issuing a revised Loan Estimate or Closing Disclosure.
- Recognize the RESPA liabilities when dealing with Marketing Service Arrangements
- Describe the loss mitigation procedures that loan services must comply with under RESPA
Module 2: Ethical Mortgage Advertisement Practices
This module is written with a focus on consumer protection. Most, if not all of the regulations of the mortgage and banking industry are implemented to protect the consumer. In this module you'll be provided with a better understanding of laws that protect consumers from untruthful mortgage advertising. Understanding what you can and cannot do in regard to advertising loan products is vital when dealing with the public and promoting your services. As an advocate for your customer it is up to you to be diligent in your understanding of the laws and regulations affecting our industry, how they affect you in your business, and how to adhere to them for compliance and consumer protection.
Module 2 Objectives
When you have completed this module, you will be able to:
- Identify the Consumer Financial Protection Bureau's rules on mortgage advertising, including the scope, definitions, and prohibited representations for mortgage loan promotional advertising.
- Give examples of statements used in mortgage lending advertising that may be in violation of the CFPB's advertising rules.
- Recognize the difference between the CFPB advertising rules and the rules set forth in the Truth in Lending Act.
- Describe the restrictions on kickbacks and referral fees outlined in the Real Estate Settlement Procedures Act.
- Explain the Federal Trade Commission's rules regarding advertised endorsements.
- Recognize the importance of consumer privacy protection rules by understanding the national Do Not Call registry and the CAN-SPAM Act.
Module 3: Complying With the BSA/AML SAR Filing Requirements
This module will review the compliance requirements of the Bank Secrecy Act in regards to Anti-Money Laundering and the reporting of Suspicious Activity. We will outline the anti-money laundering compliance requirements and reinforce your knowledge of your requirements to report suspicious financial activity. The topic of failing to comply with BSA/AML SARs filing requirements is required study by all mortgage licensees for their 2018 NMLS renewal.
Module 3 Objectives
When you have completed this module, you will be able to:
- Identify the stages of money laundering.
- Outline the process of authenticating a customer's identity at the point of establishing a
- relationship or account with the customer.
- Describe the information that should be included on a preliminary suspicious activity report.
- Review the process a compliance officer must follow to file a suspicious activity report (SAR)
- with FinCEN.
- List various red flags that could imply fraud in the transaction.
- Recognize the penalties for not complying with SAR filing requirements
Module 4: Non-traditional Mortgage Products
Besides a traditional conventional loan product, there are other options available when it comes to rehabilitating a home for purchase and refinance that may more perfectly fit the rehab loan needs of the borrower. This module will explain several non-traditional mortgage products, exploring other options available to borrowers such as the Federal Housing Administration's 203(k) property rehabilitation loan, four types of energy efficient mortgage products, and the Fannie Mae HomeReady® rehab loan product.
Module 4 Objectives
When you have completed this module, you will be able to:
- Describe the guideline for the FHA 203(k) rehabilitation loan product.
- Recognize the qualified improvement differences between the standard 203(k) and the limited 203(k).
- Paraphrase the purpose of energy efficient mortgages (EEMs).
- Review four EEM programs: the FHA EEM, the VA EEM, the Fannie Mae HomeStyle®
- Energy Mortgage, and the Property Assessed Clean Energy (PACE) Program.
- Outline Fannie Mae's rehabilitation mortgage product, the HomeReady Mortgage program.
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.
