Profile picture for Dunes....

Mortgage News Daily:Reg Z Violations Easily Enforced Under SAFE Act; Comp Plan Recruiting Rush

From Mortgage News Daily...April 1, 2011
Reg Z Violations Easily Enforced Under SAFE Act; Comp Plan Recruiting Rush

Today was/is the big day for many companies. If you're thinking about being devious, you may want to think twice. "The companies & loan officers that skirt around the comp Rule, will get caught. This was a well thought out and defined rule, from an enforcement perspective. Penalties are severe this time and easily enforced by every state that now has the power due to SAFE Act, to enforce Federal laws with state penalties. Competitors will turn them in. Not to mention that a comp plan violation is a TILA violation as well with now, individual liability on a loan by loan basis. Private right of action will be very painful to the LO that thought it was the "company's problem if they over pay me".  This FRB Rule with compensation and QRM lines make the last 3 years of changes look like stability in this industry. Profound business model changes are in the works and will reverberate for the next 6-12 months like a Tsunami."

Assuming the comp plans go ahead as planned, which is now open to debate, analysts are concerned that the mortgage origination business might experience significant turmoil as lenders are compelled to reconcile their just-released compensation programs in response to real world market conditions."

PART 226--TRUTH IN LENDING (REGULATION Z)



  • April 01 2011 - Brooklyn
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Answers (42)

Profile picture for Dunes....
"Dunes, if I wanted to say take my word for it, I would have said take my word for it."

I know that Clay that's why I said

"I'm not being a pain I hope but I'm getting more from this than all the Take my word for it stuff or the repetition of things it's assumed I do not comprehend if I ask questions.."

I was attempting to thank you for not doing that and talking/sharing/discussing...I was getting more, the public is getting more from you than others (317 views so far and only 4 posting..somone is looking)
I said it poorly I guess because I truly appreciate the time you have taken to talk...

I haven't said I'm against it or for it.
I want the Consumer to be able to have info to work with so they can decide..
I purposely haven't posted any Lender hater links or they are out to get us links..just NAMB links, court papers, an article from a Mortgage magazine..Info

Tried to keep it all level..perhaps I failed could have done better but I tried



  • April 04 2011
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Profile picture for Dunes....
"Board of Governors of the Federal Reserve System (the "Board")
submits this memorandum of law in opposition to appellants' emergency motion
for a stay of the April 1, 2011 effective date of the regulation they challenge,
pending judicial review in the district court"

Case: 11-5078 Document: 1301438 Filed: 04/04/2011
  • April 04 2011
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Profile picture for Blue Nile
"But I'd listen to Clay anytime ;)" -

Well, maybe they should just hire Clay to make the infomercial for the industry by himself.

He certainly tracks the economics better than most and is able to explain things in plain English.

I also see I left off John Paunun, who is the one that bothered to point out to Zillow that Zillow's present ZMM quoting platform doesn't meet the new law.
Zillow and Reg Z Changes

  • April 04 2011
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Clay, in that thread you were referring to: Thread Clay was referring to,
the person asking the question seems to be getting conflicting advice.  Some seem to think 1% origination fee is normal, some seemed to think it was outrageous.  Is this something that was common pre-regulation or is this the result of changes already being made? 

Please excuse my ignorance, I'm am admittedly a bit befuddled on the finance side of things- just trying to learn.
  • April 04 2011
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Clay:  "Let me make a prediction for you and the public, after this goes into effect you will see many more of these posts except the question will be: Why do I have to pay $8000 origination fee?"

Who exactly does the origination fee go to?  Is it just paid to the person who originated the loan or is it split?  Is that the only compensation paid to the loan officer?   How many hours of work is typically involved in processing a loan?  

I figure we talk about agent commission structure on here quite a bit, but how lenders and all people in the process are paid is a mystery to me.  I'm not even sure I understand who all is involved in the loan process from start to finish.
  • April 04 2011
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Profile picture for Dunes....
"Who exactly does the origination fee go to?"

That's the question the Public will be asking IMO ..
Is the problem the Public will be asking that question?

It's one they now ask RE Agents every day and a subject many here rag on them about if we are going to be honest...
Why does it cost that...who gets it

Another is Educational requirements to be an Agent to earn the money they earn...the amount of time spent to earn what they earn..what do they actually do to earn what they earn ;)..

Is this not true?

Fair is Fair
  • April 04 2011
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LOL, had a small book written but lost it because we are about to get slammed by a storm, have rebooted 3 times in 15 minutes. Gotta go find some candles... 
  • April 04 2011
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I'm not just asking for the public, I'm asking for myself because I am now going to stand up and admit that both times in my life that I bought a major loan, I was woefully ignorant about what fees I was paying and why.
I never negotiated anything, never thought to ask questions.  I just signed where I was told to sign.
Now I am feeling foolish, thinking that its really important to understand this part of the business, and wishing I had done it before I became a customer.
I realize how easy it is to want to assume that the people who sell you products, especially ones that are complicated and kind of hard to understand, that these people are looking out for your best interests and its so much easier to just trust them.  Doing homework and studying is hard, especially when its usually one of many stressors in the homebuying process.
How many of us truly understand the loan products we purchase?  Where the money we pay for the loan goes, how it gets calculated, how many people actually have their hands on your loan, who owns the loan (tricky one, that)?
How many of us truly understand the banking institutions, their various fragmented departments, their relationship with loan origination firms, and how all the products they make up and dabble with impact us? 
There are so many different aspects of this business I admittedly, and perhaps shamefully, have no clue about.
  • April 04 2011
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Profile picture for Blue Nile
Well, I hope that Clay gets his electricity and computer back up and running soon, and that he is able to "reconstruct" that "book" he was writing...

I read through the Fed response, and wasn't at all surprised at what was there.  The Fed already won the case, so why would they think there would be any reason to appeal in the first place, let alone postpone the implementation of a law that was passed about a year ago?
  • April 04 2011
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It came back on at 4:50, and it was loud. OK, it wasn't a small book, maybe a small chapter. Have to get a few cups of caffeine down while I try to remember what I was going to say.    
  • April 05 2011
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Profile picture for Dunes....
On March 28, 2011, FinCEN issued its Mortgage Loan Fraud Update (Report) for the period January 1, 2010 to December 31, 2010.
FinCEN: 2010 Mortgage Fraud Report

FinCEN.gov
  • April 05 2011
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Profile picture for Blue Nile
I guess everyone has read by now that the court "stay" is "over" and that Reg-Z is officially law, and that there are still issues on Zillow's quoting platform, but that they are supposed to be fixed this week...
  • April 05 2011
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