Florida Compliance (45%) Flashcards
Prohibited Practices Under Chapter 494
It is a violation of Florida law for a licensee to commit the following actions: (1 of 3)
To knowingly or willingly employ any device, scheme, or artifice to defraud (494.0025(4)(a))
To engage in any transaction, practice, or course of business which operates as a fraud upon any person in connection with the purchase or sale of any mortgage loan (494.0025(4)(b))
To obtain property by fraud, willful misrepresentation of a future act, or false promise (494.0025(4)(c))
Record a mortgage brokerage agreement or any other document which purports to enforce the terms of the agreement, unless that document has been rendered by a court of competent jurisdiction (494.0025(8))
Prohibited Practices Under Chapter 494
It is a violation of Florida law for a licensee to commit the following actions: (2 of 3)
To knowingly and willfully falsify, conceal, or cover up by a trick, scheme, or device a material fact, make any false or fraudulent statement or representation, or make or use any false writing or document, knowing the same to contain any false or fraudulent statement or entry (494.0025(5))
Pay a fee or commission related to a mortgage loan transaction to any person or entity other than:
o A mortgage broker
o A mortgage lender
o A person exempt from licensure under the law (494.0025(7))
Prohibited Practices Under Chapter 494
It is a violation of Florida law for a licensee to commit the following actions: (3 of 3)
Use the name or logo of a financial institution for marketing or soliciting customers unless the name or logo is used with the written consent of the financial institution. Furthermore, a name or logo may not be used in a manner that would lead a reasonable person to believe that the material or solicitation originated from, was endorsed by, or is related to or the responsibility of the financial institution or its affiliates or subsidiaries. (494.0025(9))
Knowingly destroy, conceal or alter books, records or computer files while under an investigation or examination (494.0025(10))
If, in a mortgage transaction, a licensee has a conflict of interest, the licensee is required to provide the following disclosures, in writing, to the borrower:
The nature of the relationship, ownership, or financial interest between the provider of products, services or business, and the licensee making the referral
The estimated charge or range of charge generally made by such a provider
The financial benefit to the licensee as a result of the conflict
That alternative sources may be chosen by the borrower
licensee has a conflict of interest if:
The licensee or the licensee’s relative (refer to the course section on “Definitions” for information on who constitutes a relative) provides the borrower with additional products or services The licensee or their relative owns, controls, or holds with power to vote, or holds proxies representing, 1% or more of any class of equity securities or other beneficial interest in the person providing the additional products or services or in the licensee A holding company owns, controls, or holds with power to vote, or holds proxies representing, 1% or more of any class of equity securities or other beneficial interest in both the licensee and the person providing the additional products or services One or more persons, or a relative, sits as an officer or director for both the licensee and the person providing the additional products or services, or just for the person providing the additional products or services
Mortgage brokers are required to maintain a file for each mortgage transaction. The files must be maintained in a central location and in an alphabetical or numerical sequence. Each file must contain at least the following:
Mortgage broker agreement
Copy of signed closing statement or documentation of denial or cancellation of the mortgage loan application
A copy of the good faith estimate of costs
-Supporting documentation must be maintained for all expenses or fees paid by the licensee on behalf of the client indicating the amount and the date paid. A canceled check maintained in a separate file must be considered proof of payment of fees and expenses.
A copy of the written commitment issued by the mortgage broker, and
A copy of the written commitment provided by the lender
A copy of the written lock-in issued by the mortgage broker; and
A copy of the written lock-in provided by the lender
If the loan is funded by a non-institutional investor, then the file must also include the following:
A copy of the appraisal or opinion of value of the mortgage property and a signed and dated acknowledgment by the non-institutional investor of receipt of the appraisal or opinion of value or a copy of a waiver of the appraisal dated and executed by the non-institutional investor
A receipt acknowledging that the non-institutional investor has been furnished with title insurance or a legal opinion of title, or written waiver thereof
On a junior mortgage, documentation that the non-institutional lender has been furnished with a statement showing the balance owed and status of the liens that will be superior to the lien being funded by the non-institutional investor
A signed and dated acknowledgment by the non-institutional investor of receipt of the recorded mortgage or other instrument securing a note or assignment
If applicable, documentation that said licensee has disclosed that it is acting (directly or indirectly) as a borrower or principal in that transaction
Mortgage brokerage businesses and lenders acting in the capacity of a mortgage broker business are required to maintain a journal of mortgage brokerage transactions, which must include, at a minimum, the following information:
Name of applicant Date applicant applied for the mortgage loan Disposition of the mortgage loan application – in other words, the result of the transaction. The disposition of the case must be categorized as one of the following: o Loan funded o Loan denied o Application withdrawn o Other (with explanation) Name of lender, if applicable
All transaction journal records must be updated on a current basis meaning?
within 7 days of when events occurred
The transaction journal must be maintained in the ______ office or in each branch office where mortgage brokerage transactions are originated.
principal
The Florida Administrative Rules require that Mortgage Lender Files contain the following:
A copy of the good faith estimate
The original mortgage loan application,
Copy of the closing statement or documentation demonstrating that the mortgage loan application was cancelled or denied
Copy of any written lock-in agreement
Copy of any written commitment
Copy of written disclosures of any conflict of interest
If a lender makes a material (substantial) change to the loan that had been offered to the borrower, the licensee has certain responsibilities under the Law:
The licensee is required to notify a borrower of any material changes in the terms of a mortgage loan previously offered to the borrower.
The licensee must make this notification within three business days after being made aware of such changes by the lender but not less than three business days before the signing of the settlement or closing statement.
The licensee bears the burden of proving such notification was provided and accepted by the borrower.
What is an Institutional investor?
Is a state or national bank, state or federal savings and loan association or savings bank, real estate investment trust, insurance company, real estate company, accredited investor, or other business entity that invests in mortgage loans, including a secondary mortgage market institution including, without limitation, the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Government National Mortgage Association (Ginnie Mae), conduits, investment bankers, and any subsidiary of those entities.
What is a Non-institutional investor?
Means any investor other than an institutional investor.
When a loan originator is arranging a mortgage loan for a non-institutional investor, the licensee must:
Provide an opinion of value from an appraiser stating the value of the security property unless the opinion is waived in writing:
o This must be done before any payment of money has been made
o The opinion must state the value of the property as it exists on the date of the opinion
o If any relationship exists between the mortgage broker and the appraiser, that relationship must be disclosed to the investor
Provide an original or a copy of a mortgagee’s title insurance policy or an opinion of title by an attorney
If the loan is not a first mortgage, a statement showing the balance owed by the mortgagor on any existing mortgages prior to this investment and the status of such existing mortgages must be provided
Provide a disclosure if the licensee is directly or indirectly acting as a borrower or principal in the transaction
If a title insurance policy is issued, it must:
Insure the non-institutional investor against the “un-marketability” of the mortgagee’s interest in the property
Specify any superior liens that exist against the property
If an opinion of title is issued by an attorney licensed to practice law in the state, the opinion must
Include a statement as to the marketability of the title to the property described in the mortgage
Specify the priority of the mortgage being closed
If the title insurance policy or opinion of title is not available at the time of purchase, the licensee must:
Provide a binder of the title insurance or conditional opinion of title which includes:
o Any conditions or requirements needed to be corrected prior to the issuance of the final title policy or opinion of title
o Information concerning the previously specified requirements
Any conditions must be eliminated or waived in writing by the investor prior to delivery to the non-institutional investor
The policy or opinion, or a copy, must be delivered to the investor within a reasonable period of time, not exceeding six months, after closing
The title insurance requirements may be waived in writing. If the requirements are waived by the non-institutional investor, the waiver must include the following wording:
The non-institutional investor acknowledges that the mortgage broker or mortgage lender brokering this mortgage loan is not providing a title insurance policy or opinion of title issued by an attorney who is licensed to practice law in the State of Florida. Any requirement for title insurance or for a legal opinion of title is the sole responsibility of the non-institutional mortgage investor.
In order to serve as a principal loan originator, an individual must have been licensed as a loan originator for at least ___ ____ prior to the designation.
one year
Audited Financial Statements – Filing Requirements for Lenders: (4 things)
- Completed by independent CPA
- Complete at end of fiscal year
- Submit to office within 120 days of fiscal year end
- If the licensee changes its fiscal year, the licensee must file a report within 18 months after the previously submitted report
A broker fee earned by a licensee is not considered ______ or a _____ _____ under the Interest and Usury, Lending Practices Chapter of the Florida Statutes.
- interest
- finance charge
A person may not charge the borrower a fee or broker commission in excess of the maximum fee specified by Florida law. The maximum fees or broker commissions that may be charged for mortgage loans are as follows:
On a mortgage loan of $1,000 or less: $250
On a mortgage loan exceeding $1,000 and not exceeding $2,000: $250 for the first $1,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage loan
On a mortgage loan exceeding $2,000 and not exceeding $5,000: $350 for the first $2,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage loan
On a mortgage loan exceeding $5,000: $250 plus 10% of the entire mortgage loan
In determining the total loan origination fee, all compensation for the following services must be included:
Arranging for a conditional mortgage loan commitment between a borrower and a lender
Taking an application, assembling information and preparing all paperwork and documentation necessary for a conditional mortgage loan commitment
Reviewing, analyzing, and evaluating a borrower’s financial statements, income, and credit history
Incidental services utilized in arranging for and procuring a conditional loan commitment, such as, courier services, express mailings, and long distance telephone charges
Premiums and other charges for insurance written in connection with a loan, except as provided in subparagraph
Premiums or other charges for life, credit life, accident, health, or loss-of-income insurance written in connection with a loan are not included in determining the loan origination fee if the licensee discloses both of the following to the borrower in writing:
A statement that the insurance is not required to be purchased through the licensee
The premiums for the initial term
Maximum fees or commissions must be based on the net proceeds of the loan. In determining the maximum fees or commissions on the gross proceeds of a loan, the following method may be used:
On loans in excess of $1,000 and not over $5,650: Add $1,500 to the gross proceeds of the loan and divide that sum by 11
On loans that are over $5,650 but less than $5,750, the maximum fee is the amount in excess of $5,000
On loans of $5,760 and over, divide the gross proceeds by 11 and add $227.27
A mortgage broker who creates a contract to receive a mortgage broker fee upon receipt of a commitment must disclose a number of terms to the borrower in the mortgage broker agreement. The agreement must include the following:
The gross loan amount
In the case of a fixed-rate mortgage, the note rate
In the case of an adjustable rate mortgage:
o The initial note rate
o The length of time for which the initial note rate is effective
o The frequency of changes
o The limitation upon such changes including adjustment to adjustment cap and life cap
Whether the loan has any potential for negative amortization
Identification of the margin-interest rate differential
Identification of a nationally recognized index which must be free from control of the mortgage broker, or mortgage lender
The estimated net proceeds to be paid directly to the borrower. “Estimated net proceeds” refer to the cash to be received by the borrower after payment of any fees, charges, debts, liens, or encumbrances to perfect the lien of the new mortgage and establish the agreed-upon priority of the new mortgage.
The lien priority of the new proposed mortgage
The number of calendar days, which are mutually agreed upon, within which the mortgage brokerage business must obtain a bona fide mortgage commitment
A loan origination fee is prohibited unless the borrower signs a mortgage broker agreement
Must include:
- LO’s NMLS#
- describe the services to be provided
- document fees to be collected for LO
- All fees on the mortgage broker agreement must be disclosed in dollar amounts
- All loan origination fees must be paid to the mortgage broker
Mortgage Disclosure Statement must be signed within ____ business days after a mortgage loan application is accepted if the borrower is present when the application is accepted.
three
The total mortgage broker fee must include all compensation for the following services:
Arranging for a conditional mortgage loan commitment between a borrower and a lender
Taking an application, assembling information and preparing all paperwork and documentation necessary for a conditional mortgage loan commitment
Reviewing, analyzing, and evaluating a borrower’s financial statements, income, and credit history
Incidental services utilized in arranging for and procuring a conditional loan commitment, such as, courier services, express mailings, and long distance telephone charges
Premiums and other charges for insurance written in connection with a loan
If a broker is to receive any payment from a lender, that amount must be disclosed to the borrower in the written mortgage broker agreement. That agreement must:
State the nature of the relationship with the lender
Describe how compensation is paid by the lender
Describe how the mortgage interest rate affects the compensation paid to the mortgage brokerage business
State the exact amount of any payment of any kind by the lender to the mortgage broker must be disclosed in writing to the borrower within three business days after the mortgage broker is made aware of the exact amount of the payment from the lender but not less than three business days before the execution of the closing or settlement statement
The _____ bears the burden of proving such notification was provided to the borrower.
licensee
Additional Broker Disclosures. The disclosures include the following:
That the mortgage broker may not make mortgage loans or commitments. The mortgage broker may make a commitment and may furnish a lock-in of the rate and program on behalf of the lender. The commitment must be in the same form and substance as issued by the lender.
That the mortgage broker cannot guarantee acceptance into any particular loan program or promise any specific loan terms or conditions.
A good faith estimate
Any amount collected in excess of the actual cost must be returned within 60 days after rejection, withdrawal, or closing
When must a mortgage broker provide any additional broker disclosures?
The disclosures must be made at the time the broker agreement is signed or before any application fee or third party fees are accepted (i.e. credit report or appraisal fee), but no less than three business days prior to loan closing.
The good faith estimate must be signed and dated by the borrower, which discloses the total amount of each of the fees which the borrower may reasonably expect to pay if the loan is closed. This includes, but is not limited to:
Fees earned by the mortgage broker
Appraisal fees
Inspector fees required by the lender and/or pest inspection fees
Loan assumption fee and a transfer fee
Lender fees or credit report fees
Third-party fees such as settlement or closing fees charged by a settlement agent or attorney fees
The terms and conditions for obtaining a refund of such fees
The good faith estimate must also identify the recipient of all payments charged to the borrower and, except for all fees to be received by the mortgage broker, may be disclosed in generic terms, such as, but not limited to:
Paid to lender Appraiser Officials Title company Any other third-party service provider This requirement does not supplant or is not a substitute for the written agreement described in the previous paragraphs
When must Disclosures Related to Adjustable Rate Mortgages be made?
At the time the loan is offered to the borrower
If the mortgage broker agreement includes a nonrefundable application fee, the following requirements are applicable:
- The amount of the application fee must be clearly disclosed
- The specific services that will be performed
- The application fee must be reasonable
- An LO can’t accept any fee in connection with a mortgage loan other than an application fee, credit report fee, property appraisal fee, or other third-party fee.
- All mortgage broker fees must be paid to a mortgage brokerage business licensee
- A mortgage broker may not pay a fee to any person not properly licensed
Records of advertisements must be maintained for ?
2 years after the date of publication which includes commercial scripts of radio or TV
When must Any fee from a third party given to a mortgage broker licensee be placed into a segregated account with a financial institution located in the Florida?
Immediately
-• Such funds must be held in trust for the payor and must be kept in the account until disbursement.
• Such funds may be placed in one account if adequate accounting measures are taken to identify the source of the funds.
