SCP Provides Current Innovation Services
Compliance is a focus of everything we do in our business today. SCP, however, aims to provide more than the protection of attorney driven fixed cost compliance.
Through technological breakthroughs and best in class industry partners, SCP will provide access to multiple services impacting all facets of lending operations.
Important Update – Mini-Correspondent Evaluation
In response to the CFPB’s guidance pertaining to potential treatment of mini-correspondents as brokers and the profound impact on compliance with Regulation Z, RESPA, and ATR laws, SCP in conjunction with Offit Kurman is announcing M-CE: a compliance assessment backed by a legal opinion and analysis to provide Warehouse Lenders, Mini-Correspondents and Investors a third party legal opinion on whether their relationships with Mini-Correspondents will pass CFPB Scrutiny.
The evaluation will also provide recommendations to strengthen the mini-correspondent relationship.
If you are interested in M-CE, register for an M-CE evaluation below or you can contact Leslie Benjamin at firstname.lastname@example.org or phone (301-691-1300) for more information.
Strategic Compliance Partners Has The Answer For You!
- Real-time Policies – Automatically updated, and attorney reviewed based on nationwide audit results.
- All-encompassing attorney driven compliance programs for lenders of all sizes.
- Monthly implementation webinars
- Core compliance training and policy implementation for all staff.
- Unique solutions provided by cutting edge innovations.
- I.C.E. Internalized Compliance Examinations.
We Specialize In Financial Services Companies
We specialize in compliance services and solutions for the mortgage banking industry.
Our clients include:
Whether you are a one person mortgage broker or a full service retail lender; we can help you get and remain in compliance. We understand that compliance is not a one size fits all. That is why we are the first in the industry to tailor our compliance solutions to fit the various businesses in our industry.
We utilize and leverage our strategic partnerships with Offit Kurman and other strategic partners to provide a unique combination of experience and backgrounds to find the right compliance solutions for your company.
Whether is merely providing policies that are automatically updated based upon the latest audit findings or providing a fully integrated, turn-key compliance solution, SCP has the most cost-effective and best answers to and options for meeting your compliance needs.
Frequently Asked Questions
How do you comply with the ATR requirements?
The ATR rule is satisfied by meeting the specific ATR requirements, i.e., the list of eight (8) underwriting factors to consider, are:
(1) current or reasonably expected income or assets;
(2) current employment status;
(3) monthly payment on covered transactions;
(4) monthly payment on any simultaneous loan;
(5) monthly payment for mortgage-related obligations;
(6) current debt obligations, alimony, and child support;
(7) the monthly debt-to-income ratio or residual income;
(8) credit history.
Under the ATR rule, am I still allowed to originate a mortgage with a DTI higher than 43%?
Yes, the 43% DTI ratio, which under the regulation is the back-end ratio, applies to QMs but, even under the QM definition; there is not an absolute bar on back-end ratios above 43%.
If a loan qualifies for purchase by a sponsored GSE or for insurance or sponsorship by a federal agency the loan is eligible for QM status.
However, the GSE/federal agency test is limited in duration and, in particular, the federal agency test is limited to the federal agencies promulgating their own QM test—HUD proposed its QM definition on September 30, 2013.
What is the difference between a Safe Harbor and Rebuttable Presumption QM?
The difference between a Safe Harbor QM and a rebuttable presumption QM is the level of protection afforded the lender.
A Safe Harbor QM conclusively establishes that the lender complied with the ATR requirements when originating the mortgage; on the other hand, the rebuttable presumption allows the consumer to argue, i.e., rebut, that the lender properly evaluated the consumer’s ability-to-repay at the time of consummation.
Rebuttable presumption QMs definition is as a QM loan with an APR that is 1.5 percentage points above the APR, i.e., a Higher-Priced Mortgage loan.
What specific fees are included in the QM points and fees calculation?
The points and fees calculation is complex. The CFPB did not provide a specific GFE or HUD-1 line by line inclusion or exclusion of fees.
Instead, the CFPB provided categories of fees that should be included in the QM points and fees calculation.
Those categories are:
1) Loan Originator Compensation;
2) Non-Interest Finance Charges;
3) Loan Level Price Adjustments (if not built into pricing)
4) premiums for insurance where the creditor is the beneficiary or debt cancellation or suspension coverage payment payable at or before consummation;
5) PMI premiums payable at or before consummation that exceed the FHA premium or are not required to be refunded when the loan is paid in full;
6) prepayment penalties if the lender is refinancing a loan held by or serviced by the lender or an affiliate.
What features are prohibited for QM loans?
Generally, loans that have the following characteristics are not considered QM loans: Negative amortization; Interest-only payments; Balloon payments; Terms exceeding 30 years; or No doc loans.
Who is a considered a loan originator under the revised rule?
The expanded definition of loan originator includes anyone who takes applications; offers, arranges, or assists in obtaining or applying to obtain credit; advertises or communicates to the public that they can or will perform any loan origination activities; or who offers or negotiates credit terms.
Does the new definition of loan originator encompass processors and underwriters activities?
Engaging in normal processing and/or underwriting activities does not meet the definition of loan originator. However, communication of the actual credit offer, taking of an application, or discussion of specific terms of credit—including making a counter-offer— would meet the definition of loan originator.
Does telemarketing count as originating even if an application is not taken?
More Specifically: My Company conducts telemarketing activity where a sales assistant hands-off “hot leads” to a licensed MLO, does this activity count as originating even if the sales assistant does not take an application?
Under the definition of loan originator, telemarketers or anyone participating in the origination process likely meets the definition.
This fact has far-reaching implications, and a company should review all position descriptions in order to evaluate whether that particular position’s requirements meet the definition of loan originator.
If it does, the company should review the employee compensation plan to ensure it meets the requirements under the Final Rule and determine whether the employee meets the qualification and background requirements required for loan originator employees, which can be found here:
CLICK HERE TO DOWNLOAD PDF
Can a company still have non-producing branch managers?
Yes, but SCP does not recommend this approach. Technically, as long as the origination of loans is not the basis for the manager’s compensation, and the branch manager does not communicate specific credit terms or engage in offer/counter-offer negotiations with the consumer, they will not meet the definition of loan originator and be subject to LO Compensation rules.
It is important to remember that constructing a compensation plan and position description that meets the LO Compensation rules is a complex undertaking.
SCP recommends engaging legal counsel if you wish to have non-producing branch managers.
How do I make sure I am compliant with the new LO Comp rules?
Complying with the new loan originator compensation rules requires revising job descriptions so that no gray areas exist, structuring compensation arrangements accordingly (especially in regards to management compensation), and making all bonuses easily traceable and verifiable.
Remember, compliance is about viewing your company’s practices through the regulator’s lens, and the CFPB’s lens places consumer protection above all else. SCP recommends having all employment agreements drafted or reviewed by an attorney.
Do we have to establish an escrow account moving forward if my company qualifies for the small creditor exemption?
Not necessarily, if your organization originates a loan under a forward commitment and the acquirer of the loan is not eligible for the exemption, you must establish an escrow account.