Enhance Your Business with eSignature Legality for Email Cover Letter

How to eSign a document: e-signature legality for Email Cover Letter

good morning everybody my name is Brian Gibbs and today we will provide an overview of reporting requirements and compliance reviews for mortgage brokers license in South Carolina uh this webinar is going to discuss what mortgage brokers are required to do the South Carolina Department of Consumer Affairs com compliance review process and what we look for during compliance reviews we will also talk about some previous issues in violations that we find okay so who needs to be licensed as a mortgage broker in South Carolina the mortgage broker act requires that all businesses offering mortgage brokerage services including loan correspondents table funding an independent contractors loan processors and Underwriters um they have to file with the Department of Consumer Affairs using the nmls the current initial filing fee is $750 the renewal fee is $550 all checklists are found on the State Licensing requirement page which is easy to find from the nmls resource center South Carolina mortgage log South Carolina law requires all mortgage brokers and mortgage lenders and Serv servicers file a mortgage log each year directly with the state of South Carolina note that this log is separate from the mortgage call report filed with the Nationwide multi-state licensing system in registry which is the enl list and the humed data report that lenders file with the cfpb the mortgage log submitted must be in the format determined by the south Carina Department of Consumer Affairs and the board of financial institutions the board of financial institutions instruct its lenses to file directly with the Department of Consumer Affairs who must file a South Carolina mortgage loan log all licensed mortgage brokers must file pursuant to code 40 5865 regardless of the number of loans originated made in 2023 the mortgage log data must include all or the mortgage log data must include all data required by the south Carina code 40 40 5865 uh that includes South Carolina Residential Mortgage applications and Loans loans in process closed loans turn Downs denials and withdrawals we do ask third party processors and Underwriters to submit the statement of no activity although they are exempt uh since they have the same license type as Brokers they are included in our reports if you don't submit it we end up sending you reminders so it's going to save you some time and trouble if you just submit the log and say no activity when is the South Carolina mortgage loan log do a complete mortgage loan log must be sub submitted no later than March 31st of each year and that's pursuant to the code 40 5865 for mortgage brokers and 3722 to10 for mortgage lenders and servicers a mortgage log with deficiencies will be sent back for Corrections those Corrections must be received by midnight on March the 31st is there a penalty for submitting the South Carolina mortgage Lan log late and yes there is a fine of a $100 per day for late or incomplete data submissions so if you're one day late it's $100 10 days late that's a $1,000 fine 30 days late it's a $3,000 F now how do you submit the South Carolina mortgage loan log you will have to email the completed form to mortgage logc consumer.gov with the file name in The Following format so you have the company nmls number the company name uh and all lenses are required to correct and submit a correcting an amendment if any information contained in original filing becomes inaccurate or incomplete in any material way if you have questions about the South Carolina mortgage loan log data submission refer to South Carolina mortgage loan instructions on our website at .c consumer. .gv buus resources licensing mortgage broker after searching these instructions state laws and supplemental Federal Regulation information lenses may contact the department by calling 803 734 4256 or you can email mortgage logc consumer. GI and if you have any questions um you can contact UM Curry Boyer Holly she's our licensing attorney if you have any questions uh about the mortgage Log please feel free to reach out to her so pursuant to South Carolina code section 40 5865 a a mortgage broker licensed pursuant to this chapter must maintain at their usual place of business books records and all documents pertaining to the business conducted to enable the administrator to determine compliance with this chapter and shall include a mortgage loan log the mortgage longan log must be completed with information known at the time of the review by the administrator and must include loans in process closed loans turn downs and denials most of the South Carolina mortgage broker compliance reviews will be Co coordinated using the csbs Statewide examination system and that's also known as the SCS so when a company has been selected for a mortgage broker compliance review the contact person listed in the nmls will receive an email from the SCS to register as a user to start the onboarding process and once the company is onboarded then they will be able to respond to any information requests with any state agencies and right now there are at least 50 state agencies that have adopted the SCS system so once you are on boarded with one agency then uh any of the state agencies will be able to contact you um through the state examination system to do any um any uh exams so we'll talk about what disclosures need to be kept in a closed loan file and they are your initial loan application you have a written cover letter the sign South Carolina mortgage broker fee agreement the initial loan estimate all revised loan estimates with the change of circumstance if applicable the attorney insurance agent preference form your list of attorneys the initial closing disclosure for the borrower your sign closing disclosure for the borrower your home ownership counseling disclosure your sign right to resend a broker fee check or wire transfer statements and also the thirdparty processing invoice if applicable in some instance instances the department May request the complete loan file so the initial loan application which is also known as the 1003 um you'll have the the borrowers information will be on that the financial information for the assets and liabilities the financial information for the real estate section four is the loan and property information section five are your declarations section six are your acknowledgement acknowledgements and agreements section seven talks about any military service and section eight talks about your demographic information and section nine is your loan originator information and that section should be completed by the loan officer your written cover letter so if you have to mail your disclosures and they're not going to be signed within three days of the application we can use the date of the cover letter to meet the timing requirements next we'll talk about your home ownership counseling disclosure this disclosure is mandatory if you are originating a high cost loan so section 372 3 40 um talks about high cost loan and the lender of a high cost loan may not make a high cost loan without first receiving a written certification from a counselor that is proved by the state Housing Finance and Development Authority that the borrow has received counseling on the advisability of the loan transaction and the appropriate loan for the Department or for the the borrower the Department of Consumer Affairs shall specify the information that must be provided by the lender and reviewed by the consu the consumer credit counselor so next we'll talk about the this is a state requirement um this document the South Carolina mortgage broker fee agreement uh section 40 5875 um states that within three business days of a receipt of the application for a mortgage loan the the broker must provide the borrower um with the the fee agreement that discloses the total estimated charges to the borrower a person may not earn charge or collect a mortgage broker fee unless the person meets the requirements of this chapter all fees earned for the services rendered as a mortgage broker must be disclosed to the applicant by the mortgage broker as required by federal or state law the mortgage broker a fee agreement must be in writing and include the current name address telephone number of the mortgage broker's branch office the account number uh if there's any the date of the agreement the name of the borrower on the prop or the proposed borrower signature of the borrower and the mortgage broker the amount of any fees and the nature of services provided to the borrower a copy of the completed agreement must be provided to the borrower by the mortgage broker and again the only fee the only fee the broker um or the only fee that should be disclosed on the mortgage broker fee agreement is the broker fee and that is the fee that the broker is receiving either either by lender paid compensation or borrower paid compensation uh one other thing I will add on the fee agreement is anytime the agreement changes like if you if there's a DVA that is added or deleted the company or Branch address changes the fee agreement must be amended to reflect the changes now so what we see on the the fee agreement a lot is um some fees that should not be listed on the fee agreement uh so a lot of times we'll see loan discount points appraisal fees the credit report Lenders Title Insurance recording fees prepaid interest property tax and the attorney fees so again the only fee that should be reflected on the mortgage broker fee agreement is the fee the broker is getting to broker the loan lender fees attorney fees appraisal should not be reflected on the fee agreement uh so in the file we'll also look at um all of the loan estimates um if there is a change of circumstance um we'll ask that you uh provide that as well um so you must provide the loan estimate to the borrower was within three days of the app application um when you have the following information so you have once you have the borrower's name the income the social security number the address of the property the estimate of the value of the property then you have to send out the loan estimates and also the loan amount as well once you have those um once you obtain that data from the borrower you have to send out the loan estimates so also in the file this is another state uh disclosure that's required and this is um the signed attorney Insurance preference form um with the list of attorneys if applicable section 3710 102 and just talks about the attorney fees and other charges on mortgage loans for personal family or household purposes so to comply with the South Carolina attorney Insurance preference disclosure um the Creditor has to provide the notice to the borrower of their right to select an attorney uh and also insurance agent within three days of the application uh the borrower has to choose their own attorney and then also whoever that borrower chooses as their attorney needs to be reflected on the closing disclosure at closing now when completing the attorney Insurance preference form all the entries on the attorney Insurance preference form should be ritten in a borrowers handwriting unless you're using some type of um e signature so this includes the date the attorney and also the insurance provider selections now if the borrower does not have an attorney Andor insurance provider at the time that you deliver the the tney insurance form to the borrower they can enter a TV D to be determined undecided will decide later but they have to complete uh something in that section now when they decide who they want to use as an attorney um it's in the best interest to complete a new attorney Insurance selection have the borrow fill out the form the attorney insurance agent preference form so that way you'll have you'll you'll have two attorney Insurance preference forms in the file one with the tub determined and then one where the Bor has selected an attorney um and all of this has to be done prior to the loan closing and if the if the borrower decides to change attorneys uh you may want to have some notes in there on why they change why they decided to change attorneys all right so next talk about the closing disclosure um the closing disclosure must be provided to the borrower at least three business days prior to the consummation the lender paid compensation or the Bor paid compensation must reflect the same dollar amount as disclosed on the South Carolina mortgage broker fee agreements the closing attorney selected by the barber reflected on the South Carolina attorney Insurance preference form should also be reflected as a closing attorney uh for the loan uh then we're also asked to see the signed uh right to resend on a a refinance um the three-day right to recision also known as a cancellation rule is a legal right the that allows the borrowers to cancel certain loans without penalty within three days of signing the contract the right of recision applies to loans that use a person's home as collateral including home equity loans home equity lines of credit refinancing of existing mortgages with a different lender federally federally insured revers mortgages known as home equity conversion mortgages uh in that file we also um request that you keep a copy of the the check that you reive for closing um if there's a wire transfer you ask we ask that you keep a copy of the wire transfer in that file as well so for those of you who use thirdparty processors um to process your loans we'll ask that you keep the a copy of the the the third party processing invoice in the file as well to South Carolina code 4058 20 C says a processor underwriter who is an independent contractor may not engage in the activities of a processor or underwriter unless the independent contractor maintains a license as provided by rule regulation pursuant to section 3722 to70 so basically if you are a third-party processor you have to obtain the same license as a mortgage broker now this is a a federal um section here that we'll talk about and which is part 1026 36f and this requires that State licens Brokers and lenders if you're going to use a third-party processor you have to verify the third-party processor with whom the contract is uh is licensed so basically it is your responsibility if you are going to use a third-party processor to find out if they have a license in South Carolina to be a third-party processor you can confirm any third-party Processing Company that's licens in South Carolina by calling our mortgage broker Licensing Division or you can confirm the registration license um through the uh nmls uh website now so the inprocess loan files um there's certain disclosures will will like for you to keep in your files as well um and these are these are just the minimals but the initial loan application the written cover letter home ownership counseling uh disclosure yeah the South Carina mortgage broker fee agreement um all loan estimates and also your uh attorney Insurance preference forms with the list of attorneys uh if applicable uh in some instances the complete loan file may be requested so the um the adverse action file what would the least we would want to see in that file is the initial loan application and then also the notification of the adverse action now so we'll talk about um uh two of the state um disclosures that we talked about earlier just wanted to point out what are some of the common violations that we see on the mortgage broker fee agreements um uh so the first one is uh just not providing the broker fee agreement within three days of the application a lot of times um we won't see that fee agreement um disclosed until um the day of closing um so again this is where the the cover letter comes into play um if you sent out the the fee agreement but the borrower has not signed it um as long as you have a something in the file uh a cover letter in the file that shows that you sent out the the broker fee agreement within three days that meets the the timing requirement of that um another uh uh another issue we see is just not completing the broker fee agreement correctly um so that may include um let's say if you changed branches or if you change locations and the the address at your new location is still reflecting the the prior location um I see that a lot um also see where U you're just not completing the uh the broker fee agreement completely leaving it blank leaving some of the the disclosures blank um also uh we'll see um when you completing the fee agreement where you're not disclosing the broker fee in a dollar amount um you may um disclos it in it as a percentage of the loan amount but do not include that ual dollar amount that you received um uh for the loan let's see so another um uh another thing I see when I'm looking at the files is um a lot of times the the loan amount may increase uh or the loan amount May decrease and you don't redisclose the new South Carolina um f agreement disclosing uh the increased fees so if the loan amount was 100,000 and then the loan amount changes to 125 during the uh during the process you have to redisclose a new fee agreement that's going to disclose The increased broker fee that you'll be getting based on the the in the increased loan amount out let's see so we'll talk about some of the penalties for um for the fee agreement if it's not um disclosed correctly to the borrower so if the broker or loan officer violates this provision the borrower May recover from the mortgage broker or loan originator charged with the violation a penalty in the amount to be determined by the court of not less than $1,500 and not more than $7,500 for each loan transaction uh so that's very important um that you U have the fee agreement completed uh correctly and also disclosing um the amount of the broker fee that you are going to receive for the loan uh so they can also recover fees paid to the borrower to the mortgage broker for the services rendered for the agreement so if you did not disclose a mortgage uh if you did not disclose a broker fee U and the loan closes the borrower you may have to refund the borrower for the the broker fee that you receive so if you receive 3,000 to closed loan then you may have to uh refund $3,000 back to the borrower for um not disclosing a broker fee um also actual costs including attorney fees for enforcing the borrowers rights under the agreement now so some of the violations we see on the other state required document on the attorney Insurance pref preference form is not providing the borrower the preference form within three days of the application not completing the attorney Insurance preference form correctly the borrower not choosing the attorney uh and also the attorney changing with the without the borrower acknowledging the change so initially if the if the borrower chooses a specific attorney during the the process um the attorney changes um then it's not so a lot of times I'll see where the broker um they'll say well well I have an attorney for you we'll just use this attorney well that's a violation because you did not give the borrower the choice of who they wanted to use as the attorney so I do I I see that a lot when looking at the files so there are some violations um uh if you don't disclose the uh the attorney Insurance preference form to the borrower uh section 3710 105 just talks about um if any of the Creditor violates a provision of this chapter the debtor has a cause and cause of action other than in a class action they recover actual damage es and also a right in an action uh let's see to recover the person's violating this chapter a penalty and the amount to be determined by the court of not less than $1,500 and not more than $7,500 for any of the transactions so that was uh a brief overview of the mortgage log uh requirements and also some compliance uh issues that we run into uh when we're looking through files all right well thank you again for attending the presentation and have a great rest of your day