Affinity NMLS Exam Prep Crash Course

So my name is artricia woods and this is your exam prep crash course we're going to just be talking about what you need to know to pass the exam this is my name this is our 800 number if you press extension one you'll get me and you can leave a message directly for me if you need to speak with someone specifically press extension 2 and you'll get ding you can also send text messages to that number as well and I Get a lot of students they just text me questions all day long so if you

see me checking my phone are things of that nature it's because I am I'm actually returning students messages are my email address is here you can email me I told you guys about the Facebook study group and then this is the website you guys should be able to open the book and actually follow me so go ahead and find this page in the book as well so go ahead and find this page this page Is our disclaimer um it's just to let you know that our information is copy written because we do find that a

lot of people take our information copy it pass it out I went to a convention they were just selling them five dollars five dollars five dollars still have my name on it and they were just selling them so we do the information is copywritten so you guys we have to let you know that uh going forward Going to find this page and this is where we're actually going to get started now there are six steps that it takes to get licensed you need to know these steps because these are the six steps it takes to

get licensed but you also need to know these steps because they're going to test you on your knowledge of these steps so the first thing you have to do is get your nmls number by now everybody in here should have had their Nmls number I want you to highlight where it says unique identifier unique identifier we call it our nmls number but that's slang the correct name for it the official name for it is unique identifier you need to know that I don't want you to get it wrong on the exam because they said something

about the unique identifier that's just your nmls number now this number will be tied to you for The rest of your life just like your social security number it has to be on all your advertising it has to be on all your literature your business cards things of that nature if you are also a real estate agent make room for it take a look at my cards uh on your way out and you can see I have my broker number but I also have to have my nmls number on all advertising okay on all marketing

things of that nature now this number will appear on the following documents You ready The Animals number our unique identifier will appear on the following documents the 1003 loan application promissory notes mortgages and trustees so I'm going to say that again because they're going to actually wear with the nmls number are you identifier number appear it will appear on the 1003 loan application Promissory notes mortgages and trustees it will not appear on appraisal reports so again they're going to say and which of the following documents with the nmls number appear on which of the following

documents will it not appear you need to know where it will appear where it will not appear you also need to know that nmls number and unique identifier those Are the same the next thing it says complete 20 hours of pre-licensing highlight the 20. complete 20 hours of pre-licensing laughs everyone has to complete 20 hours of pre-licensing you also have to complete eight hours write that down of continuing education each year once you get licensed I'll talk about that in a minute 20 hours of pre-licensing before you can get a license but once your License

you have to do eight hours of continuing education every single year it's not like the real estate where you have to do it every four years for this one you have to renew and you have to do eight hours of continuing education every year once you've complete your 20 hours of pre-licensing the next thing you have to do is take an exam make sure you're taking the correct exam the national exam with UST component National exam with UST component UST stands for uniform state test UST stands for uniform state test that means you can take

one exam and all of the other states that have adopted the one test philosophy and there's only two states now that have not that means you will be able to do loans In those States once you pass this exam you'll notice the correct exam because it's a hundred and ten dollars but it's the national exam with UST component make sure you know what UST stands for uniform state tax take one exam and you'll be able to do loans in multiple States I'll show you a map a bit later of all the states but as of

right now as of last week there's only two that require a separate test now once you pass the test you have to Complete what's called your individual application it's called an mu4 highlight mu4 that is the name of the individual application that each person must complete they're going to ask you what is the name of the individual application it's called an mu4 and just for your own knowledge that application fee is three hundred and thirty dollars you don't need to know That for the test but you need to know that for your pocketbook right three

hundred and thirty dollars so it's expensive to get this license it will be seven eight hundred dollars before you finish with all your schooling and everything you don't want to exasperate that by having to take the test over and over and over again because each time you take the test you gotta pay to take it again so you want to be able to pass the test The first time it's not the first time the next time you definitely not don't want to keep trying this over and over again once you've completed your application or as

a part of your application you have to do fingerprinting Live Scan and a lot of people say well I've already been done a Live Scan because I'm a notary because I'm a policeman because I'm a fireman it doesn't matter they want their own you can't skip that step You're going to do Live Scan I believe it's either 29 or 39 but that's a step that you can't skip and then the last step is you're going to have to pay for a credit report and that's like 19 uh that scares a lot of people because they

think oh what if I have bad credit what if I have late payments what if I have uh foreclosures or or any of that that's not going to stop you the only things I've seen that have stopped someone and I've been doing This for going on eight nine years now is very large IRS tax liens that you don't have any type of payment plan or arrangements with if you have IRS tax lien doesn't mean you're not going to get it just means are you working with the IRS are you running from the IRS if you're

running they're not going to give it to you if you're trying to work it out you will get it but they do pull your credit report a lot of people think they have to have a certain credit score That's not how it works it's just part of their process so these are the six steps that it takes to get license you're going to get your end MLS number you have to complete your 20 hours of pre-licensing once you do that you have to take a test once you pass the test you do your application it's

called an mu4 you're going to do your fingerprinting and they're going to pull a credit report it's done in this particular order Any questions on anything on this page when you go in to complete your mu4 and online the paperwork for the Live Scan there's it's going to be in part of the system uh and what you have to do is you're going to pay for it online and then they're going to ask you for your zip code and they're going to tell you all of the approved places you can go near your ZIP code

I don't know what the m stands for they don't really tell us but you have an mu1 Mu2 or mu3 mu4 on the exam and we just want to make sure you pass the exam they're going to say which one is the one for your individual application and you need to know that that's the mu4 like me one is for a company mu2 is for a branch things of that nature but the individual application mu4 that's what you need to remember for the exam it could be any one of those any one of those there's

over 4 000 possible questions Those are the different documents that the uh nmls number are unique identifier number could appear on the mortgage [Music] now next slide you have to pass the test with a score of 75 or higher highlight that they're going to ask you what is the passing score for the exam and people are putting 70. that's the real estate exam this is the mortgage exam the passing Score is 75 or higher if you fail the test you have to wait 30 days before you can retake it they're going to ask you that

if you fail the test how long do you have to wait before you can retake it 30 days so highlight that if you fail the test three times how long do you have to wait if you fail the test three times six months who wants to do that okay and remember you're paying a hundred ten dollars each Time over there where it says six months I want you to write 180 days because they could ask it that way um now to keep your license current want your license you have to do eight hours of continuing

education every year highlight that eight hours of continuing education every year and it must be completed each year by December 31st highlight that so don't get it confused because a lot of the questions are scenario based they Give you a lot of stories they can do continuing education anytime during the year it could be January it could be March it could be April but it must be completed by December 31st do you understand that it doesn't have to be the last part of the Year continuing education can be done any year although most schools don't

start offering them to the second half of the year it can be done anytime during the year Now this next one confuses people so we want to make sure you understand it when does your license expire to answer that question on the test when does your license expire the answer is December 31st every loan originator's license expires every single year on December 31st unless they renewed during the renewal period you need to know what the renewal period is November 1st to December 31st if you Got your license during that renewal period it won't expire on

December 31st but say if you got your license in January it expires December 31st so if you got your license in April it expires December 31st renewing your license meaning paying them money is 330 a year to renew every single year you can only renew during this 60-day period of November 1st to December 31st every loan officer in the world I just did mine This week doesn't matter whether you're here Connecticut New Jersey Hawaii every loan officer in the world has to give them 330 dollars during this 60-day period can you imagine our bank account

for this 60 days that's how they actually do their budget because they know you have to do it you can't do it early and if you do it late it's going to be almost double that okay and there's tons of loan officers In the world we all have to give them 330 dollars during this 60-day period so for the exam you need to know what the renewal period is November 1st to December 31st if you got your license during that time you don't have to renew your grandfathered in but say if you got your license

in October and you pay 330 dollars in October you still have to pay it by December 31st So you guys are not in this particular class in that situation because we're already in November you're in that particular period 330 dollars let me go ahead and finish this one and then I'll take questions so the next one says your license is valid for five years highlight that because that's how you're going to answer the question how long is your license valid well the answer is going to be for five years What does that mean does that

mean after five years I need to do all of this again no it means if you go five years without renewing five years without giving them their money then you have to start all over again so what if I just went one year without renewing two years without renewing three years without renewing my license is still valid it's just not active well how do I get it back active I have to pay the renewal fee for the prior year Not all the years that I missed just the prior year and I have to do continuing

education for the prior year then I'm back in the game but if I let five years go by I have to start all over again with the 20 hour the background the test everything if you never want to take this test again once you pass don't go five years without giving them their money do you get that Any questions on anything on this page yes if you get your license During the period of November 1st to December 31st is not going to expire on December 31st because you're getting your license during the renewal period correct

go ahead you can't do anything your license is not active okay it just means that so if your License is inactive it just means you still have a period of time that you can reactivate it without starting over but if you let five years go by start all over again background check uh test 20 hour class all that stuff go ahead how long is the 20-hour class valid for five years how long is your test results valid for five years I have people that have passed the test and they still Haven't gone through and done

their mu4 well after five years you're gonna have to do it all over again okay uh because they're just not ready they're just not ready it's good for five years now a lot of times people have uh done their 20-hour class two three four years ago they never took the test they don't have to do the 20 hour class again but the information is old you're not going to be able to pass the test with what you learned from back Then you have to take an updated crash course because this test has changed probably about

seven times now and it's going to be changing again the first quarter so you guys want to get this information take this task pass this test be done with it got it now when you go to take the test it's 100 computerized you will know before you get out of that chair if you pass you'll be sitting there like do I press The button do I press the button because once you do boom pass or fail the people in the front with Noah's way that you're going to walk out and they're gonna be like hey

high five or they're gonna be like okay thank you thank you you know try to avoid you but you wouldn't know right then and there if you passed or not um take your driver's license or ID in there with you they're pretty strict on that don't bother taking a calculator Because you have to use theirs there has been so much cheating people have secret codes in their calculators uh they had one they showed us a video a lady was just pulling up her skirt and it's just written on her leg things of that nature they

don't even let you go to the bathroom by yourself someone goes with you okay they don't go in the stall with you of course but they go in there with you to make sure that you're not doing any cheating things of that nature so They're pretty strict about that uh the test is 125 questions uh 10 of them are questions that they're practicing out you're only scored on 115. 10 of them are I call them like they say fake news Trump I call them fake questions but you have no idea which ten those are and

a lot of times people say well I'm just going to try to figure out which questions are real and which ones aren't who cares just try to get them all right regardless of what they are but you Really only scored on 115 of them they give you three hours to take the test it does not take three hours to take the test okay but they give you three hours it probably takes about an hour hour and 15 minutes if you're prepared but when you go to take the test um what happens is a lot of

people see that they have a lot of time left so they keep going through it over and Over and over again that's not good either I suggest that when you go take the test you go through it twice twice okay the first time that you go through it only answer the questions you 100 know there's a button that says skip questions use it when you go through that test the first time if you look at it and you know it like the back of your hand 20 hours this eight hours is some things You will

know answer all of those and keep track of what you know for anything else skip question if it's a lot to read it's a math don't do those the first round I went through my whole test and back then it was only 100 questions and there were 64 that I just knew like the back of my hand then you hit the button that says return to skip questions they don't get harder they don't change there's some myth out there like they'll make them hard no They're the same questions then you hit the button that says

return to skip questions that's when you sit back in your chair that's when you look at the screen pray on the question rub it like you at the casino whatever the case may be but that's when you worry about it but at that point either you know it or you don't pick an answer and move on it doesn't make sense to go through the same test five times it's not going to help you And it's going to confuse you more than anything like I said I had one person that she went through it five times

and every time she went through it she changed something else she was so mixed up by the end that of course she didn't pass so don't do that any questions on anything on this page all right so here we go this is where I want you to have a separate sheet of paper to the side to take notes do not Try to write all your notes in between these little bitty lines on this screen does it possible 4 000 test questions You're Gonna Get 125. You have no idea 125 you're gonna get but a lot

of them are the same questions asked over and over in different ways so I start all my classes out with this things to remember section and then we'll get into some specific things this first line let me read it first and then I'm going to tell you what I want you to highlight If an application for credit could be credit for a house car boat doesn't matter if an application for credit is denied based on the appraisal ecoa which is regulation B says the bar has 90 days to request appraisal and the lender has 30

days to deliver it highlight ecoa regulation B highlight 90 days and highlight 30 days if an application for credit is denied And they say it's based on the appraisal ecoa says a bar has 90 days to request a copy of the appraisal and when they do a lender has 30 days to deliver it there's about 30 questions that they come up with from this one particular line this is how they do it what law says the bar has 90 days to request a copy of the appraisal what are three possible answers one is the Equal

Credit opportunities Act Another is ikoa and if they're using letters another one is regulation B same question but three different ways that they can ask it what law says the bar the lender has 90 days to deliver it equal credit opportunities act E coli regulation b six questions how many days does the borrower have to request a copy of the appraisal if they're using numbers 90. But what if they're using months three how many days is the lender have to provide it if they're using numbers 30 days if they're using months one month 10 questions

but it's the same thing do you see what I mean it's not 4 000 different questions it's just the way that they manipulate the questions circle the word appraisal here circle the word appraisal and on top of appraisal I want you to write value value If an application for credit is denied based on the value because what does the appraisal give you it gives you the value my 10 questions just what turned into 20. now another way that they ask this that's not so obvious and I want you to write it in your notes they're

going to ask you which regulation allows the borrower To challenge the value stated in the appraisal so I'm going to say that again what law or which regulation allows the borrower to challenge the value stated in the appraisal and I want you to go back and either underline or highlight the words challenge the value those are buzzwords whenever you see challenge the value I want you to think ecoa Equal Credit opportunities act regulation B Because if you get denied And they say well it's because of your appraisal what's the first thing you're going to want

let me see a copy of that appraisal so E coli regulation B allows the borrower to challenge the value stated in the appraisal and then they'll go through that same series of questions how many days do they have to challenge the value and if they challenging how many days does the lender have that way my 20 questions Just went up to 30. but it doesn't matter if you know and this is why I don't teach question answer question answer you need to understand why the answer is the answer so in case they ask it to

you in a different way you'll still be able to figure it out if an application for credit could be credit for anything an application for credit is denied and they say it's based on the value Which is the same thing as saying is based on the appraisal ecoa which is regulation B since the bar has 90 days to request a copy of the appraisal and when they do the lender has 30 days to deliver it that's just the role regardless of how they ask the question that's just the rule got it now the next one

um I gave you guys a list of acronyms in your packet Go ahead and pull that out I call it your cheat sheet it's a list of acronyms I want you to find on their ecoa on there in the ease and highlight it find a chord now ecoa stands for the Equal Credit opportunities act ikoa Equal Credit opportunities act highlight that okay and in your notes I need you to write the following about ecoa ecoa is about a credit application Ecoa is about a credit application it's the Equal Credit opportunities Act so wherever you're taking

notes ikoa is about a credit application ecoa is regulation B you have to remember that that ecoa is regulation B it's the law that says that they must be equal when extending credit you're gonna have to remember that equal is regulation B so the way that I help you remember that Eco is regulation B is I want you to write that ecore is the law that says that they must be equal when extending credit the core is regulation B The Regulators must be equal when extending credit what does that mean they can't discriminate because I'm

female and you're male or because I'm black and you're Latino no they have to be equal ecoa is regulation b sometimes if you know what the law is all about you can figure out what letter We're going to be talking about regulation b d n p a whole bunch of them B it's the law that says that they have to be equal when extending credit got it the next one is hamda regulation C Honda find it on your cheat sheet and highlight it Honda regulation C now hamda is the Home Mortgage disclosure at Honda Home

Mortgage disclosure Act now wherever you're writing notes and I told you guys to have a sheet of paper for your notes hamda is regulation C hamda is regulation C how do I help you remember that hamda is regulation C here we go Honda is the law that allows Regulators to see Where possible discrimination takes place maybe if you know what the law is all about you can remember the letter Honda is the law that allows Regulators to see where possible discrimination takes place Honda just happens to be regulation see it's the law that allows Regulators

to see where possible discrimination takes Place you're gonna need more paper so on the back or something okay now they're also going to actually where is Honda information found or where is Honda information collected hum the information is found on Section 10 it's written like a Roman letter x Honda information is found on Section 10 of the 1003 loan application have you ever looked at the back of a loan application and there's a section that says male female Hispanic not That's the Honda section they might even just show you that session it says what law

uses this section section 10 of the 1003 to identify possible discriminatory practice hamda Honda is regulation C it allows The Regulators to see where possible discrimination takes place got it ecore is regulation B The Regulators must be equal hamda is regulation C allows Regulators to See where possible discrimination takes place the next one I want you to find on your sheet there and highlight is respa respa thank you now respa is regulation X how do I help you remember that respite is regulation X I just mispronounce it I call it Rex like r e x

p a so write that down respite equals rexpa r-e-x-p-a and that can help you remember that respa is Regulation X let's call it Rex but E coli is regulation B The Regulators must be equal hamda is regulation C allows them to see where possible discrimination takes place and respa let's call it rexpa to remember that it's regulation X now the next one find it it's Tilla Tilla truth in Lending Act Tella truth and lending Act nutilla is Regulation Z Illa is Regulation Z is one of the biggest ones we're going to go over and because

it's Regulation Z to remember that it's Regulation Z we call it Tilla the Godzilla Tilla the Godzilla that will help you remember that Tilla is Regulation Z teller the Godzilla now in your notes you need to write this about Tilla Tilla deals with credit APR and advertising of Consumer loans that's even a question they're gonna say what law deals with credit APR and advertising of Consumer loans Tilla the Godzilla Regulation Z just with credit APR and advertising of Consumer loans the next one HIPAA HIPAA Find it on your cheat sheet highlight it and you're ready

for a lot of notes HIPAA homeowners protection act there's about four things I'm gonna have you write down about HIPAA so HIPAA is the homeowner's protection act and it's all about PMI private mortgage insurance HIPAA deals with PMI so again four things that I want to have you write down about HIPAA number one HIPAA deals with PMI not MIP A deals with PMI private mortgage insurance not MIP we'll talk about MIP when we get the FHA Loans but that's not what HIPAA is all about HIPAA is about PMI private mortgage insurance number two PMI is

on conventional loans not government okay PMI Is on conventional loans not government number three PMI is required when the bar puts less than 20 percent down when is a bar required to pay PMI when they put less than 20 percent down payment then they have to pay PMI and the last one PMI Protects the lender not the borrower they're going to ask you who does PMI protect or who does PMI cover PMI protects the lender not the borrower so those are four things that you have to remember about PMI private I mean about HIPAA HIPAA

deals with PMI not MIP PMI is on conventional loans not government loans PMI is required when the bar puts less than twenty percent down and who does PMI Protect the lender not the borrower the next one SAFE Act find SAFE Act on your list of acronyms and then when you find it circle the word secure because that's what people get wrong here they're going to ask you the Safe Act stands for and they're going to have their ABCD and a is going to say it stands for the safe and fair Enforcement Act it does not

they're trying to trick you yes it's called The Safe Act but what does the S stand for secure Don't let them trick you if they trick you enough you got to go back and give them another 110 bucks yes it's called The Safe Act but the S stands for secure an easy one to get wrong so don't get it wrong if you're gonna get something wrong get something good wrong some math or something like that and then the next one find it Hera Hera housing and economic Recovery Act Hera You need to know that Hera

is the law that created the Safe Act does not say what law created the safe act or what law came before The Safe Act Hera is the law that created the Safe Act next slide we're going to talk about fakra biggest thing that people do wrong with factors they don't know what the fcra stands for Sacra Fair Credit Reporting Act Sacra Fair Credit Reporting Act and fakra is regulation V how do I help you remember that factor is regulation V or Sacra is about a credit report factor is about a credit report and regulation V

I say don't you want to have a very good credit report that can help you remember that factor is regulation V it's about credit reports and I want to have a very good credit report now make sure you keep this in Mind ikoa is about a credit application thakura is about a credit report because they're going to try to confuse you what law deals with a credit application ecoa what law does with a credit report deals with credit reports and credit reporting agencies faculty deals with credit reports and credit reporting agencies what do I mean

when I say credit reporting agencies Equifax Experian TransUnion Factor deals With what they can and cannot do so factor is regulation V and it deals with credit reports and credit reporting agencies the next one is the fact Act again know what the f-a-c-t stands for fact at fair and accurate credit transaction and whenever they put an a at the end it's just the word Act fair and accurate credit trans fair and accurate credit transaction Act sometimes they call it facta sometimes They call it fact act it's the same thing now in your notes what is

fact act all about identity theft what law deals with identity theft the fact Act now the fact act in your notes also has a section of rules these rules are called section 114 rules because you could get that question what law has section 114 rules the fact act has a separate section of rules called section 114 rules well what are section 114 rules here we go section 114 rules are red flag identity theft rules section 114 rules what's another name for that red flag identity theft rules they're a section of rules that if the lender

sees this uh like uh packages coming back they change their address every week just some things that look a little weird those are red flags that they should check to see if there's any identity Theft going on section 114 rules AKA Red Flag AKA also known as red flag identity theft rules the next one Graham Leach bliley Act glba Graham leech blileiak so this law was written by three Senators Senator Graham Senator Elite Senator bliley a senator's job is supposed to be to protect people so I'm trying to give you guys something to kind of

make the connection SPF SPF when we see SPF we Think of protection like sun protection or skin protection the gram leech blightly act has SPF Three Laws they begin with S P and F afeguarding pre-taxing Financial privacy so find Grandma on your cheat sheet and get ready for a lot of notes Graham leads bloody highlighted on your cheat sheet and get ready for a lot of notes on this one foreign act has three policies Safeguarding policy pre-texting policy Financial privacy policy it requires three policies SPF the first one I'm going to talk about is the

safeguarding policy so they're going to ask you a question what law says that there must be a safeguarding policy the grammarly to blyle act then they're gonna say well what is a safeguarding policy here we go A policy on how companies have to keep our credit card and personal information safe when we use it at their place of business so I'm going to say it again what is the safeguarding policy all about it's a policy the companies have to have it just like they have to have an employee manuals and safety policies it's another Policy

that they have to have on how they're going to keep our credit card and personal information safe when we use it in their place of business when Target got in all that trouble with the credit card scams first thing FBI said is let us see your safeguarding policy what do you use what do you train your people on when I go to Macy's or Olive Garden or Vons or whatever and I use my credit card I Should feel safe because they have a policy on what they train their people on on how to keep our

credit card and personal information safe who says they have to have such a policy the gremlin's body act the next policy required by the law is a pre-texing policy pre-taxing policy so what is a pre-taxing policy here we go a pre-taxing policy is a policy to keep Others from Gaining access to your information under false pretenses and then I want you to underline the words false pretenses so what law says they have to have a pre-text and policy the gram bleach blighty act what is a pre-taxing policy a policy to keep others from Gaining access

to your information under false pretenses and I want you to Underline the words false pretenses and then here I also want you to put in parentheses Pretenders Pretenders it's a policy to keep others from pretending from being you and getting into your information have you ever locked yourself out of your account and now ask for your mother's maiden name or your first car all of those security questions those are pre-texting policies Policies to keep people from getting into your stuff under false pretenses if you're trying to get in your daughter's account or your client's account

or your husband's account you put in the password wrong too many times it's gonna lock you out that's a pre-taxing policy now you're going to have to answer some security questions to get in a policy to keep other people from getting into your stuff from pretending from being you and getting access to Your information under false pretenses that's what a pre-texting policy is and then the last one which is an F Financial privacy policy they're going to say what law says that there must be a financial privacy policy the gram Leach blightly Act what is

a financial privacy policy here we go it's a policy that governs the collection of non-public information And how it share with affiliates so I'm going to repeat that who says that they have to have a financial privacy policy the Grammys by the ACT what is a financial privacy policy a policy no what did I say it governs the collection let's start with this it governs the collection of non-public information and go back and highlight our underlying non-public information and how it's shared with Affiliates Non-public information is information that someone couldn't google on you when you

fill out a loan application you may be put in your bank account numbers there your social security number some personal information would this policy governs what they can collect on you when I go to Chase or Wells Fargo and I fill out an application it governs what they can collect on me and what they can share with their Affiliates all these companies they share your information Well this policy governs what they can collect and what they can share this is why you get a lot of junk mail this is why you get a lot of

spam because they're sharing your information I have Chase Chase is associated with providing I get offers from Pavilion providians associated with Capital One so I get offers it's from them that's why you get so much spam that's why you get so much uh these flyers and stuff in your mailbox because they share your Information but this policy governs what they can collect on you number one and it governs of that information what they can actually share with their Affiliates and I want you to write in parentheses here opt in opt out they have to give

you the opportunity to opt in or opt out of having your personal information shared that's even a question what law Has to give says that they have to give you an opportunity to opt in and opt out of having your personal information shared the financial privacy portion of the Grambling Act so the grammarly to blighty act has SPF safeguarding pre-taxing Financial privacy not sure not on the test so we're just doing Testa hope allowance find hopa on your cheat sheet and Highlight it hope a lot now hopa home ownership and Equity protection act hope alone

I call them hard money loans like what you would get at Cash Call or die Tech or some of the hard money lenders excuse me for the exam we only care about two hope alone there's several out there but we only care about two for the exam hope of section 32 which are called high Cost I'm gonna go through later what would make it a high cost low but right now I need you to associate 32 with high cost and then there's section 35 which are high priced section 32 are high cost hope allowance section

35 are high price they're going to try to trick you remember that 35 is high price 32 is high cost now regardless of what type of Hope alone it is it's only part of Tilla remember I told you Tilla is the Godzilla and a lot of stuff comes under tiller okay um so they could say hope alone is a part of which larger law the answer would be tiller section 32 laws are part of which larger law the answer would be teller high cost laws are part of which large get my point that's how they

come up with 4 000 different questions it's the same stuff that they ask it in different ways got it Now afba find it afba affiliate affiliated business Arrangement you notice I have here one percent not 10 percent one percent not ten percent an affiliate business Arrangement is a disclosure that you have to give your client if you referring them to a business that you also have part ownership in and now you're going to be making money off of them in that business as well the question on the exam is if you own More than what

percent are you then required to disclose it you're already doing a loan for me and then I tell you you know what Susan I could also use a roofer or contractor and you look into your wallet and you give me a card and say hey use this company if you own a part of that company you're trying to get me to use you're supposed to tell me that that's what an affiliate business Arrangement disclosure is again the Question on the exam is if you own more than what percent are you then required by law to

tell me people think it's 10 they don't want to pick one because they think it's too low but that's what the answer is one percent and then they're gonna say when must that disclosure be made the best answer is immediately when must the affiliate business Arrangement disclosure be made the best answer is immediately but if immediately is not one of the options there in ABCD Then the next best answer is prior to dock signing you should let them know before they get committed prior to dock signing if both immediate and prior to dock signing are

in the ABCD he immediate is still the best you know more than one or one one percent or more now this next one Civil Rights Act it's not on your cheat sheet but listen to what I'm telling you About the Civil Rights Act any question you get any any any question you get with the word Civil Rights Act the answer is about race and they're going to try to trick you and if you get one of these questions you will get the other so listen listen it goes right over a lot of people's head and

those of you guys that were took my 20-hour class you already know this so let the other ones try they're gonna ask you I'm gonna ask you Two questions which of the following can you not discriminate against age race religion all of the above which of the following can you not discriminate against age race religion all of the above what's the answer all of the above then you get another question and you'll think you got a free question oh my God they asked me the same question twice but it's gonna say which of the following

according to the Civil Rights Act can you not discriminate against age race religion all of the above then you have to pick race but that goes right over someone's head anyone need me to repeat that got it okay so listen to me first of all I told you any question you get about the Civil Rights Act the answer is going to be race these are not the same two questions which of the following can you not Discriminate against age race religion all of the above you can't discriminate against any of those so the answer would

be all of the above right then they ask you again or you think they're asking you the same thing which of the following according to the Civil Rights Act that specific law can you not discriminate against age race religion all of the above race do you get my point yes Don't let it go over your head and what happens is people are so anxious to finish the test they just see which of the following and they go to D you didn't read it it's a little bit different don't be in so much of a rush

got it now they do the same thing with this one you have to know that an escrow account well that's the same thing as an impound account well that's the same thing as a reserve account that's the account what The lender takes the money for your taxes and insurance to put with your mortgage payment in California we call it an escrow account they escrowed our taxes and insurance well some states call that an impound account they impounded our taxes and insurance where others call it a reserve account I had one lady that got all three

questions on the test she said she answered each one of them differently to make sure she got at least one right no they want to know Again you're going to be able to do loans in over 48 49 states they want to know that you know the language an escrow account is the same as an impound account the same as a reserve account it's the account where the lender takes the money to put your taxes and insurance so that when you make your payment you're making one payment to cover all now they will ask you

what type of a mortgage did that create This down if it's escrow impound or has a reserve account what type of a mortgage did that just create it created what's called a budget mortgage b-u-d-g-e-t if it's escrow impound of reserved it created a budget mortgage well what the heck is a budget mortgage write this down budget mortgage equal Piti mortgage it's just a mortgage that has budgeted for the Piti the principal interest taxes and insurance and when You pay that mortgage you paid everything required with that payment so that was our warm-up we haven't actually

started today's class I'm going to give you guys a quick break before we actually start today's class but you should be sufficiently warmed up that's how it's going to go uh everything that I went over I will go over again but I need you guys to hear It at least three times one I just did it again I'm gonna do it a little bit slowly and then you should listen to this recording over and over and over again that's why we give it to you so I want to talk about the federal section five sections

of the exam we're going to go over the federal section right now which is the most difficult part uh when they polled people that passed the test and didn't pass the test the pass rate right now as of last week It's 62 percent that means almost 40 of the people that take the test sell it over 40 or almost 40 percent of the people that take the test fail it that's because as Brokers agents we think we already know stuff or we took this class online and we got a false sense of hope are we

um we just think this test is about mortgages and real estate and only about 20 25 of it is the rest of it is about rules regulations laws regulation NPD all of that kind of stuff and you don't know that going in and if you take a 20-hour class online you probably didn't pay a lot of attention you probably just click next next while you were watching TV handling business things of that nature this section is the federal section of all the people that failed 72 percent felt this section so that's why we spend A

lot of time on the federal section I'm going to get started with the cfpb so you guys should be following me along the slides everything that you see on the slides is in in the little uh pamphlet there cfpb cfpb stands for Consumer Financial Protection Bureau cfpb cfpb I called a cfpb the new sheriff in town that's who's coming in making all these rules regulations changes things Of that nature the cfpb for the exam you need to know that cfpb stands for Consumer Financial Protection Bureau you also need to know the two entities the two

laws that created the cfpb and that is the Dodd-Frank Act high like that and the Consumer Finance protection act those are the two entities that created the cfpb now all of these uh organizations here now have to report to the cfpb they used to be their own boss but not Anymore like Hut HUD didn't have to answer to anyone but HUD but not anymore now they have the answer to the cfpb the FTC all of these now have to answer to the cfpb why because when the whole mortgage meltdown happened um they went to HUD

and said what do you think happened they were like we don't know they went to the uh FDIC what do you think happened we don't know they Went to all of these entities that deal with money and banking to kind of get advice on why do you think this happened no one had any answers so that's why they created the cfpb now all of these entities now have to answer to the cfpb they're not Standalone anymore they all have a boss now which is the cfpb now any entity that deals with money and banking must

report to the cfpb on the exam there's one that they try to trick you with that does not report to the Cfpb the Fair Housing Act make yourself a note the Fair Housing Act does not report to the cfpb why because it doesn't deal with money in banking it's about discrimination Fair Housing Act has nothing to do with money or banking it's about discrimination but they try to trick you with that so I kind of let you guys know the Fair Housing Act does not report to the cfpb but all of these here do report

To the cfpb money or banking it's about discrimination so I want to start with respa we're going to talk about respite now respite is regulation X I call it rexpa the purpose of respa is to help consumers become better Shoppers for Settlement Services highlight Settlement Services that's my buzzword when you see Settlement Services I want you to be thinking respa just so you'll know what Settlement Services are that just means escrow stuff but on the exam what law deals with Settlement Services respa the purpose of respa is to help consumers become better Shoppers for Settlement

Services now respite deals with one to four unit residential property what type of property does respa deal with one to four unit residential property everything on this test Is about one to four unit residential property does not apply to a commercial you don't need this license to do commercial this license is all about residential property another name for residential property is owner occupied property now respite does not deal with all cash sales parental property of more than four commercial property of property of 25 acres or more Property of 25 acres or more is also called

agricultural property make sure you know that so you're going to get questions like this which of the following is covered by respa which of the following is not covered by respa it's a three unit apartment building and the owner stays in Unit A yes or no yes it's a four unit apartment building and all four units are rented out no it's a Single family resident and my mom stays in there and pay 500 a month rent no my mom stays in it it's not owner occupied see how they're trying to trick you it's a 10

unit apartment building and I stay in unit a no because it's more than four it's a four unit I stay in Unit A I got such a good deal I paid all cash for the property no no so you have to know the rule because can You imagine how many scenarios how many questions they can come up with but you need to know respite deals with one to four unit residential property the bar has to stay in one it does not deal with all cash sales rental property of more than four commercial property or a

property of 25 acres or more also known as agricultural property that's just the rule the penalty for violating respa ten thousand dollars and Up to one year in jail the penalty for violating respite is ten thousand dollars and up to one year in jail it's the only one that has the end up to one year in jail uh if I were to say what law has a penalty of ten thousand dollars you can probably name a few but if I said what law has a penalty of ten thousand dollars and up to one year in

jail there's only respa only respa you guys get that Now there are several sections of recipe but for the exam I only care about four and you need to know which four of those are again several sections of respa in your 20-hour class they probably talked about a bunch of sections but for the exam we only care about four sections that's section six that deals with mortgage Servicing Section 8 9 and 10. so I'm going to start with respite section six Section 6 deals with mortgage Servicing and mortgage servicing abuses again respite section 6 deals

with mortgage servicing and mortgage servicing abuses you need to know what a mortgage servicer is a servicer may not be the company that actually or the actual investor of the loan they're just the company that's been hired to handle the payments and to pay the taxes and insurance that's what a servicer does collects the monthly Payments and handles the taxes and insurance what law deals with mortgage servicing and mortgage servicing abuses respite section 6. respa section six there's a lot of things that Services did wrong not applying people's payments on time not paying their taxes

and insurance not giving them loan mods not giving them short sale holding up the process what law deals with Mortgage Services and Mortgage servicing abuses respa section 6. section eight deals with kickbacks face splitting and unearned face what law deals with Kickbacks fee splitting and unearned fees respite Section 8 prohibits giving or accepting you're just as guilty if you accepted the gift well I didn't give it I didn't do it they gave it to me you're just as guilty You cannot take referral fees that's what they call Kickbacks in mortgages what in real estate we

can do this this is not a real estate exam in mortgages you cannot take referral fees for services they call that a kickback a thing of value means anything of value they can give you the title company can give you pins with their names on it and stickies and all of that stuff but they can't give you a Gucci purse Dodger tickets switch to Vegas in Exchange that would be considered a kickback and that will be a violation of respwest section 8. it also prohibits what's called fee splitting so what is fee splitting splitting your

money with an unlicensed person now this happens every day but after you get license you can't say you didn't know that this was wrong fee splitting you have a loan but you don't have your license So you say our Trisha can you do it because I don't have my license so I can't I can't put it in my name can you do it I do the loan I get paid you found out I got paid then you want me to meet you down the street to give you your hat you don't have a hat I

can't split my fee with you you are an unlicensed agent do you get that like I say people do this all the time but if they get in trouble they're gonna Be in trouble you cannot split your fee the unlicensed person unearned fees that means two other words that they use for that is up front piece and Advance fees you cannot take money up front from the borrower you can't take advantage fees you can't say I'm gonna do this loan for you I'm gonna get paid at the end I'm gonna charge you two points three

points but to start you need to give me 500 you can't do that how do you get paid in Mortgages in real estate if and when the deal closes you cannot take unearned fees two other words that they use for that are upfront fees and Advance fees if you do that what law are you violating respite section eight section nine so you could take it on three closes respite section 9 deals with title insurance Title Insurance any question you get about title insurance is respite section 9. prohibits the seller from requiring a home buyer to

use a particular title company as a condition of the sale another one that people do all the time because they don't know the rules they don't know the laws uh and I come across this a lot prohibits the seller from requiring the home buyer to use a particular title company as a condition of the cell you cannot make them use a certain Title Company but then people say but seller chooses All services that applies to everything except for title that applies to everything except for title and a lot of Brokers still don't know that you

cannot make them use this particular Title Company I've had this where I I had a client she looked at everything and she said this is all great but I don't want to use this title company so I had to go back to the broker and said this is all great but do you have Another title company she doesn't want to use this title company he was like well what do you mean she doesn't want to use this title company seller chooses all services well that applies to everything except for title do you have another Title

Company well this is who we use this is what's wrong with these people we like them they do great we've used them for years I didn't say anything was wrong with them I just said that my bar doesn't want to use that Title company well he said if you don't use this title company we're not going to sell you this house this is who we use and I tried to educate him and say well you can't say that he says yes I can seller chooses all services and I was trying to tell him but that

applies to everything except for title but he was adamant about it and he said if you don't use this title company we're not going to Sell you this house and I told him you're violating respite section 9. he says well I don't know what the hell that is but if you don't use this title company we're not going to sell you this house he just didn't know he was old school he didn't know the new rules regulations so I had to go back to my bar and says he just doesn't know and he's adamant and

if you don't use his title company they're not going to sell you this house So you have to decide whether you want to go with this or we want to go find another house she said well I don't want to lose the house over this fine just use this title company we did everything went fine there was no problem at all we didn't say anything was wrong with their title company but then after that I gave her the emails where he put in writing if you don't use our Title Company we're not going to sell

you this house she was able to go back and sue Him for three times the amount she paid for title insurance why because he made it a condition of the sale and he can't and the law says if they do you can sue for three times the amount and another word that they use for that is treble damages for the amount paid for title insurance this only applies to title Restless section 9 is about title insurance section 10 deals with escrow accounts two other words I told you that they use In place of escrow accounts

are impound accounts and Reserve accounts recipe section 10 deals with escrow accounts and escrow account is the count where the lender takes the money for your taxes and insurance to put with your payment you need to know what they can do each month and what they can do at closing each month the lender can take no more than one twelfth of the annual amount of the taxes and insurance why 112 because There's 12 months in a year for January they can take the January portion February they can take the February portion they can't take anything

up front with this January monthly payment you can take the January portion of my taxes and with February the February portion 112th highlight that that's what you want to see let me finish at closing they can take a cushion Of up to two months at clothing they can take a cushion highlight the word cushion in two months now this is where people tell me well I've seen where they've taken the next six months of taxes okay that's something totally different if the taxes are due they can take this next six months of taxes and still

take the cushion again I'm trying to show you how to pass the test if they ask you how much of a cushion what does your answer Need to be two months okay and with each month they can take no more than what 112. if taxes are due and they take the six months of taxes and the cushion great okay but for the exam what is the most that they can take as a cushion or a buffer two months now respite section 10 also requires that they conduct an annual escrow analysis how many of you guys

own a home and your taxes and insurance is included If that's the case every year they give you a statement that says this is all the tax and insurance we took out every month this is when we paid it they have to give you that statement every single year okay you don't want to go five years and find out you've been paying too much you don't want to go five years and find out you haven't paid enough and now they want it all at one time that's why they have to do it annually what law

says They have to do it annually respite section 10 says they have to conduct an annual escrow analysis meaning once a year if they took 50 or more too much highlight the 50 they're gonna actually at what point would they be required to return any money if they took 50 or more too much then they'd have to give it back that's not on the test we're doing what you need to know to pass the test Now you need to know what makes up a complete application these are the six items that make up a complete

application and if the lender gets all six of these items then they have to give out what's called the initial disclosures you need to know when the lender has to give out the initial disclosures if they get a complete application so you need to know what's considered a complete application these six items here now next to where it says Address of subject property things you may see that are okay if it says unk that means unknown that's okay if it says TBD to be determined that's okay what's never okay and they try to trick you

is if it says n a n a is never allowed so they're gonna ask you on the test which of the following is never allowed if they put in a if it's a refinance it'll have an Address there but if it's a purchase maybe you don't know the property yet so it could be Unk or TBD but it cannot be in a does that make sense to you great so again if a complete application is uh collected then the borrower must get What's called the initial disclosures you need to know the two instances when they

would not have to get the initial disclosures these are called exceptions now I'm going to tell you in a few Minutes what are the initial disclosures but you need to know in which instance are when is it an exception when the lender does not have to give the bar the initial disclosures there are two if the lender receives a complete application but the bar withdraws the application within the first three days they don't have to give them all that initial disclosures so that's one if the applicant withdraws the application within the first three days Even

though the lender got a complete application they don't have to give out all those initial disclosures they don't have to waste all that paper or if the lender turns it down before the third day they do not have to give out their initial disclosures they can just give a one-page denial letter instead of all the initial disclosures and then I'm going to show you what the initial disclosures are in a few minutes So you need to know in which instances would the lender not be required to give out the initial disclosures one if the applicant

withdraws the application before the third day or two if the lender turns it down before the third day but if that does not happen the lender has to give out what's called the initial disclosures they have to get them out at or within three days of the application so let's look at this chart here And on top of this chart I want you to First write the words respa deals with timing respa deals with timing respa talks about not so much what they have to get but when they have to get it now disclosures are

simply notices notices that the bar must get respa deals with what notices they have to get out when respa deals with timing according to respa there's four different time frames and you'll see Them all here four different time frames there's at or within three days of the application certain things Russia says they have to get then there's where it says before settlement where I have before settlement I want you to write before doc signing so over here where it says before settlement I want you to write before doc signing and then there's at settlement where

it Says add settlement I want you to write at the doc signing and then after dark signing there's some things that respite said they still should be getting so according to respite there's four different time frames added within three days of the application some things they have to get before settlement meaning before they get Docs certain things they have to get at settlement meaning at the actual dot signing while you're sitting there with The notary certain things they have to get and then after signing even after the loan has been closed there's still some things

that recipe says that they have to get those are the four different time frames respa talks about when they must get certain documents then the next thing that I want you to do is take a circle a pen and circle all of these here these are what's called and make yourself a note the initial disclosures They're going to ask you questions what are the initial disclosures where they are these four documents when would the bar get the initial disclosures at or within three days of the application what are the exceptions if the applicant now the

application has been withdrawal within the first three days or the lender turns it down within the first three days they don't get the initial disclosures but if that doesn't happen they get the initial disclosures well What are the initial disclosures these four documents here so they're going to ask you questions and the reason why I'm stressing that they're going to ask you questions which of the following is one of the initial disclosures which of the following is not one of the initial disclosures if you know what the four initial disclosures are you can't get it

wrong okay then they're going to ask you when Would the bar get the home loan toolkit added within three days of the application when would the bar get the loan estimate had it within three days of the application you get my point they that's how they come up with 4 000 different questions the information is all there they're just breaking it down into little bitty chunks so now I want to talk about each of these initial disclosures the first one that I'm going to talk about is the home Loan toolkit the home loan toolkit I

want you to put next to that for purchases only the home loan toolkit is a booklet that must be given out to people that are doing a purchase loan for purchases only it's just a little workbook that tells them how purchases work when do they have to get that at or within three days of the application is one of the initial disclosures the next one is the loan estimate what I Want you to write next to the loan estimate is formally the good faith estimate it used to be called the GFE but now it's called

the loan estimate you notice that I have it in red there and it says Tilla this is why it's not a respite document it's a tiller document respite just says when they have to get it I'm going to say that again the loan Estimate is not a respite document it's a tiller document respite just says when they have to get it so here's the question what losses the bar has to get a loan estimate tiller what law says the bar has to get a loan estimate at or within three days of the application respa because

respa deals with when they have to get it not so much what they have to get so the loan estimate is a tiller document it's required by tiller respite just says That they have to get it added within three days of the application the next one the Market's servicing disclosure statement what I want you to write next to that is the word intent i-n-t-e-n-t the mortgage servicing disclosure statement tells the lenders intent on whether they intend to service the loan themselves or if they're going to let somebody else service it when I first got my

loan it Was with IndyMac and then it went to SLS and then it went to occupant they let someone else collect the payments and pay the taxes and insurance but the mortgage servicing disclosure statement tells their intent we're going to fund your loan and you're going to make your payments to us forever that'll never change or we're going to fund your loan but we reserve the right later maybe five years from now ten years from now we haven't Decided but we may let someone else service it we're just letting you know right now that that's

a possibility that they have to let you know their intent so the mortgage service and disclosure statement tells the lenders intent on whether they're going to service the loan themselves for the whole life of the loan or their intent that they might they don't know let someone else service it and a list of her counselors that's Pretty self-explanatory uh what was going on is that Bars were saying I don't believe my loan officer I don't believe escrow I don't believe anybody who can I talk to so the cfpb says you have to give them a

list of Hud counselors uh and when they get a loan their packet they'll get a list of hot counselors who has nothing to do with the transaction that they can ask questions to those are the initial disclosures when does the bar get the Initial disclosures at or within three days of the application unless the application has been withdrawn within the first three days or the lender turned it down otherwise this is what they get at or within three days of the application now before settlement before dock signing they get that afba disclosure remember I told

you that one percent if you're referring them to a business that you have part ownership in you're Supposed to tell them immediately but if you didn't tell them immediately you have to tell them before they sign Docs that's all this is saying and then they get the closing disclosure next to where it says closing disclosure I want you to write formally the HUD it used to be called the HUD now it's called the CD closing disclosure when do they get it two times Three days before doc signing and then again at the doc signing and

it should be the same don't give me something to review three days before and then when I get to the actual signing it's different if that's the case I get three more days okay so when do they get the closing disclosure three days prior it used to be called the HUD one and when it was the HUD one when did they get it one day before but the cfpb says one day before The review all of this that doesn't make sense that's not enough time we're changing the document it's now going to be called the

closing disclosure and we want them to get it three days before doc signing we think that that's adequate enough now it's in red as well because it's a tiller document respite just says when they have to get it what losses they have to get the closing disclosure Tilla What law says that they get it three days before and then again at the Dax signing respa because respa deals with timing and then the initial escrow statement uh they get that after docs at the doc signing it's just a statement that says how much their taxes and

insurance are they're not really going to ask you about that after sediment they're going to get the annual escrow statement remember I told You that's a statement that you get every year that says when they actually pay your taxes and insurance how often do you get it annually what law says you have to get it rest for section 10. and the bar will get the servicing transfer statement now up here in the market servicing disclosure they said we might let someone else service your loan we don't know we'll let you know but we may but

down here at the servicing Transfer statement we sold the servicing of your loan don't make your payments to us anymore start making them over here this is when they actually did it another name for it is the goodbye letter goodbye don't make your payments to us anymore start making them over here the question is going to be when must they get that servicing transfer statement or that goodbye letter 15 days prior 15 days prior to the transfer And the bar is not penalized meaning no late payment no ding on their credit if they accidentally make

their payment to the old lender that's going to fly for 60 days okay oh I didn't know it changed I didn't open my mail oh I had it going out directly and my bank still send it to the olender that's good for 60 days after 60 days you're going to be held accountable for it now All of these disclosures on this page are respite disclosures except for two the loan estimate and the closing disclosure are tele documents but every other document here is a respite document that's important because they're going to ask you what law

says they have to get the service and transfer statement respa what law says that they have to get the afba respa what losses they have to get a list of Hud counselors respa but what Law says they have to get the loan estimate Attila so they're going to ask you a series of these and then they're going to throw in Attila and those just kind of throw you off if you know you know and they can't trick you got it yeah a couple other things you need to know about the loan estimate I told you

it used to be called a good faith estimate no fee except for the credit report fee can be collected Before they get the loan estimate now the loan estimate is an estimate of what the fees are it's an estimate these aren't the actual costs this is what we estimate this is going to cost do you want to move forward they can't charge you for appraisal inspection and all that stuff you haven't agreed to the estimate the only thing that they can charge you before uh at the only thing that they can charge you before they

get the loan estimate is For the credit report fee that's it the terms on the loan estimate must be good for 10 business days how long is this estimate good for 10 business days couple of new terms that they came out with one is called the tip you need to know what the tip means total interest percentage and what is the difference between the tip and the APR because people are confusing them which I don't understand why but let me explain it the tip The total interest as a percentage just the interest expressed as a

percentage the APR the interest plus all the other fees add it together expressed as a percentage what's the difference between the tip and the APR the tip is only the interest expressed as a percentage the APR is the interest plus all the other fees add it together expressed as a percentage make sure you understand the Difference in the definition and then you need to know about the rate lock or they'll call it the lock when they call it the lock or the rate lock it's the same thing they're going to actually where do you find

information about the lock or the rate lock if the rate is locked how long is locked when the lock expires any any anything you need to know about the lock also known as the rate lock is only Found on the loan estimate and the loan estimate only you won't find that information anywhere else information about the rate lock is found on the loan estimate oh the closing disclosure this is no longer an estimate these are the actual fees now the loan estimates was the estimate of what it's going to cost the closing disclosure this is

not an estimate anymore this is What is actually going to cost you the actual fees it used to be called the HUD one you need to know who completes the closing disclosure for whom because that has changed who completes the closing disclosure for whom look at that third bullet foreign ER meaning the bank the lender completes it for the borrower well that's who they're getting the money from so that makes sense the bank completes it for The borrower and the settlement agent mean the title or escrow completes it for the seller now in real life

and this is what people do they confuse what happens in real life with how to pass the test okay in real life most of the time the lenders will give it to Escrow and let escrow give it to the borrower okay but on the exam it's going to say about who's ultimately responsible for giving It to the bar if the lender gives it to the escrow and let escrow gives it to the bar and something's wrong with it who is ultimately responsible for the information getting to the borrower the Creditor the lender again the closing

disclosure are the actual fees the actual cost um they get it three days before doc signing and again at the doc signing three days before the vaccining and Again after doc signing and if any of these three things down here at the bottom change then they get a new three-day waiting period those are called valid changing circumstances when would the bar get a new closing disclosure if they give them out to closing disclosure but then they change the APR well they get a new three days they give them the closing disclosure and then they change

it from fixed to Adjustable well they have to do the paperwork over they're going to give you scenarios and they're going to actually in which instance would the bar need to get a new closing disclosure it is one of these three things then they have to get a new clothing disclosure and that new closing disclosure means a new three-day waiting period that's why you want to work with a good Escrow Company because if they keep changing things at the last minute they can add days and Days and days onto your deal I've had one where

they changed something we had to go three more days then they changed it again it was like nine days and then that Monday was a holiday so that I mean it was taking forever to get paid because they kept making mistakes if any of these three things change then they have to give them new closing disclosure hence a new three-day waiting period that's where I'm going to stop with Respa the next thing that we're going to talk about is Tilla the Godzilla but before we do that we're gonna take a break tella the Godzilla truth

and lending Act Regulation Z illa deals with credit APR and advertising of Consumer loans what law deals with credit APR and advertising of consumer laws tiller truth and lineiac Regulation Z it requires lenders to disclose the Complete cost of credit highlight those words complete cost of credit that's a buzzword what law requires lenders to disclose the complete cost of credit which means they have to tell you the whole story yes you're getting this house for three hundred thousand but after 30 years you will have paid blank they have to tell you the whole thing up

front that's what they mean when they say disclose the complete cost of credit what law says they have to give you that Information up front yes you're buying this diamond ring for two thousand dollars but you're financing it for five years so after five years you will have paid blank they have to disclose the complete cost of credit get that now Attila is also the law that established What's called the three-day right of rescission rule three-day write a rescission Rule now rescission just means changing your mind if you know what the three-day writer rescission Rule

is it says that in a HELOC home equity line of credit or a refinance even though the bar assigns docs they have three days to change their mind but in a purchase they have zero days there is no right of rescission what law made up that rule tiller is the law that established the three-day right a rescission Rule now there are some things you need to know about the three-day writer rescission Rule it only takes one bar to change their mind if four of us go together to buy a house and we're all on the

loan and one person changed their mind it's dead for all of us only takes one bar to change their mind also the rescission period starts the day after the docs are signed so there's a three-day rescission period the day they sign is not day one the next day is day one and in fact the Rescission period is not up until midnight of the third day so here's my example Mary signed docs on Monday when is the three-day rescission period up a says Tuesday no B says Wednesday no C says Thursday well could be but D

says midnight on Thursday then the one that says midnight on Thursday is the most correct answer but What if Dee said Friday then it would have been Thursday do you get that so you have to pay attention and you have to pick the most correct answer the most correct answer also if there was any money collected in the bar recent how long does escrow have to give them back their money 20 calendar days 20 days please also how many copies of the right to resend Must the borrower receive how many copies two a bar must

receive two copies of the right to resend that means that they were properly no uh properly notified of the right to resend here's a question that you may see if a bar was not properly notified of the right to resent if a bar was not properly notified of the right to rescind properly notified meaning they got two copies how long can the recision period possibly be extended To anyone knows three years three years so I'm going to say that again if a bar was not properly notified of their right to rescind meaning they didn't get

two copies how long can the recision period possibly be extended to the answer is three years all right they can say if the bar didn't receive two copies of the right to resent at closing how long can the Rescission period be extended three years but they're just going to say three years on the test one year two year three year four year the answer is going to be three years now Tilla applies when there are more please underline more tiller applies when there are more than four installments what do I mean have you ever listened

to Home Shopping Network or QVC three payments or less Four payments or less why why did they want to stay the three payments and four payments because they don't want to deal with Tilla tiller rules and regulations do not apply unless there are more than four payments that's why QVC Home Shopping Network dollar bills three payments or less four payments or less so they don't have to go by tiller rules and regulations till it kicks in when there are more than four installments you're Buying a car you're going to get to the disclosures all those

long paperwork if you're going to pay for it in more than four installments you're buying a house you're buying whatever if you're going to pay for it in one payment two payment three payments four payments no tiller documents you just get a receipt but if you're buying it and then you're paying for it on credit and more than four installments which means five But they're not going to say five they're going to say more than four then till it kicks in got it now the only fee that can be collected before teller disclosures is for

the credit report tiller disclosures must be kept for two years highlight that but there's an exception to this rule so you have to know the exceptions If it's the loan estimate it has to be kept for three years if it's the closing disclosure it has to be kept for five years so you have to really pay attention if they say how long must Tilla disclosures be kept they didn't say any particular one just generic how long must Tilla disclosures be kept the answer is two years but if they specifically say how long must the loan

estimate be kept and I know it's a tiller document but it's an Exception to the rule how long must the loan estimate be kept three years how long must the closing disclosure be kept five years you have to know the exceptions hello Miss Tila disclosures be kept two years but what about the closing disclosure that's a tiller disclosure five and the loan estimate three so make sure you understand that those are exceptions to the rule Now what are the teller disclosures we talked earlier about the respite disclosures now I want to talk about what are

the tiller disclosures disclosures that are required by tiller were the loan estimate and the closing disclosure those are tiller documents respite just says when you get them but they are actually Tilla documents another tiller document is the charm booklet you need to know what charm Stands for Consumer handbook on adjustable rate mortgages charm booklet consumer handbook on adjustable rate mortgages and they're gonna actually win with the bar get the charm booklet when they're getting an adjustable rate mortgage the reason why that's important is because like I said 50 of this exam is all stories scenarios

they're going to give you some storage and they're going to say which one of these scenarios in Which one of these scenarios with the bar get the charm booklet Sue is getting a fixed rate loan she wouldn't get the charm booklet Danny is getting an interest-only loan he wouldn't get the charm booklet Mary is getting an adjustable rate mortgage and the rate is starting at this that and the other she would get the charm booklet why because she's getting an adjustable rate mortgage the charm stands for Consumer handbook on Adjustable rate mortgages and then another

teller disclosure that the when your home is on the line disclosure when would they get that then when your home is on the line disclosure foreign excuse me if they're getting a HELOC or a refi why a HELOC just starting their their taking additional money out on their home if you don't pay this your home is on The line you can lose it a refinance they're starting their loan all over again so there's a booklet called when your home is on the line and if they're getting a HELOC or refi you have to give them

this booklet so they can understand how helocs work and how refinance work if they're not getting a HELOC or refi then they wouldn't get that particular discussion you need to know another word for APR is effective rate they're going to ask you What is another word for APR effective rate and there are two other words that they use for interest rates they may call it the note rate and the nominal rate two other words that they use for interest rate note rate and nominal rate and you need to know the penalties for violating tiller pretty

hefty five thousand dollars a day if it was a single violation twenty five thousand dollars a day if it Was a reckless violation a million dollars for violating trit that's these escrow companies that closed before the three-day waiting period that's what they're risking a million dollars for violating trips now I want to talk about the mdia ACT mortgage disclosure Improvement act mdia act and I want you to put on the top of this slide just to remind yourself still a part of Tilla the mdia ACT is still a part of Tilla mdia stands for mortgage

Disclosure Improvement act another name for the mdia ACT they also refer to it as the 373 rule 373 rule this is what this law says initial disclosures are required within the first three days we've been talking about that all morning when are the initial disclosures required within the first three days then it goes on to say the soonest that a loan can close is seven days after disclosures have been delivered or put In the mail now in California we don't really close laws in seven days but this is a national exam what is as soon

as they loan can close wherever it is seven days after disclosures have been delivered or put in the mail and then if redisclosure is required and when you hear the word redisclosure you almost don't have to read anymore redisclosure always means three additional days if redisclosure is required then the bar Gets three additional days that is the 373 rule redisclosure is generally required because the APR changes highlight here where I have 1 8 for a regular transaction which it simply means a 30-year fix are one-fourth for a irregular transaction anything that's not a 30-year fix

if the rate goes up or down by more than 1 8 or 1 4 you have to redisclose and the bar gets three additional days To decide if they still want to do the loan here's a scenario or an example you're doing a loan for me you meet with me we do all the initial pre-qualification you pull my credit you pre-qualify me and you tell me my rate I think we can get you our Trisha um at 4.5 percent we can get you proved at 4.5 so do you agree and I'm like okay sure continue

I'm good with that at four and a half percent my payment is going to be Fifteen hundred dollars so you go off to loan land and try to find me a loan I go back to work you call me back 30 40 days later when you found me a lender and you got me approved and you called me said we got you approved meet me at five o'clock I have the notary there uh you can sign your docs and you can get in your house we got you a loan I get there but all the

paperwork now says six percent Well when we first talked you told me four and a half percent and now the deal is done you're telling me six percent yeah that's the best we can do but go ahead and sign the good thing is we got you approved you can't expect me to sign you have to do what redisclose why because the rate Changed by more than one eighth or one-fourth so you have to give me all the paperwork again redisclosure and I get what three additional days to look it over and Decide if that's something

that I want to do three seven three Rule and read this logic can only be waived in the case of what's called a bona fide Financial emergency those are the words that you're looking for bona fide Financial emergency here's an example of the class question that I had with that it says in which of the following instances can redisclosure be weighed a the house burned down B the bar's dad died she got to leave Time see the cat died d Bonafide Financial emergency you're looking for the words bona fide Financial emergency and then it's going

to say who determines if it's a bona fide Financial emergency the lender the lender and the only time that I've seen where there's they've approved the modified Financial emergency is because the house was going to go for foreclosure the very next day so they did it other than that it's really not going to happen the reason Why it's not going to happen is because what if I agree to that and I didn't do the three days to think about it my payment was going to be 1500 but at the last minute my rate changed to

six percent now my payment is going to be three thousand I didn't take the three days to think about it I just signed it a year later I'm in foreclosure and the lender says well what happened you know they're saying well why did you foreclose well you know that loan Officer I deal with at the last minute they changed everything on me and um this is what happened and I couldn't make the payment they want to say they want to be able to say no no our Trisha the rate did change but you had three

days to think about it and you still agreed to it so it's not the lender's fault it did change but you had three days to think about it and you still agreed to it got it Now bona fide Financial emergency and only the lender can determine if it's a bona fide Financial emergency you need to know the definition of a business day according to Tilla the definition of a business day according to Tilla all calendar days except for Sunday and legal holidays a business day is any day calendar day except for Sunday and legal holidays

they're gonna ask you what law Says Saturday is a work day tiller Tillerson Saturday is a work day why because a work day to Tilla is any calendar day unless it's Sunday or legal holiday now there's an exception to this rule an exception to this rule if they're talking about the loan estimate the initial loan estimate if the question asks about the initial loan estimate mean the very first one The one that they get at or within three days of the application the definition of a business day is any date that that Bank is open

for business any day that creditor is open for business maybe the Creditor was open yesterday for Veterans Day or on Thanksgiving day so you have a lot of banks now that are in supermarkets and they're open on Sundays they're open on holidays if the question asks about the initial loan estimate that's a Business day because they're old so if it's the initial loan estimate is any day that that particular Bank is open for business if it's anything else a calendar day is any day except for Sunday and legal holiday now I also want you guys

to write down and make sure you understand the difference between a business day and a calendar day how do you know something is a business day or a calendar day If it's zero to nine let me explain it if it's zero to nine single digits it's always going to be a business day one day two day three day four day all the way up to nine whether they say it or not it's a business day in the finance world if it's 10 and over meaning double digits then it's going to be a calendar day if

they just said 14 days is that business or calendar well that's 10 and over so that's going to be what calendar They just said four days what is that business so if it's zero to nine days it's going to be a what business day if it's 10 and over it's going to be a calendar day says who teller now I told you that Tilla also mandates advertising tiller also deals with advertisements credit APR and advertising of loans we're going to talk about the advertising part of telenil you have to Be able to recognize when something

is a triggering term a triggering term means if they use this term it triggers additional things that they have to say have you ever listened to a radio commercial or TV commercial they're talking really slow then all of a sudden because the attorney comes on it has to get a legal ease it's because they said something that was triggering it triggered that they had to say something Else or you see a really nice flyer and then all of a sudden at the bottom it has this little bitty writing in here disclaimers because they said something

that was triggering you have to understand what a triggering term is because they're going to test you on that I'm going to give you my definition of a triggering term you can write it down if you like and then we'll go over what they have here this is what a triggering term is If they use a number if they use a number to describe credit terms and that number is not the APR IL then it triggers again if they use a number to describe credit terms and that number is not the APR then it triggers

but if they use the APR But if they use the APR they don't have to say anything else so look at the boxes I have here one is triggering terms look they use they're using numbers to describe credit twenty percent down that triggers not enough information seven hundred dollars a month that triggers uh 360. well all of those uh quoting interest rates without giving the APR those are all triggering terms that's not enough you have to give More information but look at those in the second box they gave the APR or they use generic terms

those are okay on Advertising when I say it triggers what do I mean when it triggers it has to now give you the amount of the percentage the terms uh the annual percentage rate the number one thing that a lot of loan Originators do to violate this law is we quote interest rates without giving the APR I wear a shirt That says I am a mortgage broker people tap me at the grocery store what's the rates today and I said oh about four and a half percent what law did I just break I just violated

tiller because I gave her the interest rate I use a number without giving the APR but if I would have said oh the APR today is about blank she would have been like well I don't want to know the APR I want to know the interest rate well then I have to explain to her what APR is and things Of that nature and I'm trying to get out of the store with some milk or whatever but that's how it goes you are not supposed to quote rates or any of these things without also giving them

the information for number one number two and number three but if you give them the APR you don't have to say anything else until they come in and do a complete application with you if you use any of these generic terms you don't have to say anything Else until they actually come in you don't want to spend all your time your voice your resources explaining when they're not serious yet but if you're advertising you cannot use triggering terms unless you also give them the APR where do you find the APR is published every Monday with

Freddie mac.com or just Google it just just Google it 100 why doesn't that count it's a number but it doesn't leave anything to the imagination it's a whole Okay what's your question um zero percent wouldn't count either okay but uh because there's nothing in there it's not really a number now this next one qualified mortgages qualified mortgages make yourself a note on this slide still a part of tiller remember I told you till it was what the Godzilla so all of this is still chiller qualified mortgages people are confused that because they think it has

to do With whether or not the borrower qualifies for a mortgage has nothing to do with the borrower at all it has to do with whether or not the lender qualifies for what's called Safe Harbor highlight where it says Safe Harbor I call it government bailout money so qualified mortgage either a mortgage qualifies the lender for Safe Harbor meaning the bailout money or it doesn't qualify them for Safe Harbor what They're telling lenders is we're going to make it a little bit harder for people to get loans but if they get a loan based on

this qualification and they still go into foreclosure if you issue this loan as a qualified mortgage and your borrower still defaults because you did what we said we'll give you back all the money you lost on for example our Trisha applies for a law the first thing they're going to do is Say oh my God let me see if our Trisha fits as a qualified mortgage because if our Trisha goes into default we don't care the government's going to give us back any money we lost on nutrition oh our Trisha doesn't qualify because she doesn't

meet these criteria well we're Bank of America what will we do for what can we do for attrition whenever you turn it along nowadays the first thing the bank is going to do is see if they fit into qualified mortgage Because it's like a no-brainer it's a guarantee if they fit into here and they go into default they don't care they're going to get their money back but what if they don't fit then they're going to do whatever they would have been doing in the first place you have to know what makes a mortgage a

qualified mortgage or a non-qualified mortgage and it's a All or Nothing thing if any one of these items are off then it's not a qualified mortgage either they fit into the box All the way or they don't so let's go over what makes a mortgage a qualified mortgage the point is a lot of people got mortgages that shouldn't have gotten them they couldn't even prove that they actually had the ability to repay them so they're making it harder okay so the first thing is no doc loans and Nina loans Nina stands for no income no

assets those are not allowed they want the bar to go for that they're Not doing stated or Nina or not not for this guarantee they want the bar to be able you have to actually qualify for a loan now when I got my first house they stated my income I didn't make that much they stated my income okay but now you can't do that you have to actually be able to prove the income so no Doc and Nina loans are not allowed the other thing is this I'm not saying you can't get a loan that

way I'm just saying they're not going to guarantee That loan and get bailout money the second one is the back end ratio cannot be higher than 43 percent that's pretty tough over 50 of my money go to my mortgages so I wouldn't fit this but in order for this mortgage to qualify for Safe Harbor no more than 43 percent of their uh debt can go toward their the maximum DTI is 43 the loan originator can't be charging more than three points not for this guarantee The long term cannot be over 30 years it could be

under I did a 40-year loan about four or five months ago fine just not part of this guarantee they don't want interest only they don't want negative am they don't want prepayment penalty they're trying to get us back to 30-year fixed 30 year fixed 30-year fixed the norm so this is how that would go which of the following is a qualified mortgage which of the following is not a Qualified mortgage Sue got a loan it's a 30-year uh fix she was able to go full doc her back-end ratio was 45 percent David got a loan

his ratio was 40 the loan originated charged two and a half points it was for 15 years and he went full doc yes yes see what I'm saying All or Nothing so this page is very important put a circle or X around it because you will probably get at least Seven or eight just on qualified mortgages because this topic is so new and because you have to know it and because any one thing can throw it all off they tell you everything but then they say but then they put a prepayment penalty well now it's

all off so you have to know all of these things you also have to know all of these on the next page what they call ATR ability to repay what are the eight things that The lender must look at to make sure that the bar actually has the ATR the ability to repay well these are the eight items that they have to look at they are now making lenders buy back loans if they can't prove that the bar should have got the loan in the first place I have a friend that's an investor a mortgage

Banker she did a loan they made her buy back a three hundred thousand dollar loan why because that borrower defaulted went into foreclosure And when they went back to check the file and they went back to her they said show us that you proof of why you gave them this loan show us where you looked at these eight things she didn't have proof of all of it so she had to buy back that 300 000 loan you need to know what are the eight things that A lender must look at and verify before they can

give the person a loan they have to actually make sure that the bar actually has the ability to Repay the law they're gonna say which of the following is one of the things they must look at which of the following is not if you know all eight things they can't trick you not you as the individual but that particular whoever funded it whoever got paid for it the bank hope allowance we're still on Tella hope allowance you need to understand the term a p o r A p o r stands for average Prime offer rate

apor all it really means are what are the average rates today and that's going to help you determine if a loan is a section 32 or if a loan is a section 35. highlight there where it says six and a half and eight and a half those are the triggers that will make a loan a section 32. and then highlight what I have at the bottom the one and a Half two and a half and three and a half those are the triggers that will make the loaning section 35 but it's all based on the

apor on the exam they will always tell you what the apor is the average rate so I can actually hey what's the apor today or I can say hey what's the average rates today it's the same thing so don't get caught up in that terminology but this is how the question will go the apor today is four percent Danny applied for a loan with Cash Call and they approved him but at 26 percent is it a session 32 or is it a section 35 it will be a section 32 because it exceeded the apor by

more than the six and a half and eight and a half okay because remember they're all hard money lost we had a guy um that came in the other day and he brought his paperwork from one of these type of loans uh he got an email that says you've been approved for ten Thousand dollars we will wire ten thousand dollars in your bank account in 10 minutes you've been approved for ten thousand dollars internet loan so he applied he got approved for ten thousand dollars in ten minutes all we need you to do is download

these disclosures hope A disclosures sign them and send them back and we'll wire the ten thousand dollars into your accounts so he printed them out and he brought him to class the apor Was something like 31 percent do you really want ten thousand dollars that bad would that have been a 32 R35 that would be a 32 it would exceed whatever the average is by way more than six and a half or eight and a half but if it only exceeded by these smaller numbers then it would be a section 35. remember hope and lows

are all hard money loans but it's based on the apor The tests always have to give you the apor and then say but your bar is getting this is it a 32 or is it a 35 oh okay so the next section that we're going to talk about is the core but before we do we're going to take another break here ikoa Ronnie KOA the Equal Credit opportunities act now I get this question almost every week our Trisha you told me ecoy was about Discrimination but I read something that said fair housing was about discrimination

did you make a mistake which one of these laws deal with discrimination and the answer is both both ecoa is about discrimination with a credit application fair housing is about discrimination in the cell and least of property so you need to read the whole scenario or they Talk about someone discriminating uh with a credit application then it's ecoa are they talking about someone discriminating and selling or leasing a property then they're talking about fair housing but both are about discrimination do you get that so equals about discrimination with a credit application any question about a

credit application is going to be under equal the Equal Credit opportunities act Any cause regulation B The Regulators must be equal when extending credit they can't discriminate because I'm female and you're male or I'm black and you're Latino or I'm Muslim and you're Catholic they have to be equal ecoy is the Equal Credit opportunities Act it's so that everyone has an equal chance to obtain Credit Now if you apply for credit how long do they have to give you an answer on a credit application 30 days How long do you have to get an answer

on a credit application 30 days if the application is a denial it could be called an adverse action notice that's just a fancy word for no adverse action notice so how long do they have to give you an adverse action notice 30 days you need to know what a protected class is a protected class is a class of individuals they cannot use this as the reason on why they're saying yes or no It's a protected class you need to know what the protected classes are there eight protected classes under equal eight sex race religion color

and national origin the ones I have here in the black are also protected by fair housing act so Circle dose and make yourself a note that sex race religion color national origin are also protected by the fair housing act But age marital status and public assistance these that I have here in the red are only protected by ikoa they're going to actually what's protected by fair housing and E coli those first five what's only protected by ecoa age marital status and receipt of Public Assistance you're gonna have to know that now what do I mean

when I say protect the Class I mean that they cannot use this as the reason why they're denying you well sex well you're female we don't give loans to females they can't say that that's a protected class well you're Muslim or you're black or you're from this country they cannot use those as the reasons on why they're denying you those are what's called protected classes their decision can't be made on those under equal you also have age they can't use that as a reason Well we denied you because you're 92 and you want us to

give you a loan for Maserati they cannot deny you because of your age we denied you because you're only 21 and this house is a four bedroom five bathroom they cannot deny you because of your age they also cannot deny you because of your marital status are by what's called receipt of Public Assistance receipt of Public Assistance you need to know what public assistance mean because people Want to think it just means welfare but it doesn't it means Social Security disability child support alimony all of those they cannot deny you because you get what's called

Public Assistance but you need to understand what public assistance mean so they can't say we denying you because only income you get is social security can't deny you because your income is social security or we're denying you because your income Is child support they can't do that you can have like nine different baby daddies and you have a whole bunch of Child Support so they can't say it's because it's child support or alimony where you don't really work all you do is get alimony they cannot deny you because of your receipt of Public Assistance so

you need to know what's considered public assistance all non-taxable income so some examples are social security disability child support Alimony foster care income pension income retirement income this is what I want you to write here under ecoa under equal you cannot be denied or they cannot deny you based on your source of income under ecore they cannot deny you based on your source of income meaning where it's coming from however They can deny you based on your amount of income so I'm going to say that again under equal they cannot deny you based on your

source of income however they can deny you based on your amount of income we're not denying you our Trisha because you get child support we're just saying that the amount that you get is not enough we're not denying you because it's Social Security it's just you don't get Enough social security income to qualify for this house this card this boat whatever you're trying to get so they cannot deny you based on the source but they can deny you based on the amount that's all that's saying under ecoa the only correct way to ask about marital

status is are you married unmarried are separated what law did you violate if you asked a person if they're single ikoa if they're Widow if they're Divorced you cannot say those you cannot go around if you're doing a loan application asking a person if they're single you can do that in a nightclub but you can't do that if you're uh doing a loan application you cannot say are you single are you widowed are you divorced you have to say are you married unmarried or separated that's the only correct way to ask about marital status says

who ikoa regulation B that's just the rule Again under equal you can't consider age you just have to make sure that at least 18 or if they're applying for reverse mortgage if they're at least 62. uh equal records must be kept for how long 25 months who would have known that had you not taken a class they're going to say on the test how long must equal records be kept six months 12 months 24 months 25 months who'd actually pick 25 months but now you know E coli records must be Kept for 25 months that's

why I tell people that come to me that says oh I've been a broker for years I should be able to pass this test you wouldn't know that you wouldn't know that equal records must be kept for 25 months why because a person has up to 24 months to sue under equal so the records will still be there so how long to pay attention to the question how long does a person have to sue for equal violation 24 months how long must equal records be Kept 25 months says who ikoa the penalty for violating Eco

at ten thousand dollars if an application for credit don't matter if it's credit for a house car boat if an application for credit is denied based on the appraisal the bar has 90 days to request a copy of the appraisal and when they do the lender has 30 days to deliver it if it's denied the bar has 90 days to Request a copy of the appraisal and when they do the lender has 30 days to deliver it but what if it's not denied what if it's approved they get it three days prior to Doc signing

three days prior to Doc signing so pay attention to the question what did they ask did they ask if it was denied when did they get it or did they ask if it was approved because there's a difference Fair Housing Act So equal was about discrimination and granting credit a credit application fair housing is also about discrimination but it's about discrimination in the sale and Lease of property fair housing has seven protected classes the first five sex race religion color national origin Circle dose they're also protected by E coli the last two Are only protected

by the fair housing act disability you can't deny selling or leasing me this property because I'm in a wheelchair because I have a hearing aid because I have one because I have some kind of a disability you cannot use that as the reason on why you're denying me or because of familiar status familiar status write this down anything having to do with children familiar status means anything having to do with children the question you'll get more Than likely is someone that's denying a person because she's pregnant we don't want to rent you this room on

the third floor because you're six months pregnant and we don't feel comfortable with that what law did they just violate the Fair Housing Act now there are three laws that come under the Fair Housing Act and you need to remember that they come under the Fair Housing Act blockbusting steering and redlining are all a part of the Fair Housing Act blockbusting steering and redlining are all a part of the fair housing act now blockbusting trying to induce an owner to sell their home by saying that another ethnicity is moving in the neighborhood and now your

values are going to change you might want to think about selling didn't you notice there was a black a Latino or Asian just moved in your neighborhood here's my car your values are probably Going to go down there call me you might want to think about selling another word for blockbusting is panic selling trying to panic someone into selling their house by saying because another ethnicity just moved in the neighborhood your value is probably going to go down so you might want to think about selling now blockbusting Panic selling Theory is just the opposite of

that trying to get them to buy in a Particular neighborhood but based on their race religion or ethnicity so you're Armenian so we should probably start in Glendale right or you're Latino we should start in East L.A or you're Muslim we should start over here you can't do that you can't use their race religion or ethnicity to determine where you're going to show them a home you're steering them based on their race religion or ethnicity now they can steer Themselves my sister-in-law you guys saw my little nephew she's Filipino she said I only want to

live in La Palma don't show me anything but La Palma I can read the signs there's a lot of Filipino people there I can feel comfortable if it's not La Palma don't show it to me she steered herself but I couldn't have said okay girl we're gonna find you a house now you know you Filipino right so we got to stay over Here that would be wrong that would mean be me steering her base on her you know race religion or ethnicity sometimes you get clients that say show me an area that's predominantly blank or

show me an area that's predominantly black that's fine if they do it you can't just look at them and says okay I have a Latino client coming in so I should probably get ready to go over here or I have a black person coming in you can't do that Got it they're gonna ask you who commits the discriminatory practice of blockbusting and steering who does that the answer is real estate agents and then you have redlining refusing to make loans for any discriminatory reason who does red lighting the answer is a lender blockbusting and steering

real estate agents redlining A lender and also make Yourself a note redlining is the law that led to the creation of hamda what law led to the creation of the hamda law redlining is the law are the reason why we have Honda regulation C how long does a person have to sue under the fair housing act one year how long do they have under ecoa two years how long do they have under Fair Housing one year make sure you keep it straight This logo look at this little house Equal Housing Opportunity they're going to ask

you what law requires that that logo be on all advertising and what people do is they say oh this logo the Equal Housing Opportunity ecola that's so wrong that's the fair housing logo so don't get it wrong people look at that word equal and they go straight to ecoa that's what they want you to do if they trick you enough you get to give Them another hundred and ten dollars okay it's called the Equal Housing Opportunity logo but it's required by what law the Fair Housing Act HIPAA homeowners protection act HIPAA this is where people

want to teach me to class and I need to make sure that you understand it let me teach the class HIPAA is all about when PMI can be canceled but teacher PMI can never be counseled you're talking about MIP with FHA Loans that's not where we're on I'm talking about PMI HIPAA is about when PMI can be canceled so PMI stands for the homeowners protection act PMI can be canceled the bar can request you need to know two things when can the bar request that the PMI be canceled when the loan uh has been when

the loan LTV has reached 80 percent so the bar can request PMI cancellation at 80 LTV loan of value if the loan has been paid down by 20 and they only owe 80 the bar can contact the lender and says hey can You consider removing the PMI the lender can say yes or no but the question on the exam is at what point and let's just keep it to what you need to know for the exam at what point can the bar request cancellation of PMI when the loan reaches 80 LTV or they can say

when the loan has been paid down by how much 20 because they pay it down by 20 what's left 80. and the bar can request and the lender can Say yes or the lender can say no then the next question is at what point must A lender automatically meaning they must do it they can't say no cancel the PMI when the loan is at 78 LTV they don't have a choice they have to do it which means it's been paid down by 22 percent so they have a choice at 80 they can say ah no

we've seen that you've been late a few times we don't want to take it off but at 78 they have to remove the PMI They may require an appraisal or some other things that's not the question the question is at what point must the lender at what point can the bar request it 80 at what point must the lender do it 78. okay they may ask it in a opposite way if it's been paid down by 20 what's left 80. if it's been paid down by 22 what's left 78 just answer the question the way

that it needs to be answered to pass the test Oh no uh if it's uh what if the market uh does not allow that's not the question I'm just trying to show you how to pass the test got it okay when can the bar request cancellation of PMI when the LTV is 80 when must the lender cancel the PMI when the loan is at 78 that's all I'm going to talk about okay hamda Regulation C Honda Home Mortgage disclosure act Honda regulation C allows the lenders to see where possible discrimination takes place what law lets

the lender see or possible discrimination takes place Honda regulation C it requires lenders to file monthly highlight monthly because they're going to ask you how often monthly quarterly annually Honda requires lenders to file monthly reports these reports are called Lars highlight That as well loan activity registers monthly reports that detail um the ethnicity sex and race of anyone that applies for a loan they're going to say what law requires lenders to file a monthly report regarding the race ethnicity and sex of anyone that applies for a loan with them Honda regulation C's what is that

report called loan activity register this is section 10 of the 1003 this is What it looks like this is the hamda section this section is also called the government monitoring section so they may say section 10 or they may say the government monitoring section make sure you know it both ways thakura now factra is about a credit report so I told you regulation V you want to have a very good credit report make sure you make this distinction ecoa Is about a credit application thakura is a credit report don't get it mixed up ecoa is

about a credit application Sacra is about a credit report so factor a Fair Credit Reporting Act is about credit reports and credit reporting agencies what are credit reporting agencies Equifax TransUnion experience those are credit reporting agencies in fact we're talking about what they can and cannot do Okay what they can and cannot do according to factra according to vacra a bar has five rights okay the first one they have a right to an adverse action notice simply a denial letter you have a right to get it in writing what law says you have a right

to get it in right they can't just call and say yeah Trisha we looked at it nah we don't think that's gonna work they have to give it to me in writing and explain the reason in case I want to dispute it what Law says they have to give it to me in writing backwards It also says I have a right to a credit report now they may call it a credit file don't get all crazy and mixed up because they didn't say credit report they said credit file same thing what law says you have

a right to get a copy of your credit file fakra It also says you have a right to get a copy of your credit score but the credit score is not free make sure you get that you have a right To request a copy of your credit score but they don't have to give it to you for free your report they have to give it to you for free but if they want to charge you for the score they can here is the question what law says you have a right to get a free copy

of your credit score what law says you have a right to receive a free copy of your credit score there isn't one you do there is no law now some people Say well I can get a free copy my credit score this company gives it that's fine but that wasn't the question the question says what law says they have to give you a free copy of your credit score there isn't one there's a lot it says they have to give you a free copy of your credit report but there is not a lot it says

they have to give you a free copy of your credit score so keep that straight okay what law says that if you can Dispute incomplete or inaccurate information you look at your credit report you'll be like I wasn't late or this isn't me or I didn't make this inquiry what law will let you dispute that background fakura and limit pre-screen offers what law allows you to limit pre-screen offers these are the five rights that you have under fakra that they'll test you on now Factor says that any organization or Company that denies you and they

said it's based on your credit report they have to give you the name address and phone number of what credit reporting agency they use if you have applied for a car or jury or something they say we denied you we use Equifax here's their name address and phone number whenever you get denied they have to give you the name address and phone number of what credit reporting agency they use so that you can contact them and see what's Going on on your credit report what law says they have to do that factra Factor says you

can get a free copy of your credit report if Circle to if because there's one law this is we'll give you a free copy of your credit report if but there's another law that says you don't need a reason we'll give it to you once a year you need to know which one has the if That's fakura we will give it to you under Factor if and then there's another law we'll talk about in a minute that says you don't need a reason you can get it once a year Sacra has the if you can

get a free copy of your credit report under fact right if you got denied and have a denial letter if you've been the victim of identity theft if you've been a victim of fraud if you're on public assistance Social Security disability child support Or if you're unemployed you can write them and says I'm unemployed and I um because what happens is now sometimes employers want to look at your credit report your Facebook page your Instagram everything before they hire you so factors allows you to get a free copy of your credit report if you're unemployed

and they're not going to charge you for that why you don't have a job so you can just write it says I'm unemployed seeking employment and under Thakura I'd like to receive a free copy of my credit report you might want to see what's on there before an important potential employer looks at it got it now Factor also says negative information can stay on your credit report for seven years late payments or any of those things negative information how long does it stay on your credit report seven years bankruptcies doesn't matter what chapter It is

a bankruptcy can stay on your credit report for how long 10 years unpaid underline the word unpaid unpaid tax liens stealing your credit report forever unpaid but if it's a paid tax lien it's considered negative information and it stays for seven years so you really have to make sure you're paying attention did they say paid tax lien or unpaid tax link is gonna make a difference and They're thinking that that's going to go over your head so if it's unpaid it's going to stay on there a lot of people say oh I got an unpaid

tax lien I'm going to let it sit there for seven years and it'll go away it's never going to go away if it's unpaid but if it's a paid tax lien it's going to show paid but it's still going to stay there for seven years before it goes away criminal conviction some states put criminal convictions California way though but some east coast states should put criminal convictions if that goes on your credit report it will stay on there forever must limit access to credit report only to those with a legitimate business need they're going to

give you some scenarios and say which one of these situations would allow or would be okay for someone to put someone's credit report because what's going on is loan Originators you'll be able to have access to post Someone's credit report and all your friends family whatever will come to you say can you put my credit I'm getting ready to guide a card I want to see what's on it can you put you're not supposed to do that you're not even supposed to give a person a copy of their credit report you can only have access

or post someone's credit report if you have a legitimate business need so they're going to give you scenarios and you're going to have to determine Which one is a legitimate business need to put someone's credit for example my daughter just moved to Frisco and she moved with her boyfriend fiance I wanted to pull his credit so bad to see if that but that wouldn't be a legitimate business need okay or my neighbor they just got a new boat and a car I know their information let me see what I couldn't do that okay or my

employee she just got prior employee she just got a new car I know I Don't pay her enough for that let me pull her I can't do that but if someone's applying for a loan with me or insurance with me that would be a legitimate business need you get it you can only pull their credit if you have a legitimate business need if not what law are you violating factra fact Act now fact act came under fakwa just so you know factwork came first but it Wasn't enough then we start having a problem with identity

theft so Factor was amended to include the fact act the fact act so if they actually what came first thakura then the fact act fact is the fair and accurate credit transaction act fact Act and it's all about identity theft what law deals with identity theft the fact that it has a section of rows called section 114 rules what's another name for Section 114 rules identity theft rules it's a set of rules that if the lender sees this our creditor sees this they should probably do a little bit more checking into it one of the

rules says that they have to verify uh the validity of any change of address what does that mean verify the validity of any change of address so say this is American Express and they get a call says hey this is our Trisha you know what I lost my American Express card can you send me a new one oh sure we'll send you one right away oh I moved let me give you my new address send my new credit card to this new address they still have to say sure right away but then when they get

off the phone they have to verify the validity of that try to call me back at a number that I have on record or text me or send me a letter that says hey did you just order a new card was this Really you because that's a red flag they're supposed to check on it they're not supposed to just send it out what if that really wasn't me so the question on the exam is what law says that they must verify the validity of any change of address section 114 rules of the fact that you

have to verify the validity this law also says you can get a free copy of your credit report once a year no if needed remember factra you can Only get a free copy of your credit report if one of these reasons exists number one number two number three number four if it's not one of those reasons you can't get a free copy of your credit report under fakra find another law to get it under okay but under fact Act you don't have to have a reason you can get it once a year know if needed

you have to know what law has the if which one has to know if Factor they want you to check it you don't want to go five years and find out somebody's instilling your identity so they suggest that you check it once a year to make sure everything is on the up and up the site that they want you to use is annualcreditreport.com that is the one that's backed by the government annualcreditreport.com but they will try to trick you this is how that question goes Once a year you can get a free copy of your

credit report so every year you should get a free copy of your credit report what site do you go to to get a free copy of your credit report then they have their a b c d and a says freecreditreport.com and you're thinking free free free free no they're trying to trick you annualcreditreport.com that's the only one that's backed by the government now under the fact that you have the Following rights businesses must truncate highlight that word truncate debit and credit card information what does that mean that means that they have to shorten they have

to put XXX in just the last four to five digits they can't put your whole credit card number on the receipt what if you go to Home Depot use your credit card you walk out and it blows in the wind then someone will have your whole credit card number no they won't Because it has to be truncated it will be XXX in just the last four or five digits what law says they have to do that the fact that also uh what law allows you to place a credit freeze or you can write there in

parentheses or a password on your credit report the fact that you can freeze your credit where they have to ask you each and every time or put a password if someone doesn't know your password they can't access your credit Or requires measures for you to secure and dispose of sensitive information under secure and dispose I want you to put burn tread or keep it locked what loss is that you either have to burn it shred it or keep it locked just because you're done with that client's file and you got paid your commission you can't

just take it and throw it in the trash can Somebody can get it out you either have to burn the information shred it or keep it somewhere locked to prevent identity theft a question that you get here a lot is what law did the loan originator violate when they went to lunch and just left all the clients filed on the desk you're thinking when I'm going to lunch I'm coming right back but you can't just leave the information out you have to Lock it up other than that you're violating the fact that people do it

all the time but what law are they breaking when they do that the fact that Graham Leach bliley Act we talked a lot about that this morning Graham Leach blyliet you need to know what's another name for the Grammys blightly Act is is the financial services modernization act Graham Lincoln another name for it is The financial services modernization act and it has three laws or three policies SPF safeguarding pre-taxing and financial privacy safeguarding pre-taxing Financial privacy we talked about safeguarding requires financial institutions to have a policy on how they're going to keep our information safe

I had you guys write that down earlier pre-taxing policy Apostle to keep people from getting into your information under false pretenses pretending to being you and signing into your accounts Financial privacy governs the collection of non-public information and I told you that's the one that allows you to either opt in or opt out of having your personal information shared you need to know the gramly to bloody act has what SPF safeguarding pre-taxing Financial privacy Then the USA Patriot Act the USA Patriot Act brought about because of 9 11. requires companies to establish an anti-money laundering

program but this is what I want you to remember lenders are required to verify date of birth social security and ethnicity of anyone applying for a loan what law requires that lenders verify date of birth social security and ethnicity of anyone getting a loan in the United States the Patriot Act The DNC list do not call us DNC list if you are a loan originator and you're buying leads or getting leads or you go to work for a company and they give you a list of people to call to solicit business that essentially turns you

into what's called a telemarketer and what you're supposed to do Under the Do Not Call List is before you call anyone on that list you're supposed to go to the internet to do not call.gov And search the internet's do not call us to see if any of those people are on the Do Not Call list now no one actually does this but that's what's supposed to happen the question on the exam is because when you get hired at a company the first thing they do is you're the low person on the total call here's a

few leads sit down and call these people and see if you can get any business before you call those people what are you supposed to do Searches do not call us to see if they're on the Do Not Call list how often this is the question how often must a loan originator or telemarketer call a search the Do Not Call List and remove the names of people that are on there before they call them every 31 days every 31 days now there are two lists that you need to be concerned with the national lists do

not call.gov and each company is Supposed to keep their own internal list they may call it internal list a company list a branch list you need to know how Austin must those lists be updated the national list is updated every 90 days meaning every three months the Do Not Call National list the one on the Internet is updated every three months meaning every 90 days but if you are a company Which you're supposed to have a do not call list or a branch or a bank how often must you update your list and pass it

back out to your employees every 30 days the penalty for violating the Do Not Call List is sixteen thousand dollars per incident what is the penalty for violating the Do Not Call US sixteen thousand dollars now listen to this question because this is another way that they trick people Anna call someone on the Do Not Call List twice what is the maximum she can be five 32. Anna call someone on the do not call us twice what is the maximum she can be fine 32. the next question is Anna call someone on a Do Not

Call List twice what is the maximum per incident that she can be charged see how they try to trick you they said per incident So again you have to pay attention to the different ways that they're trying to trick you if they trick you enough another 110 bucks for them got it no there's something called an EBR established business relationship EBR and if you have an EBR with someone meaning you did business with them even though they're on the Do Not Call List you can call them but for how long that's what you need to

Know so if someone is on the do not call us and you close business with them you closed alone you can call them for 18 months but they're on the Do Not Call this that's fine because you just did a deal with them and it closed you can call them for 18 months but what if your deal didn't close it was just an application or inquiry you can only call them for three months but what if they say stop calling you Have to stop calling do you got it so they're gonna ask you a really

tricky question Dana is on the Do Not Call List you just closed the deal with them it went through just fine but Dana's on the do not call us but Dana says stop calling me how often can you call him you can't you can't say well Dana I just closed the deal with you so I can call you for 18 months whether you like it or not you can't do that okay Got it now you need to know about Mars not the planet but the law Mars Mortgage Assistance relief Service rules Mark is all about

loan mod short sale and foreclosure scams it's the law that deals with loan mod foreclosure and short sale scams there was a lot of that going on Right Nelly we did that back in the day now this law Bans the collection of fees into the homeowner receiving offer what was going on with all these low mods and everything is that they were taking money up front and never even getting the people Lomas so this law says no until you get them a loan lot and they accept it you can't take any money so what law

buys the collection of fees on loan mods until they received an offer not just received an offer but accepted it Mars also prohibits uh from advising The consumer to not talk to their lenders that's another thing don't answer the phone when the lender calls just let us know they called and we'll deal with it what law says you cannot tell your borrower not to speak with their lender Mars because if you do that you can be fined eleven thousand dollars what was going on is they were telling the bars not to talk to the lender

and then they weren't talking to the lender no one spoke to The lender so the lender foreclosed what law says you can't do that Mars and then you have the bank secrecy act another name for the bank secrecy Act is the anti-money laundering act two names for the same law the BSA Bank secrecy Act and the AML anti-money laundering act it's all about money laundering anytime you are depositing withdrawing or transporting more than ten thousand dollars cash you Go on the list doesn't mean you did anything wrong but they keep track of that look for

terrorism purposes and things of that nature and also for money laundering I'm not sure if you guys know and I tell you uh people about this about Abby Lee Miller dance mom that reality show um she took the kids so there's a reality show where they dance and all this stuff she took them Overseas got paid forty thousand dollars cash for their show she didn't when you go to the airport they give you this little form are you transporting more than ten thousand dollars cash she said no she got paid forty thousand dollars cash she

put it in four kids backpack ten thousand dollars each tried to come through the airport of course the people saw it they asked The kids whose money is this they all pointed to her she's in jail right now in Victorville for violating the anti-money library act she got sentenced to a year all she had to do was say yes that's dangerous what if somebody else knew that she had that cash and they tried to hijack the plane anytime you are depositing withdrawing or transporting more than ten thousand dollars cash it goes on the list they

just need to know what's going on Who says so the BSA or the AML and that's the end of the federal review ladies ladies non-traditional mortgages non-traditional mortgages gets a little bit easier after this part but we're done with the hard part the federal part so this stuff is either stuff you want to know or you probably know it a little bit because you're a little bit in the industry it's a lot of Terms definition things you need to know so it goes a little bit easier the rest of the class non-traditional mortgages the definition

of a non-traditional mortgage according to the safe act because they're going to ask you according to what law according to the safe act the definition of a non-traditional mortgage is anything highlight anything other than a 30-year fix so if a non-traditional mortgage is Anything other than a 30-year fix what does that make a traditional mortgage a 30-year fixed that's what they want you to know there's two categories two boxes one box says traditional one box says non-traditional traditional 30-year fix non-traditional any and everything else according to who the Safe Act doesn't mean good or bad

it just means Traditional 30-year fix non-traditional anything else any other kind of mortgage they're trying to get you back to thinking the normal everyday traditional thing to do is a 30-year fix that's why they call it a traditional mortgage according to what law the Safe Act conforming loans also called conventional sometimes but conforming loans meet the standards of Fannie and Freddie it conforms to the guidelines or the standards of who Fannie and Freddie non-conforming loans do not meet the standards of who Fannie and Freddie so conforming allows me to standards of Fannie and Freddie so

they can be sold on the secondary Market primary Market is where we as people get loans secondary Market is where lenders sell loan to one another if it conforms to the standards of Fannie and Freddie it can be sold on a secondary Market if it does not conform to the standards of Fannie and Freddie it cannot be sold on the secondary Market it usually has to do with the size that's why another name for non-conforming loans jumbo loans jambola sub Prime loans what do you need to know about those they allow more risk than Prime

loans highlight where I put allow more risks subprime loans allow more risk than Prime loans secondary financing when the bar gets money from another source Other than the primary anyone else is secondary secondary financing when the buyer borrows money from another source other than the primary everybody else comes second they're secondary mortgage terms mortgage terms you have to know the difference between these fix what does that mean it means the payment is fixed it's not going to change interest only another name for interest Only is straight note because you're paying straight interest all you're paying

is interest interest only loan also known as a straight note adjustable rate mortgage arm adjustable rate mortgage at some point the rate is going to adjust make sure you understand the difference between a fix a interest only and an adjustable notes also known as promissory notes don't get It wrong just because they said the note a note and a promissory note that's the same thing there are four that you need to know about straight note which is the same as the interest only a straight note is the same as interest only only paying interest a

partially amortized uh note that means it has a balloon payment what type of promissory note has a balloon Payment a partially amortized loan negative am the monthly payment was not sufficient to cover the interest they're going to ask you what type of loan is it that you make a payment every month but the balance still grows that will be negative am negative amortization uh the payment wasn't enough to cover all the interest so they keep adding it to the back of the loan fully amortized now another name for fully amortized loan is a self Liquidating

loan another name for fully amortized self liquidating loan they're going to ask you what type of loan is it that the bar makes a payment every month and for 30 years and at the end of the 30 years the whole thing is paid off it liquidated itself it paid off itself that's fully amortized so know the difference between straight partially amortized negative and a fully Amortized loan make sure you know that a partially amortized loan is the one that has a balloon payment make sure you know that another name for fully amortized is self-liquidating acceleration

Clause versus alienation clause people get these mixed up all the time I'm going to show you how I remember it and hopefully you'll be like me and you'll never forget it after this the difference between acceleration clause And alienation clause I choose to focus on acceleration costs because when I think of acceleration Clause I think of an accelerator in the car when I step on the accelerator what does it do this is my definition of acceleration Clause write it down if you like and then I'll go through theirs acceleration clause speeds up steps on the

gas beats up when the payment is due Because of default acceleration cost speeds up when the payment is due because of default this is their definition gives the lender the right to declare the entire balance due immediately highlight immediately we want all the money now why because of bar default highlight default in order for it to be acceleration there always have to be two things immediate and default Immediate and default we want all the money now because you're 60 days late 90 days like 100 days like that doesn't matter for it to be acceleration immediate

and default if they want all the money for any other reason besides default it's not acceleration for it to be acceleration immediate and default we want all the money now because you're late acceleration costs they stepped on the gas they speed up when they want the money but why did they do that because You're late now alienation clause gives the lender the right stated rights when there is a transfer of ownership highlight transfer of ownership you transferred who owned it another name for alienation is due on sale so you sold it you deeded it you

gave it away you gifted away you quit claimed it whatever you did you transferred the ownership that's what makes it alienation costs Transfer of ownership has nothing to do with being late or any of that so make sure you clearly understand the difference between acceleration clause and alienation clause adjustable rate mortgage arm adjustable rate mortgage there's some components that you need to know adjustable rate mortgage it has three parts you have to know what the three parts Are the index the margin and the rate the index plus the margin equals the rate the index plus

the margin equals the right you need to know the index is the part that goes up and down that's what makes it adjust it's tied to things like coffee cozy Library Prime you don't need to know any of those for the test you just need to know what part goes up and down what part makes it Adjust the index is the part that makes it go up and down the margin stays the same for the life of the law the margin is actually the profit that the bank makes but the index plus the margin equals

the rate index goes up and down margin stays the same for the life of the law buy Downs what are buy Downs discount points paid to get a lower rate The term buy down and the term discount points mean the same thing buy Downs are discount points paid to get a lower rate so I got a six percent how many points can I pay to get it to five percent or four percent some lenders offer discount points money that you can pay up front to get a lower rate those are called buy dials or discount

points you need to know that discount points are based on the loan amount one percent of the loan amount and the Reason why that's important is that sometimes they're going to give you uh the sales price the appraised value and the loan amount and they'll say calculate three points well which one of those amounts do you calculate the points on the loan amount points are always calculated based on the loan amount reverse mortgage what do you need to know about a reverse mortgage well the bar has to be at least 62. most people know that

for reverse mortgage the bar has to be at least 62. then they're going to ask you in a reverse mortgage what increases and what decreases the balance of the loan Rises the equity shrinks in a reverse mortgage the balance of the loan Rises the equity shrinks what is a hecam make sure you know that term highlight that h e c m heck em what does that stand for home equity Conversion mortgage that's fha's name for their reverse mortgage home equity conversion mortgage heck them it's an FHA reverse mortgage in tenure what does it mean when

the bar is getting their money the 10-year method tenure simply means payment over time they don't want it in a lump sum they want the 10-year method they want to get a monthly check instead of make a monthly payment they chose the 10-year option Now when is a reverse mortgage over when does it go away what would make it go away there's four reasons uh-oh let's go back here four reasons the first one if the bar passes away the reverse mortgage goes away if the bar sells the home the reverse mortgage is over if the

bar ceases to live in the property for 12 consecutive months highlight consecutive or underlying consecutive if the bar ceases to live in The property for 12 consecutive months the reverse mortgage is over sometimes you have kids my age that tell your the parents hey Mom Dad get a reverse mortgage you got a lot of equity why are you struggling to pay your bills buy your medicine things of that nature when you have all this equity in this house get a reverse mortgage and you can get a monthly check instead of make a monthly payment heck

I'll even move in with you And help out so they do that and they move in with the parents they get a reverse mortgage they're getting a monthly check and then they put the parents in the rest home and they're getting the check if they find out mom and dad hasn't been there for 12 consecutive months then they're going to call the reverse mortgage and it's going to be over they need to bring them home every now and then for a month or so Okay other than that they're in violation or you have some seniors

that are pretty smart they get a reverse mortgage they are getting a monthly check they go stay with their kid and rent out the house still fraud if they find out they haven't been there for 12 consecutive months then the reverse mortgage is over you're not supposed to even do it for one month But the question on the test 12 consecutive months or if they don't pay their taxes and insurance they can take the reverse mortgage away that way as well so you need to know these four ways that a reverse mortgage can be terminated

the the bar passes away the bar sells the home they cease to live in the home for 12 consecutive months or they don't pay their taxes and insurance then the lender can take the reverse mortgage Away and then they can have to start paying again these are some terms that you need to know so I'm going to have you highlight those you need to know what a balloon payment is a balloon payment is and another name for a balloon payment is partially amortized alone so make sure you know that another name for balloon payment is

partially amortized low you need to know what a hybrid arm is hybrid well hybrid car what is that it Can be gas and electric gas and electric well hybrid mortgage can be fixed and adjustable fixed and adjustable same concept bi-weekly mortgage bi-weekly mortgage that's one set that's set up where the bar has to make a payment every other week not once a month every other week so they're going to actually in a bi-weekly mortgage plan how many payments are made in a year 26 Blanket mortgage highlight exactly this covers more than one parcel of land

a blanket mortgage covers more than one parcel of land sometimes you have developers that go out in there by land is divided into what's called parcels and you will have a developer uh that go out and they buy a whole big lot that maybe consists of several parcels they don't get a loan on each parcel They get a blanket mortgage for all of that and then they may build a house one at a time on each parcel so a blanket mortgage covers more than one parcel of land a bridge mortgage it Bridges the gap between

one loan and another for example some banks offer what's called Bridge mortgage say I'm selling my home to buy another home but I need the money from the sale of my Current home so that I can get the down payment for my new home and in the perfect world escrow everything is working fine this one sells I get this money and I put the down payment on this one but what if my new house is ready and I need my money now but my old house is still in escrow you can go to a bank

and some banks will give you what's called a bridge mortgage just enough to let you bridge the gap and close that deal and then when your Existing home sell they get their money back immediately that's a bridge mortgage to bridge the gap a cash out mortgage also known as a refinance Cash Out mortgage or refinance number one they have to know that they're starting their loan completely over but more importantly for the test in order for a bank to do a cash out mortgage now they have to have what's Called a net tangible benefit highlight

that they're going to ask you what type of loan must have a net tangible benefit meaning they're not going to just do it unless it makes sense uh you had loan Originators that were refinancing people hey we can save you a hundred dollars but the clothing costs were like six thousand to seven thousand dollars was that really beneficial and then they go back to the Next year we can save you another fifty dollars another six seven thousand dollars in closing costs nowadays the cfpb says that there must be a net tangible benefit does that really

make sense it's saving that fifty dollars worth six thousand seven thousand dollars in closing costs lenders have to make sure that there is actually a net tangible benefit if it's a refinance they're gonna ask you what kind of loan must Have a net tangible benefit and now you know if it's a Cash out refinance net tangible benefit that term only goes with um refinances that have cash out HELOC home equity line of credit and home equity loan you have to know the difference between an open end and closed in he like a home equity line

of credit what is the difference between the open end and closing well open in means you Can go back and forth and get more money close in means once you borrow it and you pay it off that's it it's over so open in I borrow or I get a HELOC for twenty thousand dollars I use ten of it well I now have ten thousand dollars credit that I can go back and use whenever I want closed in I borrow ten thousand dollars I use five I still have to pay the five but I can't go

back and get another five that's Closed open in is more like a credit card where you can go back and forth closed in you just paying it off you guys get that construction mortgage another name for construction mortgage that they use on the test is interim loan it's just a loan it's an in-between loan construction mortgage is just the loan to buy the material and build the house it's not the loan on the house it's just for the construction and the building of The house you still have to get another loan after that that's where

the takeout loan comes in that's the permanent financing now people want to use this term and this incorrectly we're going to get a takeout loan to build a house no you're going to get a construction loan or an interim loan to build a house and once it's billed then you're going to get a takeout loan uh conventional or FHA or whatever you're going to get an actual real loan on the house that's What the takeout loan is the construction mortgage it's not the mortgage on the house it's just for all the materials the labor and

everything to actually build the house Equity participation mortgage Equity participation mortgage uh they may just call it a participation mortgage or they may call it a Sam uh shared appreciation mortgage what is that that's a loan where the lender gets a part of your Equity when you sell It you agree with the lender that once you sell this house you're going to give them back some of the equity that you earn well why would you do that or here's a situation we had to borrow up in San Diego area the house was worth they owed

over a million a million and one but it was only worth about 700. they were upside down like way upside down and they hadn't made a payment in like 18 months well we worked with Bank of America we got Bank of America to Forgive over 300 000. and forgive the back payments so now their new loan is at the 700 000 that they actually owe so their payments went down dramatically that was a loan mod but the deal was Bank of America says we'll do this for you but the deal is whenever you sell this

house we want five percent of the equity when you do that Equity participation mortgage of course they did it they got to stay in their beautiful San Diego Home shared appreciation Market Equity participation Market when the lender gets to participate or get a part of the equity when you sell the home package mortgage highlight exactly this a mortgage that includes personal property whenever you see the term personal property you're talking a package mortgage they're packaging in things like the stainless steel refrigerator the microwave the Dishwasher sometimes you go into model homes where they're showing them

and they say oh how much is if you include this refrigerator oh we'll package that in oh how much if I want to keep this uh these lamps these things those things are not free they're packaging the price into that into the loan that's what a package Mortgage in they're adding in personal property to the whole thing wraparound mortgage highlight exactly this When an existing loan on a property is retained so they're gonna the lender is going to take over your existing loan not start it over not refinancing the existing loan on the property is

retained and the lender gives the bar a new larger loan so I'm going to give you a loan you have a loan I'm going to take over that loan and give you a bigger loan I'm going to wrap the loan that you already have in and then I'm going to add another 40 50 100 000 we're wrapping your own loan into your new loan you have a completely new loan but now I took it over I have your own loan and when you make a payment you're just making that one payment that's what a wraparound

loan is they don't do those a whole lot anymore because it doesn't really make a whole bunch of sense uh but it's when an existing loan is retained on the property they didn't refinance it they didn't pay it off Is still there but they give the bar a new uh a new larger loan on the property that's called a wraparound loan okay so that's that section on non-traditional mortgages so this part is going to be on mortgage loan origination what you need to know in this particular section you need to know what the process is

it starts with origination do not call yourself a loan officer that means you are dating yourself and you didn't pay attention in Class you are a loan originator that's the term or the terminology that cfpb you wants us to use you're a learner originator I call us an information gatherer collecting all the paperwork and getting it where it needs to be so loan origination is where the process starts then it goes over to the processor the processor doesn't approve anything they're just basically verifying the information verifying the information and once it Gets through processing then

it goes to the underwriter that's the bank that's who's actually making the decision number one two and three are all a part of the process originating processing and verifying I mean originating processing and underwriting that's a part of the process servicing is not a part of the product process make sure you know that servicing is a result of the process if it's approved because Remember servicing is just taking the payments and paying the taxes and insurance if it's never approved it doesn't go to Servicing so originating processing and underwriting are part of the process if

it's approved it goes to servicing if it's not approved then it doesn't go to Servicing now application urla uniform residential loan Application urla you need to know the two main types of applications used in the industry Fannie May use this one called a form 1003 Freddie Mac uses one call to form 65. you need to know who Fanny uses you need to know who Freddie is in the industry you need to know underwriting there's two types of underwriting automated underwriting done by a computer to save money aus automated underwriting and manual Underwriting the old-fashioned way

which is a calculator and a pencil you need to know the two main types of uh underwriting Systems computer systems used in the industry and by whom Fannie Mae use this one called du desktop underwriter Freddie Matthews is a system called LP loan prospecting you need to know who Fannie is this you need to know who Freddie uses Fannie Mae uses du desktop underwriter Freddie Mac uses LP loan prospector you need to know conventional laws and put in parentheses there conforming because sometimes they call them conforming conventional conforming loans this is what you need to

know they're not insured circle the word insured and on top of insured I want you to write FHA so they're not insured are guaranteed circle the word guarantee and on top of guarantee I want you to Put VA so conventional loans are loans that are not insured meaning they're not FHA and they're not guaranteed meaning they're not VA by any government entity the ratios for a conventional loan 28 over 36. this is where people tell me well I've seen other ratios for conventional and this is when I tell you to pass the test when you

get this question the ratios for conventional are 28 over 36. that's What the answer is to pass the test no matter what you've done out there in the industry if you want to pass the test the ratios for conventional 28 over 36. PMI is required if the bar puts less than 20 down meaning the LTV is higher than 80 percent and listen to what I'm saying here because it goes right over people's head the late fee is five percent of the p and I only Not the p-i-t-i not the payment they cannot charge you a

late fee on the taxes and insurance portion so they're going to try to trick you the late fee is five percent but the p and I portion only and on the test they're going to say the principal is 500 the taxes is 300 the insurance is 200 uh so on and so forth calculate the late fee and you'll probably remember about the five percent but did you remember to only calculate that on the p and the I The principal in the interest they cannot charge late fee on the tax and insurance portion that's why you

really need to make sure you go through all my tests so that I can trick you all the different ways they're going to trick you got that now FHA Loans circle the word insured FHA Loans are insured the FHA does not lend the money they just ensure a portion of the funds in case the bar Goes into default FHA laws are insured whenever you see the term in short it means FHA down payment for FHA loan is three and a half percent and the ratios for FHA no matter what you've seen out there in the

world to pass the test the ratios for FHA 31 over 43. 31 over 43. they're going to ask you what is the maximum amount that the seller can contribute on the FHA loan six percent The occupancy requirement for an FHA loan the bar must move in within the first 60 days and stay a year on FHA loan they want the bar to move in within the first 60 days and agreed to stay a year FHA Loans do not have PMI they have MIP again FHA Loans do not have PMI they have MIP mortgage insurance premium

and they also have what's called ufmip upfront mortgage insurance premium You don't have to know how long it lasts and when it's going to stop or you don't need to know any of that for the test just make sure you have this strike what kind of loans have PMI conventional what kind of loans have MIP FHA what kind of loans have UF mipl one-time fee FHA just keep it that simple and pass the test no prepayment penalty the late fee is four percent of the p and I only four percent of the p and I

own VA loans the term they use is guaranteed VA loans guarantee the VA does not lend the money but what they're saying is give this veteran this guy or this girl uh a chance let them get into this house with no money down if they go into foreclosure don't worry we guarantee you x amount VA loans are guaranteed the money still comes from a bank it comes from the VA approved a bank VA loans are guaranteed the maximum guarantee that Any veteran can get is 25 of the purchase price or the appraised value make sure

you know that what is the maximum no matter how long they've been in the service what is a maximum guarantee that a veteran can get is 25 of the purchase price or the appraised value VA loans have uh two documents that are needed for eligibility one is a DD214 discharge paperwork and the other is called a Coe Certificate of Eligibility The Coe tells what their maximum amount that they will be qualified for the VA only cares about one ratio the back end they don't have two but the back end ratio cannot be higher than 41

percent there are two names for VA appraisals one is called a CRV certificate of reasonable value the other is called a nov notice the value those are just two names for VA appraisals Now VA loans have what's called a non-refundable variable funding fee highlight that term that term is only only associated with VA loans what kind of loan has a non-refundable variable funding fee they don't have to make a down payment but they have to pay a variable funding fee variable because it can change and you don't have to know the different amounts it can

change but you do need to know who is this fee waived for disabled vets because they Got hurt and surviving spouses for VA loan they have to move in within the first 60 days and stay a year move in within the first 60 days and stay a year they do have to have what's called residual income so write that down what kind of loan must have residual income that's a requirement of a VA loan that means they have to have some money left over to handle to you know eat and live and things of that

Nature so VA loans do have to have what's called residual income the bar must move in within the first 60 days and stay a year the maximum that the lender can charge for their fees is one percent and the late fee is four percent of the p and I only four percent of the p and I only USDA loans if you go oh my God we're doing loans for meat and cattle no a USDA loan is a type of a mortgage loan And it's very popular here in California you know most people don't know about

it because we have a lot of rural land like what used to be Paris California Elsinore Hemet all of those areas a lot of those people got what's called USDA loans but it could be anywhere in any state uh it is another name for USDA loan or section 502 loans 100 financing to buy or build a property in a rural development uh rural means small towns are also you want to put their Farm Communities 100 financing they're going to ask you where does the money come from for a USDA loan because it does not come

from a bank it comes from the Department of Agriculture no maximum loan amount no prepayment penalty the late fee is four percent of the p and I only appraisal approaches there are three and you need to know when each will be used appraisal approaches you have the sales comparison approach that's the most Popular approach the everyday approach uh they also call that the market approach don't get it wrong because they called it the market approach sales comparison to Market is the same thing there has to be a minimum of three comps then you have the

cost approach also called the replacement cost approach when did they use this vacant land highlight that new construction highlight that unusual or special purpose property let's talk About unusual sometimes there's some really crazy wacky architecture geometrical GSI different kind of architecture where they can't really compare that to something else so they would use this one if it's unusual our special purpose it's a hospital it's a school it's a um church it's only for that one purpose they will use this approach also they call it the replacement cost Approach because they use it if they are

appraising something that was damaged due to a natural disaster so say if it was burnt down because of Hurricane Katrina or it was in an earthquake or was in a fire or a flood what approach would they use the replacement cost approach an income approach is pretty self-explanatory if the purpose of the property is to generate income for the borrower it's a store It's a laundromat it's some kind of business it's an auto lot they would use the income approach as it relates to employment if a bar is self-employed if a bar is self-employed they're

going to want to see a minimum of two years tax return this is where people tell me but I've seen banks that have done this that or the other I'm just telling you if you want to pass the test and you get this Question if they ask you for a self-employed borrower they have to have a minimum of two years tax return if they're not self-employed they're what's called a wage earner they get a check they're going to want to see that they've been in the same field the same line of work for two years

I did not say they had to be on the same job I just said they had to be in the same line of work if they're not in the same line of Work what are they going to want some type of certification or certificate or proof of schooling as to why they made the change alimony and child support are the only kind of income that are optional whether or not the bar wants to use them they don't have to use their child support in alimony that's optional if they want to use it but if they

do want to use it you have to know what law says the lender must accept it do you guys Remember because alimony or child support and the bar wants to use it what law says that the lender cannot refuse to take it ikoa because it's considered public assistance so make sure you remember that alimony child support they have to show that they're going to continue for at least three years tax-free income meaning Public Assistance income is grossed up Highlight that term grossed up and put in your notes increased by 25 percent for the test is

increased by 25 tax-free income Social Security disability child support alimony they increase that by 25 percent so you're going to get a question that says John gets a thousand dollars a month Social Security income how much is the underwriter going to count 1250 they increase it by 25 percent you Have to remember that they're not going to remind you about that Sally gets a thousand dollars a month child support how much counts 1250. one question someone asked me are people ask me over and over and over again in the Facebook group they don't understand why

they keep getting it wrong because my question is Danny gets paid 13.50 an hour and he gets 500 a month alimony what the people keep doing wrong in the Facebook group is they're not increasing the alimony by 25 and that's why they keep getting it wrong do you get that yeah tax-free income must be and you have to remember it they're not going to remind you it has to be increased by 25 percent they're not gonna they're not gonna give you credit for it unless you can prove if the kid is 18 and not in

college it's they're going to look at the the award letter it stops so They're not going to let them use that because it's not going to continue now rental income is reduced by 25 percent so if I get a thousand dollars a month because I rent my room they're only going to give me credit for 7.50 the other 25 is what's used for what's called vacancy Factor 4506 T what is that a 4506t is a form that the lender uses to get a transcript Of the bars tax return transcript they will use what's called a

8821 to get a full copy of the bar's tax return but they use a 4506 t for a transcript or a summary of the bar's tax return now in calculating the math I'm going to give you some tips that you need to write down and remember okay these are some tips that they expect that you already know when dealing with the math so write these down Number one tip that I'm going to give you always start with the gross monthly income they are not going to remind you about that to do any of the math

and you'll see it here in a second you have to start with the growth monthly income they may give it to you hourly weekly daily yearly but before you can do the math problem you have to start with the gross monthly income or your problem is going To be wrong so that's my first tip my second tip understand the difference between bi-weekly and bi-monthly if you don't understand the difference between getting paid bi-weekly every other week so there's 26 pay periods and by monthly twice a month there's only 24 pay periods your math problem is

going to be wrong that's tip number two Tip number three whatever they give you the sales price and the appraised value because they're always going to give you way more than what you need for the math problems so sometimes in the math problem they're going to give you the sales price and the appraised value which one do you think you use for the problem for the test you're going to use whichever is lower For the math so whenever they give you a problem and most people don't know that whenever they give you a problem they

give you the sales price and the appraised value you have to use whichever is lower for the math so those are my tips that you need to know going into the math because they expect that you already know this okay they expect that you already know this so take out your phone or whatever You're using for a calculator and let's do these few math problems the first thing I'm going to show you how to calculate is what's called LTV loan to value calculating LTV loan to value this is the formula for calculating LTV you take

the first loan amount and divide it by whatever is lower the sales price and the appraised value press equal and just read what it says I cannot tell you how many times people Are there still adding this and they're still at I'm like what are they doing you take the sales price I mean you take the first loan amount and you divide it by whatever is lower the sales price and the appraised value just press equal for the CLTV combined loan of value you're going to take the first loan amount and the second loan amount

and divide it by whatever is lower press equal and just read it For LTV it's just the first divided by whatever is lower CLTV is the first and the second divided by whatever is lower here is your problem if you have a home that has an appraised value of 120 it has a sales price of 125. the loan amount on the first is 90 000. the loan amount on the second is ten thousand calculate the LTV and the CLTV And I'll let you know if you're right or wrong take a few minutes to do that

so the LTV you have to take the first loan amount which is what ninety thousand dollars and divided by whatever is lower 120 press equal what did you get 75 and for the CLTV the ninety thousand plus the ten thousand divided by whatever is lower and just press equal So the ninety thousand plus the ten thousand divided by a hundred and twenty thousand and you should have gotten 83 percent LTV that's how you calculate LTV and CLTV all right so the next one I'm going to show you is calculating ratios how to calculate ratios we

call them the front and the back ratio are the top and the bottom but on the test they call it calculating The her I was like well who is she the her housing expense ratio you need to know that term what do they mean when they say housing expense ratio well to us that means the front end or the top ratio you got to take the house note the p-i-t-i and divided by the gross monthly income the Piti divided by the gross monthly income and just press equal for the back end of what they call

the tour Total obligation ratio you're going to take the p-i-t-i plus their debt and remember you're only going to be counting debt that's going to show up on the credit report not like the soccer dues or all of that stuff just debt that will show up on the credit report but there's two things you have to remember about the back end if it has 10 payments or less if it's credit with 10 payments or less you don't count it Unless it's a lease if it's a lease I don't care if it has one payment or

100 payments you have to count it every single time so pay attention to the problem did it say an auto loan with six payments left or did it say I auto lease with six payments left that's gonna make a difference do you guys get that you have to understand that so here is your problem Smith's annual income is sixty thousand Dollars their house note or their Piti is 15.50 their debt is 450. calculate the front end and the back end and we'll see if you're right or wrong calculate the front end and the back end

so the first thing you had to do is calculate the gross monthly income the gross monthly income sixty thousand dollars divided by twelve should have been five thousand dollars Then you can calculate the front which would have been 1550 divided by the five thousand you would have gotten Thirty one percent and then you're going to calculate the back which would have been the 1550 plus the 450 divided by the 5000 the back end will be forty thousand dollars that's how you calculate the front end and the back end 40 yeah 40 percent so now we're

going to do what's called Calculating maximum mortgage payments three steps okay although there's probably tons of other ways to do this if you do it these this way that I'm showing you your answer will always come out right and someone's always wants to show me a different way to do it I don't want to know that I just want to know the way I know step one step two step three if you do it this way it's always going to come out right step number one oh also you Should know there's some problems that if

you have not memorized the ratios you wouldn't be able to do them in the first place you have to memorize the ratios going into the test you need to know what the ratio is for FHA conventional and VA you're supposed to know that okay so this is this problem this is how you calculate maximum mortgage payment step number one you're going to take the gross times the front ratio in the problem they'll tell you if It's FHA or if it's conventional and you need to know that ratio the gross times the front ratio press equal

step number two the growth times the back ratio subtract the debt the gross times whatever the back ratio is minus the debt write that number down step number three says look at both of those numbers you just wrote down whichever is the lowest is the answer to the problem and people ask me well how come I can't Just do step one well how are you going to know what's lower if you didn't do them both follow instructions step one says take the gross times the front ratio step two says take the gross times the back

ratio minus the debt step three says look at both of those whichever is the lowest is the answer for the exam here is your problem a bar has a stable monthly income of four thousand dollars They have debt of 600. they're getting an FHA loan so hopefully you've memorized the ratios for FHA because if not how you gonna do it what is the maximum monthly payment that the bar will qualify for go ahead and do step one do step two and do step three step one says take the gross times the front Ratio or the

front ratio for FHA is what 31 percent step number two says take the gross Times the back ratio 43 and minus the debt step number three says whatever number is the lowest that's the answer to the problem if they ask you to calculate maximum mortgage payment this is what you do step one step two and step three this is the steps to calculating maximum mortgage payment these are the ratios that you just have To memorize my biggest thing when I was doing the test and studying for this is I was always confused am I supposed

to multiply something or am I supposed to divide something I don't know is this a multiplication problem or division problems I hate math which one do I do well this is what I learned and write it down here if they're asking you to calculate a Ratio that's a division problem if they're asking you to calculate a ratio that's a division problem if they're asking you to calculate a payment amount that's always a multiplication problem once I learned that I was able to figure out am I supposed to multiply or divide if they say what is

the ratio for well that's division What is the payment amount for the next multiplication got it now the math part stresses a lot of people out but just know they can't give you more than seven math problems that's the mass you can even miss all the seven math problems and still get past the test I did a string I think just yesterday or whatever because my students were killing me with all the math problems They were stressing so much on the math problems and I had to let them know you guys should be concentrating on

regulation this that and the other and factor or whatever you're gonna have 25 or 30 of those most people get four math problems that's it but the most that they can give you is seven if you join the Facebook group look at the string we asked them I asked the last few test takers how many math Problems you got the majority was three or four how many hours did you spend studying math tons for three or four problems you should have been concentrating on some of the other areas I'm not saying don't do the math

but I'm just saying if you're going to stress out on something don't let it be math Let It Be Federal make sense you're gonna get 25 or 30 of those you're going to get four or five math problems Okay now ethics ethics is all about right or wrong things you should have learned in kindergarten be fair to the truth be honest they're going to give you scenarios if it sounds bad it probably is okay so most people really don't have a problem with ethics because if it sounds like somebody is being cheated they Probably are

being cheated but there's some definitions that I need to make sure that you know you need to make sure you know the difference between actual fraud it was done on purpose you knew it was fraud you saw them over there making up those check stubs you even helped them figure out the calculations actual fraud our constructive fraud you had no idea that they did this you just went by what they said You also have to know the difference between fraud for property and who commits that homeowners or potential homeowners fraud for property and fraud for

profit who does that now let's talk about fraud for property first fraud for property lying on their application making up check stubs making up tax returns using straw buyers why are these people committing this fraud Because they want the property they're not trying to get money they want the house so who commits fraud for property potential homeowners borrowers consumers fraud for profit that's about money write down the term industry insiders they're going to ask you who commits fraud for profit industry insiders people inside the industry for money uh charging you to verify your employment um

charging you to not look up this on The title uh different things like that that will be fraud for profit it's committed by industry insiders an appraiser charging you to give you a good value are the um tax person CPA charging you for a profit and loss statement why are they doing that they want money they want money industry insiders commits fraud for profit now here are a few terms mortgage schemes that you need to know Air loan what is an air loan there's not even a property they made up the address it used to

happen a lot do we get a person that would make up an address and get it to their appraisal for instance hey put this address on one of your old appraisers and send it to me if we get this deal done we'll give you a cup then they get to their inside person at the mortgage company hey see if you can Walk this through if we get this done we'll give you a cut and sometimes they will get a loan on a property and commission on a property that doesn't even exist that's called an air

law so whenever you see the term non-existent loan or no collateral of course they couldn't do it anymore because they check and check and recheck but for the test you need to know what is the definition of an air law non-existent property they made it All up you also need to know deed scam what is that when they scam someone out of their D happens a lot in low mods sign your property over to us and we're going to help you fix your credit get you straight and then we'll give you back your property and

they'd find some reason not to get the people back their property they scammed them out of their deed double Soul loans Double so long used to happen a lot you'd have these Mortgage Bankers that would set up LLCs Nevada Corporation this Corporation and what they would do is they would have a property and they would sell it to two different lenders on the secondary Market because it used to be a time where in order for something to show up on your credit or public record took 30 45 days and what they would do is they

would sell it to two different lenders on the secondary Market one didn't know it was already purchased by the other they got paid the three four five hundred thousand dollars and they just dissolved the LLC and go do it again double so lost unrecorded silent second what makes that unethical if you have a lien against someone or someone had to lean against you it is supposed to be recorded at the county recorder's office you're not supposed to Wait till the last minute I lost the deal last week because at the last minute someone had an

unrecorded thing and they found out the property was being sold and they went and they recorded it really fast you know um if there is a lien on the property it's unethical not illegal but unethical to hold on to it they're supposed to have that recorded at the county recorder's office and it's supposed to be public record that there Are liens on this property unrecorded or silent seconds Equity skimming making rescue loans to people when you know the bar can't pay this happened a lot in stated and a lot of people got it home and

couldn't even make the first payment the loan originator because the bar had a good credit score stated their income but he doesn't have a job oh I don't have to prove that he have a job because He had a 750 credit score and all the lender wants is the credit report but you know he doesn't have a job oh he promises me if they get the loan their cousins their family their friend they're going to come up with the money but you know he doesn't have a job that's unethical making loans to people when you

know they don't have the ability to repay can't do that anymore but that was called Equity skip loan flipping refinancing them over and Over again when there's no net tangible benefit costing six seven eight thousand dollars in closing costs but all you saving was fifty dollars sixty dollars that's what that one is straw buyer using someone else's name to buy the property but the lender thinks that they're the one that's staying there for example if I get my loan in my sister's name because she has better credit than I do and every month when I

make the payment I make it under her Name she would be a straw buyer can't do that okay three other ones that you need to know bait and switch and alluring but insincere offer to sell a product or service it sounds good I'm going to tell you whatever I need to tell you to get you in the door I'm gonna make all kind of promises just to get this appointment and get you here but once I get you here I'm gonna say okay so let me tell you what I really want to show you but

what about all that stuff we just talked about all you did was lure them in on something that you really didn't want to talk about switch after sale you took a deposit you took a deposit uh and then you switched it if you take any deposit or our company takes any deposit for example uh say that there's a 70 inch TV for sale and you call say Best Buy or Whatever you say I hear that you have a 70 inch TV for sale I'd like to know more about it yeah but we only have three

left if you give me a deposit I'll hold it for you but then I give them a deposit and I drive all the way down there and they say well we don't have the one we talked about but let me show you this then why did you take my deposit that's called switch after sale because they took money now Bonafide offer you have To make sure if it's a service or a product that you're offering that you can actually provide it that you can actually provide it they do that a lot with Black Friday sales

the first 100 people we're going to give you this Xbox for forty dollars but they only got 30 Xboxes and they got all these people sleeping there it's not a Bonafide offer how are you going to give it to the first 100 people if you only have 30. that would make it not a Bonafide offer do you get that SAFE Act SAFE Act you need to know this is the part of the test why you don't have to take a separate California test anymore you'll need to take one test now and you can do loans

in over 40 or so States because you passed the national egg test exam with UST uniform state test component you need to know that Hera is the law That created the Safe Act what law created to Safe Act Hera you need to know that the Safe Act stands for the secure not the safe the secure and fair Enforcement Act and make sure you know that the n and nmls stands for Nationwide not National Nationwide so make sure you know those three things Hera is the law that creates a safe act the Safe Act stands for

the secure not safe and the n stands for Nationwide And sometimes they actually what does the r stand for the r stands for registry you need to know what two entities created the entire nmls system highlight csbs that's one along with the aarmr Highlight that one those are the two organizations that created this entire nmls system they're going to say the csbs and the Aarm created the nmls you are a loan originator if you're taking a loan application or negotiating a mortgage a lot of people out there should have this license and they're still doing

they're calling them Junior processors or things like that and it should really have this license if they are negotiating mortgages discussing rights things of that nature they're supposed to have this license so if you're taking applications or Negotiating mortgages you're supposed to have this license okay if you get caught you're going to be in a lot of trouble if all you are really doing is Administrative and clerical you don't have to have this license so if all you're doing is Administrative and clerical you're not discussing rates and terms and things of that nature you're fine

you're just doing paperwork if you're only doing time shares you don't have to have this license If you only need to do a loan for a member of your immediate underlying immediate family member you don't have to have this license I don't want to be in the loan business I'm just trying to help my daughter with the law I got to get licensed to do a loan for my daughter no that's my immediate family member or my mom immediate family member you don't have to then they're going to ask you there's a processor or underwriter

Has to have a license and everybody wants to say no but the answer should be it depends who do they process our underwrite form that's going to determine whether or not they should be licensed who do they process or underwrite for if they process or underwrite for FDIC insured Bank then no they are not licensed they are what's called registered but if they're an independent processor or underwriter Then the answer is yes case in point my sister works for Chase she has an nmls number just like I do she does same thing process underwrites does

loans but she can only do them for Chase she is what's called a registered loan originator she didn't have to take this test she doesn't have to do continuing education she doesn't have to do the class she doesn't have to do anything get up comb your hair go to Chase got hired that's it they give her A number it's registered to Chase but I have a friend her name is Sean Davis she's a processor she works from home she has her own Processing Company it's called unique processing she does some processing for me for some

other people that I know for a few Banks as a contractor she is has to do the same thing we have to do she had to take the test she has to do continuing education she has to pay all the fees so the question is when They pass out their business cards who do they represent if they represent an FDIC insured Bank then no they are what's called registered they don't have to do any of this yeah they have a number just like us but they don't have to do any of this but if they're

representing themselves their own company then yes they have to do the same exact things that we have to do so don't get that wrong because they're Going to give you a lot of questions in this section about whether or not a processor or underwriter has to be licensed it depends on when they pass out their how do they represent themselves to the public do they work for a bank then no then they're registered or do they work for themselves then they're licensed just like us registered loan Originators work for a bank No other really way

to say it State licensed loan Originators all the rest of us everybody has a number either your number is registered work for a bank or your number is license all this money time energy effort that we have to do that's all it means you have to have never lost their license in the past if you lose this license go learn something else they Will never ever give it back to you it used to be a time I lost my license in Texas let me move to Utah oh I messed up in Utah let me move

to Jersey not anymore that's why they have us on a registry if you lose this license just go learn something else you have to have not plea guilty of a felony in the past seven years but if the felony dealt with money crimes ever so if you had a felony in the past seven Years that didn't have to do with money Ponzi schemes all of that you're okay but if you had a felony and it dealt with money crimes you'll never get it I could have committed felony manslaughter 10 years ago I'll get licensed if

I commit a felony Ponzi scheme 150 years ago I'll never get it The Only Exception is if I got pardoned by the governor so you need to know that if you got pardon then they'll let you In you have to do 20 hours of pre-licensing highlight the 20. but they're going to ask you up that 20 hours how many hours had to be Federal how many hours had to be ethics how many hours had to be non-traditional and you see that other 12 hours for those of you that took this class the 20-hour class online

that's why you didn't pass that other 20 hours of fluff that they put in there Okay and then you studied that stuff for the test the test consists of three hours of federal two hours of Ethics two hours of non-traditional the other 12 hours the instructor could have talked about whatever they wanted probably sound real good probably stuff you need to know to be in the business but not necessarily what you needed to know to pass the test and that's why people in online classes have a hard time you don't know what to study and

You're studying way more stuff than you need to of the eight hours you have to know how many federal federal never changes how many non-traditional how many um ethics and you have to know the term successive year rule highlight that that just means you cannot take the same continuing education class every year you can go back to the same school we have our students come back every year but each year we have to teach Something different if we don't change our curriculum they're not going to get credit successive Euro you can't get credit for the

same exact course this map and it needs to be updated now uh this map and in your email that I'm going to send you in a minute you'll have an updated one all the ones here in the blue and the yellow once you pass this test you can do loans in all those States This is what I need you to do on your paper Circle Minnesota all the way up there in the top Circle Minnesota and Circle West Virginia as of today every state on this map besides those two are now blue which means once

you pass this test you can do loans in all of the states except for Minnesota and West Virginia I have family in Texas I do their loans Here even though my sister works for Chase but everybody doesn't qualify for a Chase loan I do their refi's here I have people here that own property in New York or Pennsylvania or they're that family there I helped them here once you pass this test you can do loans in all these states now some states require additional education for example look at Nebraska it says 22 hours well you've

already done the 20 hours if you want to do a loan in Nebraska go online to my website do the two hours next next next learn about Nebraska look at Connecticut you have a loan in Connecticut you've already done the 20 hours go online and do the one hour you don't have a loan in any of these states then don't worry about it make sense you need to know the term state regulatory Authority highlight that state regulatory Authority the state regulatory Authority is what I call your Babysitter the state regulatory Authority they're going to ask

you on the exam what can the state regulatory Authority do and not do that is who you are licensed under state regulatory Authority just happen to be in California we have the bre and the dbo but in Texas it's called something different in New York it's called something different and Pennsylvania it's called something different so You're not going to need to know that for the exam you're just going to need to know the term state regulatory Authority who do you have to report to now the state regulatory Authority is responsible for supervising you making sure

you're registered uh conducting investigations they can deny you suspend they're your babysitters that's who is in charge of you during this mortgage licensing I need you to highlight the last three bullets those are the most Important ones that you need to know for this exam you have to have what's called each state has to have what's called protection options because most loan officers really don't know what they're doing in the beginning so if you go out there and get sued where does the money come from because we don't have money either well either they're going

to require that you have a minimum net worth If you don't have a minimum net worth which there's some guidelines to that then they're going to want you to get bonded just like if you're a notary you have to have eno insurance they don't require that you get bonded most companies will pay for a bond for you or if you're a real estate agent it you can uh you pay dues already and each state has what's called a State Recovery Fund so they're going to ask you on the exam What are the three protection options

that each state regulatory Authority have to have in place they're either going to require a net worth surely bonding or State Recovery Fund those are the three and you need to know them by name you also need to remember or you need to know that a state regulatory Authority cannot issue a prison sentence they ask that a lot they're gonna say which of the Following things can they not do they cannot send you to jail they could take your license they can suspend your license they can give you a fine but they don't get to

send you to jail now they may send your case over to the district attorney and let him send you to jail but for the test the state regulatory Authority does not issue a prison sentence the penalty for violating the safe act 25 000 highlight that the penalty for violating the safe act 25 000 if you don't want to pay that twenty five thousand dollars do not do any of the things that I have on these next two pages because if you do you will be fined 25 000 but you couldn't do any of them anyway

can you practice without a license no can you defraud borrowers no can you break the rules no Can you beat up the appraisal because he didn't give you the value that you wanted no can you take the people's deposit money and go pay your own bills with it no any of those things would be a violation of the Safe Act and if you do any of them you will be fine what 25 000 dollars and that brings us to the end of that now I've made you guys some charts okay um so you want to

pay attention to this because this is going to help you you Need to know what came after what look at here hair came first then came the Safe Act the Safe Act is actually Title Five of Herod you need to know that Sacra regulation V came first and then the fact act which has section 114 rules what are those red flag identity theft rules what are the three things under the Grammys bliley Act safeguarding pre-taxing Financial privacy what are the three things under the Fair Housing Act blockbusting steering and redlining what are all of the

things that make Tilla the Godzilla you need to know all of these laws are underteller they're going to say hope alone is part of which larger law Attila section 32 part of which larger loctilla and on and on and on all of these things are under tiller this is what we call Tiller the Godzilla You need to know here with ecoa and thakura and make notes right here on your paper they're going to say what is a protected class under both ecoa and fair housing and look at the first five sex race religion color national

origin those are protected under Fair Housing and e-core but then they're going to say what's protected only under E coli age marital status receipt of Public Assistance was protected only under Fair Housing disability and familiar status but you're going to get a lot of questions that says what's protected by ecoa but not fair housing what's protected by fair housing bus 90 Court what's protected by both fair housing and E coli and you're going to be happy that we made this chart okay this next one background versus fatback remember I told you one of them you

get a free credit report if And the other one I told you has no if so under thakura right if you can get a free copy of your credit report if and you can go back to the page where I gave you the four reasons why you can get a free copy of your credit report under fakura but remember fact act you don't have to have a reason so write no if under fact that you get a free copy of your credit report once a year you don't have to have a reason know which one

you have to have the Reason for and which one you don't have to have the reason for do you get that and then I think I got happy and gave you guys the charts over and over and over again but that's pretty much it thank you foreign thank you [Music]