Must read!

Article from the Cleveland Free Times

Sue The Bastards!
What To Do About Mortgage Brokers And Lenders Who Don't Play Fair?
By Charu Gupta, Third In A Series

Minimum wage vs Commision

I do not know about you but I am not sure about paying minimum wage to loan officers or pay them just commission.

Department of Labor Opinion Letter on Outside Sales Employees (March 31, 2006)

Wage & Hour Guidelines presented during the 2005 Legislative Conference (April 11, 2005)
Fortney and Scott Attorneys at Law Opinion Letter

Outside sales employee vs. inside employee Huh? When I read legal things I do not feel to bright. But after reading all this legal stuff I know what I am going to keep doing, but I am still not sure what is right and what is wrong.

New Minimum Wage

H.R. 2

SEC. 101. MINIMUM WAGE.

(a) In General- Section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) is amended to read as follows:
`(1) except as otherwise provided in this section, not less than--
`(A) $5.85 an hour, beginning on the 60th day after the date of enactment of the Fair Minimum Wage Act of 2007;
`(B) $6.55 an hour, beginning 12 months after that 60th day; and
`(C) $7.25 an hour, beginning 24 months after that 60th day;'.
(b) Effective Date- The amendment made by subsection (a) shall take effect 60 days after the date of enactment of this Act.

Another Words
July 24th 2007 the minimum wage goes to $5.85
On July 24th, 2008 $6.55
On July 24th, 2009 $7.25


Nice way to raise taxes without raising taxes

Marc Dann May Sue the Credit Rating Companies

It seems as if Marc Dann is trying to sue every aspect of the mortgage industry.

Subprime contagion?
Ohio's attorney general is investigating the role that credit-rating agencies like Moody's played in rubberstamping dicey bonds, report Fortune's Katie Benner and Adam Lashinsky.

It sure has been an interesting year to watch

Regulators set new subprime loan standards

Bank watchdogs add consumer protections against unscrupulous lenders

http://www.msnbc.msn.com/id/19504015/

Enclosed is the link to the Statement on Subprime Mortgage Lending

http://www.federalreserve.gov/boarddocs/press/bcreg/2007/20070629/attachment.pdf

New Rules for SB 185 as of June 1, 2007

The rules as of June 1, 2007

AN ACT

I found this today It is called An Act Looks like SB 185 amended Not really sure

http://www.mcglinchey.com/pdf/126_SB_185_EN_N.pdf

(Amended Substitute Senate Bill Number 185). AN ACT. To amend sections 109.572, 1321.57, ... Be it enacted by the General Assembly of the State of Ohio

This is the description that came up for the link.

Seems to have a number of changes. I thought they were done with this bill and had moved on.

Predatory Lending Bill Back in Congress

Congress woman Stephanie Tubbs Jones (D-Ohio) has reintroduced the Predatory Lending Practice Reduction Act of 2007.

New Proposed Rules as of April 9, 2007

http://www.com.state.oh.us/dfi/pub/cons_RULESRefile.pdf

predatory lenders will "be going to jail in handcuffs" by the time the next president is elected.

Ohio's AG says predatory lenders will be dealt with


likened predatory lending to stealing people's money in an armed robbery using a gun.
Just because he did it with a computer and a calculator, doesn't make it any less of a crime," he said.

"We're going to be very aggressive going after predatory lending institutions," through criminal charges or civil lawsuits, he said. "We think it's going to lead us to Wall Street."

There always has to be a first!

Here is the first lawyer that I have found that has information about some of the do's and don'ts of mortgage lending. The website contains a very brief description of what mortgage lenders must do and if you do not, you may need to contact his law office. I think the site is a little out of date but, I wondered how long it would take before I would see an attorney advertising in relation to mortgages.

I am still waiting to see an advertisement on the television.

Here is the link for you to view.
http://www.ohiolemonlaw.com/ocll-site/ocll-mortgage_fraud.html

Has anyone else seen any advertisements yet?

Bond investors now suing investment brokers

Here is a very interesting twist to the foreclosure issue. The people that invested in the subprime bonds are now suing the people that sold them the bonds. Enclosed is the Bloomberg article.

Subprime Losers Blame Bear, Credit Suisse, JPM, Morgan Stanley
By Christine Richard

"211"

Cuyahoga County Forclosure Prevention Program

Cuyahoga County is trying to educate the public. Very interesting web site. At least they are trying to be proactive with their foreclosure problem. Thumbs up to them!

Congress told of cities devastated by lenders

From The Cleveland Plain Dealer

Thursday, March 22, 2007
Sabrina Eaton
Plain Dealer Bureau

Washington - Predatory mortgage lenders and payday loan shops are turning inner-city neighborhoods all over the nation into ghost towns and must be reined in by the federal government, a panel of urban experts told a House subcommittee on Wednesday.
Defaults on mortgages given to financially strapped homeowners at high interest rates have pushed neighborhoods in cities like Cleveland past the "tipping point" of urban blight, Cuyahoga County Treasurer James Rokakis told the House Government Oversight subcommittee on domestic policy.

"The damage has been enormous, but sadly, the news of the past few months convinces me that the worst is yet to come," Rokakis said, attributing high foreclosure rates in Cleveland to "unbridled greed" by unregulated mortgage brokers.

Whole Article

What will the Feds do now?!?!?!

New Century may be shut down in Ohio

State attorney general gets temporary restraining order against the troubled mortgage lender, claiming 'predatory' lending practices.

March 15 2007: 6:59 PM EDT
NEW YORK (Reuters) -- Ohio's attorney general joined officials from other states, barring troubled subprime mortgage lender New Century Financial Corp. from operating in the state.

On Attorney General Marc Danny's request, an Ohio judge late Wednesday issued a temporary restraining order prohibiting New Century (up $0.68 to $1.35, Charts) from soliciting consumers for broker services or mortgage loans, accepting loan applications and fees to process loans, initiating new foreclosures and pursuing pending ones and evicting consumers.

This is a little scaring!!!!!

Proposed Statement on Subprime Mortgage Lending

Contributors

Department of the Treasury
Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Department of the Treasury
National Credit Union Administration

The main text is on page 6 through 11.

Great BLOG!

Bank Lawyer's Blog

When is an application an application?

According to the Real Estate Settlement Procedures Act

§ 3500.2 Definitions. (a) Statutory terms. All terms defined in RESPA (12 U.S.C. 2602) are used in accordance with their statutory meaning unless otherwise defined in paragraph (b) of this section or elsewhere in this part. (b) Other terms. As used in this part: {{6-30-05 p.6992}}

Application means the submission of a borrower's financial information in anticipation of a credit decision, whether written or computer-generated, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is an application for a prequalification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage loan.

According to the Equal Credit Opportunity Act (Reg. B)

202.2
(f) Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested. The term application does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit. A completed application means an application in connection with which a creditor has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested (including, but not limited to, credit reports, any additional information requested from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral). The creditor shall exercise reasonable diligence in obtaining such information.

According to Home Mortgage Disclosure (Reg C)

§ 203.2 Definitions. In this regulation: (a) Act means the Home Mortgage Disclosure Act ("HMDA") (12 U.S.C. 2801 et seq.), as amended.
(b) Application.
(1) In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.
(2) Preapproval programs. A request for preapproval for a home purchase loan is an application under paragraph (b)(1) of this section if the request is reviewed under a program in which the financial institution, after a comprehensive analysis of the creditworthiness of {10-29-04 p.7272} the applicant, issues a written commitment to the applicant valid for a designated period of time to extend a home purchase loan up to a specified amount. The written commitment may not be subject to conditions other than:

(i) Conditions that require the identification of a suitable property;
(ii) Conditions that require that no material change has occurred in the applicant's financial condition or creditworthiness prior to closing; and
(iii) Limited conditions that are not related to the financial condition or creditworthiness of the applicant that the lender ordinarily attaches to a traditional home mortgage application (such as certification of a clear termite inspection).

According to U.S. Department of Housing and Urban Developement

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

FDIC has a booklet "Mortgage Loan Prequalifications: Applications or Not"
A Guide For Complying With Regulations B and C

So which one do we use? Your comments are welcome.

This is what mortgage lenders are up against

"The way lenders got (home buyers) in the beginning was to give them this easy-street financing that just goes berserk when the rates explode," Suzanne Gravette Acker, of the Coalition on Homelessness and Housing in Ohio told the Dayton Daily News in late January. "Lots of people this year are going to find their mortgage doubles or even triples."

Quote from the Dayton Daily News, Tuesday, February 23, 2007 article link on the left.
"Ohio 7th, Dayton area 51st for January foreclosures" written by Lisa Bernard

February 22, 2007

"Cordray said there are three main factors for the upsurge in foreclosures around Ohio.One cause is the slow growth in the Ohio economy and job losses, he said.

A second key reason, according to Cordray, is that there's never been any real regulation of the mortgage lending industry in Ohio.

And a third factor is an increase in the complexity of some mortgage products, leading to a greater need for personal finance education, said the state treasurer.

As for regulation of the mortgage lending industry, Ohio legislators passed Senate Bill 185 last summer, taking effect New Year's Day.According to Cordray, the new law will tighten up a number of practices in the state and prevent some of "the very aggressive sub-prime lending" that got people into houses but on a short-term basis, with balloon payments and other things that weren't going to last for people."

Quote from Wilmington News Journal Tuesday February20, 2007 "Treasurer talks foreclosures Numbers high for Clinton County" Gary Huffenberger Staff Writer Article link on the left

Has anyone seen the rule for the Mortgage Loan Origination Disclosure Statement

Rule 1301:8-7-15 seems to be missing. This is the rule in regards to the Mortgage Loan Origination Disclosure Statement or MLODS. All the other rules are there but that one. I have found the rule in some of the drafts but not in the final version of the rules.

If any one has found this missing rule please let me know.

CSPA

The sections that seem to apply are in the Ohio Revised Code 1345.01 to 1345.13. So says SB185. I only find up to 1345.091.

In the Ohio Revised Code you must go to Section 13 then 1345.01. I have included the law links below.

The list below contains the parts of CSPA that directly speak to mortgage companies. Now all of CSPA applies, but these part are directed to the mortgage industry.

1321.57 Authorized interest and charges
1343.011 Residential mortages; discount points; prepayment and refinancing penalties.
1345.01(H)(J)(K) Definitions section
1345.031 Unconscionable acts or practices concerning residential mortgages
1345.09 (C)(2)Private remedies
1345.091 Liability of assignee or purchaser of mortgage loan for value

SB 117 would have limited damages under CSPA, but it seems to be in limbo at this time. The Ohio House and Senate is suing the Ohio Secretary of State over whether the bill was able to be allowed to be vetoed by the governor. (Look at the article from the Toledo Blade)

I have placed two links to an Ohio Supreme Court recent decision that talks about damages allowed. One from the Ohio Supreme Court and one from a law firm.

I am not sure how we can keep up with how CSPA is being applied. It seems like a moving target that I am not sure how to get my arms around. Any suggestions????

Revised Consumer Handbook on Adjustable-Rate Mortgages

In case you did not see this, The Federal Reserve Board and the Office of Thrift Supervision revised the Consumer Handbook on Adjustable-Rate Mortgages (the CHARM booklet).

Enclosed is the link to the announcement.
http://www.federalreserve.gov/boarddocs/press/bcreg/2006/20061226/default.htm

You can continue using the old one until October 1, 2007, then you will have to use the new revised booklets. The revised booklets are available for FREE from The Federal Reserve. The address is on the announcement.

Disclosures to Clients

These are the items that I have figured out that Senate Bill 185 requires mortgage brokers to disclose to their clients.

Addendum to the Mortgage Loan Origination Disclosure Statement
High Loan to Value Disclosure
Ohio Revised Code 1322.o62(A)(1)(j) &
Ohio Administrative Code 1301:8-7-15(A)(9) Does not exist yet

Ohio Homebuyers' Protection Act Informational Document
Acknowledgment
Customer Acknowledgment
Ohio Revised Code 1345.05 (A)(4) and (G) & Administrative code 109:4-3-29

Mortgage Loan Origination Disclosure Statement
Ohio Revised Code 1322.062 &
Ohio Administrative Code 1301:8-7-15 Does not exist yet

Addendum to the Good Faith Estimate
Ohio Revised Code 1322.062(D) &
Administrative Code 1301:8-7-15(D) Does not exist yet

Instructions of Borrower
Ohio Revised Code 1322.081(A)(2) & Administrative Code 1301:8-7-26

Referral of Settlement Services
Ohio Revised Code 1322.075(A)(4)

Payment Breakdown
Ohio Revised Code 1322.063

Notice of Change in Mortgage Terms
Ohio Revised Code 1322.062 &
Ohio Administrative Code 1301:8-7-15(F) Does not exist yet

Closing Disclosure
Ohio Revised Code Section 1345:031 (B)(8)

Tangible Benefit
I think there needs to be something to make sure you have documented the benefit to the customer.
Ohio Revised Code 1345.031 (B)(12) & Ohio Administrative Code 109:4-3-26

I am not an attorney, does anybody have any thoughts to add to this list?