Overview This document is intended to provide guidance and clarification regarding state specific requirements and disclosures in order to target issues identified through state examinations. Please contact the Compliance Department at compliancedepartment@cmgfi.com for any additional information. Ownership Document Owner: Applicable Channel(s): Process Responsibility: Compliance Department All Channels All production and operations staff Table of Contents Click on the state below to view the state guidance document. Additional states will be added as needed to address deficiencies from state examiners. Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming 1
Ohio Company Licenses and Permitted Loan Programs CMG has the following licenses in the state of Ohio: Ohio Mortgage Broker Act (OMBA) Mortgage Banker Exemption Ohio Mortgage Loan Act (OMLA) Certificate of Registration OMBA The OMBA license is for lenders that originate, purchase, sell or service residential first mortgage loans and meet at least one of the following criteria: Approved by Fannie Mae as a seller/servicer Approved by Freddie Mac as a seller/servicer Approved by the Department of Housing and Urban Development (HUD) as a nonsupervised mortgagee with participation in the direct endorsement Approved by the Department of Veteran Affairs (VA) as a nonsupervised automatic lender CMG meets this criteria and all loans originated by CMG under these approvals are under the OMBA license. OMLA The OMLA license is for lenders that originate, purchase, sell or service residential first mortgage loans that are not originated under the approvals of Fannie Mae, Freddie Mac, HUD or VA, which means these loans do not comply with the underwriting and documentation requirements of Fannie Mae, Freddie Mac, HUD or VA. At CMG, these loans are often referred to as non-agency loans. Note: OMLA also covers second mortgage loans and unsecured loans, which are not currently offered by CMG. The primary issue with originating loans under the OMLA license is the state law requirement that CMG collect the first payment prior to being permitted to sell the loan. Due to the servicing requirements and risk associated with ensuring this requirement is met, CMG will not originate these loans in the state of Ohio. Corporate Credit is responsible for ensuring the guidelines for the specific loan programs that fall under the OMLA license reflect that CMG is not permitted to originate these loans in Ohio. Brokering Out CMG is not permitted to broker out loans to other lenders in the state of Ohio. In order for CMG to be properly licensed for this activity, CMG would be required to relinquish the Ohio Mortgage Broker Act (OMBA) Mortgage Banker Exemption license and obtain the Ohio Mortgage Broker Act (OMBA) Certificate of Registration license. In making this change, CMG would no longer be originating loans under the OMBA Exemption license (which is specific to the approvals of Fannie Mae, Freddie Mac, HUD and VA); instead, all loans originated by CMG would be under the OMLA license, which requires the first mortgage payment to be collected by CMG before the loan can be sold. 2
Correspondent Loans For loans originated by Correspondent Sellers that are purchased after funding by CMG, the following requirement is specified in the Correspondent Selling Guide: For all loans originated by the Seller under the Ohio Mortgage Loan Act (OMLA) Certificate of Registration license, the Seller must provide proof of the first payment being collected by the Seller prior to CMG being permitted to purchase the loan. Please see the Ohio Mortgage Loan Act (OMLA) for more information. Loans originated under the Ohio Mortgage Broker Act (OMBA) licenses do not have this requirement. Brick and Mortar CMG is not required to have a branch physically located in the state of Ohio due to having the Ohio Mortgage Broker Act (OMBA) Mortgage Banker Exemption license. Disclosures Notice of Escrow of Taxes & Regular Monthly Payment The Notice of Escrow of Taxes & Regular Monthly Payment is required to be delivered to the borrower prior to closing, however it cannot be included in the initial disclosure package. The Notice has specific timing requirements under the OMBA and OMLA licenses. Since CMG is only originating loans under the OMBA license, the information below is based on the requirements from the Ohio Mortgage Broker Act (OMBA). No later than three business days before a loan is closed/signed, CMG is required to deliver the Notice of Escrow of Taxes & Regular Monthly Payment. The Notice specifies if property taxes will be escrowed and contains a description of what is covered by the regular monthly payment, including principal, interest, taxes and insurance, as applicable. For this requirement, business days is defined as all calendar days except federal holidays and Sundays. For example, if the borrower confirmed receipt of the Notice any time on Monday, the closing/signing may occur any time on Thursday. The Notice can be delivered to the borrower much earlier than three business days prior to closing/signing. As soon as accurate tax and insurance information is received, this Notice may be delivered to the borrower. If escrows are added or removed subsequent to the Notice being provided, a new Notice must be delivered to the borrower and receipt confirmed. Evidence that the borrower received this Notice must be uploaded to the loan file. Receipt can only be evidenced by one of the following options: Signed and dated Notice of Escrow of Taxes & Regular Monthly Payment Email read receipt showing the borrower read the email Email from the borrower confirming receipt of the Notice Note: Prior to any disclosures being emailed to the borrower, the borrower must accept an electronic disclosure and consent agreement. If the borrower electronically signed any documents via CMG s document vendor, then the borrower did accept the agreement. If the borrower did not electronically sign documents, then the borrower must sign and return CMG s Electronic Disclosure and Consent Agreement before any disclosures can be emailed. Note: The timing requirement under the OMLA license is for this Notice to be delivered not earlier than three business days nor later than twenty-four hours before the loan is closed/signed. 3
Other Disclosures Other disclosures required by the state of Ohio are: Acknowledgment of Receipt of Home Mortgage Loan Informational Document required at application, or within 5 business days if application is not submitted in person, and must be signed Anti-Discriminatory Loan Disclosure initial disclosure Business Relationship Disclosure required if borrower is referred by broker or loan officer to any settlement service provider Closing Disclosure required to be signed at closing prior to any other documents Distinct Entity Disclosure initial disclosure only required from broker to disclose if there is any business relationship or affiliation with a particular lending institution, if applicable High Loan to Value Disclosure initial disclosure only required for loans with LTV exceeding 90% Homebuyers' Protection Act Informational Document required to be provided at application, or within 5 business days if application is not submitted in person Mortgage Loan Origination Disclosure Statement initial disclosure only required from broker Mortgage Loan Origination Disclosure Statement Addendum initial disclosure only required from broker Notice of Change in Mortgage Terms disclosure required if any material change in loan terms occur or if any fees payable by the borrower to the lender, broker or loan originator increase by more than 10% or $100 (whichever is greater) Refinancing Disclosure closing disclosure for refinance loans For more information on any state specific disclosures, please contact the Compliance Department. Advertising All advertisements (all material printed, published, displayed, distributed or broadcast) and websites referencing the Loan Officer s services is required to include the following that is listed on the certificate of registration the Loan Officer received from the state of Ohio: Loan Officer s name o The name must match the certificate of registration exactly. If the state of Ohio approved any trade or alternative names, the Loan Officer may use the alternative name or any combination of the approved names as they appear on the certificate of registration from the state of Ohio. Office address Ohio Mortgage Broker Act (OMBA) Loan Originator License number This information is required to appear on any written advertisement using a font no smaller than ten point Times New Roman. These requirements do not apply to minimal promotional advertising done on pens, pencils, pocket calendars, balloons, coffee mugs and similar items. For radio advertisements, a statement of CMG s full business name and Ohio Mortgage Broker Act (OMBA) Mortgage Banker Exemption license number is sufficient to meet the requirements. Note: Information that CMG distributes to brokers solely for the use of the brokers and not for dissemination to the public is not considered an advertisement. The document must state that it is not intended as an offer to extend credit nor a commitment to lend; the loan interest rates, fees, and terms presented herein (if applicable) are for illustrative purposes only and may not be currently available; and that the document has been prepared to assist brokers in illustrating some of the financing options available to buyers (if applicable). 4
New Jersey Permissible Fees The lists below provide the fees that are permitted and not permitted to be charged in the state of New Jersey by the Lender and Mortgage Broker. For questions regarding any fees not listed below, please contact the Compliance Department. The following fees are not permitted: Administration Fee Broker Fee Document Preparation and Redraw Fees Electronic Delivery Fee Escrow Waiver Fee Funding Fee Lender Fee Origination Fee Processing Fee Underwriting Fee Wire Fee The following fees are permitted: Application Fee Commitment Fee, if charged by Lender Discount Points Rate Lock / Lock-in Fee, if charged by Lender Fees payable to third parties: o Credit Report Fee o Appraisal and Final Inspection Fees o Overnight Delivery, Messenger, Fax or Other Special Delivery Fees, if borrower executes the Overnight Document Delivery Service Acknowledgment o Flood Certification Fee o Attorney Fee o Tax Service Fee Disclosures Application Disclosure (aka Advance Fee Disclosure) The Application Disclosure is required to be disclosed to the borrower prior to the Lender or Broker accepting any fees, including the application fee, credit report fee, and appraisal fee. This disclosure must include the following information: 1. A description and the amount of each fee; 5
2. Whether all or any part of the fees are refundable; 3. The terms and conditions for the refund; 4. A realistic estimate of the number of calendar days required to issue a commitment following receipt of the fees by the lender; 5. The name or title of a person within the lender s organization to whom the borrower may address written questions, comments, or complaints and who will be required to promptly respond to such inquiries; and 6. For Correspondent Sellers, a statement indicating that the licensee is a correspondent mortgage lender and as such does not hold mortgage loans or service mortgage loans for more than 90 days in the regular course of business. Note: The Application Disclosure was updated in IDS on 12/23/2014 to automatically include 30 as the number of days to issue a commitment. Please ensure any loans disclosed prior to this date have the number of days completed. If missing, please generate a new Application Disclosure to deliver to the borrower and ensure an executed copy is uploaded to the loan file. The Application Disclosure is required to be signed and dated by all borrowers. Loans are not permitted to proceed to closing without the fully executed disclosure uploaded to the loan file. Settlement Service Fees Estimate (aka Mortgage Fee Disclosure or NJ Disclosure Form) The Settlement Service Fees Estimate is required to be disclosed within the same timeframe as the Good Faith Estimate (GFE) and list all of the same fees as on the GFE. On the Settlement Service Fees Estimate, the individual fees must be totaled by category, with the total amounts equal to the amounts shown on the various Blocks and Lines on the GFE form, and also include which, if any, fees are refundable and the terms and conditions for such refund. To ensure the GFE and Settlement Service Fees Estimate disclose the same fees, the Settlement Service Fees Estimate should be redisclosed each time the GFE is redisclosed; however, if no fee changes occur on the GFE, the redisclosure of the Settlement Service Fees Estimate is not required. The Settlement Service Fees Estimate is required to be signed and dated by all borrowers. Loans are not permitted to proceed to closing without the fully executed disclosure uploaded to the loan file. If any changes to the fee amounts occur after the disclosure was executed, the new disclosure must also be executed and uploaded to the loan file. Only permissible fees may be disclosed on the Settlement Service Fees Estimate. If impermissible fees are listed on the Settlement Service Fees Estimate, a new disclosure must be executed by the borrowers with only the permissible fees listed. The Lender is not permitted to collect any fees at closing that were not disclosed on the Settlement Service Fees Estimate, so the HUD-1 Settlement Statement and Settlement Service Fees Estimate must match. Note: The Settlement Service Fees Estimate was updated in IDS on 12/23/2014 to be automatically included in all Redisclosure packages in order to ensure any fee changes disclosed on the GFE are captured in this required disclosure. Please review all loans in process to ensure this disclosure is present, matches the GFE and is executed by the borrowers. 6
Other Disclosures Other disclosures required by the state of New Jersey are: Property Insurance Disclosure initial and closing disclosure Right to an Attorney Disclosure initial disclosure Mortgage Broker Service Agreement required only from Brokers at application Overnight Document Delivery Service Acknowledgment initial disclosure required if special delivery services are used Loan Commitment required to be delivered to borrower upon loan approval Lock-in Agreement required when rate is locked; if a rate lock fee or commitment fee is charged, it must be disclosed in this agreement Private Well Testing Act Certification only required on purchases at closing if the property s well meets certain conditions Tax Authorization Notice closing disclosure For more information on any state specific disclosures, please contact the Compliance Department. 7