Saturday, June 7, 2014

Tips, Thoughts and Practices is a weekly email/blog from AcuClix© disseminated to mortgage compliance professionals.

This blog will discuss specific compliance issues, provide examples of non-compliance and tips for managing MLOS.

ISSUE: Unfair, Deceptive, Abusive Acts or Practices (UDAAP)

How do you know if an act by the MLO is UDAAP? This is a very subjective area of compliance. We have identified a few examples that we have identified in our reviews:

1. MLO title: We have found "Branch Owner", "Partner", Counselor" and "Financial Planner", among others. There is an attempt to create the impression that that MLO is other than a person who sells mortgage loans.
2. Appearing to be a separate licensed mortgage company: This occurs most frequently with MLOS working as a team. Many times there is a separate name and tag line. The connection to the licensed Company is not clear.
3. Acting in the capacity of counseling and advising: We have found MLOS that appear to be acting in a "fiduciary" relationship.
4. Misleading descriptions of loan programs: We find this with the Home Equity Conversion Mortgage (HECM). HUD requires a very clear and specific definition which is not set forth.
5. Describing a mortgage as "wealth-creation" and using terms such as "debt-free", "eliminate debt" or other terms or phrases the appear to make using a mortgage (debt) to eliminate debt.
6. Use of terms such as: "Government Benefit", "Government Program".

TIP: Some ideas you might use:

1. Establish list of approved titles;
2. Establish list of non-approved terms.
3. Regularly inspect the social media use to ensure compliance

We hope you find this information useful. Thank you.

Michael J. Wallace, Esq.
Chief Compliance Officer, AcuClix©.