Sunday, May 4, 2014

Tips, Thoughts and Practices is an  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. This area is risk management and not perfection. The goal is to have in place policies, and procedures by which the Compliance officer is managing the risk associated with use of social media.

ISSUE: RESPA Section 8: The prohibition against kickbacks and unearned fees goes way back to 1974 with the introduction of the Real Estate Settlement Procedures Act (RESPA). This was among the first national acts seeking to impose compliance upon the mortgage industry. In the normal course of business MLOS establish close ties to realtors and other service providers. This does, however, lead to violations of RESPA. We have found potential violations in:

1. MLO joint marketing materials with realtors;
2. Discounts provided by using various service providers;
3. Referral relationships with attorneys and other service providers;

TIP: Some ideas you might use:

1. Provide written policy regarding joint marketing including:
   1. Pre-approval of relationship
   2. Pre-approval of all co-branded marketing material regardless of dissemination channel;
   3. Establish percentage of MLO cost based upon the space on the marketing piece. For example: if the MLO has half the page he/she should pay half the cost.
   4. Require proof of payment by MLO directly to marketing company/printer and not realtor.
2. Review of origination sources, loan programs, type of borrower, specific rates and terms to determine if there is an unusual pattern or practice.
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©.