all right everyone thank you for joining us for our web meeting on qualified mortgage we hope that you’re all enjoying the first week of January and ready for these changes that are coming up very quickly this should hopefully get you ready for anything that you may have forgotten or that you aren’t quite prepared for we’re going to jump on in and get started I’m tiny’mon a anderson a vice president here at mortgage educators and we also have on the line David Luna David well you introduce yourself hello my name is David Luna with mortgage educators and we’re going to try to take a very boring and dry subject qualified mortgage and help make sense of what in the heck is going on so there’s been a lot of changes over the last few months and so I entitled this okay what’s the latest so as of january2014 I’m going to go back just a little bit and give you a little history of how we got to where we are and where we’re going from here so put your seat belts on this is going to go fast okay this is going to go really really fast I really would even try to keep up on notes we are recording this and that we will make the recording available to everyone so you’ll be able to see the slides get the recording and here we go all right Winston Churchill said nothing wrong with change if it’s in the right direction well let’s see what direction we were in the past and how we got to where we are now so Oh thing go would you which used to be the regulator of Fannie and Freddie back in december two thousand six said you know what according to the non traditional mortgage risk guidance the agencies fannie freddie fdic NCUA control of the currency Federal Reserve everybody was saying you know what we look like we have a problem with all of these subprime loans so in that same december two thousand six of news release at that time the director of the gses director Lockhart says we’d like to have an update by februari 28 2007 Fannie and Freddie of what you plan to do all right so wall street journal reported on februari 28 2007 that Fannie and Freddie said if we go to the second page of that wall street journal article it said as of sep tember first Freddie will no longer by subprime lumps no longer by subprime loans so from December of 062 now 2007 guys we are not going to do this now I think people were caught off guard when they said what are you serious and then we fast forward from sep tember 1 2007 to sep tember 2008 when the US government took over Fannie and Freddie and said we we’ve got a problem and everybody remembers the mortgage meltdown the credit crisis the credit crunch you had President Obama sign the dodd-frank wall street reform and consumer protection act so let’s let’s stop here for just a second how does the dodd-frank wall street reform and consumer protection act actually reform Wall Street all right and how does the dodd-frank wall street reform and consumer protection act protect consumers we want you by the end of this webinar help you understand that what it did what it did to reform Wall Street and what it’s doing to protect consumers are actually good things okay are actually good things so let’s get into it the dodd-frank act in title 10 we’re going to concentrate just on two parts of dodd-frank title 10 created the CFPB so the CFPB is the Consumer Financial Protection Bureau so the CFPB is now charged with you know a carrying forth provisions in dodd-frank to quote mate markets for consumer financial products and services work for Americans well what is the CFPB done what powers and authority do they have and how are they going to make the financial products and services work ok to to protect consumers Americans and reform Wall Street well they have to have the tools okay and so

the CFPB is over a lot of different laws this is just a few laws over which they have the authority okay they have the authority over equal credit opportunity act respa hummed up the home ownership and equity Protection Act the safe act keyla they have a lot of authority over a lot of different things and so they now have the power to move forward all right all right so what we’re going to do now is going to take tear apart section by section dodd-frank again in title 14 sending in title 14 breaking down what dodd-frank a change now this is an amendment to Tila 1403 this section amended Tila which was intended to prevent lenders from placing borrowers and loans with rates and fees that are higher than appropriate in light of the borrower’s qualifications we’ve got to make sure that the borrower in fact does qualify now last last month we did already a webinar on the ability to repay okay ATR we covered a TR and if you want to have a copy of that please let us know we covered a PR and I’m not going to go into eight ER today all right I just want to concentrate more on qm seeing that we’ve already covered that before so in 1403 some of the provisions some of the provisions were that consumers could only be charged for actual real bona fide origination and third-party charges now what’s happening was that those charges could be paid by either the borrower or lender or if you had a purchase transaction you could have the seller paid some of those charges but they had to be real they had to be reasonable customary and we’re going to get into all of that in just a second so the Act also prohibited originator from doing three things one it prohibited originator from steering borrowers to a loan that had quote predatory characteristics what’s a predatory characteristic equity stripping excessive fees abusive terms remember the mess that got us into this thing the subprime loans now again if we would have done subprime as many across the country have said we should have done then we wouldn’t be in the situation that we’re in and they were really abused whether subprime comes back or not will be a topic of discussion very shortly in this presentation today number two it was that applicant prohibited resonators from steering barbers to alone that the consumer lacks the ability to repay so no more of that stated income no more of that Nina this ninja if in fact you wanted to write a QM loan qualified Mortgage and then finally number three if prohibited of originator from steering a borrower from a QM that the bar were qualified for to a non-qm all right so let’s go down for half a second and ask the question will there be non-qm loans made in the future answer absolutely yes absolutely yes so you can do a kill em you can do a non-qm but I just wanted to get that one just quickly right out of the chute our world is really not going to radically change because of QM now I have tine out you heard try to introduce the beginning of the the course and as we go through laws I want you to understand something that’s super super important it’s you individual loan officers liability for violating some of these sections and dodd-frank I’m specifically talking about in Section 1404 it says you individual loan officers if you have violated 1413 you personally individually could also have some penalties that you pay for example if you for whatever compensation you made it could be three times the amount of the compensation it could be the actual damages it could be reasonable attorneys fees so again don’t think that you can hide either behind the company or the if you guys are brokers the company that you sold the loan to so heads up on that now I’m going to back off the microphone for just a second and give some time to Tynna so kind of kind of help us understand this a little bit better right well I just want to point out my favorite part of this says plus

reasonable attorneys fees Oh even though actual damages and three times the skit three times the amount of compensation might seem scary enough to you reasonable attorneys fees can dwarf that amount depending on how high up it goes I’ve seen cases mortgage related cases where the attorney’s fees are four hundred thousand or more so it’s not so much an afterthought as this is serious business and this is why everyone needs to be aware of what what exactly is entailed with qualified Mortgage so you are doing it correctly because the liability is for yourself okay so here’s the motivation of doing qm is because you’re going to have a greater protection and we’ll talk about safe harbor as well Thank You taina okay so looking backward at the ability to repay say on the subprime loans many didn’t do that but looking forward absolutely imperative that we look at the ability to repay it is part of our jobs looking forward now a creditor can’t make a QM loan unless there’s been a reasonable and good faith determination to see if the borrower in fact really does have the ability to repay well how do you know that they have the ability to repay that is based on verified and documented information verified and document it again according to our ATR webinar we’ve talked about what verified and documented means we’re not going to go into that right now but ladies and gentlemen loan officers you guys already know what that means pay stubs bank statements tax returns credit reports etc etc etc so you’re looking in to that kind of information you’re verifying it you’re documenting it you’re looking at debt-to-income ratios and all the other moving parts that we’re going to cover today okay in the past they looked at the consumers equity in the dwelling as the ability to repay the loan we’re going to sell the home we’re going to foreclose the home etc etc that is not the future the DTI ratio or residual income if you’re doing a VA loan after paying the mortgage and non mortgage debt obligations for example the things on a credit report is sitting at a general DTI of forty three percent now I said general at forty three percent I’m going to give you some specific examples that are larger than forty three percent and we’ll show you the documentation that it isn’t you know mortgage educators saying that it is information that’s being shared by the agencies and others you’re looking at the employment of the borrower you’re looking at their resources okay so a couple of questions here did dodd-frank eliminate subprime mortgages no does the CFPB eliminate non-qm no will there be non-traditional subprime non-qm mortgages in the future yeah if we go backwards last year to the July 2013 Scotsman’s guide where if this was an email that they sent out so I want to give credit to Scotsman’s guys this is not our slide this is there slide it gives answers to some of these questions for example will subprime come back yeah did you know subprime is back Scotsman’s guide is saying for the first time in nearly five years they publish the subprime matrix it’s going to start off small but it is going to continue to grow let’s look at others and what they’re saying for example the board of governors of the Federal Reserve look at the date on the right hand side this is just December 13th what to not even three weeks ago where notice the red that we’ve underlined an institution may originate both qm and non-qm loans so will you be able to do qms yes will you be able to do more importantly none qms again the answer is yes i do want to point out one more thing though and although qm is not a requirement the ability to repay portion of the law is a requirement so whether you’re doing sub x non-qm or qm you do need to make sure you’re following those ability-to-repay guidelines okay the borrower has the ability has to have the ability to pay the thing back again we’re we’re not going to go backwards into this this crisis that we’ve just come out of that has its own name now is the Great Recession everybody is looking forward to say we’ve learned from the past let’s not make those mistakes again all right

let’s move forward in section 1411 you need to consider as taina said the borrower has the ability to repay their good standing whether the extension of the new credit would help or hurt would it prevent a default all right and look at these borrowers as if they were good borrowers that you would offer regular normal rate discounts and other favorable terms to that borrower if they really did have good credit ratings if the borrower qualifies for something better put them into something better all right this is a definition given in dodd-frank of what a fully index rate is now a fully indexed rate as most of you guys know all right is that is after the introductory or the teaser rate what will the actual real rate be after the expiration of any of those introductory or teaser rates I’m going to go back for just have a second we’re going to talk about the difference between a fully indexed rate and an interest rate if it’s an adjustable rate for a QM loan in just a few slides all right r is all alone are all loans covered no you do have some what that are not going to be touched by this qm ok so in section 1411 this section shall not apply to either reverse mortgages temporary or bridge loans and the quick definition of those kinds of loans are alone that has a term of 12 months or less so I want to slow down and stop here for just a second and talk about you january2014 also have new requirements for reverse mortgages that you do need to make sure that the bar work has the ability to at least take care of their property taxes and fire insurances so if you’re new to reverse mortgages understand this is a change and we’re not going to go into a really in-depth talk about the changes of reverses but as it pertains to our jobs to see if the borrower is making any money heads up on a reverse you’ve got to find out if you got to make sure that they can at least make those two payments moving on to section 1412 in 1412 dodd-frank requires that the lender assess whether the borrower has the ability to repay where we’ve talked about it five six seven eight nine ten times already the ATR you’ve got to make sure that the borrower can pay the loan back because you want the protection of the safe harbor I put it I put this graphic here on the slide to talk about the safe harbor for just a second we have the boats sitting in the harbor they’re anchored there a storm high winds waves will come and the boat may have been battered around a little bit but for the most part it’s going to be safe we’re going to want to write qms for the protections of a safe harbor and taina can I call on you to give us a little bit more depth on that yes let me explain a little bit of the difference between safe harbor the rebuttable presumption that’s also available to QMI loans and then the full burden of proof that is required if you do not have any sort of a QM moan so as I mentioned earlier or as they was speaking ellos are now personally liable if they do not write qm loans what does that mean means if someone comes back and tries to sue your company a couple of years after you write alone for them then they can sue not just your company but they can sue you if it was a qualified mortgage you can file a motion with the judge set says judge I followed all the guidelines if they have them you no longer have the burden of proof to show that you did anything correct or incorrect the person who filed the lawsuit has the burden of proof and not only that but you have a very strong protection around you with safe harbor now if it’s a higher-priced qualified mortgage then that changes to just be a rebuttable presumption which means that you don’t have the burden of proof you don’t have quite as much protection but they still have the burden of proof or the borrower still has a burden of proof to show that you didn’t comply with qm requirements so not quite as strong a safe harbor but it’s still protection for you this is why many people will be doing a lot of QM loans in the future if you do not do a QM loan then like I stated earlier you do still have to comply with a TR so then the full burden of proof is on you to show that you did comply with a CR it’s not your fault that the bar work to not make their payments a couple of years into

the loan based on all the numbers that you looked at you followed the eight underwriting guidelines and they should be able to pay it for the life of the lungs so instead of the borrower were proving that you did something wrong you have to prove that you did everything right if you are not doing qm loans and that’s kind of the difference there between the safe harbor rebuttable presumption and the general burden of proof that you have if you’re not doing cute i love having an attorney sit next to me to make sure that i’m saying everything correctly okay so we want to do qms we don’t have to do to QMI but the reason we want to do qms is because for the protection of the safe harbor okay so in general terms a qm is a loan that has a term of not more than 30 years 5 years 15 years 30 years but not more than 30 years that the loan is fully amortized well wait a minute does that mean that I can’t write a balloon loan sure you can sure you can as long as the term is not more than 30 years and that when they make the payments on that balloon that the payments are amortized will give you some examples but these examples will come from the CFPB and not just for mortgage educators point number three in order to have a qualified mortgages as either a fixed interest rate or if it is an adjustable interest rate the loan is underwritten on the borrower’s ability to repay note the underlying the highest permissible interest rate during the first five years which is different from the fully indexed rate so we’re looking at the first five years seeing how high that loan could possibly go to and qualifying the borrower principal interest advertising term to make sure that they still qualify and have the ability to read eight another one of the moving parts and this is one that you guys have asked us a million questions on point number four is what does it mean by that it cannot exceed three percent of the total loan amount this three percent you’ve got to be a three percent or less on the loan amount greater than 100 at or greater than a hundred thousand dollars so some of your guys’s questions are well Dave what if it’s less than a hundred thousand for you guys you’re asking less than a hundred thousand dollar loan amount sit tight for two slights everybody else let me tell you what is going on on this three percent and how this three percent is kind of being protected the Realtors Association is asking the Realtors to have the sellers pay as much of the borrower’s or buyers closing costs as possible so that the borrowers don’t have anything touched at three percent and not only the realtors are going to bat for us but look at our affinity or other partners that we have in the industry the slide coming up next is for example from magic this slide is a QM update i like the pencil i like the tagline straight to the point on points and fees on qm loans and if you look at the chart on the middle lower left-hand side of the page it talks about if you used magics premium plan either the monthly mi let’s just stop there on the first line it is not included according to them in the points and fees calculation look at the next slide down I mean the next line down on LP mi lender pay mortgage insurance ok and the adjustment of the interest rate are also not included on points and fees for qm well does that mean everything on mi is not part of the three percent know if you have a bar repaid single premium even if it is refundable or a borrower paid single premium that’s non-refundable those things according to magic SWA are included in the three percent so you could have mi charges as part of the three percent it’s not just three percent commission going over to the loan officer now let’s bring everybody back including those that we’re thinking well three percent is not going to cut it if my loans 20 grand or something all right on points and fees the three percent is only for loans that are less than sorry equal to or greater than a hundred thousand dollars if the loan amount is sixty thousand dollars or more but less than a hundred thousand you go up to three thousand dollars if it’s between 20,000 and sixty thousand five percent and if it’s between twelve thousand five hundred and twenty

thousand you can go a thousand dollars and if it if it’s less than twelve thousand five hundred dollars for a loan amount you can go up to eight percent so even though generally speaking when the CFPB is talking about a three percent or they’re talking about a forty three percent DTI okay those are general those are general statements on this slide you’re noting and again we’ll show you from the CFPB so I we’ve got a big ol red arrow pointing to it that depends on the loan amount and depends on the type of QM that you’re writing there’s a lot of different kinds of qms out there all right on the points and fees they are included if they are known at or before consummation ladies and gentlemen you guys know some of your fees at or before consummation look at the two bullet points at the bottom of the slide look at the lowest one ello comp you guys are not running a charity at least most of you are not you want to be compensated this is how you feed your families you knew that at or before consummation am I depending on your LTV prepayment penalties if any I’m going up now discount points and these are bona fide discount points meaning that the borrower is actually getting a lower the normally available interest rate is defined by respond and other third-party charges so if you know those things they are part of the three percent points and fees cast now here in appendix Q and all of this information that i know most you guys are not even going to read it talks about in tela that the ratio has to be at forty-three percent and it cannot exceed it that one more time is a general guideline okay so let’s fine-tune this three percent a little bit more and as we’ve dug into this thing we feel that we’ve answered or should answer today the difference between a finance charge and some of those points and fees okay so for some of you guys this will be review some of you guys that’ll be new to yet what’s included in the finance charge I’m not going to go through the slide you guys can read just as easily as I can you know the interest rate online I know one of the settlement statement is is going to be included in that finance charge transaction loan origination fees points and these are real bona fide you know points look at the rest of the slides for the next five seconds slide number to notice up at the top let me get my laser pointer here these are on the financial ards they may be included and then we’ll go up to the third slide these are where’s my laser pointer again these are not included okay so now that we’re differentiating between finance charge let’s go back and now compare points and fees and finance charges okay alright so on the left-hand side is for example interest as i mention lying 901 interest to the end of the month is moving left to right is it a point or a fee no is it a finance charge yes now let’s look at mi whether it’s federal whether it’s state whether it’s guarantee whether it’s VA funding fee whether it’s an upfront MIP etc etc okay is that a pointer feet no then a finance charge absolutely so as you can take and look at this chart we’ve tried to explain in English the difference between a point and fee part of the three percent and a finance charge that is not part of the three percent so we’re going to give you a second take a look at the slide one more time we want to remind everybody we are recording this you will get a copy of every single slide you’ll get a copy of the entire recording you’re going to get a copy of everything we’re answering a ton of questions if you by the end of the presentation and I’m going to slide the move the slide forward if by the end of the presentation you still have questions we’re going to give you an email address compliance support educators calm or more time compliance that mortgage educators calm where you can send us your questions if we have not covered all of

your questions as it pertains to QMI okay and also while Davis talking about the difference and you’re looking at these charts for whether or not as a point fee or finance charge I did want to mention on appendix cute you will would sort of you that because for the most part it looks a lot like guidelines you’re already used to but there are differences and if there is a difference you must follow eyes in appendix Q in order to stay within the qf time I’ve got a question how does everybody on our webinar look up a Pentax Q as the CFPB has a copy of it or we can get them one if they would like so guys ladies and gentlemen it is on the CFPB website but again if that’s what it’s that’s something that you would like us to provide for you then you know just go ahead and send us an email and we will repeat the email address at the end of the presentation okay moving on so we have this reasonable test now some of the fees are excluded for points and fees their conditional notice the quotes here unless they are deemed unreasonable now most of you in your practices know what your competition is doing know what a fair price is for a credit report an appraisal title insurance settlement services I mean you guys know if it’s fair if it’s reasonable what’s the insurance industry call it customary normal usual ok so these charges are excluded from points and fees notice it’s capitalized only if the charge is reasonable the creditor receives no direct or indirect compensation and the charge is not paid to an affiliate of the creditor tyne I think you have a little bit more on this right so this reasonable test is actually found specifically in the real estate related fees portion the reason we put it in here is because it does talk about reasonableness in other portions but they don’t give us the test so it’s the only thing we have to go on even though it’s only specifically mentioned in the real estate related fees we think when they go to use air when they are trying to see it say if something is reasonable or not this is the test they will go to moving on so as we’re looking at the CFPB’s charts here let me take out that laser pointer one more time and go across the top and if this is too small for you you can always blow it up you can always look this up yourself we’re trying to get all the information for you so on the left-hand side that talks about loan features loan term limits points and fees we talked about the three percent etc etc that’s going vertically now going to horizontally the ability-to-repay jinro qm definition agency specific or what has also been called a temporary qm again for the first seven years or until twenty twenty-one a balloon payment qm small creditor qm again there are it’s more than just one size fits all to em okay it’s like a grid i’m hopefully i’m pronouncing your name correctly last name warren jolyn so it is kind of like a grid to help us oh and i even pronounce your name correctly hey so take a second take a look at this notice over and over and over it talks about for example GSE requirements for credit history it doesn’t really give any specific requirement this in one shot this in one shot is going to give you a really i print this out i would print this out and i would have it with you to answer some questions as to whether i’m writing a general qm an agency specific qm etc etc you guys are throwing out all kinds of questions to me Charles I am read what you’re saying on seller financing I’m trying to go through so many slides and try and doing it in a reasonable amount of time that I apologize we’re not going to answer any questions live but I promise we will get to them and we do keep track of questions at our app I’m just trying to move this thing forward all right here is a flowchart if you are a small creditor notice that the top left-hand side again we do have some mortgage bankers we do have banks and credit unions on the line as well so a small creditor in a very quick definition if you’re doing to if you

have assets of two billion dollars or less and 500 loans per year or less taina did you want to add something on to this I just like to tell people where they can find this on the CFPB website because everyone should be aware of what the CFPB has provided so go to then you’ll see some links across the top go over to the one that says regulations I’m doing this by memories but if you hover over that a box should come down with several links look for the one that says new mortgage rules implementation something along that line click on that you’ll see all sorts of charts okay and these charts even though we blown it up here almost as big as we can get it I would suggest that you probably probably want to print out some of these things and just keep them for quick reference notice the big red arrow again from the CFPB’s website it talks about not just me saying three percent 583 thousand one thousand it’s all right here on the CFPB’s flowchart and it’s just yes as a nose to find out whether you are or not can cannot do do not it’s just a yes/no very simple very straightforward flowchart and even though we are blowing this up big you may want to blow it up even bigger alright moving on unqualified mortgage as we talked about the DTI you’ve got to take everything into consideration the seven things that are regularly normally part of the mortgage payment the first four piti the remaining three it depends whether they have mortgage insurance on there whether you have flood insurance on there or whether they are in an HOA you’re going to take everything to determine whether they can or cannot pay back that loan okay the Act creates that safe harbor that we were talking about if you’re writing a QM loan not just agency not just general not just small not just balloon taking all of those things into account that you you reasonably determined that the borrower has the ability to pay the loan back now as taina was talking about with the safe harbor even if the lender can show that the loan is a qm loan the presumption that the borrower has the ability to repay is only rebuttable they say okay okay okay I understand that you took my income my bank statements my paycheck stubs my tax returns by W to my 1099 my part-time my seasonal whatever it is that you took to determine that the borrower can come back and say well I don’t think you should have made the loan right that’s the that’s that’s them in this great country that we live in having their right to sue whoever they want to but the protection of the safe harbor is we did our job we verified we documented we made the loan and it’s because of your gambling habit that you went into foreclosure seven years from now because you know whatever so it means that the borrower can still present evidence to overcome the above presumption this means that even if the lender is within the safe harbor you may have to prove it but it’s you know i’m going to go turn back to the attorney when we talk about burden of proof and all where we talk about qm and why we want to write qms trying to take a second and talk about that let me just address this one other thing I wanted to say while we’re on this slide is that an interesting fact about the borrower being able to robot that presumption is that they can use oral evidence so they can testify and get other people to testify it doesn’t have to be documented evidence which is a little bit different from a lot of evidence that we typically requires also Julian us about the safe harbor only being applicable for seven years I have not seen that anywhere from what I have seen the safe harbor will protect you for as long as needed if you do a QM loan what I think you’re confusing is the temporary or agency qm which is only available for seven years and or or until the agencies are no longer under the conservatorship of the federal government correct or if they create their own qm then it holds that agency out of the qm definition that’s provided so there is that little difference but hopefully that helps clear it up a little bit Marty I like what you’re saying again it isn’t a question but I like that you said that for a diligent ello much of this information is i love the words that you’re using vital to share with your real estate partners who are woefully lacking in knowledge on this topic end

quote Marty absolutely right on ok so let’s continue you do want i’m going to go backwards you do want that protection of the safe harbor but again in a litigious society they can sue whoever they want to sue you can be accused of a crime the other person’s got to prove it though moving on the dodd-frank act grants the CFPB the ability to quote add to or subtract from the criteria that define a cue em loan now we’ve seen in the last three months hundreds of pages of information we’ve seen lots of changes that are going on and I want to share some of these with you just understand this is still a little bit of a moving target and here’s something else anything that the CFPB does according to dodd-frank it does need to be revisited with in five years so are all the changes over and done with her forever nope they’re not so on cue em it goes into effect January Kent hello comp rules changed on january first 2014 i just want to fast forward to the note from the CFPB notice their logo in the top left September 13 2013 they finalized several more rules from their January 2013 finalization of the rules so again it keeps updating where it says ello comp changes should have gone into effect January 1 2014 brokers you got to make sure that your ello comps with your loan officers are correct as of whatever that was a week ago January one China I also wanted to point out that if you have loan currently in the pipeline those do not and have to have anything to do with qm it’s for applications taken on genuine January tenth or later that this all goes into effect so if they if you took an application today then this doesn’t apply its January 10 or after all right very cool thank you alright so III don’t want to appear to have glossed over this I want you guys to really understand the gravity of this thing a violation of the dodd-frank sax d reason steering incentive and the ATR ability to repay provisions give rise to an affirmative claim against the mortgage originator ladies and gentlemen look in the mirror we are talking to you directly now if your company is going to protect you great if the wholesaler is going to protect you great however just be aware that you as a professional can also be named to defend yourself if you have done something wrong now let me get personal with you guys wrap a second most of you guys have seen me in person I nationwide and told you that in the past some loan officers not you but some loan officers said you know what if the underwriters proves it cool I’m safe that’s not the case anymore that is not the case anymore you have to do your due diligence you have to make sure that that you’ve done your job as the licensed professional here okay and one of the comments on the meeting chat on the left hand side when they talked about that seven-year rule China correctly said that the defense is not subject to any statute of limitations for damages we’re talking 10 15 17 29 years from now well let’s let’s shift gears for just a little bit all right I like you ms I like the protection of qms but I was reading in the industry publication that maybe I could potentially be discriminating under the Equal Credit Opportunity Act reg be or either that or the despaired impact doctrine don’t I have to be kind of careful because of that well not all borrowers are going to qualify for a QM you know that you can do loans that are non-qm so I want to show you something from the agencies regarding these qm changes here january2014 now the top talks about FDIC I said agencies look at the slide the right hand side I’ve underlined the agencies and just so that you know what I’m talking about when I say the agencies we’re talking about the CFPB control of the Currency Board of Governors of Federal Reserve FDIC and CUA all collectively those are the

agencies and they’re the ones that are answering the question regarding disparate impact or possible ecoa reg be violations they said quote in the agency’s view the requirements of the ability-to-repay rule any khoa are compatible the rest is not underlined but I want to keep reading it ecoa and reg be promote creditors acting on the basis of their legitimate business needs viewed in this context and for the reasons described below you guys can read it if you want the agencies do not anticipate that a creditors decision to offer only qms would absent other factors elevate a supervised institutions fair lending risk you have some companies that will only do qms and so we’re wondering well is that really going to be a problem am I going to be sued for another reason if I’m trying to comply with just keel in the answer shortly one word no all right so from the CFPB this is a very quick overview of what we’ve told you now this is what the CFPB is telling you let me pull out my laser pointer again starting January 10 2014 you got to assess the borrower’s ability to repay for virtually all closed-ended residential mortgage loans qms are presumed to comply with this requirement if you meet the guidelines below so they’re going to look at the general definition which I told you less than 30 years the gses can have their own and separate and different provisions and then options for small creditors so some of the mandatory product features for all qualified mortgages points and fees three percent depending on loan amount no risky features maximum term is less than or equal to 30 years the continuing from the CFPB and I think this was a question about qm lonely being available for seven years this is the seven year rule that they’re talking about when they say look at point number two any loan that means the product feature requirements and is eligible for purchase guarantee or insurance by the gses okay I’m going to ask that alphabet soup regardless of the DTI this GM category applies for GSE loans as long as the gses are in FHFA’s conservatorship and for federal agency loans until an agency issues its own qm rules or January 10 20 21 whichever occurs first so I think the person talking about well isn’t this only temporary or doesn’t have a limited lifespan know if you do a QM now and you followed the QM guidelines let’s say they were Fannie’s guidelines you were good what does that be 7 10 15 20 25 26 27 28 27 year rule to add some clarification is while they’re under the conservatorship of the federal government and then again I’ve already defined what the small creditor category for qms again less than 2 billion in assets and originating 500 or fewer loans per year want to move on extra note even if alone is not a QM it can very well still be an appropriate loan for the borrower if you’re actually helping them did we see any of these changes coming up yes from FHFA which is the new regulator motto fail but the new regulator of the GSEs may 2013 they told us they were going to align themselves with qm they told us they were going to get rid of for two year terms they told us that they were going to move away from interest only here is their information news release may 6 2013 let me get my laser pointer again may 6 2013 they said beginning January 10 2014 Fannie and Freddie will no longer purchase a loan that is subject to the ability-to-repay rule if one it’s not advertising to as a term longer than 30 years or three includes points and fees in excess of the three percent again depending on loan amount let’s look at another thing that they did knowing that January they were going to have the changes come into effect they had a d you update the weekend of November 16 when they updated their software 291 they brought Fanny into alignment with the qms that were moving forward if you look at the big green arrow again Fanny told us that they could go to a DTI of

forty five percent and look at this arrow they told us that they were going to retire the interest-only and forty year term so did we know in fact they were going to change these things yes besides qm besides ello conch and the other new changes for january 2014 yes you have new appraisal rules the CFPB has issued a new rule under ECOA scratch your head for appt a second appraisal ecola what’s that all about you have a new rule that goes into effect January 18 2014 that says the borrower’s get a copy of their appraisal three days before loan consummation some of you guys are saying according to the Mortgage Disclosure Improvement Act I already do that great if you’re in compliance now but some questions were asked by consumers and answered by the CFPB let’s show you the answers you’ll notice the quote marks on these new appraisal rules it says that the creditors you are to provide applicants free copies not free appraisals free copies of the appraisal and you know again the question will is an eco a kind of prohibiting discrimination what the heck doesn’t a phrasal do with discrimination well discrimination in a home valuation may have occurred where the estimate of the home’s value appears to be based on improper factors racial or religious background of a neighborhood etc etc improper discrimination in an appraisal or home valuation is often difficult to spot you being in the industry no appraisals and the many pages and legal I mean you guys know this but to a borrower they may not so quote from the CFPB that’s one reason why it’s important to review the estimate of the home’s value provided by your lender CFPB’s song to the borrower make sure you understand the reports and see whether any parts of them don’t make sense to you a follow-up question then from industry is can a borrower waive their three-day right to have that appraisal three days before closing your settlement short and sweet sure but listen listen to what the CFPB is saying quote a lender can ask you to waive your right to get a copy evaluations three business days before closing this means you borrower agree that the lender does not have to provide you with a copy three days in advance even if you waive this right the lender still has to give you a copy of any evaluations if you waive this right in your loan closes the lender can give you a copy two days before one day before or on the day of think carefully borrower before you agree not to get a copy of valuations three days in advance of closing for example it could take time to look over all the information and appraisal and decide whether it makes sense to you China so you might be and purchasing in this webinar in thinking this is a lot of information it’s going into effect in two days and my company is not prepared I have not seen any of these changes coming through from them what am I supposed to do you can give us a call you what I would suggest is you talk to your manager or the owners and tell them to give us a call if you get into it and you still wonder you’re doing a non-qualified mortgage you want to make sure that the underwriters are everyone is doing everything to protect you because you do have to still show that that non qualified mortgage it’s the ability to repay requirements call us we can do a quality control check on those mortgages to help out make sure they’re all in compliance make sure they’re doing it the right way right we do QC on multiple loans we do audits also so give us call for that this gentleman in Louisiana Ross how are ya you’re saying that some lenders are requiring forms to receive appraisals within three days of application is that correct not that I am aware of Ross again we got to get the appraisals three day before closing settlement signing recordation funding disbursement again I know I’m talking to a nationwide audience I don’t know what the right word is in your particular area but before consummation you got to give them a copy of the of the appraisal now if you’re doing it before the three days Ross then you are way in compliance all right join us a great question limp Oh chillin sorry are we going to be required to hold loan files we can have a whole discussion on that and it could be quite lengthy because there are specific rules on how long records need

to be kept when they need to be destroyed and how you’re going to protect yourself if you do a non-qm and someone comes back seven years later that and wants to show that you actually proved your ability to repay so unfortunately we can’t cover all that in this webinar but just know that as we are aware that that is an issue and you do have specific record retention requirements depending on the different laws okay we are getting ready to wrap up we’re trying to be mindful of your time we will be at less than an hour jolyn you’re welcome hey um regarding the uniform state test ladies and gentlemen the clock is ticking you now have less than 90 days what that means is if you’re on the webinar and you have a license Wendy you’re welcome you have less than 90 days to take and successfully passed the USD the uniform state test the uniform state test passes the testing requirements of many states April when it came out last year 20-something states then we thought to go to 25-30 it is now up to 35 States Rita Mahalo to you too uh well I says Aloha Rita I have no idea what the heck time it is in Hawaii trying to get back on track on the uniform state test maybe Rita is talking about how Hawaii came on here in January we are going to give you seminar webinar participants we’re going to give you guys the ability to prep and successfully pass that USD if you go to our website we are charging fifty nine dollars which we think is a fair price Kevin thank you for taking our stuff and passing it easily we are going to give you a twenty dollar discount we’re going to give you a 29 12 20 dollar discount today and today only thirty-nine dollars for the UST one more time the uniform state test you passed the testing requirements for 35 States by taking a little twenty five question quiz we now have students that have taken our UFT exam prep prep in one day took the test the very next day and passed it with a hundred percent now can we make that claim that everybody is going to do that obviously not we don’t know what study habits are passed questions can change oh we’re saying is if you are interested we’d love to help you let us know how we can save you twenty dollars it’s only thirty nine dollars today taina i’m done yep I parent we’ve had a few people calling in to ask about additional trainings we do have lots of trainings available not all are free we do some free and then we sell some so call and talk to our customer service department and they’ll help you out to see what they can do for you justin asks why are there only 90 left for the UST nmls told us that we had until March 31st to take the test and so you’ve got to get it done in the next two and a half months or so right and what if you don’t do it then you’ll have to take it in addition to the whole national exam Akande so for right now if you’re already licensed you can take just the USP portion the USP will still be available but you’ll have to retake the entire national exam don’t do it before I talk and some of you guys are overachievers and you want to take that big long dreaded test again and pay more money you know what good for you you guys are better at it than I am hey thank you everybody we’re trying to be here less than an hour we’re recording it Oh