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Growing Mortgage Company Opens Wholesale Regional Operations Center

By James Comtois

FRANKLIN, TN-As a result of slow and steady growth, Franklin American Mortgage Co. here has recently opened a new wholesale regional operations center in Danvers, Mass. This added location will allow FAMC to develop and expand in order to maintain the company's growth.

This operations center will support broker production for more than 20 account executives in the Northeast with a talented operations staff.

According to the company, this new location will allow FAMC to expand upon its core product mix of agency, jumbo and government products.

"We are extremely excited about the quality of individuals that have joined our organization in the Northeast," said FAMC chief executive Dan Crockett. "As Franklin American Mortgage continues to expand, it is vital to our success that we continue to offer our customers the highest level of service and this expansion will achieve that goal."

Compliance News Recap

More than 10,000 people with criminal records were allowed to work in Florida's mortgage industry, according to a report in The Miami Herald. Of those, more than 4,000 cleared background checks despite committing crimes that state law requires regulators to screen, including fraud, racketeering, and extortion. The state's chief financial officer, Alex Sink, is calling for an executive order to stop issuing and renewing mortgage broker licenses to convicted felons. He has also requested that Florida's chief mortgage regulator, Don Saxon, step down. Mr. Saxon is commissioner of the Office of Financial Regulation.

The Securities and Exchange Commission has issued an emergency order effective July 21 designed "to enhance protections against naked short selling in the securities of Fannie Mae, Freddie Mac, and primary dealers at commercial and investment banks." Under the emergency order "anyone effecting a short sale in these securities" must "arrange beforehand to borrow the securities and deliver them at settlement." The SEC said its emergency order will terminate on July 29, but "may be extended for no more than 30 calendar days in total duration." The commission said it plans on following up the emergency order with marketwide rulemaking. The SEC can be found at http://www.sec.gov.

The Department of Housing and Urban Development should withdraw its RESPA proposal and work with the Federal Reserve Board in developing "more simplified mortgage and real estate settlement cost disclosure forms," according to a "dear colleague" letter being circulated in the House. Reps. Ruben Hinojosa, D-Texas, and Judy Biggert, R-Ill., are leading the effort to get Housing Secretary Steve Preston to abandon HUD's proposed Real Estate Settlement Procedures Act rule. The two House Financial Services Committee members are urging fellow members of Congress to sign a letter that petitions HUD to immediately commence a joint rulemaking process with the Fed, which is working on improving Truth in Lending Act disclosures for mortgage borrowers. "It is critically important for consumers that any revision to RESPA achieve the following goals: simplify, clarify and reduce the cost of mortgage and real estate settlement processes," the letter to the HUD secretary says. However, HUD's RESPA proposal does not meet those goals, according to Reps. Hinojosa and Biggert. "We are profoundly concerned that HUD's proposed RESPA rule will hinder rather than help the recovery of the housing market." Over a dozen banking, mortgage, and settlement provider trade groups will be lobbying lawmakers to sign the letter.

Even though mortgage fraud for housing "doesn't seem quite as violent" as mortgage fraud for profit, it has its own consequences, according to a representative of the Florida Office of Financial Regulation's Bureau of Financial Investigations. Rui Goncalves told attendees at the Florida Association of Mortgage Brokers annual convention in Kissimmee, Fla., that fraud for housing is "more of a temptation" because it is easy for people to think they are trying to help someone get into a home. But those who participate might not realize the consequences, even if the loan never goes into default. For example, having unqualified buyers in the market competing for properties drives up prices, and eventually there will be a crash, Mr. Goncalves said. He called on originators to strive for transparency in their dealings and to ask questions of their customers.

Suitability is a key point in determining what might be mortgage fraud, the chief of the Florida state attorney general's mortgage fraud task force told attendees Wednesday at the Florida Association of Mortgage Brokers annual convention in Kissimmee, Fla. R. Scott Palmer, who is also the special counsel for antitrust enforcement, said that under his office's definition of suitability, it is a violation of the state's unfair and deceptive practices act to put someone into a loan if the originator knows the borrower cannot repay it. Questioned by an audience member, Mr. Palmer added that suitability is "a developing concept" that is in its infancy and that case law will likely be developed around it. The real issue, he said, is whether the broker is aware that the information is false. Don Saxon, commissioner of the Office of Financial Regulation, said the concept could be similar to what exists in the securities industry, where (while there is no hard and fast rule) practitioners have to consider the consumer's portfolio as a whole to determine suitability.

Featured Grapevine Thread

Legal Corner

HIGHLIGHTS OF THE NEW FEDERAL RULES GOVERNING MORTGAGES

FACTS

Here are highlights of new federal rules for mortgage lending, which take effect Oct. 1, 2008.

For subprime mortgages:

* Lenders will be required to verify a borrower's income and assets.

* Lenders will be barred from levying prepayment penalties for the first four years of any adjustable rate subprime mortgage; other subprime mortgages could have no prepayment penalties for two years.

For all mortgages:

* Lenders will not be allowed to run advertising that compares different loans unless all payments and rates are also disclosed.

* Advertising that recommends mortgage plans in a foreign language would be required to include legally required disclosures in that same language.

* Lenders will be required to credit borrowers' payments on the day of receipt. (lat71508)

MORAL

Some fix!

Read on...

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