Presentation FL2PE

AAA Mortgage Training 10/21/2019
2 Hour FL SAFE Online State Law PE

2 Hour Prelicensing Elective Online Instructor Led (OIL)
AAA Mortgage Training
NMLS Provider # 1400980
219 Winslow Drive
Westfield, IN 46074
317.201.7612
www.AAAMortgageTraining.com
Content Publication Date 04/21/2017
Last Updated 04/21/2017
NMLS Approved 10/31/2016
AAA Mortgage Training 1
Quiz
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Course Topic Preview
Florida Office of Financial Regulation and Definitions Reviewed
License Law and Regulation
Compliance
Disciplinary Action
Unique Florida State Law Topics
Learning Objectives
Understand the structure of the Florida Office of Financial Regulation (FL‐OFR)
Apply definitions and terms used by Florida Statutes and Regulations
Explain the licensing requirements of companies as well as individuals
Understand compliance requirements and consequences for non‐compliance and
disciplinary actions.
Understand the unique portions of Florida law and regulations
Florida Office of Financial Regulation (FL‐OFR)
The Florida Office of Financial Regulation, as the name implies has regulatory
authority to make rules for clarification and enforcement of Florida law, relating to a
host of financial related products, persons and laws.
Within the Department, the Division of Consumer Finance specifically has
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authority to license, deny licenses, take civil action, order restitution and other
powers over various industries, including Loan Originators, Mortgage Brokers and
Branches, and Mortgage Lenders and Branches.
The Bureau of Registration, processes licenses for approval, restrictions or denials
according to the law and associated regulations.
The Bureau of Enforcement conducts compliance examinations.
Leadership: the OFR reports to the Financial Services Commission, which is
comprised of Florida’s cabinet. The office is headed by a commissioner appointed by
the Commission. The Commission has final rule approval, but all regulatory decisions
are vested with OFR
FL‐OFR
Key Function: provides regulatory oversight for Florida’s financial services providers.
Mission: to protect the citizens of Florida, promote a safe and sound financial
marketplace, and contribute to the growth of Florida’s economy with smart, efficient
and effective regulation of the financial services industry.
FL‐OFR Powers
Issue regulations
Issue, restrict or deny licenses
Investigate, examine, subpoena
Issue rulings, impose penalties, require restitution,
Get court cease and desist, injunctive relief, attorney’s fees, seize records
Suspend, revoke licenses notify NMLS
Lacks Power
Arrest, indict, impose criminal penalties, can only refer to a person who has authority
to levy a criminal charge, such as a local prosecuting attorney or state Attorney
General
Office of Financial Regulation OFR
Powers and Duties
Responsible for administration and enforcement of Florida Statutes Chapter 494
The Commission may adopt rules for use of electronic forms
MU1 (company form),
MU2 (Owners form),
MU3 (Branch Form), and
MU4 (MLO form)
And rules for use with the NMLS
Rules Passed Accomplish
Requiring use of the forms, and payment of NMLS fees by licensee
Pass rules necessary to participate in registry such as changing licensing, amending,
surrendering (previous persons with felony crimes of dishonesty were licensed)
Implement information for challenge process for NMLS
Implement information reporting to NMLS
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Implement Barring Period
Permanent bars for felonies involving fraud, dishonesty, breach of trust, or money
laundering;
A 15‐year disqualifying period for felonies involving moral turpitude;
A 7‐year disqualifying period for all other felonies; and
A 5‐year disqualifying period for misdemeanors involving fraud, dishonesty, or any
other act of moral turpitude.
Powers of OFR
Florida Administrative Code (F.A.C.) Rule 69V‐40.00112 provide for extension or
reduction of waiting (Bar) period, but can be reduced to no less than the Federally
imposed 7 year minimum for any felony or indefinite period requirements for felony
crimes of dishonesty.
All fees, charges and fines remain in regulatory trust fund of the Office of Financial
Regulation.
Mortgage Loan Originator Defined Cite: Florida Statutes Chapter 494.001
“Loan originator” means an individual who, directly or indirectly, solicits or offers to
solicit a mortgage loan, accepts or offers to accept an application for a mortgage
loan, negotiates or offers to negotiate the terms or conditions of a new or existing
mortgage loan on behalf of a borrower or lender, processes a mortgage loan
application, or negotiates or offers to negotiate the sale of an existing mortgage loan
to a noninstitutional investor for compensation or gain. The term includes the
activities of a loan originator as that term is defined in the S.A.F.E. Mortgage
Licensing Act of 2008, and an individual acting as a loan originator pursuant to that
definition is acting as a loan originator for purposes of this definition. The term does
not include an employee of a mortgage broker or mortgage lender who performs
only administrative or clerical tasks, including quoting available interest rates,
physically handling a completed application form, or transmitting a completed form
to a lender on behalf of a prospective borrower.
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Definitions
Cite: Florida Statutes Chapter 494.001
Definitions Cite: Florida Statutes Chapter 494.001
“Material change” means a change that would be important to a reasonable
borrower in making a borrowing decision, and includes a change in the interest rate
previously offered a borrower, a change in the type of loan offered to a borrower, or
a change in fees to be charged to a borrower resulting in a change of total fees
greater than $100.
Control person, executives, officers, directors, those people who can influence
business operations.
Persons who own, even indirectly 10%
Credit score alone, is not a credit report.
Credit Application=
ALIENS
Gathering these 6 items Address, Loan amount, Income, Estimate of value, Name
and Social security number.
Servicing endorsement permits lenders to service a loan more than 4 months.
“Substantial fault of the borrower”
Failed to provide information or documentation required by the lender or broker in
a timely manner;
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Provided information, in the application or subsequently, which upon verification
proved to be significantly inaccurate, causing the need for review or further
investigation by the lender or broker;
Failed to produce by no later than the date specified by the lender all documentation
specified in the commitment or closing instructions as being required for closing; or
Failed to be ready, willing, or able to close the loan by no later than the date specified
by the lender or broker.
For purposes of this definition, a borrower is considered to have provided
information or documentation in a timely manner if such information and
documentation was received by the lender within 7 days after the borrower received
a request for same, and information is considered significantly inaccurate if the
correct information materially affects the eligibility of the borrower for the loan for
which application is made.
Loan Originator License Cite: Florida Statutes 494.00312
In order to apply for a loan originator license, an applicant must:
Be at least 18 years of age and have a high school diploma or its equivalent.
Complete a 20‐hour prelicensing class approved by the registry, including 2 hours of
Florida law.
Pass a written test developed by the registry and administered by a provider
approved by the registry.
Pay a nonrefundable application fee of $195 and $20 fee for mortgage guarantee
trust fund
Pay and submit fingerprints for (FBI) background check, OFR reviews background
results,
Pay for and authorize credit check
Submit all supporting information to resolve regulatory action, criminal and civil
events.
License Denial Florida Statutes Chapter 494.00255 Administrative penalties and
fines; license violations
If a person failed to demonstrate character, general fitness, and will not act honestly,
the department must notify denied license applicant of exact reason.
Credit score alone not sole reason for a license denial, and financial responsibility
evaluation must consider total picture.
Previous revocation is cause for denial, unless license was reinstated.
License annulled if issued in error but may be reinstated.
All licenses expire on a calendar year, December 31 annually.
Any felony in the last 7 years, some felonies longer, and felony crimes of dishonesty
permanently barred. Citation for extended licensing period restrictions see Florida
Administrative Code F.A.C. Rule 69V‐40.00112 for additional details.
https://www.flrules.org/gateway/ruleNo.asp?id=69V‐40.00112
Branch Offices Require Licensure
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Each branch must be licensed, fee is $450, branch office address and manager
provided to Office of Financial Regulation and license issued in name of company
renewal is $450.
Processor, MLO Are Employees Cite: Florida Statutes Chapter 494.00331
MLO Exclusively Employed
MLO works for one licensee at a time, not two simultaneously.
Processor, who does not originate can work for more than one at a time
Processor means, gathering supporting information, not acting as an MLO, not
discussing loan terms, disclosures, negotiating or advising, or counseling on loan
terms
Processor Declaration of Intent
Processor must be licensed MLO and file a “declaration of intent” to engage solely in
loan processing.
Click here to see form OFR‐494‐13 Declaration of Intent to Engage Solely in Loan
Processing.
If Processors wants to act as an MLO, must file withdrawal of intent, effective date of
withdrawal is date of filing.
Processing fees, can be paid to employer of independent processor without violating
licensing laws, provided the “intent” form OFR‐494‐13 was filed.
Four (4) Months
Four (4) months is the length of time a lender can service a Florida loan without
having a Florida servicing endorsement. Cite: Florida Statutes Chapter 494.00471
Exemptions Cite: Florida Statutes Chapter 494.00115
Exempt Persons or Entity
MLO working for depository
Depository exempt
Government Sponsored Enterprises (GSE’s) and Government agencies
Attorney not originating as primary function
Timeshare finance
Trustee‐guardian under court
More Exemptions
Seller held mortgages
Servicer of loans made by government agencies
Person making only non‐residential (commercial)loans
Person investing their own money in mortgages
Person selling a mortgage made with their own money for investment
Proof of Exempt
Burden of proof is on person claiming exemption.
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MLO or non‐MLO Activity?
Job title of processor, with the
following responsibilities:
1. Order and acquires
verifications of employment,
deposit and mortgage
2. Verify all necessary
Three out of two people have documentation in file and lock
trouble with fractions, how many the loan for the chosen
have difficulty with MLO roles and program and terms, based on
responsibilities? email communications with the
borrower.
3. Stack and submit the file to
underwriting. Choose the
answer below, is it MLO or
Non‐MLO Activity?
MLO Activity
Non‐MLO Activity
Yes, the title of a person, “processor” is less
relevant than the activity of “negotiating the
loan terms”
Continue ››
MLO activity includes all specific discussions of loan terms
Negotiates the terms or conditions of a mortgage loan, or Issues mortgage loan
commitments or interest rate guarantee agreements to prospective borrowers
MLO’s protect your support team, make sure to handle all discussions regarding loan
terms and loan locks or get help from a fellow licensee.
Click Continue Above in Yellow!
Our greatest glory is not in never falling, but in
rising every time we fall. Confucius
MLO Activity includes all specific discussions of
loan terms and especially choosing loan terms
Continue ››
MLO activity includes all specific discussions on loan terms
Negotiates the terms or conditions of a mortgage loan, or Issues mortgage loan
commitments or interest rate guarantee agreements to prospective borrowers.
MLO’s protect your support team, make sure to handle all discussions regarding loan
terms and loan locks or get help from a fellow licensee.
Click “Continue” in the Yellow Box Above to Proceed.
Permission to Work?
A MLO may work for one
licensee at a time. A processor
licensed as an MLO, may work
for how many employer
licensees at the same time?
(simultaneously).
Consider the consequences, what is a Click the best answer below.
SAFE approach!
Processors do not require
licensure as an MLO
1 licensee, if engaged solely
as processor, without filing form
2 licensees, if filed an “intent
to engage solely as processor”
Yes, the licensed MLO works at only one licensee at
a time. Processors must be licensed, and if “Intent
to Engage Solely in Loan Processing” form is filed,
the processor can work at more than one licensee.
Continue ››
A processor can work at more than one employer simultaneously
Provided the processor filed the “Intent to Engage Solely as a
Processor” form as required. If the processor engages in any
origination activity, such as discussing or negotiating loan terms,
soliciting, offering to solicit, or holding themselves out as able to
act as an MLO, then only one employer is permitted.
Click “Continue” above to proceed!
So close, but this is not the game of horseshoes,
ugh! Processor can work at more than 1 licensee, if
intent to solely engage in processing, filed”
Continue ››
Yes, a MLO licensee working as a “Processor” make work at

more than 1 licensee!
Provided the processor filed the “Intent to Engage Solely in Loan
Processing” form as required. If the processor engages in any
origination activity, discussing, negotiating loan terms, soliciting
offering to solicit or holding themselves out as able to act as an MLO,
then only one employer permitted. Click Continue Above to Proceed
Come on, that is one huge difference when Florida is
compared to other states, why?
Continue ››
Processor is a licensed MLO in Florida
Provided the processor filed the required “Intent to Engage Solely in

Loan Processing” form as required, the processor work for more than
one licensee. If the processor engages in any origination activity,
discussing, negotiating loan terms, soliciting offering to solicit or
holding themselves out as able to act as an MLO, then only one
employer is permitted at a time. Click “Continue” above to proceed.
MLO Renewal and
Licensee Updates
MLO Renewal and Licensee Updates
MLO completes eight (8) hours NMLS approved CE annually on the following
topics:
Three (3) hours of federal law,
Two (2) hours on nontraditional mortgage products,
Two (2) hours on ethics, fraud, and consumer protection,
One (1) hour on Florida law and regulations
Courses cannot be repeated in consecutive years.
MLO Renewal fee $150 + $20 Mortgage Guarantee Trust Fund (MGTF)
Licensee has thirty (30) days to Thirty (30) days notify FL‐OFR:
any action taken against a licensee or control person for acts of dishonesty or moral
turpitude
any felony and,
bankruptcy
from effective date to notify of any change of any item on application
Thirty (30) days prior to, or within two (2) days of notice to licensee for a change in
control person, and comply with background check, and any other requirements
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Three (3) Days for Disclosures:
Issue disclosures within three (3) days, tolerances are slightly more strict than TRID‐
TILA‐RESPA requirements for “material change”. Licensee must disclose within three
(3) days after discovery of change, and at least three (3) prior to closing. The
threshold is $100, not 10% and client waiver is permitted for bona‐fide financial
emergency such as foreclosure, etc.
Timely mortgage call reports, other reports to NMLS as required by the Office.
License is not transferrable or assignable to any person.
Company Renewals
Meet original licensing requirements financially and qualifications, submitting new
control persons for screening (provided they failed to submit as required)
Pay all fees for background checks, credit checks, NMLS, plus application and $100
fee for the Mortgage Guaranty Trust Fund (MGTF)
Broker Company + $100 fee for MGTF
Keep Records Three (3) Years
Florida Administrative Code (F.A.C.) Rule 69V‐40.170 Books and Records
Subject to Examination
All records necessary to prove compliance kept at place of business for three (3)
years
Office may authorize retention elsewhere upon request, but also must be produced
in FL upon request
All books, accounts, records, documents, and receipts for expenses paid by the
licensee on behalf of the borrower, including each closing statement signed by a
borrower, shall be preserved and kept available for examination by the office for at
least three (3) years after the date of original entry.
Destroy Records Appropriately After Three (3) Years
Lenders must file audited financial statements within one hundred and twenty (120)
days of end of fiscal year, and at least every eighteen (18) months if change in fiscal
year
Penalties Include:
Reprimand issuance
Suspension of license, reinstatement subject to compliance of Commission’s Office
conditions
Note: regulatory action triggers NMLS notification and possible sanctions or scrutiny
in other states
Mortgage Guaranty Trust Fund Funded by Licensees
Same amount for initial and renewal applications, both Lender and Broker companies
= $100 per license year
MLO=$20 per license year, Fees Suspended at Fund Amount Exceeding $5 Million
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Until Fund Depleted to Less Than 1 Million
Mortgage Guaranty Trust Fund (MGTF) Cite: Florida Statutes Chapter 494.00172
A borrower may seek recovery from MGTF if:
Obtained a judgement on licensee for a violation of Florida Statutes Chapter 494 for
damages
Judgement not satisfied after searches and attempts
Borrower applied any recoveries to damages
Borrower notified Commission in timely manner
Violation occurred 2011 or later
Bankruptcy by licensee voids above requirements
Payment from the MGTF fund, is cause for license revocation!
$50,000 or less awarded and other caps
Maximum award lessor or remaining damages of $50,000
Attorney’s fees capped at $5k or 20%
Maximum borrower claim 50k regardless if multiple licensees involved
Maximum 250k against any one licensee
Office takes 2 years to pay after notice to Office, to give claimant time to collect from
judgment
Filing giving late notice, may still claim in order of notice, if 250k maximum per
licensee not exhausted
Claimant, assigns right to collect to Office, to the extent of recovery from fund
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New Day Case Study
Introduction
Case Study 1: Multi‐State Settlement Agreement and Consent Order—New Day Financial
The following slides will cover a multi‐state enforcement action against New Day Financial.
We will explore the nature of the complaint, the violations involved, and the details of the
Settlement Agreement and Consent Order:
Complaint Background; Nature of Complaint
• 44 states (“Participating States”), agreed to negotiate and enter into the Settlement
Agreement and Consent Order (the “Agreement) with New Day, a licensed mortgage
broker/lender under the laws of each Participating State
• The state mortgage regulators of the Participating States are members of the
Conference of State Bank Supervisors (“CSBS”). The Participating States agreed to address
their concerns with New Day through the Multi‐State Mortgage Committee (“MMC”)
• The Nationwide Mortgage Licensing System and Registry (“NMLS”) is owned and
operated by the State Regulatory Registry (“SRR”). The SRR administers Continuing
Education and Uniform State Test protocols. State‐licensed mortgage loan originators are
required to complete annual continuing education under the SAFE Act
• On October 7, 2013, a former employee of New Day filed a complaint alleging that
that employees of New Day had violated the rules and conduct of the NMLS by providing or
receiving assistance on and misusing study materials for the SAFE mortgage loan originator
testing program
• Complaint alleged that the director of training for New Day encourage MLOs to report
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information that they acquired with taking the SAFE test for the purpose of updating New
Day’s internal test preparation materials
• Compliant alleged that a Senior Vice President and Account Executive at New Day
shared the answers to quizzes and/or tests included in the NMLS approved pre‐licensure and
continuing education courses with MLOs. The sharing of this information allowed the MLOs
to more quickly complete the courses and to circumvent the intent of the courses
• The Mortgage Testing and Education Board investigated the complaint. New Day was
notified of the complaint and the investigation on October 15, 2013
Notification of Complaint; Internal Investigation
• On November 26, 2013, New Day submitted a written response to the SRR regarding
New Day’s investigation. The written response included the following:
o Upon being made aware of the complaint and violation, New Day retained an outside law
firm to conduct an internal investigation. The internal investigation included staff interviews,
document reviews, and review of relevant company policies
o The internal investigation determined that New Day employees had, in fact, violated the
NMLS Rules of Conduct for Test Takers and Standards of Conduct for Course Providers
o During the course of the internal investigation it became known that certain New Day
MLOs had had New Day compliance staff sit through continuing education programs with
them and take quizzes on their behalf. It was discovered that certain midlevel and senior
managers at New Day had knowledge of and had participated in these acts
o As a result of the findings of the Internal Investigation, New Day terminated the head of
its Virginia sales division, the head of its television division, the head of recruiting, the
Delaware Branch Manager, and the Vice President of Sales. The head of New Day’s reverse
mortgage division also resigned
o New Day demoted and/or reduced the pay of certain MLOs who acknowledged allowing
others to complete their continuing education for them
The Value of a Consent Agreement as the name implies, permits the parties to agree to a less
costly resolution as compared to a formal hearing. The formal hearing process requires the
regulatory or enforcement agency to more thoroughly document and prepare a case to
present the allegations. The allegations stand disputed with the respondent (licensee or
person subject to licensing) also consuming valuable resources disputing the facts alleged. As
compared to a criminal plea bargain where the defendant typically must admit guilt, consent
agreements often permit the respondent to settle the case with a lessor penalty than
permitted by law or regulation and in many cases the individual does not admit to the
alleged offence. Notice the phrase “in lieu of litigation, and without admitting or denying the
allegations herein” in the consent agreement and that while not admitting it, the agreement
indicates one cannot deny the allegation either.
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New Day Case Study Interrogation
Results of Internal Investigation
 As a result of the internal investigation, New Day implemented the following remedial
measures:
o All New Day Employees with a continuing education requirement for 2013
were required to retake those courses in a proctored and controlled
environment provided by a third‐party vendor
o All New Day employees with continuing education requirements in the future
will meet the continuing education requirements in a proctored and controlled
environment using either “live” or “live‐equivalent” course formats
o A “tip line” was implemented for anonymous reporting of compliance concerns
by New Day employees. The tip line is maintained by a third party service
provider who reports to a designated compliance executive
o A Whistle Blower Policy was implemented encouraging the reporting of
compliance violations and safeguarding the rights of those who report
compliance violations
o On a quarterly basis, all middle and senior level managers are required to
certify to their supervisors that they are appropriately overseeing the activities
of their subordinates, that those activities comply with all applicable federal
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and state laws and regulations to the best of their knowledge, and that they are
aware of no conduct that violates applicable federal and/or state laws and
regulations
o All employees will be provided with business ethics education above and beyond
what is required by federal and state mortgage lender licensure requirements on
an annual basis
Corrective Action
When included corrective or remedial action means the party to the agreement is
possibly making restitution, amending conduct that violated laws or regulations, or
implementing processes and procedures to mitigate or eliminate the risk of future
violations.
Violations Discovered
 After receiving New Day’s letter stating the results of the Internal Investigation, the
SRR’s Review Committee credited New Day for making remedial changes, but still found
that New Day had violated the Rules of Conduct for Test Takers in the following ways:
o Through the conduct of loan officers who shared confidential test information
with the Director of Training
o Through the conduct of the Director of Training who requested such information
be shared
o By fostering, through the actions and inactions of executive leadership, a culture
based primarily on production quotas
 New Day declined to appeal the Review Committee’s decision and the matter was
referred to the Multi‐State Mortgage Committee (“MMC”). The MMC conducted an
additional investigation, which was headed by the State Mortgage Regulator for the
State of Maryland and focused on identifying the extent to which senior management
at New Day had knowledge of the misconduct. The investigation by the State of
Maryland (the “Maryland Investigation”) determined the following relevant facts and
information:
o Employees of New Day violated the NMLS Rules of Conduct for Test Takers
o Certain New Day employees admitted to participating in a practice where
members of the New Day compliance staff would take continuing education
course and quiz requirements on their behalf and for compensation;
 These practices began as early as 2005 and continued until uncovered by
the Internal Investigation
o Despite that fact that several senior managers and employees were terminated,
resigned or retired as a result of the internal investigation, at least two of those
individuals were rehired
o The Chief Executive Officer and Chief Operating Officer of New Day
acknowledged that continuing education courses were taken for them by
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members of the New Day compliance team;
 Both individuals claimed that they were unaware of their requirements
and these practices, despite evidence that at least one of the individuals
had knowledge and condoned of the practices
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New Day Fact Finding
Nature of Settlement Agreement
 New Day informed the State Mortgage Regulators that it implemented measures to
comply with all regulatory requirements imposed by each State and acknowledged
that the Settlement Agreement reached between New Day and the State Mortgage
Regulators could be revoked if New Day was found to have knowingly or willfully
withheld information from the Regulators
 New Day entered into the Settlement Agreement in order to resolve the complaint
without admitting violations of applicable laws, regulations or rules and agreed to
continue to implement the self‐imposed remedial actions from the November
Letter
 New Day agreed to fully cooperate with any State Mortgage Regulator in any other
related investigation related to the Investigation that led to the Settlement
Agreement and agreed that the State Mortgage Regulators have the legal authority
to initiate administrative actions based on the findings of the Investigation
 By voluntarily entering into the Settlement Agreement, New Day waived the right to
hearing and judicial appeal of the terms, conditions and obligations of the
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Settlement Agreement
Details of Settlement Agreement
 Administrative Penalty: New Day agreed to pay an administrative penalty of
$5,160,000. The administrative penalty was divided equally among the state
mortgage regulators who were part of the Settlement Agreement
 Investigation Fee: New day agreed to pay an investigation fee of $5,906.25 to the State
Mortgage Regulator for the State of Maryland through the NMLS upon execution of
the Settlement Agreement
 Independent Auditor: Within 60 days of the execution of the Settlement Agreement,
New Day was required to retain an independent auditing firm approved by the State
Mortgage Regulator for the State of Maryland to conduct an independent analysis
and provide recommendations on the following:
o A review of New Day policies and procedures to ensure compliance and that
New Day is operating according to accepted business practices for a mortgage
company of its size
o A review of New Day’s training and education programs to ensure that New Day
is in compliance with all duties and obligations under all contracts or
agreements and all federal and state laws and regulations
 The Independent Auditor was required to produce and initial report with
recommendations within 270 days after being retained by New Day to produce and
follow‐up report within another 270 days after that to ensure that New Day had
implemented the recommendations from the initial report
 Comprehensive Compliance Plan: Within 270 days of the execution of the Settlement
Agreement, New Day was required to submit a comprehensive compliance plan to
the Multi‐State Mortgage Committee, which would outline appropriate corporate
management and governance structures and best business practices for a mortgage
company of its size. 270 days after submitting the compliance plan, New Day was
required to submit a follow‐up report detailing the steps take to implement the plan
 Removal of Chief Operating Officer: Upon execution of the Settlement Agreement, the
Chief Operating Officer of New Day was required to be removed from his position. He
was allowed to retain his minority ownership of New Day and remain employed with
the company but was no longer allowed to hold any position that is considered a
“control person” or any position in senior management
o New Day was required to appoint a new Chief Operating Officer within 180 days
of execution of the settlement agreement
Final Notes:
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Respondent who does enter a consent agreement typically acknowledges that they
voluntarily enter the agreement and waives any right to a hearing concerning the
terms, conditions or penalties imposed in the agreement.
Consumer Rights Not Impaired
Regulatory bodies typically include a statement in the agreement indicating that the
consumers rights are not limited or impaired as a result of the agreement, meaning
the respondent is still at risk of civil litigation by individuals alleging they were harmed
by the person(s) subject of the agreement.
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New Day Decadence and Violations Noted
Decadence noted as discovered in subsequent state examination:
1. The New Day Chief Executive Officer acknowledged that continuing education
courses were taken for him by members of the New Day staff at least eighteen (18) times.
He stated that he was unaware of his requirements and only became aware of this activity
after the initial complaint was disclosed by the SRR.
Consider the following:
If the CEO was licensed in 10‐20 states (New Day was licensed in all 50 states, so 10 or 20
licenses held is plausible), some of those courses that were completed on the CEO’s behalf
would have been 7 hour core content or 8 hour comprehensive courses needed to fulfill CE
and apply for partial or full credit for each state due to the reciprocity of education available
with the advent of the NMLS. The licensee would have created 10‐20 license violations for
each year in which the required CE was completed on his behalf. Thus, it is likely that those
18 instances compounded to several dozen state licensing violations for failure to meet each
state’s CE requirements. If each state levied the maximum penalty, the total amount of fines
could easy escalate to several hundred thousand dollars per perpetrator per year.
2. The New Day Chief Operating Officer acknowledged that continuing education
courses were taken for him by members of the New Day compliance team at least eighteen
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(18) times. He claimed that he was unaware of his requirements and only became aware of
this activity after the initial complaint was disclosed to New Day by the SRR. Contrary to this
assertion, however, the Maryland Investigation uncovered evidence demonstrating that Mr.
Alger did indeed have direct knowledge of and condoned these practices while they were
occurring.
Specific State Statute violations and citations:
Education Requirement:
All Licensees engaged in the CE fraud failed to comply with the minimum continuing
education requirement for each year in which the education was not properly completed by
the licensee
NMLS Rules of Conduct/NMLS misrepresentation:
Many states have specifically written into the law or regulation that making a
misrepresentation to the NMLS is a violation of state law or rule, and other states consider
misrepresentations to the NMLS as a general misrepresentation and a violation of that
respective state’s prohibited acts portion of their state mortgage lending law(s) SC
Prohibited Acts:
Misrepresenting, concealing or omitting material facts is a violation of
Duty to Update:
When a licensee became aware that they have attested to meeting the requirements on
renewal when in fact they have not, the licensee has a duty to update the NMLS record and
self‐report the misrepresentation or inaccurate information.
One attests to the accuracy of the filing at each renewal, screenshots are available in this
PDF:
https://mortgage.nationwidelicensingsystem.org/licensees/resources/LicenseeResources/Att
estation.pdf
Failure to self‐report a misrepresentation or inaccurate information is a violation of
Violation of federal and state laws—violation of mortgage statutes:
States routinely include a provision in the mortgage statutes and/or regulations stating that a
violation of Federal laws or regulations triggers a violation of state law and/or regulations.
This relieves the state of the burden of creating a redundant state law or regulation in order
to enforce the Federal provisions. This allows states to protect their residents from violations
of federal law without having to pass redundant state laws.
Statement indicating that violations of federal law are also violations of federal law found in
0
16
Quiz
17
Prohibited Activity
1. To act as a mortgage sale of any mortgage 6. To misrepresent affiliation

lender in this state loan; or with a financial institution
without a current, active c) To obtain property by using a logo or name.
license issued by the fraud, willful 7. When subject to
office pursuant to part III misrepresentation of examination, obstruct
of this F.S.C. 494. a future act, or false examination through
2. In relation to mortgages: promise. misrepresentation or
a) To knowingly or 3. Using the words implying destruction of records
willingly employ any a bank, banco, banker,
device, scheme, or trust company” etc
artifice to defraud;
4. To pay a commission to a
b) To engage in any person who should be
transaction, practice, licensed.
or course of business
which operates as a 5. To record documents to
fraud upon any enact an agreement
person in connection enforcement without
with the purchase or court action.
Quiz
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2 Hour FL SAFE Online State Law PE

Module 2
Prospect Action
Compliance: Prospect agreed to immediately begin implementing measures to comply with
its obligations under the Agreement and to continue to comply with all regulatory
requirements of each State Mortgage Regulator
• Revised Policy and Procedure Manuals: Within 60 calendar days of the effective date
of the Agreement, Prospect agreed to submit revised policy and procedure manuals to the
MMC
o The contents of the revised policy and procedure manuals was required to be
comprehensive to all of its mortgage operations and to specifically address fees,
disclosures, requirements for charging consumer credit cards, record retention, and new
employee screening
o The sections of the revised policy and procedure manuals addressing fees were required
to include language that would ensure compliance with Regulation X (RESPA) and
Regulation Z (TILA)
o The sections of the revised policy and procedure manuals addressing record retention
were required to include language that would ensure that records generated or possessed
by Prospect would be preserved and retained in the manner required by state and federal
laws
• Training: Prospect agreed to complete training for all management, loan originators,
and related support staff in all areas for which those individuals have responsibilities
related to the revised policy and procedure manuals
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o Evidence of completion of training was required to be provided to the MMC by way of a
signed affidavit signed by a senior manager
Enforcement and General Provisions of the Agreement
• The Agreement in no way limited the ability of any State Mortgage Regulator to conduct
examinations or investigations if Prospect was found not to be adhering to the requirements
of the Agreement
• If Prospect fails to comply with the terms and conditions of the Agreement, the State
Mortgage Regulators were free to pursue any action allowed by law
• The State Mortgage Regulators were able to, if deemed necessary, issue a separate
administrative order to adopt and enforce the terms and conditions of the Agreement
Once again, a review of the many cited violations:
*Note: State specific laws or regulations violated are included in brackets [] for reference
• Loan files that were missing required disclosures
• Loan files containing disclosures with insufficient data or language
• Premature charges on consumers’ credit cards for appraisal services
• Failure to issue initial escrow account statements
• Deficient employee screening procedures
• Record retention deficiencies
• Failure to include Company and loan originator unique identification information (NMLS
ID Numbers) on loan documents
• Unlicensed loan originator activity
• Failure to properly disclose an affiliated business relationship
Violations of federal law are also violations of state law
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Prospect Mortgage, LLC: A Repeat Offender
Remember, the investigation that resulted in the Settlement Agreement and Consent order
was conducted in 2012 and the Agreement was reached in 2013.
The exasperating and incredibly bold thing is, according to the next order, Prospect
Mortgage did not learn from the Agreement or amend its practices, but instead
transitioned to even more egregious conduct.
In January of 2017 the Consumer Financial Protection Bureau announced another
enforcement action against Prospect Mortgage.
Next, we will examine some excerpts from the press release, along with instructor
comments in italics.
Follow the link below to view the enforcement action press release in its entirety:
https://www.consumerfinance.gov/about‐us/newsroom/cfpb‐orders‐prospect‐mortgage‐
pay‐35‐million‐fine‐illegal‐kickback‐scheme/
“WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today took action
against Prospect Mortgage, LLC, a major mortgage lender, for paying illegal kickbacks for
mortgage business referrals. The CFPB also took action against two real estate brokers and
a mortgage servicer that took illegal kickbacks from Prospect. Under the terms of the
action announced today, Prospect will pay a $3.5 million civil penalty for its illegal conduct,
and the real estate brokers and servicer will pay a combined $495,000 in consumer relief,
repayment of ill‐gotten gains, and penalties.
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‘Today’s action sends a clear message that it is illegal to make or accept payments for
mortgage referrals,’ said CFPB Director Richard Cordray. ‘We will hold both sides of these
improper arrangements accountable for breaking the law, which skews the real estate
market to the disadvantage of consumers and honest businesses.’”
Remember, any person who gives or receives a thing of value (including individual
MLOs and real estate professionals) for the referral of real estate related services
violates section 8 of RESPA and, by violating Federal law while engaging in state‐
licensed activity, also violates State law through such violation (violations of federal
law are also violations of state law).
These violations of State law by MLOs and mortgage companies are punishable by
individual and company license suspensions or revocations and/or Civil penalties.
“Prospect Mortgage, LLC, headquartered in Sherman Oaks, Calif., is one of the largest
independent retail mortgage lenders in the United States, with nearly 100 branches
nationwide. RGC Services, Inc., (doing business as ReMax Gold Coast), based in Ventura,
Calif., and Willamette Legacy, LLC, (doing business as Keller Williams Mid‐Willamette), based
in Corvallis, Ore., are two of more than 100 real estate brokers with which Prospect had
improper arrangements. Planet Home Lending, LLC is a mortgage servicer headquartered in
Meriden, Conn., that referred consumers to Prospect Mortgage and accepted fees in return.
The CFPB is responsible for enforcing the Real Estate Settlement Procedures Act, which was
enacted in 1974 as a response to abuses in the real estate settlement process. A primary
purpose of the law is to eliminate kickbacks or referral fees that tend to increase
unnecessarily the costs of certain settlement services. The law covers any service provided in
connection with a real estate settlement, such as title insurance, appraisals, inspections, and
loan origination.”
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Specific Violations Committed by Prospect Mortgage
“From at least 2011 through 2016, Prospect Mortgage used a variety of schemes to pay
kickbacks for referrals of mortgage business in violation of the Real Estate Settlement
Procedures Act. For example, Prospect established marketing services agreements with
companies, which were framed as payments for advertising or promotional services, but in
this case actually served to disguise payments for referrals. Specifically, the CFPB found that
Prospect Mortgage:
• Paid for referrals through agreements: Prospect maintained various
agreements with over 100 real estate brokers, including ReMax Gold Coast and Keller
Williams Mid‐Willamette, which served primarily as vehicles to deliver payments for
referrals of mortgage business. Prospect tracked the number of referrals made by each
broker and adjusted the amounts paid accordingly. Prospect also had other, more informal,
co‐marketing arrangements that operated as vehicles to make payments for referrals.
• Paid brokers to require consumers – even those who had already
prequalified with another lender – to prequalify with Prospect: One particular method
Prospect used to obtain referrals under their lead agreements was to have brokers engage
in a practice of “writing in” Prospect into their real estate listings. “Writing in” meant that
brokers and their agents required anyone seeking to purchase a listed property to obtain
prequalification with Prospect, even consumers who had prequalified for a mortgage with
another lender.
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• Split fees with a mortgage servicer to obtain consumer referrals: Prospect and
Planet Home Lending had an agreement under which Planet worked to identify and persuade
eligible consumers to refinance with Prospect for their Home Affordable Refinance Program
(HARP) mortgages. Prospect compensated Planet for the referrals by splitting the proceeds
of the sale of such loans evenly with Planet. Prospect also sent the resulting mortgage
servicing rights back to Planet.
Under the consent order issued today, Prospect will pay $3.5 million to the CFPB’s Civil
Penalty Fund for its illegal kickback schemes. The company is prohibited from future
violations of the Real Estate Settlement Procedures Act, will not pay for referrals, and will not
enter into any agreements with settlement service providers to endorse the use of their
services.”
Real estate brokers or agents as well as mortgage companies and their MLOs often make
recommendations to their clients for various services, such as real estate professionals,
mortgage lending, title insurance, or home inspectors.
The Real Estate Settlement Procedures Act (RESPA) prohibits all parties from exploiting
consumers’ reliance on these recommendations by accepting or providing payments or
kickbacks in return for referrals to particular service providers.
The CFPB’s investigation found that ReMax Gold Coast and Keller Williams Mid‐Willamette
accepted illegal payments for referrals. Both companies were among more than 100 brokers
who had marketing services agreements, lead agreements, and desk‐license agreements
with Prospect, which were found to be vehicles to obtain illegal payments for referrals.
The consent agreement mandated the following:
• The violators must not enter into any other kickback schemes in violation of
the RESPA
• ReMax Gold Coast was ordered to pay $50,000 in civil money penalties
• Keller Williams Mid‐Willamette was ordered to pay $145,000 in disgorgement
and $35,000 in penalties
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Violations Committed by Planet Home Lending through its Dealings with Prospect
Mortgage
“In 2012, Planet Home Lending signed a contract with Prospect Mortgage that facilitated
the payment of illegal referral fees. The company’s practices violated the Real Estate
Settlement Procedures Act and the Fair Credit Reporting Act. Specifically, the CFPB found
that Planet Home Lending:
• Accepted fees from Prospect for referring consumers seeking to refinance:
Under their arrangement, Planet Home Lending took half the proceeds earned by Prospect
for the sale of each mortgage loan originated as a result of a referral from Planet. Planet
also accepted the return of the mortgage servicing rights of that consumer’s new mortgage
loan.
• Unlawfully used “trigger leads” to market to Prospect to consumers: Planet
ordered “trigger leads” from one of the major consumer reporting agencies to identify
which of its consumers were seeking to refinance so it could market Prospect to them. This
was a prohibited use of credit reports under the Fair Credit Reporting Act because Planet
was not a lender and could not make a firm offer of credit to those consumers.
Under the consent order filed against Planet Home Lending, the company will directly pay
harmed consumers a total of $265,000 in redress. The company is also prohibited from
violating the Fair Credit Reporting Act and the Real Estate Settlement Procedures Act, will
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not pay or accept payment for referrals, and will not enter into any agreements with
settlement service providers to endorse the use of their services”
Once again, violations of federal law are also violations of state law, but perhaps we
should explore more direct violation of state law?
Some interesting questions for consideration:
Did anyone who received compensation (legal or illegal referral fees) related to the
loan transactions in these schemes also engage in unlicensed activity?
For the companies and persons who paid compensation to an unlicensed person in
violation of law, did they employ unlicensed persons in violation of State or Federal
licensing statutes?
Did any person who received compensation in fact act as an unlicensed loan
originator?
State laws have adopted the definition of MLO provided under the Secure and Fair
Enforcement of mortgage licensing act (SAFE Act) which, in Section 1503(3)(A)(i), defines a
"loan originator" as:
"an individual who (I) takes a residential mortgage loan application; and (II) offers or
negotiates terms of a residential mortgage loan for compensation or gain."
Section 1503(3)(B), entitled "Other Definitions Relating to Loan Originator", adds:
“an individual ‘assists a consumer in obtaining or applying to obtain a residential mortgage
loan' by, among other things, advising on loan terms (including rates, fees, other costs),
preparing loan packages, or collecting information on behalf of the consumer with regard to
a residential mortgage loan.”
It seems that part (II) of the definition of loan originator above was met by the receipt of
compensation in the form of illegal payments (kickbacks) for referrals.
One must then wonder: in how many circumstances did the recipient of illegal kickback fees
meet part (I) of the definition of loan originator above because they gathered part or
virtually all of the necessary information about an applicant on an initial application or
“prequalification form”, which could be considered a proxy for the Uniform Residential Loan
Application (URLA)?
If so, one could argue that each transaction created a separate violations of State and Federal
licensing law as well.
The consent order filed against Prospect Mortgage is available at:
https://files.consumerfinance.gov/f/documents/201701_cfpb_ProspectMortgage‐consent‐
order.pdf
The consent order filed against ReMax Gold Coast is available at:
https://files.consumerfinance.gov/f/documents/201701_cfpb_RGCServices‐consent‐
order.pdf
The consent order filed against Keller Williams Mid‐Willamette is available at:
https://files.consumerfinance.gov/f/documents/201701_cfpb_Willamette‐Legacy‐consent‐
order.pdf
The consent order filed against Planet Home Lending is available at:
https://files.consumerfinance.gov/f/documents/201701_cfpb_PlanetHomeLending‐consent‐
order.pdf
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Florida High Cost Loans “Fair Lending Act”
Cite: Florida Statutes Chapter 494.00792 Required disclosures for high‐cost
home loans
Florida High Cost Loans “Fair Lending Act” Cite: Florida Statutes Chapter
494.00792 Required disclosures for high‐cost home loans
The Following Conditions Are Required:
No prepayment penalties except:
Term less than three (3) years and applicant offered an alternative loan
without prepayment provision
And applicant had three (3) days to consider loan without prepayment
provision and prepayment loan offers borrower benefits such as lower rate
as compared to loan without a prepayment provision
In case of default interest rate cannot increase
Ten (10) year term+/no balloon
No negative amortization
No prepaid payments
Ability to repay must be evaluated
Payments to contractors must be made to borrower jointly or solely
Compliance Notes Cite: Florida Statutes Chapter 494.0067 Requirements of
mortgage lenders
Company Broker or Lender transact business from principal place of business,
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unless branch offices licensed
Issue early disclosures under TILA and RESPA
Issue CHARM booklet on ARM products
Issue material change notification
Lender has four (4) months to service, unless servicing endorsement, higher net
worth required to qualify for servicing endorsement
Report net worth deficiency within two (2) days to FL‐OFR
Prior to selling to non‐institutional investor licensee provides an appraisers opinion of
value or get a waiver and disclose affiliate relationships to investor
Provide title policy to non‐institutional investor or attorney opinion of title, detailing
marketability and any senior liens
Provide binder of insurance or opinion if not available and deliver policy or opinion in
six (6) months
Broker must deposit proceeds with attorney, or title company, broker cannot handle
borrower funds
Waiver for a non‐institutional investor must say:
The noninstitutional investor acknowledges that the mortgage lender selling this
mortgage loan is not providing a title insurance policy or opinion of title issued by an
attorney who is licensed to practice law in the State of Florida. Any requirement for
title insurance or for a legal opinion of title is the sole responsibility of the
noninstitutional mortgage purchaser.”
Licensee provides non‐institutional investor:
1st lien loan balance if 2nd lien loan
Statement indicating licensee is borrower or principal
Mortgage assignment recorded ASAP and within 30 days
If applicable, written servicing agreement
Provide original note with endorsement
Cite: Florida Statutes Chapter 494.0067 Requirements of mortgage lenders
Origination, Broker Fees and Disclosures Cite: Florida Statutes Chapter 494.0038
Fee prohibited unless detailed written, dated and signed agreement with unique
identifier(s).
All fees except third party origination fees
All origination fees paid to company licensee
Signed with 3 days, or sent, licensee must prove sent
If YSP, describe amount, function of rate, within 3 days after known at least 3 days
prior
Broker places loans, lender makes loans
Commitment comes from lender not broker
Broker can’t guarantee acceptance of terms
Broker retains signed and dated GFE
Excess fees refunded 60 days
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Application fee not charged, unless services for fee defined, labeled, and not a %
Broker can’t accept, any fee, except third party, until borrower written commitment
from lender, third party fees go to a trust account, can offer other business services
(insurance, etc.)
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LOAN ORIGINATION FEES
CITE: FLORIDA STATUTES CHAPTER §494.0042
loan origination fees Cite: Florida Statutes Chapter §494.0042
(1) a loan origination fee earned by a licensee, pursuant to this part, is not
considered interest or a finance charge under chapter 687.
(2) a person may not charge or exact, directly or indirectly, from the borrower a fee
or commission in excess of the maximum fee or commission specified in this
section. The maximum fees or commissions that may be charged for mortgage loans
are as follows:
on a mortgage loan of $1,000 or less: $250.
on a mortgage loan exceeding $1,000 and not exceeding $2,000: $250 for the first
$1,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage
loan.
on a mortgage loan exceeding $2,000 and not exceeding $5,000: $350 for the first
$2,000 of the mortgage loan, plus $10 for each additional $100 of the mortgage
loan.
on a mortgage loan exceeding $5,000: $250 plus 10 percent of the entire mortgage
loan.
For the purpose of determining the maximum fee, the amount of the mortgage loan
is based on the amount of mortgage loan actually funded exclusive of the
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authorized maximum fees or commissions.
Fees Earned Commitment Agreement Cite: Florida Statutes Chapter 494.00421 Fees
earned upon obtaining a
bona fide commitment
Required Information on Agreement
Loan amount
The rate and/or ARM terms
Estimated cash‐out above fees, liens, costs
Lien priority
Length of broker agreement in days to get commitment
12‐point font for statement
These requirements do not apply to commercial loans above 1 million loan amount
“You are entering into a contract with a mortgage broker to obtain a bona fide
mortgage loan commitment under the same terms and conditions as stated
hereinabove or in a separate executed good faith estimate form. If the mortgage
broker obtains a bona fide commitment under the same terms and conditions, you
will be obligated to pay the loan origination fees even if you choose not to complete
the loan transaction. If the provisions of s. 494.00421, Florida Statutes, are not met,
the loan origination fee can only be earned upon the funding of the mortgage loan.
The borrower may contact the Department of Financial Services, Tallahassee, Florida,
regarding any complaints that the borrower may have against the loan originator. The
telephone number of the department is: (insert telephone number).”
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Shootout Learning Exercise
27
Modification Agreement
Cite: Florida Statutes Chapter
494.00296 Loan modification
Modification Agreement Cite: Florida Statutes Chapter 494.00296 Loan
modification
Must have a signed modification agreement
Execute a modification agreement disclosing all loan terms
Company only compensated upon closing and meeting all terms of the written
agreement
3 days right to cancel and all monies returned with 10 business days of cancel
Provide a copy of signed agreement within 3 hours to the borrower
Frivolous suits brought to harass may require a bond provided by person bringing
the lawsuit
Prevailing party gets attorney’s fees, costs etc, except not costs against a Regulator
Lock in Agreements and Commitments Cite: Florida Statutes Chapter 494.00421
Contains: expire date, rate, discount points, commitment, lock‐in fee, a statement
indicating all these must be provided
Lender must try to honor in good faith
Lock‐in agreement must be signed by both parties, mailed to borrower, to be
binding, verbal does not apply, rescindable until mailed
Lenders must be able to meet all locks agreed to, with adequate funds available,
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unless locked with an investor
Lock‐in fees without funding above, must be trust account deposited until, closed,
cancelled by applicant or rejected, or lender is required to forward to third party to
execute.
COMMITMENT PROCESS
Expiration date, loan amount, if terms can change before expiration, ARM terms
The following statement, in at least 10‐point bold type: “The interest rate will be the
rate established by the lender in its discretion as its prevailing rate (x) days before
closing.”;
Amount of commitment fee, and if refundable
Time to accept by borrower
Commitment can’t be changed prior to expiration, if any items are unknown, lender
must make best reasonably available notice and state an estimate
Commitment fee refundable if:
Contingent on approval of sale of loan
Conditions not met, beyond borrower control
Borrower willing but unable to meet purchasers’ requirements
Borrower gets refund, if loan does not close through no substantial fault of
borrower
Conflict of Interest Cite: Florida Statutes Chapter 494.0023
If there is a conflict of interest (similar to RESPA affiliated business arrangement)
licensee must disclose:
Nature of affiliation, may be financial benefit to licensee, that borrower may
choose alternative sources
Conflict of interests exists if service provided by licensee or relative of licensee
One (1%) percent ownership by licensee or family, directly or indirectly or has
a “control position”
Prohibited to Advertise and‐Record Requirements
Violation to advertise:
Unqualified access without stating limitations
Rate without disclaimer if an ARM component is present and rate could change
Terms unless you can make to reasonable number of qualified applicants
Misuse “national, federal, FDIC, FHA or other federal terms, if not authorized to
perform
Deceptive or unfair
MUST RETAIN 2 YEARS AFTER LAST USE
Disciplinary Action Cite: Florida Statutes 494.00255
Penalties against a person or company include: (a)Issuance of a reprimand.
(b)Suspension of a license, subject to reinstatement upon satisfying all reasonable
conditions imposed by the office.
28
(c)Revocation of a license.
(d)Denial of a license.
(e)Imposition of a fine in an amount up to twenty‐five thousand dollars ($25,000) for
each count or separate offense.
(f)An administrative fine of up to $1,000 per day, but not to exceed $25,000
cumulatively, for each day that:
1.A mortgage broker or mortgage lender conducts business at an unlicensed branch
office.
2.An unlicensed person acts as a loan originator, a mortgage broker, or a mortgage
lender.
Conduct Triggering Penalties Cite: Florida Statutes 494.00255
Trust‐escrow account mismanagement
Failure to account for funds or disburse according to an agreement
Misuse of another’s property entrusted
Fraud, deceit, negligence incompetence
Violation of appraisal independence
Low‐balling underestimating closing costs
Causing a Mortgage Guaranty Trust Fund loss
Fraud in any jurisdiction
Dishonesty felony conviction
Civil judgement for dishonesty deceit, fraud
Subject of administrative order or regulatory action, revocation, suspension, for any
financial related business
Violating RESPA TILA or their regulations
License suspended, revocation anywhere
Origination without a license when required
Operating a branch without a license for the branch without a branch manager
Misstatement of fact on license application or renewal
Paying fees with bad check
Failure to comply with rules or orders
Failure to maintain records as required for 3 years
Refuse an exam, investigation or pay fees, fines or assessments
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Penalty Reviewed Cite: Florida Statutes 494.00255
Penalty against a person or company
Reprimand
Suspension revocation denial of license
$25,000 fine for each count or offense
Administrative fine of $1000 per day up to $25,000 for unlicensed branch or MLO
Company, branch manager, on hook for pattern of behavior of MLO
Summary suspension possible for imminent threat
Powers of FL‐OFR
Office can issue injunction, restraining order, cease and desist, receivership (seize)
documents and records.
Office can order subpoenas, order testimony, compel production books and
records, administer oaths.
Office can petition local court for compliance and injunctive relief such as cease and
desist MLO activities.
Office can request a court to attach assets to protect against licensees liquidation,
order refunds if transaction charges lack substantiation.
Office can move to attach (control) all books, accounts and record and summary
29
procedure, plus seek attorney’s fees and costs, non‐payment is contempt of court
Cite: Florida Statutes 494.00135
High Crimes, Penalties and Fines Cite: Florida Statutes 494.0018
Whoever knowingly engages in escrow trust fund related violations and misuse, theft
in mortgage business, or failure to account for any monies not licensees or retaining
monies not licensees or return upon demand or failure to disburse funds as agreed,
or origination without a license or fraud or other items cited in FSC 494.0025
commits a felony of the third degree, (includes a penalty of imprisonment for up to 5
years). Each such violation constitutes a separate offense.
Any person who violates any provision of ss. 494.001‐494.0077, in which the total
value of money and property unlawfully obtained exceeds $50,000 and there are
five or more victims, commits a felony of the first degree, (includes a penalty of
imprisonment for up up to 30 years)
Part B. Florida Anti‐Coercion Law Florida Administrative Code (F.A.C.) Rule 69O‐
124.002
69O‐124.013 Statement of Anti‐coercion; Form
The following statement is required under Rule 69O‐124.002, F.A.C., of the rules and
regulations promulgated by the Financial Services Commission relative to anti‐
coercion:
The Insurance Laws of this state provide that the lender may not require the
borrower to take insurance through any particular insurance agent or company to
protect the mortgaged property.
The borrower, subject to the rules adopted by the Financial Services Commission, has
the right to have the insurance placed with an insurance agent or company of his
choice, provided the company meets the requirements of the lender. The lender has
the rights to designate reasonable financial requirements as to the company and the
adequacy of the coverage.
I have read the foregoing statement, or the rules of the Office of Financial Services
relative thereto, and understand my rights and privileges and those of the lender
relative to the placing of such insurance.
I have selected the ___ Insurance Agency, or ___ Insurance Company to write the
hazard insurance covering property located at:
_________________
Name of Borrower
_________________
Name of Borrower
_________________
Date
Florida Administrative Code (F.A.C.) 69O‐124.016 Title Insurance
These rules and regulations do not apply as to title insurance.
Florida is Lien Theory State
29
TITLE Theory States vs.
LIEN Theory States
In a title state, the lending institution holds title to the property in the name of the
borrower through a Deed of Trust. In a lien state, the deed stays with the borrower
(mortgagor), and the lender (mortgagee) places a lien on the property using the
mortgage instrument. Generally, foreclosure in a title state occurs through a non‐
judicial proceeding, while lien states are conducted via judicial methods; it varies
with each state.
Foreclosure Rescue or Loan Modification Cite: Florida Statutes Chapter 494.00296
Loan modification
"Equity purchaser" means any person who acquires a legal, equitable, or beneficial
ownership interest in any residential real property as a result of a foreclosure‐rescue
transaction.
Foreclosure rescue consultant‐other than mortgage licensee, counseling or like
agency, but a for‐profit endeavor.
Must have a written agreement
No upfront fees, prior to performing all services
Written agreement in twelve (12) point font describing terms and services, date.
Homeowner agreement provided at least 1 full day before signing (like old HUD1)
Consumer has three (3) business days to cancel after signing
Company has ten (10) business days to return funds after notice of cancel
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The foreclosure‐rescue consultant must give the homeowner a copy of the signed agreement within
3 hours after the homeowner signs the agreement.
In any foreclosure‐rescue transaction in which the homeowner is provided the right to repurchase
the residential real property, the homeowner has a 30‐day right to cure any default of the terms of
the contract with the equity purchaser, and this right to cure may be exercised on up to three
separate occasions. The homeowner's right to cure must be included in any written agreement
required by this subsection.
In any foreclosure‐rescue transaction, before or at the time of conveyance, the equity purchaser
must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be
extinguished by the foreclosure.
If there is a right to repurchase, “equity purchaser” must verify ATR and DTI <60%
If repurchase price is <17% per annum unconscionable transaction
Violators are subject to the penalties and remedies provided in part II of this chapter, including a
monetary penalty not to exceed fifteen thousand dollars ($15,000) per violation.
Foreclosure Rescue or
Modification Agreement
Cite: Florida Statutes Chapter 494.00296 Loan modification
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FLORIDA STATE TAX LAW
FLORIDA STATE TAX LAW
County Taxes
Documentary Tax Stamps
Deed and Mortgage Tax Stamps
AD Valorem Property Taxes
Amendment 1 Homestead Exemptions
Understanding real estate taxation in Florida
Understanding the real estate tax laws in Florida can be complicated, as‐there are
several different factors that can affect the taxation level. The amount of a property
tax bill depends on two main factors:
the assessed value of the property, and
the tax rate (expressed as tax dollars paid per thousand dollars of assessed property
value) for each local government body in the subject property’s area.
For example, the subject property purchased may be subject to taxes by the
County, the School Board, the City, and various designated district organizations
such as the Hospital District and the Water Management District. Additionally, the
borrower will also be affected by whether or not they live in a Community
Development District (CDDs)‐CDDs have extra tax regulations that will affect how
32
much property tax is owed. There are other considerations, too, such as Homestead
Exemptions and the "Save our Homes" amendment, which will limit the amount of
property tax.
County Taxes
The tax rate varies depending on the county of residence, along with which part of
the county the borrower resides. This is because within a county, certain regions may
be incorporated, and other regions may be unincorporated. Those regions which are
unincorporated have slightly lower property taxes.
Documentary Deed Tax Stamps
Cite: Amendment 1 Homestead Exemption
Whenever real estate is transferred in Florida, either by quit‐claim deed, warranty
deed, or a written obligation to pay (such as a mortgage) is filed, a Florida document
tax must be paid to the County Clerk's Office if the document is filed and paid directly
to the Florida Department of Revenue if the document is not filed.
The tax rate for documents that transfer an interest in real property is $.70 per $100
(or portion thereof) of the total consideration paid, or to be paid, for the transfer. An
exception is Miami‐Dade County, where the rate is $.60 per $100 (or portion thereof)
when the property is a single‐family residence. If the Miami‐Dade property is
anything other than a single‐family residence, the tax rate is $.60 plus $.45 surtax per
$100 (or portion thereof).
Examples of documents that may transfer interest in real property include:
Warranty deeds
Quit claim deeds
Contracts for timber, gas, oil, or mineral rights
Easements
Contracts or agreements for deed
Assignments of contract or agreement for deed
Assignments of leasehold interest
Assignments of beneficial interest in a trust
Deeds in lieu of foreclosure
Consideration
Assessed on “consideration”, which generally consists of:
Money paid or to be paid
Discharge of an obligation
Mortgage or other lien encumbering the property
Exchange of property
Any other monetary consideration or consideration which has value
When the consideration paid or exchanged for real property is property other than
money, the consideration is equal to the fair market value of the real property.
Documentary Mortgage Tax $.35 per $100, Intangible $.20/$100
A document that transfers an interest in real property between a husband and wife
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may be subject to documentary stamp tax. If the property is mortgaged, tax is
generally due on half of the outstanding balance of the mortgages encumbering the
property. Tax is generally not due if the property is not mortgaged or if the marital
home is transferred between former spouses due to a divorce.
The Florida home buyer will be assessed a Florida mortgage tax, which is typically
$0.35 per every $100 of the mortgage amount. A Florida State Mortgage Intangible
Tax may also be assessed at an average rate of $0.20 per every $100 of the financed
amount.
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Documentary Tax Deeds, Documentary Tax
Mortgage and Intangible Tax Example
Documentary Tax Deeds, Documentary Tax Mortgage and Intangible Tax Example
DOC STAMPS EXAMPLE
Buyers pay $.35/$100 for new money (borrowed money) such as a mortgage. The
stamps are not assessed on cash paid from the Buyer. Buyers secures a 80% LTV 1st
lien mortgage. The seller is charged $.70/$100 on the sale price of the transaction.
(Except in Miami/Dade, where the seller pays $.60/$100)
To calculate, divide loan amount by 100, and multiply that amount by the tax rate.
Example, a $450,000 property, $360,000 mortgage
$450,000 / 100 = 4500
$360,000/100 = 3600.
Mortgage and Intangible paid on amount financed
Documentary mortgage tax
3600 * .35 = $1,260
Intangible tax
3600 * .20 =$720
Documentary deed tax 4500 * .70 = $3,150
No rules dictate who must pay the tax. The payment of the applicable tax(es) are
negotiable in the real estate transaction.
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Ad Valorem Property Taxes
Taxes that are based on a property’s value are called ad valorem property taxes. Most
city and county property taxes fall into this category. The ad valorem tax bill is the
result of the coordinated efforts of county taxing authorities and officials:
The property appraiser, who determines the market value of your property;
The taxing authorities, which are the local government units who determine
the tax rate and levy the tax; and
The tax collector, who sends the tax notice and collects the tax,
The local property appraiser sets a value on a property, based on current market
value, including buildings and other improvements. A homeowner may be eligible for
certain exemptions. Any exemptions are deducted from the assessed value.
The final amount is the taxable value of property.
Important Tax Dates
January 1 Assessment date
March 1 Last day to file for homestead and other exemptions
April 1 Prior year taxes delinquent
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Learning Game Golf Bucket 2
34
Tax Rates Review
Tax Rates Review
Documentary Tax Stamp Deeds
$.70 per $100 on sales price
Documentary Tax Stamp Mortgage
.35 per $100 on loan amount
Intangible Tax
.20 per $100 on loan amount
Ad Valorem Tax‐Property Tax‐ Varies by County is provided in mils and explained
shortly
Homestead Exemptions
The first $25,000 is exempt,
The second $25,000 is NOT exempt
The third $25,000 is exempt except school related taxes.
Thus, the taxable value on a $50,000 property is the same as a $70,000 property. (If
they mention Homestead in the question, make sure to remember these
exemptions.
Amendment 1 Homestead Exemption
Applies for the 3rd $25,000 in assessed value, exempts tax, except school tax
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Homestead Exemption Up To $50,000
Under the homestead exemption, all legal residents of Florida can deduct $25,000
from the assessed value of their primary residence. This essentially reduces the
taxable value of the property and reduces how much eligible Florida residents pay in
property tax.
The $25,000 homestead exemption is not granted automatically, however. To be
eligible in any given year the taxpayer must take possession of the homestead by
December 31, and then apply for exemption no later than March 1 of the next year.
Since January 9, 2008, eligible Florida homeowners can gain a further $25,000
exemption under Amendment 1.
This exemption is received automatically by any homeowner who applies and is
approved for the original homestead exemption.
2nd $25,000 Fully Taxed
The second exemption is calculated as follows:
The first $25,000 value of the home is the original exemption.
The second $25,000 is fully taxable. Providing funding to Florida towns and cities
where assessed property values are lower to fund local government.
The third $25,000 is the new Amendment 1 exemption. It is exempt from all taxes
except for school tax. This allows schools to continue receiving the funding they need
(if this third portion was totally exempt, schools would suffer even greater funding
challenges).
Items for Homestead Filing
If filing for the first time, be prepared to answer these questions:
In whose name or names was the title to the dwelling recorded as of January
1?
What is the street address of the property?
How long have you been a legal resident of the State of Florida? (A Declaration
of Domicile or Voter's Registration will be proof of date before January 1.)
Do you have a Florida license plate on your car and a Florida driver's license?
Were you living in the dwelling on January 1?
The Florida "Save Our Homes" Amendment
If a homeowner qualifies and applies for Homestead Exemption this guarantees the
property's assessed value cannot rise more than three (3) percent each year. This
law is a result of the "Save our Homes" amendment, which states that annual
property assessment figures cannot exceed the lower of 3% of the prior year's
assessment, or the percent increase in the Consumer Price Index (CPI). This
amendment protects existing homeowners but note that a purchased property will
not be protected by "Save our Homes" automatically‐when the property changes
hands, the assessed value cap is lifted, and the buyer does not qualify for protection
until they obtain a Homestead Exemption.
The "Save our Homes" amendment means it is particularly important that a buyer
35
not rely on existing property tax value assessment if they are considering purchasing
any home within all of Florida‐a protected home has an artificially low assessed
value, and depending on the region in which the home is purchased, the assessed
value may increase sharply once the property has changed hands.
Exemptions
Widow exemption
$500 Widow's and Widower's Exemption
$500 Disability Exemption
$5,000 Disability Exemption for Ex‐Service Member
$500 Exemption for Blind Persons
1. Service‐Connected Total and Permanent Disability Exemption
An honorably discharged veteran with service‐connected total and permanent
disability may qualify for total exemption of homesteaded real estate used and
owned as a homestead, less any portion used for commercial purposes. An existing
exemption can be transferred to a new qualifying residence.
Under certain circumstances the benefit of this exemption can carry over to the
surviving spouse.
If filing for the first time, bring proof of your service‐connected disability: such as, a
letter from the United States Veterans' Administration.
2. Exemption for Totally and Permanently Disabled Persons
Available, but Conditions Apply
Additional Homestead Exemption for Persons 65 and Older
State law allows a city or county government to enact a local ordinance allowing an
additional homestead exemption amount, up to $50,000, to any person who has legal
or equitable title to real estate on which they make their permanent residence.
In order to apply for and receive this local option homestead exemption, the
applicant's income may not exceed the amount adjusted annually shown below,
based on the CPI. The income limitation was established at $20,000 in 2001.
35
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AAA Mortgage Training 10/21/2019

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