Lykken on Lending

[Alice] Thanks Dave, and hello everyone! I am sorry I cannot be there in person with you because I have super exciting news. As you know, I am the good news bearer on the show all the time. Just kidding, because it’s about another regulation that we’re all going to have to follow. So the CFPB has issued a final rule on this new registry that they’re pulling together. This is the implementation of the non-bank registration system. So, they published the final rule and put an effective date of September 16^th of 2024. Now the actual earliest registration date for a lender would actually be 30 days after that, so October 16 and then their entities will be required to actually start submitting information to this new non-bank registry by Tuesday, January 14 of 2025 so CFPB feels like they’ve given us plenty of notice. Now. What exactly is this? This is CFPBs effort to really have a collective single place to understand if an entity has had public orders, public information, court orders that have been put on that entity or certain persons in that entity across the country. So, if you can imagine, you know, there are bad actors out there. We know we see them. Somebody does bad business in one state, they get caught, and then they simply go, move to another state and feel like they can fly under the radar or perhaps they structure the companies a little bit differently so that they cannot be on the radar, but it’s still the same bad actors. And so the idea of the registry is to force entities to have to report when they’ve been cited by a particular state and then therefore be able to collapse that okay, this company has done poorly in state Y and state D, and now we actually can keep watching them. I think the challenge with this is it does from what I am reading, appear to be really a self-reporting responsibility. So as a lender, you’ll have to have a Senior Executive at your company who’s responsible for ensuring that this registry is maintained, that you’re reporting timely anytime there’s been an applicable order. So, there’s a lot to study here. It’s almost a 500-page rule. Now, a lot of that is just deciphering the difference between the proposed rule and the final rule. So, this is not news. Those of you who are going wait a minute, where did this come from? Okay, they went through the process. They did publish a proposed rule. So, we’ve had plenty of time to look into this, and we did talk about this quite some time ago on the show. So going forward, I think it’s all of you just need to have a heads up as non bank entities to go check out this final rule. Study it, read it, make sure that you’re ready to implement being a part of the registry and reporting events that would be applicable under this new rule. Hopefully the CFPB is using this in the right way. The one thing I do want to make sure you also recognize is that this will be a publicly available registry, so anything that goes in will be available to the general public. So, if your company has a court order in a particular state that will be required to be reported into the database, and it will then be publicly available. Now they haven’t told us exactly to what extent the information will be public. There may be just some high-level information, but it’s public anyway. It’s just going to make it easier for a consumer to perhaps navigate to where that is. The other thing I think that’s important in walking through this is just simply that in those public orders, just trying to make sure that you’re reporting it timely, and that you do provide a written statement, so the database will give the entity the ability to provide a written statement that goes with that. So, lots to learn, lots of process to resolve, and we’re just at the beginning stages of seeing the final rule that came out on June 3. Last but not least, I do want to remind everyone that FHA has changed their large deposit requirements. This has been all over the news. What is amazing to me is how marketing departments are saying donor bank statements are no longer required. Okay, folks, I get it. People love headlines, and they love to make sure that you all recognize that, for starters, how many donors even know about that ahead of time? So I think that’s kind of a funny headline. Certainly, they’re trying to communicate to the realtors and make sure that they who do know that gift documentation can be quite cumbersome, that FHA is no longer arbitrarily in every case required or the donor bank statement. If that’s the good documentation to provide, you can still do it. It’s just that it’s not mandatory on every loan. You certainly have to make sure you’re documenting the transfer of the funds. We’re not getting off the hook for trying to make a paper trail. And that’s part of the challenge I have with the way some of the marketing is going on out there. I think what’s important is that, you know, it does certainly make it a little bit easier, and we absolutely applaud FHA for removing that stumbling block. So that’s my report for today. Dave. Have a great day.

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Alice Alvey, Master CMB
Vice President Partner Education and Training at Union Home Mortgage
8241 Dow Circle
Strongsville, OH 44136
D: 440.420.4294
C: 248.941.1939

She handles development of their World Class Training program designed to support UHM partners and organizational effectiveness.

Prior to UHM, Alice served as Senior Vice President at Indecomm leading the Indecomm-Mortgage U division, Internal QA and Compliance and SaaS technologies. Indecomm acquired Mortgage U in 2013, where Alice was President/Co-founder, providing training and consulting since 1996. Prior to MU she served as SVP of Operations at a national bank overseeing operations for wholesale, retail and correspondent from underwriting through servicing, and compliance.

She has been in the trenches of mortgage lending operations from application through servicing for over 30 years. Her authoring work in training content, policies and procedures and the FHA/VA Practical guides illustrates her ability to bridge regulatory requirements with day-to-day operations.

Alice has been a weekly contributor to the Lykken on Lending show since its beginning in April 2009 and has made her weekly contributions to 450+ episodes!