Arizona Association of Mortgage Brokers

Foreclosed homes in metro Phoenix...signs of improvement?

Arizona Association of Mortgage Brokers

The new ASU-Repeat Sales Index, compiled by the Center for Real Estate Theory and Practice at the W. P. Carey School of Business, shows that the rate of decline of foreclosed home prices is slowing down.

In October, the median price of foreclosed homes dropped 15 percent.  In November, the drop is anticipated to be 8 percent and in December only 2 percent. 

This is in stark contrast, however, to what's happening to prices of non-foreclosed homes.  In October, prices fell 19 percent and December is expected to show a drop of 23 percent.  Non-foreclosed home prices have been in a rate of decline at approx. 20 percent per month since October 2008.

For more detail, click here.

Fingerprinting Now Available through NMLS for SAFE Act Pre-Licensing

Arizona Association of Mortgage Brokers

NMLS has posted information on their website about getting fingerprints...one of the necessary steps in the process of obtaining a mortgage originator license in compliance with the SAFE Act.

Fingerprints will be submitted to the FBI in order to conduct a criminal background check.  Results of the check will be attached to each mortgage loan originator's NMLS record. 

The fee is $39 for a live scan (electronic) capture, or $49 (or more) for paper card capture.  Live scan and paper card locations can be selected from a list of vendors during the process of registering for fingerprinting. 

Live scan is recommended by NMLS over paper card capture because it costs less, can be scheduled more quickly, requires fewer steps, and results in fewer unreadable prints, which presumably require a do-over.

To begin the process and for more information, CLICK HERE to go to the NMLS website.

For more general information on the AAMB Blog about licensing, click here.

HUD announces FHA changes; MIP to increase

Arizona Association of Mortgage Brokers

Please see below for an important press release from HUD.  

 

HUD No.10-016 Melanie Roussell (202) 708-0980

FOR RELEASE Wednesday January 20, 2010

FHA Announces Policy Changes to Address Risk and Strengthen Finances

New Measures Will Help FHA Better Manage Risk, While Maintaining Support for the Housing Market and Access for Underserved Communities

WASHINGTON – Federal Housing Administration (FHA) Commissioner David Stevens today announced a set of policy changes to strengthen the FHA’s capital reserves, while enabling the agency to continue to fulfill its mission to provide access to homeownership for underserved communities. The changes announced today are the latest in a series of changes Stevens has enacted in order to better position the FHA to manage its risk while continuing to support the nation’s housing market recovery.

The FHA will propose to take the following steps: increase the mortgage insurance premium (MIP); update the combination of FICO scores and down payments for new borrowers; reduce seller concessions to three percent, from six percent; and implement a series of significant measures aimed at increasing lender enforcement. U.S. Housing and Urban Development Secretary Shaun Donovan previewed the changes in December of last year, noting that the FHA would announce additional details before the end of January.

“Striking the right balance between managing the FHA’s risk, continuing to provide access to underserved communities, and supporting the nation’s economic recovery is critically important,” said Commissioner Stevens. “When combined with the risk management measures announced in September of last year, these changes are among the most significant steps to address risk in the agency’s history. Additionally, by continuing to provide affordable, responsible mortgage products, FHA will support the housing market’s recovery. Importantly, FHA will remain the largest source of home purchase financing for underserved communities.”

Announced FHA Policy Changes:

1. Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending
   • The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
   • If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
   • This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
   • The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.
2. Update the combination of FICO scores and down payments for new borrowers.
   • New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA's 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
   • This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
   • This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.
3. Reduce allowable seller concessions from 6% to 3%
   • The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
   • This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.
4. Increase enforcement on FHA lenders
   • Publicly report lender performance rankings to complement currently available Neighborhood Watch data - Will be available on the HUD website on February 1.
     • This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
   • Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
     • Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
     • This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
   • Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
     • Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
   • HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
     • Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
     • Legislative authority permitting HUD maximum flexibility to establish separate "areas" for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

In addition to the changes proposed today, the FHA is continuing to review its overall response to housing market conditions, and continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through FHA/HAMP and other FHA initiatives going forward.

###

HUD is the nation's housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development ad enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.

AAMB Legislative Alert

Arizona Association of Mortgage Brokers  

What does your AAMB membership do for you?

Why should you RENEW or JOIN NOW?

Dear AAMB Member and Everyone in the Mortgage Industry,

As a member in AAMB you are also a member in the National Association of Mortgage Brokers (NAMB).

NAMB continues to educate lawmakers and regulators in the continued battle to defend yield spread premiums from inaccuracies painting small business mortgage brokers in a negative and disparaging manner. 

Most recently, a small faction of Senate Democrats, led by Sen. Jeff Merkley (D-OR), sent a letter to the Federal Reserve Board calling for a ban on YSP, labeling it as an unfair and deceptive practice used to steer consumers into riskier mortgage loans and gain a larger profit. 

The letter was clearly used to protect Wall Street and big banks increase their market share at the expense of unemployed small business men and women and their employees, by deflecting Wall Street’s and big banks’ involvement in causing the mortgage and housing crisis.  Click HERE for the Senate Letter. 

Sen. Christopher Dodd (D-CT)                Sen. Robert Menendez (D-NJ)
Sen. Carl Levin (D-MI)                            Sen. Mark Warner (D-VA)
Sen. Barbara Mikulski (D-MD)                Sen. Ron Wyden (D-OR)
Sen. Jack Reed (D-RI)                           Sen. Daniel Akaka (D-HI)
Sen. Claire McCaskill (D-MO)                 Sen. Russ Feingold (D-WI)
Sen. Benjamin Cardin (D-MD)                 Sen. Frank Lautenberg (D-NJ)
Sen. Charles Schumer (D-NY)                Sen. Sherrod Brown (D-OH)
Sen. Bob Casey (D-PA)                         Sen. Jeanne Shaheen (D-NH)
Sen. Sheldon Whitehouse (D-RI)
  
NAMB's government relations team was alerted to the fact that Senator Merkley was soliciting signatures on a letter to the Federal Reserve to ban mortgage broker compensation.  NAMB immediately responded to this effort with a letter to the Senate defending mortgage broker compensation by explaining its use in providing options to consumers.

NAMB's letter to the Senate provided detailed information on the required disclosure of mortgage broker compensation under Federal law, citing several federal documents clarifying the legal use of YSP. Additionally, NAMB's letter shed light on the deep involvement Wall Street and big banks have played fueling the subprime boom.  NAMB also pointed out the need for mortgage lender compensation to be regulated in the same manner as mortgage broker compensation.  Click HERE for the NAMB Letter.

These types of false accusations against you as a mortgage broker will continue and are what mortgage brokers must fight against in Congress.  NAMB has worked hard to defend mortgage brokers against deceptive and misleading information, and we have been successful in many instances. 

Our fight has intensified tremendously as the Senate considers comprehensive financial regulatory reform.  NAMB continues the fight to protect and preserve your industry, but NAMB NEEDS YOUR HELP to support the high level of consistent action taken on behalf of your businesses.  Your active participation is very important and can make the difference.  Now is the time! 

GET INVOLVED!
At the NAMB 2010 Legislative & Regulatory Conference in Washington, DC in February, members of the Board of AAMB will take this opportunity to speak with members of Congress, to protect your industry.  2010 is set to be another busy legislative and regulatory year.  NAMB will have panelists and guest speakers talk on the most important issues facing the mortgage industry this year.  If you are a member you can come to the NAMB Legislative Conference in order to be a part of this effort to set the record straight.  Visit www.namb.org/legconference for more information!

2010 KEYNOTE SPEAKER: FHA Commissioner David Stevens

DONATE!
NAMBPAC raises money to elect and re-elect candidates that have a clear understanding of the topics that are at the forefront of the mortgage broker industry and who support our initiatives.  When you contribute to NAMBPAC you are helping your business and the mortgage broker Industry. NAMB members are able to build a united voice on Capitol Hill and provide a key role in the campaign process by contributing funds to support candidates who share the same viewpoints and outlook for our industry. 

If you are serious about staying in this business now more than ever we need to build the PAC funds! The only way we can fight this is through strength in membership and PAC funds. Don't waste anytime thinking about it or contemplating contributing, DO IT NOW by donating $50.00, $75.00, $100.00 or more today!  To donate, click HERE!

The NAMB Legislative and Regulatory Action Fund directly helps fund the extensive daily legislative and regulatory efforts maintained by NAMB.  By donating, you support NAMB's commitment to a competitive and level playing field among origination channels, combating abusive lending practices, a simplified mortgage process, consumer financial literacy, and fair access to affordable credit.  To donate, click HERE!  

IF YOU ARE ALREADY A MEMBER, RECRUIT NEW MEMBERS!
Do you have colleagues who are not members of AAMB/NAMB? Begin the New Year on the right track by recruiting new members to join AAMB/NAMB!  We are working hard to protect, promote and propel the small business mortgage profession. 

AAMB/NAMB keeps its members educated, trained and well-informed on everything happening in the mortgage broker industry.  Benefits include: Legislative advocacy, discounted education, industry public relations, member discounts, certification opportunities, valuable networking at conferences, and more!
Direct potential members to www.aamb.org today!


What Has NAMB done in 2009?
NAMB fights for its members on a daily basis on the frontlines and behind the scenes.  Click HERE for an overview of what NAMB accomplished in 2009 on a month-by-month basis.

 

Last Day to Write the FED - Legislative Affairs Update

Arizona Association of Mortgage Brokers

December 24 is the final day for writing letters to the FED about the proposed rule that is extremely important to our industry and everyone’s ability to earn a living.  NAMB has sent out a final call to action with the talking points and contact info (see below).

If you haven't already, please get your letters in!!

Thanks,

 

Jody Davis

Government Affairs

Arizona Association of Mortgage Brokers

 

 

Directions for Submitting Comments to the Board

 You may submit comments, identified by Docket No. R-1366, by any of the following methods:

• Agency Web Site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

• Federal eRulemaking Portal: http://www.regulations.gov.  Follow the instructions for submitting comments.

• E-mail: regs.comments@federalreserve.gov.  Include the docket number in the subject line of the message.

• FAX: (202) 452-3819 or (202) 452-3102.

• Mail: Jennifer J. Johnson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue, NW., Washington, DC 20551.

• All public comments are available from the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons.  Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets, NW.) between 9 a.m. and 5 p.m. on weekdays.

 

 

To Whom It May Concern:

As a mortgage broker, and member of the National Association of Mortgage Brokers (NAMB), I write to you today expressing my concerns with the Federal Reserve Board Proposed Rule amending Regulation Z - Docket No. R-1366 (F.R. Fed. Reg. 43232).  While I believe it is necessary to address remaining problems in the mortgage market, the Proposed Rule will ultimately only harm me, the small business mortgage professional, and the consumers I serve.  I request that you strongly consider my concerns before issuing a Final Rule that could negatively change the mortgage market landscape, and impede a recovery of the housing industry.

 I am greatly concerned with The Board's proposals addressing originator compensation.  The main alternative would eliminate yield spread premiums (YSP) and remove a vital consumer choice in how to finance a loan, and limit competition in the mortgage market by choosing winners and losers.   Furthermore, the Board recognizes that YSP provides a benefit to consumers, but inaccurately characterize it as an unfair or deceptive practice that can be used to steer consumers.  Choosing to finance closing and origination costs through the rate allows borrowers to purchase and start building wealth through their home without requiring significant outlays of cash in addition to the downpayment at the outset of the loan.  YSP allows consumers to compensate originators for origination services when they pay none, or only some of the origination fees or closing costs up front.  This is a legitimate and legal way for borrowers to finance those upfront costs through the interest rate.  I believe it is important for The Board to recognize and consider the unintended consequence that will be caused if the proposal is made final.  

The second alternative proposed regarding originator compensation will require consumers to pay for services rendered in connection with obtaining a loan either all up front or all on the back end of through the rate.  The proposed rule will remove interim rate financing options for consumers, potentially limiting their ability to obtain loans or forcing them to take on more debt over time.  For example, if a consumer desires (or is required in order to qualify) to pay some upfront fees to reduce the overall costs to be financed over the life of the loan and hence partially reduce their monthly payment (as opposed to financing any costs through the rate); they would not be allowed to do so.  Instead, if they do not have enough cash to cover all of the costs up front, (or simply want to preserve some cash on hand), their only choice would be to finance all of the costs through the back end at a higher interest rate, higher payment and overall higher debt.

The Board proposes sweeping changes to current mortgage disclosures that I believe cause fundamental problems of practicality and potential consumer confusion.  I request that you consider the following policy recommendations:

• Revise language of the Proposed Rule to permit either the creditor, or a mortgage broker or third-party originator, to provide the required pre-application disclosures.  
• Because the Board has not defined mortgage brokers or other third-party originators as creditors, and these originators are often the ones making first contact with consumers and taking applications, the Proposed Rule poses a compliance problem for creditors, mortgage brokers and other third-party originators.
• Eliminate the disclosure of APR, and instead require disclosure of payment terms, settlement costs and monthly payment.  
• Board testing showed that consumers do not typically understand the APR and do not use the APR effectively as a shopping tool.
• Establish a reasonable tolerance threshold, within which certain terms could change after the final TILA disclosure but prior to closing without requiring re-disclosure and without triggering an additional waiting period.

In closing, I would like to present the following policy recommendations that I believe The Board should strongly consider when developing a Final Rule.  Small businesses offering mortgage loan origination services will be negatively and disproportionately impacted by the Proposed Rule.  For this reason, I cannot support the Proposed Rule because it will not serve the best interests of the consumer or the market.  
 

1.         Withdraw the proposed prohibition on payments to loan originators that are based on the terms or conditions of a loan.

2.         Delay implementation of any final rule until Congress has acted on currently proposed legislation that would create a new Consumer Financial Protection Agency

3.         Permit either the creditor, or mortgage broker, or other third-party originator to provide the required pre-application disclosures.

4.         Eliminate disclosure of the APR and instead require disclosure of payment terms, settlement costs and monthly payment.

5.         Establish a reasonable tolerance threshold, within which certain terms could change after the final TILA disclosure but prior closing without requiring re-disclosure and without triggering an additional waiting period.

6.         Ensure that loan originators retain their ability to receive compensation as a percentage of the loan amount and not just a flat fee.

7.         Adopt an anti-steering rule that does not affect the mechanism for providing direct and/or indirect compensation to a mortgage originator, does not limit or affect the amount of compensation received by a creditor, and does not restrict a consumer's ability to finance the fees and costs associated with a loan transaction into the loan amount or rate.

8.         Require originators to disclose the lowest interest rate the creditor would accept on a given loan.

9.         Address all "up selling" in connection with mortgages and other financial transactions, not just YSP.

10.       Compliance with the Administrative Procedures Act.

11.       Mortgage companies should be treated in the same manner as lender companies.  Mortgage broker companies operate on net profits after all income and expenses and treating them differently from lender companies (some of which have fewer loan originators than mortgage brokers) is bad policy.

The Board’s goals to simplify and clarify disclosures for consumers and prohibit anti-steering are not successfully accomplished through the proposed changes.  In fact, the changes, as planned, fail to achieve those goals and contradict their overall purpose.  The offered amendments to Regulation Z make the entire mortgage process more complex for borrowers, exacerbate and compound the already complicated practices that exist, and most importantly, eliminate consumer choice.  Therefore, the Board should withdraw the proposed amendments, perform more qualified consumer testing (utilizing the results in an effective manner), and engage and confer with seasoned, knowledgeable industry experts to obtain credible and useful participation to ensure a successful and effective resolve to achieving the Board’s objectives.

Sincerely,

(Your Name)

 

 

 

 

Legislative Affairs Update from AAMB's Jody Davis

Arizona Association of Mortgage Brokers

 

Here is Jody Davis’ report after meeting with the AAMB lobby team.

THE STATE BUDGET – The 800 Pound Gorilla.  Our lobby team feels the state agencies that depend on the overall budget for the money will be cut another 30%.  The departments on the 90/10 plan will be the same at least for 2010.

The entities on the general fund are DES, ACCSS, CPA, etc.  There is no clear direction of how to correct the budget issue.  Taxes will have to be raised.  The sales tax will probably go for a vote to the public over the summer which more than likely will be voted down as no one wants higher costs. 

The states are also hoping for another Federal Stimulus which would cover ½ of the problem.

The next looming issue is the Health care bill.  Arizona would be 1 of 4 states to suffer the most as our poverty level for income purposes exceeds the threshold of the proposed bill and AZ would not get any stimulus money from the health plan and actually have to pay money into the system.  

 

There are no LEGISLATIVE ITEMS on tap so far for next year.  Since it is an election year, there will be more middle of the road politics and legislation passed.

 

THE FED RULE  Sheila Harris, who is part of the lobby group, was previously part of the 11^th district of the FED for 11 years.  She has offered to take our talking points to two of the members of the FED reserve board that she has a relationship with.  I will be working with NAMB to compile a letter that encompasses our talking points and getting it to her by next week.  Meanwhile we need to push the members to write their own letters.  More info will follow on how to do this and what action to take.

Fighting HVCC

Arizona Association of Mortgage Brokers

We thought you'd like to know about the efforts of an organization called HVCCPetition.com that is fighting  for the permanent reversal of HVCC.  The two founders of the group, along with Marc Savitt, Immediate Past President of NAMB, and a handful of others, visited Andrew Cuomo's office yesterday.  Click the link "TBWS Daily" below to view the video.

Be sure to go to HVCCPetition.com and add your name to the growing list.

__________________________________

From an email sent by HVCCPetition.com - Nov. 18, 2009

Frank Garay and Brian Stevens are in New York presenting the HVCC Petition to Cuomo's office right now (117,394 individually printed petition signature pages).  Be sure to stay tuned in to the TBWS Daily for the latest updates directly from New York.  Mark Savitt from NAMB is with them and it looks like they already have Fox News and CNBC covering our collective efforts to get rid of HVCC once and for all. 

The three of them are making it clear to everyone that this is not the end of battle, but just the beginning, and we will not abandon this petition or our efforts to get rid of HVCC until HVCC is Gone!  We are quickly moving from a "minor annoyance" to a "major pain in the @$$" for everyone in support of HVCC and we need to put the pressure on more than ever so please keep forwarding the petition site to everyone you know. 

Everyone that has anything to do with the real estate industry has an obligation to join us in our effort to make their lives and industry better.  We are ramping up our efforts in a big way right now and we plead with you to do the same.  

Thanks so much for your continued support!


HVCC PETITION SUMMARY (HVCCPETITION.COM)

117,394 signatures collected and printed as of 11-16-2009
97,234 of the signatures are confirmed as valid unique petition signers
The 20,160 non-verified signatures collected were not counted in the formal total but were included in the printing for the following reasons.

1. A large percentage of them are believed to be valid but some information was missing.
2. Though thousands of them appeared to be duplicate signatures they contained new horror stories of HVCC victims.  Many Real Estate professionals appeared to be trying to submit fresh stories of how their most recent clients were directly harmed by HVCC.  We felt those stories were relevant and worth including, especially since the new victims listed could be contacted through the signer listed.
3. A few of the duplicates appeared to be a previous signer attempting to update their signature with formal authorization to pass their information along to the press/media since that feature was added to the petition several weeks after it was launched.

39.6% of the petition signers were mortgage originators
29.8% of the petition signers were real estate professionals
17.4% of the petition signers indicated they worked in some other facet of the industry
The remainder of the petition signers were primarily homeowners or potential home buyers

Polls - In addition to the petition itself, we have conducted a number of online surveys to real estate industry professionals regarding HVCC.  Each poll question was preceded by an emphatic plea to respond with accurate and verifiable data only.  Even so, we acknowledge that the polls were not conducted in a scientific and controlled manner so the results may not be 100% accurate, but the story they tell is still very revealing.

How did your last "purchase" HVCC appraisal compare to the contract price?
533 - A. At or above purchase price.
151 - B. Low - but less than 3%
224 - C. Low - Between 3% and 6%
262 - D. Low - Between 6% and 10%
278 - E. Low - Between 10% and 20%
170 - F. Low - More than 20%

How could we best stabilize home prices?
407 - A. Extend the $8,000 tax credit.
144 - B. Increase high balance conforming limit to $1MM.
257 - C. Bring back Seller Funded Down Payment Assistance.
1025 - D. End HVCC.

How many of your transactions have died due to HVCC?
128 - A. 0
152 - B. 1
187 - C. 2
794 - D. 3 or more

Do you think HVCC could kill Fannie Mae?
208 - A. Yes. FHA is easier, so less FNMA loans will get done.
96 - B. No. As long as they need help, the Fed's will give it.
35 - C. I'm not sure, but I'd like to see some real data on it.
54 - D. I'm not sure, but given the choice - I'll go FHA every day.
94 - E. Both C and D.

Pre-Licensing Info: The Test (part 2)

Arizona Association of Mortgage Brokers 

Here’s more information about the NMLS pre-licensing test for loan originators required under the SAFE  Act.  The information is from a PowerPoint created by the Conference of State Banking Supervisors, the organization that manages NMLS.

Knowledge is power!

NMLS TEST QUESTIONS

"How are test questions created?"

Written by subject matter experts

Reviewed, edited, and approved by committees

Created from content outline categories and subcategories

Supported by reference materials (laws, regs, etc.)

All questions are 4-option multiple choice

No short answer, fill-in-the-blank or true/false

Only one correct answer and 3 incorrect options

No “All of the above” or “None of the above”

No trick questions

No questions with multiple correct answers

No questions without a correct answer

Good wrong answers

 

“Why are some questions not scored?”

Un-scored questions are being “tried out.”

NMLS only wants to put onto their tests questions that meet high quality standards. 

NMLS gathers statistics on them first.  When they have enough “hits”, psychometricians analyze the stats

They are reviewed to determine if a question is problematic

Eventually, questions that “make the cut” become scored questions

Un-scored questions do not affect a candidate’s score

They are not marked in any visible way to the test-taker (candidates can’t distinguish between a scored or an un-scored question)

They are scattered randomly throughout the test

 

“What if a law changes that affects a test question?”

All questions are reviewed annually

If a new law affects a question, it will be addressed

During maintenance, pretest questions can become scored and old scored questions may be retired

After maintenance, new versions of the tests are released

If an outline changes, it will be updated online (with new date posted)

 

“What if a law change goes into affect prior to the scheduled maintenance cycle?”

Updates to laws and rules are consistently monitored

If a question is found that is no longer accurate, the following steps may occur:

Subject Matter Experts may be called on to access the validity and edit or revise if necessary

A question may be retired and replaced with another

 

NMLS CONTENT OUTLINES

NMLS has provided Content Outlines of the test. 

No additional study guides or study materials will be developed or endorsed by NMLS.

NMLS Content Outlines are:

The basic structure or blue print for the test

The roadmap for constructing test questions

A tool to help candidates prepare for the test

An overview of what will be on the test. 

The national and state components of the test each have their own outline.  The Content Outlines map out specific test content and question distribution (weightings).

Outlines are on the NMLS Resource Center HERE

TEST FORMS

 “What are test forms?”

Forms are the different versions of a test

The purpose of having multiple forms in a test is to enhance test security

For example, the national test component has 90 scored and 10 un-scored questions.

The different forms (versions) of the test all have the same number of questions.

To ensure fairness and reliability, different forms of the national test are all of equal difficulty.

Questions present in random, computer-generated order each time for each form.

 

TEST ADMINISTRATION

Preparing to Take the Test

A candidate does not have to complete education prior to enrolling or taking a test.

Before enrolling in a test, a candidate must have a unique NMLS ID number (must either already have made a filing or created a base record).

A candidate must request and pay for an enrollment in NMLS before scheduling a test session (*enrollment fees are non-refundable– listed on testing page).

Each enrollment window is open for 180 days, during which the candidate must schedule to take the test.

 

“After candidates create enrollments, how do they schedule test appointments?”

To schedule, must have an NMLS ID number

500 test centers for candidates to choose from (Pearson and Prometric)

After selecting a state on “Find a Test Center” page, a list of all test centers in that state will appear

Scheduling– online or over the phone

All tests are available at all test centers (i.e. candidate may take AZ test component in PA)

A company can request a group appointment (see Prometric or Pearson web sites for more info)

*Special accommodations requests may also be made if necessary.

“Can a test-taker schedule the national test component and a state component on the same day?”

Yes, but only if a test center has two back-to-back appointments available.

However, please encourage candidates not to overlap their testing appointments or they can run out of time!

(*The test time for the national component is 3 hours and each state component is 2 hours.)

 

“What if a candidate needs to reschedule a test appointment?”

Must contact Pearson VUE or Prometric directly to reschedule

 Must be rescheduled no later than 12 p.m. local time two business days prior to appointment

Appointment scheduled for:        Must be cancelled or rescheduled later than 12:00 p.m. local

Sunday, Monday                       Thursday of the preceding week

Tuesday                                    Friday of the preceding week

Wednesday                               Monday of the same week

Thursday                                   Tuesday of the same week

Friday                           Wednesday of the same week

Saturday                                   Thursday of the same week

*If a holiday occurs during the normal cancellation/reschedule period, this

schedule adjusts to define "timely cancellation" as one day earlier than stated

above.

THE TEST CENTER.

Arrive 30 minutes prior to test time

Must bring a current, government-issued ID with candidate’s photo and signature.

Will be photographed; finger or palm print may be taken

Candidate may not bring anything into testing room (may be asked to show empty pockets)

All belongings such as notes, cell phones, watches, wallets must be placed in locker

Basic calculator (not financial calculator) and scratch paper are provided

Must read and agree to the Rules of Conduct

 

TEST SECURITY—POLICIES

All candidates must read and agree to the “Rules of Conduct” prior to taking the test.

They stress the confidentiality of all of the test questions and test materials, as they are the copyrighted, proprietary property of NMLS. 

Any attempt to modify, publish, transmit, or create derivative works of the test materials, in whole or in part, is a direct violation of copyright laws, the Agreement and the Rules of Conduct and will subject you to federal and/or state sanctions.

Also, when creating a base record, NMLS users agree to use the system and its test “only for activities related to obtaining or maintaining a mortgage loan originator license”.

Candidates who violate or may violate the Agreement, the Rules of Conduct, or copyright laws, who own, operate, are employed by, or are otherwise affiliated with organizations that are NMLS Approved Course Providers or organizations that intend to seek NMLS Course Provider Approval status, may cause their NMLS Course Provider applications to be denied or their Approval status to be revoked, suspended, or subject to other sanctions.

 

COMPUTER TEST OPERATIONS AND FUNCTIONALITY

Test Time—National component

2.5 hours test time (150 minutes)

15 minutes allotted for tutorial (before test)

15 minutes allotted for optional survey (after test)

Total seat time = 3 hours

100 questions in 150 min. = 1.5 min. per question

 

Test Time– State Components

1.5 hours test time (90 minutes)

15 minutes allotted for tutorial (before test)

15 minutes allotted for survey (after test)

Total seat time = 2 hours

Approx. 60 questions in 90 min. = 1.5 min. per question

*State test lengths vary from 55 to 65 total questions

 

“What is the computer test functionality? Is it simple to use? How does it work?”

 Tutorial and Test Functionality

Tutorial walks candidates step-by-step through test functionality.

Some key features that candidates can utilize:

Toggle back and forth between test questions

Mark a question for review and then come back to it later on

Change an answer

 

Exit Survey

The exit survey is completely optional.

All of the data collected in the survey is monitored and shared with us.

Candidates may also provide feedback to the test center administrator on the enrollment process, test center facilities, content of test questions, etc. All comments will be reported.

 

Score Reports

At the end of the test session, candidates will:

see their test scores on their computer screens

receive a paper copy of their score report

These scores do not become official until they are entered in NMLS.

Within 48 hours of completing a test, candidates will receive an email informing them that their official scores are now ready to be viewed in NMLS.

 

“What happens if a candidate fails?”

Score report has a diagnostic table that informs candidates of how they performed on each outline content area.  A passing score is 75% for either the state or national component.

 

Retake Policy

Must wait 30 days between each test taking attempt

May create an enrollment and schedule an appointment, but can’t take the test prior to the end of prescribed wait time

After every fourth failed attempt, a 180 day wait time is instituted

*After passing a test component, a test taker will not be allowed to retake that particular test component.

 

Click HERE for AAMB's Part 1 of Test Information

FTC delays enforcement of "Red Flags" Rule

Arizona Association of Mortgage Brokers

The Federal Trade Commission is delaying enforcement of the “Red Flags” Rule until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC.

 

The Rule was promulgated under the Fair and Accurate Credit Transactions Act, in which Congress directed the Commission and other agencies to develop regulations requiring “creditors” and “financial institutions” to address the risk of identity theft. The resulting Red Flags Rule requires all such entities that have “covered accounts” to develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as “red flags” – that could indicate identity theft.

The previous deadline was November 1, 2009.

 

 

Legislative Affairs Update from AAMB's Jody Davis

ARIZONA ASSOCIATION OF MORTGAGE BROKERS 

 

Federal Update

NAMB has sent out legislative alerts over the past couple of weeks with regards to H.R. 3126 (Consumer  Financial Protection Agency Act of 2009).  Since Arizona does not have a member on the House Financial Services Committee we really could not participate in the call to action like other states.  We have been monitoring the items and I wanted to give everyone an update and clarification to what is occurring.

H.R. 3126 is basically a bill that is attempting to merge several government agencies into on one huge bureaucratic department.  Through this, they have been jockeying for power with regards to financial reform.  So this bill encompasses numerous topics that are not all related to mortgages.  When the committee agreed to hear the bill, there was a push by NAMB to draft amendments that would address other pending items while trying to remain as innocuous as possible.  The effort produced 3 amendments that addressed the following;

Amendment 1 - nullifying the HVCC, not just an 18 month moratorium but killing it altogether.  This was sponsored by Miller and Childers who have been a huge help to small business and the mortgage community.

Amendment 2 – delay the HUD rule until the FED, HUD and industry could work out the conflicts between the two rules.  This was sponsored by Biggert.

Amendment 3 - prevent CFPA from capping compensation to any person, ensure fair dealings with consumers and ensures no disparate treatment among industry participants whether they are federally chartered, big or small.  This was also a Miller sponsored amendment.  

The results of NAMB’s efforts were victorious on two fronts.  The first amendment nullifying HVCC was approved by the committee.  This will work on the premise that loan officers licensed under the SAFE Act would be able to order the appraisals directly and there is a large push to have the appraisers registered on the NLMS system too.  This will ensure tracking and regulation of the intended rule.

The second amendment mentioned above was not allowed in its entirety.  There was much deliberation on the exact dates of postponement and this overshadowed the real intent of the amendment.  It did however result in the allowance of lenders/brokers using either GFE until July 1, 2010.  This solves a more critical issue that was more of an underlying factor than the FED and HUD rules conflicting.  The unspoken possibility was the large lenders would stop lending until they could finish their beta testing on the new forms.  This could have shut down the industry in January until a compromise could have been achieved.

The third amendment is still a possibility but will have to come from changes made along the way.

Finally H.R. 3126 will ultimately merge with several other regulatory reform bills such as H.R. 1728 (Mortgage Reform and Anti-Predatory Lending Act of 2009).  The companion legislation has not been introduced into the Senate although it is expected in the coming weeks.    There will be several state of the industry announcements and forums in the coming weeks.  Stay tuned to those as the situation is extremely fluid and can change in the blink of an eye.                           

Arizona Update

The legislature will be called into special session later this month or sometime in November.  The budget must be dealt with and DFI still has no money to implement the SAFE Act registration process.  For those of you who attended AAMB’s Mortgage Marketplace Conference, you heard that DFI has five people to process the anticipated 5,000 applications for SAFE.  The budget passage would potentially add another 5-7 people to process the applications.  Since this is still a huge unknown, AAMB encourages everyone to take their classes and take the test as soon as possible.  DFI has 120 days to process the paperwork and they will probable use every part of it.  

I realize this is a long update but I thought everyone needed to know what the results of the amendments mean to us and what the association has done to insure the longevity of our industry. 

Respectfully,

Jody Davis

Government Affairs

Arizona Association of Mortgage Brokers