For buyers (and their agents) there’s nothing more aggravating (and time-wasting) than to have buyers continually filling out loan applications and having their credit “pulled” each time they make an offer on a property (“cross qualifying”).
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For buyers with low credit scores, multiple credit “pulls” may tank their first loan approval or lower scores so much, they pay a higher interest rate.
To avoid the “cross qual dance”, a buyers agents should be prepared to provide a DU approval when submitting offers.
“DU” Loan Approvals! Never Lose a Buyer Again
Then provide the buyer’s credit scores, proof of funds,W2s & pay stubs. For listing agents simply doing their “due diligence” to assure a smooth COE; this is sufficient to move the transaction forward.
Complying with the New CFPB’s RESPA Enforcement Policy
For listing agents who still persist in requiring a buyer submit a full loan application to their “preferred lender” before an offer is considered, these agents are “steering” and the CFPB has begun a series of high-profile enforcement actions, all with a list of career ending penalties for those parties continuing this ruse.
If you and / or your buyer have been victimized by “steering” click here to begin the complaint process at the CFPB. The CFPB responds within 15 days.The statute of limitations is 3 years for RESPA.
How the CFPB’s New Hyper
RESPA Enforcement Affects Agents
By far the vast majority of listing agents are innocent of intent but feel pressured by their office sales managers to refer buyers to their “in-house” lender to perpetuate this practice.
Unbeknownst to agents, often those same managers are wrapped up in a web of (illicit) back door referral fees and kickbacks.
Virtually all agents (and lenders) have lost buyers to steering violators but the recent CPFB’s high profile RESPA enforcement has made it clear: “Listing agents requiring potential buyers to complete a “written application” with their “preferred lender” (before considering the buyer’s offer) are in violation of RESPA Section 8(a)”.
The CFPB’s most recent “enforcement order” against Prospect Mortgage specifically outlines the issue of listing agents steering buyers to “preferred lenders”.
2) Prospect’s partners to these agreements then took various steps to “STEER” consumers to Prospect, often with Prospect’s encouragement.
2a). Required all buyers to apply for & attain loan “Pre-approvals”, with Prospect, BEFORE ALLOWING THEM TO SUBMIT AN OFFER ON A PROPERTY.
Over 100 agents at Gold Coast Realty (Ventura) were caught up in the investigation & Prospect Mortgage was forced out of the lending industry & their assets bought by another mortgage corp.
An independent analysis of the CFPBs action has been posted on line, by prominent attorney Donald C. Lampe (Washington D.C) of Morrison and Foerster.
Morrison & Foerster is one of the nation’s leading legal firms with offices throughout the U.S. and 8 countries.
Fines, license and commission forfeiture, exposure to civil suit liability are the standard penalties. The results of the CFPB’s investigations are then shared with the IRS & the State Franchise Tax Boards
Violators not claiming illicit income on their tax returns (highly unlikely) OR burying kickbacks as an expense (under the guise of “advertising”) can expect the IRS Department for Criminal Investigations and State Franchise Tax Board Criminal Investigation Department for audits for (up to) 6 years.
Lately critics of the CFPB have been heralding the imminent demise of the CFPB. But with Richard Corday’s term not expiring until the end of 2018 its unlikely the agency will even go away after that.
Daniel Dobbs (.org)
Managing Broker
Mutual Home Mortgage
500 S. Kraemer #165
Brea, Ca. 92821
Cell: 949 250-3981
Dandobbs6@gmail.com
DRE # 00986886 …..NMLS# 307631
Copywrite © August, 2018 Daniel Dobbs MHM Mortgage /// All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other noncommercial uses permitted by copyright law. For permission requests, write to the publisher, addressed “Attention: Daniel Dobbs, Author- VP-Broker Mutual Home Mortgage 265 S. Randolph #120 Brea, Ca. 92821 Cell: 949 250-3981 Dandobbs6@gmail.com NMLS #307631 BRE #00986886