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STATE OF COLORADODIVISION OF REAL ESTATE

Mortgage Broker Pre-Licensing Education Course Content OutlineFederal, State and Consumer Protection Laws: 19.5 Hours

Mortgage Lending Basics and Ethics: 20.5 HoursTotal Time: 40 hours

Federal, State and Consumer Protection Laws = 19.5 Hours:

Required Federal Law Course Time: 7.5 hrs

Learning Objectives:I. Acquire a working knowledge of the basic purpose and provisions of each law

and related regulations.II. For each law, know whom it protects and what responsibilities and restrictions

it places on the mortgage broker.III. Know the penalties for non-compliance with these laws.IV. Attain a working knowledge of the relevant forms used in the real estate

transaction.

Federal LegislationI. Equal Credit Opportunity Act (ECOA) .50 hour

A. PurposeB. Who ECOA applies toC. Who ECOA protects - Protected classesD. Regulation B – Requirements and restrictions

i. Taking applicationsii. Evaluating applications

iii. Extension of creditiv. Consumer notification requirements

a) Right to copy of appraisalb) Notification of adverse action

v. Information for monitoring purposesE. Penalties for violation

i. Pattern or practice of discrimination (DOJ)ii. Individual cases of unfair discrimination

a) Office of Thrift Supervision (OTS)b) Comptroller of Currency (OCC)c) Federal Reserve Board (FRB)d) Federal Deposit Insurance Corporation (FDIC)e) National Credit Union Association (NCUA)f) Federal Trade Commission (FTC)

II. Fair Credit Reporting Act (FCRA) 0.25 hr

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A. PurposeB. Who FCRA governsC. Provisions

i. Right to credit reportii. Prescreening & trigger lists

iii. Right to correct inaccuraciesiv. Explanatory statementsv. Lender’s responsibility to disclose identity of credit bureau

vi. Adverse action disclosure requirements

III. Fair & Accurate Credit Transactions Act (FACT) 0.25 hrA. Amendments to and reauthorization of FCRAB. Free credit report requirementsC. Mortgage lender disclosure requirementsD. Identify theft provisions

IV. Real Estate Settlement Procedures Act (RESPA) 1.75 hrsA. PurposeB. Loans/transactions coveredC. Provisions

i. Required disclosures to borrowersa) Costs of settlementb) Affiliated business arrangementsc) Lender servicing and escrow requirements

ii. Timing of required disclosures and who is responsiblea) At time of loan application

a. Information Bookletb. Good Faith Estimatec. Mortgage Servicing Disclosure Statement

b) Before Closing/Settlementa. Affiliated Business Arrangementsb. HUD-1 Statement of Settlement

c) At Closing/Settlementa. HUD-1 completedb. Initial Escrow Statement (or within 45 days after closing)

d) After Closing/Settlementa. Annual Escrow Statementb. Servicing Transfer Statement (if applicable)

iii. Prohibited practicesa) Sect. 6 – Loan servicingb) Sect. 8 – Kickbacks, fee-splitting, unearned fees

a. Restrictionsb. Penalties for violation

c) Sect. 9 – Seller required title insurance

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a. Prohibitions on sellerb. Penalties for violation

d) Sect. 10 – Escrow limitationsa. Lender limits and required annual analysisb. Penalties for violation

D. Enforcementi. HUD and Regulation X

a) Procedureb) Finesc) Injunctive relief

ii. Individual law suitsiii. Filing a RESPA complaint

V. Truth In Lending Act (TILA) of 1968 1 hrA. Consumer Credit Protection Act

i. Purposeii. Who TILA protects

B. Regulation Zi. Provisions

ii. Disclosures at Closingiii. Advertising

a) Guidelines and restrictionsb) Trigger Terms and related requirements

C. Home Ownership Equity Protection Act (HOEPA) - restrictionsi. Refinancing guidelines

ii. Home equity loansD. Enforcement and Penalties

VI. Home Mortgage Disclosure Act (HMDA) 0.25 hrA. PurposeB. Prohibited practices: Red-liningC. Required borrower data

VII. Community Reinvestment Act (CRA) 0.25 hrA. PurposeB. Prohibited practices: Red-liningC. Requirements for financial institutions

VIII. Gramm-Leach-Bliley Act (GLBA) (aka Financial Modernization Act) 0.25 hrA. Purpose – Consumer privacyB. Requirements

i. Who is coveredii. Written policy requirements

C. Enforcement

IX. Fair Housing Act .50 hr

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A. Title VIII – Protected classesB. PenaltiesC. Enforcement

X. Sherman Antitrust Act 0.25 hrA. PurposeB. BlockbustingC. Price fixingD. Penalties

XI. Telemarketing and Consumer Fraud and Abuse Prevention Act 0.5 hrA. PurposeB. Deceptive telemarketing rulesC. Penalties

XII. U.S. Patriot Act 0.25 hrA. Anti-money laundering

i. Purposeii. Program requirements

B. Consumer identification program (CIP)C. Mortgage broker’s role

XIII. Anti-Wire Fraud and Mail Fraud (Title 18 U.S.C.), and COCCA 0.75 hrA. Provisions and prohibited conductB. Penalties

XIV. Federal Trade Commission Act 0.25 hrA. Unfair methods of competition

XV. What’s New – Recent Laws and Regulations 0.5 hr

Required State Law Course Time: 12.0 hrs

Learning Objectives:

I. Acquire basic knowledge of the history and creation of law and related regulations.

II. Acquire a working knowledge of the basic purpose, provisions, and penalties for non-compliance of each law and related regulations. For each law, know whom it protects and what responsibilities and restrictions it places on the mortgage broker.

III. Acquire basic knowledge of the essential elements of the Colorado contract as they relate to the mortgage industry.

IV. Understand the basic foreclosure process.

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Content Outline:

I. Creation of law 1.0 hr

A. Sunrise Review Process1. Submit application-must establish reason for registration or licensing of

trade to protect the public health, safety, or welfare of the public2. DORA review of the proposal & recommendation to regulate professional or occupational group3. Introduction of bill to require registration or licensing4. CAMB submitted Sunrise Application to DORA June 2004 requesting

State registration of mortgage brokers.5. DORA submitted written report to the Colorado General Assembly

October 14, 2005

B. Legislative Process1. Introduction of bill into house or senate-purpose of bill defined2. Bill becomes law-Governor signs bills into law

C. Executive Branch-elected positions1. Governor

a. Offices of the Governor1) Boards, Commissions and Director model

2. Lieutenant Governor3. Secretary of State a. Requires all companies in Colorado to be registered4. Attorney General5. Colorado State Treasurer

D. State Government Department Agencies1. Department of Regulatory Agencies (DORA)

a. Executive Director appointed by the Governorb. Communication of consumer rights and industry professional’s

responsibilitiesc. Consistent application of professional standards, education, licensing and enforcement of real estate license law regulations.d. Connection of regulatory activities and economic development

E. Divisions1. Division of Real Estate-licensing, education & enforcement agency

a. Director of Division of Real Estate 1] Mortgage brokers 2] Real Estate brokers 3] Appraisers 4] Subdivision Developers

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F. Boards, Commissions and Director Model1. Mortgage Broker Program a. Director model

a. Oversees mortgage brokers2.Real Estate Commission

a. Composed of five members appointed by the Governorb. Three members are brokers with not less than five years experience, one consumer and one subdivision expertc. Appointed for three-year termd. Oversees real estate brokers

3. Board of Real Estate Appraisers a. Composed of seven members appointed by the Governor, confirmed by the State Senateb. Three appraisers, two consumers/public members, one mortgage lender, one county assessorb. Board members serve staggered three year terms

c. Oversees appraisers4. Division of Insurance

a. Oversees title companies and insurance industry

II. Laws and Regulations 1.0 hr

A. Colorado Revised Statutes (C.R.S) 43 titles

1. Real Estate & Mortgage related titles in Colorado Revised Statutes

b) Title 5 - Consumer Credit Code, is amended by the addition of a new article (House Bill 02-1259, Section 1) Article 3.5 Consumer Equity Protection Act

1) Purposea] Protection of consumers’ home ownership equity

2) Provisions & restrictions on mortgage brokera] 5-3.5-102 Protection of obligorsb] Limitation of balloon paymentc] No call provisiond] No negative amortization e] No increased interest rate upon defaultf] Limitations on mandatory arbitration clausesg] No advance paymentsh] Limitations on prepayment fees

(a)First thirty-six months only(b)No prepayment fees for certain refinancing(c)Lender must offer choice

i] 5-3.5-103 Restricted acts and practices1. No lending without cautionary notice

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2. No lending without due regard to repayment 3. Refinancing within a one-year period

j] No refinancing certain low-rate loansk] Restrictions on covered loan proceeds to pay home

improvement contractsl] No financing of credit insurancem] No recommending defaultn] No fee for payoff quoteo] 5-3.5-104 Reporting to credit bureaus

1] Lender or its servicer shall report at least quarterly both favorable and unfavorable payment history information

3) Enforcement – liability as stated in C.R.S. 5-3.5-201a] The Attorney General and any obligor may enforce this article.

c) Title 6 -Consumer & Commercial Affairs, is amended by a new paragraph (House Bill 02-1259, Section 3)1. Purpose2. Provisions

a] Article 1, Colorado Consumer Protection Act i. 6-1-105 (1) A person engages in a deceptive trade practice

when they violate Section 38-40-105, CRS ii. 6-1-110, is amended by the addition of a subsection

House Bill 02-1259, Section 4) iii. Restraining orders-injunctions, assurances of discontinuance

iv. District attorney may, in addition to any other remedies, apply for and obtain, in the court that has previously issued an injunction, a further injunction against continuing to participate in the business of originating mortgage loans for up to five years.

b] Article 4-Property and Casualty Insurancec] Article 11-Title Insurance Code of Colorado

d) Title 10 -Insurance 1. Purpose2. Provisions

a] Article 4-Property and Casualty Insurance 1] Part 110.6-Homeowner’s insurance definition

2] Part 114-Requirements on hazard insurance coverage for loans secured by real property

3] Part 116-Use of credit information4] Part 117-Loss history information report-notice to insured-

definitionb] Article 11-Title Insurance Code of Colorado

1] Part 108-Prohibitionse) Title 12 - Professions & Occupations 0.50 hr

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1. Purpose2. Provisions

a] Article 61–Real Estate 12-61-101 to 12-61-8111] Part 1-Brokers & Salesperson aa) 12-61-113.2

ii) Definitions a] Employing Broker, Independent, and Associate

b] Settlement Services ii) When permittediii) Reporting Affiliated Business Arrangements to

RE Commissioniv) “Sham” Affiliated Business Arrangementsv) Division of Insurance

2] Part 7-Real Estate Appraisers aa) USPAP Conduct Rule bb) Advisory Opinion cc) Broker Price Opinion (BPO)3] Part 8-Brokerage Relationships4] Part 9-Mortgage Broker Licensing Act 12-61-901 to 12-61-915 2 hrs aa) Section 12-61-902, C.R.S. - Definitions

bb) Section 12-61-903, C.R.S. amended Revised-license required effective January 1, 2008i] Who is required to be licensed-conversion of

registration to license-must be licensed in Colorado regardless of whether or not licensed in another state

ii] Shall apply for license renewal every three yearsiii] How to become licensed-criminal history checkiv Post a bondv] Renewal feevi] Education requirements on or after January 1, 2009 complete pre-licensing course and examination approved by the director of at least nine hours of classroom instruction

vii] Independent testing services to develop, administer and grade the exam

viii] Director shall issue or deny a license within 21 days after receiving criminal history record check, completed application, E & O, application fee, and proof of the posting of the surety bond

cc)12-61-903.5. Errors & Omissions insurance-require Director to determine terms and conditions of coverage requireddd) 12-61-904 (Amended). Exemptions for licensing

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ee) 12-61-904.5. Broker’s relationship to borrower-rulesff) 12-61-905. Powers and duties of the directorgg) 12-61-905.5. Disciplinary Actions-grounds-procedures-rules hh)12-61-905.6. Hearing-administrative law judge-review-rules ii) 12-61-905.7. Subpoena-misdemeanor

jj) 12-61-907. Bond required of $25,000 kk)12-61-908. Fees set by director ll) 12-61-910. Violations-injunctions mm)12-61-910.4. Nontraditional mortgages-consumer protections nn) 12-61-911. Prohibited conduct-fraud-misrepresentation-conflict of

interest-rules oo) 12-61-911.5. Acts of Employee-mortgage broker’s liabilitypp) 12-61-912. Dual status as real estate broker or salesperson-

requirements qq) 12-61-913. Written contract required-effect rr) 12-61-914. Written disclosure of fees and costs-contents-limits on

fees-lock-in agreement terms-rules within three business days ss) 12-61-915. Fee, commission, or compensation-when permitted-

amount f) Title 38 -Property-Real and Personal 1. Purpose 0.25 hr 2. Provisions

a] Article 25.5-State and Local Tax Liens b] Article 29-Title to Manufactured Homes

c] Article 35-Conveyancing and Recording1] Part 125-Closing and settlement services-disbursement of funds-“Good

Funds” lawi. Available for immediate withdrawal as a matter of rightii. Available for immediate withdrawal as a consequence of an agreement

of a financial institutioniii. Failure to comply with the provisions of this section shall be deemed a

deceptive trade practiced] Article 40, is amended by the addition of a new section (House Bill 02-

1259, Section 2) 1] Purpose- protects consumer, creditor, lender or an agent of the lender2] Provisions & restrictions on mortgage broker

i. 38-40-101. Mortgage broker fees-escrow accounts- unlawful act-penalty

ii. 38-40-102. Disclosure of costs-statement of terms of indebtedness

iii. 38-40-105. Prohibited acts by originators of certain mortgage loans

e] Penalties for non-compliance with this article1] Court may refuse to enforce contract

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2] A violation shall be deemed a deceptive trade practice in Section 6-1-105, (1) (uu), CRS

f] Safety clause (House Bill 02-1259, Section 5) this act is necessary for the immediate preservation of the public peace, health & safety

B. Mortgage Broker Rules – To teach entire rule 2.0 hrs

1)Emergency Rules and Permanent Rule Process a) Emergency rule becomes permanent rule. b) Division issues emergency rule to be able to act in interim

2) Reasonable Inquiry and Tangible Net Benefit, Rule 3-1-1 3) Errors and Omissions Insurance for Mortgage Brokers, Rule 1-3-1 4) Mortgage Broker Disclosures, Rule 5-1-2

a) Good Faith Estimates b) Compensation Disclosure

c) Colorado Lock-in Disclosure Form 5) Mortgage Brokers Duty to Respond and Provide Requested Documents for Investigations, Rule 3-1-26 6) Prepayment Penalties, Rule 3-1-4 7) Maintaining current contact information required for licensing,

Rule 3-1-3 8) Mortgage Broker Contracts Rule 5-1-1 9) Mortgage Broker Advertising Rule 8-1-1

C. Rules on the Horizon:1) Coercing and Intimidating a Real Estate Appraiser2) Dual Status as a Real Estate Broker and Mortgage Broker

D. Mortgage broker is required to keep records of the disclosures for a period of four years

E. Director Position Statements 0.25 hr

1. Non-Traditional Mortgage Products and Documentation Types a) Purpose b) Provisions

c) Broker responsibility d) Penalty2. Mortgage Broker Contracts

a) Clarification of the uncertainties regarding mortgage broker contracts

F. Colorado Real Estate Commission Rules 0.25 hr1. Rule E-22-Inducements from settlement producers prohibited2. Published in Real Estate Manual

a) Purposeb) Provisions

1. Reasonable Value Defined

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2. Customer Entertainment3. Office Space Accommodation4. Noncompliance Penalties

5. Licensing required 6. Applicability of Colorado Mortgage Broker Law regarding State Financial Institutions.

III. Essential Elements of a Colorado Buy-Sell Contract 1.5 hrsA. Section 1-Mutual Assent

1. Offer2. Acceptance

B. Section 2-Names and signatures of the PartiesC. Section 2.3-Dates and DeadlinesD. Section 2.2-Description of the PropertyE. Section 4-Sale Price and Payment ProvisionsF. Section 4.1-Consideration

1. Earnest moneyG. Section 4.3-Seller Concessions

Section 4.4.1-New loanSection 4.4.2-Change to new lender after approvalSection 4.4.3-Loan limitations: conventional, FHA, VA, BondSection 4.4.4-Good Faith Estimate

H. Section 5-Financing Conditions and Obligations Section 5.1-Loan Application

Section 5.2-Loan ConditionsSection 5.3-Credit Information and Buyer’s New Loan

Section 5.4-Equity Loan ReviewI. Section 6-Appraisal Provisions

Section 6.2.2, 6.2.3 & 6.2.4-Conventional, FHA, VA Section 6.3-Cost of Appraisal

J. Section 7-Evidence of Title Section 7.1-Exceptions Section 7.3-Survey/Improvement Location Certificate Section 7.4-Common Interest Community Documents

K. Section 8-Title Survey ReviewL. Section 9-Lead Based Paint

M. Section10-Property Disclosure Inspection, Insurability and Buyer Disclosures

N. Section 11-Methamphetamine Laboratory Disclosure O. Section 12-Closing

1. Delivery of deed2. Hour and place of closing documents

P. Section 13-Transfer of Title Q. Section 14-Payment of Encumbrances R. Section 15-Closing Costs, Documents and Services S. Section 16-Prorations

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T. Section 17-Possession Date U. Section 19-Insurance; Conditions of, Damage to Property and Inclusions V. Section 25-Additional ProvisionsW. Section 30-Notice of Acceptance, Counterparts

a. Buyer signature b. Seller signature

X. Section 31-Counter; Rejection Y. Broker’s Acknowledgments and Compensation Disclosures

1. Buyer’s Agent2. Seller’s Agent3. Transaction-Broker4. Change of status

Z. Closing Instructions

IV. Foreclosure Process & Regulations 2 hrs A. Foreclosure action-procedure C.R.S. 38-20-108 thru 116 B. Colorado Foreclosure Protection Act

1. 6-1-1103. Definitions 2. Foreclosure Consultants a. 6-1-1104. Foreclosure consulting contract 1) Notice Required by Colorado Law 2) Notice on Cancellation b. 6-1-1105. Right of cancellation c 6-1-1106. Waiver of rights-void d. 6-1-1107. Prohibited acts e. 6-1-1108 Criminal penalties f. 6-1-1109 Unconscionability 3. Equity Purchasers a. 6-1-1111.Written contract required b. 6-1-1113. Cancellation c. 6-1-1114. Notice of Cancellation d. 6-1-1118. Criminal penalties C. Short Sale Addendum

V. Resources for Federal and State Laws and Regulations 0.5 hr A. RESPA B. TILA C. DORA www.dora.state.co.us/real-estate D. Colorado Revised Statutes www.michie.com/colorado E. Colorado Mortgage Broker Forms http://www.dora.state.co.us/real-estate/mortgage/MBForms.htm F. Colorado Foreclosure Hotline 1-800-601-HOPE and

Coloradoforeclosurehotline.orgG. Sign up for Newsletters and E-Mail updates www.dora.state.co.us

VI. How to File a Complaint 0.25 hr

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http://www.dora.state.co.us/real-estate/mortgage/MBForms.htm

A. The Division of Real Estate requires a complaint form be completed B. You can file on-line or print off form and submit a physical package to the

DivisionVII. Updates 0.50 hr

Mortgage Lending Basics and Ethics = 20.5 Hours

Mortgage Broker 101 Course time: 16 hrs

Mortgage 101

I. Fundamental Roles in Lending 1.5 hrsA. Introductory discussion of mortgage brokers’ role in the process of

originating loans.B. Relationship between mortgage broker and source of fundsC. Processing

1. Functions and responsibilities of the loan processorD. Underwriting

1. Functions and responsibilities of the loan underwriter

E. Closing1. Understanding of the closing process the role of the tile closer

and explanation of closing forms including the HUD1F. Post-closing

1. Explanation of the role of the loan funder, shipper and servicing process

II. Definitions and Mortgage Terms 4.0 hrsA. Glossary of standard industry terms

1. Mortgage specific2. Real estate specific3. Title specific4. Specific exercises to demonstrate proficiency in mortgage, real

estate and title terminology.

B. Standard Mortgage Forms1. 1003

a) Detailed explanation of the URLA form. Its importance and effective completion of the form

2. Disclosures with practical hands-on applications a) Federal / State complete understanding of related Federal and State disclosures required at the time of loan application

3. Support Documents

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a) Explanation of required support documents needed at loan application i.e. voe,vod,vor, etc

4. Traditional debt and security instruments a) Explanation of Deed of Trust, and various forms of deeds, including Warranty, Quit Claim and Special Warranty

III. Basic Mortgage Mathematics 1.0 hr A. Principal and Income calculation

1. Standard P & I2. PITI3. MIP/MI4. Interest Only5. Hybrid Calculations / negative amortization. etc.

a. A thorough understanding on how to successfully compute basic mortgage calculations using a financial calculator or factor tables

IV. Debt to income ratios and Loan To Value 1.0 hrA. Front End RatioB. Back End RatioC. LTVD. CLTV

Understanding various ratio calculations. How to perform them and how to explain the calculations

V. Annual Percentage Rate (APR) 0.50 hr1. Calculation of Amount Financed2. Understanding of Itemization of Amount Financed3. Understanding of APR is computed and how to explain to

applicants

VI. Basic Mortgage Program – Overview 2.0 hrsA. A complete working knowledge of all mortgage types, their specific uses

and how to properly explain the benefits of each to the applicant1. Fixed Rate Mortgages2. Adjustable Rate Mortgages (ARM)

Understanding of all elements of the ARM loan including; Index, Margin, Caps and Start Rate

3. Home Equity Lines of Credit4. Conventional Mortgages5. Government Programs

FHA VA Bond Program

6. Jumbo – Non-conforming loan amounts7. Expanded Criteria

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8. Sub-prime9. Niche and portfolio10. Affordable Housing Programs

VII. Secondary Market 1.0 hrA. Overview of the Secondary market including traditional secondary sourcesB. Significance to loan origination and documentationC. Yield Spread Premium (YSP)

1. Understanding of YSP, what it is and how it influences loan pricing

2. Understanding of proper disclosure of any YSP D. Rate Sheets

1. How to read and interpret wholesale pricing sheetsE. Cycle of Money

1. Understanding of how mortgage money flows through the various lenders to the secondary market

2. Understanding of how interest rates are determined and the market influences

VIII. Qualification Process 3.0 hrsA. Understanding of how to effectively counsel an applicant and how to

obtain the necessary information to begin the loan process1. Information required from borrower2. Taking the loan application (1003)3. Securing documentation and analysis4. Determining ability to repay

Complete understanding of how to calculate an applicant’s ability to qualify for a loan based on their income and debt structure

5. Creditworthiness Credit scores

i. Understanding of credit requirements and credit scoring

ii. Understanding the 4 “C”s of credit underwriting; Credit, Capacity, Capital and Collateral

6. Credit reports Understanding credit report types; RMCR and Tri-

Merge Understand documentation requirements for various

credit circumstances

IX. Closing Costs and Pre-Paid Expenses 1.0 hrA. Distinction and handling in disclosure

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1. Understanding the time requirements for disclosure form and the potential penalty for non-disclosure

B. Good Faith Estimate1. Complete understanding of the Good Faith Estimate2. What fees can be charged for various loan types3. Federal/State Distinction

C. Review of protocols to project costs accurately1. Understanding of how fees can be disclosed

2. Understanding of which lenders are required to disclose YSP and how to disclose properly with regard to warehouse funding

X. Miscellaneous Categories 1.0 hrA. Underwriting

1. Understanding of the differences between Automated Underwriting (Aus) and Traditional Underwriting procedures

B. Real estate appraisals1. Knowledge of the appraisal process2. Understanding of the Uniform Residential Appraisal Report

C. Title Insurance1. Understanding of the role of Title Company 2. Knowledge of the ALTA title policy

D. Closing Process 1. Knowledge of the closing provider and the settlement agent2. Understanding of a “Table Closing” and the role of all settlement

service providers per RESPA guidelines

Ethics, Business and Trade Practices Course time: 4.5 hrs

Ethics, Business and Trade Practices

I. Mortgage Fraud Introduction 0.5 hrA. Mortgage Fraud definedB. Who commits mortgage fraudC. Effects of mortgage fraud

II. Types of Mortgage Fraud 1 hrA. Types of Fraud

1. Indicators of fraud2. Actual fraud3. Constructive fraud4. Mortgage fraud

B. Fraud for profit1. Flipping

C. Fraud for propertyD. The result of mortgage fraud

1. Foreclosure

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2. Foreclosure scams3. Consumer strategies

III. Fraud Participants 2 hrs A. Tile & Escrow Companies

1. Title and RESPAa. When does RESPA apply and RESPA changes

2. HUDa. HUD-1b. disclosures

B. Appraisers & Real Estate Brokers1. Appraisal Fraud Schemes

a. inflated appraisalsb. lender pressurec. comparable sales selectiond. stolen appraiser identitye. false/dual contractsf. unreasonable adjustmentsg. false condition statementsh. seller concessionsi. previous sale or listing2. Real Estate Agents

a. Dual Contractsb. straw buyerc. over-valuingd. unqualified buyerse. increasing list price after contract datef. false MLS

C. Mortgage Brokers 1. Predatory Lending vs. Mortgage Fraud2. Predatory Lending

a. indications of predatory lendingb. sub-prime lending

c. predatory schemesd. risk reduction techniques

i. federal interventionii. existing laws

3. Ethical & Legal Considerationsa. honestyb. conductc. advertisingd. disclosuree. confidentiality & record keeping

i. FTC Safeguard Rule1. protecting personal information

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2. disposing of consumer report information3. risks of identity theft4. reducing risks to computer systems

ii. Complying with the Safeguard Rule1. written security policy

f. mortgage broker obligations upon discovery of fraud

IV. Fraud Case Studies 0.5 hr

V. Additional Appraisal Provisions - USPAP 0.5 hr

A. Uniform Standards of Appraisal Practice – Purpose1. To promote and maintain a high level of public trust in appraisal

practice by establishing requirements for Appraisers. It is essential that Appraisers Develop and communicate their analysis, options and conclusions to intended users of their services in a manner that is meaningful and not misleading.

2. USPAP addresses the ethical and performance obligations of appraisers through definitions, rules, standards, standards rules and statements.

B. Provisions Relevant to Mortgage Broker Compliance AO- Refers to

“Advisory Opinion “

1. AO-3 Update of prior appraisal2. AO-18 Use of automated valuation method (AVM)3. AO-19 Unacceptable assignment conditions in appraisal assignment concerning real property.

4. AO-25 Clarification of the client in federally related transactions.5. AO-26 Readdressing (transferring) a report to another party.6. AO-27 Appraising the same property for a new client.7. AO-30 Federal financial institution regulatory agencies required for proper appraisal development and reporting (replaces AO-10)

C. Uniform Standards of Professional Appraiser Practice (USPAP)Ethics Rule Position on predetermined values. Conduct, management and Confidentiality

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