CALIFORNIA
MORTGAGE LOAN
BROKERING AND LENDING
4th edition
By Dr. D. Grogan, MBA, GRI, CRS, CPM
M. C. “Buzz” Chambers, RECI, GRI
©2011 Cengage Learning
Contents
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PART 1 SCOPE OF THE BUSINESS
Ch 1: Scope of the Loan Brokerage
1.1 Overview of the Book
1.2 Historic perspective
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Hard money versus seller carry-back money
Careers in mortgage loan brokering
Loan originators
1.4 Licenses and Professional
organizations
Legal and licensing requirements
Professional organizations
Ch 2: Sources of Business
2.1 Getting started
2.2 Marketing
2.3 Advertising
2.4 Other Sources of Business
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1.3 Basic information
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In the beginning
Early progress
Unstable market
Today
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Referrals from Realtors
Referrals from Other sources
Referrals from the Public
Testimonial
2.5 Types of Media
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©2011 Cengage Learning
Affiliation
Billboards, benches, Buses
Direct advertising
Direct main advertising
Internet
Magazines
News Releases
Newspapers
Contents
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2.5 Types of Media (continued)
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Office supplies
Promotional materials
Radio
Realtors®
Telemarketing
Television
Trade Shows
Networking group
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2.6 Advertising regulations
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PART 2 Loans
Ch 3: Loans Conventional
3.1 How a mortgage broker selects a loan
3.2 Conventional loan features
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Licensee advertising
License number on business cards
Advance Fee Advertising
Regulation Z Advertising Disclosures
Fair Housing Terminology
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Loan amounts
Eligibility requirements for high-balance loans
Loan to value ratio
Loan to value payment
Fixed rate loan
Bi-Weekly fixed rate loans
The 10- or 15-year mortgage
Adjustable rate mortgages
Index
Treasury bill rate
LIBOR
The two step mortgage
Price level-adjusted mortgage
Reverse annuity mortgage
©2011 Cengage Learning
Contents
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3.2 Conventional loan features (cont.)
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FNMA & FHLMC loan programs
Condominium loans
3.3 Mortgage insurance
3.4 California loan programs
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3.5 Refinance, Equity and Junior or
Sub-Prime loans
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Refinance loan
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Junior liens
Home equity line of credit
Loans: Sub-Prime borrowers
Defaults
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California housing finance agency
Southern California Home Financing
Authority
Hope for Ownership of Single Family
Homes
Home Investment and Affordable Housing
Public Employees Retirement System
State Teacher Retirement System
Home Ownership Program
My Community mortgage loan
Energy Efficient Mortgage
Other loan programs
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Ch 4: Loans: Government
4.1 FHA loans
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©2011 Cengage Learning
Statutory loan amount limits
FHA 202
FHA 203B and FHA 203I
FHA 302 K
FHA 207
Contents
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4.1 FHA loans (cont.)
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FHA 221 d 2
FHA 221 d 3
FHA 221 d 4
FHA 223 e
FHA 223 f
FHA 234
FHA 237
FHA 238
FHA 244
FHA 245
FHA 251 (ARM)
FHA 255 (HECM)
FHA Title I
FHA Energy Efficient Mortgage (EEM)
4.2 FHA loan considerations
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FHA versus first-time-home buyers (FTHB)
FHA MIP
FHA Streamline loan (rate reduction)
Other FHA features and loan programs
Secondary residence
FHA housing loan programs
4.3 Veterans loans
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Veterans regulated closing costs
DVA loans with second trust deeds
DVA refinances
Rate reduction refinance
Standard refinance
DVA jumbo loan
Veteran’s EEM (DVA EEM)
Sellers’ concessions
FHA or DVA loan approval
©2011 Cengage Learning
Contents
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4.4 Credit Alert Interactive Voice
Response System (CAIVRS)
4.5 California Veteran (Cal Vet)
4.6 SBA
Ch 5: Loans Financial Disclosure
and Other Real Estate Disclosures
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Real Estate Settlement Procedures Act
(RESPA)
Regulation X (Reg X)
Home Mortgage Disclosure Act (HMDA)
Home Mortgage Disclosure (Reg C)
5.1 Federal TIL (Reg Z)
5.2 APR
5.3 Section 32 loan guidelines
5.4 Federal RESPA, Reg X
5.5 HMDA (Reg C)
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5.6 Government loan disclosures
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5.7 California disclosures
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Required disclosures for FHA loans
Required disclosures for DVA loans
Mortgage loan disclosure statement
5.8 California licensee non-loan
disclosures
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©2011 Cengage Learning
Appraisal disclosures
Credit and fair lending disclosure
Death of acquired immunodeficiency syndrome
(AIDS)
Earthquake disclosure
Energy conservation, retrofit and thermal
disclosure
Environmental hazards disclosures
Fire hazard areas (state responsibility areas)
Flood disaster areas
Foreign investment in real estate tax act
(FIRPTA) and Cal-FIRPTA
Contents
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5.8 California licensee non-loan
disclosures (cont.)
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Flood disaster areas
Foreign investment in real estate tax act
(FIRPTA) and Cal-FIRPTA
Government compliance disclosure
Hazard insurance coverage
Language of the agreement
Lead-based paint
Local option disclosure statement
Supplemental property taxes disclosure
Mello Roos disclosure
Methamphetamine-contaminated properties
Pest control
REO property (REO)
Smoke detector compliance
Title insurance advisory
Transfer disclosure statement (TDS)
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5.8 California licensee non-loan
disclosures (cont.)
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5.9 Other loan disclosures
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Article 7
Prepayment penalty
Liability
Loan terms
Maximum charges
5.10 Predatory lending law
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Utility line extensions
Water heater bracing
Lender/purchaser disclosure statement
Disclosure
Prohibited loan terms
Prohibited practices
Penalties and corrective action
Balloon payment
5.11 Good Faith Estimate (GFE)
©2011 Cengage Learning
Contents
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PART 3: Processing
Ch 6 Processing: Pre-qualification
and loan application
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6.1 Lender/purchase statement
6.2 Disclosure of home ownership counseling
6.3 Residential loan application
6.4 Qualifying ratios
6.5 Department of Veterans Administration
(DVA) qualifications
6.6 Federal Housing Administration (FHA)
qualifications
6.7 Conventional qualifications
6.8 Other qualifications
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Ch 7 Processing: Credit and
disclosures
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7.1 Credit
7.2 Credit and FICO score
7.3 Privacy policy
7.4 ECOA
7.5 Non-traditional credit reports
7.6 The housing financial discrimination act of
1977 (Fair lending notice)
Ch 8 Processing: Verifications and
stacking order
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©2011 Cengage Learning
8.1 Processing tools
8.2 The processor’s file
8.3 Income and guidelines for the processor
8.4 Borrow documentation
8.5 Sample loan file
8.6 Stacking order
Contents
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Ch 9 Processing: Escrow,
settlement, title and appraisal
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9.1 Escrow
9.2 Statement of Information
9.3 Impound account
9.4 Title insurance
9.5 Appraisal
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Ch 11 Processing: Docs, funding and
closing
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Ch 10 Processing: Underwriting
and quality control
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10.1 Underwriting
10.2 Red Flags
10.3 Quality control and auditing
11.1 Conditions prior to Docs
11.2 Drawing Docs
11.3 Conditions prior to funding
11.4 Loan documents
11.5 Funding
11.6 Closing
PART 4 The Secondary Money Market
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Ch 12 Shipping and Servicing
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©2011 Cengage Learning
12.1 Shipping
12.2 Loan servicing
12.3 Securities dealer
12.4 Types of securities
12.5 Real estate economics
12.6 The secondary money market: Investor
protection
Contents
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Ch 12 Shipping and Servicing
(cont.)
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12.7 Packaging and selling loans
12.8 Yield spread premium
12.9 National Code of Real Estate Loan
Servicing Industry
PART 5 Regulations and Operations
Ch 13 The business operational
practices and Department of
Corporations (DOC) licensing
13.1 Employment considerations
13.2 Business office operations
13.4 Wholesale broker agreement
13.4 How to become a mortgage banker
13.5 Computer applications and publications
13.6 Acts by the loan agent
13.7 Compensation and referral fees
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13.8 Exemptions from the licensing
requirements
13.9 License law for the loan agents
13.10 California DOC
Ch 14 The California Department of
Real Estate (DRE) license activity
for loan agents
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©2011 Cengage Learning
14.1 California Department of Real Estate
(DRE) license
14.2 DRE Broker supervision
14.3 California codes and regulations for
licensees
14.4 Review of instruments
14.5 California financial code
14.6 Trust Funds
Contents
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Ch 15 Math and trust funds for the
loan agent
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15.1 Introduction
15.2 LTV ratio
15.3 Borrowing qualifying income
15.4 Payment factor chart
15.5 Amortization comparisons
15.6 Financial calculators
15.7 Trust fund accounting
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Appendix
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Appendix A: Loan application FNMA Form 1003:
English and Spanish
Appendix B: Credit Report
Appendix C: Verifications
Appendix D: Sale Escrow Instructions
Appendix E: Appraisal Report
Appendix F: Preliminary Title Report
Appendix G: Loan documents
Appendix H: Employment forms
Appendix I: Wholesale Brokerage Agreements
Appendix J: Internet Web Sites
Appendix K: Glossary of terms
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©2011 Cengage Learning