Summary of Amendments to Parts 38, 410, 413 and MB 106 110
December 23, 2009
SUMMARY OF AMENDMENTS TO PARTS 38 OF GENERAL REGULATIONS OF THE BANKING BOARD, PARTS 410 AND 413 OF THE SUPERINTENDENT’S REGULATIONS AND SUPERVISORY PROCEDURE MB 106
Section 38.1 – New definitions of net branch, branch manager, branch and application will be added and the definitions of loan solicitation branch and full service branch will be deleted. Additionally, most of the definitions will be re-lettered.
Section 38.3 – The amendment will require a statement to be added to the introductory paragraph of an application which will alert the borrower to the gravity of falsifying any information that they put on their application.
Section 38.3(a)(vii) – The amendment will clarify the disclosure requirements of mortgage brokers in connection with compensation to be received from lenders and borrowers. It specifically will require that fees and points, paid by lenders and borrowers, be disclosed separately and as an aggregate.
Section 38.3(b)(1)- A new section will be added to Part 38. It will require that a statement regarding the charging of discount points by the lender be added to the application. The statement will point out to the borrower that (i) discount points may lower the interest rate paid on the loan but may not lower the overall cost of the loan; (ii) if the borrower refinances or pays off the loan quickly, they will lose the benefit of any lower interest rate provided by the discount points; and (iii) if the borrower finances the discount points, this will increase the amount of money that they must repay to the lender and they will have to pay interest on the discount points as part of the amount they borrowed.
Section 38.7 - A new section will be added to the list of Prohibited Conduct outlined in Part 38.7. This will prohibit a mortgage banker, mortgage broker or exempt organization from engaging any employee or independent contractor who has an employment relationship with any other mortgage banker, mortgage broker or exempt organization, except with the written approval of the superintendent.
Section 38.11 – This section will be amended to address employees working from their homes and net branching. It will explicitly prohibit the establishment of a net branch and it specifically state that, if an employee, independent contractor, or consultant works from a place other than a defined branch, that person must be assigned to a specific branch location for purposes of managerial and regulatory oversight.
Part 410.6 – The amendment will eliminate the reference to “full service branch” and “loan solicitation branch” and replace these references with a single reference to “branch”.
Part 413.3(a)(5) and MB 106 – The amendments will clarify the corporate surety bond requirements for mortgage brokers to act as FHA Mortgage Loan Correspondents.