Real Estate Professionals Only
This section is designed to provide Real Estate Professionals with helpful information in order to keep their business above board.
Did you know that the Maryland regulatory agencies, both local and state, have moved aggressively forward with enforcing sanctions against real estate professionals that fail to do their jobs properly and legally? This is Maryland’s way of cleaning up the real estate industry and providing strong consumer protections for her residents.
Most, if not all of Maryland’s agencies, have reached out to real estate associations such as the Mortgage Bankers Association, Maryland Association of Realtors, National Association of Realtors, Maryland Association of Appraisers, members of the title insurance industry, real estate settlement companies, mortgage and real estate brokerages, and individual professionals to advise them of the problems associated with fraud within their respective industries. Maryland agencies have not only reached out to these various groups in the real estate profession, but agency heads have led discussions with associations to help them strengthen their stand against fraud within their professional communities. The majority of the associations have fully supported Maryland’s efforts to repair the real estate industry and return it to a healthier state.
Although the conversations have been had, new rules have been set in place, and old rules have been reinforced, there are still real estate professionals willing to walk in the grey areas of their chosen fields. For those that continue to do this, there are multiple agencies ready to punish and deter those individuals who continue to add to the mortgage fraud mess that we are in.
Loan Officer/Loan Originators
In the most basic explanation provided by The Department of Labor, Licensing and Regulation, the Office of the Commissioner of Financial Regulation (DLLR), the agency is responsible for overseeing entities and individuals that: provide mortgages, consumer loans, retail sales financing, as well as credit reporting, debt collection, debt management, check cashing and money transmitting services to Maryland consumers. Click here to read the additional regulatory function of the Department of Labor and Regulation http://www.dllr.state.md.us/.
DLLR Financial Regulation Section has aggressively moved forward in assisting with the eradication of mortgage fraud that has been perpetrated against Maryland citizens. As such, it has adopted and issued several new requirements and regulations that have changed the face of the loan origination industry.
For a full reading of the new regulations and/or advisories, Click http://www.dllr.state.md.us/finance/advisories/licbus.shtml/.
What professionals should remember is that DLLR outlines exactly what you are allowed to do as a loan originator licensee.
Log onto to DLLR to see if you are in good standing. If you are not and you are acting as if you are, DLLR has the right to revoke or suspend your license and any profit or monies received from clients may be classified as a theft and punishable up to 25 years in prison. If you lose your license in Maryland your information will be shared on a national registry that can be viewed across the country. Most states have reciprocity laws, meaning if you lose your license in Maryland, another state will not issue one to you. Before participating in a transaction that seems fraudulent in anyway, pass on the risk, because in the long run, your license is worth a whole lot more.
SCAM ALERT for Loan Originators
Beware of loan modification companies that contact you for leads. By providing leads to them from your client base, you may find yourself falling under the Protection of Homeowners in Foreclosure Act. See section on PHIFA.
Penalty for violating PHIFA can include fines, penalties, incarceration and the loss of your license.
Loan Officers and Credit Repair Do Not Mix
Do not offer to fix or repair your client’s credit or anyone else’s unless you are licensed under the Maryland Credit Services Business Act (MCSBA). To offer or perform this service you must obtain a license through DLLR. The law not only includes those who engage in credit repair, but also to individuals and companies that engage in the business of loan modification and foreclosure prevention. See Commissioner of Financial Regulation Advisory Notice 2-09. For violating MCSBA, one may be subject to administrative, civil, or criminal penalties, and fines up to $5,000.00 and/or imprisonment up to 3 years.
Do not engage in Appraisal Shopping. Under new appraisal laws, loan originators are forbidden from selecting or contacting the appraiser. This process was created to keep appraisers independent and to prevent influence from loan originators from tampering with the appraisal process.
Appraisers
Appraisers are licensed through the Department of Labor - Licensing and Regulation’s Commission of Real Estate Appraisers and Home Inspectors. A real estate scammer usually aligns himself with a willing and able appraiser to assist in scamming unsuspecting individuals.
Appraiser’s jobs are instrumental to the mortgage loan process because of the inherent liability of the Appraisers work. Billions in loans have been given based on the representations of appraisers. Due to the massive amount of problems in the real estate industry, the appraisal industry along with Fannie Mae, decided to take matters into its own hands by promulgating new regulations and requirements for appraisers. Maryland sets out the licensing requirements and laws for appraisers. Fannie Mae sets its own regulation standards that appraisers adopt.
A summary of the Maryland license qualifications can be found at: http://www.dllr.state.md.us/license/real_est_app/reareq.htm/.
Maryland laws governing appraisers can be found at: http://www.dllr.state.md.us/license/law/reapprlaw.htm/.
Fannie Mae promulgated new rules for the appraisal industry. A brief glimpse of those changes are listed below and can be found at: https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2008/0830.pdf/.
In brief, commission-based mortgage originators (loan officers) will no longer have contact with appraisers for conventional mortgages. Appraisals must be ordered through an Appraisal Management Company.
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