Loan Fraud Zero Tolerance, REG Z and CORE Pricing Policy


The following changes are incorporated into your contract to be in compliance with anti-steering laws in regards to commission earned by Contractors, loan fraud policy and to define the pricing of correspondent loans with inclusion of the Broker fee for selling a correspondent note:

Loan Fraud Zero Tolerance Policy

NOTICE: ANY SUBMISSION OR REPRESENTATION OF INFORMATION TO PACIFIC HOME BROKERS INC., AS WELL AS ITS WHOLESALE LENDERS IN CONNECTION WITH A RESIDENTIAL MORTGAGE LOAN TRANSACTION, KNOWINGLY CONTAINING FALSE AND/OR MATERIALLY MISLEADING INFORMATION IS A FEDERAL CRIME.

Mortgage fraud means a material misstatement, misrepresentation, or omission relied upon by Pacific Home Brokers Inc., its wholesale lenders and its loan investors, whether individually or collectively, to fund or purchase – or not to fund or purchase -- a residential mortgage loan. Mortgage fraud is investigated by the Federal Bureau of Investigation and is punishable by up to 30 years in federal prison or $1,000,000 fine, or both. It is illegal for a person to make any false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property, in a loan and credit application for the purpose of influencing in any way the action of a financial institution.

Mortgage fraud includes, but is not limited to, false information contained in identification and employment documents, as well as in a 1003 loan application; falsifying personal identities and forging or “cut and pasting” signatures; altering information presented on bank statements and government forms; fraudulent appraisals; theft of custodial funds; non-remitted payoff funds; misrepresentation of borrower funds; and property flipping where designed to falsely inflate property value. Possible mortgage fraud means that Pacific Home Brokers Inc. has a reasonable belief, based upon a review of information available, that mortgage fraud may be occurring or has occurred. It is the intent of Pacific Home Brokers Inc.’s ZERO TOLERANCE FRAUD POLICY (“Policy”) to support the industry’s and law enforcement’s efforts to eradicate residential mortgage loan fraud. Accordingly, by doing business with or accepting employment with Pacific Home Brokers Inc., you shall be directly responsible for your actions taken and not taken, services performed and not performed, and employment duties performed and not performed, in the course of your customer relationship, business dealings, and/or employment with Pacific Home Brokers Inc. The same applies to your employees, contractors, agents and representatives doing business with Pacific Home Brokers Inc. and on your behalf. You shall also be directly responsible for your compliance with this Policy.

Some of the applicable Federal criminal statutes which may be charged in connection with

Mortgage Fraud include:

18 U.S.C. § 1001 - Statements or entries generally

18 U.S.C. § 1010 - HUD and Federal Housing Administration Transactions

18 U.S.C. § 1014 - Loan and credit applications generally

18 U.S.C. § 1028 - Fraud and related activity in connection with identification documents

18 U.S.C. § 1341 - Frauds and swindles by Mail

18 U.S.C. § 1342 - Fictitious name or address

18 U.S.C. § 1343 - Fraud by wire

18 U.S.C. § 1344 - Bank Fraud

42 U.S.C. § 408(a) - False Social Security Number

 

The Most Common Examples of Mortgage Fraud:

1. Identity theft;

2. Submission of inaccurate or misleading information, including any false statement on the loan application(s) and falsification of documents purporting to substantiate credit, employment, deposit and asset information, or personal information including identity, ownership/non-ownership of real property.

3. The alteration or forgery of otherwise predominantly accurate information.

4. Inaccurate representations of current occupancy or intent to maintain required occupancy as agreed in the security agreement.

5. Lack of due diligence or concern by borrower, loan officer, or processor including failure to obtain or divulge all information required by the application and failure to request further information as dictated by Borrower’s response to other questions. This could include the following examples: (i) simultaneous or consecutive processing of multiple owner-occupied loans from a single applicant where information differs on each application; (ii) permitting an applicant or interested third party to assist with the processing of the loan; and (iii) failure to disclose any relevant or pertinent information known to the Broker which could negatively impact the lending decision. Pacific Home Brokers Inc. specifically represents the integrity of its loan production to its wholesale lenders and to the end loan investors that include federal government agencies and enterprises.

Consequently, residential mortgage loan files containing fraud or material misrepresentation can not only negatively impact the company’s business reputation and severely strain its business and investor relationships, but it can also go so far as to expose the company to severe legal penalties such as is found in the laws listed above as well as in the federal False Claims Act to combat fraud perpetrated against the federal government.

POSSIBLE CONSEQUENCES OF LOAN FRAUD AND/OR MISREPRESENTATION:

For Borrowers:

1. Acceleration of debt as authorized by the security instrument (Deed of Trust/Mortgage).

2. Criminal prosecution, which may result in possible fines, imprisonment or both.

3. Civil action by Pacific Home Brokers Inc. for damages.

4. Civil action by other parties to the transaction, such as the seller or real estate agent/broker.

5. Forfeiture of any professional license.

6. Long term adverse effects on credit history.

 

For Loan Officers, Brokers, and Realtors:

1. Criminal prosecution which could result in fines, imprisonment or both.

2. Loss of professional license.

3. Loss of access privileges due to exchange of legally permissible information between lenders and mortgage insurance companies; loan investors (ie, Fannie Mae and Freddie Mac); policy agencies; and state and federal regulatory agencies including the Department of Justice and the FBI.

4. Civil action by applicant/borrower, Pacific Home Brokers Inc. and/or other parties involved in the transaction.

5. Loss of approval status with wholesale lenders

6. Employment termination.

If Broker finds that Contractor committed fraud, Contractor will forfeit any commission received by Broker.


Correspondent Loan Addendum

- Regulation Z Anti Steering Flat Rate Compensation

A Contractor with a Mortgage Loan Originator license will receive up to a maximum of 4% of the loan amount as commission on all loans under Pacific Home Brokers Inc. DBA Pacific Property Loans on correspondent/broker banked loans only. Compensation is based on the rate the Contractor locks, any relock fees, origination and/or discount points charged by Contractor or any lender or interest credits given by the Contravtor.  Contractors contract under Pacific Home Brokers Inc. in regard to brokered loans and fees remains the same.

Contractor may receive less compensation from Broker on correspondent/broker banked loans if:

• The client decides to use a lower interest rate

• Contractor credits the borrower in order for the client to obtain a loan or have more favorable terms

• The client's loan scenario causes the final pricing to be lower

• Contractor charges a lower borrower paid compensation at their discretion

• Contractor chooses to broker the loan through a wholesale lender

• An action or choice is made by Contractor that lowers their origination charge or final price on the loan

• Any action or choice the client decides that the Contractor honors that may lower the final compensation. 

- Correspondent Loan Pricing and Broker Fees

Broker will deduct .0025 of the total loan amount, a $399 Broker fee and a $125.00 fee for their contribution to the Broker's errors and omissions insurance policy premium per transaction. Contractor is responsible for ensuring that they lock a rate that will have a spread that will cover these fees and/or charge origination or discounts to cover the Broker fees on all correspondent loans with Pacific Property Loans. The additional .0025 of the loan amount being charged is the Broker's compensation for selling the note to an investor. 

- Correspondent Commission Options

  • Contractor will be able to make up to a total of 3.75% on the back end of the loan as your compensation without disclosing this charge to your client.

  • Contractor can make up to 3% as an origination or discount fee on the front end of the loan which is fully disclosed to the client.

  • Contractor can do any variation of these charges up to a max compensation of 4% to Contractor.

  • Contractor can disclose your commission fees as origination or discount points.

  • Contractor can choose the lender fees they would like to disclose to the client to be competitive.  Contractor will be responsible for any lender fees not charged to the client. Contractor can use the back end compensation to make up the difference for the other fees not disclosed or charged to the borrower.

  • Contractor compensation in the spread is not disclosed to the borrower. Discount/ origination fees are disclosed. Contractor can charge a higher rate to absorb costs Contractor does not disclose to the client.
  • Contractor can provide lender credits and charge a higher rate to adsorb this credit.

  • Contractor can charge origination and/or discount points in addition to the back end compensation up to a total of 4%..

The undersigned represents no alterations have been made to this Agreement and all documents, policies, and agreements referenced in and associated with this Agreement have been read and understood.

Agreed and Accepted

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Document name: Loan Fraud Zero Tolerance, REG Z and CORE Pricing Policy
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November 15, 2018 8:23 am PSTLoan Fraud Zero Tolerance, REG Z and CORE Pricing Policy Uploaded by PHB Support - support@pacifichomebroker.com IP 68.6.176.49