Monthly summary of mortgage activities, Oct. 2005

Inside this Issue

2

Commissioner Appointed

2

Continuing Education: Providers

& Course Content

3

OTHER ITEMS Examination Issues

3

OTHER ITEMS Federal Regulations

5

Administrative Actions & Issues

Check for
Web Outstanding C&D and Consent Orders
2990 Brandywine Road Suite 200
Atlanta, GA 30341 Phone: (770) 986-1269
Fax: (770) 986-1029

Monthly Summary of Mortgage Activities
Georgia Department of Banking & Finance
FOR THE PERIOD ENDING
October 2005
SUMMARY OF ACTIVITIES
MORTGAGE DIVISION
WEB SITE: www.state.ga.us/dbf STAFF: www.state.ga.us/dbf/staff.html

. . . . . . . . . . . . . . . . . . .

News Items

DEPUTY COMMISSIONER FOR MORTGAGE
BRASWELL APPOINTED DBF COMMISSIONER

Governor

Sonny

Perdue

announced the appointment of

Deputy Commissioner for

Mortgage Robert M. Braswell as

Commissioner of the Georgia

Department of Banking and

Finance (DBF) on Friday,

November 4, 2005, replacing

retiring Commissioner David G.

Sorrell.

Deputy Commissioner Braswell,

43, has been the Deputy

Commissioner for Mortgage for

the Department since August

2003. He has spent his entire

professional career with the

Department. Braswell previously

served as district director and

supervisory examiner for the

Northwest region and held

several financial examiner

positions. He received his

bachelor's degree in business

administration,

with

a

concentration in finance, from

Georgia Southern College.

George Reynolds will continue to serve as senior deputy commissioner. He has more than 27 years of regulatory experience with the department.

The

Mortgage

Division

congratulates Rob on his

promotion, and he will be missed

as the Division faces the daily issues regarding mortgage industry regulation. However, he will be available to provide insight and guidance regarding Mortgage Industry issues. The Division wishes him success in meeting the challenges of his new position.
CONGRATULATIONS, Rob!
CONTINUING EDUCATION: PROVIDERS & COURSE CONTENT ISSUES

As anticipated, many questions

are being asked regarding how

the Department will view the

qualifications of the various

professional organizations and

approved education providers

offering Continuing Education

Credits (CEs). The following will

hopefully

provide

some

guidance. There are two issues

here: approved providers and

course content.

Regarding approved course(s)

and content, the topics which

can be considered for credit are:

mortgage brokering process,

federal law, federal rules and

regulations, Georgia law,

Georgia rules and regulations,

applications and required

documentation, fraud, ethics or

other topics pertinent to the

operation of a mortgage

brokering business in Georgia,

and the inclusion annually of at

least one hour concentrated on

fraud

detection

and

prevention.

Regarding approved continuing

education providers,

the

regulation states that seminars,

courses or classes sponsored and

approved by mortgage-related

state and federal regulatory

agencies,

the

National

Association of Mortgage Brokers

(NAMB), state and federal

regulated lenders and their

affiliates or professional

associations, all of which must

be recognized by the department

as proper providers of education

requirements

("approved

providers") will qualify. To be a

Georgia approved provider

(school), which does not fall

within the other state, federal,

lender,

or

professional

categories noted above, the

school must be initially qualified

to provide the 40 hour training

course for licensing. See

Department Regulation 80-11-4-

.02 regarding approved schools.

Looking at these groups, the following apply:

State Regulatory Agencies &

Approved Providers:

A

listing of state regulatory

agencies is noted on the

American Association of

Residential

Mortgage

Regulators (AARMR) website

at the following address:

http://www.aarmr.org/page

04.lasso. Mortgage related

courses provided by these

regulatory agencies or their

state-approved providers of

mortgage education (schools)

would qualify, with the

exception of "state-

specific" law and regulation

courses taken pertaining to

any state law other than the

State of Georgia. Other

state's mortgage laws and

regulations courses will not

count for Georgia CE credit.

Federal Mortgage Regulatory Agencies/Other Federally Related Groups: Those federally related agencies offering courses, such as

2

. . . . . . . . . . . . . . . . . . . ..

HUD, would qualify, or courses sponsored by other federally related entities, such as the GSEs Fannie Mae or Freddie Mac. Related courses offered by other Federal regulatory agencies, such as the FDIC, would have to be reviewed to determine the applicability of the course content to the mortgage industry. For example, an FDIC sponsored course on bank formations, would most likely not be applicable to the mortgage industry.

NAMB The National Association of Mortgage Brokers, and its affiliated state organizations, such as GAMB, would be approved providers of mortgage training for CEs.

State and Federal Regulated Lenders and Their Affiliates: These include mortgage lenders, banks, thrifts, credit unions, etc., which are state or federally regulated mortgage lenders, (i.e. FDIC insured), and their affiliates. Courses offered by these lenders and their affiliates on mortgage related topics will be considered for CEs.

Professional Associations - If

the organization is a

Department

recognized

industry-related professional

organization,

such as

National Association of

Professional

Mortgage

Women, Georgia Banker's

Association, etc. , then their

topics meeting the seminar

or course criteria noted

above, offered through

training sessions or luncheon

meetings which meet the hour time requirement (minimum 50 minute training session), will qualify.

Generally these groups will

be registered as a non-profit

organization with their

state's Secretary of State's

Office (or similar governing

oversight body). That will be

a beginning point of

reference

for

the

Department in determining

the organization's status as

an approved provider.

It is also recognized that many such organizations operate separate foundations which might handle training, and these would be reviewed.

If there is a question regarding the status and nature of the organization, then a copy of the by-laws, purpose and policies might be required in order to make a further determination as to qualification for continuing education.

Course Content Remember that the course content is significant, such that a course on another state's mortgage statutes will not count as credit for the Georgia Mortgage Broker's license. Federal and Georgia law courses and seminars related to the mortgage industry, as well as the other items noted above, will count for CEs.

Speakers/Instructors: For

purposes of continuing

education,

individual

instructors and speakers at

seminars, conventions or

classes sponsored by

approved

education

providers will not be

required to seek separate

department approval as

approved providers of

mortgage training classes.

Other Items

EXAMINATION ISSUES

Examiners often

see the same

examination

issues

from

licensee to licensee. Therefore,

it may be helpful to itemize

those issues for you here to

prevent citation of the same

problems in an examination of

your licensed business.

Ineligible Employees It

appears that many licensees

take for granted that their

current employees won't get

a Cease and Desist or

Consent

Order,

and

therefore do not routinely

check the Department's

database for orders which

may have been issued

subsequent

to

the

individual's employment

with the company, as is

often the case. Licensees

are reminded to check the

database on the internet at

https://bkgfin.dbf.state.ga.

us/WebAdmActions.html on

a routine basis to determine

that no orders have been

issued to current employees.

Mortgage Loan Transaction Journal (MLTJ) In general, the MLTJ must contain the following information: (a)

3

. . . . . . . . . . . . . . . . . . . ..

Full name of the proposed

borrower and all co-

borrowers, and their social

security number(s); (b) Date

customer applied for the

mortgage loan; (c) Name

of the loan officer

responsible for the loan

application whose name

also appears on the

application; and; (d)

Disposition of the application

and date of disposition and

the result of the loan

transaction. It appears that

licensees often have a

problem maintaining these

required components of the

MLTJ as spelled out in

Department Regulation 80-

11-2-.03 Mortgage Loan

Transaction

Journal,

Paragraph (1). And... it is

important to note that

Subparagraph (c), inclusion

of the name of the loan

officer is now required as a

result of this year's

regulation changes. While

the foregoing components

for the MLTJ are a minimum,

more information than this

can be contained in the MLTJ

and inclusion is encouraged,

but is not required.

Employee Personnel Files Licensees must keep personnel files on all employees, both current and those who have left the company. At a minimum the file must contain: 1) an employment application, 2) a background check, 3) copies of all W-2 statements issued on the employee's behalf, and 4) a copy of the W-4 statement as completed by the employee.

Based on employment, property and ownership

issues which continually arise

in this industry, licensees are

encouraged to draft an

exclusivity / employment

contract denoting terms of

employment, and in

particular

spell

out

ownership of the loan files,

particularly noting that the

files are the property of the

licensee, not the property of

the loan officer.

Also, remember that Regulation 80-11-1-.05(1) regarding background checks was revised. Employers must now submit the background information to the proper law enforcement authorities within 10 business days of initial hire.

Georgia Fair Lending Act

Licensees are responsible for

determining if they are or

are not making high cost

loans. Brokers cannot rely on

the lender to inform them or

to calculate the costs of a

high cost loan.

The

calculation should be done

for each loan, and a copy of

the calculation placed in

each file, or the points and

fees calculation can be input

as a field on the journal.

FEDERAL REGULATIONS
Often licensees overlook the fact that many federal regulations, other than just those like Regulation Z-TIL, Regulation BECOA and RESPA, pertain to residential real estate loans, or other laws, such as with FACTARecord Disposal, pertain to other aspects of consumer credit and are applicable to licensees.

The following is a partial list of
the more significant regulations
which pertain to residential
mortgage loans and those who
make them, and require
compliance by non-bank
mortgage licensees:
Equal Credit Opportunity Act
- Reg B
Real Estate Settlement
Procedures Act (RESPA) Reg
X
Truth-in-Lending Reg Z Fair Credit Reporting Act Right to Financial Privacy Act Fair Housing Act HMDA Gramm-Leach-Bliley Act

Of particular concern are the prevalence of two web site issues advertising of rates and information security, as most licensees utilize the web for advertising, and many take online loan applications.

Consumer information privacy

concerns appear to be

overlooked by many licensees.

Web sites where applications are

taken are often not properly

encrypted. Based on recent

incidents of theft of consumer

information, at a minimum

licensees need to determine that

proper on-line security measures

are taken to safeguard

customers'

non-public

information, such as social

security numbers and birth

dates. Sites need to be

encrypted by use of Secure

Sockets Layer (SSL) technology,

which secures web sites by

encrypting information and

providing authentication.

An encrypted communications channel between the consumer and the licensees' server will:

4

. . . . . . . . . . . . . . . . . . . ..

reduce the risk of
eavesdropping;
provide parties to a
transaction the ability to
verify one another's identity;
make use of digital
certificates to encrypt the data.

Encryption is Indicated on a web site by https:// in the web site address line, and the lock icon, shown here, in the lower right of a web site's screen.

Without SSL encryption, packets of information travel networks in full view, similar to sending mail through the postal system in a clear envelope. Anyone with access to it can see the data, and if it looks valuable, then they are likely to use it or change it.

Without third-party verification,

users do not know a Web site is

an authentic representative of a

business they trust. Every SSL

Certificate is created for a

particular server in a specific

domain for a verified business

entity. An SSL Certificate is

issued by a trusted authority.

When the SSL handshake occurs,

the

browser

requires

authentication from the server.

If the information does not

match or the certificate has

expired, the browser displays an

error message.

Licensees utilizing the web to take applications need to make certain they are taking adequate steps to protect customer information.

The next areas of concern, advertising of rates and other

loan payment information, are in Regulation Z.
Regulation Z, Truth in Lending, requires that certain items be disclosed if an ad uses "triggering terms". Triggering terms include those items set forth in Regulation Z, Part 226.24, In general, the following apply to advertisements, hardcopy or website, as discussed in Part 226.24 (c) of the Regulation:
"Part 226.24 (c) of Regulation Z(c) Advertisement of terms that require additional disclosures.
(1) If any of the following terms is set forth in an advertisement, the advertisement shall meet the requirements of paragraph (c)(2) of this section: (i) The amount or percentage of any downpayment. (ii) The number of payments or period of repayment. (iii) The amount of any payment. (iv) The amount of any finance charge.
(2) An advertisement stating any of the terms in paragraph (c)(1) of this section shall state the following terms, as applicable: (i) The amount or percentage of the downpayment. (ii) The terms of repayment. (iii) The annual percentage rate, using that term, and, if the rate may be increased after consummation, that fact."
Many licensees fail to meet these disclosure requirements of Regulation Z on their websites or other advertisements. Often a payment amount for a loan will be listed, but the APR will not be disclosed. "RATE" will be used, but it does not disclose INTEREST

RATE or if it is the APR. Failure to disclose the required items in any advertisement results in violations of the Regulation.
Even though licensees are not routinely examined by any federal banking regulatory agency, other federal regulatory agencies, such as the Federal Trade Commission, do have jurisdiction over those non-bank entities subject to these regulations.

5

. . . . . . . . . . . . . . . . . . . ..

Administrative Actions and Issues
CEASE AND DESIST ORDERS Issued
American Lending Group, Inc. dba Avant Lending Group, Inc., El Segundo, CA Cease and Desist Order issued September 8, 2005 became final on October 9, 2005.
Beedles, Yolanda, Douglasville, GA Cease and Desist Order issued September 22, 2005 became final on October 23, 2005.
Bychtovoy, Oleg, Atlanta, GA (license no. 15848) Cease and Desist Order issued September 2, 2005 became final on October 2, 2005.
Croft, Johnny Dean, Cartersville, GA (license no. 19978) Cease and Desist Order issued September 2, 2005 became final on October 2, 2005.
Dupree, Brian C., Athens, GA Cease and Desist Order issued September 22, 2005 became final on October 23, 2005.
Newell, Wesley Harrison, Dawsonville, GA (license no. 19594) Cease and Desist Order issued September 22, 2005 became final on October 22, 2005.
Osibodu, Nicole, Marietta, GA Cease and Desist Order issued September 22, 2005 became final on October 13, 2005.
RateCapital, Inc., Vienna, VA (license no. 17915) Cease and Desist Order issued September 21, 2005 became final on October 23, 2005.
Wilson, Rasheed, Atlanta, GA Cease and Desist Order issued September 22, 2005 became final on October 13, 2005.
_____________________________________________________________________________________

CEASE AND DESIST ORDERS Lifted None

FINAL CONSENT ORDERS Issued
Fidelity Lending, LLC, Atlanta, GA (license no. 16856) - Consent Order issued October 20, 2005, became final on October 20, 2005.
Meuschke, Elena, Atlanta, GA - Consent Order issued October 20, 2005, became final on October 20, 2005.

6

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SUPERIOR COURT INJUNCTIONS None

FINE PUBLICATION
Information regarding fines assessed against a specific licensee and against whom there are no pending administrative actions, is available on an individual licensee basis by submitting a written request to the following e-mail address: dbfmort@dbf.state.ga.us

7 Licensees fined for Advertising Violations 1 Licensee fined for Unapproved Branch 1 Licensee fined for failure to respond to
Consumer Complaint

FINE REASON
1 Licensee fined for Check returned for Insufficient funds 1 Licensee fined for Prohibited Act

________________________________________________________________________________________________________

LICENSEES/REGISTRANTS REVOKED, EXPIRED, SURRENDERED, WITHDRAWN OR DENIED IN OCTOBER 2005

ID# NAME

CODE

5750 GE MTG SVCS LLC

LD

12468 FIDELITY MTG INC

LD

12869 ATL N MTG

BD

15210 LAND HM MTG LLC

BD

15848 BYCHKOVOY, OLEG

BD

16703 1ST RATE MTG GRP INC

LD

16856 FIDELITY LENDING LLC

BD

17915 RATECAPITAL INC

BD

19232 AMER BEST MTG INC

BD

19594 NEWELL, WESLEY H.

BD

19978 CROFT, JOHNNY DEAN

BD

20412 HOMEFI MTG ADVISORY INC BD

TOTAL: 12

REVOKED EXPIRED SURRENDERED
10-02-2005 10-23-2005 10-22-2005 10-02-2005

WITHDRAWN 10-11-2005 10-11-2005 10-17-2005 10-11-2005
10-21-2005
10-26-2005
10-17-2005

DENIED

7

. . . . . . . . . . . . . . . . . . .

LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN OCTOBER 2005

ID# COMPANY NAME

CITY

20646 Cyber Mortgage, Inc. 20742 Allgood Financial Group, LLC 20781 Union Street Inv Company 20794 Darrell Scott DeNardo 20797 Lowe's Mortgage, LLC 20800 Ultimate Mortgage, LLC

Annandale Tucker Chicago Parker Norcross Suwanee

20805 USA Liberty Mortgage, Inc. 18540 Georgia Funding Network, LLC* 20632 Homeloan USA Corporation 20651 Smart Money Mortgage, Inc. 20731 Abby Mortgage & Finl Svcs 20779 Vanguard Mortgage & Title, Inc. 20780 Classic Home Lending, Inc. 20802 U R Services, Inc. 20807 TC Financial Mortgage, LLC 20808 Triumph Mortgage Corporation 20809 Dream Home Funding, Inc. 20810 Cynthia Wilson Anderson 20838 STWilliams, LLC 20839 North Metro Atlanta Mtg, LLC 20844 Quick Loan Funding, Inc. 20847 Union Centre Mortgage, LLC 20732 Integral Equity Mortgage, LLC 20749 Greater Southeast Mtg Corp, 20796 Len Roberts, Ltd. 20836 Absolute Mtg Solutions, LLC 20843 Ebenezer Akinlade 20846 Empowerment Home Lending, 20848 Alpha Mortgage Group, LLC 20863 Home Depot Finl Mtg Svcs, LLC 20571 OCM, Inc. (California) 20590 Bruce Walter Everling 20650 Jarman Clifford Bryant 20735 Advertent Mortgage Company 20806 Goldleaf Funding, LLC 20812 Advanced Capital USA, Inc. 20835 J D Mortgage Co., Inc. 20840 Andre T. Lynar 20853 Amen Mortgage, Inc. 20873 Acceptance Home Mg, Inc. 20888 Global Mortgage VLC, Inc. 20898 Dianne Key Anderson 20903 Partners Mtg Services, LLC 13198 North Georgia Home Mtg, Inc.

Holbrook Winder Albuquerque Lake Elsinore Grayson Littleton Houston Alpharetta Morrow Marietta Atlanta Duluth College Park Suwanee Costa Mesa Douglasville Jonesboro Dallas Apopka Wethersfield Loganville Woodstock Norcross Dudley Santa Ana Gwinnett Atlanta Atlanta Stockbridge Riverside Alabaster Marietta Athens Hazlehurst Westlake Village Atlanta Sugar Hill Greensboro

MB

ORIGINAL

ST CODE APPROVAL RENEWAL REINSTATED

VA

B

GA

B

IL

L

CO

B

GA

B

GA

B

10-07-2005 10-07-2005 10-07-2005 10-07-2005 10-07-2005 10-07-2005

10-07-2005 10-07-2005 10-07-2005 10-07-2005 10-07-2005 10-07-2005

NY

B

GA

L

NM

L

CA

L

GA

B

CO

L

TX

L

GA

B

GA

B

GA

B

GA

B

GA

B

GA

B

GA

B

CA

L

GA

B

GA

B

GA

B

FL

B

CT

L

GA

B

GA

B

GA

B

GA

B

CA

B

GA

B

GA

B

GA

B

GA

B

CA

B

AL

B

GA

B

GA

B

GA

B

CA

L

GA

B

GA

B

GA

B

10-07-2005 08-01-2003 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 02-06-1998

10-07-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-14-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-21-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-28-2005 10-07-2005

10-07-2005

8

. . . . . . . . . . . . . . . . . . .

LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN OCTOBER 2005

ID# COMPANY NAME
20055 Maverick Residential Mtg, Inc.
TOTAL: 45

CITY Frisco

MB

ORIGINAL

ST CODE APPROVAL RENEWAL REINSTATED

TX

L

02-11-2005

10-07-2005

10-07-2005

MB CODES B = BROKER L = LENDER R = REGISTRANT

*

Upgrade Broker to Lender

+

Downgrade Lender to Broker

#

Upgrade Lender to Registrant



Downgrade Registrant to Lender

9

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