Monthly Summary of Mortgage Activities Georgia Department of Banking & Finance Inside this Issue 2 Georgia's "Wet Funding" Statute 2 Continuing Education Requirements 3 Background ChecksNew Time Requirements 3 Fraud Reminder 3 Outstanding Orders: Cease & Desist vs Consent Orders 3 FACTA-Record Disposal Rule OTHER ITEMS 4 Audit Submission E-mail Addresses New URLA (1003) 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 FOR THE PERIOD ENDING September 2005 SUMMARY OF ACTIVITIES MORTGAGE DIVISION WEB SITE: www.state.ga.us/dbf STAFF: www.state.ga.us/dbf/staff.html 1 . . . . . . . . . . . . . . . . . . . News Items GEORGIA'S "WET FUNDING" STATUTE Licensees are reminded to review the provisions of Title 44 of the Official Code of Georgia ("O.C.G.A."), specifically O.C.G.A. Section 44-14-13, the "wet funding" statute, which addresses the loan funding requirements in Georgia. Title 44 sets the funding requirements for loans involving purchase money loans or refinance loans involving residential real estate, stating that "the lender shall at or before the loan closing deliver loan funds to the settlement agent either in the form of collected funds or in the form of a negotiable instrument ...." It is obvious from this that loans that are "closed" must be funded. This code section also calls for substantial actual and punitive monetary penalties to be paid to the borrower in the event that this section is violated. Modifications to loan agreements or documents which in essence extend this time period by the lender, particularly to benefit licensees in those states without wet funding provisions, would appear to possibly violate the provisions of this code section. In addition, Rule 80-11-3-.01 (19) states that "The GRMA in O.C.G.A. Section 7-1-1013 (3) prohibits failure to `disburse funds in accordance with a written commitment or agreement to make a mortgage loan'. If the department finds... that a lender or a broker acting as a lender has failed to disburse funds in accordance with closing documents, which include legally binding executed agreements indicating a promise to pay and creation of a security interest, a fine of $5,000 per transaction may be imposed. CONTINUING EDUCATION REQUIREMENTS Just in case you missed the new requirements for broker continuing education, here are the highlights. For more details see Department Rule 80-11-4- .01 - Initial Experience and Education Requirements; Continuing Education. Hours Required: Brokers must obtain 12 hours of continuing education in a 12 month period prior to the annual renewal deadline. Qualifying Attendee: Is the individual owner of the licensee, or an employee serving as the primary supervisor or manager of the business. Qualifying Courses: Those approved by mortgage related state and federal regulatory agencies, NAMB, state and federally regulated lenders and affiliates, and other approved providers. Includes monthly association meetings, conventions, seminars or those courses provided through electronic means, provided the subject meets the requirements of the rule. Course Content: Must pertain to state and federal rules and regulations on the mortgage industry, the brokering process, loan application processing, proper loan documentation, and, in general, operating a mortgage brokering business in Georgia. NOTE-At least one hour shall be concentrated on fraud detection and prevention annually. Proof of Training: Licensees must maintain course documentation for a period of 5 years. Approved Georgia in-state education providers must maintain lists of attendees for 2 years. Fine: Licensees who apply for renewal, but who have failed to meet the continuing education requirements will be fined $1,000, and will have from April 1 to June 30 prior to the new fiscal year licensing period starting July 1 of each year to obtain CE credits, or their license can not be renewed. The requirement for CE hours will begin with the FY 2008 licensing period (April 1, 2007 renewal). Licensees will have from January 1, 2006 through April 1, 2007 to obtain initial credits. After that period, April 1 through March 31 will be the period each year to obtain CE hours. Licensees who fail to obtain credit during that period, will have from April 1 to June 30 to make up the credits, but will receive a $1,000 fine for failure to obtain credit in the qualifying 12 months for that renewal period. If the CE hours are then 2 . . . . . . . . . . . . . . . . . . . .. not obtained in the make-up period, the renewal will not be approved. BACKGROUND CHECKSNEW TIME REQUIREMENT Reminder that Regulation 80-111-.05(1) regarding background checks on covered employees was revised. All employers must submit background information to the proper law enforcement authorities promptly upon initial hire in order to meet the 90 day review requirement. Therefore, the new requirement states that employers must submit the information to the proper law enforcement authorities within 10 business days of initial hire. A fine of $1,000 is imposed if the 10 business day filing requirement is not met and an employee is found to be disqualified under Code Section 7-1-1004. FRAUD REMINDER As fraud continues to be a major problem in the mortgage industry, and with more arrests and convictions taking place, it may be beneficial to again provide licensees the information from the Federal Financial Institutions Examination Council (FFIEC) on fraud prevention and detection. The white paper entitled "The Detection, Investigation, and Deterrence of Mortgage Loan Fraud Involving Third Parties", provides guidance on the establishment of procedures and best practices to detect and prevent mortgage fraud. The report also identifies mortgage fraud red flags and discusses ways to stop it. The information is available on the following website: http://www.ffiec.gov/exam/whi tepapers.htm OUTSTANDING ORDERS: CEASE & DESIST VS CONSENT ORDERS Licensees have the responsibility to check the Department's website to ensure their potential employees do not have an outstanding Cease & Desist or Consent Order issued by the Department. It is important to note the following regarding Orders issued by the Department. A Cease and Desist Order issued to an individual or other person (company) not licensed by the Department keeps that person from working in the industry for a three year period, commencing from the date the order became final. Licensees against whom a Cease and Desist Order has been issued are able to continue operating in the industry. These orders are generally issued to effect changes in business practices in lieu of license revocation. An exception would be a C&D issued for failure to meet financial standards for licensing. Failure to meet the standard results in expiration of a license if not corrected. Often employees of licensees or the companies themselves are issued Consent Orders. The purpose of the order is similar to that of a Cease and Desist Order against a licensee. However, these have specific terms and conditions which must be met by the person receiving the Order, and often the terms are such that a person may not work in the industry for a specified period of time, may work but may not hold specific positions, etc. Licensees should check for outstanding Orders on the web at: http://www.state.ga.us/dbf/cdo rders.html You need to be aware that if a prospective employee has an outstanding Consent Order, then request a copy of the Order from the Department to determine exactly what restrictions have been placed on that employee or potential employee regarding working in the industry. FACTA- RECORD DISPOSAL RULE A reminder regarding disposal of sensitive consumer information: Effective June 1, 2005, the FACTA Disposal Rule required businesses and individuals to take appropriate measures to dispose of sensitive information derived from consumer reports. The Rule applies to people and both large and small organizations that use consumer reports, including lenders; employers, landlords, and mortgage brokers. The standard for the proper disposal of information derived 3 . . . . . . . . . . . . . . . . . . . .. from a consumer report is flexible, and allows the organizations and individuals covered by the Rule to determine what measures are reasonable, based on the sensitivity of the information, the costs and benefits of different disposal methods, and changes in technology. The FTC has issued a new publication, "New Rule Seeks to Protect Privacy by Requiring Proper Disposal of Sensitive Consumer Information," to educate businesses about the new requirements, available at: www.ftc.gov/bcp/conline/pubs/ alerts/disposalalrt.htm Other Items AUDIT SUBMISSION As you know, the financial standards for licensing were changed with this legislative session. All licensees and registrants, brokers and lenders, must now provide a surety bond. As a result, submission of audited financial statements to the Department is no longer required. For those lenders and HUD approved brokers who were still able to use their audited financials for the FY 2006 renewal period, and any other company that has historically provided financial statements as a matter of practice, please note that submission is not required, and the Department asks that you do not send in your financial statement. Financial statement information is still required for applicants for new licenses. In addition, Department examiners will continue to review the financial information of the licensee for compliance with Regulation 80-11-2-.02 (g). E-MAIL ADDRESSES The Department would like to remind all licensees that much of our communications with licensees is now done via e-mail. In order for licensees to have the latest information and for the Department to contact you on a timely basis, we need your current e-mail address information. Changes can be made on-line for the main contact receiving mail, for the complaint contact, and for the registered agent for service. We urge you to keep this information current. Please make all updates at: https://bkgfin.dbf.state.ga.us/Mortg ageDocs/MBContactChng.html REVISED UNIFORM RESIDENTIAL LOAN APPLICATION (1003) The U.S. Department Of Housing And Urban Development, in its MORTGAGEE LETTER 2005-39, announced the issuance of a revised loan application form (Fannie Mae Form 1003). The Uniform Residential Loan Application (URLA), is shared by Fannie Mae, Freddie Mac, the Department of Veterans Affairs, Rural Housing Services, and the Federal Housing Administration (FHA). Mortgagees may begin using the revised form immediately but must use the new URLA for all loan applications taken on or after July 1, 2006. There are no data changes to the form. Information and a copy of the form are available from the following website: http://hudclips.org/sub_nonhud /cgi/nph-brs.cgi?d=MLET&s1=0539$%5BNO%5D&SECT5=MLET&SEC T1=TXTHLB&l=50&u=../cgi/news doc_run.cgi&p=1&r=1&f=G 4 . . . . . . . . . . . . . . . . . . . .. Administrative Actions and Issues CEASE AND DESIST ORDERS Issued Argent Mortgage Company, LLC, Orange, CA (license 17408) Cease and Desist Order issued August 16, 2005 became final on September 6, 2005. Bottomline Mortgage, Inc., Monrovia, CA (license no. 13906) Cease and Desist Order issued September 1, 2005 became final on September 22, 2005. Brinkley, Mitchell III, Macon dba Riverside Brokers, Macon, GA (license no. 18014) Cease and Desist Order issued September 1, 2005 became final on September 30, 2005. Capital One Mortgage Corporation, Duluth, GA (license no. 14157) Cease and Desist Order issued August 3, 2005 became final on September 1, 2005. City First Mortgage, Inc. Alpharetta, GA (license no. 17101) Cease and Desist Order issued August 9, 2005 became final September 7, 2005. Destiny Capital Mortgage Bank, Inc, Irving, TX Cease and Desist Order issued August 8, 2005 became final September 8, 2005. Dickerson, Brenda dba Dickerson Mortgage, Macon, GA Cease and Desist Order issued August 19, 2005 became final September 19, 2005. Foundation Mortgage Corporation, Villa Rica, GA (license no. 6182) Cease and Desist Order issued August 18, 2005 became final on September 20, 2005. Help U Find A Mortgage, Hiawassee, GA Cease and Desist Order issued August 18, 2005 became final September 18, 2005. Jaa, Teal E. dba InStone Mortgage Services, East Point, GA (license 19439) Cease and Desist Order issued August 18, 2005 became final on September 20, 2005. Lighthouse Funding Corporation, Tustin, CA (license 13834) Cease and Desist Order issued September 1, 2005 became final on September 22, 2005. Lorimer, Andrew, Atlanta, GA Cease and Desist Order issued September 6, 2005 became final September 27, 2005. Matisse, Inc., Doraville, GA (license no. 19634) Cease and Desist Order issued August 26, 2005 became final September 27, 2005. Matrix Investment Corporation, Groton, CT (license no. 16681) - Cease and Desist Order issued September 1, 2005 became final September 22, 2005. New Horizon Mortgage Group, Inc. Snellville, GA (license no. 18469) Cease and Desist Order issued August 17, 2005 became final September 14, 2005. 5 . . . . . . . . . . . . . . . . . . .. Parker/Wilson, Mary, Powder Springs, GA Cease and Desist Order issued August 29, 2005 became final on September 20, 2005. Powell, Donna, Atlanta, GA Cease and Desist Order issued August 24, 2005 became final on September 14, 2005. Southwestern Mortgage Co., Atlanta, GA (license 19640) - Cease and Desist Order issued August 3, 2005 became final on September 1, 2005. Wall Street Brokers, Inc., Riverdale, GA (license no. 15098) Cease and Desist Order issued August 3, 2005 became final on September 1, 2005. White, Paulette, Stone Mountain, GA Cease and Desist Order issued August 18, 2005 became final on September 8, 2005. Williams, Glenda Cease and Desist Order issued September 6, 2005 became final September 27, 2005. _____________________________________________________________________________________ CEASE AND DESIST ORDERS Lifted None _____________________________________________________________________________________ FINAL CONSENT ORDERS Issued Boswell, Damon, Atlanta, GA Suwanee, GA - Consent Order issued September 8, 2005 became final on September 8, 2005. Morton, Candis, National City, CA Consent Order issued September 8, 2005 became final on September 8, 2005. Mortgage Partners, Inc., Atlanta, GA Consent Order issued September 8, 2005 became final on September 8, 2005. SUPERIOR COURT INJUNCTIONS None 6 . . . . . . . . . . . . . . . . . . .. 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 3 Licensees fined for Unapproved Branch 1 Licensee fined for failure to respond to Consumer Complaint FINE REASON 1 Licensee fined for failure to respond to Consumer Complaint 78 Licensees fined for failure to pay $6.50 Fees 3 Licensees fined for Unapproved Branch Manager ________________________________________________________________________________________________________ LICENSEES/REGISTRANTS REVOKED, EXPIRED, SURRENDERED, WITHDRAWN OR DENIED IN SEPTEMBER 2005 ID# NAME 6182 FOUNDATION MTG CORP 13834 LIGHTHOUSE FUNDING 14157 CAP ONE MTG CORP 15098 WALL ST BROKERS INC 16681 MATRIX INV CORP 17101 CITY FIRST MTG INC 18014 BRINKLEY, MITCHELL III 18469 NEW HORIZON MTG GRP 18635 MTG PARTNERS INC 18740 DIRECT FUNDING INC 19221 PRATHER, MARY ELLEN 19439 JAA, TEAL E 19634 MATISSE INC 19640 SOUTHWESTERN MTG CO TOTAL: 14 CODE BD LD BD BD LD BD BD BD LD BD BD BD BD BD REVOKED EXPIRED 09-20-2005 09-22-2005 09-01-2005 09-01-2005 09-22-2005 09-07-2005 09-30-2005 09-14-2005 09-20-2005 09-27-2005 09-01-2005 SURRENDERED WITHDRAWN 09-13-2005 09-08-2005 09-13-2005 09-16-2005 DENIED LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN SEPTEMBER 2005 ID# COMPANY NAME CITY 14303 Access Financial Group, Inc. * 20320 New Century Mtg Ventures, LLC 20551 A Plus Financial, Inc. 20574 William D. Runion, Jr. McDonough Irvine Duluth Duluth MB ORIGINAL ST CODE APPROVAL RENEWAL REINSTATED GA L CA L GA B GA B 02-05-1999 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 7 . . . . . . . . . . . . . . . . . . . LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN SEPTEMBER 2005 ID# COMPANY NAME CITY 20702 Monarch Mortgage, Inc. 20722 Lightning Funding, Inc. 20723 Eric Edward Luelf 20724 Lorinda Theresa Montgomery Asheville Massapequa Atlanta Lithonia 20725 Tanya Leigh Thompson Marietta 20726 David Dwayne Luelf Atlanta 20734 Rafael Jose Santiago Atlanta 6648 Smith Enterprises, Inc. Hogansville 13499 The Private Capital Group, LLC * Atlanta 15893 DeCarlos Perez Williams Stone Mountain 20550 Crosspoint Financial, Inc. Newport Beach 20552 North Point Funding, Inc. Hampton 20616 ADT Interactive, LLC San Francisco 20631 Freedom First Mtg & Finance Lawrenceville 20635 United Mortgage Brokerage, Inc. Plainview 20670 Avelo Mortgage, LLC Irving 20683 Regency Financial Services & 20706 IInternational HI ome Mtg, Inc. Laurelton Buford 20720 STJ Loan Solutions, Inc. Doraville 20721 Supreme Mortgage, LLC Farmington Hills 20758 Delissa Fontaine McAdoo Stockbridge 20760 DSD Mortgage LLC Norcross 20761 A Son Never Forgets, LLC Jonesboro 7502 Beazer Mortgage Corporation * Atlanta 20555 David Etute Virginia Beach 20570 J. P. Mortgage, LLC Rincon 20591 Charles Barry Nash Duluth 20615 US Mortgage Capital, Inc. Chatsworth 20622 The Prime Finl Group, Inc. (MI) Bingham Farms 20627 Argent Funding Corporation Orange 20641 Mortgage Funds Direct, LLC Roswell 20647 Family America Mtg Group, Inc. Coconut Grove 20674 Your Mortgage Source, LLC Norcross 20728 Barry M. Cobb Lithonia 20729 Terri Denise Josey Snellville 20743 SNGC, LLC Eureka 20744 SNBOA, LLC Eureka 20745 Del Norte Refi, LLC Eureka 20746 SN Commercial, LLC Eureka 20762 Blue Point Funding, LLC Norcross 20770 Meridias Capital, Inc. Henderson 20786 Lending Solutions, Inc. Duluth 20788 Eagle Lending Corporation Alpharetta 15698 Park West Mortgage, Inc. Atlanta 19939 Nationwide Realty & Mtg, Inc. Marietta MB ORIGINAL ST CODE APPROVAL RENEWAL REINSTATED NC B NY B GA B GA B 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 09-02-2005 GA B 09-02-2005 09-02-2005 GA B 09-02-2005 09-02-2005 GA B 09-02-2005 09-02-2005 GA B 09-24-1993 09-09-2005 09-09-2005 GA L 05-01-1998 09-09-2005 09-09-2005 GA B 07-28-2000 09-09-2005 09-09-2005 CA B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 CA B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 NY B 09-09-2005 09-09-2005 TX R 09-09-2005 09-09-2005 NY B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 MI B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 GA B 09-09-2005 09-09-2005 GA L 12-29-1995 09-16-2005 VA B 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 CA L 09-16-2005 09-16-2005 MI L 09-16-2005 09-16-2005 CA L 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 FL B 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 CA L 09-16-2005 09-16-2005 CA L 09-16-2005 09-16-2005 CA L 09-16-2005 09-16-2005 CA L 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 NV L 09-16-2005 09-16-2005 GA L 09-16-2005 09-16-2005 GA B 09-16-2005 09-16-2005 GA B 06-23-2000 09-23-2005 09-23-2005 GA B 01-14-2005 09-23-2005 09-23-2005 8 . . . . . . . . . . . . . . . . . . .. LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN SEPTEMBER 2005 ID# COMPANY NAME CITY 20445 The Loan Page, Inc. 20544 CBAC Funding LLC San Francisco Stamford 20593 Christine Lee Dubose Duluth 20618 Ryan David Hudson Gainesville 20638 ResMae Mortgage Corporation Brea 20640 Fast Track Funding Corp. Hicksville 20652 U S Direct Finance Lilburn 20704 Alliance Commercial Group, LLC Duluth 20708 Ameri Dream Mortgage, LLC Lilburn 20730 Joseph Vincent Rutowski, Sr. Duluth 20750 Home Mac Mtg Corporation Atlanta 20752 Millenium Mtg Solutions, LLC Snellville 20755 Integrity First Funding Group, 20765 HI & H Mortgage Services, Inc. Dunedin Richmond Hill 20766 By Design Financial Svc, Inc. Columbus 20768 Jeremy Daniel Pennington Rising Fawn 20785 First Capital Funding Group, LLC College Park 20787 Summit Mortgage Corp. Chicago 15290 ABC Mortgage Services, Inc. Augusta 19083 Community Resource Mtg, Inc. Columbia 20642 New York Mtg Funding, LLC New York 20705 Legacy One Mtg Group, Inc. Marietta 20739 Norvic Mortgage, LLC College Park 20753 Z Best Mtg & Realty Solutions, Smyrna 20795 LSH, Inc. Decatur TOTAL: 74 MB ORIGINAL ST CODE APPROVAL RENEWAL REINSTATED CA B CT L GA B GA B CA L NY B GA B GA B GA B GA B GA B GA B FL L GA B GA B GA B MD L IL L GA B SC R NY L GA B GA B GA B GA B 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 01-07-2000 12-05-2003 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-23-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 09-30-2005 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 . . . . . . . . . . . . . . . . . . ..