Georgia Department of Banking & Finance NON-DEPOSITORY FINANCIAL INSTITUTIONS Monthly Summary of Mortgage Activities For the Period Ending December 2006 INSIDE THIS ISSUE Forclosures Double 1 New CHARM Booklet 1 Hiring of Felons 2 EXAMINATION ISSUES Loan Officer's Assistant 2 Loan File Documentation 3 OTHER ITEMS & ISSUES $6.50 Loan Fees 3 FY 2008 Renewals 3 Application Issues & Fee 4/5 Payments On-line Fine Payments Continuing Education Loan Limits/Holidays Administrative Actions 6/7 Licenses Revoked, Expired...Denied 8 Licenses Approved & Reinstated 9 2990 Brandywine Rd. Suite 200 Atlanta, GA 30341 Phone: 770.986.1269 NEWS ITEMS Forclosures Double American Banker December 20, 2006 The foreclosure rate for subprime mortgages has doubled, to 20%, since 2002, according to a study released Tuesday by the Center for Responsible Lending. The study estimates that one in five subprime mortgages originated in the past two years will end in foreclosure. The group, which projects that these foreclosures will affect 2.2 million homeowners at a cost of $164 billion, said the rate of foreclosures will continue to climb as the housing market cools. The study said "risky" loans like hybrid alternative mortgages - particularly "2/28s" that feature semiannual rate adjustments after a two-year fixed-rate period - increase the chance of foreclosure. But inadequate oversight, loose underwriting, thirdparty originations, and predatory lending also fuel the subprime foreclosure rate. The consumer group said lenders need to be held more accountable to stave off foreclosure and should "confirm that the loans they offer make economic sense for a given borrower's circumstance." Revised CHARM Booklet revised the CHARM booklet to include discussions about "interest-only" and "payment option" mortgages. The revised booklet describes how these loans typically work, showing how much (and how often) monthly payments could increase, and how the loan balance could increase if minimum monthly payments are made. A mortgage shopping worksheet is included to help consumers compare the features of different products, and also a glossary to help them understand some of the terminology. The Federal Reserve Board and the Office of Thrift Supervision announced on 12/26/2006 the availability of a revised Consumer Handbook on Adjustable Rate Mortgages (the CHARM booklet), which provides information to consumers about the features and risks of such loans. In recognition of the growing use of nontraditional mortgage products that allow borrowers to defer payment of principal and sometimes interest, the agencies have substantially Under the Board's Regulation Z (which implements the Truth in Lending Act), creditors must provide a copy of the CHARM booklet, or a suitable substitute, to consumers with every application for an adjustable rate mortgage loan. The Board indicated that creditors may begin immediately using the revised CHARM booklet, or may continue using their existing stock of CHARM booklets until October 1, 2007. Up to 100 copies of the brochure are (Continued on page 2) Continued on Page 2 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 2 CHARM (Continued from page 1) available free of charge from: Publications, Mail Stop 127, Federal Reserve Board, 20th and C Streets, N.W., Washington, DC 20551; 202-452-3245 In addition, you may also download a copy in PDF format from the Department's website at http://www.ganet.org/dbf/ mortgage_forms.html under the link for OTHER INFORMATION. Hiring of Felons As most of you are aware, O.C.G.A. 7-1-1004(d) provides in pertinent part that "The Department may not issue or may revoke a license if it finds that the applicant or licensee or any person who is a director, officer, partner, agent, employee, or ultimate equitable owner of 10 percent or more of the applicant or license.....has been convicted of a felony involving moral turpitude..." In short, if an applicant employs a felon, then the Department may not issue a license to the applicant, and may revoke an existing license. (There are circumstances, such as a pardon, which "cure" a conviction, permitting a person to work in the industry). It has been argued that a licensee's employees who work for the licensee in another state are not subject to this provision if they do not work on Georgia loans or handle the files of Georgia consum- ers, as these are not "covered employees" as defined in GRMA O.C.G.A. 7-1-1004(f). The purpose of making a distinction regarding "covered employees" and the requirement by licensees to run the GCIC background checks on those employees is to specify that the applicant or licensee has the primary responsibility for conducting background checks on those covered employees, while the Department is responsible for conducting background checks on principals of the company as denoted in an application or subsequent change in management for the company. The Code also states that the Department shall be entitled to review the applicant's or licensee's files to determine whether the required background checks have been run and whether all covered employees are qualified. So, to state that an out-of-state employee who may or may not work on Georgia residential mortgage loans is not covered by the provisions regarding the prohibition of the employment of a felon, as the person is not a "covered employee", is incorrect. Employment of a an outof-state employee who is a felon is a ground for the denial of a license application or revocation of an existing license. The Department may conduct such checks on "covered employees" (those who work in Georgia) but the primary responsibility for those checks, and reviewing the conviction status of any employee anywhere, rests with the applicant or licensee. EXAMINATION ISSUES Loan Officer's Assistant In the course of performing examinations of licensees, it has been found that some loan officers have employed their own assistants, or used uncompensated "helpers". This practice is not allowed unless the loan officer is individually licensed, and even then with some caveats. All individuals who perform any mortgage activity on loans that are regulated under the Georgia Residential Mortgage Act (GRMA) must be exclusive, supervised, W2 employees of the licensee, or must have their own individual license. Rule 80-11-4-.03(2) of the Department of Banking and Finance states, in part, that the exemption from licensing provided pursuant to O.C.G.A. 7-1-1001(11) to an employee of a licensee applies only to natural persons who meet all of the following criteria: an employee must be employed by just one licensee or exemptee and work exclusively for that person; an employee may not solicit, process, or place loans for anyone else while claiming (Continued on page 3) UPCOMING SPEAKING ENGAGEMENTS Director for Mortgage Supervision Sandra Sheley will be speaking to the Metro Atlanta Relocation Council, Cobb Galleria Center, February 8, 2007, 9:30 a.m. on mortgage fraud. Useful Links MORTGAGE FORMS: CODE, REGULATIONS & APPLICATIONS HTTP://WWW.STATE.GA.US/ MORTGAGE_FORMS.HTML UPDATING LICENSE INFORMATION HTTP://WWW.STATE.GA.US/ DBF/MORTGAGE_FORMS.HTM L#ONLINE PRESS RELEASES HTTP://WWW.GANET.ORG/D BF/BULLETINS.HTML Continued on Page 3 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 3 LO Assistant--(Continued from page 2) the exemption; an employee's procedures and activities must be supervised by the licensee on a daily basis and the licensee is responsible for the actions of such employees; and, an employee may not be paid or compensated for performance of mortgage activity as an independent contractor or on a 1099 basis. Should a loan officer desire an assistant, that assistant must be properly employed by the licensee as noted previously, and go through the proper channels of hiring. Management must make it clear to their employees that use of anyone other than an employee of the company for any mortgage activity is a violation of GRMA for dealing with an unlicensed entity. Licensees are responsible for the actions of their employees. Any licensee found in violation will be subject to fines and revocation. Loan File Documentation appraisal in the loan file if the appraisal was ordered by the licensee. Rule 80-11-3-.01(12) of the Department states, in part, that any person who is required to be licensed under Article 13 as a mortgage broker or any lender acting as a broker who fails to maintain a loan file for each mortgage loan transaction as required by Rule 80-11-2.04 or who fails to have all required documents in such file shall be subject to a fine of $1,000 per file not maintained or not accessible, or per file not containing required documentation. OTHER ITEMS & ISSUES $6.50 Per Loan Fee Due $6.50 "per loan" fees for the second half of 2006 (July 1 through December 31, 2006) are now due. Payments must be received by the due date of March 1, 2007. Failure to pay fees owed by the due date can result in a fine of $1,000. FY 2008 Renewals The FY2008 on-line license renewal application system will be available beginning mid-February, 2007. ALL licensees MUST complete their application ON-LINE. Licensees should use their USER ID and PASSWORD which will be mailed with the renewal notice in February. Please note the following: PAYMENT: May be made by ACH or credit card ONLY. PASSWORDS: Are provided in your renewal notice. Contact the Department if you misplace this information. INCOMPLETE or "INFORMATION REQUIRED" APPLICATIONS: Should any additional information be required for any renewal, the licensee will be contacted by email or fax ONLY. Renewals requiring additional information cannot be approved until such information is received and approved. All fines and fees must be paid. Licensees are reminded that the Mortgage Division Rules of August 21, 2006 include two changes that affect documentation required in the loan file. The Department of Banking and Finance Rule 80-11-2.04(2)(a) changed to include the requirement that all loan files shall include a copy of the signed mortgage loan application if received by the licensee, and (2)(c) of that same rule was expanded to require inclusion of the order for the Please make these payments via ACH or credit card on line at the following website: https://bkgfin.dbf.state.ga.us/ GRMAFee.html Payments may also be made by check. Please complete the form on-line, print a copy and send it in with your check payment. However, please note that the major credit cards, Visa, MasterCard, Discover, and American Express, are now accepted for payment. LATE FILINGS: If you have attempted access but been unable to utilize the on-line system, please contact the Department for instructions to complete your application. HARD COPY FORMS ARE NOT AVAILABLE ON THE INTERNET. Failure to request assistance in a timely manner will NOT prevent the assessment of the late fee if the deadline has passed. BROKERS ONLY - CONTINUING EDUCATION REQUIREMENT The continuing education reporting Continued on Page 4 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 4 Renewals- (Continued from page 3) requirement is effective with this FY2008 licensing period. See the article on this page concerning CEs. Application Forms & Fees/Payments FORMS: Licensees are reminded that only current application forms should be used when applying for branches, changes in management, changes in control, name registrations, changes in existing branch managers, etc. These contain the latest requirements for the applicant based on changes in law, regulation or policy. Failure to use the most recent forms will result in delays in processing your application. The latest revisions are available on the internet at: https://bkgfin.dbf.state.ga.us/ mortgagedocs/ FEES/PAYMENTS: Payments for applications should be made by certified check or money order ONLY. Applications submitted with personal or business checks, including the separate payment required for fingerprint cards, will be returned to the applicant for resubmission with the proper form of payment. On-Line Fine Payments BROKERS Continuing Education In the event that a licensee has had a fine imposed, it is important to remember that these fines are due and payable within 30 days of assessment, as noted under the GRMA. However, often fines remain unpaid until it is time to renew. All fines must be paid by a licensee, with only certain exceptions pertaining to administrative actions, in order to renew a license. Please remember that the requirement for CE hours will begin with the FY 2008 licensing period (April 1, 2007 renewal). Licensees have had from January 1, 2006 through April 1, 2007 to obtain CE credits for this initial CE period. Beginning with the FY 2009 license renewal and going forward, April 1 through March 31 will be the period each year to obtain CE hours. To facilitate payments, the Department has a new website that is available to accept payments. That site is available from the Forms and Applications page for Mortgage or from the link below: https://bkgfin.dbf.state.ga.us/ mortgagedocs/MtgFinePay.html Licensees may now pay by Visa, Mastercard, Discover, or American Express. There is also an option to print a receipt page to submit with a check payment. The receipt will list all fines being paid. The on-line renewal payments function will also provide for payment of any outstanding fines. Payments at renewal are by credit card or ACH drafts only--no checks are accepted for renewal fees and fines. Licensees who fail to obtain credit by the April 1 deadline of any year have until June 30, 2007 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 not obtained in the make-up period, the renewal will not be approved. Note that there was a regulation change in 2006 which states that any person licensed in any year after April 1 must have the required 12 hours of CE credit in order to renew their license. So, if a person is licensed after April 1 but prior to December 31 in any given year, they must obtain CE hours in order to renew in the next year, and in order to avoid a fine must obtain those credits prior to March 31 of the renewal year. Brokers will be required to report their continuing education hours and information on-line as a part of the renewal application for their license. Hours MUST total to 12 in order to complete the renewal. Sponsoring Organization, Course Name/Description, Date(s) of Training, Hours of Credit, Instructor, and Certificate Number assigned are required for renewal. Continued on Page 5 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 5 2007 CONFORMING LOAN RATES 2007 Single-Family Mortgage Loan Limits Effective January 1, 2007: First mortgages One-family loans: $417,000 Two-family loans: $533,850 Three-family loans: $645,300 Four-family loans: $801,950 Note: One- to four- family mortgages in Alaska, Hawaii, Guam, and the U.S. Virgin Islands are 50 percent higher than the limits for the rest of the country. Second mortgages $208,500 In Alaska, Hawaii, Guam, and the U.S. Virgin Islands: $312,750 Last Revised: December 01, 2006--http://www.fanniemae.com/aboutfm/loanlimits.jhtml 2007 State Holidays The following is a list of State Holidays when the Capitol and all State agencies will be closed in 2007. HOLIDAY New Year's Day Martin Luther King Jr.'s Birthday Confederate Memorial Day Memorial Day Independence Day Labor Day Columbus Day Veterans' Day Thanksgiving Day Robert E. Lee's Birthday Christmas Day Washington's Birthday DATE / OBSERVANCE DATE Monday, January 1 Monday, January 15 Monday, April 23 Monday, May 28 Wednesday, July 4 Monday, September 3 Monday, October 8 November 11 will be observed on Monday, November 12 Thursday, November 22 January 19 ~ will be observed on Friday, November 23 Tuesday, December 25 February 19 ~ will be observed on Monday, December 24 Continued on Page 6 Administrative Actions For the Period Ending December 2006 CEASE AND DESIST ORDERS--ISSUED Page 6 A & L Mortgage, Inc, Cochran, GA (license no. 17415) Cease and Desist Order issued November 17, 2006 became final on December 17, 2006. Ero, Bosedo, Lawrenceville, GA Cease and Desist Order issued November 14, 2006 became final on December 5, 2006. Lexim Mortgage, LLC, Birmingham, AL (license no. 20035) Cease and Desist Order issued November 21, 2006 became final December 21, 2006. NLL Capital, LLC dba The Lynn Group Mortgage Company, Wauwatosa, WI (license no. 19197) Cease and Desist Order issued November 14, 2006 became final December 15, 2006. Obayemi, Christina, Sugar Hill, GA Cease and Desist Order issued November 14, 2006 became final on December 5, 2006. Ridgeway, Dianne, Decatur, GA Cease and Desist Order issued November 21, 2006 became final on December 28, 2006. Rush, Deirdre Anise dba Processing Priority aka Spread Processing Priority, Atlanta, GA Cease and Desist Order issued October 31, 2006 became final December 1, 2006. Treasury Financial Group, Buffalo, NY Cease and Desist Order issued November 3, 2006 became final on December 4, 2006. Continued on Page 7 Administrative Actions For the Period Ending December 2006 Page 7 CEASE AND DESIST ORDERS--LIFTED OR RESCINDED American Castle Development and Sales, Inc., Douglas, GA (license no. 19627) Cease and Desist Order issued August 16, 2006 was rescinded on December 22, 2006. Madson Mortgage Company, Douglas, GA (license no. 12845) Cease and Desist Order issued September 25, 2006 was rescinded on December 1, 2006. FINAL CONSENT ORDERS --ISSUED None SUPERIOR COURT INJUNCTIONS None FINE PUBLICATION FINE REASON 10 Licensees fined for Advertising Violations 4 Licensees fined for Unapproved Branch 4 Licensees fined for Background Checks Violation 2 Licensees fined for Unapproved Branch Manager 7 Licensees fined for Books & Records 1 Licensee fined forGaFLA Violation 2 Licensees fined for Employment of a Felon 3 Licensees fined Loan Files not properly maintained 1 Licensee fined for Violation of Cease & Desist Order 5 Licensees fined for Prohibited Acts 1 Licensees fined for Unapproved Change in Management 2 Licensees fined for Miscellaneous/Other 2 Licensees fined for doing business w/ unlicensed Continued on Page 8 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 8 LICENSEES/REGISTRANTS REVOKED, EXPIRED, SURRENDERED, WITHDRAWN OR DENIED ID# NAME 5919 6342 12347 13872 15528 16273 17415 18074 18271 18851 19095 19113 19150 19197 19735 INFINITY MTG CORP DIVERSIFIED HM MTG INC LEAHY & WALKER FINL SVCS AMER MTG EXPRESS FINL 1ST GA MTG FUNDING INC OAK STREET MTG LLC A&L MTG INC GREEN OAK MTG LLC ASSET DIRECT MTG LLC REGAL MTG SVCS INC DREAM HOMES FINL INC 1ST SE MTG INC RFA LLC WI NII CAP LLC 1ST MIDTOWN MTG INC IN DECEMBER 2006 CODE REVOKED EXPIRED LD LD 07-01-2006 LD LD BD LD BD 12-17-2006 BD LD BD BD BD LD BD 12-15-2006 BD 12-08-2006 SURRENDERED WITHDRAWN DENIED 12-29-2006 12-18-2006 12-01-2006 12-06-2006 12-19-2006 12-12-2006 12-21-2006 12-18-2006 12-01-2006 12-05-2006 12-04-2006 20025 SAXON FUNDING MNGMT LD 12-19-2006 20035 LEXIM MTG LLC LD 20447 CROSSWALK MTG CO BD 20871 HOMEKEY LENDING INC BD 22005 AMERIQUEST ASSET MNGMT LD 12-21-2006 12-06-2006 12-06-2006 12-21-2006 TOTAL: 20 Continued on Page 9 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 9 ID# 21855 21863 21958 21970 21981 22010 22011 22020 22032 22043 22045 22049 22050 22052 22064 22019 22063 22073 22002 22021 22022 22040 22048 22069 22083 22085 22086 22096 5645 21975 22013 22067 22075 22087 22097 22047 22072 LICENSEES/REGISTRANTS APPROVED OR REINSTATED IN DECEMBER 2006 COMPANY NAME James R. McRee CITY Tucson MB ST CODE AZ B ORIGINAL APPROVAL 12-01-2006 RENEWAL 12-01-2006 Cresstar Corporation (Nevada) Alpharetta GA B 12-01-2006 12-01-2006 Capital City Mortgage Incorporated (California) American Residential Finance Corporation Colony Mortgage Lenders, Inc. Costa Mesa Baltimore Glendale CA B MD B CA L 12-01-2006 12-01-2006 12-01-2006 12-01-2006 12-01-2006 12-01-2006 Neighborhood Funding, Inc. Tampa FL L 12-01-2006 12-01-2006 Allied Capital Mortgage Company Jacksonville FL B 12-01-2006 12-01-2006 Haven Home Finance, Inc. Norcross GA B 12-01-2006 12-01-2006 B&G Financial Mortgage, LLC Woodstock GA B 12-01-2006 12-01-2006 Wellington Capital Mortgage, LP Columbus GA L 12-01-2006 12-01-2006 Sentinel Home Mortgage, LP Finksburg MD L 12-01-2006 12-01-2006 Nations Funding Source, Inc. Fort Lauderdale FL B 12-01-2006 12-01-2006 On Q Financial, Inc. Scottsdale AZ L 12-01-2006 12-01-2006 Mark DeWitt Savannah GA B 12-01-2006 12-01-2006 Fidelity Mutual Mortgage, Inc. North Palm Beach FL L 12-01-2006 12-01-2006 Smith-Myers Corporation Upper Marlboro MD L 12-08-2006 12-08-2006 Allsource Mortgage, LLC McDonough GA B 12-08-2006 12-08-2006 Mortgagepointer.com, Inc. San Mateo CA L 12-08-2006 12-08-2006 Mortgages for America, Inc. Coral Springs FL B 12-15-2006 12-15-2006 CapFirst Mortgage, LLC Richmond VA B 12-15-2006 12-15-2006 FBM, LLC Garden City NY L 12-15-2006 12-15-2006 Primrose Financial Corporation Lithonia GA B 12-15-2006 12-15-2006 H&H Mortgages & Investments, Inc. Assent Capital, LLC Plantation Irvine FL B CA B 12-15-2006 12-15-2006 12-15-2006 12-15-2006 Advantum Mortgage Network, Inc. Fort Lauderdale FL L 12-15-2006 12-15-2006 Investment International, Inc. Duluth GA B 12-15-2006 12-15-2006 Southern Residential Mortgage Services, LLC Forem Capital, Inc. Buford Marietta GA B GA L 12-15-2006 12-15-2006 12-15-2006 12-15-2006 American Residential Lending Corporation* Smyrna GA L 06-04-1993 12-22-2006 Worldwide Home Loans, Inc. Los Angeles CA B 12-22-2006 12-22-2006 Van Dyk Mortgage Corporation Grand Rapids MI L 12-22-2006 12-22-2006 Corporative Mortgage, Inc. Norcross GA B 12-22-2006 12-22-2006 Lisa A. Nesmith Buford GA B 12-22-2006 12-22-2006 Deocap Corporation San Francisco CA B 12-22-2006 12-22-2006 CT Mortgage Group, Inc. Cumming GA B 12-22-2006 12-22-2006 State to State Mortgage, Inc. Nashville GA B 12-29-2006 12-29-2006 First Reliance Home Loans (Corp) Tampa FL B 12-29-2006 12-29-2006 REINSTAT ED Continued on Page 10 Monthly Summary of Mortgage Activities For the Period Ending December 2006 Page 10 ID# 22090 22113 12854 12678 20995 18813 19627 COMPANY NAME Community Mortgage Corporation TLP Funding Corporation Madson Mortgage Company Sahara Mortgage Corporation Home Mortgage Financial Corp. Joseph P. Morgan American Castle Development and Sales, Inc. CITY Brockton Calabasas Douglas Las Vegas Marietta Douglasville Douglas TOTAL: 44 MB ST CODE MA L CA L GA B NV L GA L GA B GA B ORIGINAL APPROVAL 12-29-2006 12-29-2006 09-12-1997 07-11-1997 12-16-2005 11-07-2003 12-03-2004 RENEWAL 12-29-2006 12-29-2006 12-01-2006 12-08-2006 12-08-2006 12-15-2006 12-22-2006 REINSTAT ED 12-01-2006 12-08-2006 12-08-2006 12-15-2006 12-22-2006 * Upgrade Broker to Lender + Downgrade Lender to Broker # Upgrade Lender to Registrant Downgrade Registrant to Lender MB CODES B = BROKER L = LENDER R = REGISTRANT To receive this publication: This publication is e-mailed monthly to interested parties and is also available from the Department's website at: http://www.state.ga.us/dbf/bulletins.html If you would like to be added to our distribution list, please send an email to: dbfmort@dbf.state.ga.us. Please include your name, company, and phone number. To unsubscribe, please notify the Department at the same e-mail address noted.