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Mortgage Call Reports and annual Financial Condition Reports

Important Deadlines for NMLS reports:  Call reports are due 45 days after the last day of the quarter.  Best practice is to submit these reports as soon as possible.  If MSource will be handling your Quarterly Call Reports, we must have them at minimum, 2 weeks prior to the deadline.

Note:  We’re starting to see states implementing daily fines if reports are submitted after the due date.

If you are newly licensed, whether or not a call report is due will be based upon the date of your license approval (in the first state you were licensed in). Example:  If your NMLS record shows you were officially approved on 3/31/21, you would be required to file a call report (whether or not you had any loan applications).

 

 

Deadlines for Submitting the Mortgage Call Report

Residential Mortgage Loan Activity (MCRs) – due quarterly, within 45 days after every calendar quarter:

  • Quarter 1 data (January 1-March 31) is due May 15
  • Quarter 2 data (April 1- June 30) is due August 14
  • Quarter 3 data (July 1-September 30) is due November 14
  • Quarter 4 data (October 1-December 31) is due February 14

Financial Condition – due annually, within 90 days of company’s Fiscal Year End. (If your year end is 12/31, the deadline is Marc 31st).

Many states also require you to submit a quarterly or annual report directly to them (in addition to NMLS filings).  It is imperative that you know if a separate report is due.  Examples>  CA-DFPI requires a separate annual report due on March 15th.  NC & SC both require an annual report due March 15th.  This list is NOT inclusive.  The state will start sending out reminder notices every month so please read all emails sent by your state regulator.  Failure to meet these deadlines will, in many cases, subject you to fines and/or penalties.

To reitterate an earlier post: to continue to operate your business, all companies must file an annual renewal through Secrestry State.  If filings are not renewed each year, you could jeopardize your ability to apply for licensing in another state. (you must be able to prove that your company is in good standing with the State Corporations Division.

 

Virtual Webinar & Sales Symposium

The Michigan Mortgage Lenders Association is hosting an MGIC webinar “Time is Money!  What’s stealing yours?”  The cost of this webinar is $25 for non-members and is open to everyone. (Need not be a Michigan resident or an MMLA member).  For more information, go to:  https://www.mmla.net/events/time-is-money?lsid=0&msid=117087

The MMLA is also holding their virtual Sales Symposium on April 15th.  Keynote speakers will be Josh Pitts/Shred Media and Kristin Messerli/NextGen.   This event is also open to everyone at the low cost of $49.00.  If interested in this event?  https://www.mmla.net/events/sales-symposium?lsid=0&msid=117087

Amendments to ATR/QM Rule

There are two separate and distinct amendments to the Regulation Z ability to repay (“ATR”) / qualified mortgage (“QM”) requirements. Both rules become effective for applications taken on or after March 1, 2021, but the new General QM requirements need not be used by creditors until applications received on or after July 1, 2021. The current “Temporary Patch QM” will expire on the mandatory effective date of the new General QM requirements (applications received on or after July 1, 2021). Thus, between March 1, 2021 and July 1, 2021, creditors may use either the current Temporary Patch QM or the new General QM requirements as further detailed below.

1) Revised General Qualified Mortgage Requirements

  • Eliminates the requirement that a borrower’s debt-to-income (“DTI”) ratio cannot exceed 43% and eliminates Appendix Q.
  • Replaces the eliminated DTI requirement with new pricing requirements:
    • For first lien loans, a loan would still be a Safe Harbor QM (despite the borrower’s DTI ratio) if the APR is less than 1.5 percentage points above the APOR at the time the interest rate is set.
    • For second lien loans, a loan would still be a Safe Harbor QM (despite the borrower’s DTI ratio) if the APR is less than 3.5 percentage points above the APOR at the time the interest rate is set.
    • For first lien loans, a loan will still be a Rebuttable Presumption QM (despite the borrower’s DTI ratio) if the APR is less than 2.25 percentage points above the APOR at the time the interest rate is set.
    • A first lien loan with a APR exceeding the APOR by 2.25 percentage points or more cannot meet the definition of a General QM (with the exception of a loan with a small loan amount which has higher caps as set forth below).
    • Provides higher pricing thresholds for loans with smaller loan amounts, for certain manufactured housing loans and for subordinate-lien transactions.
    • For adjustable rate mortgages, creditors are required to calculate the APR based on the highest rate of interest that can apply during the five (5) years after the first payment date. This differs from the APR calculation currently used for disclosure purposes.
    • Effectively loans which exceed a certain APR will not fit within the QM requirements.
  • All other current requirements remain unchanged (no risky loan features, terms do not exceed 30 years, 3% max points and fees, verify ATR with income, assets, debts, DTI and liabilities, etc.).
  • The rule details the manner in which lenders should consider and verify the income, assets, debts, DTI ratio, residual income and liabilities of applicants. The new General QM rule provides flexibility to creditors to take into account additional factors that are relevant in determining a consumer’s ability to repay.
  • The rule includes a list of specific verification standards that creditors may use to meet the revised General QM definition’s verify requirement. If a creditor satisfies the verification standards in the then current Freddie, Fannie, FHA, VA and the USDA manuals, the creditor has a safe harbor for compliance with the verification requirement in the revised General QM definition. A creditor need only comply with requirements in the manuals for creditors to verify income, assets, debt obligations, alimony and child support using specified reasonably reliable third party documents or to include or exclude particular inflows, property, and obligations as income, assets, debt obligations, alimony, and child support.

2) New Seasoned Qualified Mortgage (only for loan applications taken on or after March 1, 2021)

  • Permits a loan to acquire QM status and receive Safe Harbor status following its origination if it meets with the precise requirements (among the following):
    • Loan must be held in portfolio or transferred only once in the 36-month period following the first payment date (“Seasoning Period”).
    • Loan may NOT be securitized during the Seasoning Period.
    • Loan can be a higher priced mortgage loan (“HPML”).
    • Loan may not be a HOEPA high-cost loan.
    • Loan may not be down 30 more than twice and may not be down 60 at all during the Seasoning Period.
    • Loan must be a fixed rate first lien loan.
    • In connection with the loan, lenders must consider the income, assets, debts, DTI, residual income and liabilities of applicants, including using the underwriting guidelines of Freddie, Fannie, FHA, VA and the USDA for verification standards (see above).
    • All other current requirements remain unchanged (no risky loan features, terms do not exceed 30 years, 3% max points and fees).
  • The Seasoned QM Rule contains a provision whereby the Seasoning Period is effectively suspended due to a financial hardship caused by a disaster or pandemic, such as COVID-19. There needs to be a presidentially declared emergency, major disaster or pandemic. Many other requirements apply to this exception.

Please note on January 20, 2021, President Biden’s Chief of Staff issued a memorandum to the heads of executive departments and agencies setting forth terms related to a regulatory freeze.  The regulatory freeze requires Acting Director of the CFPB to consider whether to postpone the effective dates of the above rules until March 22, 2021 in order to engage in a review of any questions of fact, law, and policy raised by the rules.

Annual Filing – State Corporations Division

The NMLS renewal season is behind us but each business entity registered or filed with the Office of the Secretary of State is required to file an annual report.  This has nothing to do with NMLS and your mortgage company license.

Each business entity registered or filed with any Office of Secretary of State is required to file an annual report.  This includes both domestic and foreign entities.  Late filings will be charged late fees.

It is extremely important that each entity verify its information prior to filing an annual registration. Corrections can only be made by filing another annual registration or an amended annual registration and paying the appropriate filing fee. Additionally, a person who signs a document he or she knows is false in any material respect with the intent that the document be delivered to the Secretary of State for filing may be guilty of a misdemeanor.

Note:  If you receive an email from a Resident Agent company indicating they will file your annual report on your behalf, think about it carefully!  This is a revenue generator for the Resident Agent company.  The fee you will pay them will most likely be ten times what the cost is to file it yourself and it should only take you about 5 minutes to file it.