Banks, Lenders, and Mortgage Brokers

Banks, lenders, and mortgage brokers face some of the greatest financial risks in the entire real estate industry. In addition to financial losses, these professionals can also lose accreditation and professional licensing that allows them to lawfully engage in real estate transactions. By working with a real estate attorney to develop appropriate policies and procedures, these real estate professionals can reduce the risk of liability and professional discipline.

Banks are involved in many phases of the real estate industry. They can act as lenders or brokers. They can underwrite home loans themselves or sell their mortgages on the derivatives market. All of these activities are regulated by different laws and administrative regulations. It is important for banks and their employees to be compliant with all regulations that apply to each real estate activity the bank engages in. In order to do this, banks need to have clear written policies for employees to follow. They must institute appropriate training programs and supervision to ensure compliance. And they will also need legal advice specific to the unique situations that arise on a daily basis. A real estate attorney can help banks mitigate their liability throughout all phases of any real estate activity.

Banks are involved in many phases of the real estate industry. They can act as lenders or brokers. They can underwrite home loans themselves or sell their mortgages on the derivatives market. All of these activities are regulated by different laws and administrative regulations. It is important for banks and their employees to be compliant with all regulations that apply to each real estate activity the bank engages in. In order to do this, banks need to have clear written policies for employees to follow. They must institute appropriate training programs and supervision to ensure compliance. And they will also need legal advice specific to the unique situations that arise on a daily basis. A real estate attorney can help banks mitigate their liability throughout all phases of any real estate activity.

There was a time when real estate lending was done almost exclusively through banks. Now, the real estate lending industry has evolved into a complex business with myriad players engaging in many different phases of lending. Financial regulations have also had to develop and become more complex in response to these evolving procedures. It is important for any lender to be aware of the many laws and regulations that apply to all aspects of their business activities. An experienced real estate lawyer can help lenders with critical business procedures, including:

• Creation of compliant advertising and marketing policies

• Drafting compliant lending documents

• Legal opinions on specific compliance issues

• Creating underwriting guidelines and policies

• Initiation of default notices and foreclosure proceedings

In addition to these laws, there are lending regulations contained in the Code of Federal Regulations:

• Regulation B: Equal Credit Opportunity Act

• Regulation C: Home Mortgage Disclosure

• Regulation D: Alternative Mortgage Parity

• Regulation E: Electronic Fund Transfers

• Regulation F: Fair Debt Collection Practices Act

• Regulation G: S.A.F.E. Mortgage Licensing Act – Federal Registration of Residential Mortgage Loan Originators

• Regulation H: S.A.F.E. Mortgage Licensing Act – State Compliance and Bureau Registration System •

Regulation I: Disclosure Requirements for Depository Institutions Lacking Federal Deposit Insurance

• Regulation J: Land Registration

• Regulation K: Purchasers’ Revocation Rights, Sales Practices and Standards

• Regulation L: Special Rules of Practice • Regulation M: Consumer Leasing

• Regulation N: Mortgage Acts and Practices-Advertising

• Regulation O: Mortgage Assistance Relief Services

• Regulation P: Privacy of Consumer Financial Information

• Regulation V: Fair Credit Reporting

• Regulation X: Real Estate Settlement Procedures Act

• Regulation Z: Truth in Lending

• Regulation DD: Truth in Savings

The mortgage industry regulations put in place after 2008 also affect mortgage brokers. Every aspect of the mortgage business is subject to state and federal regulations. Advertising must be compliant, underwriting guidelines can be subject to legal minimums, disclosures are required before and at closing, and other laws apply throughout the process of brokering loans.

There was a time when real estate lending was done almost exclusively through banks. Now, the real estate lending industry has evolved into a complex business with myriad players engaging in many different phases of lending. Financial regulations have also had to develop and become more complex in response to these evolving procedures. It is important for any lender to be aware of the many laws and regulations that apply to all aspects of their business activities. An experienced real estate lawyer can help lenders with critical business procedures, including:

• Creation of compliant advertising and marketing policies

• Drafting compliant lending documents

• Legal opinions on specific compliance issues

• Creating underwriting guidelines and policies

• Initiation of default notices and foreclosure proceedings

Mortgage brokers handle a lot of sensitive information. If the broker does not take reasonable precautions to protect this data, he or she can be liable for costs the client incurs as a result of the breach. (For example, fraudulent credit card charges or credit monitoring.) Brokers should work with an attorney to create and implement procedures that protect sensitive client data.

Mortgage brokers can deal with residential or commercial property loans. They might work with vacant land or industrial properties. Their clients can be individuals, small businesses, or large corporations. They might work with secured investments (such as mortgage derivatives). Different regulations can apply to each of these situations. It is important for mortgage brokers to understand exactly what regulations apply to each one of their transactions and ensure compliance from all employees at all stages of the transaction.