1. ©2011 Cengage Learning CALIFORNIA MORTGAGE LOAN BROKERING AND LENDING 4 th edition By Dr. D. Grogan, MBA, GRI, CRS, CPM M. C. “Buzz” Chambers, RECI, GRI

2. ©2011 Cengage Learning Contents PART 1 SCOPE OF THE BUSINESS Ch 1: Scope of the Loan Brokerage 1.1 Overview of the Book 1.2 Historic perspective  In the beginning  Early progress  Unstable market  Today 1.3 Basic information  Hard money versus seller carry-back money  Careers in mortgage loan brokering  Loan originators 1.4 Licenses and Professional organizations  Legal and licensing requirements  Professional organizations Ch 2: Sources of Business 2.1 Getting started 2.2 Marketing 2.3 Advertising 2.4 Other Sources of Business  Referrals from Realtors  Referrals from Other sources  Referrals from the Public  Testimonial 2.5 Types of Media  Affiliation  Billboards, benches, Buses  Direct advertising  Direct main advertising  Internet  Magazines  News Releases  Newspapers

3. ©2011 Cengage Learning Contents 2.5 Types of Media (continued)  Office supplies  Promotional materials  Radio  Realtors®  Telemarketing  Television  Trade Shows  N etworking group 2.6 Advertising regulations  Licensee advertising  License number on business cards  Advance Fee Advertising  Regulation Z Advertising Disclosures  Fair Housing Terminology PART 2 Loans Ch 3: Loans Conventional 3.1 How a mortgage broker selects a loan 3.2 Conventional loan features  Loan amounts  Eligibility requirements for high-balance loans  Loan to value ratio  Loan to value payment  Fixed rate loan  Bi-Weekly fixed rate loans  The 10- or 15-year mortgage  Adjustable rate mortgages  Index  Treasury bill rate  LIBOR  The two step mortgage  Price level-adjusted mortgage  Reverse annuity mortgage

4. ©2011 Cengage Learning Contents 3.2 Conventional loan features (cont.)  FNMA & FHLMC loan programs  Condominium loans 3.3 Mortgage insurance 3.4 California loan programs  California housing finance agency  Southern California Home Financing Authority  Hope for Ownership of Single Family Homes  Home Investment and Affordable Housing  Public Employees Retirement System  State Teacher Retirement System  Home Ownership Program  My Community mortgage loan  Energy Efficient Mortgage  Other loan programs 3.5 Refinance, Equity and Junior or Sub-Prime loans  Refinance loan  Junior liens  Home equity line of credit  Loans: Sub-Prime borrowers  Defaults Ch 4: Loans: Government 4.1 FHA loans  Statutory loan amount limits  FHA 202  FHA 203B and FHA 203I  FHA 302 K  FHA 207

5. ©2011 Cengage Learning Contents 4.1 FHA loans (cont.)  FHA 221 d 2  FHA 221 d 3  FHA 221 d 4  FHA 223 e  FHA 223 f  FHA 234  FHA 237  FHA 238  FHA 244  FHA 245  FHA 251 (ARM)  FHA 255 (HECM)  FHA Title I  FHA Energy Efficient Mortgage (EEM) 4.2 FHA loan considerations  FHA versus first-time-home buyers (FTHB)  FHA MIP  FHA Streamline loan (rate reduction)  Other FHA features and loan programs  Secondary residence  FHA housing loan programs 4.3 Veterans loans  Veterans regulated closing costs  DVA loans with second trust deeds  DVA refinances  Rate reduction refinance  Standard refinance  DVA jumbo loan  Veteran’s EEM (DVA EEM)  Sellers’ concessions  FHA or DVA loan approval

6. ©2011 Cengage Learning Contents 4.4 Credit Alert Interactive Voice Response System (CAIVRS) 4.5 California Veteran (Cal Vet) 4.6 SBA Ch 5: Loans Financial Disclosure and Other Real Estate Disclosures  Real Estate Settlement Procedures Act (RESPA)  Regulation X (Reg X)  Home Mortgage Disclosure Act (HMDA)  Home Mortgage Disclosure (Reg C)  5.1 Federal TIL (Reg Z)  5.2 APR  5.3 Section 32 loan guidelines  5.4 Federal RESPA, Reg X  5.5 HMDA (Reg C) 5.6 Government loan disclosures  Required disclosures for FHA loans  Required disclosures for DVA loans 5.7 California disclosures  Mortgage loan disclosure statement 5.8 California licensee non-loan disclosures  Appraisal disclosures  Credit and fair lending disclosure  Death of acquired immunodeficiency syndrome (AIDS)  Earthquake disclosure  Energy conservation, retrofit and thermal disclosure  Environmental hazards disclosures  Fire hazard areas (state responsibility areas)  Flood disaster areas  Foreign investment in real estate tax act (FIRPTA) and Cal-FIRPTA

7. ©2011 Cengage Learning Contents 5.8 California licensee non-loan disclosures (cont.)  Flood disaster areas  Foreign investment in real estate tax act (FIRPTA) and Cal-FIRPTA  Government compliance disclosure  Hazard insurance coverage  Language of the agreement  Lead-based paint  Local option disclosure statement  Supplemental property taxes disclosure  Mello Roos disclosure  Methamphetamine-contaminated properties  Pest control  REO property (REO)  Smoke detector compliance  Title insurance advisory  Transfer disclosure statement (TDS) 5.8 California licensee non-loan disclosures (cont.)  Utility line extensions  Water heater bracing  Lender/purchaser disclosure statement 5.9 Other loan disclosures  Article 7  Prepayment penalty  Liability  Loan terms  Maximum charges 5.10 Predatory lending law  Disclosure  Prohibited loan terms  Prohibited practices  Penalties and corrective action  Balloon payment 5.11 Good Faith Estimate (GFE)

8. ©2011 Cengage Learning Contents PART 3: Processing Ch 6 Processing: Pre-qualification and loan application  6.1 Lender/purchase statement  6.2 Disclosure of home ownership counseling  6.3 Residential loan application  6.4 Qualifying ratios  6.5 Department of Veterans Administration (DVA) qualifications  6.6 Federal Housing Administration (FHA) qualifications  6.7 Conventional qualifications  6.8 Other qualifications Ch 7 Processing: Credit and disclosures  7.1 Credit  7.2 Credit and FICO score  7.3 Privacy policy  7.4 ECOA  7.5 Non-traditional credit reports  7.6 The housing financial discrimination act of 1977 (Fair lending notice) Ch 8 Processing: Verifications and stacking order  8.1 Processing tools  8.2 The processor’s file  8.3 Income and guidelines for the processor  8.4 Borrow documentation  8.5 Sample loan file  8.6 Stacking order

9. ©2011 Cengage Learning Contents Ch 9 Processing: Escrow, settlement, title and appraisal  9.1 Escrow  9.2 Statement of Information  9.3 Impound account  9.4 Title insurance  9.5 Appraisal Ch 10 Processing: Underwriting and quality control  10.1 Underwriting  10.2 Red Flags  10.3 Quality control and auditing Ch 11 Processing: Docs, funding and closing  11.1 Conditions prior to Docs  11.2 Drawing Docs  11.3 Conditions prior to funding  11.4 Loan documents  11.5 Funding  11.6 Closing PART 4 The Secondary Money Market Ch 12 Shipping and Servicing  12.1 Shipping  12.2 Loan servicing  12.3 Securities dealer  12.4 Types of securities  12.5 Real estate economics  12.6 The secondary money market: Investor protection

10. ©2011 Cengage Learning Contents Ch 12 Shipping and Servicing (cont.)  12.7 Packaging and selling loans  12.8 Yield spread premium  12.9 National Code of Real Estate Loan Servicing Industry PART 5 Regulations and Operations Ch 13 The business operational practices and Department of Corporations (DOC) licensing 13.1 Employment considerations 13.2 Business office operations 13.4 Wholesale broker agreement 13.4 How to become a mortgage banker 13.5 Computer applications and publications 13.6 Acts by the loan agent 13.7 Compensation and referral fees  13.8 Exemptions from the licensing requirements  13.9 License law for the loan agents  13.10 California DOC Ch 14 The California Department of Real Estate (DRE) license activity for loan agents  14.1 California Department of Real Estate (DRE) license  14.2 DRE Broker supervision  14.3 California codes and regulations for licensees  14.4 Review of instruments  14.5 California financial code  14.6 Trust Funds

11. ©2011 Cengage Learning Contents Ch 15 Math and trust funds for the loan agent  15.1 Introduction  15.2 LTV ratio  15.3 Borrowing qualifying income  15.4 Payment factor chart  15.5 Amortization comparisons  15.6 Financial calculators  15.7 Trust fund accounting Appendix Appendix A: Loan application FNMA Form 1003: English and Spanish Appendix B: Credit Report Appendix C: Verifications Appendix D: Sale Escrow Instructions Appendix E: Appraisal Report Appendix F: Preliminary Title Report Appendix G: Loan documents Appendix H: Employment forms Appendix I: Wholesale Brokerage Agreements Appendix J: Internet Web Sites Appendix K: Glossary of terms