NM State Law Assignment 2 of 2

Please read and answer the following questions in the Comments Section below.

Dave Martin is a recent college graduate and after going through a simple interview process, has just gone to work for Fast2Cloz Mortgage Company.  He was desperate to get a job, any job, and this small office promised him that he’d be making six figures within six months.  As the first college grad in his family, Dave was anxious to prove himself and start paying back those college loans.

He had some concerns about the disorder in the shop on his first day but he told himself to just ignore it and focus on learning the business.  His manager told him he would be making loan modification loans for people, and would be helping them get out of bad situations as a result of the terrible economy.

After spending 20 minutes with his manager, Julian, going over the application, he went back to his desk and started answering the phone.  Julian told him he would eventually have to get a license but he wanted to train him first.  That sounded like a good idea to Dave.

The first call he got was from a woman nearly in tears as she described how far behind she was in her mortgage payments.  She said she was just back from Afghanistan and had been disabled in service so she was having a great deal of trouble finding work, therefore could not get caught up on her mortgage payments.  Dave immediately made an appointment for her to come in and complete the application.

After filling out most of the form with his first customer, Dave showed it to Julian who told him to have her sign  an additional document called the Service Agreement, which described how Fast2Cloz Mortgage would provide document preparation, underwriting and submission services for her loan modification.  The fee for negotiating with the servicer was $1,000 for a first lien and $500 for each additional lien. Fees were to be paid at the time of loan submission.

Approximately 30 days later, the borrower contacted Dave and told him that Fast2Cloz had processed her check, resulting in overdraft fees on several other transactions.  She was irate and demanded that the fees be credited back immediately.

Dave immediately went to Julian, who indicated that the fees were needed sooner, and that Julian would contact her.  Julian then sent her an email telling her that she would have to pay the fees as the loan was processed, or they might decide to stop working on her file.  He told her they would credit the fees back but that she’d need to pay them very soon.  Dave, since he was copied on the email, was troubled by this discussion since he had told her they’d be due when the loan was ready to send to the lender.

One week later, the borrower contacted Dave and told him the funds had still not shown up in her bank and the bank said no deposit showed as pending. This time the borrower was even angrier and claimed she would file a complaint with the state.  Once again, Dave went to Julian and repeated the conversation.  Julian indicated he would take care of it but Dave did not feel confident.

The next day Julian asked Dave to contact the borrower and tell her the file was ready to submit and that the fees were now due so there was no point in crediting back the charge.  The borrower agreed but explicitly stated her frustration with the practices of Fast2Cloz Mortgage.

Approximately 60 days later, the borrower called Dave once again to tell him she checked with her lender and they have never heard from Fast2Cloz and that she wanted to cancel the transaction and get her refund, including 4 overdraft fees.

The following day, an examiner from the New Mexico Financial Institutions Division arrived at the office and spoke with Dave, since Julian was out.  The examiner explained that he was doing an examination as a result of a complaint received the previous day.

When the examiner asked Dave for his origination license, Dave advised him that he was told he needed  to be trained before going to get the license.  After the examiner outlined New Mexico’s  license requirement to him, Dave’s stomach sank to his feet.  All the nagging concerns of the past 2 months started going through his head. Julian arrived about half an hour into the examination.  When told who the person was sitting at a desk, his face went white. The examiner asked for the branch license, along with Julian’s qualified manager license and his production reports.  Julian told him he couldn’t find them; that he expected they were being held at corporate headquarters.

Three days later, New Mexico’s Financial Institutions Division issued a cease and desist order, outlining the numerous violations.  The state indicated its intent to permanently bar Julian from the industry. 

Please provide an answer below for the following questions, be sure and provide your instructor with information on what section of the law you discovered your answer.  

Students should post directly to the Blog!  If you have any problems posting your assignment to the Blog (due to firewall issues etc.), you may send your answer directly to the instructor via email at oil@mymortgagetrainer.com 

• How many possible violations does the originator, Dave, have under New Mexico’s Mortgage Loan Originator Licensing Act?

• Is the broker, Julian, liable for any violations under the Mortgage Loan Company Act?  If so, how many?

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