Monday, June 23, 2008

FHA Affirms Participation of Non Approved Brokers as Consultants

Brian Montgomery officially acknowledged in Mortgagee Letter 08-17, dated June 20, 2008, that non FHA approved mortgage brokers can provide counseling type duties consistent with HUD's guidance in the 1999-1 RESPA Statement of Policy (SOP) and 24 CFR 203.27 (e). Click here to view ML 08-17:

According to Mortgagee Letter 08-17, non approved brokers cannot perform certain origination functions that FHA requires to be performed by FHA approved entities. These duties include: taking the application; collecting financial information and documentation from the borrower; initiating/ordering credit, appraisal, verifications, inspections, and disclosures along with maintaining communication with all parties involved with the transaction. Brian Montgomery asserts that non-approved brokers may not duplicate these duties without violating RESPA, and reaffirms that FHA approved entities may not compensate non approved brokers for performing these functions.

However, Brian Montgomery affirms 24 CFR 203.27 (e), and specifically states that it is acceptable for a borrower to engage a broker who is not FHA approved to assist them in obtaining a FHA mortgage. ML 08-17 cites that non FHA approved brokers may be compensated by the borrower to perform counseling, educational, and consulting type services:

Excerpt from ML 08-17:
Other services that are considered counseling in nature (e.g., educating prospective borrowers in the home buying and financing process, advising the borrower about different types of loan products available, and demonstrating how closing costs and monthly payment could vary under each product), may be performed by a non FHA-approved broker so long as the services provided constitute meaningful counseling, and not steering.

Brian Montgomery also clarified and affirmed the guidance provided in HUD's 1999-1 RESPA Statement of Policy which requires brokers that perform only counseling type duties to provide alternatives from at least 3 other lenders for which the compensation must be the same for each. This is to ensure that meaningful counseling has been provided and not just "steering". FHA's failure to abide by HUD's SOP was previously discussed on this blog and the ML Implode Forum, and I am glad to see that they are finally in compliance on forward loans. Nonetheless, FHA is still not in compliance on reverse mortgages.

In regard to the amount of broker compensation, FHA side-stepped limit setting, and instead relied on their trusty old standby:
ML 08-17 excerpt:

Under no circumstances may a borrower be charged a fee that is not commensurate with the amount normally charged for similar services. If the payment bears no reasonable relationship to the market value of the services provided, the excess over the market rate may be used as evidence of a compensated referral or unearned fee in violation of section 8(a) or (b) of RESPA and 24 CFR 3500.14(g).

RESPA provided further guidance to industry regarding payments by lenders to mortgage brokers in Policy Statement 1999-1. While the policy statement specifically speaks of lender payments to mortgage brokers, those payments are indirectly paid by the consumer and the policy statement would apply equally to payments made directly by the consumer.

While FHA has taken a big step by acknowledging that counseling, consulting, and advising are separate and distinct from taking an application and processing a loan, Brian Montgomery has failed to recognize agency and fiduciary duty as a vital role for mortgage brokers. Commissioner Montgomery also failed to recognize that certain duties, such as taking the application and communicating with various parties on behalf of the borrower is not a duplication of duties, but moreover, duties that overlap with the lender's agent.

Example: for a mortgage broker to be able to properly advise and counsel a borrower, they must take an application and review the borrower's financial and other documentation. This duty would for the borrower. Whereas, an approved FHA broker who takes the application to originate the loan would be taking the application for the lender as part of facilitating the loan. Consider that RESPA does not prohibit duplicated or overlapping duties, but moreover, prohibits duplicate charges arising from said duplication. If neither the lender or borrower agent charges an application fee, it would not result in a duplicate charge for both to take their own application.

Although HUD recognizes in the 1999-1 RESPA policy statement that some services are for the borrower and some are for the lender, HUD states that "All services, goods and facilities inure to the benefit of both the borrower and the lender in the sense that they make the loan transaction possible".

Additionally, while Commissioner Montgomery cites that the 1999-1 RESPA Statement of Policy would apply equally to all payments whether made directly or indirectly by the borrower, he failed to address whether the borrower would be permitted to use loan proceeds, seller credits, or yield spread premiums (when credited directly to the borrower) to offset their mortgage broker costs. After all, if all fees are treated equally under RESPA, there should not be any prohibition for offset.

Perhaps that will be another Mortgagee Letter.

The reality remains that while some mortgage brokers are agents and fiduciaries and other mortgage brokers are intermediaries that only sell access to money, fiduciaries are largely ignored by the mortgage industry. As a result, HUD's 1999-1 and 2001-1 Statements of Policy and ML 08-17 are deficient as to the mortgage broker's role as a fiduciary.

Monday, June 9, 2008

The FHA Non Approved Broker Debate

FHA recently published Mortgagee Letter 08-14 regarding non approved broker participation in the HECM loan program (reverse mortgages).

Click here to view Mortgagee Letter 08-14

This letter clarified FHA policy regarding the role of non approved brokers and payment of their compensation. According to ML 08-14, non approved brokers may participate in the FHA HECM program by performing limited educational-type origination services known as “advisor” services. Brian Montgomery states in ML 08-14:

FHA permits the non-approved entity or third party to provide advisory and educational services to the HECM borrower; and under RESPA, the non-approved entity or third party may receive bona fide compensation for those services.

Brian Montgomery clearly states that under RESPA non-approved brokers may receive bona fide compensation for providing advisory and educational services on a FHA loan (HECM).

Brian Montgomery goes on to state in ML 08-14:

RESPA regulations permit a non-approved entity or third party to be compensated for educating prospective borrowers about the reverse mortgage lending process, advising the borrower about different types of loan products available, demonstrating how closing costs and payment options could vary under each product, and maintaining regular contact with the lender to keep the borrower apprised of the status of the loan application. Such services would be in addition to, and not as a substitution for, reverse mortgage counseling which is provided by a HUD-approved housing counseling agency.

So, duplication of duties is acceptable now under RESPA? Why is it then that FHA’s Policy Alert regarding payments to non approved brokers on FHA loans dated 10/30/07 states that duplication of duties is not allowable under RESPA? In fact the FHA Policy Alert specifically stated:

In transactions where the mortgage broker is not an FHA-approved broker, the loan origination services cannot be performed. Under these circumstances, RESPA would prohibit the payment to the non FHA-approved mortgage broker because those services, under FHA regulations, would have to be performed again by either an FHA-approved lender or loan correspondent. The payment to the unapproved broker for duplicated services amounts to an unearned fee in violation of section 8(b) of RESPA. Further, this payment also acts as a disguised referral fee for steering the borrower to the FHA-approved lender or loan correspondent which is in violation of section 8(a) of RESPA.

Click here to view FHA Policy Alert

Well, is it or is it not a violation of RESPA for a broker to duplicate duties? What is the difference between duplicating counseling services and duplicating taking an application? HECM Counseling is required and could result in duplicate charges whereas applications are typically done at no expense. It appears that FHA views RESPA as applying differently to forward vs. reverse mortgages, yet RESPA is the same for loan types regardless of differences in the Code of Federal Regulations.

Going back to the FHA Policy Bulletin, FHA at least admits that mortgage brokers can assist borrowers in obtaining a FHA loan although they minimize the role to an assistant:

While a broker who is not FHA-approved may assist a prospective FHA borrower in obtaining an FHA loan, the non-approved broker cannot perform required FHA loan origination services. In these instances, the fee charged must be paid from the mortgagor’s own available assets, must be disclosed on the HUD-1 at closing and a copy of the contract included in the loan file submitted for insurance endorsement.

FHA’s policy is that the borrower’s agent fee is limited to payment by the borrower and cannot be offset with YSP credits, seller credits, or loan proceeds. Nonetheless, according to ML 08-14, non-approved brokers can be paid from the proceeds of the financed origination fee:

The compensation is paid by the borrower directly from the borrower’s own available assets or from HECM loan proceeds. If the payment comes from the HECM proceeds, the amount would be added to the loan balance and disbursed to the broker by the closing agent. In all cases, the amount paid must be included in (subtracted from) the loan origination fee which is capped at the greater of $2,000 or 2% of the maximum claim amount.

On a reverse mortgage the non approved broker can be compensated from the proceeds of the borrowers FINANCED origination fee that is charged by the FHA approved lender or broker. In other words, fee splitting is also permissible on FHA reverse mortgages. Wow, fee splitting and duplication of duties. That's bold.

Now let’s take a look at compensable duties as per guidance issued in HUD’s 1999-1 Statement of Policy (SOP) and reaffirmed in their 2001-1 SOP. HUD’s 1999-1 SOP provides a list of compensable services in accordance with HUD’s letter to the Independent Bankers Association of America, dated February 14, 1995 (IBAA letter). In HUD’s letter to the IBAA, HUD stated that they would be satisfied that sufficient compensable origination services had been provided if the broker took the loan application and performed at least 5 duties from the IBAA list. Note: Both the 1999-1 Statement of Policy and ML 08-14 acknowledge that the IBAA list is not exhaustive.

HUD’s 1999-1 Statement of Policy HUD continues to further state that when services are of a counseling type nature, HUD would be satisfied that meaningful counseling, and not steering, occurred if the broker provided alternatives from at least 3 other lenders which the compensation was the same for each and not influenced by volume.

Yet neither ML 08-14 or the FHA Policy Alert state anything about providing alternatives to the borrower let alone the requirement that the compensation be the same for all alternatives.

Let's explore what the Code of Federal Regulations has to say about both programs.

Closing costs for forward mortgages are covered in Title 24 of Code of Federal Regulations Part 203, Section 203.27.

Click here to view

24 CFR, Part 203, Section 203.27, (e) states:

Nothing in this section will be construed as prohibiting the mortgagor from dealing through a broker who does not represent the mortgagee, if he prefers to do so, and paying such compensation as is satisfactory to the mortgagor in order to obtain mortgage financing.

Note: FHA approved mortgage brokers are the agent of the lender (mortgagee) and represent the lender (mortgagee) on FHA loans. However, the CFR specifically provides that that borrowers not be prohibited from dealing through a broker who does not represent the lender (mortgagee) and paying compensation that is satisfactory to the borrower (mortgagor). In other words, borrower exclusive agents.

Now lets look at the 4155.1 Rev 5, Chapter 1, Section 3, regarding allowable closing costs on forward mortgages:

I. Mortgage Broker Fees. If the borrower must pay a fee directly to a mortgage broker, that expense must be included in the total of the borrower's cash settlement requirements and appear on the HUD-1 Settlement Statement. (This requirement applies to instances in which the borrower independently engages a mortgage broker to seek financing and pays the broker directly. The payment may not come from the lending institution.)

Borrowers are allowed to independently engage their own mortgage broker to deal through that does not represent the lender (mortgagee) and pay the broker’s compensation on forward loans.

Now let’s look at reverse mortgages and Title 24 of the Code of Federal Regulations, Chapter II, Subchapter B, Part 206, Section 206.31 (A), (1):

(a) Fees at closing. The mortgagee may collect, either in cash at the time of closing or through an initial payment under the mortgage, the following charges and fees incurred in connection with the origination of the mortgage loan:

(1) A charge to compensate the mortgagee for expenses incurred in originating and closing the mortgage loan, which may be fully financed with the mortgage. The Secretary may establish limitations on the amount of any such charge. HUD will publish any such limit in the Federal Register at least 30 days before the limitation takes effect. The mortgagor is not permitted to pay any additional origination fee of any kind to a mortgage broker or loan correspondent. A mortgage broker's fee can be included as part of the origination fee only if the mortgage broker is engaged independently by the homeowner and if there is no financial interest between the mortgage broker and the mortgagee.

The Code of Federal Regulations also provides that borrowers may independently engage their own mortgagee broker on reverse mortgages and include their mortgage broker’s fee as part of the origination fee.

So, there you have it, both forward and reverse mortgages allow borrowers to deal through non approved brokers that do not represent the lender (mortgagee) and pay compensation that is acceptable to the borrower. Furthermore, RESPA does not differentiate between reverse and forward mortgages, and compensable services are outlined in HUD’s 1999-1 Statement of Policy which references HUD’s 1995 IBAA letter. According to the IBAA letter, HUD would be satisfied that compensable services had been provided if the broker took the application and completed 5 duties off the IBAA list (which HUD states is not an exhaustive list).

Additionally, for brokers that provide only counseling type services, that HUD would be satisfied that meaningful counseling had been provided, and not steering, if the broker provided alternatives from at least 3 other lenders and the compensation for all alternatives was the same and not based on volume of referrals.

Why FHA chooses not to abide by the 1999-1 SOP and why they apply RESPA differently on reverse and forward loans is beyond me. But, it is is an interesting topic.

Unfortunately, FHA continues to ignore the role of mortgage brokers as agents and fiduciaries or publish sound guidance on mortgage brokers that serve as exclusive borrower agents. As of this date, FHA's position is that the borrower's broker fee on forward mortgages must be paid exclusively by the borrower and cannot be offset via yield spread premiums (YSP), seller credits or loan proceeds despite the fact that FHA allows non approved brokers to be paid from the financed origination fee on FHA reverse mortgages. Yet FHA states on their Policy Alert that the 1999-1 Statement of Policy regarding lender payments to brokers would apply equally to payments made directly by the borrower. If the 1999-1 Statement of Policy applied equally to indirect and direct payments, borrowers would not be prohibited from offsetting the cost of their agent in the same manner that they offset payments to the lender's agent. There is nothing fair or equal in giving preference to the payment of the lender's agent while discouraging the borrower from seeking agency representation.

The inability to offset the costs of the borrower agent presents a cost barrier for borrowers obtaining agency representation and fiduciary duty.

FHA needs to clarify their policy regarding non-approved brokers that serve as borrowers agent, and define agency representation as a compensable duty if they are to set an example for the industry.

Monday, June 4, 2007

FHA for Eveyone

Saturday, May 5, 2007


In response to the California housing crisis, we have dedicated ourselves to the highest standards as proposed by HUD under RESPA. Seeing an unmet need in the community for government financing, we have elected to devote our efforts exclusively to government and agency lending.

In 2002, the Department of Housing and Urban Development
(HUD) proposed regulatory changes to RESPA, and simplified borrower disclosures. One form HUD recommended to become required was the Mortgage Broker Contract. The Mortgage Broker Contract required that mortgage brokers disclose who they represent (borrower, lender, or both) and how they get paid (borrower, lender, or both).

Our new platform implements HUD’s recommendations to the fullest extent allowed under RESPA, and submits to HUD’s proposed reform voluntarily. We believe voluntary reform is a positive step toward industry compliance. We also support the borrower’s right to exclusive representation and honest disclosure.

Because FHA loan correspondents are the lender’s agent, we cannot represent borrowers exclusively. Therefore, we will allow applicants to designate an agent (hereafter known as Exclusive Borrower Broker or EBB) to negotiate rate and terms and represent their interests throughout the transaction. However, we are the originator and must provide up front loan and agency disclosures, perform a phone or face to face interview, and complete loan processing in accordance with HUD guidelines.

As the originator, our contract is with the lender and we are their agent (hereafter known as HUD Approved Broker or HAB). The borrower’s contract with their EBB is for exclusive representation and may not hold themselves out as the lender’s agent. The HAB is paid by the lender while the EBB is paid by the borrower. A borrower can elect to use premium pricing to pay fees including the EBB broker fee. Nonetheless, compensation for either the EBB or HAB may never be based on rate, terms, or program or exceed what is stated in the original contract. Additionally, there are limits on maximum compensation.

The borrower’s right to hire their own agent for representation is supported under Title 24 CFR 203.27 (5) (e) which states: "Nothing in this section will be construed as prohibiting the mortgagor from dealing through a broker who does not represent the mortgagee, if he prefers to do so, and paying such compensation as is satisfactory to the mortgagor in order to obtain financing." Additionally, the 4155.1, Section 3, (I) states: "Mortgage Broker Fees: If the borrower must pay a fee directly to a mortgage broker, that expense must be included in the total of the borrower’s cash settlement requirements and appear on the HUD-1 Settlement Statement. (This requirement applies to instances in which the borrower independently engages a mortgage broker to seek financing and pays the broker directly. The payment may not come from the lending institution)"

Compensation must be in relation to services rendered, and EBB’s cannot simply send over an application and contract and expect to be compensated. EBB’s must perform under the terms of their contract as true borrower agents to receive compensation under RESPA. Furthermore, EBB compensation must be reflected on the Good Faith Estimate and HUD1 as per RESPA requirements. EBBs that provide the borrower’s initial application and borrower documentation to support the borrower’s loan request must provide accurate information.

Quality control and MARI reports will be completed on all parties. Simplified borrower disclosures as recommended by HUD will be provided to the borrowers in addition to State required disclosures and disclosures under RESPA. EBBs must review and sign receipt of borrower’s disclosures and must either be present at closing or review loan documents prior to closing. EBB’s must review loan documents for accuracy and explain loan documents to client. The HAB will confirm loan terms with borrowers prior to loan documents and will reconfirm prior to closing.

EBB’s wishing to participate must register with HAB prior to negotiating borrower’s loan with HAB. Registration includes:

1. Information summary for EBB company and/or agents
2. Evidence of current license for broker and agents
3. Evidence of E & O insurance* if available
4. Evidence of participation in FHA program training.
5. An acknowledgment of HAB’s policies and procedures.

EBBs that are on FHA’s LDP, Non-Procurement, Federal Exclusionary list or are otherwise disbarred, will not be accepted. EBB’s that breach their fiduciary duty to their client or engage in unethical, unacceptable, or illegal business practices will also be denied participation.

EBB’s must provide evidence of training for the program they wish to negotiate for client.

Although we require EBB’s to be pre-screened and acknowledge company policies and procedures, we are not contracting with the EBB and do not pay compensation to the EBB. EBB’s fees can be paid outside of closing, but must be disclosed on the HUD-1 Settlement Statement and must be considered in the borrower’s total cash to close. The EBB’s fee can be paid through escrow from the borrower’s loan proceeds or funds deposited in escrow. The borrower can also use a lender credit from rebate pricing to pay EBB’s fee. Neither the HAB or lender can pay EBB.

The following items are required upon application:

1. Fully executed EBB contract indicating EBB’s agency relationship to borrower and clear definition of EBB compensation. EBB compensation cannot exceed the maximum allowable for reasonable compensation and must be based on services rendered. Compensation must be paid by the borrower only. Lender or HAB paid compensation is not allowed. Agreement must provide an authorization to disclosure information to EBB and authorize HAB to release information on the borrowers behalf.

2. Signed Agency Disclosure and Agency Confirmation.

3. EBB must provide Goodfaith Estimate, California Mortgage Loan Disclosure Statement, Loan Application, and any related documentation. EBB must also transfer a copy of their Calyx Point Data File if available.

4. EBB will not be responsible for providing loan origination or loan processing functions, but may assist borrower with understanding and satisfying lender requirements.

5. EBBs are encouraged to provide borrowers with information regarding housing counseling, loan and default counseling, credit counseling, and reverse mortgage counseling referrals.

6. EBBs are encouraged to review credit reports with borrowers and assist them as needed in clearing up outstanding or incorrect credit information. EBB’s are also encouraged to assist borrowers in understanding the types of alternative credit that may be acceptable.

7. EBBs are encouraged to explain to borrowers how they can use premium pricing to reduce their cash to close.

8. EBBs are encouraged to assist borrowers by requesting waivers of prepayment penalties and short payoff requests.

9. EBBs are encouraged to request reasons that their borrower’s loan is declined in writing (if applicable), and request guidance on corrective methods to aid in future approval.

10. EBBs are encouraged to assist borrowers in formally disputing loan denials and/or suspensions for valid reasons.

11. EBBs are encouraged to review appraisals and explain appraisal to borrowers. In the event the EBB finds a material deficiency, EBB is encouraged to assist in getting the deficiency or discrepancy resolved.

12. Borrower may assign EBB as permanent designated agent for all post closing communications and offers between themselves and HAB except as required by HUD or lender for quality control audits.

13. EBBs must not interfere with loan processing functions or HAB’s agency relationship with lender.

14. EBB must understand that a contractual relationship does not exist between EBB, HAB or lender. EBB’s contract is with their borrower.


Required services as per IBAA letter dated February 14, 1995 and reaffirmed in HUD’s Real Estate Settlement Procedures Act (RESPA) Statement of Policy 1999-1 Regarding Lender Payments to Mortgage Brokers:

EBB Mortgage Broker Duties Under RESPA:

(a). Taking information from the applicant and filling out the initial loan application;

(b) Analyzing the applicant’s income and debt and prequalifying the borrower to determine the maximum amount the applicant can afford;

(c) Educating the borrower in the home-buying and financing process, advising the borrower about the different types of loan products available, and demonstrating how closing costs and monthly payments vary under each product;

(d) Collecting financial information (for example, tax returns, bank statements) and other related documents that are part of the application process;

(j) Assisting the applicant in understanding and clearing credit problems;

(k) Maintaining regular contact with the applicant, real estate broker or salesperson, and HAB, between application and closing to apprise them of the status of the application and to gather any additional information as needed;

(n) Participating in the loan closing.

In accordance with IBAA letter dated February 14, 1995, EBB must also provide:

1. EBB’s must provide the borrower the opportunity to consider products from at least 3 other lenders. Programs/products must be shown on HUD’s proposed Mortgage Shopping Cart form and signed by borrower and EBB. Note: form to incorporate disclosure of EBB’s compensation for each program/product recommended.

2. The EBB’s compensation must be the same for each product offered regardless of which loan products the borrower ultimately selects.

3. Because EBB’s services must be reasonably related to the services performed and not related to any other factor (including but not limited to amount of business referred to a particular lender or HAB), maximum compensation will be limited to a maximum amount as determined to be reasonable.


In addition to duties required under RESPA as outlined in IBAA letter dated February 14, 1995, EBB is responsible for specific agency duties as required under their Mortgage Broker Contract. Agency duties include but are not limited to:

1. Negotiating an acceptable loan commitment for borrower from lender’s HAB;

2. Providing required legal and agency disclosures as required by State and Federal Law (M.L.D.S., Agency Relationship Disclosure, and Mortgage Broker Contract);

3. Reviewing required disclosures provided to borrower from HAB/lender to ensure that rate, fees, and loan terms are in accordance with negotiated commitment;

4. Providing borrowers with referral information for non-profit agencies to assist with homebuyer education, credit and budget counseling, CCS counseling, and default counseling;

5. Acting as borrower’s representative with borrower’s current loan servicer in regard to prepayment penalty waivers, short sale approval, and other loss mitigation functions;

6. Assisting the borrower in completing a bona fide dispute in regard to an adverse action decision and requesting reconsideration of credit decision and or appraised value;

7. Assisting in the resolution of disputes between borrower and HAB/Lender;

8. Acting as borrower’s representative in clearing tax, child, support and other liens from title;

9. Assist borrower in working with their attorney to obtain bankruptcy court approval when borrower is participating in a Chapter 13 repayment plan;

10. Reviewing borrower’s final loan documents to ensure that final loan terms comply with negotiated commitment;

11. Ensure that the best interests of the borrowers are being served at all times in accordance with terms of contract and EBB and borrower’s Agency Relationship;

12. Monitoring market conditions and renegotiate new rate and terms for borrower in the event of a substantial change in the market;


Required services as per IBAA letter dated February 14, 1995 and reaffirmed in HUD’s Real Estate Settlement Procedures Act (RESPA) Statement of Policy 1999-1 Regarding Lender Payments to Mortgage Brokers:


(a) Application: confirming and clarifying information from the applicant and completing a verified application for the lender that is signed and certified by the borrower and employee of the HAB that conducted the borrower interview;

(b) Verifying and analyzing the borrower’s income and debt to income ratio and qualifying borrower for requested program as per FHA guidelines;

(e) Initiating/ordering VOEs (verification of employment) and VODs (verifications of deposit);

(f) Initiating/ordering requests for mortgage and other loan verifications;

(g) Initiating/ordering appraisals;

(h) Initiating/ordering inspections, engineering reports, and pest inspections;

(i) Providing disclosures (truth in lending, good faith estimate, others) to the borrower;

(k) Maintaining regular contact with the borrower, EBB, realtors, lender, between application and closing. EBB’s contract with borrower to does not override HAB’s responsibilities to communicate and verify information with borrower and others;

(l) Ordering legal documents;

(m) Determining whether the property was located in a flood zone or ordering such service;

(n) Participating in loan closing.

EBB’s and HAB’s duties overlap on items (a) application, (b) qualifying, (k) communications, and (n) participation in loan closing due to agency and contract obligations. The EBB initiates these duties for the borrower whereas the HAB verifies the information for the lender. EBB’s participation provides value to the borrower through expanded services and exclusive representation whereas the HAB’s participation provides a value to the lender through increased quality control and lower origination costs. Both borrower and lender benefit in terms of lower loan costs, improved loan quality, and exclusive representation. Any duplicative work completed is for the benefit of loan quality and will not result in a duplicate charge to borrower.


The HAB, as the originator for the lender, is the responsible to HUD and lender for compliance with HUD/FHA guidelines. As such, the HAB is responsible for quality assurance and compliance with RESPA, TILA, and State and Federal disclosure requirements as well as compliance with Fair Lending. As such HAB is also responsible for:

1. Initiating/completing MARI report on all parties;

2. Checking LDP and Non-Procurement Lists on all parties;

3. Completing a quality control audit;

4. Completing a compliance audit for RESPA, TILA, and State and Federal disclosures;

5. Provide simplified financial disclosures in addition to disclosures required under RESPA to ensure borrower's understanding of loan terms;

6. Provide access to HUD’s website at branch office for borrowers and toll free numbers for borrowers to contact HAB directly;

7. Provide an acceptable dispute resolution process for borrowers;

8. Completing an AUS evaluation on loan file and verifying and assigning the results to lender;

9. Completion of all submission and processing forms as required by HUD and shipping the file to Lender in casebinder to lender;

10. Completing a Quality Satisfaction Survey with borrower and reconfirm application information and loan terms prior to requesting loan funding from lender;

11. Perform all other functions as required by lender, FHA, and HUD;

12. Electronic storage and transfer of mortgage records to lender.