CASE STUDY
Danny has been a licensed MLO
working for a lending company called S & L Associates for about a year now.
And, over that time, Danny has been steadily locking down his own methods for
closing loans. Let’s look at one of his latest transactions as an example.
A borrower named Claire comes
to Danny for a mortgage loan. She was referred to him by her real estate agent
Patricia—whom Danny has worked with quite a few times. Danny takes Claire’s
application and sends her on her way.
Danny knows that, given the
volume of loans right now, it’s going to be a little tight time-wise submitting
Claire’s application and getting the appraisal done, etc., by the projected
closing date. And, what’s more, he has scheduled a remote hiking trip for the
following week, so Danny will be out of cell phone range and away from the
internet.
While he is gone, Danny asks
his buddy and co-worker Scott to look after Claire’s file because Danny will be
out of cell phone range and away from Internet access. In exchange for his
help, Danny will pay Scott $200 out of the loan commission – just for keeping Claire’s
loan on track. Everybody wins!
During Danny’s vacation,
Claire mistakenly sends the check intended for the appraiser to Danny’s office,
instead of to a third party called On Time Scheduling that S & L uses for
scheduling appraisals.
Scott does not notice the
check because he is dealing with a licensing issue of his own. Specifically,
after fifteen years as an MLO, for the first time, Scott’s license has not been
renewed! In scrambling to deal with reinstating his license, Scott forgets to
keep tabs on Claire’s loan.
So, after sitting on Danny’s
desk for five days, Danny comes back, finds the check in a stack of mail, and
forwards it on to On Time, along with an explanation of the situation.
A few weeks later, Claire’s
loan is approved and they go on to close on time. And, even though he nearly
dropped the ball with the appraisal check, Danny decides to honor his promise
to give Scott the $200 bonus for helping out with Claire’s file. After all,
Scott really needs the cash right now.
A year later, seeing that
interest rates have dropped significantly, Danny contacts Claire about possibly
refinancing her mortgage. After two weeks of phone tag, in which Danny lets
Claire know that the rates could swing back up, she finally decides to come in
and talk about a refinance.
Sure enough, by the time
Claire gets in to Danny’s office, the rates aren’t quite as good as they were
when he originally contacted her. Even so, after running the numbers, Danny
finds that Claire will still save $85 per month on her mortgage payment with
the refi! So, Claire applies to refinance her mortgage (including her correct
annual income and length of employment, this time) and is approved.
Now, Let's Answer a Few Questions:
1.
Is there anything wrong with Danny paying Scott to
watch over Claire’s loan?
A.
No, it is completely legal
B.
Yes, Scott let his license lapse
C.
Yes, it is illegal to have another LO assist on a
loan
D.
Yes, it is illegal to offer a fee to have another
LO assist on a loan
2.
What, if anything, did Scott do wrong in this
situation?
A.
He wasn’t licensed as an MLO at the time he was
watching over Claire’s loan, therefore, it is illegal for him to receive
compensation on the loan
B.
He asked for too much money from Danny to watch
over the loan
C.
He misquoted the rate that Claire would be
receiving
D.
Scott really did nothing wrong in this situation
3.
Did Danny actually misrepresent the rate he quoted
Claire at when she refinanced?
A.
Yes, he told her what the rate would be on the
phone, yet the rate she actually received was higher
B.
Yes, he knew the rates were going to go up, but
neglected to tell her
C.
No, he explained what the rates where at the time
of their conversation, and also told her they could potentially increase, nor
did he use an advertisement when dealing with Claire
4.
Did Danny break any laws by refinancing Claire’s
loan?
A.
Yes, he advertised a specific rate to her and then
didn’t give her that rate when she was ready to refinance
B.
Yes, he neglected to warn her that rates could
swing back up
C. No, Danny did not break any laws while refinancing Claire’s loan
C. No, Danny did not break any laws while refinancing Claire’s loan
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