Salt Lake City, UT / June 20, 2007 / Press Release / --  The Utah Division of Real Estate's proposed rule supported by the Utah Mortgage Commission dated for enactment as early as July 24, 2007, addresses important issues affecting Utah's mortgage industry.  In review of this proposed rule, Perfect Home Living has identified specific areas of concern where loopholes that contribute to real estate fraud can be exploited causing harm to Utah consumers, licensees and financial lenders operating within the state.  

First, the Utah Division of Real Estate's proposed language in Rule 205.1.3 allowing mortgage brokers to continue to order third-party services on behalf of the consumer should be stricken in its entirety.  Consumers involved in the purchase of a home should be provided with education material and provided resources so that all times during the real estate transaction the licensed professional remains at "arms-length."

The complexities of sorting through loans and understanding the various types of mortgage programs is often confusing and assistance to the consumer during this time can and often is beneficial in the loan selection process.  By having licensees step outside the scope of their traditional duties, a licensee's intent and due diligence becomes questionable. 

The proposed language stating, "failing to pay to third party providers the fee for any service ordered by the licensee in connection with the business of residential mortgage loans," enables both unilateral and involved steering  both of which are strikes at the heart of the Sherman Antitrust Act, meant to preserve competitive markets.    

Failure to address the proposed language of payments to third party vendors by licensees very easily leads unsuspecting consumers to one-stop shops that operate under the radar of government agencies, associations and both state and federal law enforcement.  

In the Wall Street Journal article "Your Mortgage Broker: Friend or Foe?" dated May 24, 2007, Chris Holbert, President of the Colorado Mortgage Lenders Association states, "The mortgage broker does not represent the borrower."  He further adds, "We sell access to money."

In an industry where approximately 60% of all home loans are originated by mortgage brokers according to HUD, the opportunity for unilateral and involved steering can and does happen on a greater basis.  The results of this past failed business model enables third-party conspirators to orchestrate and carry out illegal real estate transactions harming consumers and financial lenders that operate within the state.  

Secondly the Utah Division of Real Estate's R162-205-2 Residential Mortgage Standards of Practice states in the proposed language of 205.2.1 states that: "As part of the loan application process, a mortgage officer shall provide a written disclosure to any prospective borrower, which includes the mortgage officer's name, signature, license number and attestation that the license is active and in good standing, and shall request that the borrower sign a copy of the disclosure acknowledging that this disclosure has been made."

This language, while proactive in nature, falls short of its goal to demonstrate to the consumer as well as to financial lenders operating within the state, the identity of the mortgage officer.  So often in review of case files we receive, the person acting in the capacity of the licensed professional is different from (or impersonating) the individual actually holding license with the state government entity.  The inclusion of language within the disclosure should mandate that mortgage officers provide a copy of their Photo I.D. - as currently on file with the state's licensing division.  This ensures public confidence that the identity of the mortgage officer and the person assuming such role are one in the same. 

Additional disclosures from the Mortgage Officer should include:

• Reasons for selecting sub-prime lenders when the consumer qualifies for A-Paper Loan.

• Informing the consumer of underwriting criteria for loan qualification as well as for fees and rates charged either for sub-prime or A-paper loans.

• If the Mortgage Officer has been sanctioned or currently under investigation by the UMLA, Division of Real Estate or State/Federal Governmental Agency.

• Civil action pending or recently resolved.

• Transaction-level data on commission rates and fees.

• List other states where the mortgage officer holds or has held license.

• The number of lenders the mortgage officer has relations with and who the mortgage application shall be submitted to.

While we recognize the Utah Division of Real Estate's proposed rule is a work in progress, and therefore not final, Perfect Home Living strongly urges the Division to consider implementing our suggested language to ensure stronger safeguards of protection for consumers, licensees and financial lenders operating within the state. 

To review the proposed Administrative Rule in its entirety click here.

About Perfect Home Living 

Perfect Home Living is a nationally recognized leader that assists in implementing programs and providing training to financial lenders as well as educating consumers and licensed professionals to red flags within today's  real estate market.   For more information or to request assistance please email: businessdevelopment@perfecthomeliving.com