Expected passage of a reporting rule may mean more record-keeping for you

Don DeRespinis, president and founder, Charter Oak Lending Group LLC

As published in Scotsman Guide's Residential Edition, September 2010.

Beginning some time next year, mortgage brokers likely must start filing Nationwide Mortgage Licensing System (NMLS) call reports. A proposal for such reports released this past March responds to a mandate in the Secure and Fair Enforcement for Mortgage Licensing Act (aka, the S.A.F.E. Act) and intends to standardize licensed mortgage companies' reporting of loan activity in each state.

Although final guidance regarding call reports has not appeared as of press time, it's not too early for mortgage brokers to develop a plan for building the reports into their business operations. By preparing for the new requirements proactively, brokers can give themselves more time to adjust and avoid time crunches later.

What is a call report?

On the Web ___________________________ Nationwide Mortgage Licensing System's call-report proposal: sctsm.in/CallRprop

The NMLS proposal laid the groundwork for call-report requirements. A public-comment period closed this past May.

If implemented as proposed, call reports would include the total monetary loan volume and number of units for each individual loan originator who operates under the reporting mortgage brokerage. The reports would include information for the brokerage owner or managing broker's origination activity. Brokers would be required to provide  information specific to each state's regulatory authority.

The NMLS proposal included reporting requirements for the following activities during each quarter:

• Number of applications received
• Number of applications denied
• Number of applications withdrawn
• Loans brokered
• Applications in process at the beginning and end of each quarter

Broker companies and lenders would need to provide information about the types of loans brokered or funded and totaled by type. Loan categories would include purchase, refinance, Federal Housing Administration, U.S. Department of Veterans Affairs, Fannie Mae, Freddie Mac and U.S. Department of Agriculture. Other loan characteristics such as adjustable rates, balloon payments and negative amortization also would be required in the reports.

Loans in process would include all applications that meet the U.S. Department of Housing and Urban Development's requirements for mandatory issuance of a good-faith estimate.

State regulators likely will use the call reports in loan-originator-licensee investigations. The reports likely will include two parts:

• Licensees' mortgage loan activity
• Licensees' financial information

If regulators implement the call-report proposal as planned, brokers must file reports within 45 days of the end of each quarter. In practice, this would require brokers to collect mandated data with each loan file and maintain organized financial records. Trying to catch up with record-keeping at the end of each quarter could prove disastrous.

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