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   ARTICLE   |   From Scotsman Guide Residential Edition   |   March 2011

Answering the Call of Duty

NMLS call reports are coming soon and require careful attention to today’s origination activity

Starting next quarter, mortgage brokers must begin filing Nationwide Mortgage Licensing System (NMLS) call reports. The reports, dubbed Residential Mortgage Loan Activity (RMLA) reports, were mandated by the Secure and Fair Enforcement for Mortgage Licensing Act (aka the S.A.F.E. Act). The intent of the reports is to standardize licensed mortgage companies’ reporting of loan activity.

Under the S.A.F.E. Act, the NMLS was to establish a system to report the activity of mortgage loan originations for all nonbank mortgage lenders, including mortgage brokers.

"The first reports are due no later than May 15 and will cover lending activity from Jan. 1 through March 31."

In its working draft of the call-report guidelines, the NMLS set the schedule for beginning the reporting process and loosened the requirements for quarterly financial conditions. The more-simplified requirements were meant to ease the burden on smaller mortgage brokers.

The guidelines mandate call reports be submitted no later than 45 days after the end of each quarter. The first reports are due no later than May 15 and will cover lending activity from Jan. 1 through March 31.

Call reports will continue to be required quarterly and will focus only on the prior quarter, not on cumulative activity as proposed initially. Mortgage brokers also received a reprieve on reporting their financial condition. Brokers only will be required to report financial conditions annually. Those reports will be due 90 days after the end of a company’s fiscal year. States will determine individually if the reports of financial condition must be audited.

As for quarterly call reports, which focus on mortgage activity, most states require brokerage companies to complete the reports on behalf of their loan originators. Companies that aren’t required to complete the reports may defer the responsibility to their individual originators.

Although the call reports contain two sections — standard and expanded — brokers or the originators working for them likely will only be responsible for the standard section. Only approved Fannie Mae or Freddie Mac sellers and servicers and Ginnie Mae issuers must complete the expanded section.

The standard section of the reports includes information about total loan amounts and total applications worked on in the previous quarter, including numerical and monetary summaries of:

  • Applications in process at the beginning of the period;
  • Applications received;
  • Applications approved but not accepted;
  • Applications denied;
  • Applications withdrawn;
  • Files closed for incompleteness;
  • Loans originated; and
  • Applications in process at the end of the quarter.

The reports also require an account of how many forward and reverse mortgages were closed, what type of loans they were and their purpose. For forward mortgages, a breakdown of conventional, Federal Housing Administration-insured and U.S. Department of Veterans Affairs originations also is required, along with property-type details and lien statuses. Information about broker fees must be reported for forward and reverse mortgages.

Although the standard report reduces the filing requirements for brokers and loan originators, the task of managing and reporting a loan pipeline has become more complicated and time-consuming. The easiest manual systems will likely use a spreadsheet or a piece of graph paper to create a page for each criterion that must be reported.

On the Web

Keep in mind that a loan may fall into more than one category. Each loan that applies to a specific category, even if it has been listed elsewhere, must be listed and totaled to arrive at the final number and loan amount for each category. Information for forward and reverse lending, however, must not overlap.

Ideally, brokers can acquire the information they need by querying their loan-origination system. To track originations, consider setting up a system that records activity as follows and delivers totals after each calculation.

Start with applications in process at the beginning of the quarter. Add to it applications received. Then subtract the following:

  • Applications approved but not accepted
  • Applications denied
  • Applications withdrawn
  • Files closed for incompleteness

The total will equal applications in process at the end of the quarter.

If you set up a system ahead of time and update your data consistently and accurately, you’ll be ready when the time comes to file your first report and each subsequent report. Brokers with loan originators on staff should make sure each member of their staff understands the categories and definitions used.

Before the end of each quarter — and preferably at the end of each week — all loans in your pipeline should be updated and acted upon and clients should receive news on the status of their application. Companies that monitor their pipeline tirelessly can leverage NMLS call reports into useful business tools. Those that don’t risk data overload and place their business and license in jeopardy of costly compliance gaffes.


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