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Friday, July 11, 2014

Bulletin: CFPB Does Not Want Table Funders Masquerading as Correspondents

The CFPB has provided the guidance it will use in determining whether correspondents are table-funders or conducting bona-fide secondary marketing transactions:

Does the correspondent have:

  • the net worth to be a warehouse banker
  • underwriting staff
  • multiple investors to sell closed loans to
  • arrangements where it brokers but also funds with an investor/wholesaler
  • multiple lines of credit
  • the ability to sell loans to whomever it chooses vs. captive line
  • understanding of compliance risks associated with funding
  • rigorous approval by warehouse lender

Basically, are you really a lender, or are you a glorified table-funder?  The CFPB guidelines for determining this have been tempered with the idea that a company may be transitioning to correspondent, but that this may not be an artifice for circumventing Dodd-Frank rules re: compensation, disclosure.

http://files.consumerfinance.gov/f/201407_cfpb_guidance_mini-correspondent-lenders.pdf

Not to Say "We Told You So" But...

Link to LinkedIn Discussion Regarding this

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