Monday, May 19, 2014

The "Incurable" NMLS# Mistakes

An IDS Client recently asked us if we could clarify where exactly the "incurable" language comes from with regards to making sure NMLS#s appear as they should on the Note and Security Instrument. This problem is made "incurable" mostly by the way that investors are interpreting the statute. Here's how a couple of the big investors are addressing it:

Wells Fargo Newsflashes C13-067FR & C13-074FR:

"As a result, Wells Fargo Funding is expanding our pre-purchase review to ensure the required information is present on the application, Note, and Security Instrument as required by the rule.
  • Because the rule specifies that the information must be present when these documents are “provided to the consumer/presented to the consumer for signature," non-compliant Loans must be recommended for non-purchase.
  • Failure to provide name/NMLSR information as stipulated in the rule cannot be cured post-closing."
  • Chase Bulletin CB13-77: 
     "The following data must be listed on the Note and the Security Instrument:
  •  Loan Originator Organization (LOO) company name
  • Name and NMLS ID (if any) of the individual Loan Originator who, under the LOOs policy, is primarily responsible for the transaction (as defined by the Dodd-Frank Act Truth-In-Lending Act requirements).
  • The names of LOO and LO registered on NMLS must appear on the documents as they appear in NMLS.
  • The LOO and LOO ID must be on the specified docs when the documents are delivered to the borrower to sign and cannot be added post-closing.
  • The LO name and LO ID (if any) must also be on the specified docs when the documents are delivered to the borrower to sign and cannot be added post-closing."

It appears that what the investors are really struggling with is the idea that the NMLS#s are present on the note and security instrument at the time of signing. Inferring that finality is created when the documents are signed and no other changes are then allowed to be made to what has been signed.

IDS Compliance believes that it is a good reminder that this is still the current view of many investors. Please keep an eye out for data entry accuracy with the NMLS#s and corresponding names. IDS will update its clients as soon as it hears any changes to this rule.

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