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Consumer Financial Protection Bureau (CFPB) Warns Against Table Funders pretending to be Mortgage Correspondent Lenders

Posted on Posted in Common mistakes, Mortgage Broker Compliance

The CFPB has provided the guidance it will use in determining whether correspondents are table-funders or conducting bona-fide secondary marketing transactions. The items listed below are just some of tests that the lending entity must meet to qualify as a bona-fide Correspondent Lender

Can the Correspondent Lender demonstrate:

-The required net worth to be a warehouse banker
-Its own underwriting staff
-More than a single investor that purchases closed loans
-Current documented procedures where it not brokers but also funds loans with an investor/wholesaler
-Multiple warehouse lines of credit that are not captive
-A complete understanding of compliance risks associated with funding loans including all implemented and audited (with necessary written reports) compliance plans
-Open, ethical and accurate approvals by warehouse lenders

Clearly this posture calls for all Mortgage Correspondent Lenders to review their status and ensure they meet the standards and are not just a table funding Mortgage Broker attempting to circumvent Dodd- Frank. For more¬†information, view the BCPB’s supervisory and enforcement guidance.