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.
