By Don DeRespinis
President and founder
Charter Oak Lending Group LLC
How to Prep for Call Reports H to P or C
Expected passage of a reporting rule may mean more record-keeping for you
Beginning some time next year, mortgage brokers likely must start filing Nationwide Mortgage Licensing System (NMLS) call
reports. A proposal for such reports
released this past March responds to
a mandate in the Secure and Fair Enforcement for Mortgage Licensing Act
(aka, the S. A.F.E. Act) and intends to
standardize licensed mortgage companies’ reporting of loan activity in
each state.
Although final guidance regarding call
reports has not appeared as of press
time, it’s not too early for mortgage brokers to develop a plan for building the
reports into their business operations.
By preparing for the new requirements
proactively, brokers can give themselves more time to adjust and avoid
time crunches later.
What is a call report?
The NMLS proposal laid the groundwork for call-report requirements.
A public-comment period closed this
past May.
If implemented as proposed, call reports would include the total monetary
loan volume and number of units for
each individual loan originator who operates under the reporting mortgage
brokerage. The reports would include
information for the brokerage owner or
managing broker’s origination activity.
Brokers would be required to provide
information specific to each state’s
regulatory authority.
The NMLS proposal included reporting requirements for the following activities during each quarter:
• Number of applications received
• Number of applications denied
• Number of applications withdrawn
• Loans brokered
• Applications in process at the begin-
ning and end of each quarter
totaled by type. Loan categories would
include purchase, refinance, Federal
Housing Administration, U.S. Depart-
ment of Veterans Affairs, Fannie Mae,
Freddie Mac and U.S. Department of
Agriculture. Other loan characteristics
such as adjustable rates, balloon pay-
ments and negative amortization also
would be required in the reports.
On the Web O
Nationwide Mortgage Licensing
System’s call-report proposal:
sctsm.in/CallRprop
Either system should be flexible
enough to allow users to add, delete
or edit attributes as required by file
changes.
“If implemented as proposed, call reports would include
the total monetary loan volume and number
of units for each individual loan originator who
operates under the reporting mortgage brokerage.”
If regulators implement the call-report
proposal as planned, brokers must file
reports within 45 days of the end of each
quarter. In practice, this would require
brokers to collect mandated data with
each loan file and maintain organized
financial records. Trying to catch up with
record-keeping at the end of each quarter could prove disastrous.
Call reports, however, needn’t be
expensive or time-consuming. In fact,
their impending implementation marks
a good time to evaluate your current
systems and integrate processes.
System options
Brokers can ease the transition to call
reports and promote their accuracy
by using or developing software systems that code each transaction with
required attributes at origination and
throughout processing. These systems
can include a flexible way to code a
loan with specific attributes and generate a report with all loans and their associated attributes at the end of each
reporting period.
Another way to track and report your
business’s activity is to use a loan-origination system that creates lists of
loans based on which required reporting elements they meet. These lists can
automatically call on data inserted in
the system as the loan is processed.
misclassified. The best systems will
include validations that identify and
correct mistakes.
Minimizing the time required to prepare call reports can keep brokers focused on mortgage origination rather
than legal technicalities. This is also
true when it comes to preparing required financial statements. In some
cases, brokers may decide that hiring a certified public accountant to
help with that aspect of the reports is
worth the expense.
Although final call-report requirements is unknown as of press time,
the intent seems clear. Implementation likely will occur in 2011 — and by
preparing now, you can avoid the hassle of meeting new requirements on a
tight deadline. •
Don DeRespinis is president and founder
of Charter Oak Lending Group LLC. He’s a
certified public accountant and a certified
residential mortgage specialist. He has a
master’s degree in taxation and has been
an associate professor of accounting and a
department chairman at Western Connecticut State University. He and his wife, Deb
Killian, have operated Charter Oak Lending
Group for 15 years. They also developed a
comprehensive business-operating system.
Visit www.mortgagecenter.net or e-mail
danbury@snet.net.
