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Regulators Probe ‘Education Fraud Scheme’ By Mortgage Loan Originators


California is main a multi-state regulatory job pressure that’s investigating an alleged “training fraud scheme” by an organization suspected of permitting mortgage mortgage originators to skirt their pre-licensing and persevering with training coursework necessities.

The SAFE Mortgage Licensing Act requires state-licensed mortgage mortgage originators to finish at the very least 20 hours of pre-licensing training, and a minimal of eight hours of constant training yearly, utilizing suppliers permitted by the Nationwide Multistate Licensing System (NMLS).

Mortgage mortgage originators who fulfilled that requirement by way of a Carlsbad, California-based supplier, Actual Property Educational Companies (REES), have been lately ordered to offer particulars to regulators in regards to the programs they took from 2017 by way of 2020.


Regulators wish to know whether or not mortgage officers licensed by REES as having accomplished their eight-hour persevering with training classroom requirement truly attended these lessons in individual. Licensees have been additionally instructed to checklist any on-line prelicensing or persevering with training programs “for which you obtained course credit score, however you didn’t personally take and full.”

Regulators sought that info by way of a web based survey that additionally demanded copies of invoices, certificates of completion, and communications with REES or its house owners, Danny and Wendy Yen.

“This [is] a compulsory survey that gives you with a possibility to reveal info relating to your participation within the aforementioned scheme,” regulators advised recipients. “Failure to offer info or full the regulatory survey, in addition to offering false or incomplete info in your response to the regulatory survey, could end in extra extreme enforcement motion taken by your state regulator(s) towards you and your mortgage mortgage originator license.”


The survey states that it’s a part of a Multi-State Regulatory Taskforce investigation approved by the Convention of State Banks Supervisors, which owns and operates the Nationwide Multistate Licensing System (NMLS).

The survey — which mortgage originators got till July 31 to finish — additionally requested licensees to point whether or not they have been prepared to resolve any potential violations by way of a consent order or settlement settlement.

The investigation was first reported by Mortgage Information Each day’s Rob Chrisman, who stated it might contain “a whole bunch if not hundreds” of mortgage originators who relied on REES to satisfy their academic necessities since 2017.

These concerned “are dealing with, at greatest, having to retake their 2020 and 2021 NMLS lessons, and a suggestion that their license be suspended till they re-complete the 2020 class,” Chrisman reported. “All the LOs in query face the opportunity of the NMLS recommending that the state revoke the LO’s licenses. Some concerned could also be dealing with jail time.”


A spokesman for the California Division of Monetary Safety and Innovation confirmed to Inman by way of e-mail that the DFPI is the lead company within the investigation, however stated he couldn’t touch upon any particulars.

REES and its house owners, Danny and Wendy Yen, didn’t instantly reply to requests for remark to a telephone quantity and e-mail related to the enterprise. REES is not listed as an NMLS-approved course supplier, and the corporate’s former web site is inactive.

Along with finishing the required coursework, mortgage mortgage originators looking for state licensing should cross a 115-question SAFE Mortgage Loan Originator Check developed by NMLS with a rating of 75 p.c or higher.

E mail Matt Carter


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