The federal mortgage act disclosure improvement act or MDIA, came into effect on July 30th 2009. This is a particularly important law that all banks, lenders as well as agents should know about, as it governs the way in which the business of applying and confirming a business loan is conducted. This is an amendment to the previous Truth in Lending Act, which had been used by lenders and banks, similar to the good faith estimate; which was normally given by the banks to the borrower. The rule creates a slower pace for closing of home loans. For borrowers who were planning to close their deals quickly, this rule comes as a dampener.

What are the Compliance Requirements for Industry Professionals? As a professional involved in the mortgage loan origination process, you must meet the following requirements in order to become S.A.F.E. compliant. In addition to these requirements, your state may require additional action. Contact your state’s agency for specific information. Pre-licensure Education: The Secure and Fair Enforcement for Mortgage Licensing Act requires you to complete 20 hours of NMLS approved pre-licensure education. If you are licensed in more than one state, the good news is that you only need to complete this education once. Please note, however, that there may be more than 20 hours of education required by your state – do your research to determine your state-specific information.

SAFE MLO Test: S.A.F.E. requires you to pass both the National and State Components of the S.A.F.E. MLO Test. The National Component only needs to be passed once and satisfies all state requirements – you must score 75% or better on the national part of the test. The State Component must be passed for each state in which you seek licensure. Criminal Background Check: S.A.F.E. requires that you provide fingerprints for an FBI criminal history background check. Credit report: The Secure and Fair Enforcement for Mortgage Licensing Act requires that you provide authorization for NMLS&R to obtain a credit report. Continuing Education (CE): S.A.F.E. requires 8 hours of continuing education to be completed each year prior to renewal. Please note that continuing education hours are not required to be completed if pre-licensure education was completed in the same year. Each agency may require more than the designated 8 hours or require a certain number of hours with state content. For details on your state’s requirements, contact your state agency.

That means that if the value of your client’s mortgage, plus the Homestead Exemption of $50,000 per spouse exceed the value of the real estate, then the second or third mortgage will be stripped away in a Chapter 13 bankruptcy. Until recently a bankruptcy party was not allowed to strip away a second or third mortgage under a Chapter 7 bankruptcy. However, a recent case decided by Judge Eisenberg in the Eastern District of New York (Long Island), has held that a wholly unsecured second mortgage may be stripped down in a Chapter 7 bankruptcy.

However, if the second or third mortgage or judgment lien is even one percent secured by the value of the real estate, it cannot be stripped down into an unsecured debt.

Learn more about Obama Mortgage Relief Plan Qualifications.