Policy and Procedures

H A N D B O O K

 

 

The following is the UNITED PACIFIC LENDING, Inc. Handbook.

 

Please read this manual carefully and make sure you understand it.

 

If you have any questions whatsoever, contact your immediate supervisor  for any clarification of items in this handbook.

 

Please remember to initial at the bottom of each page.

Please sign and date the acknowledgement at the conclusion.

 

 

Thank You

 

 

 

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W E L C O M E

 

 

We are excited to have you become part of the UPL team. You have the opportunity to join UPL, because we believe you can contribute to the accomplishment of UPL’s goals, to the bottom line of UPL’s financial success, enhance UPL’s commitment to excellence and become a valuable ground floor member of this new and exciting company.

 

As part of the UPL team, you will discover that the pursuit of excellence is truly a rewarding aspect of your career.  As an independent contractor, team member, employee, staff member and salesperson, you must “own” the results of your productivity.

 

The success of UPL is determined by our success in operating as a unified team. We have to earn the trust and respect of our clients, every day, so that customer will make the decision to choose our services and UPL will have repeat clients, who recommend you and UPL to their family and friends. We sell service and excellent service is provided by you and our staff. There are no magic formulas.

 

Our success is guaranteed by creative, productive team members who are empowered to make suggestions while thinking “outside the box”.   At UPL, we strive to recognize the contributions of each and everyone in the company.

 

Your job, your responsibility, is essential to fulfilling our philosophies through dedicated hard work and commitment from everyone at UPL.

 

It is the desire of UPL management to have everyone succeed, which will insure that UPL achieves its goals.

 

Welcome aboard. We look forward to working with you.

 

 

 

Sincerely,

 

 

 

 

United Pacific Lending

 

 

 

 

 

 

 

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P U R P O S E

 

 

Welcome to UNITED PACIFIC LENDING, INC., which will be referred to as “UPL” for purposes of this

POLICY AND PROCEDURES HANDBOOK, which will be referred to as the “Handbook”.

 

This Handbook is designed to help you get acquainted with UPL. It explains UPL philosophies, values and beliefs. It defines the key policies, goals, expectations and responsibilities for you, as well as other information you will need as part of our UPL team.

 

You should use this Handbook as a handy reference as you pursue your career with UPL. Additionally, the

Handbook is designed to provide fair treatment of independent contractors, team members, salespersons, employees, and staff member.

 

Because UPL is a changing organization, UPL reserves the right to add, modify or update the Handbook and the policies and procedures at any time.

 

The Handbook is intended as a summary of policies and procedures and is not intended to create any contractual or legal obligations or to alter the at-will nature of your contract with UPL.

 

This Handbook is designed to acquaint you with UPL and to give you a ready reference to answer your questions while working with us. This Handbook is designed to offer two-way communication: what you can expect from UPL, and what UPL can expect from you.

 

It is your responsibility to read and become familiar with the contents of this Handbook. If you have any question or do not understand any of these policies, you are encouraged to contact your immediate supervisor.

 

The contents of this Handbook constitute only a summary of the policies, procedures, responsibilities, and expectations in effect at the time of publication.   This Handbook should not be construed as creating any kind of “employment contract”, since UPL reserves the right to add, change or delete any and all, policies, procedures, responsibilities, and expectations and all other working conditions as it deems appropriate without obtaining any other parties consent or agreement.

 

THIS HANDBOOK DOES NOT ALTER THE “AT-WILL” NATURE OF YOUR ASSOCIATION WITH UPL.

 

YOU HAVE THE RIGHT TO LEAVE AT ANY TIME, WITH OR WITHOUT CAUSE, WITH OR WITHOUT NOTICE, AND UPL HAS THE SAME RIGHTS. HOWEVER, UPL ENCOURAGES YOU TO PROVIDE US WITH WRITTEN NOTICE SHOULD YOU DECIDE TO TERMINATE YOUR CONTRACT.

 

 

 

 

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P H I L O S O P H Y   F O R   E X C E L L E N T

C U S T O M E R   S E R V I C E

 

 

UPL’s most important goal is customer satisfaction. Clients are the most important people in the world.

 

Let’s face it—without them we would not be here. Therefore, the following are “golden rules” for excellent customer service:

 

·         CLIENTS are the most important people in our business, whether we are working with them in person or over the telephone.

 

·         CLIENTS are not dependent on us, we are dependent on them.

 

·         CLIENTS are not an interruption of our work; they are the purpose for it

 

·         CLIENTS favor us with their patronage; we are not doing them a favor by serving them.

 

·         CLIENTS are a part of our business, they are not outsiders.

 

·         CLIENTS are not cold statistics; they are human beings with feelings and emotions like your own.

 

·         CLIENTS are not someone to argue with or match wits with.

 

·         CLIENTS are people who bring us their wants and needs, and it is our job and your job to fulfill those wants and needs.

 

·         CLIENTS are deserving of the most courteous and attentive treatment UPL and you can give them.

 

·         CLIENTS ARE THE LIFE BLOOD OF UPL’S BUSINESS and YOUR BUSINESS. .

 

 

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G O A L S,  V A L U E S,  &  B E L I E F S

 

 

Our goals are accomplished by a commitment from every independent contractors, team members, salespersons, employees, and staff member.

 

Our values and beliefs require that UPL:

 

• Treat each independent contractor, team member, salesperson, employee, and staff member with respect and provide each and everyone with an opportunity to provide input on how best to continually improve UPL’s goals.

 

• Treat each independent contractor, team member, salesperson, employee, and staff member fairly and with mutual respect. UPL does not tolerate discrimination of any kind and encourages all managers and supervisors to involve everyone in problem solving. When problems arise, the facts should be analyzed to determine ways to avoid similar problems in the future.

 

• Provide the most effective and efficient corrective action, to resolve customer service issues, to ensure our clients satisfaction and to prevent similar problems from repeating in the future. In this way, we will create a position of UPL’s leadership position in the industry.

 

• To foster an open door policy which encourages interaction, discussions and ideas to improve the work environment, thus increasing UPL’s productivity.

 

• Deliver competitive, impeccable service to UPL’s clients and, where appropriate, partner our               clients with other businesses who share our mission statement.

 

• Make “Do It Right the First Time” UPL’s commitment, as a team, and our only way of doing business.  This commitment will assure continued growth and prosperity.

 

 

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G E N E R A L I N F O R M A T I O N

 

 

POLICIES & PROCEDURES:

 

This section of your Handbook discusses your responsibilities to UPL. Please thoroughly familiarize yourself with these policies and procedures and apply them to your work. The result of your effort will be a more efficient, productive and pleasant atmosphere for you, your co-workers, affiliates and our clients.

 

The reputation of UPL for its honesty and business integrity is vital to our continued success. All independent contractors, team members, salespersons, employees, and staff members should use good judgment and high standards in all business dealings. UPL expects all independent contractors, team members, and salespersons, employees, and staff members to be loyal, honest, and free of influential interests and activities that may prevent them from acting in the best interest of UPL

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UPL needs to have certain reasonable policies and procedures for the conduct of business. UPL’s most important policy is the “rule of reason” which is common sense. The following are some of the policies and procedures that should not be violated under any circumstances. Violation of these UPL policies and procedures may result in immediate termination or termination of your contract. If you have any questions about these policies and procedures, or what we expect of you, please discuss them with your manager or your supervisor. UPL’s identification of these policies and procedures does not alter the “at-will” nature of your contract. UPL and you both have the same right to terminate your employment or your contract at any time, with or without cause, and with or without notice.

 

1. CONFIDENTIALITY

 

UPL requires all independent contractors, team members, and salespersons, employees, and staff members to sign a Confidentiality Agreement as a condition of their employment or their contract. Should a situation arise where an independent contractor, team member, salesperson, employee, or staff member receives confidential information intended only for UPL’s use, said person is required to maintain such information in the strictest confidence.

 

This policy benefits you, as an independent contractor, team member, salesperson, employee, or staff member by protecting the interests of UPL.

 

Independent contractor, team member, salesperson, employee, and staff member agrees that information concerning UPL’s business (including that of all corporate affiliates) is “Confidential Information” and proprietary and shall be maintained in confidence and not disclosed, used, duplicated, published, disseminated or otherwise made available except as described in this section. “Confidential Information” may also include, without limitation, leads, lists of (or other information relating to and identified with) clients, former or prospective clients or Applicants, trade secrets, confidential and proprietary methods, techniques, processes, applications, approaches, and other information of UPL in various forms, which information is used or is useful in the conduct of UPL’s business including UPL’s origination, purchase, and sale of mortgage products and the subject matter of this Agreement.

 

 

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Independent contractor, team member, salesperson, employee, or staff member may use Confidential Information of UPL only  

 

(i) in connection with performance under this Agreement, and

 

(ii) in compliance with applicable provisions of Subtitle A of Title V of the Gramm-Leach-Bliley Act (codified at 15 U.S.C. 6801 at seq.), as it may be amended from time to time (the “GLB Act”), the regulations promulgated thereunder, the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq. (as it may be amended from time to time, the “FRCA”) and all other Applicable Requirements. Independent contractor, team member, salesperson, employee, or staff member all not copy Confidential Information or disclose Confidential Information to persons who do not need Confidential Information in order to perform under this Agreement. UPL shall maintain an appropriate information security program (in accordance with the GLB act and/or any other Applicable Requirements) to prevent the unauthorized disclosure, misuse, alteration or destruction of Confidential Information.

 

2. HONESTY

 

Honesty and personal responsibility are the foundations of UPL’s operating principles. Wherever we do business, we strive to instill confidence in our clients by reinforcing UPL's ability to meet its commitments. Actions that might raise questions about UPL's business ethics are totally unacceptable. UPL expects each independent contractor, team member, salesperson, employee, and staff member to be honest and thorough in all business transactions and to conform to UPL’s business principals.

 

It is unethical and improper to give or take bribes or gifts, and such actions — even an implication of such actions ---may result in immediate termination or termination of your contract. Independent contractors, team members, salespersons, employees, and staff member must never publicly criticize UPL or its competitors. If any independent contractor, team member, salesperson, employee, or a staff member sees or hears of any action that seems questionable, it is said person’s responsibility to consult with the appropriate supervisor or manager. If any question arises about the appropriateness of an action, it should be reviewed by senior management. Throughout this process, all discussions should be documented to provide a clear record for future reference.

 

 

3. FRAUD, DISHONESTY, AND FALSE STATEMENTS

 

No independent contractor, team member, salesperson, employee, or staff member shall ever falsify any application, income information, record, invoice, paperwork, time keeping, or any other document. Any employee or independent contractor found to have engaged in fraud or who make material misrepresentations or omissions on their employment application will be subject to immediate termination or termination of your contract.

 

 

4. POLICY AGAINST HARASSMENT

 

UPL is committed to providing a workplace free of harassment (which includes harassment based on gender, pregnancy, childbirth, and related medical conditions), as well as harassment based on such factors as race, religion, national origin, ancestry, age, physical disability, mental disability, medical condition, marital status, sexual orientation, or veteran status or any other basis protected by federal, state or local laws.

 

   

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UPL prohibits harassment of any manager, supervisor, co-workers, independent contractors, team members, salespersons, employees, staff members, third parties or clients, and UPL takes all reasonable steps to protect all parties in the workplace.

 

Harassment includes verbal, written physical, or visual conduct that creates an intimidating, offensive, or hostile working environment or that interferes with work performance. Harassing conduct may take many forms such as slurs, jokes, statements, letters, notes, gestures, pictures, or cartoons regarding sex, race, color, religion, national origin, ancestry, age, physical disability, mental disability, medical condition, marital status, sexual orientation, veteran status, or any other basis protected by federal, state or local laws. Sexual harassment includes unwanted sexual advances.

 

Each of the following is just some examples of sexual harassment:

 

• Verbal requests (advances or propositions) for sexual favors
• Verbal abuse of a sexual nature or sexually degrading words used to describe an individual
• Conversations containing offensive sexual comments.
• Offering employment or other benefits in exchange for sexual favors.
• Making or threatening reprisals in response to refusal to give sexual favors.
• Leering, sexual gestures, displaying of sexual suggestive objects, pictures, cartoons or posters.
• Graphic verbal or written comments (suggestive or obscene letters), epithets, slurs, and jokes of a sexual nature about an individual’s body.
• Physical conduct such as touching, assaulting, impeding or blocking another individual.

 

If you have any questions about what constitutes harassing behavior, ask your manager or contact or your direct supervisor.

 

Any incident of harassment should be reported promptly to your supervisor or any manager.  UPL emphasizes that you are not required to complain to your manager or supervisor if your manager or supervisor is the one harassing you or if you are uncomfortable doing so. In Addition to notifying UPL about any harassment or retaliation, you may also report any such complaints to the Equal Employment Opportunity Commission (EEOC) or the state agency tasked with enforcing laws against harassment.

 

Every reported complaint of harassment will be investigated thoroughly, promptly, and with as much confidentiality as possible. UPL prohibits retaliation against any independent contractor, team member, salesperson, employee, or staff member for cooperating in any investigation or for making a complaint.

Violation of this policy will result in any independent contractor, team member, salesperson, employee, or staff member receiving the appropriate action, up to and including an immediate discharge or termination of contract depending on the circumstances.

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Sexual harassment and retaliation for opposing sexual harassment or for participating in investigations of sexual harassment are illegal. This is also true for the other types of harassment prohibited for this policy.

 

 

5. SAFETY AND ACCIDENT RULES

 

UPL is committed to providing a safe environment for you to work, and UPL has established a safety program to ensure that everyone understands the importance of safety. This program requires all independent contractors, team members, salespersons, employees, and staff members to exercise good judgment and common sense in their day-to-day job. Horseplay and practical jokes can cause accidents and injuries and therefore are not permitted.

 

 

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6. ENDORSEMENTS

 

No endorsement for or against local issues or any elected official will be given as representative of UPL.

Our focus should be on serving our clients regardless of their beliefs.

 

 

7. PRIVATE BUSINESS ENTERPRISE / OUTSIDE COMPENSATION

 

It is the policy of UPL that private business enterprise of any nature shall NOT be conducted while working with UPL clients.  Either a personal business enterprise or employment or work performed for another employer or business enterprise will not be tolerated while working with UPL clients.

 

It is important that outside activities do not interfere in any way with the responsibilities of independent contractors, team members, salespersons, employees, or staff members. The Mortgage Loan Agreement includes a Confidentiality Agreement and all employees are asked to sign a Confidentiality Agreement, which prohibits the parties from any outside activity which creates a potential conflict of interest with UPL.

 

 

8. QUALITY

 

It is a principle of UPL that there should be no compromise where quality is concerned. Each independent contractor, team member, salesperson, employee, or staff member is responsible for the quality of their work, and each manager is responsible for the quality of all work performed under their management.

 

 

9. PERSONNEL RECORDS

 

UPL is required by law to keep current information on each independent contractor, team member, salesperson, employee, or staff member’s name and address. It is the responsibility of each independent contractor, team member, salesperson, employee, or staff member to immediately advise your manager or contact or your direct supervisor of any change in name, address, telephone number(s), or marital status.

 

Any independent contractor, team member, salesperson, employee, or staff member has the right to inspect certain documents in his or her personnel file in the presence of a UPL representative at a mutually convenient time. No copies of documents in a file will be made, with the exception of documents previously signed by independent contractor, team member, salesperson, employee, or staff member.

 

UPL will restrict disclosure of personnel files to authorized individuals within UPL. Any request for information contained in personnel files must be directed to your manager or direct supervisor. Disclosure of personnel information outside sources will be limited. However, UPL will cooperate with requests from authorized law enforcement or local, state, or federal agencies conducting official investigations and as otherwise legally required.

 

 

10. USE OF UPL PROPERTY

 

UPL provides necessary marketing material which is approved by the manager or supervisor before released.   None of the marketing material or advertising material shall be used for personal use. Deliberate changes by any independent contractor, team member, salesperson, employee, staff member, third party of company’s marketing material, without the written consent and approval a manager or supervisor, will not be tolerated.  We encourage all contractors to utilize their creative instincts and develop their own advertising materials, but ALL advertising, mailings, promotional material, etc. must be approved by the your manager or supervisor prior to printing and release.

 

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11. USE OF ELECTRONIC MEDIA

 

UPL uses various forms of electronic communication including, but not limited to computers, e-mail, telephones, and internet. All electronic communications, including all software, databases, hardware, and digital files, remain the sole property of UPL and are to be used only for UPL business.   Electronic communication and media may not be used for any manner that would be discriminatory, harassing, or obscene, or for any other purpose that is illegal, against UPL policy, or not in the best interest of UPL. 

 

Anyone who misuse electronic communications and engage in defamation, copyright or trademark infringements, misappropriation of trade secrets, discrimination, harassment, related actions, or other inappropriate conduct in connection with the electronic communication system will be subject to termination or termination of contract and/or but not limited to any and all monetary infraction(s) if applicable

 

The copying of software installed on the UPL computers is not permitted unless you are specifically directed to do so, in writing, by your supervisor/manager. Anyone copying software without authorization will be subject to termination or termination of contract and/or held to monetary reimbursement equivalent to value of respective infringement.

 

All electronic information created by any independent contractors, team members, salespersons, employees, or staff member using any means of electronic communication is the property of UPL and remains the property of UPL.

 

Personal passwords may be used for purposes of security, but the use of a personal password does not affect UPL’s ownership of the electronic information. UPL will override all personal passwords if necessary for any reason.

 

UPL reserves the right to access and review electronic files, messages, mail, and other digital archives, and to monitor the use of electronic communications as necessary to ensure that no misuse or violation of UPL policy occurs. All UPL independent contractors, “internal” team members, salespersons, employees, or staff member are to conduct electronic communication through UPL email only, outside and personal emails applications are  deemed inappropriate for UPL communication, becoming subject to policy and trade infringement.

 

12. PERSONAL USPS MAIL

 

All mail which is delivered to UPL is presumed to be business related. Mail received at UPL offices will be opened by office personnel and routed appropriately. If you do not wish to have your correspondence handled in this manner, please have it delivered to your home address.

 

 

13. SHREDDING

 

It is a UPL policy that ANYTHING with personal information (such as an address, phone number, driver’s license number, social security number, birthday, financial information, credit card information, etc..will be shredded.

 

Each independent contractor, team member, salesperson, employee, and staff member is responsible for shredding of the appropriate papers.   Anyone found to have negligently handled personal information will be subject to monetary fine and disciplinary action up to, and including termination or termination of your contract.

 

 

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14. SUBSTANCE ABUSE POLICY

 

UPL is committed to maintaining a working atmosphere that is free of drugs and alcohol and to discourage drug and alcohol abuse by its independent contractors, team members, salespersons, employees, and staff members.

 

 Independent contractors, team members, salespersons, employees, and staff members, who are under the influence of a drug or alcohol on the job compromises UPL interests, and endanger their own health and safety and the health and safety of others.

 

Substances abuse in the work atmosphere can also cause a number of other work related problems, included absenteeism, tardiness, substandard job performance, increased workloads for coworkers, behavior that disrupts the workplace and relationships with clients.

 

To further UPL’s interest in avoiding accidents, to promote and a maintain safe and efficient working conditions for all independent contractors, team members, salespersons, employees, and staff members, and to protect UPL’s business, property, equipment and operations, UPL has established this policy concerning the use of alcohol and drugs. As a condition of your contract with UPL, each independent contractor, team member, salesperson, employee, and staff member must abide by this policy.

 

UPL is committed to promising a safe, healthy, productive, and a drug-free work atmosphere and thereby prohibits:  manufacturing, distributing, dispensing, selling, transferring, purchasing, possessing, or being under the influence of alcohol, or an illegal or controlled substance at any time while representing UPL in a professional capacity.

 

Substance abuse includes but is not limited to:

 

Use of illegal or illicit drugs:

 

•  Misuse of legally obtained or prescribed drugs.
•  Alcohol use that causes physical, mental, emotional or behavioral changes in the user that impairs judgment or exceeds defined legal limits.

 

Nothing in this policy is intended to prohibit the customary and ordinary purchase, sale use, possession, or

dispensation of over-the-counter or prescribed medication, so long as that activity does not violate any law or result in being impaired by the use of such drugs in violation of this policy. It is your responsibility to determine from your physician whether a prescribed drug may impair job performance.

 

Contact your manager or supervisor immediately if you have knowledge that an independent contractor, team member, salesperson, employee, or staff member is manufacturing, selling, purchasing, dispensing, transferring, distributing or using controlled or illegal substance while representing UPL professionally. Any violation of this policy will results in disciplinary action up to and including termination or termination of your contract, including but not limited to indirect and/or direct monetary damages.

 

Independent contractors, team members, salespersons, employees, and staff members may be required to submit to drug/alcohol screening whenever UPL has a reasonable suspicion that they have violated any of the rules set forth in this policy. Reasonable suspicion may arise from, among other factors, management observation, reports or complaints, performance decline, attendance or behavioral changes, or involvement in a workplace or vehicular accident indicating a possible error in judgment or negligence.  In order to enforce the policy and procedures, UPL reserves the right to investigate potential violations and require independent contractor, team member, salesperson, employee, or staff member to undergo substance screening, including urinalysis, blood tests or other appropriate tests.

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Where management has reasonable suspicion that an independent contractor, team member, salesperson, employee, or staff member has violated the substance abuse policy, management may inspect vehicles, work areas, desks, purses, briefcases, and other locations or belongings without prior notice, in order to ensure a work environment free of prohibited substances. 

 

All urinalysis drug tests will utilize an initial Immunoassay methodology or an equivalent. All positive results shall be confirmed by a licensed laboratory using gas chromatography/ mass spectrometry (GC/MS) or an equivalent.

 

Any independent contractor, team member, salesperson, employee, or staff member who tests positive in a confirmed substance test will be subject to discipline up to and including termination or termination of your contract.  UPL expects independent contractor, team member, salesperson, employee, or staff member who suspects they have an alcohol or drug dependency to seek treatment. UPL will encourage and reasonably accommodate independent contractor, team member, salesperson, employee, or staff member with alcohol or drug dependencies to seek treatment and/or rehabilitation. UPL is not obligated, however, to continue to employ or continue the contract of any personal whose performance of essential job duties or responsibilities is impaired because of drugs or alcohol use. It is the responsibility of the independent contractor, team member, salesperson, employee, or staff member to seek and accept assistance before drug and alcohol problems lead to disciplinary action, including termination or termination of your contract. Failure to enter, remain or successfully complete a prescribed treatment program may result in termination or termination of your contract

 

This policy on treatment and rehabilitation is not intended to affect UPL’s treatment of any independent contractor, team member, salesperson, employee, or staff member who violates the regulations described previously. Rather, rehabilitation is an option for any independent contractor, team member, salesperson, employee, or staff member who acknowledges a chemical dependency and voluntary seeks treatment to end that dependency,

 

15. ATTITUDE

 

UPL policy expects independent contractors, team members, salespersons, employees, and staff member to follow the directions of management and to treat a management in a respectful manner. Independent contractors, team members, salespersons, employees, and staff members are expected to be courteous, polite and friendly to clients and all other persons in the work place. No one should be disrespectful to a customer, or use profanity or any other language which injures the image or reputation of UPL. Each independent contractor, team member, salesperson, employee, and staff member shall display a positive attitude towards their job. A bad attitude creates a difficult work environment and prevents UPL from providing quality service to our clients.

 

 

16. POOR PERFORMANCE

 

Each independent contractor, team member, salesperson, employee, and staff member is expected to make every effort to learn their responsibilities and to perform at a level satisfactory to UPL management at all times. Failure to do so can lead termination or termination of your contract.

 

 

17. THEFT

 

Theft in any form will not be tolerated.

 

 

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18. GAMBLING

 

Gambling is prohibited in the workplace and on UPL property.

 

 

19. WORK PLACE VIOLENCE

 

UPL is committed to providing a safe, violence-free workplace. In this regard, UPL strictly prohibits independent contractors, team members, salespersons, employees, staff members, visitors or anyone else on the premises or engaging in a UPL-related activity from behaving in a violent or threatening manner. UPL believes that the prevention of workplace violence begins with recognition and awareness of potential early warning signs. UPL does not tolerate violence or threats of violence in the workplace. Acts or threats of violence by any individual against any independent contractor, team member, salesperson, employee, or staff member on UPL premises or conducting UPL business are prohibited. Likewise, UPL will not condone any acts or threats of violence against temporary employees, consultants, clients, or visitors on the premises while they are engaged in UPL business. Any intentional conduct that is sufficiently severe, intimidating or offensive to cause an individual to fell threatened in any way will not be tolerated. Included are acts of threats of violence towards an independent contractor, team member, salesperson, employee, or staff member, members of their families, friends or property that creates a work environment that is hostile, abusive or intimidating.

 

Examples of conduct that may be considered threatening or constitute acts of violence include, but are not limited to:

 

• Hitting or shoving
• Threatening with harm
• Harassing or threatening phone calls, emails, websites postings, verbal or written communications
• Stalking or harassing surveillance
• Suggesting that violence is appropriate
• Possessing or using a firearms or weapons on UPL property or while on UPL business

 

Independent contractors, team members, salespersons, employees, and staff members on UPL premises are urged to report suspicious activity, situations or incidents involving physical violence or threats of violence.

 

Further, independent contractors, team members, salespersons, employees, and staff members should notify your manager or direct supervisor if any existing restraining order is in effect, or a potentially violent non-work-related situation exists that could result in violence at the workplace.

 

All reports of workplace violence will be taken seriously and will be investigated promptly and thoroughly.

 

In appropriate circumstances, UPL will inform the reporting individuals of the results of the investigation.

 

To the extent possible, UPL will maintain confidentiality of the reporting independent contractors, team members, salespersons, employees, or staff member and of the investigation. However, UPL may need to disclose results in appropriate circumstances, for example, in order to protect in individuals safety. UPL will not tolerate retaliation against any independent contractors, team members, salespersons, employees, or staff member who reports workplace violence or who cooperated in an investigation.

 

 

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20. EMERGENCY WORK CLOSINGS

 

In certain situations (e.g. earthquake, power outages, etc.), it may become necessary to close their office. In such cases, UPL management will make the necessary decision and advise the independent contractors, team members, salespersons, employees, and staff members when they might be available again for management or supervisory purposes.

 

 

21. SOLICITATION AND DISTRIBUTION OF LITERATURE

 

In order to ensure efficient operation of UPL’s business and to prevent disruption to an independent contractor, team member, salesperson, employee, or staff member, the following rules shall apply to solicitations and distribution of literature on UPL property:  _ No independent contractor, team member, salesperson, employee, or staff member shall solicit or promote support for any cause or organization during working time or during the working of others at whom such activity is directed;

 

•  No independent contractor, team member, salesperson, employee, or staff member shall distribute or circulate any written or printed material in work areas during working time or during the work time of others at whom such activity is directed;
•  Under no circumstances will third parties be permitted to solicit or to distribute written material for any purpose on UPL premises without authorization from your manager or direct supervisor.

 

Violation of this policy may result in action, up to and including termination or termination of your contract.

 

 

22. UNAUTHORIZED INTERVIEWS

 

No unauthorized interviews are permitted to be conducted by individuals representing themselves as attorneys, peace officers, investigators, regulatory agencies, or federal authorities, or someone who wants to “ask a few questions.” If any independent contractor, team member, salesperson, employee, or staff member is approached, they are to refer that individual(s) to management.

 

 

23. HOUSEKEEPING

 

Paperwork containing sensitive material must be shredded, and no paperwork may be left out in an unsecure place. If you observe conditions or equipment which is potentially dangerous, report it immediately to management.

  

24. SMOKING

 

Smoking regulations apply to everyone. Smoking is regarded as a privilege, and all clients, independent contractors, team members, salespersons, employees, and staff members are responsible for smoking only in designated areas. Smoking is prohibited in all UPL premises, UPL vehicles, and customer vehicles.

 

25. LOANS AND ADVANCES

 

UPL’s policy is not to make loans, or advances on earned pay or commissions, but may be reviewed by management on a case-by-case basis.

 

  

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26. ACTIVITIES OFF-DUTY SOCIAL AND RECREATIONAL

 

During the year, UPL may sponsor social or recreational activities for its independent contractors, team members, salespersons, employees, or staff members. Attendance at such social activities is completely voluntary and is not work-related. Neither UPL nor its insurer will be liable for the payment of any compensation benefits for any injury that arises out of participation in any off-duty recreational, social, or athletic activity that is not part of UPL work-related duties.

  

27. DRESS CODE AND PERSONAL STANDARDS

 

It is the policy of UPL to maintain a professional and productive atmosphere and to present a professional image to clients, clients, members, co-workers and business associates. All independent contractors, team members, salespersons, employees, and staff members are expected to dress neatly and have a well groomed business appearance and a courteous disposition, in a manner consistent with a company of our caliber. You are expected to dress appropriately for an office setting. We rely on everyone to use good judgment and to dress appropriately. 

 

All independent contractors, team members, salespersons, employees, and staff members are expected to maintain a professional appearance and are required to wear standard business attire, except on days designated by your manager or direct supervisor. Friday’s are generally designated as “Casual Friday’s”. Jean’s are allowed, but the rest of the dress code is in place. Even on excepted days, all independent contractors, team members, salespersons, employees, and staff members are expected to dress appropriately if they have an appointment with a client, customer, business associate, member or other professional which requires professional representation by UPL.

 

Please avoid extremes in dress behavior. Flashy, skimpy or revealing outfits and other non business-like clothing is unacceptable. Clothing should be clean and without rips or holes. Tattoo’s are not allowed to be visible and piercing’s should be conservative. It is solely at management’s discretion to determine what acceptable office attire is.

 

Unacceptable attire includes:

 

•  Jeans sweats or athletic wear, shorts, cut offs, overalls, mid-calf pants and skin-tight, provocative or sheer clothing.
•  Bare-midriff, short tops, or halter tops.
•  Athletic shoes, slippers, flip-flops, beach and similar types of footwear.
•  Headwear or hats

 

This policy cannot anticipate every situation. Accordingly, any independent contractor, team member, salesperson, employee, or staff member who has questions regarding dress and attire should direct them to Human Resource sin advance to avoid conflicts and potential problems. 

 

Any independent contractor, team member, salesperson, employee, or staff member who reports to work inappropriately dressed may be asked to leave and return in acceptable attire. Any independent contractor, team member, salesperson, employee, or staff member who disregards the dress and grooming standards will be subject to actions, up to and including termination or termination of your contract.

 

15                                                                                               INITIAL_________

28. OUTSIDE INQUIRIES CONCERNING EMPLOYEES

 

All inquiries concerning independent contractors, team members, salespersons, employees, and staff members from outside sources should be directed to your manager or direct supervisor.  UPL discloses only the dates of employment and the title of the last position held by present or former individual. If an individual authorizes us in writing, UPL will also inform prospective employers of the amount of salary, commissions, or wages earned. No information should be provided regarding any independent contractor, team member, salesperson, employee, or staff member to any outside source by anyone other than your manager or direct supervisor.

 

29. EQUAL OPPORTUNITY/ AFFIRMATIVE ACTION

 

UPL actively promotes an atmosphere of mutual response and recognizes that diversity creates differences in perspective that strengthens our business. It is our practice to contract, hire, motivate and retain people solely on the basis of ability, experience, training and future potential.

 

UPL has a comprehensive policy and firm belief in promoting equal opportunity for every independent contractor, team member, salesperson, employee, staff member or job applicant. UPL recruits and employs the most qualified individuals without regard to race, color, creed or religion, national origin, age, sex, ancestry, physical or mental disability, legally protected medical condition, marital status, sexual origination veteran status, or any other basis protected by state, federal or local laws. UPL prohibits the discrimination of any individual on any of the basis listed above. Equal opportunity at UPL is not restricted to the hiring procedure, but applies to all actions such as compensation, benefits, promotions, transfers, termination, layoffs, return from layoff, opportunity for training and development, and for social and recreational programs. It is the responsibility of every manager, independent contractor, team member, salesperson, employee, and staff member to conscientiously follow this policy.

 

30. INDEPENDENT CONTRACTORS

An Independent Contractor is a person who contracts to perform services without having the legal status of an employee. Independent Contractors are not eligible for benefits.

  

31. EMPLOYMENT AT WILL

UPL employs all independent contractors, team members, and salespersons, employees, and staff members on an “at will” basis. This means that any independent contractor, team member, salesperson, employee, staff member or UPL may terminate the employment arrangement or contract without cause and with or without notice at any time for any reason and without written notice of specific conduct justifying termination and without a pre-termination hearing. Nothing in this Handbook shall limit or modify the “at will” nature of the relationship. No one has the authority to enter into a contract or any agreement for any specified periods of time or to a make an agreement on other than “at will” terms.

 

32. DISCIPLINARY PROCEDURES

UPL is confident that any issues that arise in the work place will be handled fairly and professionally without the intervention of outside parties. An independent contractor, team member, salesperson, employee, and staff member’s failure to follow these rules, practices, policies, guidelines or other UPL standards or policies not specifically mentioned in the Handbook will result in disciplinary action. Any action taken will be at the sole discretion of UPL and may include informal or verbal counseling, written warnings, suspension and immediate termination of employment or termination of contract.

 

16                                                                                             INITIAL_________

33. HOLIDAYS

 

UPL generally observes the same holidays as the Los Angeles County Recorder. UPL may chose to provide a floating holiday to help staff the office. The holiday schedule is provided only as a courtesy:

 

New Year’s Day President’s Day

Memorial Day Independence Day

Labor Day Veteran’s Day

Thanksgiving Day, Day After Thanksgiving

Christmas Eve—1/2 day Christmas Day

New Year’s Eve – ½ day New Year’s Day

 

 

34. EXIT INTERVIEW

 

UPL management may, at their sole discretion, request any independent contractor, team member, salesperson, employee, or staff member leaving to attend an exit interview conducted by UPL management or direct supervisor. The purpose of the interview is to determine the reasons for resignation or termination and to resolve any questions of compensation, UPL property or other related matters to terminations or resignations.

 

SUMMARY 

The Policy and Procedure Handbook provides guidelines for you. It answers questions and outlines your

responsibilities, requirements, and the legal expectations of UPL. By always keeping the contents of the Handbook in mind, you should understand the goals of UPL. Once again, welcome to UPL, and we look forward to working with you.

 

17                                                                                             INITIAL_________

 

 

A C K N O W L D E G E M E N T     F O R M

 

This UPL “Handbook” has been prepared for your benefit to understand the policies, procedures, philosophies, practices, and benefits provided by UNITED PACIFIC LENDING,, INC. Please read it carefully.  Upon completion of your review of this Handbook, please sign the statement below, and return to your manager or direct supervisor.

 

By my signature below, I acknowledge that I have received, read, familiarized and understand the policies outline in the UPL Handbook. I agree to abide by the rules and regulations of UPL as described in the Handbook.

 

I understand that this Handbook is not intended to cover every situation which may arise during my association with UPL or Mortgage Loan Agreement, but is simply a general guide to the goals, policies, procedures, practices, benefits, and expectations of UPL.

 

I  understand that future changes in policies and procedures, except for the policy of at-will, will supersede or eliminate those found in this Handbook, and that each independent contractor, team member, salesperson, employee, or staff member will be notified of such changes through normal communication channels.

 

I also acknowledge that my employment or contract with UPL is not for a specified period of time and can be terminated at any time for any reason, with or without cause or notice by me or by UPL. I acknowledge that no oral or written statements or representations regarding my employment can alter the foregoing. I also acknowledge that no manager or employee has the authority to enter into an employment agreement – express or implied – providing for employment other than at-will.

 

I understand and agree that the information contained in these materials does not constitute any employment contract between UPL and Principal, and that UPL or Principal may terminate the employment relationship or Agreement Contract at any time with or without cause.

 

I further understand that this agreement supersedes all prior agreements, understandings and representations

concerning my employment or contract with UPL. If I have questions regarding the content or interpretation of this Handbook, Please bring them to the attention of your manager or immediate supervisor.

.

________________________________________           _________________________

Employee/ Independent Contractor Signature                                    Date

 

_________________________________________

Employee/ Independent Contractor Name (print)

 

_________________________________________         _________________________

Manager/Supervisor                                                                           Date

 

 

 

18                                                                                              INITIAL_________

 

Employment

 

 

Trying to find the most competitive Reverse Mortgage Product at the right price in a fast changing market is difficult. Combine the dynamics of multiple investors with swift moving guidelines and the pinnacle importance of giving the highest quality of service to your customers and you have a difficult equation. Big banks don't provide support or competitive compensation for their vital employees as they chase after their corporate greed for profit. Small brokers cannot provide the opportunity in lending to out-of-state markets.

UPL is a customer and employee centric company.
We are currently looking for experienced Reverse Mortgage Originators and Leaders in all major markets.

Competitive Advantages

• Licensing in over 37 states. All Major markets  with many more states pending

  • Lend in markets with stronger values or anywhere you have a customer base.

  • Leadership opportunities to manage teams in multiple markets

• Work with all the major reverse mortgage wholesale lenders .

  • Offer the best rates with the best pricing.

  • Always have access to the latest products

• Operations File Ownership

  • Your only focus is to gain customer commitment

  • Our operations team generates application package and closes your loan.

• Most competitive compensation payouts

  • Get a commission split on the full revenue generated on the loan

  • No tiering

• Commission Comparison

United Pacific Lending                                                              Major Bank
Origination                       $6,000                                      $6,000
the bank doesn't
show you what
Yield Spread Premium $3,208.28                                                 $0.00        they make on the
back end
Gross Revenue                   $9,208.28                                  $6,000.00
Paid to corporate
for branding,
Less Admin.                        -$650            legal and state
licensing
Net Revenue                     $8,558.28                                     $6,000
could be as low
as 32% if it wasn't
Commission Split                    60%                                          42%          self sourced or
you didn't hit top
tier
Less Payroll Tax                    -10%
Gross Commission                $4,621.47                                  $2,520.00
Closed fixed rate HECM with a loan amount of $458,924. there is a yield spread
premium of .625% and an additional $340 for a $30 monthly service fee.
WaterMark Capital Dana Point

• Development Tools and Strategies.

• HECM for PURCHASE

  • Presentations

  • Open House Flyers

  • Realtor Letters

• Credit Union Strategy

  • Branded Letters

  • Branded Flyers

• Get a vanity 800 extension 866-996-HECM

Are you looking for a better way to be successful in the Forward or Reverse Mortgage Industry.

 

 

Independent agenet

I. THE INDEPENDENT ASSOCIATE AGREEMENT

The regulations of the California Department of Real Estate require that each licensee have a written agreement with the broker setting forth the material aspects of the relationship between the parties, including supervision of licensed activities, duties and compensation. A fully executed copy of the Agreement should be kept in your permanent files. It may be helpful in situations arising even many years after the employment has been terminated.

In the event of a conflict between this Handbook and the Independent Associate Agreement, the provisions of the Independent Contractor / Associate Agreement will prevail.

1. Independent Contractor Status: As a salesperson you are an independent contractor.

2. Independent Contractor for Tax Purposes: A Real estate salesperson is not considered an employee for federal income tax purposes if paid by commission rather than at an hourly rate and if the contract with the broker specifies that the agent is not an employee for tax purposes. This eliminates the need for withholding income and social security taxes. For these purposes you are self-employed and will receive a Form 1099-MISC at the close of the calendar year showing commissions you have earned.  

3. Independent Contractor for Unemployment Insurance: You are not an employee for purposes of unemployment insurance or the application of minimum wage laws.

4. Workers Compensation: Court cases have been divided as to whether a salesperson is an employee for purposes of coverage under the Workers Compensation Law. To avoid uncertainty, United Pacific Lending does not provide workers compensation insurance to covers its salespersons.

II. OFFICE PROCEDURES

The operations of United Pacific Lending are confidential and by receiving your Independent Associate Agreement, you have committed to maintaining that confidentiality of United Pacific Lending’s practices, policies, and procedures.

1. Work Schedules: As an independent contractor, you may establish your own work schedule.

2. Office Hours: Not Applicable

3. Conference Rooms: Not Applicable

4. Office Equipment: Not Applicable

5. Weekly Sales Meetings: Not Applicable

6. Legal Counsel: In the event a question or problem arises in connection with a real-estate transaction, you should first attempt to resolve the issue with Marsha Prentice, your broker. If legal assistance is deemed necessary or appropriate, your broker will seek counsel and advise you of what procedures should take place. Remember to always advise your principals (clients) that they should seek their own counsel with their own attorney as well.

7. Realtor Associations: All agents with United Pacific Lending MUST be a member in good standing to local, state or national Association of Realtors during the entire duration of their contract agreement. Any breach of this condition will result in termination of contractual agreement between agent and United Pacific Lending.

8. MLS: All agents must join and be an active member of the Multiple Listing Service.

III. FEES AND COMMISSIONS

Disputes: In the event of disputes with outside agents that are members of the Association of Realtors, arbitration and mediation procedures currently utilized by the Association of Realtors, must be followed. All other commission disputes will be resolved in the manner directed by the acting broker of United Pacific Lending. United Pacific Lending has the sole discretion to determine whether action should be brought against third parties to recover commission, and the disposition of such action once initiated, including the terms of any settlement. Any payment or recovery in third party actions is subject to payment of all costs and expenses, including attorney fees, before distribution between United Pacific Lending and its agents.

1. Cash Only: Under no circumstances will there be any commissions paid in cash.

2. Mortgaging Agent-Owned Property: United Pacific Lending will charge the normal fees for these transactions.
3. Fees and Commissions: Fees and commissions that are earned and paid to United Pacific Lending for transactions for which you are the procuring cause will be split in accordance with the Compensation Section found in the Independent Associate Agreement.

IV. EXPENSES

1. Supplies: Stationery (such as pens, paper, notepads, etc) for normal correspondence is the responsibility of the agent. Business cards and any special cards, such as those with your photograph, are also at the agent’s expense. As per DRE requirements, all agents will show their license number on their business card, and their card will be ordered through United Pacific Lending and match the United Pacific Lending design and logo.

2. Advertising Costs: All property advertising costs are the responsibility of the listing agent. All ads must carry United Pacific Lending name. Please check with broker regarding current advertising layout policy. Any and all advertising costs for personal promotion are also the agent’s costs and there is no reimbursement for personal or property advertising.

3. Automobile Insurance: All sales persons are required to carry, at their own cost and expense, full automobile insurance, including comprehensive insurance covering all passengers. Remember, agents are liable for their passengers. A copy of your current insurance policy will be needed for your file at our office.

V. ERRORS AND OMISSIONS COVERAGE

1.  

   1. Intentional Torts: The Insurance Code specifically prohibits coverage for intentional acts of fraud. United Pacific Lending will not tender a defense of indemnify an agent who is accused of intentional fraud. United Pacific Lending will tender a defense where the complaint includes a cause of action for professional negligence or negligent misrepresentation. However, United Pacific Lending will not pay any portion of the judgment identified as resulting from intentional fraud or other intentional tort.

   2. Punitive Damages: In litigation involving a claim for punitive damages, a conflict can possibly arise between United Pacific Lending and the salesperson since the broker is responsible for punitive damages only if it ratified or confirmed the conduct of the agent. In such cases the agent may need to obtain independent counsel regarding the punitive damage claim. United Pacific Lending will not pay for the fees of an independent counsel retained for this purpose.

   3. Complaints: All complaints, including threats of lawsuits, must be promptly reported to your broker. Do not attempt to represent yourself or United Pacific Lending in mediation or arbitration proceedings. United Pacific Lending will provide appropriate professional counsel (except as stipulated in “A” and “B” above).

   4. Subpoenas: A transaction file may contain information that is confidential and that can only be released with the written consent of your principal. All subpoenas for records should be immediately referred to your broker for appropriate action.

   5. Dealing on Your Own Account: Our Errors and Omissions insurance will not cover you when selling or buying property on your own account. Since insurance coverage in this area changes frequently, be certain to check with your manger as to whether your acts are covered. Unless specifically authorized in writing, United Pacific Lending will not tender a defense or otherwise insure your conduct when you are dealing on your own account.

Insurance coverage will be afforded to agents for professional negligence as set forth in your independent Associate Agreement. Copies of any insurance coverage affecting you will be made available to you for inspection. Any assessments for Errors and Omissions coverage are placed in United Pacific Lending’s general operating fund to provide for attorney fees, settlements, and other general litigation costs.

When advertising your own property, you are not permitted to use United Pacific Lending name or logo in any correspondence or documents; you must disclose that you are licensed.

California Real estate law requires disclosure of your status as a licensed professional in any advertising, (including rental property) and sales agreement.

Great care must be taken if you purchase property for your own account after a listing has expired.

6. Telephone Solicitors: Telemarketers employed by a salesperson for the purpose of cold calling for listings or soliciting prospective buyers must be licensed as real estate agents or brokers in the state of California.

VI. TERMINATION

1.  At Will: Your association is At Will. Unless otherwise expressly agreed in writing with United Pacific Lending, either party may terminate the association at any time upon 24 hours written notice. Termination may be with or without cause.
2. Intentional Misconduct: Any conduct which is fraudulent, dishonest, unethical, or that can otherwise subject you or United Pacific Lending to disciplinary action by the California Department of Real Estate will result in your immediate termination.
3.  Active License Required: Each Agent must be currently licensed as a real estate broker or salesperson. If for any reason your license is not renewed, or is suspended or revoked, you may not engage in any activities on behalf of United Pacific Lending.
4.  Confidentiality: United Pacific Lending’s client lists, files, records, programs, forms, and all other materials are regarded as trade secrets. You agree to keep such information confidential and not to remove any documents from the premises without the express written permission of your broker. All such documents in your possession are the property of United Pacific Lending and must be returned with 24 hours after termination.

VII. DOCUMENTATION AND BROKER SUPERVISION

A. Transaction File: The office file of a transaction must be fully documented and all required documents placed in the file on or before the close of escrow. The broker is given the authority to refuse to disburse a commission to the salesperson until the office file has been fully documented and those documents have been reviewed and approved by the manger. A transaction/document checklist is available in your Independent Contractor Agreement.

At a minimum the file must contain the following: 

1.  
   1.  
      1. Copies of correspondence with the parties and brokers.
      2. Agency disclosure statement.
      3. All purchase agreements, counter offers, and agenda
      4. Standard or regional disclosure statement, lead-based paint disclosure when applicable (homes built before 1978) and any other required disclosure forms.
      5. FIRPTA form if applicable
      6. Any physical inspection reports.
      7. Common interest (condominium) documents.
      8. Title reports and documents signed by the buyer and seller pertaining to the transaction.
      9. All escrow documentation related to the transaction.

B. Spoiling of Evidence: When a lawsuit is filed, the first thing our attorney

Will do is review both the office file and your personal file covering the transaction. The more documentation contained in the file, the easier it is to accurately develop a picture of what happened. Do not purify or otherwise clean up your file. Spoiling of evidence is a crime. Moreover, the evidence you destroy may be what you need to establish that you did act within the standard of care. Records can not only be used to refresh your independent recollection, but are often admissible in evidence themselves as business record entries made contemporaneously with the conduct in question. Adequate record keeping and supervision from your manager are your best protection against litigation.

1. Calendars: United Pacific Lending encourages agents to keep a calendar type diary of your appointments, as well as a login each transaction giving the date and time of significant telephone calls, visits to the property, inspections. If your calendar is kept on your computer, be certain to print out a hard copy periodically.

2. Retaining Files: Most state regulations require that files and contracts be retained for a certain period of time. Nevertheless, because some statues of limitation do not commence until discovery by a plaintiff of an alleged misrepresentation, it is the policy of this Company that all files be retained for a period of at least 5 years from the last activity.

1. REVIEW OF DOCUMENTATION

Other Broker Supervision: The duty of supervision extends beyond the requirement that the Broker review and initial all material documents involved in the transaction. The Broker is responsible for making certain that the salesperson is properly advised of the various rules concerning conflict of interest, disclosure, and the required standard of care. Consultation with the broker whenever you have questions is essential to fulfilling this function.

Areas outside the Agent’s Expertise: A number of pre-printed forms contain the disclaimer that real estate agents are not qualifi3ed to give advice on legal matters, tax matters, tax implications of a transaction, or insurance. These disclaimers have been held to limit the scope of the agency of the agent and are important

No Legal or Tax Advice: Although agents have no duty to advise with regard to the tax consequences of a transaction, or the boundaries of a lot, the size of a building, insurance coverage, and other such matters, once you have developed a client relationship, an obligation arises requiring you to make sure that the advice given is correct and reliable. Therefore, do not offer advice or opinions regarding these matters.

 

Refer all of your clients to the appropriate professionals.

Referral Fees

 

1. Kickbacks: RESPA (Real Estate Settlement Procedures Act) provides that there will be no kickbacks or payments of anything of value to persons in a real estate transaction for referrals unless they are licensees. All transactions involving new first deeds of trust on property designed for once to four families are included. Referral fees (including gifts) cannot be paid to non-licensees. This includes attorneys. Consequently, advertisements saying that referral fees are paid, or similar inducements are prohibited. Referral fees to other licensees for services actually performed are permissible.

2. Non-recurring Closing Costs: A salesperson can pay for part of the closing costs out of his or her commission, but the parties must be advised of this rebate. While it is permissible for one of the parties to pay closing costs to be incurred by the other, it is important to specify exactly which closing costs are being pay rather than stating a lump sum.

3. Dealing on Your Own Account: You must always disclose any direct or indirect interest that you have or might expect to acq2uire as a result of any sale. This includes any special relationship with the buyer where there is a probability that you could indirectly acquire a financial interest in the property. If you are either wholly, partially, or indirectly a buyer, specific written approval of the transaction must be obtained from your sales manager or broker. Because of the possible conflict of interest, the proposed purchase price and other terms of the sale must be competitive, and all material information regarding value disclosed to the seller. When selling your own property you may not represent the buyers. The potential conflict is so great that it is questionable whether a buyer could knowingly consent to the relationship.

 

1. Advertising Standards

A. Fair Housing: Do not use any advertising that might be considered discriminatory. This means avoiding exclusions or preferences based on disability, familial status, age, and similar matters. The penalties for even inadvertent violations of fair housing laws can be severe.

1. Direct Lender United Pacific Lending is NOT a Direct Lender.

Enclosed is a copy of the Mortgage Loan Broker Compliance Evaluation Manual (RE 7 new 5/06) State of California Department of Real Estate, Sections 3 through 12. Please refer to this document whenever you require clarification on the State’s regulations. Much of the regulations apply to only the broker, but most of them affect you and your business.

Should you ever have any questions, always feel free to ask your broker, Marsha Prentice at 949-419-7992.

. Our aim is to provide the most efficient, pleasant, and problem free environment for your successful pursuit of your career as a mortgage loan officer. Best Wishes for your growing success and thank you for becoming a valued member of the United Pacific Lending Team.

SECTION 3 - Borrower Disclosures

Correct Procedure:

1. In a transaction in which a broker is arranging a loan, a Mortgage Loan Disclosure Statement (RE 882 or RE 883) must be provided within 3 days of receiving a completed written loan application from a prospective borrower(s). A copy of the disclosure statement signed by the borrower(s) and the broker, or the broker’s representative, must be retained by the broker for 3 years.

2. In the alternative, in a federally-related loan transaction where the principal loan amount for a senior lien is $30,000 or more or for a junior lien is $20,000 or more, a broker may provide a “good faith estimate” that complies with RESPA and meets the following conditions: the disclosure sets forth the broker’s real estate license number, contains a clear and conspicuous statement on its face that the “good faith estimate” is not a loan commitment, all applicable disclosures required by the Truth in Lending Act are provided, and, if the loan contains a balloon payment, an acceptable disclosure of the balloon payment. Prior to becoming obligated to the loan, the borrower(s) must acknowledge receipt of the “good faith estimate” and disclosures in writing. The broker must retain a true and correct copy of the “good faith estimate” and disclosures as acknowledged by the borrower(s) for 3 years.

3. The disclosures must include the real estate broker’s license identification number if an individual broker, or the corporation’s license identification number is a licensed corporation.

4. The disclosures must contain the amount of all compensation to be earned by the broker including the actual amount of any yield/spread premium if known, or an estimate of any anticipated yield/spread premium or other rebates from the lender. The disclosures must also contain the Department’s licensing information telephone number. Disclosure of any material changes to the costs, expenses, or terms of the loan must be made to the borrower(s) in a timely manner.

5. The broker must advise the borrower(s) whether or not the loan will be made with “broker-controlled funds” as defined.

6. At the time of application, the broker must provide a Fair Lending Notice (RE 867A) to the prospective borrower(s). The notice must also be posted in a conspicuous place for public inspection. A signed acknowledgement of receipt of the notice (RE 867) should be retained by the broker for 3 years.

7. If the broker is making or arranging a “covered loan” the “Consumer Caution and Home Ownership Counseling Notice” is provided to the prospective borrower(s) no later than 3 business days prior to signing the loan documents. (See also Section 10 – Covered Loans).

Reference:
Real Estate Law Book Sections 10176(a),(c),(g), 10236.4(b), 10240, 10241, Regulations 2840, 2840.1, 2842.5. Health and Safety Code Section 35830

SECTION 4 – Advertising

Correct Procedure:

1. No real estate licensee shall advertise, or cause to be advertised in any manner, any statement or representation with regard to rates, terms or conditions for making, purchasing or negotiating loans secured by real property which are false, misleading or deceptive. The advertisement cannot contain any claims or representations that are misleading or cannot be supported with satisfactory evidence to the Department.

2. Every advertisement disseminated primarily in California for a loan must include a disclosure within the printed text or oral text (radio or television) of the license under which the loan will be made or arranged.

• The following are the approved license disclosures: “Real Estate Broker, California Department of Real Estate” or “California Department of Real Estate, Real Estate Broker.” “California” may be abbreviated as “CA,” “CAL” or “Calif” and “Department” can be abbreviated as “Dept.” A dash may be used instead of the comma.

• The type size of the license disclosure must be at least as large as the smallest size type in the advertisement.

1. Advertisements to prospective lenders or note purchasers must include the broker license identification number.

2. When an advertisement contains a representation of an interest rate, the annual percentage rate must be disclosed in equally prominent type and font.

3. When an advertisement contains a representation of a payment, all of the following must be included in equally prominent type and font: term of the loan, principal loan amount, interest rate, and annual percentage rate. When the loan is an adjustable rate loan, there must also be equally prominent disclosure of how long the initial interest rate is in effect, how often and how much the interest rate and/or payments can change, and, if there is the potential for negative amortization (deferred interest) a statement to that effect. If the loan contains a provision for a balloon payment, the amount of the balloon payment must be disclosed in equally prominent type and font.

4. When an advertisement offers a gift, premium or rebate (inducement) to prospective borrowers, there must be a disclosure of all of the conditions that must be met in order to receive the gift, premium or rebate. These inducements may not be offered to a prospective lender or note purchaser.

5. When advertising the sale of a note to prospective note purchasers, no specific yield may be indicated or implied without disclosure of the note interest rate and the discount from the remaining principal balance at which it is being offered for sale.

6. Commissioner’s Regulation 2848 requires the Department to take such action as is appropriate to prevent or halt the publication of advertising that is false, misleading or deceptive in itself or through the omission of information that would prevent it from being false, misleading or deceptive. In addition to the actual text, consideration is given to such factors as format, pictorial display and emphasis in determining whether an advertisement is likely to create a false impression. Real estate licensees must ensure that their advertising complies with all of the criteria established in Commissioner’s Regulation 2848.

7. Brokers may submit their proposed mortgage loan advertisements to the Department for approval on a voluntary basis. The submission must include a Mortgage Loan Advertising Submittal (RE 884) signed by the broker or, if a corporate broker, the designated officer, a fee of $40.00 and the proposed advertisement in triplicate. The submission may be made by mail or fax.

Reference:
Real Estate Law Book Sections 10235, 10235.5, 10236.1, 10236.4(a), Regulations 2847.3, 2848

SECTION 5 – Fees

Correct Procedure:

1. No costs and expenses of making a loan may be charged to a borrower which have not been paid, incurred or reasonably earned by the broker. No fee may be charged as part of the costs and expenses of making a loan which exceeds the fee customarily charged for the same service or comparable service in the community where the service was rendered. If an escrow is conducted by a licensed escrow agent, title insurance company, bank or trust company, or a savings institution and a fee is charged to the borrower by the escrow depository for the service, no additional fee can be charged to the borrower by the broker, a salesperson licensed to the broker or any entity controlled by the broker for services related to the escrow.

2. A broker must disclose to the prospective borrower(s) all anticipated compensation being paid from all sources, including from the borrower and the lender. The broker must disclose to the prospective borrower(s) all yield/spread premiums, rebates and other compensation that it will earn.

3. A real estate licensee who acts as the agent for either party in a transaction for the sale, lease or exchange of real property, a business opportunity or a mobile home, and receives, or anticipates receiving, compensation for securing a loan to finance the transaction, must disclose to both parties to the transaction, prior to closing, the form, amount and source of compensation received or expected.

Reference:
Real Estate Law Book Sections 10176(g), 10240, Regulations 2843, 2904.

SECTION 6 – Advance Fees

Does the broker collect any fees from prospective borrowers, other than for appraisals and/or credit reports, for any services that will be provided by the broker or others?

Correct Procedure:

1. An advance fee is defined as “a fee claimed, demanded, charged, received or contracted for from a principal for a listing, advertisement or offer to sell or lease property, other than in a newspaper of general circulation, issued primarily for the purpose of promoting the sale or lease of business opportunities or real estate or for referral to real estate brokers or salesmen, or soliciting borrowers or lenders for, or to negotiate loans on, business opportunities or real estate.” In a mortgage loan transaction it is unlawful for a broker to collect a fee in advance for services to be rendered to a principal (client) without first submitting, and obtaining approval of, an advance fee agreement and related materials from the Department. As stated in Section 2, Trust Fund Handling, a broker may collect a fee for an appraisal report and/or credit report in advance without having an advance fee agreement.

2. When a broker collects an advance fee pursuant to an approved agreement, the fee must be held in a trust account and the funds remain the property of the principal (client) until the service or services are completed. An accounting must be provided to the principal at the end of each calendar quarter and when the contract has been completed.

Reference:
Real Estate Law Book Sections 10026, 10027, 10085, 10085.5, 10131.2, 10146, Regulations 2970 and 2972.

SECTION 7 – Article 7 - Regulated Loans

With the exception of the disclosure statement requirement, and rules regarding late charges and prepayment penalties, Article 7 only applies to bona fide senior liens under $30,000 and bona fide junior liens under $20,000, so called “regulated loans.” NOTE: These rules may also apply to a “covered loan” discussed in Section 10.

Does the broker make or arrange loans secured directly or collaterally by liens on real property where the principal amount on a senior lien is less than $30,000 and on a junior lien is less than $20,000.

Correct Procedure:

1. With the exception of the disclosure statement requirement (see Section 3 – Borrower Disclosures), Article 7 applies only to loans secured by a dwelling which is defined as a single dwelling in a condominium or cooperative or any parcel containing four or fewer residential buildings

2. The broker must provide the Mortgage Loan Disclosure Statement (RE 882), Mortgage Loan Disclosure Statement/Good Faith Estimate (RE 883) or alternative disclosure statements to the borrower(s). (See Section 3 – Borrower Disclosures)

3. The maximum amount of all costs and expenses for obtaining the loan, not counting actual charges for title insurance and recording fees, cannot exceed 5% of the principal amount of the loan or $390 whichever is greater. In no event can the fees exceed $700. Only costs and expenses that have actually been paid, incurred or reasonably earned by the broker can be charged to the borrower. (See Section 10241[a])

4. The maximum commissions that can be charged to the borrower are determined by the lien priority (senior lien or junior lien) and the term of the loan as follows: (See Section 10241[b])

• For a senior lien, 5% of the principal amount of the loan if the term is less than 3 years and 10% where the term is for 3 years or more,

• For a junior lien, 5% of the principal amount of the loan if the term is less than 2 years, 10% if the term is 2 years but less than 3 years and 15% if the term is 3 years or more.

1. The purchase of credit life or credit disability insurance cannot be a condition of making the loan.

2. If the property securing the loan, either directly or collaterally, is an owner-occupied dwelling of 3 units or less, and is not a note given back to the seller by the purchaser, then no payment that is more than twice the amount of the smallest payment, can be due in less than 73 months.

3. If the property securing the loan, either directly or collaterally, other than a note given back to the seller by the purchaser, and is not an owner-occupied dwelling, then no payment that is more than twice the amount of the smallest payment can be due in less than 3 years.

4. A late charge cannot be more than 10% of the principal and interest installment due except that a minimum of $5 can be charged. No late charge can be charged more than once for the same late payment and cannot be charged if the payment is made within 10 days of its scheduled payment date. For a balloon payment, the late charge cannot be more than the late charge assessed for the largest single monthly payment other than the balloon payment. A late charge for a balloon payment can be charged for each month that the balloon payment is past due.

5. A prepayment penalty on a loan secured by a single-family, owner-occupied dwelling can be charged only if the prepayment is made within 7 years of the date the loan was executed. A prepayment not exceeding 20% of the unpaid balance of the loan can be made without penalty in any 12-month period and any prepayment made in excess of that amount can be subject to a charge of not more than 6 months advance interest.

Reference:
Real Estate Law Book Sections 10240, 10240.1, 10240.2, 10241, 10241.1, 10242, 10242.5, 10242.6, 10244, 10244.1, 10245, Regulations 2840, 2840.1, 2843

Section 8 – Article 5 - Private Money Transactions

Article 5 does not apply to the negotiation or sale of notes that were created for the purpose of financing the sale or exchange of real property (seller carry-backs) where the broker acted as an agent, was not a party to the transaction and where the required disclosures were given to each party to the transaction. (The provisions of Article 5 dealing with “threshold” reporting, loan servicing agreements and the delivery of property appraisals do not pertain to transactions where the lenders or note purchasers are primarily institutional lenders or investors, or where the note or sale is negotiated or the loan is being serviced pursuant to a permit issued by the Department of Corporations pursuant to the Corporate Securities Law of 1968.)

Does the broker arrange loans for, sell existing notes to, or service loans for, private individual, non-institutional lenders or note-purchasers?

United Pacific Lending does not arrange these types of loans, but the information is included for your education.

Correct Procedure:

1. Pooling of loan funds – Except as authorized by a permit from the Department of Corporations pursuant to the Corporate Securities Law of 1968, funds accepted by the broker from a lender/purchaser, or caused to be deposited into an escrow from a lender/purchaser, must be for a specific loan transaction. Payments of loan funds payable according to the terms of a note secured by real property or by a real property sales contract, including payoffs, cannot be retained by a broker for more than 25 days without a written agreement with the lender/purchaser

2. Self-dealing - When a broker, or a salesperson acting on behalf of a broker, solicits funds from a prospective lender or note purchaser for a purchase or loan transaction that will directly or indirectly benefit the broker, so-called self-dealing, certain rules must be followed. Prior to making the solicitation or presenting the investor with the Lender/Purchaser Disclosure Statement, the broker must first submit a complete copy of the disclosure statement, without the investor’s signature, to the Department of Real Estate. The completed disclosure is sent along with a statement that it is being submitted pursuant to Business and Professions Code Section 10231.2. (Self-dealing does not include transactions where the broker is benefiting only from the commissions, costs or expenses of making or arranging a loan.) The broker must then provide the investor with the completed Lender/Purchaser Disclosure Statement not less than 24 hours before receiving any funds from the investor, or the execution of any agreement obligating the investor to make the loan or purchase the note. The disclosure statement must be signed by the prospective lender/purchaser and an exact copy must be retained by the broker for 4 years.

3. Threshold Reporting – Brokers who meet the “threshold” reporting criteria are required to submit specified quarterly and annual reports to the Department. There are several ways for a broker to meet the reporting criteria as follows:

• Negotiation of 10 or more loans secured directly or collaterally by liens on real property of business opportunities in an aggregate amount of more than $1 million as an agent of another or others, in a successive 12-month period or

• Negotiation of 10 or more sales or exchanges of real property sales contracts or notes secured directly or collaterally by liens on real property or business opportunities in an aggregate amount of more than $1 million as an agent of another or others, in a successive 12-month period or

• Negotiation of 10 or more sales or exchanges of real property sales contracts or notes secured directly or collaterally by liens on real property or business opportunities in an aggregate amount of more than $1 million as the owner of those notes or contracts, in a successive 12-month period or

• Making collections of payments in an aggregate amount of $250,000 or more on behalf of owners (beneficiaries) of notes secured directly or collaterally by real property or real property sales contracts or both, in a successive 12-month period or

• Making collections of payments in an aggregate amount of $250,000 or more on behalf of obligors (borrowers) of notes secured directly or collaterally by real property, lenders of real property sales contracts or both in a successive 12-month period.

The negotiation of a combination of 2 or more new loans and sales in an aggregate amount of more than $250,000 in any successive 3 months or a combination of 5 or more new loans and sales in an aggregate amount of more than $500,000 in any successive 6 months will create a rebuttable presumption that the broker will meet the threshold.

Within 30 days of meeting any of the above criteria, the broker must submit a Threshold Notification (RE 853) to the Department of Real Estate. The “threshold” reporting criteria apply only to transactions where the prospective lender/purchaser is a private individual investor or trustees of a pension, profit-sharing or welfare fund with a net worth of less than $25 million and where the loan or sale is not negotiated or the note is not serviced, under the authority of a permit issued by the Department of Corporations pursuant to the Corporate Securities Law of 1968.

• If a broker who meets the threshold reporting criteria fails to notify the Department in writing of that fact within 30 days of meeting the criteria, the broker shall be assessed a penalty of $50 per day for each additional day the notification is not received for the first 30 days and then a penalty of $100 per day not to exceed $10,000 until the Department receives written notification.

The notification must also be submitted when a broker will no longer meet the above reporting criteria.

Threshold” Reports – Brokers who meet the above criteria must submit quarterly and annual reports to the Department of Real Estate based on their fiscal year as follows:

• Within 90 days after the end of the broker’s fiscal year, an independent accountant’s report of a review of trust funds (Trust Account Review). If a broker did not collect trust funds during the entire fiscal year, the broker may submit a Trust Fund Non-Accountability Report (RE 854), signed before a notary. If the broker’s fiscal year ends between November 30 and the last day of February, then the report shall be due no later than May 31 of each calendar year.

• Within 90 days after the end of the broker’s fiscal year, a Mortgage Loan/Trust Deed Annual Report (RE 881) that reports the broker’s business activities during the fiscal year.

• Within 30 days after the end of each of the first 3 of the broker’s fiscal quarters, a Trust Fund Status Report (RE 855), a Trust Fund Bank Account Reconciliation (RE 856) and the bank statement for the last month of the fiscal quarter. If the broker did not collect trust funds during a fiscal quarter, the broker shall submit a Trust Fund Non-Accountability Report (RE 854) for that fiscal quarter.

• f the broker fails to submit any of the above reports by the established due date or within any additional time as the Department may allow for good cause, the Department may conduct an audit of the brokers books and records and prepare the reports at a cost to the broker of 1½ times the cost of conducting the audit and preparing the reports.

Disclosure Statements – When soliciting or negotiating the arrangement of a loan or sale of a note, a broker must provide the prospective investor with a Lender/Purchaser Disclosure Statement (LPDS) (RE 851) as early as practicable and before the receipt of funds by or on behalf of the investor. The LPDS must be signed by the lender/purchaser and by the broker, or a salesperson licensed to the broker, and must be retained for a period of 3 years. There are separate versions of the LPDS for the arrangement of a loan, the sale of a note or the collateral assignment of a note. Each must be fully completed with the required information in order for the lender/purchaser to be able to make an informed decision whether or not to make the loan or purchase the note. Each disclosure must contain the real estate broker’s license identification number, if an individual broker, or the corporation’s license identification number if a licensed corporation. The prospective lender/purchaser is entitled to a copy of a written, independent appraisal. On a case-by-case basis, the investor may waive his or her right to the appraisal in writing. In that case, the broker must provide the investor with a written estimate of the fair market value of the property securing the loan supported by objective data.

The LPDS is not required with respect to the following persons:

• The prospective purchaser of a security offered under the authority of a permit issued by the Department of Corporations pursuant to the Corporate Securities Law of 1968 which requires that each prospective purchaser be given a prospectus or other approved disclosure statement,

• The seller of real property carrying back all or part of the purchase price,

• The prospective purchaser of a security offered pursuant to a Department of Corporations regulation granting an exemption from qualification of the offering if one of the conditions is that each prospective purchaser be given a prescribed disclosure statement before becoming obligated to purchase the security,

• The prospective lender or purchaser is a bank, savings institution, finance lender or other institutional lender or investor or is a licensed residential mortgage lender,

• A licensed real estate broker selling all or part of the note to a person that is not required to receive a LPDS.

Servicing Agreements – A real estate broker who undertakes to service a promissory note secured directly or collaterally by a lien on real property or a real property sales contract must have the written authorization of the borrower, lender or note owner that complies with the following:

• The terms of the servicing agreement must satisfy all of the requirements of Business and Professions Code Section 10238(k)(1), (2), (4) and (5).

• The licensee must provide the lender with the following accountings:

1. an accounting of the unpaid principal balance at the end of the year.

2. an accounting of collections and disbursements received and made during each year

3. each accounting must identify the person who holds the original note or contract and deed of trust

• The licensee must provide the lender or note owner written notification within 15 days of any of the following events:

1. the recording of a notice of default

2. the recording of a notice of trustee sale

3. the receipt of any payment constituting an amount greater than or equal to five monthly payments, together with a request for partial or total reconveyance of the real property, in which case the notice shall also indicate any further transfer or delivery instructions.

4. The delinquency of any installment or other obligation under the note or contract for over 30 days.

7. Advancing Funds – If a broker is servicing a note secured by real property on behalf of a mortgagee, beneficiary or note owner and causes funds, other than funds received from the obligor (borrower), to be applied toward a payment to protect the security of the note being serviced, including a payment on a senior lien, the broker shall give written notice to the mortgagee, beneficiary, or note owner of the following: the date and amount of the payment, the name of the person to whom the payment was made, the source of the funds and the reason for making the payment. The notice must be made no later than 10 days after making the payment.

8. Loan Servicing – For the purposes of the California Commercial Code, if a broker arranges or sells a note secured by real property, or any interest therein, and then undertakes to service the note on behalf of the lender or purchaser, delivery, transfer and perfection shall be deemed complete even if the broker retains possession of the note or collateral instruments as long as the deed of trust or assignment of deed of trust in favor of the lender or purchaser is recorded in the office of the county recorder in the county in which the securing property is located and the note is made payable to the lender or is endorsed or assigned to the purchaser

9. Recordation of Trust Deeds and Assignments

• When a licensee negotiates a loan secured by a deed of trust, the licensee must cause the deed of trust to be recorded in the name of the beneficiary or the beneficiary’s nominee. The deed of trust cannot be recorded in the name of the licensee or licensee’s nominee (so-called table funding). The deed of trust must be recorded with the county recorder in the county in which the securing property is located before funds are disbursed unless the lender has given written authorization for prior release.

• If funds are released on the lender’s written authorization prior to recording, the deed of trust must be recorded or delivered to the lender or beneficiary with a written recommendation that it be recorded within 10 days following release of the funds.

• When a licensee sells, exchanges or negotiates the sale or exchange of a real property sales contract or note secured by a deed of trust, the licensee must cause a proper assignment of the real property sales contract or deed of trust to be executed and cause the assignment to be recorded in the name of the purchaser or purchaser’s nominee (who shall not be the licensee or licensee’s nominee). The assignment must be recorded in the office of the county recorder in the county in which the secured property is located within 10 working days after the licensee or seller receives funds from the buyer or after close of escrow, or the real property sales contract or deed of trust must be delivered to the purchaser with a written recommendation that the assignment thereof be recorded forthwith.

• The above requirements do not apply if: the lender or purchaser is any person or entity listed in Section 10232(c)(1), the deed of trust is recorded with the county recorder in the county in which the property is located and, the real property is not a single dwelling unit in a condominium or cooperative or any parcel containing only one to four residential units.

10. Delivery of copies of deed of trust – In addition to the above requirements, a broker must deliver or cause to be delivered conformed copies of any deed of trust to both the investor or lender and the borrower in a reasonable amount of time from the date of recording.

11. A real estate licensee cannot advertise to give or offer to give to a prospective note purchaser or lender, any premium, gift, or any other object of value as an inducement to make or purchase a promissory note secured directly or collaterally by a lien on real property or a real property sales contract.

• A real estate licensee may offer an inducement to a prospective borrower, however any advertisement or offer must include all of the conditions required to receive the offer and no fees, costs or expenses may be increased by the licensee in order to offset to cost of giving the inducement.

Reference:
Real Estate Law Book Sections 10230, 10231, 10231.1, 10231.2, 10232, 10232.2, 10232.25, 10232.4(b), 10232.5, 10236.4(b), 10236.5, Regulations 2846, 2846.5, 2846.7, 2846.8, 2849.01, 2849.1.

Section 9 – Article 6 - Private Money Transactions with Multiple Beneficiaries (Fractionalized Loans)

Article 6 applies only to the exemption from securities qualification claimed under Section 25102.5 of the Corporations Code. Article 6 does not apply to transactions conducted pursuant to a permit issued by the Department of Corporations to qualify the offer and sale of securities under the Corporate Securities Law of 1968 or to any other exemption from securities qualification which may be claimed without complying with Article 6. Transactions conducted pursuant to the exemption from securities qualification provided by Article 6 must comply with each and every provision of Article 6. Section 10237 states “Any transaction that involves the sale of or offer to sell a series of notes secured directly by interests in a note secured directly by one or more parcels of real property equivalent to a series transaction, shall comply with all of the provisions of this article.”

Does the broker arrange loans for, sell existing notes to, or service loans for, private individual, non-institutional lenders or note-purchasers where there are multiple (fractional) beneficial interests?

Correct Procedure:

1. The Notice

A broker must submit the Multilender Transaction Notice (RE 860) to the Department within 30 days of:

• The broker’s first transaction

• Any material change to the information required in the notice

• Becomes the servicing agent for notes upon which the payments due in any consecutive 3-month period exceeds $125,000 or the number of persons entitled to payments exceeds 120.

2. Advertising

All advertising must show the name of the broker and comply with Section 10235, Section 2848 of the Commissioner’s Regulations and Section 260.302 of Title 10, California Code of Regulations. Making reference to Article 6 in any advertising may be considered misleading or deceptive if the representation may be reasonably construed by the investor as an implication of merit or approval of the transaction.

3. The Security

Loans must be directly secured by real property located in California. No collateral assignments are permitted. Loans cannot be, by their terms, subject to subordination to any subsequently created deed of trust. The notes cannot be promotional notes as defined in Section 10238(d).

4. No Self-Dealing

The notes or interests must be sold by or through a broker, as principal or agent. At the time the interests are originally sold or assigned neither the broker nor any affiliate of the broker can have an interest as an owner, lessor, or developer of the securing property, or any contractual right to acquire, lease or develop the securing property. The two exceptions to this rule are when:

• The broker or an affiliate of the broker is acquiring property pursuant to a foreclosure under, or sale pursuant to, a deed of trust securing the note for which the broker is the servicing agent,

• The broker or an affiliate of the broker is reselling from inventory property acquired by the broker pursuant to a foreclosure under, or sale pursuant to, a deed of trust securing a note for which the broker is the servicing agent.

5. Maximum Number of Investors and Investor Qualification Statements

The notes or interests cannot be sold to more than 10 persons who meet one or both of the qualifications based on income or net worth. The person must sign a specified statement which must be retained by the broker for a period of four years.

For the purposes of counting the number of investors:

•   A husband and wife and their dependents, and an individual and his or her dependents are counted as one person

• A retirement plan, trust, business trust, corporation, or other entity that is wholly-owned by an individual and the individual’s spouse or the individual’s dependents are not counted separately from the individual. The investments of these entities are aggregated with those of the individual for the purposes of meeting the income and/or net worth requirements.

• “Institutional investors” enumerated in Sections 25102(i) or 25104(c), or a rule adopted pursuant thereto, are not counted.

• A partnership, Limited Liability Company, corporation or other organization that was not specifically formed for the purpose of purchasing the security offered pursuant to Article 6 is counted as one person.

6. Identical Interests

The notes or interests must be identical in their underlying terms, including the right to direct or require foreclosure, rights to and rate of interest, and other incidents of being a lender. The sale to each purchaser must be upon the same terms, subject to adjustment for the face or principal amount or percentage interest purchased and for interest earned or accrued. There can be different selling prices for interests to the extent that the differences are reasonably related to changes in the market value of the loan occurring between the sales of the interests. The interest of each purchaser must be recorded pursuant to the requirements of Section 10234.

7. Maximum LTV’s, Construction Loans, Multiple Properties

The aggregate principal amounts of the notes or interests sold, including the balance of any senior encumbrances, are subject to maximum loan to value percentages. The percentages based on the current market value of the securing property as determined by the broker or appraiser as required by Section 10232.6. This amount can be exceeded if mortgage insurance is obtained through a licensed insurer for the benefit of the holders of the notes or interests. The maximum loan to value percentages are:

• Single-family, owner-occupied……………………………..80%

• Single-family, not owner-occupied………………………….75%

• Commercial and income-producing properties…………….65%

• Single-family residentially zoned lot or parcel which as installed offsite improvements including drainage, gutters, sidewalks, paved roads, and utilities as required…………………………………………..65%

• Land that has been zoned (and if required, approved for subdivision as) commercial or residential development……………………50%

• Other real property.…………………………………35%

The percentages above can be exceeded when and to the extent that the broker determines that exceeding the percentages is reasonable and prudent considering all relevant factors pertaining to the real property. However, in no event can the aggregate principal amounts of the notes or interests sold, including any senior encumbrances, exceed 80% of the current market value of improved real property or 50% of the current market value of unimproved real property, except in the case of a single-family zoned lot or parcel as described above which cannot exceed 65% of the current market value, plus any insured amount as described above. A written statement by the broker setting forth the material considerations and facts that he or she relied upon for the determination must be retained in the broker’s transaction file. Either a copy of the statement or the information contained in the statement must be included in the Lender/Purchaser Disclosure Statement. A copy of the appraisal or broker’s evaluation for each parcel or real property securing the note must be delivered to each purchaser and the broker must advise each purchaser of their right to receive a copy.

For construction and rehabilitation loans, the term “current market value” may be deemed to be the value of the completed project if all of the following safeguards are met:

• An independent neutral third-party escrow holder is used for all deposits and disbursements,

• The loan is fully funded, with the entire amount to be deposited in escrow prior to recording the deed of trust,

• A comprehensive, detailed draw schedule is used to ensure proper and timely disbursement to allow for completion of the project,

• The disbursement draws from the escrow account are based on verification from an independent qualified person, as defined pursuant to Section 10238(h)(4)(D), who certifies that the work completed to date meets the related codes and standards and that draws were made in accordance with the construction contract and draw schedule.

• An appraisal is completed by a qualified and licensed appraiser in accordance with USPAP.

• In addition to the transaction documentation required pursuant to Section 10238(i), the documentation must include a detailed description of actions that may be taken in the event of a failure to complete the project, whether the failure is due to default, insufficiency of funds or other causes.

• The entire amount of the loan does not exceed $2,500,000.

If a note or interest is secured by more than one parcel of real property, for the purpose of determining the maximum amount of the loan, each property securing the loan must be assigned a portion of the loan that does not exceed the percentage of current market value described above.

8. Loan Documentation for Defaults

The documentation of a loan transaction must require that

• A default upon any interest or note is a default upon all of the interests or notes and

• The holders of more than 50% of the recorded beneficial interests of the notes or interests may govern the actions to be taken on behalf of all holders in accordance with Civil Code Section 2941.9 in the event of default or foreclose for matters that require direction or approval of the holders, including designation of the broker, servicing agent, or other person acting on their behalf, and the sale, encumbrance or lease of real property owned by the holders resulting from foreclosure or receipt of a deed in lieu of foreclosure.

The required terms may be included in the deed of trust, in the assignment of interests, or in any other documentation as is necessary or appropriate to make them binding on the parties.

9. Receipt of Funds, Trust Accounts and CPA-prepared Reports

• No funds can be collected, or caused to be collected, from prospective lenders or note purchasers except as to a specific loan or note secured by a deed of trust that the broker owns, is authorized to negotiate or is unconditionally obligated to buy.

• All funds must be handled pursuant to Section 10145 for disbursement to the persons entitled to the funds upon recordation of their interests.

• The books and records of the broker or servicing agent, or both, must be maintained in a manner that clearly identifies transactions conducted pursuant to Article 6 and the receipt and disbursement of funds in connection with these transactions.

• If a broker or affiliate of the broker is the servicing agent for notes or interests sold pursuant to Article 6 that have payments due in any consecutive 3-month period, or the number of persons entitled to the payments exceeds 120, the trust account(s) of the broker must be inspected by a CPA and a specified report must be submitted to the DRE. The CPA will select at random a specified number of “sales” and “payments” as defined in Section 10238(j) (4) and (5) for inspection. The report, Trust Account Report (Multi-Lender Transactions) (RE 852), must be submitted by the accountant to the broker or servicing agent and to the DRE and is due to the DRE within 30 days after the end of the broker’s fiscal quarter (the same schedule and “threshold reports”). NOTE: The criteria for the CPA-prepared reports required under Article 6 is based on payments due in any 3-month period as opposed to the reporting criteria for “threshold brokers” described in Section 8 above which is based on payments collected in any 12-month period.

Sale of the Notes or Interests, Requirements of the Servicing Agreement

The notes or interests must be sold subject to a written agreement that obligates a licensed real estate broker, or a person exempted from the licensing requirement, to act as servicing agent for the purchasers or lenders. A copy of the servicing agreement must be delivered to each purchaser. The broker must offer his or her services, or the services of an affiliate of the broker, as the servicing agent for each transaction. The agreement must contain the requirements specified in Section 10238(k) (1) (2) (4) and (5).

11. Lender/Purchaser Disclosure Statement

• The Lender/Purchaser Disclosure Statement (RE 851A or RE 851B as appropriate) must be provided to each prospective lender or note purchaser in the same manner as described in Section 8 (Private Money Transactions) item #5.

• Any interest of the broker or affiliate of the broker in the transaction as permitted by Section 10238(e) must be included in the disclosure statement.

• Whenever the broker knows information regarding the transaction that is not specified in the disclosure statement and the information is material or essential to keep the information provided in the form from being misleading, the information must be provided by the broker to the prospective lenders or note purchasers.

• If more than one parcel of real property will secure the note or interests, the Lender/Purchaser Disclosure Statement (RE 851D) must be provided to each prospective lender or note purchaser.

12. Identity of the Purchasers

The broker or servicing agent must provide any purchaser of a note or interest, upon request, with the names and addressers of the purchasers of other persons with interests in the note.

13. Option to Purchase

The broker cannot have the option or election to acquire the interests of the lenders or purchasers or to acquire the real property securing the interests. There is no prohibition to the broker or affiliate from acquiring the interests with the consent of the purchasers or lenders whose interests are being purchased, or the property with the consent of the purchasers or lenders, if the consent is given at the time of acquisition.

14. Annual Trust Account Report

The broker or servicing agent that meets the reporting criteria described in #9 above must also submit an annual report of a review of its trust accounts (Trust Account Review). If the broker submits reports as a “threshold broker” (see Section 8 – Article 5 – Private Money Transactions, 4. “Threshold” Reports) then that annual report will satisfy this requirement. The broker’s transactions conducted under Article 6 must be included in that report.

15. Annual Business Activities Report

The broker or servicing agent that meets the reporting criteria described in #9 above must also submit the annual report of business activities, Mortgage Loan/Trust Deed Annual Report (RE 881). If the broker submits reports as a “threshold broker” (see Section 8 – Article 5 – Private Money Transactions, 4. “Threshold” Reports) then that annual report will satisfy this requirement. The broker’s transactions conducted under Article 6 must be included in that report.

16. Identifying the Transaction

The broker must indicate in the transaction file whether the transaction was conducted pursuant to a permit issued by the Department of Corporations, or any exemption from the requirement for a permit, including the exemption provided by Article 6. The broker must retain the information for 3 years.

Reference:
Sections 10237, 10238 (a) through (p), 10239, 10239.1, 10239.2, 10239.3, 10239.4, Regulations 2846.1, 2846.7, 2849.01

Section 10 – Covered Loans (Financial Code Section 4970 et al)

Sometimes called “Cal-32,” this statute applies to certain high-cost, high-fee loans. Real estate brokers licensed by the Department of Real Estate, or licensees under the California Department of Corporations or California Department of Financial Institutions who conduct these transactions should pay careful attention to all of the provisions of this law. Note: Additional rules will apply if the transaction also falls under Article 7 (see Section 7 – Article 7 – Regulated Loans). Loans that fall within the requirements of this statute are:

• A “consumer loan” secured by real property located in California that is, or is intended to be, used as the principal dwelling of the consumer that is improved by a 1 to 4 residential unit. (Note: “Consumer loan” does not include a reverse mortgage, an open line of credit defined in Part 226 of Regulation Z, or a bridge loan as defined in Financial Code Section 4970(d). A “consumer loan” also does not include a consumer credit transaction that is secured by a rental property or second home) and

• The original principal balance does not exceed the most current conforming loan limit for a single-family first mortgage loan established by the Federal National Mortgage Association (FNMA) for a mortgage or deed of trust and

• The annual percentage rate at consummation of the transaction will exceed by more than 8 percentage points the yield on Treasury Securities having comparable periods of maturity on the 15^th day of the month immediately preceding the month in which the application is received by the creditor, or

• The total points and fees payable by the consumer at or before closing will exceed 6 percent of the total loan amount./i>

Points and fees include the following:

• All items required to be disclosed as finance charges under Sections 226.4(a) and 226.4(b) of Regulation Z, including the Official Staff Commentary, except interest,

• All compensation and fees paid to mortgage brokers in connection with the loan transaction,

• All items listed in Section 226.4(c) of Regulation Z, only if the person originating the covered loan receives direct compensation in connection with the charge.

Does the broker arrange or make certain “high-cost, high-fee” loans for borrowers that are covered loans?

Correct Procedure:

The following are prohibited acts and limitations for covered loans:

1. A covered loan cannot include a prepayment penalty after the first 36 months after the consummation of the loan

2. A covered loan may include a prepayment penalty only if the person who originates a covered loan:

• Has also offered the consumer a choice of another product without a prepayment penalty and

• Has disclosed in writing to the consumer at least 3 days prior to loan consummation the terms of the prepayment penalty for accepting a covered loan with the prepayment penalty and the rates, points and fees that would be available to the consumer for accepting a covered loan without a prepayment penalty and,

• Has limited the amount of the prepayment penalty to an amount not to exceed the payment of 6 months advance interest at the contract interest rate then in effect, on the amount prepaid in any 12-month period in excess of 20 percent of the original principal amount.

• A covered loan cannot impose a prepayment penalty if the covered loan is accelerated as a result of default.

• Will not finance a prepayment penalty through a new loan that is originated by the same person.

A covered loan with a term of 5 years or less may not provide at origination for a payment schedule with regular periodic payments that do not fully amortized the principal balance as of the maturity date of the loan.

• For a payment schedule that is adjusted for the seasonal or irregular income of the consumer, the total installments in any year cannot exceed the amount of one year’s worth of payments on the loan. This requirement does not apply to a bridge loan as defined in Financial Code Section 4973(b)(2). Note: The definition of “bridge loan” for the purpose of this requirement is different than the definition of “bridge loan” when determining if a loan is a covered loan (see Financial Code Section 4970[d]).

1. A covered loan cannot contain a provision for negative amortization such that the payment schedule for regular monthly payments causes the principal balance to increase, unless the covered loan is a first mortgage and the person who originates the loan discloses to the consumer that the loan contains a provision for negative amortization that may add principal to the balance of the loan.

2. A covered loan cannot include terms under which periodic payments required under the loan are consolidated and paid in advance from the loan proceeds.

3. A covered loan cannot contain a provision that increases the interest rate as a result of a default.

• This provision does not apply to interest rate changes in a variable (adjustable) rate loan that are otherwise consistent with the provisions of the loan documents, provided that the change in interest rate is not triggered by a default or the acceleration for the indebtedness.

A person who originates a covered loan cannot make or arrange a covered loan unless at the time the loan is consummated the person reasonably believes the consumer(s) will be able to make the scheduled payments based on their current or expected income, current obligations, employment status, and other financial resources, other than the equity in the dwelling that secures the loan.

• In the case of a covered loan that is structured to increase to a specific designated rate at a specific designated date not exceeding 37 months from the date of application, the evaluation of the consumer’s ability to repay the loan must be based on the fully indexed rate calculated at the time of application.

• The consumer shall be presumed to be able to make the scheduled payments if, at the time the loan is consummated, the consumer’s total debt to income ratio does not exceed 55% of their current gross income as verified.

• No presumption of inability to make the scheduled payment will arise solely from the fact that, at the time the loan is consummated, the consumer’s total debt to income ratio including the covered loan, exceeds 55%.

• In the case of a stated income loan, the reasonable belief can be based on the income stated by the consumer and other information that the person originating the loan customarily obtains in connection with loans of this type. A person cannot knowingly or willingly originate a covered loan as a stated income loan with the intent or effect of evading this law.

A person who originates a covered loan cannot pay a contractor under a home-improvement contract from the proceeds of the loan other than by an instrument that is payable to the consumer, or jointly payable to the consumer and the contractor, or at the election of the consumer, to a third party escrow agent for the benefit of the contractor in accordance with the terms and conditions in a written escrow agreement signed by the consumer, the person that originates the loan and the contractor prior to the disbursement of funds.

• No payments, other than progress payments for home-improvement work that the consumer certifies is completed, can be made to a escrow account or jointly to the consumer and contractor unless the person who originates the loan is presented with a signed and dated completion certificate by the consumer showing that the home-improvement contract was completed to the satisfaction of the consumer.

1. It is unlawful for a person who originates a covered loan to recommend or encourage a consumer to default on an existing consumer loan or other debt in connection with the solicitation or making of a covered loan that refinances all or any portion of the existing consumer loan or debt.

2. A covered loan cannot contain a call provision that permits the lender, in its sole discretion, to accelerate the indebtedness.

• This prohibition does not apply if the repayment of the loan has been accelerated in accordance with the terms of the loan documents (1) as a result of the consumer’s default, (2) pursuant to a due-on-sale provision, or (3) due to fraud or material misrepresentation by a consumer in connection with the loan or the value of the security for the loan.

1. A person who originates a covered loan cannot refinance or arrange the financing of a consumer loan where the new loan is a covered loan that is made for the purpose of refinancing, debt consolidation or cash out, that does not result in an identifiable benefit to the consumer, considering the consumer’s stated purpose for seeking the loan, fees, interest rates, finance charges and points.

2. A covered loan cannot be made unless the “Consumer Caution and Home Ownership Counseling Notice” specified in Financial Code Section 4973(k) is provided to the consumer no later than 3 business days prior to signing the loan documents.

• It shall be a rebuttable presumption that the licensed person has met its obligation to provide the disclosure if the consumer provides the licensed person with a signed acknowledgment of receipt of a copy of the notice.

A person who originates a covered loan cannot steer, counsel, or direct any prospective consumer to accept a loan product with a risk grade less favorable than the risk grade that the consumer would qualify for based on that person’s current underwriting guidelines, prudently applied, considering the information available to that person, including the information provided by the consumer.

• A person will not be deemed to have violated this prohibition if the risk grade determination applied to a consumer is reasonably based on the person’s underwriting guidelines if it is an appropriate risk grade category for which the customer qualifies with the person.

• If a broker originates a covered loan, the broker cannot steer, counsel, or direct any prospective consumer to accept a loan product at a higher cost than that for which the consumer could qualify based on the loan products offered by the persons with whom the broker regularly does business

1. A person who originates a covered loan cannot avoid, or attempt to avoid, this law by:

• Structuring a loan transaction as an open-end credit plan for the purpose of evading the provisions of this law when the loan would have been a covered loan if the loan had been structured as a closed-end loan,

• Dividing any loan transaction into separate parts for the purpose of evading the provisions of this law.

1. A person who originates a covered loan cannot act in any manner that constitutes fraud.

2. A person who originates a covered loan must inform any employee who originates covered loans on behalf of the person, of the administrative or civil penalties for a violation of this law.

3. Upon request, a person who originates a covered loan must provide the Department of Real Estate or the consumer, at no cost, documentation that clearly demonstrates whether any loan is a covered loan. The documentation must include, but not be limited to, a full disclosure of the original principal balance, the APR, and the total points and fees, as defined in Financial Code Section 4970.

4. A person who provides brokerage services to a borrower in a covered loan transaction by soliciting lenders or otherwise negotiating a consumer loan secured by real property, is the fiduciary of the consumer, and any violation of the person’s fiduciary duties is a violation of this law.

• A broker who arranges a covered loan owes this fiduciary duty to the consumer regardless of whom else the broker may be acting as an agent for in the course of the loan transaction.

1. A person who originates a consumer loan cannot make a covered loan that finances points and fees in excess of $1,000 or 6% of the original principal balance, exclusive of points and fees, whichever is greater.

2. A person who originates a covered loan cannot finance, directly or indirectly, into a consumer loan or finance to the same borrower within 30 days of a consumer loan any credit life, credit disability, credit property, or credit unemployment insurance premiums, or debt cancellation or suspension agreement fees.

• It is not a prohibition for these premiums to be calculated and paid on a monthly basis.

• “Credit insurance” does not include a contract issued by a government agency or private mortgage insurance company to insure the lender against loss caused by the mortgage’s default.

Reference: Financial Code Sections 4970(a) through (i), 4973(a) through (n), 4978.6, 4979, 4979.5, 4979.6, 4979.7.