Mortgage Finance Blog

I Got Audited!

November 30th, 2013 1:15 PM by Diego Quintero

For all of those mortgage brokers and mortgage loan originators who are constantly running scared of the ever "nerve-wracking event," allow me to set your mind at ease. By the grace of some great universal energy, I was given the courtesy of a 30-day notification before the Department of Financial Institutions came to my office. Luckily I was able to take the full thirty days to chew off all of my fingernails, waste most of my time reviewing old files, and spending an exorbitant amount of money on accounting services.

It is most likely a common reaction to being told that your business is going to be examined from head to toe. The good news is that only the last twenty four months of business is reviewed and the best part...that they only charge $65 per hour as they sift through your entire collection of business documents.

Simply stated, if you have something to hide, they’ll find it. If your activity has been suspicious, then you may have to spend a lot for their incredibly thorough services. This particular examiner mentioned having spent thirty days in one location. The math for that examination was well-clear of $15,000. OUCH!

One of the first questions that came to mind was whether or not this examination was being performed based on a complaint. I was told that complaints are easily located at NMLS, so I was put at ease that this was not the issue and that complaints are placed on the national online consumer site before anywhere else.

The reason for my examination was because the company was due for a review in May of 2009. Since then, the department has been downsized due to lack of resources and most importantly they were dealing with issues of much greater importance than keeping up with yearly examinations. So, they are getting to all of us, eventually.

And, we are better for it. Let me explain.

I would imagine that I am like most licensed individuals. I go about my business in an honest, forthcoming fashion. I disclose everything! If necessary, I’d disclose my shoe size if it means being compliant. Kidding aside, I just do my best to keep my clients up to date and provide them with service that is second to none. That’s the way we need to operate. Otherwise, we should find a new profession.

My examiner was personable, knowledgeable, and witty! Yes, some of the examiners do have a sense of humor, as they are "up-in-your-grill" for a few hours. I felt free to ask questions, including those dealing with future planning and the direction that the company will take. Each question was fully answered, with strategies, and methods of organization that would be most beneficial for the overall plan. Even with my inquiries, I was lucky enough to have been examined for nine "billable" hours, but there was actually a real, tangible benefit to me. I really appreciated the information and guidance.

Got plans to hire more personnel? Well, my examiner mentioned that this is the area where most firms make mistakes. It’s worth a few phone calls and emails to make sure that it is handled correctly. I now have a contact at the department to ensure that I get it right from the start.

One of my initial concerns was that I did not have the information in the format that they required. I use Quickbooks, EllieMae Encompass, online bank access, and most importantly, I keep everything that I collect, receive, and produce. From letters of explanation on loan files, to deposit receipts, copies of cancelled checks, invoices, and conversation logs. Utilizing all of these sources of information I can easily print out loan logs, deposit history, account lists, and anything else that was requested of me. If you are using the latest technology then you should be able to print reports as needed.

In a nutshell, the examination ended up being a very positive experience. While I was still a bit nervous at the start of the process, the examiner helped me feel comfortable and walked me through the exam. I feel as though I received a pat on the back by the powers that be, to continue doing what I am doing. This vote of encouragement has filled me with a great feeling that I have what it takes to achieve greater success in a profession that I really enjoy. I am looking forward to many more successful years ahead...and to my next examination in thirty-six months! Good luck to my fellow colleagues!

Your trusted Mortgage Professional,

Diego L. Quintero


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Posted by Diego Quintero on November 30th, 2013 1:15 PM


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