WEBVTT 00:00.000 --> 00:03.805 Narrator: Sheila, an audit manager, is in the process of buying her first 00:03.805 --> 00:08.049 home. Her partner, who is deemed a spousal equivalent for independence 00:08.049 --> 00:12.059 purposes, has been pushing to use a family friend who works for a 00:12.059 --> 00:16.082 mortgage broker to find a lender with the best rates, and wants to reach out 00:16.082 --> 00:20.346 to them now so they can get the process underway. Sheila understands 00:20.346 --> 00:24.019 there are independence considerations when purchasing a home, but 00:24.184 --> 00:27.247 before giving her partner the go-ahead to move forward with the family 00:27.247 --> 00:30.395 friend, she wants to be sure she’s doing the right thing. 00:30.395 --> 00:33.791 She decides to call Risk Management – Independence. 00:33.791 --> 00:35.690 Let’s listen to their discussion. 00:35.690 --> 00:39.156 Independence: Congratulations! Buying your first home is exciting! 00:39.156 --> 00:42.224 You’re right, there are independence considerations to take 00:42.224 --> 00:45.065 into account when buying a home. You mentioned that you’re 00:45.065 --> 00:47.290 planning to use a mortgage broker to help find a lender? 00:47.290 --> 00:50.947 Sheila: Yes, we have a friend that works for a mortgage broker. 00:50.947 --> 00:54.634 Independence: Okay, let’s start there. Independence rules apply 00:54.634 --> 00:57.544 to mortgage brokers too. Did you confirm the restriction 00:57.544 --> 00:59.702 status of the mortgage broker in KICS? 00:59.702 --> 01:04.763 Sheila: Oh, I didn’t consider that. If they are restricted, 01:04.763 --> 01:06.553 does that mean we can’t use them? 01:06.553 --> 01:10.216 Independence: That’s right. You also can’t use an unrestricted broker 01:10.216 --> 01:13.391 that sells its loans exclusively to restricted entities. 01:13.391 --> 01:16.467 Sheila: Hmm…how would I know that? 01:16.467 --> 01:20.029 Independence: You’re required to make reasonable inquiries of the 01:20.029 --> 01:22.780 mortgage broker to determine whether the loan may be sold to an 01:22.780 --> 01:27.113 audit client or its affiliate. Ask questions like “Do you routinely sell your 01:27.113 --> 01:31.238 mortgages to certain entities?”, and “Who is my loan going to be sold to?” 01:31.238 --> 01:34.964 If they only sell to restricted entities, you shouldn’t use this broker 01:34.964 --> 01:36.796 because that could impair your independence. 01:36.796 --> 01:42.405 Sheila: Ok, I’ll add that to the list of questions to discuss with the broker. 01:42.405 --> 01:45.483 Independence: Whether you use a mortgage broker or not, 01:45.483 --> 01:48.672 always check the restriction status of the mortgage lender in KICS 01:48.672 --> 01:52.148 before closing on the loan. You and your immediate family members 01:52.148 --> 01:55.062 are not permitted to obtain a loan from a restricted entity. 01:55.062 --> 01:59.505 Sheila: Right, and when we do close on the loan, I must report 01:59.505 --> 02:02.177 it in KICS within 14 days of closing on the loan? 02:02.177 --> 02:06.110 Independence: That’s right. And remember to report the lender, not the 02:06.110 --> 02:09.639 the servicer. The lender is the financial institution that will lend 02:09.639 --> 02:13.121 you the funds, and is often a different entity from the loan servicer 02:13.121 --> 02:16.448 that is, the one that sends you statements and that you make payments to. 02:16.448 --> 02:19.626 Sheila: Okay, is there anything else to consider? 02:19.626 --> 02:23.277 Independence: Yes, there are restrictions related to homeowners and 02:23.277 --> 02:27.701 title insurance as well. Before obtaining a new policy, or modifying an 02:27.701 --> 02:31.805 existing one, make sure you determine the restriction status of the insurer. 02:31.805 --> 02:35.730 If it’s an SEC restricted entity, you’ll need to confirm that you’re not 02:35.730 --> 02:37.396 a Covered Person to the entity. 02:37.396 --> 02:42.618 Sheila: Okay, so I can obtain a policy from a restricted entity, 02:42.618 --> 02:46.168 as long as it’s not an SEC restricted entity that I am 02:46.168 --> 02:47.798 considered a Covered Person for? 02:47.798 --> 02:51.316 Independence: That’s right. There is one other thing to keep in mind. 02:51.316 --> 02:54.640 Mortgage lenders often sell their loans to other lenders. 02:54.640 --> 02:58.604 You should review all notifications you receive about your loan carefully. 02:58.604 --> 03:02.199 If your loan is sold, you’ll need to report the new lender in KICS 03:02.199 --> 03:06.122 within 14 days of the effective date of the sale. You have an ongoing 03:06.122 --> 03:09.059 responsibility to ensure any changes to your loan 03:09.059 --> 03:11.064 are reported in KICS in a timely manner. 03:11.064 --> 03:16.614 Sheila: Oh, okay, I’ll look out for that. This has been very helpful. Thank you. 03:16.614 --> 03:19.570 Independence: You’re welcome! There’s also a resource on the 03:19.570 --> 03:22.023 Independence portal page that you can use called the 03:22.023 --> 03:25.453 Independence reminders when purchasing a home. It has information 03:25.453 --> 03:28.496 about what we discussed today and is a great tool to remind 03:28.496 --> 03:31.575 you of all your independence considerations throughout this process. 03:31.575 --> 03:35.701 Narrator: The conversation with Risk Management - Independence 03:35.701 --> 03:39.446 helped Sheila recognize the independence considerations she has to 03:39.446 --> 03:43.365 take into account when purchasing a new home. Sheila now has the 03:43.365 --> 03:47.491 information she needs to move forward. She checked KICS and confirmed 03:47.491 --> 03:50.899 that the family friend actually works for a restricted mortgage broker. 03:50.899 --> 03:54.779 She informed her partner that they aren’t permitted to use that broker 03:54.779 --> 03:56.800 and instead have begun searching for an 03:56.800 --> 03:58.640 unrestricted mortgage broker and lender. 03:58.640 --> 04:03.007