A 2011 examination covering 23 states by the Multistate Mortgage Committee shows that many mortgage lenders are engaging in unlicensed activity and wrongly collecting fees.

The committee is comprised of state regulatory members from 10 states appointed by the American Association of Residential Mortgage Regulators and the Conference of State Bank Supervisors.

The examinations uncovered many instances of unlicensed activity. These cases were often difficult to discern, a committee report states, as some licensees created multiple layers of management and employees, and assumed the business stance that there was no need to license all employees originating loans.

Impermissible Federal Housing Administration and Veterans Administration fees were noted in multistate examinations and point to a serious internal routine and control issue. The existence of these fees necessitated reimbursement to borrowers, and in significant numbers could threaten the safe and sound operation of lenders. Licensees also imposed and collected fees that were not in compliance with the Real Estate Settlement Procedures Act, including the collection of unearned fees, unallowable fees and incorrect amounts.

On Friday, the Consumer Financial Protection Bureau proposed loan officer compensation rules that it says will bring greater accountability to the mortgage origination market and make it easier for consumers to understand mortgage costs.

The committee also identified significant numbers of loans in which licensees failed to produce evidence that borrowers were provided the Truth-in-Lending disclosure within the required three business days. And many good faith estimates were inaccurate.

TILA mandates the disclosure of key terms of the lending arrangement and all costs. Specifically, it mandates that the finance charge, a key term, must not be understated by more than $100 to be considered accurate, the report noted.

Examiners found many instances where the difference between the disclosed finance charge and the actual finance charge exceeded $100. Those examinations required the licensees to refund borrowers the difference.