[Brent V]

This may be a problem. Typically odd days interest is paid at closing or there is a larger initial payment. Does your note form state that the odd days interest is added to the principal and amortized over the life of the loan?

[Brent V]

I consulted with Reg E expert, Terri Sands of Secura Risk Management and it is her opinion that you need to take the dispute and credit the customer.

[Brent V]

From the Federal Reserve FAQs

Q2: When do the requirements of Regulation O apply to extensions of credit to a person that becomes an insider after the member bank made the extension of credit (transition loans)?

A2: Transition loans need not conform to the requirements of Regulation O until such extensions of credit are renewed, revised, or extended, at which time the extensions of credit would be treated as a new extension of credit and therefore subject to all of the requirements of Regulation O. However, transition loans must be counted toward the individual and aggregate lending limits of Regulation O as soon as the borrower becomes an insider.

This same treatment would apply to extensions of credit to a director or principal shareholder that later becomes an executive officer. Such extensions of credit need not conform to the provisions of Regulation O that apply only to executive officers until such extensions of credit are renewed, revised, or extended. However, the amount of any such extensions of credit count toward the quantitative limits for loans to executive officers in section 215.5 of Regulation O as soon as the director or principal shareholder becomes an executive officer.

Many lines of credit by a member bank to an insider must be approved by the bank’s board of directors every 14 months. Each such approval constitutes a new extension of credit. Accordingly, transition loans that are lines of credit generally must conform to the requirements of Regulation O within 14 months of the borrower becoming an insider.

Notwithstanding the general principles noted above, the treatment described here does not apply to extensions of credit made by a member bank in contemplation of the borrower becoming an insider or executive officer. Under such circumstances, the extension of credit should comply with all requirements of Regulation O at the time it is made.

[Brent V]

In a rescindable transaction, all of those who have an ownership interest in the property have the right to rescind. So, even though the wife is not an applicant, she has the right to rescind. Regulation Z also states that each person who has the right to rescind must receive a copy of the material disclosures, which are included in the TRID disclosure. I assume Laser Pro is requiring the wife’s signature as an acknowledgement of receipt of a copy of the disclosure.

[Brent V]

A community development loan means a loan that:
(1) Has as its primary purpose community development; and
(2) Except in the case of a wholesale or limited purpose bank:
(i) Has not been reported or collected by the bank or an affiliate for consideration in the bank’s assessment as a home mortgage, small business, small farm, or consumer loan, (unless the loan is for a multifamily dwelling (as defined in § 1003.2(n) of this title); and
(ii) Benefits the bank’s assessment area(s) or a broader statewide or regional area that includes the bank’s assessment area(s).

Community development means:
(1) Affordable housing (including multifamily rental housing) for low- or moderate-income individuals;
(2) Community services targeted to low- or moderate-income individuals;
(3) Activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or
(4) Activities that revitalize or stabilize
(i) Low- or moderate-income geographies;
(ii) Designated disaster areas; or
(iii) Distressed or underserved nonmetropolitan middle-income geographies designated by the Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on—
(A) Rates of poverty, unemployment, and population loss; or
(B) Population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals.

For the loan to qualifies for community development credit:
• It must hit one of the four CD hooks listed above. It is not clear from the information included in your question whether that criteria has been met.
• The loan may not be HMDA reportable. Construction-permanent loans generally are HMDA reportable.

[Brent V]

You check the “Disclosure of Use of Information Obtained from an Outside Source” box when you obtain a credit report and the information in the report impacted the decision to deny the credit. Based on the information in your question, it appears that the box need not be checked.

[Brent V]

It has to post to the account. Once posted at that point the customer can submit a dispute. You could communicate to the customer information on the pended transaction but for Reg E it has to be posted.

[Brent V]

The following response is from Deb Crawford of Gettechnical, Inc:

“A US Person is not supposed to do business with anyone on the OFAC sanctions list. So it does not matter the channel, you can’t allow the transaction. It may be the bank needs to call OFAC in case there is a problem and self report.”

[Brent V]

A violation of Section 8 occurs when a person gives or receives a fee, kickback or other thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or part of a settlement service.

• Waiving a fee constitutes a “thing of value.”
• The bank refers business to the attorney. If the attorney waives the fee for the bank then a Section 8 concern arises.
o The question does not clarify whether the family member is a member of the attorney’s family or is a member of a bank employee’s family.
 If the attorney waives fees for a member of his or her own family, that is not a Section 8 issue.
 Waiving the fee for a member of a bank employee’s family may raise a concern.

[Brent V]

Your analysis is accurate. The geography in which a LPO is located does not have to be included in your assessment area. As you note, loans originated by your LPO are apparently located in areas not included in your assessment area and depending on the success of the LPO could hurt your bank’s performance on the lending test that focuses on the percentage of loans located in the assessment area.

[Brent V]

Since Reg B doesn’t discuss mixed-use properties, your safest course of action is to assume the property securing the loan is a dwelling. In this case, that triggers the requirements to provide the applicant with a copy of the appraisal and the appraisal notice.

[Brent V]

Assuming a power of attorney (POA) is required to be filed with the mortgage, then the fee for filing the POA is included in the first line in Section E.

[Brent V]

Without seeing the master policy and the evidence of insurance I have to guess a bit. I assume that the master policy is used for every loan but means nothing by itself. Once the evidence of Insurance is issued, the combination of documents (master policy and EOI) creates the contract of insurance.

Since this is not a FEMA policy it must meet the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) or contain the compliance aid statement. Since it does not contain the correct compliance aid statement, a full analysis of the private policy compared to a FEMA policy is required.

[Brent V]

How you proceed is largely based on the capabilities of your system. Generally we recommend keeping the entire file for the retention period of the document that must be retained for the longest period as a best practice. In the event of an audit, the more documentation available the better.

If your scanning systems lets you set different retention periods for each document that works better. It creates more work up front, but is reduces the bulk of documents over time.

[Brent V]

Thank you @amarie1126 for the very accurate reply!

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