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Would this relationship be considered as a ‘mortgage-broker’ under Regulation Z? We are trying to determine if the fees would be included in the calculations for finance charge and/or points and fees.
The company that handles our debt cancellation product sent out a letter stating that as long as the monthly fees were not financed and not added to loan principal and do not accrue interest, that the fee can remain at the level monthly payment amount.
From the CFPB’s commentary on the final ruling: Finally, the
Bureau again emphasizes that a credit insurance product with a level or levelized premium is not prohibited by this final rule.Are we ok to continue with the monthly level payments for debt cancellation? As long as we do not advance money to pay the fee on the borrower’s behalf if the borrower fails to pay the fee before the end of the monthly period?
I believe that small entities refer to the banks under the $10B asset size that is supervised by the CFPB.
If you look at the commentary to 1026.36(a), it describes managers and administrative staff and similar individuals who are employed by the creditor but do not receive compensation based on whether any particular loan is originated as not being loan originators.
We also have our tellers refer customers over to the personal bankers for equity loans and mortgage area for purchases. We don’t have paper applications and the tellers do not have access to the loan system to imput a lending application. One of the controls that we put in place with the SAFE Act was that (with the exception of audit staff) only persons with a NMLS number were to be given access to the loan system.
That was our interpretation of the loan originator rules – the tellers are not able to input or ‘take’ an application so they would not need to be registered. We didn’t want any employees outside of the ones registered to be helping customers with application questions. May not be ‘good customer service’ but hopefully it keeps us in compliance.
You also need to review your bank’s BSA rules for CIP – there may still be language in the policy that states you are getting copies of identification for new customers. Your BSA officer may not be concerned with the Fair Lending concerns of having copies of ID in lending files, especially if underwriting has access to the copies. Sometimes we put blinders on when it comes to the regulations we are responsible for.
I just joined the group and thought this was a good topic. I have had the push-back from the mortgage lending group on this subject. I was adding this practice as a violation in our last flood audit and management stated that this was a practice that they were comfortable with and were going to continue. The only group that pays for flood insurance at closing (actually on the HUD settlement statement) is the mortgage group on purchases.
