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Kim,
I’ve posted below a portion from Reg V (222.70(a)(1) that I think answers your question.
§ 222.70 Scope
(a) Coverage. (1) In general. This subpart applies to any person that both—
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(i) Uses a consumer report in connection with an application for, or a grant,
extension, or other provision of, credit to a consumer that is primarily for personal,
family, or household purposes; and
(ii) Based in whole or in part on the consumer report, grants, extends, or
otherwise provides credit to the consumer on material terms that are materially less
favorable than the most favorable material terms available to a substantial proportion of
consumers from or through that person.The regulation doesn’t mention anything about the freshness, if you will, of the report relied upon. I do believe you would need to apply which ever option you are using to address the Risked-Based Pricing Notice requirement.
You’ll need to be sure to read the Power of Attorney papers to ensure what powers he has been granted. There are different levels of signing power when you are dealing with Powers of Attoney. Assuming that the Power of Attoney papers allows the husband to sign for his wife you should be fine allowing him to sign or initial joint intent.
jogle01,
I believe that you will need to give the Right to Rescind notice.
I’m guessing you were having some questions as to if you needed to look at this as a refinance of a first or junior mortgage. If you look at it as being a refinance of a first lien; well it’s not with the same lender and I assume you do have new funds since you are paying off the first mortgage. Both items would cause you to have to disclose (assuming it is consumer purpose).
If you look at it as being a refinance of a junior lien, then if it’s with the original lender and no new funds and consumer purpose then you would not have to worry about the right to rescind notice. That being said it really sounds like you are extending new funds with the payoff of the first lien. If that’s the case then you will need to give the Right to Rescind notice.
Jestes,
OK I’ve done some more looking and honestly I don’t think I’ve been able to find a smoking gun for you, but here is my opinion and here is why.
I think it should reflect the situation as is on the loan since the application lead to a loan being made. Granted either way you go, you should be sure that the information matches for the individuals. So whichever you report first you should be sure their personal infomation is always first. Whoever is in the second position be sure that their personal information is always listed seconde.
I found this quote from the 2010 A Guide To HMDA Reporting (https://www.ffiec.gov/hmda/pdf/2010guide.pdf).
Applicant Information
Ethnicity, race, and sex of the
applicant. Report ethnicity, race, and
sex both for loans that you originate
and for loan applications that do not
result in an origination. At your option,
you may report those data for loans
that you purchase. Report the data
for the applicant and for the coapplicant,
if there is one. If there is no
co-applicant, use the numerical code
for “no co-applicant” in the “coapplicant”
column. For more information,
see Appendix A, I.D., Appendix
B, and the staff comments to Regulation
C § 203.4(a)(10).Here it makes a distinction between applicaitons and completed loans. Since the loan in issue sounds like it was actually funded I would tend to then that would be the driver in this case.
Section 203.6 and in Jack’s 2010 Real Estate Lending Compliance Seminar book it says the following about Bona Fide Errors:
An error is compiling or recording loan data is not a violation of the Act or the regulation if it was unintentional and occured despite the maintenance of procedures reasonable adapted to avoid such errors.
I thought that might help you as well.
nhargrove,
I don’t know that you are going to find the answer in B&W in a regulation. That being said I would highly recommend that you get those pre-disclosure items back into the loan file. With most regulators if you can’t prove that you’ve done something then you’ve might as well not have done it at all. By getting those disclsoures signed and back in file that provides the proof that you did what you were supposed to do.
Now one of the items I personally don’t keep a copy of and that would be the Privacy notice. We always give them out and when asked about the Privacy notices we always respond with that we always give them out to customers when they apply for a loan and that has never been questioned. Other than that, I highly recommend keeping the original in file.
I hope this helps.
Mfowler,
I think section 202.12 of Reg B address this issue:
§ 202.12 Record retention.
(a) Retention of prohibited information. A creditor may retain in its files information that is prohibited by the Act or this regulation for use in evaluating applications, without violating the Act or this regulation, if the information was obtained:
(1) From any source prior to March 23, 1977;
(2) From consumer reporting agencies, an applicant, or others without the specific request of the creditor; or
(3) As required to monitor compliance with the Act and this regulation or other federal or state statutes or regulations.
(b) Preservation of records —(1) Applications. For 25 months (12 months for business credit, except as provided in paragraph (b)(5) of this section) after the date that a creditor notifies an applicant of action taken on an application or of incompleteness, the creditor shall retain in original form or a copy thereof:
(i) Any application that it receives, any information required to be obtained concerning characteristics of the applicant to monitor compliance with the Act and this regulation or other similar law, and any other written or recorded information used in evaluating the application and not returned to the applicant at the applicant’s request;
(ii) A copy of the following documents if furnished to the applicant in written form (or, if furnished orally, any notation or memorandum made by the creditor):
(A) The notification of action taken; and
(B) The statement of specific reasons for adverse action; and
(iii) Any written statement submitted by the applicant alleging a violation of the Act or this regulation.
(2) Existing accounts. For 25 months (12 months for business credit, except as provided in paragraph (b)(5) of this section) after the date that a creditor notifies an applicant of adverse action regarding an existing account, the creditor shall retain as to that account, in original form or a copy thereof:
(i) Any written or recorded information concerning the adverse action; and
(ii) Any written statement submitted by the applicant alleging a violation of the Act or this regulation.
(3) Other applications. For 25 months (12 months for business credit, except as provided in paragraph (b)(5) of this section) after the date that a creditor receives an application for which the creditor is not required to comply with the notification requirements of §202.9, the creditor shall retain all written or recorded information in its possession concerning the applicant, including any notation of action taken.
(4) Enforcement proceedings and investigations. A creditor shall retain the information beyond 25 months (12 months for business credit, except as provided in paragraph (b)(5) of this section) if the creditor has actual notice that it is under investigation or is subject to an enforcement proceeding for an alleged violation of the Act or this regulation, by the Attorney General of the United States or by an enforcement agency charged with monitoring that creditor’s compliance with the Act and this regulation, or if it has been served with notice of an action filed pursuant to section 706 of the Act and §202.17 of this regulation. The creditor shall retain the information until final disposition of the matter, unless an earlier time is allowed by order of the agency or court.
(5) Special rule for certain business credit applications. With regard to a business that had gross revenues in excess of $1 million in its preceding fiscal year, or an extension of trade credit, credit incident to a factoring agreement, or other similar types of business credit, the creditor shall retain records for at least 60 days after notifying the applicant of the action taken. If within that time period the applicant requests in writing the reasons for adverse action or that records be retained, the creditor shall retain records for 12 months.
(6) Self-tests. For 25 months after a self-test (as defined in §202.15) has been completed, the creditor shall retain all written or recorded information about the self-test. A creditor shall retain information beyond 25 months if it has actual notice that it is under investigation or is subject to an enforcement proceeding for an alleged violation, or if it has been served with notice of a civil action. In such cases, the creditor shall retain the information until final disposition of the matter, unless an earlier time is allowed by the appropriate agency or court order.
(7) Prescreened solicitations. For 25 months after the date on which an offer of credit is made to potential customers (12 months for business credit, except as provided in paragraph (b)(5) of this section), the creditor shall retain in original form or a copy thereof:
(i) The text of any prescreened solicitation;
(ii) The list of criteria the creditor used to select potential recipients of the solicitation; and
(iii) Any correspondence related to complaints (formal or informal) about the solicitation.
As long as you can reproduce the documents from your images (which I would expect that you can) then you are fine to keep your copies in image form, instead of the original.
TGIF!!!
I don’t know of anything right off that would specifically address this for haz ins. I would caution you to air on the side of caution if you can’t find anything specifically that supports you doing so.
Lulu,
I went to the Q & A’s for Flood Insurance. The Q & A that I keyed on was number 62.
62. Does a lender or its servicer have the authority to charge a borrower for the cost of insurance coverage during the 45-day notice period?
PROPOSED ANSWER: No. There is no authority under the Act and Regulation to charge a borrower for a force-placed flood insurance policy until the 45-day notice period has expired. The ability to impose the costs of force placed flood insurance on a borrower commences 45 days after notification to the borrower of a lack of insurance or of inadequate insurance coverage. Therefore, lenders may not charge borrowers for coverage during the 45-day notice period. This holds true regardless of whether the force placed flood insurance is obtained through the NFIP or a private provider.I understand that you are not charging them anything during the 45 day period, but that you are going back after the 45 days have past (assuming they don’t purchase insurance and you have force place insurance setup) and charging the customer for the time frame in which you had force placed insurance in effect during the 45 days.
The above Answer states that lenders may not charge borrowers for coverage during the 45-day notice period. I will agree that that can be read and taken two different ways. To keep yourself out of trouble with your regulators I would go with the most restrictive interpretation and not charge them period for the coverage in the 45 day period. Another thing to be aware of is UDAP and who knows they might even try to get you with a UDAP violation based on the fact that the insurance is so much more expensive than if the customer bought it. I would advise not charging at all for the 45 day time period regardless if you charge them for it after the time had passed or not.
Kowsley1,
I think that you won’t have to list the cost for the items that were covered by your first loan as you know going into this loan that they are not going to incur those cost.
What I’m basing this opinion on is the following portion of RESPA:
Good faith estimate or GFE means an estimate of settlement charges a borrower is likely to incur, as a dollar amount, and related loan information, based upon common practice and experience in the locality of the mortgaged property, as provided on the form prescribed in § 3500.7 and prepared in accordance with the Instructions in Appendix C to this part
The part about “settlement charges a borrower is likely to incur…”
If you know at the onset of the loan application process that they are not going to incur these charges as it relates to the second loan then I think you have an argument that those fees are not likely to be incurred.
I looked through the Regulation, the FAQ’s, and RESPA Roundups and I didn’t find anything specific that I can point you to that would give you a definitive answer. I did want to you give you what I’m basing my opinion on.
Maybe Jack has more he could add on this subject.
This is taken straight from RESPA 3500.2(b)
Changed circumstances means: (1)(i) Acts of God, war, disaster, or other emergency;
(ii) Information particular to the borrower or transaction that was relied on in providing the GFE and that changes or is found to be inaccurate after the GFE has been provided. This may include information about the credit quality of the borrower, the amount of the loan, the estimated value of the property, or any other information that was used in providing the GFE;
(iii) New information particular to the borrower or transaction that was not relied on in providing the GFE; or
(iv) Other circumstances that are particular to the borrower or transaction, including boundary disputes, the need for flood insurance, or environmental problems.
(2) Changed circumstances do not include:
(i) The borrower’s name, the borrower’s monthly income, the property address, an estimate of the value of the property, the mortgage loan amount sought, and any information contained in any credit report obtained by the loan originator prior to providing the GFE, unless the information changes or is found to be inaccurate after the GFE has been provided; or
(ii) Market price fluctuations by themselves.
The FHLB penalty sounds like something to me that might not have been relied upon at the time the GFE was completed as that’s not something you see with most loans (at least not in my neck of the woods). The taxes on the other hand sounds pretty common, unless you are talking about back taxes which the loan officer probably would not have know about at the time the GFE was completed. I would equate this to something like flood insurance. At the time a GFE is normally given you typically don’t a flood determination and would have no way of know that the flood insurance is required. Thus you wouldn’t list on the initial GFE. Once you found out about the property being in a flood zone after pulling your flood determination that would be considered a change circumstance which would allow you to redisclose.
If this describes your situation in the way the facts came out then I would think that you would have a changed circumstance. Now remember that you only have 3 business days to redisclose from when you became aware of the changed circumstance to time of the essence.
On the other hand if you knew or reasonably should have known about these charges before the GFE was completed then you don’t have a changed circumstance and sounds like you’ll be dealing with a cure.
APR Tolerance Question:
It does sound like you have a tolerance violation. To correct it you would need to redisclose; assuming you’ve not closed the loan yet.I hope this helps!
cbgrayson,
In looking at Reg B 202.14 here is what I found:
§ 202.14 Rules on providing appraisal reports.
(a) Providing appraisals. A creditor shall provide a copy of an appraisal report used in connection with an application for credit that is to be secured by a lien on a dwelling. A creditor shall comply with either paragraph (a)(1) or (a)(2) of this section.
(1) Routine delivery. A creditor may routinely provide a copy of an appraisal report to an applicant (whether credit is granted or denied or the application is withdrawn).
(2) Upon request. A creditor that does not routinely provide appraisal reports shall provide a copy upon an applicant’s written request.
(i) Notice. A creditor that provides appraisal reports only upon request shall notify an applicant in writing of the right to receive a copy of an appraisal report. The notice may be given at any time during the application process but no later than when the creditor provides notice of action taken under §202.9 of this regulation. The notice shall specify that the applicant’s request must be in writing, give the creditor’s mailing address, and state the time for making the request as provided in paragraph (a)(2)(ii) of this section.
If you had some kind of appraisal and turned the loan down then you would need to either give them a copy of the appraisal, a notice informing them of their right to receive an appraisal, or both (is fine to do but not necessary). It doesn’t matter of the loan is approved or denied. The regulation talks about the applicant and in 202.14(2)(i) it mentions that it can be delivered at time of application but no later than when the creditors provides notice of action taken under 202.9. 202.9 address among other things, the delivery of adverse action notices.
That being said, if you deny the loan and have yet to get an appraisal of some form then you wouldn’t have to give the notice as it wouldn’t apply without some form of appraisal.
Jestes,
My bank doesn’t have to deal with HMDA report (and yes I’m happy about that) but I did a quick search and found some useful information on the FFIEC’s website. Here is a copy of the section that I think speaks to your issue:
“What do I do if I find an error in my HMDA data file after it has been submitted?
Make the correction to your HMDA file and send in a complete resubmission; partial resubmissions should not be sent. See the data collection procedure change regarding data resubmissions. Refer to the next question, “How do I resubmit HMDA data?” for the resubmission guidelines.”
Here is the link to the website as well: https://www.ffiec.gov/hmda/faqtech.htm#srs6
I hope that helps!
Part 1
I’m going to assume that you are also talking about a Higher Priced Mortgage Loan (HPML) aka Section 35. HPMLs that are secured by 1st lien on a principal dwelling are required to have Escrow accounts. In this case you only have the land as collateral, thus you don’t meet the requirements of having to have an Escrow account.
Part 2
Sinc you don’t have to have an Escrow account, I’m going to guess this is a mute point but I’ll still attempt to address it. If you set up an Escrow account after the loan is opened you will need t do an Escrow Analysis. In doing the Escrow Analysis you’ll determine what money your borrower will need to give you up front to meet the payment obligations. See Section 3500.17(c)(2) of RESPA.
1) SCRA talks about the rate reduction under section 207 and in reading it I find no limitations based upon the existence of collateral or lack of. It’s my understanding that unsecured debt would also apply for the interest reduction, assuming you are dealing with an active servicemember and/or their dependents as defined in the regulation.
2) SCRA applies to active servicemembers. The definition of duty status is defined in 10 U.S.C. 101 (d) (1-6). If they qualify as active then SCRA would apply. I’ve copied and pasted section 1-6 below:
(d) Duty Status. – The following definitions relating to duty status apply in this title:
(1) The term “active duty” means full-time duty in the active military service of the United States. Such term includes full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. Such term does not include full-time National Guard duty.
(2) The term “active duty for a period of more than 30 days” means active duty under a call or order that does not specify a period of 30 days or less.
(3) The term “active service” means service on active duty or full-time National Guard duty.
(4) The term “active status” means the status of a member of a reserve component who is not in the inactive Army National Guard
or inactive Air National Guard, on an inactive status list, or in the Retired Reserve.
(5) The term “full-time National Guard duty” means training or other duty, other than inactive duty, performed by a member of the Army National Guard of the United States or the Air National Guard of the United States in the member’s status as a member of the National Guard of a State or territory, the Commonwealth of Puerto Rico, or the District of Columbia under section 316, 502, 503, 504, or 505 of title 32 for which the member is entitled to pay from the United States or for which the member has waived pay from the United States.
(6)(A) The term “active Guard and Reserve duty” means active duty performed by a member of a reserve component of the Army, Navy, Air Force, or Marine Corps, or full-time National Guard duty performed by a member of the National Guard pursuant to an order to full-time National Guard duty, for a period of 180 consecutive days or more for the purpose of organizing, administering, recruiting, instructing, or training the reserve components.3) Either the servicemember or a dependent, or both may request relief during the period of active service including up to 180 days after the end of active duty service.
Note: You don’t have to confirm their active status but you can find out by going to https://www.dmdc.osd.mil/mla/owa/home and entering in some information that you should have to find out their duty status.
