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Per the definition of what a Private Educational Loan is, I do believe that the loan mentioned would be covered. Now if they could shift some funds, then they might change the purpose of the loan, and if the purpose does not meet the definition below, then it would no longer apply.
12 CFR 1026.46 (a)(5)
(5) Private education loan means an extension of credit that:
(i) Is not made, insured, or guaranteed under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.);
(ii) Is extended to a consumer expressly, in whole or in part, for postsecondary educational expenses, regardless of whether the loan is provided by the educational institution that the student attends;
(iii) Does not include open-end credit any loan that is secured by real property or a dwelling; and1
(iv) Does not include an extension of credit in which the covered educational institution is the creditor if:
(A) The term of the extension of credit is 90 days or less; or
(B) an interest rate will not be applied to the credit balance and the term of the extension of credit is one year or less, even if the credit is payable in more than four installments.
Compliancegirl,
FCRA only addresses the sharing of credit report information between affiliates. In the situation you described, it doesn’t sound like the other bank is an affiliate. I don’t believe FCRA addresses your question, thus this sounds like a question for an attorney.
In my opinion, I would think the sharing would not fit with the spirit of the law.
chichi63,
I believe you are correct, you should be checking everyone involved in the transaction, including those receiving proceeds. OFAC is to limit US companies from conducting business with certain people and giving them proceeds would be conducting business with them.
Potentially, waiving late fees for director could be a violation. Directors and other Reg O officers are not to be treated differently (or special) than any other customer.
If you routinely would waive a late fee for any customer under the same circumstances, then you should be fine, but watch out for not being consistent.
BDyess,
The RESPA Roundup is something that you have to comply with. There are a couple of ways that you can approach this. The RESPA Roundup doesn’t explicitly say that if you deliver the GFE late, that you have to list the fees as $0 on the HUD, in the comparison chart. It mentions that if a GFE is not delivered at all, that the fees would then have to be treated in that manner.
Some hold the belief that since it references the section of the regulation that talks about being delivered within three business days from the date of application, that not delivering it in a timely manner also would constitute listing the fees on the comparison chart as $0. If you want to be ultra conservative, you could abide by this approach and you should not be criticized by regulators. That being said, if you choose to take the approach that you don’t have to do so, as long as a GFE was given (timely or late), then you still may not be criticized, but realize that it is a possibility. It depends on your institutions appetite for risk in this area.
I personally think you’ve got a good argument, or at least could make some good points, by saying that you don’t have to list the items as $0 on the comparison chart, as long as a GFE was delivered.
As for your questions not being answered yet, if you asked HUD, I doubt, you’ll ever get an answer as RESPA is the CFPB’s baby now. You might not get an answer from them either at this point, as they are making some massive changes to RESPA, and we can only hope those changes will make things clear than what we have to deal with at this point.
lsmith5,
I don’t think that you will find anywhere in the reg that talks about what you must list in that section. I believe you are talking about the itemization of fees, which doesn’t always have to be done on a TIL.
12 CFR 1026.18 (c)
(c) Itemization of amount financed. (1) A separate written itemization of the amount financed, including: 40
40 Good faith estimates of settlement costs provided for transactions subject to the Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.) may be substituted for the disclosures required by paragraph (c) of this section.
(i) The amount of any proceeds distributed directly to the consumer.
(ii) The amount credited to the consumer’s account with the creditor.
(iii) Any amounts paid to other persons by the creditor on the consumer’s behalf. The creditor shall identify those persons.41
41 The following payees may be described using generic or other general terms and need not be further identified: public officials or government agencies, credit reporting agencies, appraisers, and insurance companies.
(iv) The prepaid finance charge.
From your question, it sounds like that particular heading comes from the format that a particular loan processing vendor has created, thus you will not find that specific question addressed in the regulation.
The following is a list of sections that I normally see with that vendor:
– Amount paid on my account:
– Other Charges Financed:
– Total Financed Prepaid Finance Charges:
– Note Principal:
– Prepaid Finance Charges:
– Amount Financed:
– Other Charges Paid in Cash:It is my opinion that typically you would list any other charges that don’t have a home in one of the other sections. Typically in my neck of the woods I see Homeowners Insurance listed here, and not much else.
I hope this helps. Look on the bright side, at least it is not RESPA!
KCapps,
I believe this is what you are referencing:
§ 339.3 Requirement to purchase flood insurance where available.
(a) In general. A bank shall not make, increase, extend, or renew any designated loan unless the building or mobile home and any personal property securing the loan is covered by flood insurance for the term of the loan. The amount of insurance must be at least equal to the lesser of the outstanding principal balance of the designated loan or the maximum limit of coverage available for the particular type of property under the Act. Flood insurance coverage under the Act is limited to the overall value of the property securing the designated loan minus the value of the land on which the property is located.
I looked in the definition section of the regulation to see if make, increase, extend, or renew were defined and I didn’t find anything. I would agree with your interpretation, which is the most conservative. Waiting till after the note is signed (but not funded) to get insurance, will do nothing but get the bank in trouble, and if found to be a pattern or practice, could lead to CMP’s.
I think you are making the right call on this one.
“● Detached garages (up to 10 percent of Building
Property coverage). Detached buildings (other than
garages) require a separate Building Property policy.”See page 2 on the linked PDF below.
https://www.tdi.texas.gov/consumer/storms/documents/NFIPcoverage.pdf
Kowsley,
I’ve always understood that an appraisal must be addressed to the bank and not another financial institution. Also, from what I know about USPAP, it would be a violation of USPAP for the appraiser to just change the name to another financial institution.
I would advise against this practice.
3500.5 Coverage of RESPA.
(a) Applicability. RESPA and this part apply to all federally related mortgage loans, except for the exemptions provided in paragraph (b) of this section.
(b) Exemptions. (1) A loan on property of 25 acres or more.
(2) Business purpose loans. An extension of credit primarily for a business, commercial, or agricultural purpose, as defined by Regulation Z, 12 CFR 226.3(a)(1). Persons may rely on Regulation Z in determining whether the exemption applies.
(3) Temporary financing. Temporary financing, such as a construction loan. The exemption for temporary financing does not apply to a loan made to finance construction of 1- to 4-family residential property if the loan is used as, or may be converted to, permanent financing by the same lender or is used to finance transfer of title to the first user. If a lender issues a commitment for permanent financing, with or without conditions, the loan is covered by this part. Any construction loan for new or rehabilitated 1- to 4-family residential property, other than a loan to a bona fide builder (a person who regularly constructs 1- to 4-family residential structures for sale or lease), is subject to this part if its term is for two years or more. A “bridge loan” or “swing loan” in which a lender takes a security interest in otherwise covered 1- to 4-family residential property is not covered by RESPA and this part.
(4) Vacant land. Any loan secured by vacant or unimproved property, unless within two years from the date of the settlement of the loan, a structure or a manufactured home will be constructed or placed on the real property using the loan proceeds. If a loan for a structure or manufactured home to be placed on vacant or unimproved property will be secured by a lien on that property, the transaction is covered by this part.
(5) Assumption without lender approval. Any assumption in which the lender does not have the right expressly to approve a subsequent person as the borrower on an existing federally related mortgage loan. Any assumption in which the lender’s permission is both required and obtained is covered by RESPA and this part, whether or not the lender charges a fee for the assumption.
(6) Loan conversions. Any conversion of a federally related mortgage loan to different terms that are consistent with provisions of the original mortgage instrument, as long as a new note is not required, even if the lender charges an additional fee for the conversion.
(7) Secondary market transactions. A bona fide transfer of a loan obligation in the secondary market is not covered by RESPA and this part, except as set forth in section 6 of RESPA (12 U.S.C. 2605) and § 3500.21. In determining what constitutes a bona fide transfer, HUD will consider the real source of funding and the real interest of the funding lender. Mortgage broker transactions that are table-funded are not secondary market transactions. Neither the creation of a dealer loan or dealer consumer credit contract, nor the first assignment of such loan or contract to a lender, is a secondary market transaction (see § 3500.2.)§ 3500.7 Good faith estimate or GFE.
(a) Lender to provide. (1) Except as otherwise provided in paragraphs (a), (b), or (h) of this section, not later than 3 business days after a lender receives an application, or information sufficient to complete an application, the lender must provide the applicant with a GFE. In the case of dealer loans, the lender must either provide the GFE or ensure that the dealer provides the GFE.
(2) The lender must provide the GFE to the loan applicant by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, e-mail, or other electronic means.
(3) The lender is not required to provide the applicant with a GFE if, before the end of the 3-business-day period:
(i) The lender denies the application; or
(ii) The applicant withdraws the application.
(4) The lender is not permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The lender may, at its option, charge a fee limited to the cost of a credit report. The lender may not charge additional fees until after the applicant has received the GFE and indicated an intention to proceed with the loan covered by that GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).
(5) The lender may at any time collect from the loan applicant any information that it requires in addition to the required application information. However, the lender is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application.
(b) Mortgage broker to provide. (1) Except as otherwise provided in paragraphs (a), (b), or (h) of this section, either the lender or the mortgage broker must provide a GFE not later than 3 business days after a mortgage broker receives either an application or information sufficient to complete an application. The lender is responsible for ascertaining whether the GFE has been provided. If the mortgage broker has provided a GFE, the lender is not required to provide an additional GFE.
(2) The mortgage broker must provide the GFE by hand delivery, by placing it in the mail, or, if the applicant agrees, by fax, email, or other electronic means.
(3) The mortgage broker is not required to provide the applicant with a GFE if, before the end of the 3-business-day period:
(i) The mortgage broker or lender denies the application; or
(ii) The applicant withdraws the application.
(4) The mortgage broker is not permitted to charge, as a condition for providing a GFE, any fee for an appraisal, inspection, or other similar settlement service. The mortgage broker may, at its option, charge a fee limited to the cost of a credit report. The mortgage broker may not charge additional fees until after the applicant has received the GFE. If the GFE is mailed to the applicant, the applicant is considered to have received the GFE 3 calendar days after it is mailed, not including Sundays and the legal public holidays specified in 5 U.S.C. 6103(a).
(5) The mortgage broker may at any time collect from the loan applicant any information that is requires in addition to the required application information. However, the mortgage broker is not permitted to require, as a condition for providing a GFE, that an applicant submit supplemental documentation to verify the information provided on the application.
(c) Availability of GFE terms. Except as provided in this paragraph, the estimate of the charges and terms for all settlement services must be available for at least 10 business days from when the GFE is provided, but it may remain available longer, if the loan originator extends the period of availability. The estimate for the following charges are excepted from this requirement: the interest rate, charges and terms dependent upon the interest rate, which includes the charge or credit for the interest rate chosen, the adjusted origination charges, and per diem interest.
(d) Content and form of GFE. The GFE form is set out in Appendix C to this part. The loan originator must prepare the GFE in accordance with the requirements of this section and the Instructions in Appendix C to this part. The instructions in Appendix C to this part allow for flexibility in the preparation and distribution of the GFE in hard copy and electronic format.
(e) Tolerances for amounts included on GFE. (1) Except as provided in paragraph (f) of this section, the actual charges at settlement may not exceed the amounts included on the GFE for:
(i) The origination charge;
(ii) While the borrower’s interest rate is locked, the credit or charge for the interest rate chosen;
(iii) While the borrower’s interest rate is locked, the adjusted origination charge; and
(iv) Transfer taxes.
(2) Except as provided in paragraph (f) below, the sum of the charges at settlement for the following services may not be greater than 10 percent above the sum of the amounts included on the GFE:
(i) Lender-required settlement services, where the lender selects the third party settlement service provider;
(ii) Lender-required services, title services and required title insurance, and owner’s title insurance, when the borrower uses a settlement service provider identified by the loan originator; and
(iii) Government recording charges.
(3) The amounts charged for all other settlement services included on the GFE may change at settlement.
(f) Binding GFE. The loan originator is bound, within the tolerances provided in paragraph (e) of this section, to the settlement charges and terms listed on the GFE provided to the borrower, unless a revised GFE is provided prior to settlement consistent with this paragraph (f) or the GFE expires in accordance with paragraph (f)(4) of this section. If a loan originator provides a revised GFE consistent with this paragraph, the loan originator must document the reason that a revised GFE was provided. Loan originators must retain documentation of any reason for providing a revised GFE for no less than 3 years after settlement.
(1) Changed circumstances affecting settlement costs. If changed circumstances result in increased costs for any settlement services such that the changes at settlement would exceed the tolerances for those charges, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of receiving information sufficient to establish changed circumstances. The revised GFE may increase charges for services listed on the GFE only to the extent that the changed circumstances actually resulted in higher charges.
(2) Changed circumstances affecting loan. If changed circumstances result in a change in the borrower’s eligibility for the specific loan terms identified in the GFE, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of receiving information sufficient to establish changed circumstances. The revised GFE may increase charges for services listed on the GFE only to the extent that the changed circumstances affecting the loan actually resulted in higher charges.
(3) Borrower-requested changes. If a borrower requests changes to the mortgage loan identified in the GFE that change the settlement charges or the terms of the loan, the loan originator may provide a revised GFE to the borrower. If a revised GFE is to be provided, the loan originator must do so within 3 business days of the borrower’s request. The revised GFE may increase charges for services listed on the GFE only to the extent that the borrower-requested changes to the mortgage loan identified on the GFE actually resulted in higher charges.
(4) Expiration of GFE. If a borrower does not express an intent to continue with an application within 10 business days after the GFE is provided, or such longer time specified by the loan originator pursuant to paragraph (c) of this section, the loan originator is no longer bound by the GFE.
(5) Interest rate dependent charges and terms. If the interest rate has not been locked, or a locked interest rate has expired, the charge or credit for the interest rate chosen, the adjusted origination charges, per diem interest, and loan terms related to the interest rate may change. When the interest rate is later locked, a revised GFE must be provided showing the revised interest rate-dependent charges and terms. The loan originator must provide the revised GFE within 3 business days of the interest rate being locked or, for an expired interest rate, re-locked. All other charges and terms must remain the same as on the original GFE, except as otherwise provided in paragraph (f) of this section.
(6) New construction home purchases. In transactions involving new construction home purchases, where settlement is anticipated to occur more than 60 calendar days from the time a GFE is provided, the loan originator may provide the GFE to the borrower with a clear and conspicuous disclosure stating that at any time up until 60 calendar days prior to closing, the loan originator may issue a revised GFE. If no such separate disclosure is provided, the loan originator cannot issue a revised GFE, except as otherwise provided in paragraph (f) of this section.
(g) GFE is not a loan commitment. Nothing in this section shall be interpreted to require a loan originator to make a loan to a particular borrower. The loan originator is not required to provide a GFE if the loan originator does not have available a loan for which the borrower is eligible.
(h) Open-end lines of credit (home-equity plans) under Truth in Lending Act. In the case of a federally related mortgage loan involving an open-end line of credit (home-equity plan) covered under the Truth in Lending Act and Regulation Z, a lender or mortgage broker that provides the borrower with the disclosures required by 12 CFR 226.5b of Regulation Z at the time the borrower applies for such loan shall be deemed to satisfy the requirements of this section.
Under the regulation, the APR disclosed is considered accurate if it is not more than 0.125% above or below the actual APR in a regular transaction, or 0.25% in an irregular transaction. 12 CFR 226.19(a)(2)(ii) requires the delivery of a revised early TIL at least three business days prior to closing if the original TIL is deemed to be inaccurate.
dmurry,
Right off the top of my head, the only restriction like you are talking about has to to with HPMLs. Sounds like the one you are looking at is not a HPML, so you should be find to escrow as the customer wants, assuming that you don’t have anything in your policy that would limit that.
