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This seems to be a common question as of late. Good call on the flood part (make, extend, or renew).
It really depends on what you are modifying. Are you just extending the maturity of the loan a month or two, or changing the payment date? Or are you doing more extensive changes?
Are you charging a fee for the modification?
In glancing at the HMDA guide to getting it right and by looking at the information that is reported on the LAR, I would say that you would not report the loan again.
To my knowledge there is no way to indicate on the LAR that the loan or a portion of the loan is sold.
On page 9 of the Guide to Getting it Right it states under the heading Transactions Not to be Reported:
The acquisition of only a partial interest in a home purchase or home improvement loan or a refinancing by your institution, even if you have participated in the underwriting and origination of the loan (such as in certain consortium loans).
I know you were the seller and not the buyer to it seems closely related and the closest think I found to your situation.
mfowler,
I believe from reading Jack’s response above, you would not include it as a prepaid finance charge initially. After all, how will you know that you’ll be doing a modification or extension when you initially make the loan?
I personally would recommend not charging a fee; as that leaves everything simple, clean, and limits what you’ve done being questioned by auditors and examiners. That being said if you do charge a fee, you might look at just doing a new note because I think you’ll cause yourself to have to give your disclosures again to ensure compliance.
Jack alluded to this earlier, in that if you make big sweeping changes to the loan, then some examiners are considering this to trigger redisclosure, like in a refinance. I tend to agree with them. If you are making small changes say to the payment date, or extending the loan a couple of months, then I don’t think you’ll have much question if you don’t charge a fee.
It can be handled a variety of different ways, but you’ll ultimately need to decide what makes the most sense for your organization. I often times will see GMI (Government Monitoring Information) collected on a separate sheet that is generated by you loan origination software.
To me, I would think that might be the easiest approach. You could also go with the alternative of the different application as you mentioned. You could create your own in-house document in Word to facilitate the collection of the information. However you choose to do it, just make sure you do it.
There is not a requirement that it be signed. That being said, getting it signed or some how documenting when and how it was delivered is a great idea and one I would highly encourage. That is just proof to auditors and examiners that you did indeed meet any kind of timing requirement.
That can be done through the customer signing, documentation by the loan officer, or if mailed a cover letter listing all of the documents that were mailed. This is not an all inclusive list but are some great ways to document.
Assuming you have disclosed everything properly, then I don’t think you have a compliance issue.
You should look at it from the standpoint of UDAP and see if you have any concerns. UDAP is so open to interpretation, so I can’t give you definitive answer as it relates to UDAP, but since it kind of seems misleading, as most rate are either offered at a discount or at rate + margin, I could possibly see it leading there.
You are required to post those kind of payments on the date of receipt. You will need to be sure your system can handle that. You may have to make an manual adjustment before the 1098 forms are produced.
To my knowledge we are waiting on the CFPB to publish regulations on this item. So I guess you could say TBA.
I think you were headed in the right direction. If the loan is secured by real estate you do not need to comply with the three required disclosures associated with Private Education Loans.
In reading your question my thoughts go to the loan originator compensation rules.
If you are making payments to people that not Loan Originators as defined in the regulation, then I can’t think of an issue with it right off.
If you are thinking about paying this to loan originators, I’d have to do some research to be sure, but I think you would still be fine as it is not linked to the terms of the loan.
I personally can’t think of any regulatory violations that would be created by that. That being said you do want to make sure you make an effort that the information is correct. If the applicant fills out the application incorrectly and you know about it, I would recommend that you document the fact that the question should have been marked differently (noting the correct answer).
Maybe Jack can give a bit more insight.
Unless your note allows you to add it and draw interest on it I would advise to code it as a non-accruing misc fee.
Sounds like you either need to deny or do a withdrawal on the GMAC loan application and start fresh.
