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Jo,
I don’t think that the agreement is a compliance issue as much as it is a legal issue. This is something you might want to consult legal council on.
In my opinion (not a lawyer) I would think what you’ve proposed would work.
COBanker,
The requirement to give a copy of the appraisal of a dwelling took effect on 4.01.2011. Here is a link to where Reg Z was changed: https://edocket.access.gpo.gov/2010/pdf/2010-26671.pdf
Now the provision to have to give a copy of the appraisal at least 3 days before closing hasn’t taken place yet. It was first introduced with HVCC; which was renamed to Appraiser Independence Requirements. This is very important at this time if you are selling loans to the secondary market, and if you think you might ever want to sell them, but who knows how long that will be around.
I’m pretty sure that the requirement in Dodd-Frank on the 3 days before closing only applies to High-Risk Mortgages; I’m guessing that means Section 32 & 35 mortgages.
This requirement doesn’t go into effect until 1-21-2013 for Dodd-Frank.
I’m afraid that you are responsible. Even if you and the dealer have an understanding that the Dealer is going to give them it’s still ultimately up to you.
gscott,
Flood proposals, there have been a few of those in the past few years. I found a link to the proposal I think you are talking about on the OCC’s website. Here is the link: https://www.occ.gov/news-issuances/federal-register/74fr35914.pdf
It’s only 30 some pages so it shouldn’t be to bad to read.
KT,
First off I sympathize with your situation as I’ve had to deal with a similar one before. The long and short of it is that you need to use the most recent FEMA maps. Now if you have something from FEMA that shows where the LOMA determined the building to not be in a flood zone then I that should be sufficient for you to end the conversation on the flood issue.
LOMA’s in my experience can take several months to come back with an answer. I’m thinking it took us 6 months to get ours back.
As far as notifying the customer of the requirement and force placement of the insurance; you’ve got 45 days from when you were notified about the change in the map. If you are still waiting to sort things out and/or waiting on the LOMA when 45 days past, then you’ll need to go ahead and force place the flood insurance if it’s not already in place.
If the LOMA comes back and is determined that the building is not in a flood zone then the insurance company should reimburse on the amount paid for the insurance; so the customer is not out anything in that case.
Your clock for the 45 days should start when you were notified of the change. I’m assuming you had life of loan on this loan and your service provider had a delay in notifying you. We’ve had the same thing happen to us a few times. The maps had changed, months past, and then we were notified of the changes.
I hope this helps KT and if need additional follow up, just let me know.
Misty,
I’m not a master at calculating APRs, but I can give you a resource that I use that is really helpful. You can search for the program called APRWIN which is offered by the OCC and is Free. It’s really easy to use, just follow the prompts and it will let you know what the APR should be. It’s a great tool to double check your loan origination software.
From your questions I think you might have the requirements for HPML confussed a bit. I know it was a big issue when it first came out about having to use the highest payment within the first 7 years on HPML loans, but that was in determining your borrowers ability to repay. I don’t think it has anything to do directly with the APR. You should only have one APR amount.
I highly suggest checking out the APRWIN program; I think it will really help you with what you need.
If I’m understanding your question correctly; you are asking if you need a letter from your bank to your bank that you are only doing the temporary (or construction) financing.
I don’t think you are required to give yourself a letter stating that you are doing only the temporary financing. That being said I think that it would be prudent to document your loan file with the loan situation. That can be done via a letter, memo, or even an officer comment sheet, etc. That along with the commitment (aka take out) letter should make the situation and expectations clear to anyone who then reviews the file.
pcorder,
RESPA address the definition in section 3500.2, but simply refers to the definition in Reg Z.
Reg Z defines a Ballon Payment in section 226.18:
(5) Balloon payments. (i) Except as provided in paragraph (s)(5)(ii) of this section, if the transaction will require a balloon payment, defined as a payment that is more than two times a regular periodic payment, the balloon payment shall be disclosed separately from other periodic payments disclosed in the table under this paragraph (s), outside the table and in a manner substantially similar to Model Clause H–4(J) in Appendix H to this part.
On the Bridge Loan question I think section 3500.5(3) of RESPA will address your issue:
(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.
Ashleigh,
Comment 36(d)(1)-(3) is the only section of the regulation that talks about what are acceptable forms of compensation. For complete assurance that a compensation structure is OK you would need to pick on of the options they’ve listed. Otherwise you will be at the mercy of your regulators.
I found the below informaiton from the Federal Reserve: https://edocket.access.gpo.gov/2010/pdf/2010-22161.pdf
3. Examples of compensation not based on transaction terms or conditions. The following are only illustrative examples of compensation methods that are permissible (unless otherwise prohibited by applicable law), and not an exhaustive list. Compensation is not based on the transaction’s terms or conditions if it is based on, for example:
i. The loan originator’s overall loan volume (i.e., total dollar amount of credit extended or total number of loans originated), delivered to the creditor.
ii. The long-term performance of the originator’s loans.
iii. An hourly rate of pay to compensate the originator for the actual number of hours worked.
iv. Whether the consumer is an existing customer of the creditor or a new customer.
v. A payment that is fixed in advance for every loan the originator arranges for the creditor (e.g., $600 for every loan arranged for
the creditor, or $1,000 for the first 1,000 loans arranged and $500 for each additional loan arranged).
vi. The percentage of applications submitted by the loan originator to the creditor that result in consummated transactions.
vii. The quality of the loan originator’s loan files (e.g., accuracy and completeness of the loan documentation) submitted to the
creditor.
viii. A legitimate business expense, such as fixed overhead costs.
ix. Compensation that is based on the amount of credit extended, as permitted by § 226.36(d)(1)(ii). See comment 36(d)(1)–9
discussing compensation based on the amount of credit extended.I hope this helps.
In my neck of the woods we typically don’t have to deal with HOA fees so I had to do some searching for this answer.
I went to the HUD’s FAQ’s and found this answer below:
5) Q: Where should the charge for the Homeowners Association (HOA) transfer fee be disclosed on the GFE and HUD-1?
A: The charge for the HOA transfer fee, unless it is a service required by the loan originator, need not be disclosed on the GFE. The charge for the HOA transfer fee may be shown on a blank line in the 1300 series on the HUD-1.Here is a link to the pdf file of the FAQ’s where I found it: https://www.hud.gov/offices/hsg/ramh/res/resparulefaqs.pdf
I hope that helps!
In section 3500.5 of RESPA it talks about the vacant land exemption from RESPA.
Any loan secured by vacant or unimproved property is exempt from RESPA, unless:
– Within 2 years from the date of the settlement of the loan;
– A structure will be constructed or a manufactured home placed on the real property using the loan proceeds; and
– The loan for a structure or manufactured home (aka mobile home) to be placed on vacant or unimproved property will be secured by a lien on the property.The mention about the signed statement from the borrower is not a regulatory requirement. It is however a good idea and something that you can use to protect your financial institution. With the signed statement that shows that you’ve exercised good faith in excluding the loan from RESPA and should protect you from being potentially criticized.
Jenniferlippy,
OK let me see if I can address this. There are no regulations or laws that limit an individual to just one HELOC. Now you’ll need to check your Loan Policy to make sure you don’t have anything in there that restricts having more than one. I would shocked if you did but hey you at least need to check that out.
I believe where your lender is coming from is based upon what type of loan your borrower should have from basic stand point of prudent lending. Typically HELOC loans are secured by a persons home, but a person can have multiple personal residences. In your example it sounds like for your borrower it would be a completely business loan. So that’s where your loan officer is getting that it would be a business line of credit, and typically that’s what they would have. However that doens’t mean that you couldn’t do a HELOC.
I hope that clears up the issue but I may have just muddied the waters even more.
Kim,
Right of Rescission applies to a transaction subject to Reg Z in which a security interest is or will be retained in a consumer’s principal dwelling.
Dwelling means a residential structure that contains 1-4 units, whether or not the structure is attached to real property (mobile homes). The term also includes an individual condo unit, cooperative unit, mobile home, and trailer, if it is used as a residence. A consumer can only have one principal dwelling at a time. A vacation or second home is NOT a principal dwelling.
Right of Rescission doesn’t apply to purchase loans, business loans, transaction where a state agency is a creditor, or refinancing by the original creditor of an extension of credit that is already secured by the consumer’s principal dwelling, so long as NO NEW FUNDS are extended. Any new funds would be rescindable.
If the loan secured by the consumer’s principal dwelling is refinanced with a different lender; then rescission does apply. If the loan (secured by the consumer’s principal dwelling) is a is for home improvement or other consumer purpose then rescission applies. – Assuming none of the above exemptions apply.
