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Make sure that the private policy covers losses that are in excess of those covered by the FEMA policy. There may be a $250,000 deductible on the private policy, so that only covers the excess losses.
Examiners will likely encourage you to continue to collect HMDA data; that makes their job much easier. If you don’t collect, examiners will need to collect HMDA-like data for a sample of the fewer than 100 loans per year originated by your institutions.
• Since your institution will no longer collect such data you will not be in a position to refute the findings from the examiner’s sample.
• You will still be required to collect GMI for each application as required by Regulation B or by the OCC’s Part 27, but will not be required to compile it in a list.
o Compiling the data puts you in position to refute examiner’s findings. If you are going to compile the data you should just continue to use the HMDA LAR; you are already familiar with the requirements.Please review the late edit I added to the end of the previous post.
You will still be required to collect GMI for each application as required by Regulation B or by the OCC’s Part 27, but will not be required to compile it in a list. Compiling the data puts you in position to refute examiner’s findings. If you are going to compile the data you should just continue to use the HMDA LAR; you are already familiar with the requirements.
Chris,
The current threshold for reporting closed-end loans for purposes of HMDA is 25 loans. On July 1, 2020 the threshold increases to 100 closed-end loans. As a result of the revision institutions that originate:
• Fewer than 25 closed-end loans continue to be exempt from reporting closed-end loans for HMDA;
• 25 or more, but fewer than 100, closed-end loans become exempt from reporting closed-end loans for HMDA effective July 1, 2020 (More detail below.); and
• 100 or more closed-end loans continue to be required to report closed-end loans.Impact During 2020
If as of December 31, 2019 your institution, in each of the two preceding calendar years (2018 and 2019), originated at least 25 closed-end mortgage loans that are not excluded from this part pursuant to § 1003.3(c)(1) through (10), then HMDA data collection for closed-end loans would be required for 2020 until July 1, 2020.
• Newly excluded institutions, those subject to HMDA’s closed-end requirements as of January 1, 2020 because it originated at least 25 closed-end mortgage loans in 2018 and 2019 and meets all of the other requirements under § 1003.2(g), but no longer subject to HMDA’s closed-end requirements as of July 1, 2020 because it originated fewer than 100 closed-end mortgage loans during 2018 or 2019, are relieved of the obligation to collect, record, and report data for their 2020 closed-end mortgage loans effective July 1, 2020.
o Newly excluded institutions may cease collecting 2020 data for closed-end mortgage loans as of July 1, 2020.
o Pursuant to § 1003.4(f), newly excluded institutions must still record data on a loan/application register for the first quarter of 2020 by 30 calendar days after the end of the first quarter. They will not, however, be required to record closed-end data for the second quarter of 2020 because the deadline under § 1003.4(f) for recording such data falls after July 1, 2020.
o Because newly excluded institutions collecting HMDA data in 2020 would not otherwise report those data until early 2021, the final rule also relieves newly excluded institutions of the obligation to report by March 1, 2021 data collected in 2020 on closed-end mortgage loans (including closed-end data collected in 2020 before July 1, 2020).Impact During 2021
If as of December 31, 2020 your institution, in each of the two preceding calendar years (2019 and 2020), originated at least 100 closed-end mortgage loans that are not excluded from this part pursuant to § 1003.3(c)(1) through (10), then HMDA data collection for closed-end loans would be required for 2021.Future Regulatory Expectations
Examiners will likely encourage you to continue to collect HMDA data; that makes their job much easier. If you don’t collect, examiners will need to collect HMDA-like data for a sample of the fewer than 100 loans per year originated by your institutions. Since your institution will no longer collect such data you will not be in a position to refute the findings from the examiner’s sample.It appears that a loan deferral program would benefit your customer. It also appears that the lack of availability of a periodic statement could prevent implementation of the program.
Stopping the delivery of periodic statements does not appear to fall under any regulatory guidance on easing credit restrictions/not criticizing banks for helping customers with COVID-19. If anything the borrower’s need for a periodic statement is likely greater during the time of a deferral than at any other time.
Robin points out a potential loophole above. Periodic statements must be delivered within a reasonably prompt time after the payment due date. If the payment due date is deferred does that extend the reasonably prompt period for sending the statements. While this could be a solution to your dilemma I agree with Robin, talk with your regulator and legal counsel as you are making these decisions.
I agree with Robin’s comments, but take a little stronger stand on this. The Commentary states, “Creditors must provide the disclosures required by this section (including the brochure) on or with a blank application that is made available to the consumer in electronic form, such as on a creditor’s Internet Web site.” If you have an application form on your website that can be used to apply for an ARM, the disclosures must appear “on or with” that application.
To the extent of my knowledge only seven of 120 counties in the Commonwealth of Kentucky have implemented electronic filing for mortgages; unfortunately Fayette is not one of the counties.
Obtaining an owner’s title policy, if available, may help protect your borrower. In the previous response Robin brought the very valid issue of can you require the owner to buy a policy. The Lender’s policy protects the lender. Strongly encouraging the lender to buy an Owner’s policy is wise, but does not appear to improve the bank’s position. If your counsel opines that you can require the Owner’s policy there are questions:
1. One question is how long will title companies continue to write title policies (owner’s or lender’s) when they are unable to verity liens while the clerk’s office is closed. Apparently some of the closed offices are holding title work received in the mail and are tracking when received, so the mortgages and deeds can be recorded in order received once their office opens again.
2. If you are developing TRID disclosures for a new transaction then the Owner’s Title Insurance, which is usually listed as optional in Section H of Other costs is listed in both the LE and the CD as required in either Section B or C, depending on whether or not the borrower is allowed to shop for the service.
3. If you have already provided a LE and are now requiring, based on the guidance of legal counsel, the borrower to purchase Owner’s Title Insurance, you have a changed circumstance and may provide a revised LE disclosing the Owner’s policy as described above.
4. According to § 1026.4(c)(7)(i) the fees for title examination, abstract of title, title insurance, property survey, and similar purposes may be excluded from the finance charge in a transaction secured by real property or in a residential mortgage transaction, if the fees are bona fide and reasonable in amount.The Bank – If you offer 90 day payment deferrals or up to 180 days interest only, but do not extend the maturity date you may be safe.
MIRE is an acronym for make, increase, renew or extend. If you accomplish the accommodation using a new note, you are MAKING a new loan. If you extend the maturity date you are EXTENDING the loan. If you increase the loan balance you are INCREASING the loan. When you defer the payment does your system calculate interest during the deferral period? Is that interest added to the outstanding balance. When you collect interest only for 180 days, what is going on with the escrow payments? The unpaid escrow payments are creating a shortage or a deficiency in the account. If the borrower asks for a payoff balance, your would quote the principal, interest, and the amount of any deficiency as part of the balance. Is that an INCREASE in the loan amount?
Kathy,
I know you participated in 3/26 webinar Pandemic Relief – Managing Compliance Issues. Yes you can offer slip-a pay, you can skip several pays, there are many ways of handling skip a pay, and there is a long, long list of compliance issue that vary depending on your system and the decisions you make on how to implement the skip-a-pay program. Please work through the extensive manual that you received. If you have specific issues get back to us.
Mary Francis. Good points. Your observation that a refi doesn’t trigger new disclosures is accurate for Truth in Lending, but other requirements such as flood may apply.
We are conducting a 90-minute webinar entitled Pandemic Relief Managing the Compliance Issues on March 26. It is a 60-page manual. It includes information on skip-a-pay and other Pandemic relief topics. CMG members can attend for free. If you are unable to attend live, you will receive the recording.
Thanks for your comments. We intend to keep building on this resource.
kmeade – There is a good list in the March 18th post? What more are you seeking?
We are conducting a 90-minute webinar entitled Pandemic Relief Managing the Compliance Issues on March 26. It is a 60-page manual. It includes information on skip-a-pay and other Pandemic relief topics. CMG members can attend for free.
As Chris noted, all of the requirements of the flood insurance regulations kick in whenever you make, increase, renew or extend (MIRE) a loan. Here are a few thoughts for your consideration:
• You cannot MIRE a loan unless adequate flood insurance is in place.
• If you MIRE a loan a new flood determination is needed, unless the existing determination was initially recorded on the Standard Flood Hazard Determination Form (SFHDF), the prior determination is not more than 7 years old, and no new or revised FIRM or FHBM has been issued for the area in which the property is located since the last determination was obtained
• If you obtain a new determination can a determination fee be imposed? If you are making, increasing, renewing or extending a loan you may impose a new determination fee.
• Does SAP impact the life of loan protection from your determination company. Your contract with the determination company will spell out any situation which voids or impacts the life of loan provision in the contract.
• If you MIRE a loan you must provide a Special Flood Hazard Notice.
• If you Mire a loan you must establish an escrow for flood insurance premiums unless a loan level exception applies or your bank is covered by the small creditor exception.
• When you MIRE, sell or transfer a loan you must notify FEMA, or FEMA’s designee, of the identity of the servicer.Angie and Chris,
None of the lending compliance regulations have a section dealing with skip a payment (SAP). In each regulation you have to “read between the lines” to pull out information that would impact a SAP. There is a surprising number of issues to consider. Actually you could write a book about this topic, which is what we are in the process of doing right now. We will answer this question with a series of posts. We encourage everyone reading this series of posts to chime with your thoughts and questions.
Here are a few questions to start the discussion:
1. Do you accomplish the SAP? Do you use a new note (a refinancing) or a modification agreement?
2. Who is eligible for your SAP program?
3. How do you handle the SAP for accounting purposes?That is correct. Using the numbers in my previous reply, if this was a borrower requested change and the change represented 7.5% of the amount in the 10% bucket, then you could not reset tolerance, but at 7.5% there is no violation either.
Mary Francis,
What a very timely question. With rates dropping many may face this issue.
The charge can be passed to the borrower. The borrow requests the change. You agree, subject to the condition that they pay the fee. Everything is detailed in the note or modification agreement. If you use a new note, the transaction is a refinance and disclosures are required. If the existing note is modified, no disclosures are required.
If the transaction is a refinance subject to TRID, the fee could be disclosed on the Loan Estimate and on the Closing Disclosure in one of two ways. First, if the fee is retained by your bank it would be disclosed as discount points in section A, since the fee is paid to the creditor to reduce the rate that otherwise would have been imposed. The second option is to disclose the fee as a Service You Can Not Shop For in Section B, since the fee is actually paid to a third party.
Your question indicates that the fee is ultimately paid to the investor, which makes the second option most responsive to your question.
