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The interagency Questions and Answers state:
§ 345.12(i)–2: Are personal charitable activities provided by an institution’s employees or directors outside the ordinary course of their employment considered community development services?
A2. No. Services must be provided as a representative of the institution. For example, if a financial institution’s director, on her own time and not as a representative of the institution, volunteers one evening a week at a local community development corporation’s financial counseling program, the institution may not consider this activity a community development service.We are suggesting that you assure that such activities are done as a representative of the institution. A board resolution stating appreciation for the services of Director Soandso as a representative of XYZ bank in connection with the ABC Community Development Corporation should provide appropriate documentation.
The flood rules allow you to force place insurance immediately upon the lapse of coverage. In addition to continuing efforts to contact the borrower you should if you have not done so already get the insurance in place in order to minimize the gap in coverage.
Examiners could impose fines. Given that you found the violations, cured the problems, and have taken steps to assure the problems are not repeated I would expect the fines, if any, would be small.
An unusual approach but it works for me. Actually in this scenario the lender still controls the workflow and the undisbursed funds would appear in the Cash to close section and in section K-4 on the CD.
I agree fully with rcooper’s answer. When compiling a new disclosure for the rate lock agreement I would definitely include the information about the escrow deposit, seller credit, home inspection fee, and pest inspection fee. Actually I would provide an informational disclosure that included the escrow deposit, seller credit, home inspection fee, and pest inspection fee even if there were no rate lock agreement.
Your understanding is correct assuming we are talking about a bank that meets all of the requirements for the EGRRCPA partial HMDA exemption.
For more information about the EGRRCPA partial HMDA exemption consider about October 1, 2018 webinar https://mycomplianceresource.com/event-registration/?ee=192.
You mention that the borrower manages the workflow and pays each person as the work is completed. In order to pay each person the borrower must have control of the funds. If the funds are in an account under the control of the borrower the funds have been disbursed and should have been shown as cash to the borrower at closing.
This conversation keeps getting better and better.
I don’t the risk of discrimination is a big concern. ECOA and the Fair Housing Act deal with lending. Funds availability doesn’t stretch into the lending space.
UDAP could be a concern because the inconsistent treatment might be construed as “unfair.”
For purposes of Regulation AA the term “co-signer” means
“a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation, or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account.The term includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law”
The mother does not appear to be a “co-signer” since she receives “goods, services, or money in return for the obligation.”
The typos in your question result in a lack of clarity, but it appears that you have a challenge.
For a line of credit you may obtain insurance for the full amount of the line or for a lesser amount, but you can’s make an advance unless adequate flood insurance is in place. The constant shifting of your collateral will be a challenge. One option is to establish an open-end line of credit secured by collateral that does not change. Your customer can make immediate purchases up to the limit of the line. Upon completion of the transaction you can make a closed-end loan secured by the purchased property following appropriate flood insurance procedures with the proceeds used to pay down the LOC and ready it for the next purchase.
The rescission period lasts until midnight of the third business day following consummation, delivery of the rescission notice, or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first.
You stated that the TIL was under-disclosed. It is not clear what disclosure was “under-disclosed.” Section 2016.23(g) provides tolerance rules for the disclosure of the APR, finance charge and the total of payments. If any of those items was understated by more than the allowed tolerance then the error kicks you into the extended three-year rescission period. “Re-opening the rescission period” does not terminate the extended three year period.
KRS 304.9 – 135(2)(f) actually requires the insurance notice. That section does not define what is considered insurance. The lack of a definition has been a problem for decades. Your clear definition from KRS 190.100(7) doesn’t necessarily apply to KRS 304.9 – 135(2)(f), but it is worth a try.
The arrangement of players in your question is not clear. If your bank is compensating it own employees (lenders) the compensation rules in Section 1026.36 allow compensation so long as it is not based on the terms of the loan. For example a lender that makes a loan with a higher yield can not receive greater compensation than a lender than makes a loan with a lower yield. But the rules in 1026.36 do not prohibit higher compensation for a loan made to a LMI borrower.
Section 1024.14 of RESPA generally prohibits a referral fee to a third party. The regulation has seven exceptions where fees to third parties are permitted. The seventh exception works if you compensating your own employee and not a third party. If you are referring to rules other than 1026.36 or 1024.14 please clarify.
HMDA and Regulation C require collection of data for the applicant and co-applicant. Co-applicants are two or more people apply jointly.
For purposes of Regulation AA cosigner means a natural person who assumes liability for the obligation of a consumer without receiving goods, services, or money in return for the obligation, or, in the case of an open-end credit obligation, without receiving the contractual right to obtain extensions of credit under the account. The term includes any person whose signature is requested as a condition to granting credit to a consumer, or as a condition for forbearance on collection of a consumer’s obligation that is in default. The term does not include a spouse whose signature is required on a credit obligation to perfect a security interest pursuant to state law.
Generally cosigners under Regulation AA are not co-applicants under HMDA. Generally a co-applicant shares in the goods, services, or money in return for the obligation, so they would not be a co-signer. If a cosigner is requested as a condition to granting credit to a consumer then they did not apply jointly with the borrower.
Matt – Your question hits smack in the middle of a dilemma. The Comment D7.ii.B. clearly states that the term of the Interest Only period includes the term of the interest only payments during the construction phase and any interest only payments during the beginning of the permanent phase period. The commentary for Appendix D does not address the term of the introductory period. Presuming consistency can get you in trouble, but if the regulation is consistent from one section to another then the correct term of the introductory period would by 6.67 years.
Are you using two different vendors or are you getting different results from the same vendor depending on whether you obtain docs directly or through your LOS? I In either event I suspect that the different results you are obtaining may be the result of how you enter the data. Check with your vendor or vendors.
