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The compliance regulations do not mandate the terms of the note. The note establishes the terms of the agreement between your bank and your borrower. One of the critical terms of the note is the interest rate. Generally the note should reflect the actual rate charged at origination. If that can change then the contract provides the details regarding the adjustable rate feature.
The “Prepaids” include amounts to be paid by the consumer in advance of the first payment. I suspect that the consumer has already paid the insurance premiums for the current home. If not and the consumer is expected to pay those premiums as part of the current transaction then the amounts would be reflected in prepaids.
Great question. First, when you have multiple properties securing the loan, you identify all properties in Section 1026.37(a)(6). In the projected payments – Estimated Taxes, Insurance and Assessments area you would generally show the total amounts due on each property. If one property is escrowed in connection with another loan the amounts would not be showed in the escrow line for the payment calculation but would be shown in the Estimated Taxes, Insurance and Assessments section. For the In Escrow? question indicate “Some”.
The flood regulations apply when a loan is secured by a building or a mobile home. As mentioned your loan is not secured by either. There does not appear to be any flood insurance concerns and you have the UDAAP concerns covered.
The operator may have UDAAP concerns if pads in the flood zone are leased without notice of the risk.
You have hit upon an oddity in the open-end credit rules of Regulation Z. The rules require the disclosure of rate caps but not rate floors. We believe that floors should be disclosed as part of the contract terms and contract terms and disclosures are generally intermingled for open-end credit.
You will need to contact LaserPro regarding the language that appears in your document. Would it be difficult to key the rate into the rate field and into the floor field at the same time?
1. I can’t immediately identify any other requirements impacted by the rural or underserved lists.
2. Generally compliance with a particular requirement is determined at the time the loan is made. If the loan was located in a rural track at the time the loan was made then the second appraisal would not be required. If the area subsequently losses it “rural’ designation after consummation there is no requirement to go back and obtain a second appraisal.
Section 2.2.3F of the TILA-RESPA Guide to the Disclosure Forms states, “Homeowner’s Insurance includes flood insurance.” But neither the Guide, the regulation or the Commentary state that the flood insurance premiums must be combined into a single number. In my opinion disclosing the standard homeowners premiums as “homeowner’s Insurance” and the Flood Insurance as “Other – Flood Insurance” adequately states the costs, and arguably, is an even more thorough disclosure of the insurance cost.
Section 1003.4(a)(27) requires the LAR to indicate whether or not the loan has a balloon payment as defined in Regulation Z 1026.18(s)(5)(i). That section of Regulation Z defines a balloon as a payment that is more than two times a regular periodic payment. Since your regulation payment is interest only, the final payment apparently will be a balloon payment.
Let’s ease into this answer by starting with a few questions.
Is there a charge for the text alert feature?
Does your existing privacy policy allow you to share nonpublic personal information with third parties?
There is nothing in RESPA or TILA that addresses anything like this.
Once the excess funds are returned to the individual escrow accounts the accounts will have a surplus that should be refunded to the borrower according to RESPA. When you do annual escrow disclosures, as required by RESPA, the estimated payment for the next year is $0. I think you will just go through with the charade of complying with RESPA rules each year.
I hope others chime in on this topic.
For CRA purposes examiners continue to consider your home mortgage, small business, small farm and consumer loans The CRA definition of home mortgage loan was revised, effective January 1, 2018, to reflect the changes in HMDA to the definitions of closed-end mortgage loan and open-end line of credit.
While the definition of home mortgage loan is now broader the expansion in home mortgage came from a contraction in consumer loans (home equity). CRA has always been broader than just home purchase, home improvement and refinance and that continues to be the case.
TRID not only requires you to monitor the APR from the LE to the CD, but you must also make sure your disclosed APR is accurate when compared to the actual APR. This is nothing new; the comparison has been required since 1969.
The tolerance for the Total of Payments (TOP), which only appears in the CD, has also existed since 1969, but instead of the previous $0.00 tolerance you now have $100. The TOP is calculated by adding together the principal, interest, mortgage insurance, and loan costs.
You should monitor all applicable tolerances. I would assume that whatever loan origination software system is used by your bank will properly calculate the TOP. But we have seen cases where the system accurately calculates the number, but it is still wrong because of an entry error by the bank, for example, an item that should be included in the loan costs is not included in the loan costs.
Neither the law nor the regulation contains a cure for TOP violations, but presumably adjusting the TOP so the borrower does not pay more than disclosed would “cure” the violation.
TRID not only requires you to monitor the APR from the LE to the CD, but you must also make sure your disclosed APR is accurate when compared to the actual APR. This is nothing new; the comparison has been required since 1969.
The tolerance for the Total of Payments (TOP), which only appears in the CD, has also existed since 1969, but instead of the previous $0.00 tolerance you now have $100. The TOP is calculated by adding together the principal, interest, mortgage insurance, and loan costs.
You should monitor all applicable tolerances. I would assume that whatever loan origination software system is used by your bank will properly calculate the TOP. But we have seen cases where the system accurately calculates the number, but it is still wrong because of an entry error by the bank, for example, an item that should be included in the loan costs is not included in the loan costs.
Neither the law nor the regulation contains a cure for TOP violations, but presumably adjusting the TOP so the borrower does not pay more than disclosed would “cure” the violation.
Well if you didn’t know it before, you know it now, the joint intent rules in Regulation B are screwed up.
The ONLY option for obtaining evidence of intent is to obtain the customers signature or initials at the time of application (application, not completed application), which is doable in a face-to-face application when both applicants are present. In any other situation, including each of the situations mentioned in your questions, the guidance in the regulation does not work.
What we have advised banks for years is to develop reasonable written procedures for each situation and then rigidly follow your own procedures. For example on an electronic application include the model “intent” language and require each applicant to provide an electronic signature in conjunction with the disclosure. For your commercial loans provide your loan officer with printed “intent” forms and have then sign at the time of the face-to-face meeting.
If an examiner challenges your procedures then ask him/her to provide you with the citation for the appropriate procedure from the regulation. Since there are no alternate procedures in the regulation your examiner should drop their challenge.
