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On a construction loan inspections typically take place after closing, therefore, as stated in 1026.4(c)(7) the fees are included in the finance charge. On your permanent loan the final inspection occurred prior to consummation so the charge is excluded from the finance charge. Overstating the finance charge, as you have done, is not a major concern. Understating the finance charge is what leads to problems, such as reimbursement.
I know that not all banks are handling this consistently – some backdate, some don’t. I am not sure of the majority position.
Hopefully others will join this discussion and share their practice.
The amount of insurance needed is the lesser of the balance of the loan, FEMA’s maximum amount of the value of the improvements. Apparently in your example the amount of the loan is the lowest of the three amounts.
It appears that you obtain insurance for the balance of the loan including the increase in the loan amount resulting from force placing insurance, although the math in the Coverage amount calculation does not equal the total. Your practice is conservative.
I am unable to come up with the $260 difference you mention. Do you have any explanation for the amount.
The regulators have not provided binding answers for the questions you have. Providing coverage as of the expiration date is the most conservative way to handle this situation, but as a practical matter if the customer has made an interim payment obtaining insurance in an amount sufficient to cover the reduced principal should be adequate.
We have a recording of a 2017 webinar on the topic of overdraft protection services available in out store. Details are available by clicking here. If you are interested we can sell a copy of the program manual for $25.
The instructions for completing the LE do not specifically discuss the disclosure of overnight charges.
• Comment 37(f)-1 indicates that loan costs include services that the creditor or mortgage broker require for consummation, such as underwriting, appraisal, and title services.
• Section 1026.37(g)(4)states that the Other Amounts category includes an itemization of any other amounts in connection with the transaction that the consumer is likely to pay or has contracted with a person other than the creditor or loan originator to pay at closing and of which the creditor is aware at the time of issuing the Loan Estimate.An argument can be made for either location. In my opinion the Services that you cannot shop for is the more logical location for the charge.
Regarding the unpredictability of the amount of the charge, Section 1026.19(f)(3)(ii) allows a creditor to charge a consumer or seller the average charge for a settlement service if the following conditions are satisfied:
(A) The average charge is no more than the average amount paid for that service by or on behalf of all consumers and sellers for a class of transactions;
(B) The creditor or settlement service provider defines the class of transactions based on an appropriate period of time, geographic area, and type of loan;
(C) The creditor or settlement service provider uses the same average charge for every transaction within the defined class; and
(D) The creditor or settlement service provider does not use an average charge:
(1) For any type of insurance;
(2) For any charge based on the loan amount or property value; or
(3) If doing so is otherwise prohibited by law.$ 0.00 is correct. The construction costs are included in the payments to third parties, so is the sales price of the property. According to your numbers when you subtract payments to third parties ($250,000) from the Loan Amount ($200,000) you get a – $50,000. If the product is $0 or a negative number then Closing Costs Financed is $0.
Check out page 22 of the interagency CRA Questions and Answers https://www.gpo.gov/fdsys/pkg/FR-2016-07-25/pdf/2016-16693.pdf Q & A .12(g)(3) – 1 states, in part. “. The concept of “community development” under 12 CFR __.12(g)(3) involves both a “size” test and a “purpose” test that clarify what economic development activities are considered under CRA. To meet the “purpose test,” the institution’s loan, investment, or service must promote economic development. These activities are considered to promote economic development if they support:
• Permanent job creation, retention, and/or improvement
1. for low- or moderate-income persons;
2. in low- or moderate-income geographies;
3. in areas targeted for redevelopment by Federal, state, local, or tribal governments;
4. by financing intermediaries that lend to, invest in, or provide technical assistance to start-ups or recently formed small businesses or small farms; or
5. through technical assistance or supportive services for small businesses or farms, such as shared space, technology, or administrative assistance; orSeveral of these items, including 2 and 3, are not limited to jobs for low- and moderate-income persons.
The regulations do not allow you to make. increase, renew or extend a loan unless the customer purchases an adequate amount of insurance. I am aware of cases where the FDIC did not cite a violation when a loan covered by a force-placed policy was increased, renewed or extended, but there is nothing in the regulations that support that position. The safe answer is – don’t do it. If you must make. increase, renew or extend the loan or risk a total loss then it may be worth violating the regulation. Try to hang on to your force-placed coverage and hope for the best.
Any time you make, increase, renew or extend a loan the full set of flood insurance requirements apply. Unless you comply with the full set of rules, including requiring the borrower to purchase the proper amount of flood insurance, you should not make, increase, renew or extend the loan.
It appears the balloon payment is the final payment in the 59-month portion of the loan. If so, then I agree with each of your data points.
PTAFA does not now, and did not in the past, require a notice at closing. If you foreclose and there is a tenant that is to be removed, a 90-day notice is required.
This is a question we have been asking the CFPB for several years. The issue is not addressed in Regulation C, the Official Interpretations, the Small Entity Compliance Guide or the 2018 Filing Instructions Guide. For purchased loans that are subject to HOEPA we encourage banks to try and determine HOEPA status (Code 1 High-Cost or Code 2 Not High-Cost) at the time the loan was originated. That can be very difficult to do, especially when trying to recreate the amount of the total points and fees. If the loan was not subject to HOEPA then enter Code 3 Not applicable.
Appendix C to Regulation CC contains Model Availability Policy Disclosures. There is no model form for same-day availability. You may want to ask the examiner for a source of the information that he/she sent you in search of. I suggest modifying an existing form, such as the next day availability form, to make it work in your situation. In doing so stick as closely as possible to the existing model language.
Add I encourage any other users of the Forum to respond if you have had a similar experience.
Employing a dual employee provides access to your customer database to the other employer. Among other items, Section 1016.6 requires a privacy disclosure to include the categories of affiliates and nonaffiliated third parties to whom you disclose nonpublic personal information, other than those parties to whom you disclose information under §§1016.14 and 1016.15 of this part. Sharing under §1016.14 that is necessary to effect, administer, or enforce a transaction does not have to be disclosed. Sharing with the investment company to complete the transactions does not have to be listed in the disclosure, but opening your full database to them does impact the disclosure.
