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Creditors are required to place a Closing Disclosure in the hands of a consumer no later than three business days (specific days) before closing. Mailing it six days before closing assures an appropriate result. This is the latest date the disclosure can be provided; it may provided sooner. The disclosure must be prepared based on the best information reasonably available on the date the disclosure is prepared.
If the initial CD changes after delivery a revised disclosure may be provided as late as the closing date unless the change causes the APR to be inaccurate, the loan product changes or a prepayment penalty is added. In any of these situations the consumer must receive the revised disclosure no later than three business days before consummation.
None of the above is new; it has been in effect since October 2015. It is not clear to us how this differs from your practice. Please explain.
If taxes and insurance are adequately escrowed under a first mortgage then there is no need to disclose an escrow on a subordinate lien transaction. If at the time the LE is prepared no knowledge of the first lien exists then estimates for taxes and insurance should be provided.
The guidance on this point is less than pefectly clear. The Commentary to Regulation C states, “If two persons jointly apply for a loan and both list income on the application, but the institution relies only on the income of one applicant in computing ratios and in evaluating creditworthiness, the institution reports only the income relied on.” If this section used the term “natural person” instead of “person” the answer would be more clear. Since a “person” can be an individual or a business entity this section causes the confusion.
Most examiners take the approach mentioned in Angie’s comment above. For that reason it is best to use “NA” if either the applicant or co-applicant is not a natural person.
This dilemma is not made any more clear in the revised Regulation C rules that are effective on January 1, 2018.
As for regulatory concerns, examiners will evaluate the situation to determine if the credit card payments are a convenience or a necessity. If the borrower lacks the ability to make the payments on the loan other than by increasing the balance on the credit card, the situation is considered an unsafe and unsound banking practice and may be a violation of the Regulation Z Ability to Pay rules (12 CFR 1026.43).
I agree fully with Robin’s reply and want to elaborate on one point. The probability of an UDAAP violation increases significantly if you fail to deliver a timely disclosure and costs have risen by the time the disclosure is delivered. The increased cost would be an easily identified damage resulting from the violation. At a minimum we would encourage you to absorb the increased costs resulting from the delayed disclosure.
Kristin,
You should have the consumer provide consent to receive electronic disclosures at the time of application. Then the electronic disclosure is deemed given when you send. As long as you have record of sending the disclosure you have met the timing requirement. It is doubly effective if the consumer acknowledge receiving you electronic disclosure, but again you have met the timing requirement if you send the electronic disclosure within three business days of receiving the application.
Under the revised HMDA rules, effective January 1, 2018, mobile homes constructed before June 15, 1976, are excluded from reporting, regardless of whether they are used as residences. Manufactured homes continue to be reportable.
Under the revised HMDA rules, effective January 1, 2018, mobile homes constructed before June 15, 1976, are excluded from reporting, regardless of whether they are used as residences. Manufactured homes continue to be reportable.
I fully agree with Robin’s answer, but would like to remind you that generally accepted banking practices for a commercial loan include a review of company documents. For example, if the company is a corporation you should obtain and review the articles of incorporation and bylaws. Your should determine if the documents allow the company to borrow? Who has the authority to sign a promissory note? Can corporate assets (the secondary residence) be pledged as collateral to secure a debt?
Interesting question. I agree with Robin’s comments. Assuming it does not meet HUD’s definition of “manufactured home,” I suggest reporting it as:
> Purpose – Code 1 – Home purchase
> Property Type – Code 1 – 1-4 family dwelling
> Owner Occupancy – Code 2 – Not owner-occupied as a principal dwellingRV loan – really?
The TILA has long standing provisions that allow cures that prevent civil liability, but restitution is required and the action must be taken in a timely manner, generally within 60 days after discovery. Contact your attorney and take action promptly.
Several times over the years I have been in hotels when fire alarms have gone off in the middle of the night and everyone has to trek down to the lobby. It is pretty obvious that people throw on whatever clothes are convenient.
One night the rest of us had been in the lobby for a few minutes when the stair door burst open and a fat guy (another fat guy, not me) stumbled into the lobby in his boxer shorts. Every one was embarrassed for him. A hotel employee grabbed him a sheet and we all survived the night.
I share mdunker’s understanding of the e-sign provisions. The law contains a number of exceptions, one of which may be applicable to your situation. It appears you have several avenues available. You can:
* Work with the auditor to confirm the requirement;
* Communicate with the FHLB to confirms their signature requirements; or
* Hire counsel to challenge the claim of the auditor.
