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A detached structure MAY be excluded from the flood insurance requirement if the conditions are met. One of the conditions is that the lender must determine if the structure is intended for use or actually used as a residence, which includes sleeping, bathroom OR kitchen facilities. The fact that the garage includes a bathroom confuses the matter. The safe practice is to require flood insurance on the garage.
Government monitoring info is required if the loan involves a natural person getting a loan for purchase or refinance that involves a 1- to 4 family dwelling that is the borrower’s principal dwelling and is collateral for the loan. It appears GMI is needed.
Sandy – There are seven different model rescission forms. There are five for open-end credit and two for closed-end credit. You didn’t mention whether the credit was open-end or closed-end credit.
Assuming it is closed-end credit, the correct model form when refinancing another creditor’s debt is Model form H – 8 (General). The H-9 form is used when refinancing your own debt, with new money.
FEMA offers threes flood policies:
• Dwelling
• Residential Condo Building Association Policy (RCBAP); and
• General.The Dwelling policy is for a one-to-four unit dwelling. The RCBAP is for a condominium association. The General policy is for everything else. The General policy seems appropriate for your loan. The maximum coverage is $500,000 for the building.
Definitely check with your agent. It is possible that an alternate arrangement may be available, through FEMA, or more likely, through a private insurer.
Question 1 Yes. The LE explains that before closing your interest rate, points and lender credits can change unless you lock the rate.
Question 2. Yes again, for the same reason.
Generally state law does not require use of a coupon book. But you should check your state law. Also, if you are providing monthly statements, check state law regarding any required content.
Also review the content of your existing note form. Does the contract state that you will provide coupon books? If so, getting rid of the coupon books might be more of an issue.
KRS 304.12-150 requires every debtor, borrower, or purchaser of property with respect to which insurance of any kind is required in connection with a debt or loan on the property shall be informed by the creditor or lender of his or her right of free choice in the selection of the agent and insurer through or by which such insurance is to be placed. There shall be no interference either directly or indirectly with the borrower’s, debtor’s, or purchaser’s free choice of an agent and of an insurer, the creditor or lender shall not collect a separate charge for the handling of insurance required in connection with a loan or extension of credit based on the consumer’s choice of agent or insurer, and the creditor or lender shall not refuse an adequate policy so tendered by the borrower, debtor, or purchaser. Upon notice of any refusal of an adequate policy, the commissioner shall order the creditor or lender to accept the tendered policy, if he or she determines that such refusal is not in accordance with the requirements set out in subsection (2) of KRS 304.12-140. Failure to comply with the order of the commissioner shall be deemed a violation of this section.
Subsection 2 of KRS 304.12-140 states, “This section shall not prevent the reasonable exercise by any vendor or lender of its right to approve or disapprove the insurer selected to underwrite the insurance, and to determine the adequacy of the insurance offered.
The Kentucky statutes don’t specify a delivery time. However we encourage you to provide the notice at the time of application. if the disclosure is delivered at consummations it makes it difficult to argue that you didn’t interfere with the borrower’s free choice. Some lenders deliver the notice at application and at closing due the lack of clarity in the regulation.
Yes, I know several consultants that could handle this assignment. Please contact me by email jack@mycomplianceresource.com. Include your name, your institution and contact information.
Paragraph 43(c)(4)(vi) states, “In verifying a consumer’s income, a creditor may use a written or electronic record from a government agency of the amount of any benefit payments or awards, such as a “proof of income letter” issued by the Social Security Administration (also known as a “budget letter,” “benefits letter,” or “proof of award letter”).”
Appendix Q Section II-C-3 states, “a. Income received from government assistance programs is acceptable as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.
b. If the income from government assistance programs will not be received for at least three years, it may not be used in qualifying.” Please note that Appendix Q was removed as guidance effective July1, 2021. No new guidance was issued. However it still sheds light on the CFPB’s thinking on this topic.Section 8 of RESPA, the implementing regulation, and the CFPB’s Frequently Asked Questions all confirm that no thing of value may be given in response to a referral. There is no acceptable minimum amount.
As you have identified, it appears the disclosure is wrong. The consumer could be mislead by the error.
The additional tax data you are adding seems to be the source of the problem. We suggest discussing this with your loan origination software provider. Either your language or third system need to be adjusted to eliminate the problem.
From your description, it appears the title company has committed Truth in Lending violations. It appears they have significant liability, as does your institution. Get your attorney involved. The title company will likely try to push the liability in your bank’s direction. You may want a consultant to review the transaction to determine all of the errors and to calculate the amount of required reimbursement.
A pre-closing review should have caught these apparently obvious errors. What happened there?
Regulation C defines “home improvement as “a closed-end mortgage loan or an open-end line of credit that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which the dwelling is located.’ The definition does not mention home maintenance, but an argument can be made that maintenance work is synonymous with repair or rehabilitate.
The Official Interpretations list several specific examples of “home improvement” including:
• Replacing a roof
• Remodel a kitchen
• Installation of a swimming pool, and
• Construction of a garage, or landscaping.A good argument can be made that painting a house is similar to replacing a roof; both are examples of rehabilitation.
The Official Interpretation also states, “In determining whether a closed-end mortgage loan or an open-end line of credit, or an application for a closed-end mortgage loan or an open-end line of credit, is for home improvement purposes, an institution may rely on the applicant’s or borrower’s stated purpose(s) for the loan or line of credit at the time the application is received or the credit decision is made. An institution need not confirm that the borrower actually uses any of the funds for the stated purpose(s).” Stating the loan purpose on the application as “home improvement – paint the house” or “home rehabilitation – Carpet cleaning” improves the likelihood that examiners will agree with your categorization.
I concur with the answer provided by the other sources you used, use the date on which the interest rate was set by the financial institution
for the final time before final action is taken.What is the aversion to using the date the rate changed? Is this an input issue? Will it result in a system change?
