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RESPA applies to federally related mortgage loans, which generally includes loans secured by a one- to four-family dwelling. A servicing disclosure statement is needed for a mortgage servicing loan, which is a first lien federally related mortgage loan. You must also consider RESPA exemptions. Construction loans are generally exempt; however RESPA applies to a construction loan in several situations, such as when you are providing both construction and permanent financing, or when you are providing funds to both buy the land and to build the dwelling.
There is nothing in your question that justifies either transaction being exempt from Regulation Z. Check with loan operations for any additional information that impact this answer.
We focus on federal lending compliance issues. Your question involves state law issues. We suggest you contact the bank’s legal counsel.
The risk-based pricing notice is not required for a denied loan. So, providing the adverse action notice completes your responsibilities.
An adverse action notice is required when the creditor takes adverse action, not when a consumer withdraws an application.
The risk-based pricing notice is only required when credit is granted on terms that are materially less favorable. No credit is granted when an application is withdrawn.
Are you using the risk-based pricing notice or the credit score exception notice?
A home purchase loan must be for the purpose of purchasing a dwelling and the loan must be secured by a dwelling. Your question didn’t mentioned whether the loan was secured or not. Even if it is secured, the loan is not for the purpose of purchasing a dwelling. There apparently is no transfer of title at the time your loan occurs.
Both Deborah, who I hired into her current position many years ago, and your supervisor have valid points. Deborah’s analysis relies on a strict reading of the definition. Your supervisor appears to be looking at the substance of the transaction. Unfortunately my opinion, Deborah’s opinion and your supervisor’s opinion do not count. The issue is not addressed in Regulation C, the official staff commentary or the FAQs. You should run this by your examiner to find out how he/she wants it reported.
It appears that your customer is making the loan. If your customer makes more than 25 loans per year, then the customer is covered by the Truth in Lending Act and Regulation Z, and is responsible for providing a Truth in Lending disclosure.
ECOA has been revised, but no regulations have been published yet. You are not required to change anything at this point.
You both got it right. If you have a preferential rate, you must disclose it, and you must also the circumstances under which the preferential rate may be revoked.
The delivery fees, which are often referred to as Loan Level Price Adjustments, are disclosed in Block 2 (Checkbox 3) of the GFE.
Voluntary Mortgage Life Insurance does not appear on the GFE and need not appear on the list of providers. The instructions for the HUD-1 state, “Lines 904 and additional sequentially numbered lines are used to list additional items required by the Lender (except for reserves collected by the Lender and recorded in the 1000-series), including premiums for flood or other insurance. These lines are also used to list amounts paid at settlement for insurance not required by the Lender.”
An attorney waiving the title charges for an employee can be a significant violation of Section 8 of RESPA. This transaction should be reviewed and possibly reversed immediately.
If you obtain a credit score you should either provide a risk-based pricing notice to appropriate applicants, or you may choose to provide a credit score exception notice (CSEN). There are three credit score exception notices – one for loans secured by one to four units of residential real property, one for loans not secured by one to four units of residential real property, and one for situations where the consumer does not have a credit score.
For more information abou risk-based pricing requirements we have a video available on our website. The link is https://mycomplianceresource.com/RISK-10.html.
There are actually seven different rescission notices – two for closed-end credit and five for open-end credit. The model rescission forms are contained in Appendix G (open-end credit) and Appendix H (closed-end credit) of Regulation. The link for Appendix G is
https://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=4d168cc811a7a3701ebdb177e45cd4b7&rgn=div5&view=text&node=12:3.0.1.1.7&idno=12#12:3.0.1.1.7.7.8.10.23. The link for Appendix H is https://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=4d168cc811a7a3701ebdb177e45cd4b7&rgn=div5&view=text&node=12:3.0.1.1.7&idno=12#12:3.0.1.1.7.7.8.10.24.For closed-end credit use the general rescission form in all cases, except when you are refinancing a loan at your bank that involves new money.
