Forum Replies Created
-
Posts
-
If a HELOC is being refinanced into another 1-4 family or multi-family dwelling type loan (e.g. open-end or closed end loan) and you meet the definition of a HMDA reporter you would need to collect the GMI information for reporting. If you are not a HMDA reporter you will still have GMI collection requirements under Reg B/ECOA (§ 1002.13(a)(1)) and/or FHA depending on who your regulator is for principal residences.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
@dianacraddock. Jack retired last May. When researching your question, I was unable to find the exemption he referenced in April of 2023. I did find a few fact sheets issued by the CFPB one specific to coverage https://files.consumerfinance.gov/f/documents/cfpb_ecoa-valuation_transaction-coverage-factsheet.pdf. As well as interagency FAQs https://www.occ.treas.gov/news-issuances/bulletins/2018/bulletin-2018-39a.pdf.
Neither of these allow for an exemptions for ECOA appraisal requirements nor was I able to find any exemptions for Reg B (ECOA).
Currently, the rules are focused on Consumer lending. However, I would not forget that Small Business tends to follow the lead of consumer. With 1071 rules going into play, you may want to consider any loans that will use personal property as collateral falling into these rules.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
The best way to not be discriminatory would be to follow your CIP/CDD rules. BSA/AML rules are not considered discriminatory.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
Disclosures require that your provide the best information at the time you created the CD. But you are also required to provide a revied one if something changed after you receive updated information. The positive is you do not have cure to worry about but you are required to send them an updated CD within 30-days.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
Since it is family gift from a relative (parent) the amount ($64k+) is disclosed as an “other credit” in the cost to close section of the Loan Estimate (LE) and the Closing Disclosure (CD). The seller credit ($5k) will be shown in the seller credit area of both the LE and CD.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
In our opinion, the best option would be to disclose it separately as it would be cleaner. If you were to add it annually into the loan you are “increasing” it and would trigger Flood. But you are correct in your assessment as well.
In the case of a sale for less than market value there are various opinions on the proper method of disclosure. We believe the safest approach is to disclose the contract sales price. The instructions for the LE and CD require the contract sales price be disclosed as “sales price” in a purchase transaction. Consumers purchasing a home for less than the fair market value prefer that the fair market value be shown as the purchase price, since that higher number improves the loan-to-value ratio. Using the higher number results in the “gift of equity.” The TRID regulations and related guidance do not address the disclosure of this arrangement.
Each of these items needs to be shown as what they are. One as seller credit and the other as a gift. Similar to the prior post – A sale for less than market value there are various opinions on the proper method of disclosure. We believe the safest approach is to disclose the contract sales price. The instructions for the LE and CD require the contract sales price be disclosed as “sales price” in a purchase transaction. Consumers purchasing a home for less than the fair market value prefer that the fair market value be shown as the purchase price, since that higher number improves the loan-to-value ratio. Using the higher number results in the “gift of equity.” The TRID regulations and related guidance do not address the disclosure of this arrangement.
As for how to show it. My question back. What does the contract say? Is it a gift or is it 20% off the sales price. If the contract states the sales price is $321,000 then that is what the sales price should state and the gifted amount needs to be shown as such. In our opinion not doing it this way would affect the LTV on the loan.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
The rules for Reg. B do apply to both consumers and commercial loan transaction. In general the rules do say “A creditor shall provide an applicant a copy of all appraisals and other written valuations developed in connection with an application for credit that is to be secured by a first lien on a dwelling.”
You are correct that the CFPB contradicted itself and has not clarified their definitions of dwelling vs structure and like to use them interchangeably. When they created the factsheet in 2020 they still had not expressly addressed whether they and thus the rule interprets the ECOA Valuations Rule to apply when a loan is secured by a first lien on more than four units in a residential structure that contains more than four units. As a result, the revised factsheet continues to create confusion as to the ECOA Valuation Rule’s coverage. IMO so not to confusion your FI, I would follow the definition of a dwelling as it relates to HMDA if you are a HMDA reporter and if not the definition in the Flood rules. That would in my opinion eliminate confusion and keep it consistent in your FI.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
________________________________________The E-Sign Act allows the use of electronic records to satisfy any statute, regulation, or rule of law requiring that such information be provided in writing, if the consumer has affirmatively consented to such use and has not withdrawn such consent. To ensure your institution is compliant you will need to have a process in place that includes the following elements:
Intent to sign, Consent to do business electronically, Opt-out clause, Signed copies, and proper Record retention. More details can be found in each regulators compliance handbook but here are few links to resources:
1. https://www.consumercomplianceoutlook.org/2009/fourth-quarter/q4_02/
2. https://www.fdic.gov/system/files/2024-06/x-3-1.pdf
3. https://www.consumerfinance.gov/rules-policy/regulations/1024/3/
4. https://www.consumerfinance.gov/rules-policy/regulations/1030/3/NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
________________________________________In the commentary for the definitions, when it came to principal ownership the CFPB indicated you could utilize some of the practices in place for beneficial ownership. Except that you would only have to get information from “direct” owners they are not expecting you to drill down to a heartbeat unlike beneficial owners for BSA. So the example used would be – individual A owns 50% and ABC inc. owns 50% you only have to get information from the individual. Your example of two entities owning a business has been addressed by them as of yet. Your example provides for a business that I assume they do not consider to be “small” <$5 million in GAR. They continue to update their FAQs so I would recommend that you keep watching to see if they address two businesses instead of just individuals. If I were building the program with out additional guidance, I would make the decision of how far to drill down based off the GAR first. If either of the business in your example had GAR of <$5 million I would get the information collected to avoid them saying my program was circumventing collection. NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege. THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
If you force place a policy the regulations states, The amount of insurance must be at least equal to the lesser of:
• The outstanding principal balance of the designated loan;
• The maximum limit of coverage available for the particular
type of property under the Act;
• The value of the improvements (building or mobile home)
and any personal property that secures a loan and not the
land itself. [Insurable Value or Replacement Cost Value]You are only required to do it when the policy lapses falling all requirements. If you were to choose to monitor and reduce this for the borrower you will need to be ready to do this for all borrowers or you could have a UDAP/UDAAP issue.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
For Reg C – HMDA. If there is no “dwelling” HMDA does not apply. For Reg B collection is based on principal residence dwelling related credit. Since you have chosen to take the principal residence as collateral, the transaction would require both HMDA and Reg B GMI collection. Had you not taken the primary residence as collateral you would not have had any collection requirements for the land only transaction.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
Per the FDIC website: https://www.fdic.gov/resources/deposit-insurance/financial-products-not-insured. It speaks to life insurance. However; Credit life insurance is not life insurance.
Their names are nearly identical, and both kinds of insurance policies make payouts in the event of a death. But that’s essentially where the similarities end.Life insurance covers the policyholder and makes payouts to their survivors upon their death. They make monthly premiums that create a cash value.
Credit life insurance covers a loan and benefits its lender by paying off the remainder of the loan if the borrower dies or is permanently disabled before the loan is paid in full.Neither Credit Life nor AD&D are considered deposits in the definitions. Life Insurance is considered a deposit and would require the non-deposit sign.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
Correct, you can inform an applicant that you do not offer a particular loan product they are requesting. There is no requirement that a financial institution offer all credit products.
NOTICE: This email message, including any attachments, is intended only for the addressee, and may contain confidential and privileged information either as protected work product or confidential client information. Any unauthorized review, use, disclosure or distribution is prohibited. If you are not the intended recipient, do not read, copy, retain, or disseminate this message or any attachment, and please contact the sender by reply e-mail or at 888.760.5646 and destroy all copies of the original message and attachments. Neither the transmission of this message or any attachment, nor any error in transmission or misdelivery shall constitute waiver of any applicable legal privilege.
THIS EMAIL AND ITS ATTACHMENTS DO NOT CONSTITUTE LEGAL ADVICE
