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My understanding there is only an exemption for smaller loans from Appraisals with HMPL. These dollar limits are each December based on the Consumer Price Index and effective every January. If it is a non-HPML (standard) residential real estate loans, the federal interagency appraisal rules exempt transactions of $400,000 or less from requiring a full, certified appraisal. For loans below this threshold, lenders are permitted to use an evaluation instead of an appraisal. You can find more details:
* https://www.fdic.gov/news/financial-institution-letters/2019/fil19053.html
* https://www.federalreserve.gov/frrs/guidance/interagency-appraisal-and-evaluation-guidelines.htmlNOTICE: 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.
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From an ATR/QM compliance perspective, I would be cautious about saying it’s “okay” simply because the omitted debts do not materially affect the DTI. This is primarily an Ability-to-Repay (ATR) issue rather than a QM issue on a TRID loan.
ATR requires the creditor to make a reasonable and good-faith determination of the consumer’s ability to repay based on verified and documented information. One of the ATR factors is the consumer’s current debt obligations, alimony, and child support. If debts appearing on the credit report should have been included under your underwriting policy or standard DTI calculation methodology, they generally should be considered in the ATR analysis.
Even as a Small Creditor, you should address this from the perspective that all applicable debt obligations must be evaluated. The question is whether excluding these small payments constitutes an exception to your underwriting requirements. If the answer is yes, I would recommend documenting the exception in the file.
In addition, I would recalculate the DTI including the omitted payments and document that the revised DTI remains within your institution’s acceptable underwriting standards. This demonstrates that the debt obligations were considered and supports the creditor’s reasonable and good-faith ATR determination.
Wow – Large/complex scenario — best approach is to break it down–
1. Under the National Flood Insurance Program (NFIP):
• Each building requires its own separate flood insurance policy
• NFIP policies are written per structure, not per property
• In this case (house, office, cabins, bathhouses, etc.), you are likely looking at multiple policies, not a single blanket policy.
• A single policy may be possible through private flood insurance, depending on the carrier.
2. Coverage limits with NFIP:
• Commercial building max: $500,000 per building
• Contents: $500,000 per building
• If your appraisal shows higher replacement values (which is common with multiple structures), NFIP may not satisfy the requirements.
3. Documentation / file setup – Build a clear structure list from the appraisal:
• Building name (Cabin #1, Bathhouse A, etc.)
• Use (residential, commercial, storage)
• Replacement cost (focus on replacement cost, not cash value, for lending)
• Square footage
• Elevation (if available)
4. RV/Campground:
• Primary buildings (office, dwellings, cabins):
o Typically must be individually insured (NFIP or private)
• Lower-value structures (sheds, pavilions):May be:
o Not required by the bank OR Covered under a private/blanket policy (if allowed)
o Under NFIP, these would still require separate policies
5. Considerations
• Do not assume: “One property = one policy” (not how flood works under NFIP)
• The bank is not limited to NFIP:
o Private flood insurance is often a better fit for this type of risk:
* Can cover multiple buildings under one policy
* Can provide higher limit policy which offer better coverage
* More flexibility for mixed-use properties• Important:
o Ensure all required structures are specifically covered or scheduled
o Apply consistent standards across borrowers to avoid compliance issuesTHIS POST DOES NOT CONSTITUTE LEGAL ADVICE
Short answer is “Yes” the disclosure is a statutory requirement, and we cannot find evidence that that requirement has been changed. The Department of Financial Institution’s website is still active and still lists the requirement.
We suggest you contact your legal team to do more research on this requirement and monitor for whether the law changes. The disclosure requirement is tied to the mortgage, not the grant program.
However, as customers may be confused, you may want to provide a script to customer service reps advising that this is occurring and we have no way of knowing when grant applications will resume, and provide the customer with appropriate links.
IMO – I would use the contract information it will be what the client has. They could have changed offices, which would account for the difference in addresses. Websites are often times not updated quickly. In a lot of cases, a LLC will use a DBA but on Professional State Pages it will list legal names.
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Yes, I do think you would have a Fair Banking issue by allowing an exception based on “large business customers” employees getting special treatment. If you were to make an exception to your Bank’s policy, you would need to make sure it was for everyone and had standards that would provide the same opportunity to all prospects equally.
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Townhomes are treated as individual SFR. If the unit you are taking is not in the Special Food Hazard Area, then the borrower would not be required by Flood rules to get flood insurance. However, as a Safety and Soundness precaution you Institution could consider requiring it to protect your collateral. If you do that you will need to make it a standard practice for consistency.
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Townhomes are treated as individual SFR. If the unit you are taking is not in the Special Food Hazard Area, then the borrower would not be required by Flood rules to get flood insurance. However, as a Safety and Soundness precaution you Institution could consider requiring it to protect your collateral. If you do that you will need to make it a standard practice for consistency.
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Anytime you obtain an appraisal in conjunction with a home transaction (ref, purchase, home improvement) you are required to provide the Appraisal Notice. You as the lender may not waive this.
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I agree with @pparks, Since the Income was collected and updated to figure a DTI. It would need to be HMDA reportable. I also agree with the need to have a policy to have consistency.
I would agree that a counteroffer with a qualified applicant would be the safest way to go to avoid DL issues. Particularly since you have the 550-619 policy rule, The insufficient file is not a valid reason based on having a file since 2022 with a score. You would have issues with the credit score reason because of the 550-619 policy.
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IMO – I would not select insufficient credit file since the applicant has one. Unless your policy is specific on what constitutes an insufficient file. If you are counter offering for a qualified co-applicant that would be a good option to avoid a Fair lending issue. You never indicated what the loan type is but I’m assuming this is for unsecured or a vehicle since you stated that policy. I’m also assuming this is not a customer? If it is not a customer again asking for a qualified loan applicant seems reasonable to me recognizing that credit score is below and your have a policy on low score standard and not being a customer who I assume would be the norm for the 550 -619?
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If the loan is not for a purchase, refinance (even cash out), or hoe improvement. Then you would use other.
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Yes, you must tell the borrower on the LE all the fees they will be paying. It is your responsibility to provide them the best information available for all fees they will be paying, even if it is out of town. Which the scenario you are describing sounds like creating a special providers list for them. Also based on the scenario is sounds as if a third-party is dictating your process, with the release of the interagency guidance on third-parties in June of 2023, you may want to consider more controls over those realtor third-parties. Mortgage third-parties have been looked at more stringently in the last few years.
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For HMDA transactions you would only report number of units for multi-family properties. Multi-family is described as more than 4. This would not qualify as muti-family by way of definitions based on the situation described in the question.
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