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I agree with what Rebekah stated, but I also think you need to look at this as two separate issues: correcting the Closing Disclosure and addressing the promissory note.
Closing Disclosure: The 30-day rule is not a blanket window to correct any error discovered after closing. Under Regulation Z §1026.19(f)(2)(iii), corrected disclosures are required when an event connected with settlement occurs during the 30 days following consummation, causes the disclosures to become inaccurate, and results in a change to an amount actually paid by the consumer.
The Disbursement Date on the CD should reflect the date the loan proceeds are expected to be paid, under §1026.38(a)(3)(iii).
There is also an exception worth considering. The Official Interpretation of §1026.19(f)(2)(iii), Comment 2, states that a corrected CD is not required when the only changes are to per-diem interest and disclosures affected by that change. However, since the disbursement date itself is also incorrect here, I would not automatically assume that exception resolves the entire issue.
I would first determine whether the disbursement date changed because of an event after consummation or whether it was simply entered incorrectly on the original documents. That distinction matters when determining which correction requirements apply.
Promissory note: This is a separate issue. Under Regulation Z §1026.17(c)(1), Comments 1 and 2, the disclosures must reflect the legal obligation between the borrower and creditor. That obligation is normally presumed to be contained in the note or contract.
Sending a corrected CD does not, by itself, correct or amend the promissory note. Since both the disbursement date and payment amount are incorrect on the note, I would have the bank’s legal counsel determine the appropriate way to correct the loan documents under applicable state law. The bank should also ensure that the payment schedule in its servicing system reflects the legally enforceable loan terms.
My recommendation: Reconcile the disbursement date and all affected calculations, determine the appropriate CD correction, and separately address the note. I would not simply override the payment in the core system or assume that mailing a corrected CD resolves both issues.
References:
12 CFR §1026.19(f)(2)(iii) — Post-consummation changes
Official Interpretation of §1026.19(f)(2)(iii), Comment 2 — Per-diem interest
12 CFR §1026.38(a)(3)(iii) — Disbursement Date
12 CFR §1026.17(c)(1) — Legal obligation
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Thank you for the question. This is an important issue in commercial lending because a security interest in personal property can trigger flood insurance requirements even when the institution’s primary focus is the real estate collateral.
My recommendation would be to establish a consistent, documented methodology for identifying and determining the insurable value of the personal property securing the loan.
I would start by reviewing the security agreement to identify the specific personal property securing the loan and determining where that property is located. I would also distinguish between loans secured by both real estate and business personal property and loans secured by personal property only. Additionally, consider whether the UCC filing covers specifically identified equipment or inventory versus a blanket lien on business assets.
For valuation purposes, the institution could establish acceptable documentation based on the type of collateral, such as equipment listings, appraisals, inventory reports, or other supportable valuation records. The procedure should address situations where inventory fluctuates or the collateral description is broad.
I would be careful not to automatically equate the value of the UCC filing, the outstanding loan balance, and the insurable value of the contents. The institution should determine the required flood insurance amount under the applicable regulatory requirements and document its methodology. The NFIP maximum for nonresidential contents coverage is generally $500,000, but that does not mean every loan requires that amount. The required coverage must be determined based on the applicable regulatory calculation and the circumstances of the loan and collateral.
I would also recommend coordinating with the institution’s flood insurance provider or specialist to confirm the appropriate valuation approach for different types of commercial collateral, particularly where the institution has a blanket lien on business assets or the value of inventory fluctuates.
As the procedure is developed, make sure it addresses collateral identification, valuation documentation, calculation of required coverage, exceptions, and ongoing monitoring. For the existing deficiency, the institution should also document its review and remediation of affected loans and address any applicable notification and force-placement requirements where coverage is insufficient.
The Interagency Questions and Answers Regarding Flood Insurance and the institution’s primary regulator’s examination guidance are useful resources when developing the procedure. The goal is to establish a consistent, supportable process that identifies the personal property subject to the flood insurance requirements, documents its insurable value, and determines the required coverage.
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The property tax bill should show in Section F – Prepaids on the Closing Disclosure. Since the bank does not escrow taxes, it would not go in Section G – Initial Escrow Payment at Closing.
For additional guidance, the CFPB addresses this in the Official Interpretation of Regulation Z §1026.37(g)(2)-1. It identifies both property taxes due within 60 days after consummation and past-due property taxes as examples of prepaid items. You can find this in 12 CFR §1026.38(g)(2) and the Official Interpretation of §1026.37(g)(2)-1.
For delinquent property taxes, I would generally look to Section F if the past-due tax bill is being paid at closing as a prepaid item. There is also a separate provision, §1026.38(j)(1)(v), that addresses outstanding property taxes as other consumer charges when they are not otherwise disclosed in the applicable sections. I would look at the nature of the obligation and make sure it is disclosed appropriately without being counted twice.
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Yes, you can potentially do this as a TRID closed-end consumer loan, assuming the loan is structured as a true closed-end transaction.
TRID applies to closed-end consumer credit secured by a dwelling. It is not limited to purchase, refinance, or construction loans. So the fact that the borrower wants the funds available for general consumer purposes does not, by itself, prevent the loan from being subject to TRID.
Since you are saying this would not be revolving, the bank could structure the loan as a closed-end draw-down loan. The important part is that the borrower does not get a credit balance that becomes available again as principal is repaid.
For example, if the bank approves $50,000 and allows the borrower to take the $50,000 in advances as needed, that can be structured as a closed-end loan. Once the borrower repays principal, that amount would not become available for another draw.
So, based on what you have described, I don’t see a TRID issue simply because the purpose is to have funds available for future consumer needs or because the borrower currently has no debt on the home. I would just make sure the loan documents and the way the product operates clearly establish that this is a closed-end, non-revolving loan rather than an open-end home equity line of credit.
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If the bank is a HMDA-reportable institution, then the demographic information is required for applicable HMDA-covered applications. That includes documenting how the application was received and, if the application was taken face-to-face and the applicant chooses not to provide the information, recording the ethnicity, race, and sex based on visual observation or surname.
Since you are not a HMDA bank, though, you don’t have to complete the HMDA demographic section simply because the loan is a residential loan.
There is still a Regulation B/ECOA requirement that applies to certain residential mortgage applications. Under § 1002.13, when a natural person applies for credit primarily for the purchase or refinancing of a dwelling that is or will be the applicant’s principal residence, and the credit is secured by that dwelling, the bank has to request monitoring information — ethnicity, race, sex, marital status, and age.
The applicant can decline to provide the information. If the application is taken in person and the applicant declines to provide ethnicity, race, or sex, the creditor records that information based on visual observation or surname.
So I would not say that a non-HMDA bank has to complete the HMDA demographic section on every residential loan application. I would say the bank needs to determine whether the particular loan falls under Regulation B § 1002.13. If it does, then the bank has a GMI/monitoring-information requirement even though it isn’t subject to HMDA reporting.
And one other little distinction — I wouldn’t call this a requirement for every “principal mortgage loan.” The purpose of the credit, whether it is the applicant’s principal residence, and whether the dwelling secures the credit are all part of determining whether § 1002.13 applies.
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Regulation C specifically excludes “transitory residences such as hotels, hospitals, college dormitories, and recreational vehicle parks” from the definition of dwelling. It also specifically says RVs, campers, travel trailers, and park model RVs are not dwellings.
I would not report this loan for HMDA purposes based on the facts provided in your question.
Although one of the RV parks has three rental cabins and two mobile homes used to house employees, I would not view the presence of those units as converting the RV park into a dwelling. The cabins appear to be ancillary to the RV park’s transient lodging operation, and the employee housing is associated with the operation of the park. The HMDA commentary also specifically recognizes that transitory employee housing is not a dwelling.
The mixed-use provision does not mean that the presence of any residential-type structure automatically makes a property HMDA-reportable. For a mixed-use property, the property must have a residential primary use. Here, the primary use is the operation of an RV park, which is specifically excluded as a transitory residence.
I would consider the loan not secured by a dwelling and therefore not HMDA-reportable, assuming there are no other facts indicating that the cabins or mobile homes are being used as long-term residential housing.
One thing I would add to your internal analysis: If the cabins are actually being rented as long-term housing rather than nightly/weekly/seasonal transient lodging, I would reassess and possibly change my opinion. But with what you’ve described, two RV parks, land/pads, a few cabins ancillary to the park, and staff mobile homes, this is not HMDA reportable IMO.
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I think you are understanding this correctly. Once you knew the policy was cancelled and the bank was not going to pay that premium, I do not think you should have continued to include that specific premium as an anticipated disbursement. Continuing to carry it forward would artificially increase the escrow payment and could result in a surplus, which appears to be what happened.
The fact that hazard insurance is required does not necessarily mean you should continue using the premium from the cancelled policy. You would want to base the analysis on what you reasonably expect to pay. For example, if the borrower obtains replacement coverage or the bank force-places coverage, then that anticipated premium could be included.
Based on the facts you provided, I would question the basis for continuing to include the old premium in both the 2023 and 2024 analyses if the bank did not expect to actually make that payment.
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Flood is a dwelling related loan. Which would mean if the loan is secured by two separate duplex buildings, You would need a flood determination that identifies each building securing the loan. You cannot safely use one house number and assume the result applies to the other duplex simply because both sit on the same tract.
The Interagency Flood Q&As are very clear on the underlying principle: when a loan is secured by multiple buildings, the lender must determine whether each building securing the loan is located in an SFHA. The regulation requires use of the standard determination form for the building or mobile home offered as collateral. However, based on your vendor two separate flood certificates don’t necessarily mean two completely separate orders if your vendor has a way to run both buildings in one transaction/package. But the documentation must clearly identify and provide a determination for both structures. One determination using one duplex’s house number is not sufficient documentation for the second duplex.
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Based on the information you provided. Yes, this loan is likely HMDA reportable as a home improvement purpose transaction under Regulation C (12 CFR Part 1003).
Home Improvement Definition: Under HMDA, a home improvement-purpose transaction is one where the proceeds are used to improve a dwelling or the real property on which it is located.
Reimbursement: Using loan proceeds to reimburse the business entity for past renovations on a 1-4 family dwelling qualifies as a home improvement purpose, as long as the stated intent/use of the funds ties back to improving the dwelling. The fact that the property is listed for sale does not exempt it from home improvement classification.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.
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Yes, that is correct. In 2024 and 2025 you were below threshold. You will need to monitor this every year so that you will know when your requirements change. Two consecutive years will require you to move into an ISB.
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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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