[Kimberly Boatwright, CAMS, CRCM]

As good rule of thumb, IMO, outside of BSA/AML requirements, has been to maintain workpapers and documentation at a minimum of exam cycle to exam cycle. Or for five years to align with the BSA testing. However, with recent enforcement actions depicting the Regulators using HMDA data that is 5-6 years old in Fair Lending and redlining cases. You may want to consider maintaining testing documentation for a period of 7 years.

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[Kimberly Boatwright, CAMS, CRCM]

With certain exceptions, the Ability-To-Repay/Qualified Mortgage Rule (ATR/QM Rule or Rule) requires creditors to make a reasonable, good faith determination of a consumer’s ability to repay. Regulation Z currently prohibits a creditor from making a higher-priced mortgage loan without regard to the consumer’s ability to repay the loan. Based on what you describe, it appears you have a made a good faith effort to ensure they can repay the loan.

My question back to you, is based on fair lending. Have you clearly provided in policy/procedures requirements for granting this exception so that if another borrower is in the same situation, it can easily be applied to their loan utilizing similar standards? But in addition, the loan notes documenting the exception match back to FI standards. Hope this helps.

Best,
Kimberly

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• This reply was modified 3 years, 10 months ago by Kimberly Boatwright, CAMS, CRCM.

[Kimberly Boatwright, CAMS, CRCM]

Good afternoon:

I can’t really respond based off business practices of other FIs. However, from a fair lending perspective have you covered this in procedures to ensure equal treatment for all borrowers that fall into this scenario? Based off your question it appears you may have different types of scenarios based on loan amount or length of time. I would want to make sure these are covered in procedure so that you can track them for analysis based on numbers, volume, product type, and how often you are having to remove fees etc.

I’m hoping other FIS can weigh in on how they handle this.

Best,
Kimberly

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[Kimberly Boatwright, CAMS, CRCM]

Good afternoon:

When reviewing and research the question, it appears that you would use the address for the FDIC as your primary Federal banking agency. (Section 338.4—Fair Housing Poster).

Best,
Kimberly

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[Kimberly Boatwright, CAMS, CRCM]

Good afternoon:

I think I might have an answer, but if you could provide more detail that would be helpful to ensure we provide you the best answer.

Thank you

[Kimberly Boatwright, CAMS, CRCM]

Good afternoon:

The answer to both questions is yes. In June 2021, The CFPB clarified, defined, and explained that the terms and requirements of the EFTA including:

1. Which consumers are protected,
2. Which transfer circumstances are covered, and
3. Who is obligated to follow the Act.

Additionally, the CFPB clarified whether a P2P payment app qualifies as a financial institution and whether P2P transfers are covered by the EFTA.

The Bureau’s statement confirmed that:

1. P2P payment app companies fall into the official definition of a financial institution under the EFTA, and
2. P2P payments are specifically included as covered transactions under the Act.

I hope this helps,
Kimberly

• This reply was modified 3 years, 10 months ago by Brent V.

[Kimberly Boatwright, CAMS, CRCM]

Based on what you are describing the answer is yes. Even if a borrower is paying for the appraisal, it had to be on the initial CD. Since the fee is in the zero-tolerance category it needed to be disclosed and shouldn’t have been left off. Without having it on the initial CD the borrower didn’t have an accurate understanding of total loan costs/fees even though they wanted to pay it. Based on what you described it sounds like it was handled appropriately.

Best,
Kimberly

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