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IMO – This would be a business decision. When determining how long to keep the ‘Hard copies” you would want to verify a couple of things:
1. Bankruptcy requirements
2. If there are any state law requirements when it came to “wet copies” vs. scanned reproductions.OTICE: 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.
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TRID has a very specific Purpose Hierarchy and Waterfall requirement and aides in determining which purpose should be used on the LE. The TRID loan purpose waterfall (hierarchy) is as follows: One, purchase; two, refinance; three, construction; and four, home equity loan. When determining which purpose to disclose, a creditor must look at the waterfall of four possible purposes in the order that they appear in Section 1026.37(a)(9) of Regulation Z and select the first one that applies to the loan.
Each of these in the order that they appear in the rules are as follows:
Purchase Loan Purpose. A purchase is defined as credit to finance the acquisition of the property that secures or will secure the transaction. Since bare land loans are subject to TRID, this means that a purchase loan will often include either a purchase of bare land or the purchase of a dwelling.
Refinance Loan Purpose. A refinance is defined as credit that will be used to refinance an existing obligation that is secured by the property that secures or will secure the transaction. A refinancing is a new transaction requiring new disclosures to the consumer and occurs when an existing obligation that was subject to Regulation Z is satisfied and replaced by a new obligation undertaken by the same consumer.
Construction Loan Purpose. A construction purposes is one where the credit will be used to finance the initial construction of a dwelling (not renovations to an existing dwelling) on a property that secures or will secure the loan. As we will explain when we discuss the TRID Loan Purpose Hierarchy, a construction loan purpose will only be used when an applicant already owns the land they are building on and they are not refinancing that land with the construction loan.
Home Equity Loan Purpose. A home equity loan is a credit that is not a purchase, refinance, or construction loan. These loans are often debt consolidation loans, second mortgages (new money), or other loans where an applicant owns a home free and clear.
Based on why you stated in your question and the TRID waterfall requirements. Your loan appears to be a purchase.
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1. Can the lender provide a list of the banks approved appraisers to a customer who wants to obtain the appraisal on their own if there is no loan application submitted?
Answer – There is no regulation/law that states you may not give a borrower your approved appraiser list regardless of a loan application. This would be a business decision and one you would want to document in policy so if asked again that customer would receive the same response and treatment.
2. If the customer gets an appraisal from one of the banks approved appraisers and comes back to the bank later for a loan using that piece of property as collateral, can the bank use that appraisal to consider value or the property? Or, would it be considered bias since they received a list of appraisers from the bank?
Answer – No, you cannot use the appraisal without the appraiser assigning it to your FI. As with any appraisal being reused by anyone/financial institution you have to have the original requester’s permission and assignment of it by the appraiser/appraisal company that performed it.
3. Would we be better off to tell the customer that we can’t recommend an appraiser as they are usually ordered by the financial institutions?
Answer – This would need to be a business decision by the Bank and one that is written into policy so if asked again that customer would receive the same response and treatment.
4. Can we order an appraisal for them without a loan in progress if the customer pays out of pocket? If so, and the borrower comes back to the bank later for a loan application, would we be able to use that appraisal to consider valuation of the property?
Answer – No, all regulatory language indicates that an FI can only order an appraisal in connection with “federally related transactions. Additionally, FIs are required to have real estate lending regulations and guidelines, that require written real estate lending policies that are consistent with principles of safety and soundness and that reflect consideration of the real estate lending.
IMO, based off this regulatory language if you do not have an application you cannot order the appraisal.
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Interesting questions with both Federal and State challenges.
Question 1 (signing on different days) First off no one can sign early that would violate TRID and the requirement that the Closing Disclosure be delivered three business days before “consummation.” Since consummation is determined by state law, lenders have concluded that an early signing is tantamount to consummation in some states. As such, an early signing would violate the three-day rule if the Closing Disclosure was merely delivered three business days before the scheduled closing date.
Second – I have found no guidance that would allow for signing on different days. If in person, they can come in and sign at different times as long as a Notary Public is present to witness and authenticate the signing of the documents.
Thirdly- some governments products (i.e. FHA) will not allow for a loan to be closed with out both borrowers signing on the same day.
There are lots of different moving parts to this question.
Question 2: can the spouse sign the Mortgage after closing date –
No, it has to be at time of closing. This is very clear in state laws and in government type products.
However, the work around that is allowable for both of your questions is for a borrower to designate an attorney-in-fact to use a power of attorney to sign documents on his/her behalf at closing. Which of course is another cost.
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Yes, all commercial loans that meet the small business definition (<$5 million in gross annual revenues for the preceding fiscal year) are required to be reported for 1071. The exception is if it is HMDA reportable. Those do not require reporting on both LARS. HMDA reportable loans for HMDA reporters go on the HMDA LAR. If you are not a HMDA report, then all your covered commercial loans will go on the SBLAR. 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
Having not had the opportunity to read/receive the letter the best I can offer is my opinion based off the questions you posed.
1. Does the act of resubmitting HMDA data have the potential to affect the overall HMDA rating? – Based on what you stated, it would seem you would have more of an issue if you did not make a good faith effort to review your data as requested to ensure the accuracy of the address field. If the CFPB has stated this will not affect the “timeliness” of the original filing it would seem that this is a wide spread issue and they are concerned about the accuracy of the HMDA data for those three years. Recognizing this data is Geocoded and used for fair lending analysis your FI could run a bigger risk for disparities and redlining if the data is inaccurate. You could also run the risk that if you don’t test for accuracy that your data could have issues that would be identified in your next exam and trigger a possible refile which at that time could end up causing a CMP. I would recommend that you make a good faith effort by testing your data using the testing guidelines established in HMDA and based off the result of a random sampling test that will aide you in determining if you need to continue scrubbing the data or if you have a good feeling about the accuracy.
2. When reviewing the last four years (most recent being 2023) of HMDA FIGs the address fields have always shown that you would not use any special characters like a period, so I’m assuming they are keeping inline with those requirements. But to your point I would agree that your FI would need to determine the best means to validate for Geocoding. I would however, keep in mind what the CFPB has documented in their FIG requirements what/how they want the data reported for HMDA.
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For case-by-case – regulations indicate:
•Must include this option in Funds Availability Policy to use.
•May be used for any reason (hold amount under $5,525 for large deposit hold,)
•Must make first $225 of checks deposited available next business day ($225 total – not per check)
•Place CASE-BY-CASE HOLD for all but $225 of checks deposited for 2 business days.For large deposit – that would be the reason you are doing it. But from a UDAP perspective you would need a good reason that wasn’t unfair to the customer. These holds have been cited as UDAP issues for some FIs. Without clear policy and understanding for placing the hold.
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Yes, TRID would apply based off the scenario you listed.
1. The transaction described is a closed-end consumer credit transaction secured by real property.
2. The transaction as described is a consumer purpose.
3. The applicant is a natural person.Hope this helps.
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I see a couple challenges with your question:
1. You have stepped outside of the “typical” and will need to be able to explain why. Since this loan was treated differently.
2. Insurable amount = Insurable value by way of the regulation. So does the policy you received indicate the what they valued and insured the property for without including the land? Land can not be used in the calculation.
The regulation states; The insurable value of the building may generally be the same as 100 percent Replacement Cost Value (RCV), which is the cost to replace the building with the same kind of material and construction without deduction for depreciation.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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As defined in the proposed 1071 rules –
Small business = a business is a small business if and only if its gross annual revenue for its preceding fiscal year is $5 million or less.If you are looking at a new business then yes, it would be $0 since there would be no prior year Gross Annual Revenue.
Using Webster’s Dictionary, Gross Annual Revenue is described as follows – Gross revenue, also known as gross income, is the sum of all money generated by a business, without taking into account any part of that total that has been or will be used for expenses. As such, gross revenue includes not just money made from the sale of goods and services but also from interest, sale of shares, exchange rates and sales of property and equipment.
Hope this helps,
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Thank you for your question. I would need a little bit more background to understand exactly what you are asking around the foreign tax ID.
A “minority census tract” is a census tract that has a minority population of at least 30 percent and a median income of less than 100 percent of the AMI. (fhfa.gov/DataTools/Downloads/Pages/Underserved-Areas-Data.aspx#:~:text=A%20“minority%20census%20tract”%20is,100%20percent%20of%20the%20AMI.)
A majority-minority (high-minority) census tract has a population that is at least 50 percent minorities, which means that more than half of individuals in the census tract are minorities, i.e. Black, Asian, Hispanic, Asian-Pacific Islander, and/or Native American. (https://www.lawinsider.com/dictionary/majority-minority-neighborhood)
Underserved area definition are determine by, low-income area and minority census tract definitions are based on prior year metropolitan area definitions as determined by OMB. Designated disaster areas are identified by FHFA based on the three most recent years’ declarations by the Federal Emergency Management Agency.
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Yes, you would have to have them sign a media release to be in your video.
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Looking into section 1026.42 there doesn’t appear to be glaring issues related to the fee waiver by the appraiser since it is more designed around the relationship between the bank and the appraiser. However, with the “why” I’d want to understand if there was any UDAP or conflict of interest issues. What made this person get a free appraisal?
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Hi Cindy –
I guess my questions is why do they want to do this? Pretty risky in today’s environment. However, you are correct in your whole assessment.
1. Yes, you will have to update the language in your disclosures, agreements, and provide the proper notification.
2. Yes, Fees are being scrutinized heavily using UDAAP standards. Firstly, you would need to have a very good reason for the $10 additional fee. You will need to clearly be able to explain ” the Why”. Without using explanations that show it to be fee income for the financial institution. To do that you will mostly likely need a break out of how much it costs the FI to have them close the CD early. It will be a hard sale if this process for opening and closing is basically automated. Even “employee” time spent opening or closing the account is probably not much by way of time or process.
The institution will need to prove the new standard is not “unfair” or “abusive”. Unfair because people are living paycheck to paycheck right now and we are in an “recession”. So why charge the interest penalty and the extra $10. Abusive because it will be a policy that could hurt a person or persons who really need their money. They could be in financial hardship that they didn’t have when it was opened. As long as disclosures properly explain the fee the institution should be able to avoid a “deceptive” standard.
3. Two other consideration,
a. Fair Banking. Fee Waivers – If there is the ability for the employee to waive any of the fees (interest and/or the $10) you are going to need a very good policy, procedure, and tracking mechanism. It will need
to be monitored and trended to spot potential issues/disparities, which ultimately for deposit accounts will tie back to UDAAP.
b. Reputation Risk – Complaints – You’re going to want to watch these closely as well. As you know, no amount of disclosing ever prevents complaints by depositors. So you will want to look for these as they could
be early warning signs. If they hit social media they could catch the eye of the CFPB and/or your Federal and State regulators, as well as special interest groups.Hope this helps provide another opinion on the risky practice charge fees. Please let us know if you have other thoughts or question.
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