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If there is a barn (any building) in a flood plain regardless of use it will require flood insurance per the regulations. If the FI, using risk based decisions, will allow any deviation from the law requirement it would need to be documented in a policy etc. However, the law does require insurance on any budling in the flood plain.
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Line increases were included in both the proposal and the final rule as being a trigger for the data collection. As such, I would not remove them from your origination count when determining the tier. In the final rule line increase is now a collection point in the credit purpose category. Additionally, being CRA reportable does not exclude loans from 1071 reporting. The only exception they gave in the final rule is for HMDA reportable loans. CRA reportable loans will be on both the CRA and Small Business Data Collection LARs.
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I would caution excluding loans just because you didn’t consider the GAR. The CFPB clearly stated what ever process you use to determine the FIs tier should not circumvent collection of information (or tier determination). The expectation is that you use a reasonable methodology to determine what tier your FI would fall into. IMO, just because it wasn’t’ collected or asked for would not fall into reasonableness. However, it would need to be a Management or BOD decision as to the practices you use to determine the FI tier.
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This could be a gray area. The definition states “business concern”. Which could mean if they are getting a loan using their SSN ( which in some states is a Sole Prop or a DBA) it would be reportable. If I’m getting a loan to buy 5 cows to be fed and raised on my acreage that will be slaughtered and sold that could be viewed as a business concern. It is important that your procedures be created to address gray areas and how you will handle them. The rules did not differentiate between using a TIN or a SSN to define a business. Only speaks to GAR and loans, which they have defined purposes of the proceeds.
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FEMA standards and appraisal rules list an appraisal as being stale after 1 year. Flood FAQs from May 2022 discuss one method of coverage being replacement cost value which I assume is what is listed on the Farm Policy. Rules also indicate that you would need to align the flood insurance requirements with the Flood rules and your bank’s policy.
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You would cancel it as of the date of the flood change and ensure all payments are refunded from that date.
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This would be a legal question and best answered by an Attorney in the State of California. Putting on my BSA/AML compliance hat – I would have to ask why they would do a loan in CA since they do not operate in your state. That would be the “big” red flag IMO.
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Flood Q&A’s state in the “Amount” Question 2. – 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. In calculating the amount of insurance to require, the lender and borrower (either by themselves or in consultation with the flood insurance provider or other appropriate professional) may choose from a variety of approaches or methods to establish the insurable value. They may use an appraisal based on a cost-value (not market-value) approach, a construction-cost calculation, the insurable value used on a hazard insurance policy (recognizing that the insurable value for flood insurance purposes may differ from the coverage provided by the hazard insurance and that adjustments may be necessary), the replacement cost value listed on the flood insurance policy declarations page, or any other reasonable approach, so long as it can be supported.
Flood Q&A’s state in the “Condo/COOP” Question 4 (Which is the closest to your situation)- If there is no RCBAP on the residential condominium building, then the lender must require the individual unit owner to obtain coverage in an amount sufficient to meet the requirements outlined in Q&A Condo and Co-Op 3.
Based off the FAQs you would need to determine which method your FI will follow for Flood coverage and use that approach. I would also suggest this be documented in policy so the same approach is used the next time this would happen.
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Per Reg Z section 1026.36(g) and the SAFE Act testing in examiner testing manuals they state
(ii)The name of the individual loan originator (as the name appears in the NMLSR) with primary responsibility for the origination and, if the NMLSR has provided such person an NMLSR ID, that NMLSR ID.So it would have to be the name as it is tied to the the NLMS number. However, the NLMS system does allow for an “AKA” if that is also part of the MLO’s record I would think you could possibly use the “AKA” on their business card. I would just caution that since it would be regulator “discretion” to take it since their exam manuals state “as the name appears in the NMLSR”
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That would be up to your institution. It sounds as if this is an internal policy you have put in place. Regulation only says you must provide reasonable notice of flood insurance requirements prior to loan closing.
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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
