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Would it be better to update this verbiage “This letter is for information purposes only and is not an advertisement to extend customer credit as defined by Section 12 CFR 1026.2 Regulation Z. Program rates, terms and conditions are subject to change at any time” to say “This advertisement is for information purposes only and is not an offer to extend customer credit as defined by Section 12 CFR 1026.2 Regulation Z. Program rates, terms and conditions are subject to change at any time”.
We are interested in this topic as well. We have already had some commercial loans that we have agreed to change the payment to interest only (and escrow if applicable) for a period of time. Our attorney has a modification that explains the modification is due to COVID-19 and we will have him prepare the modification for us. Today we had our first call asking about skipping/modifying the payment on a 1st mortgage primary residence. I have researched looking for any regulation that talks about additional disclosures for a modification and have only been able to find information in 1026.20(a) for refinancings. Reading this I don’t think we would need additional disclosures if all we are doing is temporarily modifying the payment. 1026.20(a)Changes in the terms of an existing obligation, such as the deferral of individual installments, will not constitute a refinancing unless accomplished by the cancellation of that obligation and the substitution of a new obligation.
Interested to hear other thoughts as well.Thank you Robin. We have internal auditors coming in May so I will get their opinion and update this post too.
Thanks Robin. That was our thought … as a follow up question. Do the property taxes fall into a tolerance category? If so, which category? We can not find anything in the regulation and we want to correctly inform our officers and processors.
Shea930 — We had the same issue and our first TRID application happened to be a construction loan. We did show the inspection fees on the LE and CD because that is the only way to get the fee in the APR. On the CD it shows in the cash to close but we didn’t collect the funds for the inspection. We had the borrower write a check for the cash to close minus the inspection fees. That may not be correct but the other banks we reached out to didn’t collect the inspection fees the way we do so that was our only option. We have since decided to collect a flat fee at closing for inspections. And we base the fee on a tiered loan amount (i.e. 0 – 100,000 loan amount inspection fee of $300.00 and 100,001 – 500,000 loan amount inspection fee of 500.00 etc…) We have in house appraisers so we won’t have to hold the money in a GL account that will be debited later to pay for the inspection.
Hope this helps.Thank you Robin. We’ll look at the wording on the lock agreement form I believe it is something we can update ourselves.
Since only some of the mortgage investors we use charge the lock extension fee we do not want to have any fair credit issues by having our loan officers charging the fee when we are not charged by the mortgage investor. Even though the borrower signs a rate lock agreement stating “all relocks will be subject to a minimum relock fee of .250%”.
Sorry this is so long… We are probably making this way too hard but we are trying to decide if the bank needs different software to “prove” the borrower was able to open an attachment when we email the Loan Estimate, revised Loan Estimate or the Closing Disclosure.
We read 1026.19(e)(4)(ii) but we also read this in the Sept. 2014 Small Entity Guide (page 48-49) which is where we got the 7 business days:
Are there any restrictions on how many
days before consummation a revised
Loan Estimate may be provided?
(§ 1026.19(e)(4))Yes.
•The creditor may not provide a revised Loan Estimate on or after the date it provides
the Closing Disclosure.
•The creditor must ensure that the consumer receives the revised Loan Estimate no later
than four business days prior to consummation. If the creditor is mailing the revised
Loan Estimate and relying upon the 3 business day mailbox rule, the creditor would need
to place in the mail the Loan Estimate no later than seven business days before
consummation of the transaction to allow 3 business days for receipt. (§ 1026.19(e)4 ;
Comment 19(e)(4)(i)-2)So if we do not want to wait the 7 business days and want to show evidence that the borrower received the email delivery of the revised loan estimate earlier. What would be our evidence?
Example of Electronic Delivery from the official interpretation of 1026.19(e)(1)(iv) says:
Electronic delivery. The three-business-day period provided in § 1026.19(e)(1)(iv) applies to methods of electronic delivery, such as email. For example, if a creditor sends the disclosures required under § 1026.19(e) via email on Monday, pursuant to § 1026.19(e)(1)(iv) the consumer is considered to have received the disclosures on Thursday, three business days later. The creditor may, alternatively, rely on evidence that the consumer received the emailed disclosures earlier. For example, if the creditor emails the disclosures at 1 p.m. on Tuesday, the consumer emails the creditor with an acknowledgement of receipt of the disclosures at 5 p.m. on the same day, the creditor could demonstrate that the disclosures were received on the same day.So does the acknowledgement of receipt mean the email was opened or the attachment was opened?
Yes, do we need to disclose all the HELOC fees on the HUD or Disbursement and then show as a credit to “reimburse” the borrower for the special closing cost program.
We are probably making this harder than it needs to be.If I understand correctly we need to set up a disclosure for each tier with the costs associated with each tier unless we do the combined disclosure.
Another question about the fees. How do we disclose the fees on the disbursement or HUD (even though a HUD is not required we still have one prepared if paying off another HELOC so the attorney controls the funds)? We will still have 3rd party fees that we have to pay such as attorney fee, recording fees and flood cert fees. And we will have our appraisal and processing fees that we normally charge that comes to the bank. Do we need to show all of these fees as an actual charge and then as a credit to zero out the borrower’s costs?
We would treat the loan as an investment property because it would not be our borrower’s primary residence but their son’s so ATR does not apply.
Thank you for your responses. We currently do not round down on LTV or DTI but we had a officer ask about rounding down on DTI so then the discussion began…..
My understanding is that you must give the borrower anything that is used in connection with an application. From the January 2014 Small Entity Guide page 12 – 13 the last paragraph says:
Keep in mind that if a valuation is developed in connection with the application, then you must provide a copy to the applicant, even if you do not use the valuation or you use it only for a limited purpose.
