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There is not a required letter for not accepting a private flood policy. Your loan staff needs to be able to have conversations about the requirements with their customers. Each time your bank makes a determination on a private flood policy, you should document your files of the status (i.e. does it meet the definition of private flood insurance which requires you to accept the policy or does it not meet the definition of private flood insurance at which point you may decide to accept it under the discretionary rule if it meets the criteria outlined in the regulation).
Although not required, a letter would provide nice customer service and would also serve as documentation for your file. As for what to include, the essential item would be to explain that this is a designated loan for which flood insurance is required (outline requirement) and state that a private policy may be acceptable if it meets the definition of “private flood insurance” (may include the definition) as outlined in the flood regulations (insert citation) issued by (insert bank’s regulator); however, the policy presented does not qualify as private flood insurance under (include citation) and as a result, your bank will not accept the policy…
Let us know if you have any other questions.
I apologize we overlooked your question. Waiting until your annual analysis should be sufficient to deal with the surplus. See 1024.17(f)(2).
I think generally, if the customer is using an on-us check to purchase the cashiers check they will make the check payable to the bank (this is what I’ve seen most) or the customer themselves.
From what you have described it sounds like it may a residential mortgage transaction, which would be exempt. However, you know the details of the transaction and if you are uncertain if it applies, especially in uncommon circumstances such as this, then you can always extend the right to rescind to the consumer.
If it is closed-end consumer credit (primarily for personal, family, or household purposes) secured by real property (including commercial property) it would be covered by TRID.
It sounds like you are already looking to the Regulation Z advertising rules, including the marketing rules related to college students in 1026.57, and the marketing/opt-out rules related to Reg P and FCRA. You will also need to consider UDAAP and CAN-SPAM. UDAAP affects everything you do and CAN-SPAM relates to email advertisements. You can find information about it on the FTC’s website at: https://www.ftc.gov/tips-advice/business-center/guidance/can-spam-act-compliance-guide-business and https://www.ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/can-spam-rule
If you have specific questions once you’ve reviewed these requirements please let us know.
You would provide the credit score information on the AAN if it impacted your credit decision. If the applicant’s credit score was excellent then the credit score probably didn’t impact the credit decision. The purpose is to give the customer information they need to correct issues/make themselves a better candidate for credit in the future. From Model form C-1:
This section should be completed if the credit decision was based in whole or in part on information that has been obtained from an outside source.
__Our credit decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agency. The reporting agency played no part in our decision and is unable to supply specific reasons why we have denied credit to you. You also have a right to a free copy of your report from the reporting agency, if you request it no later than 60 days after you receive this notice. In addition, if you find that any information contained in the report you receive is inaccurate or incomplete, you have the right to dispute the matter with the reporting agency.
What you describes sounds like it would be a covered loan based on the following:
1. General. Section 1003.3(c)(10) provides a special rule for reporting a closed-end mortgage loan or an open-end line of credit that is or will be made primarily for a business or commercial purpose. If an institution determines that a closed-end mortgage loan or an open-end line of credit primarily is for a business or commercial purpose, then the loan or line of credit is a covered loan only if it is a home improvement loan under § 1003.2(i), a home purchase loan under § 1003.2(j), or a refinancing under § 1003.2(p) and no other exclusion applies. Section 1003.3(c)(10) does not categorically exclude all business- or commercial-purpose loans and lines of credit from coverage.
2(j) Home Purchase Loan
1. Multiple properties. A home purchase loan includes a closed-end mortgage loan or an open-end line of credit secured by one dwelling and used to purchase another dwelling. For example, if a person obtains a home-equity loan or a reverse mortgage secured by dwelling A to purchase dwelling B, the home-equity loan or the reverse mortgage is a home purchase loan under § 1003.2(j).Let us know if you have other questions. Thanks!
See the CFPB’s webinar q&as: https://files.consumerfinance.gov/f/documents/201707_cfpb_Outlook-Live_Index-of-TRID-Questions-Addressed-During-Webinars.pdf, see page 3, question 2:
Does the creditor have to disclose an itemization of amount financed with the LE? Answered on October 1, 2014, General Questions. (Listen to the entire question and answer and the CFPB addresses this for TRID transactions in general.)Please let us know if you have any additional questions.
Thanks!Under Regulation Z it seems as though the transaction you describe would not be rescindable as the consumer does not have an ownership interest (see below). However, under TILA ownership interest does not come into play (see below). I think most people in the industry comply with the regulation, but there is a slight difference in the language between the two and in certain cases, such as this one, the law would require rescission when the regulation does not. If you have doubts or concern give the right of rescission.
1025.15(a) Consumer’s right to rescind. (1)(i) Except as provided in paragraph (a)(1)(ii) of this section, in a credit plan in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind: each credit extension made under the plan; the plan when the plan is opened; a security interest when added or increased to secure an existing plan; and the increase when a credit limit on the plan is increased.
15 USC 1635 (a) Disclosure of obligor’s right to rescind
Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying the creditor, in accordance with regulations of the Bureau, of his intention to do so.Great questions.
1) You are correct that the sample dec sheet for the private flood policy does not include the flood zone. However, there is a supplemental schedule attached to that particular policy’s dec sheet (not shown in the manual) that shows the property information and applicable flood zone. Many private policies will show the flood zone on the first page of the dec sheet. You will want to make sure the flood zone is listed.
2) You can certainly decline to accept a private flood policy if the insurer is not licensed, admitted, approved, etc. to engage in the business of insurance in the applicable state. There is no requirement that you accept a private policy until July 1, 2019 and after that time a licensed or approved insurer is a requirement of a private policy both for the mandatory acceptance criteria and the discretionary acceptance criteria.
See page 24 and 29 of the manual for the criteria related to the license or approval by state insurance regulators.
Let us know if you have any other questions.
The tenant protection provisions apply in the case of any foreclosure on a “federally related mortgage loan” or on any dwelling or residential real property. They provide that “any immediate successor in interest” in such a foreclosed property, including a bank that takes title to a house upon foreclosure, will assume the interest subject to the rights of any bona fide tenant and will need to comply with certain notice requirements.
It does not sound like what you’re describing (I’m assuming you have a borrower that would be purchasing a foreclosed property) would be covered as your borrower would not be the immediate successor – that would have been the foreclosing bank. You should check with legal counsel regarding your specific legal requirements.
1026.2(a)(6): Business day means a day on which the creditor’s offices are open to the public for carrying on substantially all of its business functions.
Comment 1026.2(a)(6) Business Day
1. Business function test. Activities that indicate that the creditor is open for substantially all of its business functions include the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries. Activities that indicate that the creditor is not open for substantially all of its business functions include a retailer’s merely accepting credit cards for purchases or a bank’s having its customer-service windows open only for limited purposes such as deposits and withdrawals, bill paying, and related services.It sounds like you don’t have staff on hand to do these tasks (e.g. make loan disbursements, open accounts, etc.) for real estate transactions, only consumer (non-real estate) and, as a result, to me it sounds as though you are not open for substantially all of your business functions.
You could always contact your examiners since they’ll be reviewing your processes and get their opinion (since that is what it ultimately comes down to on something like this). Of course, you know they won’t give you anything in writing, but you would be able to document your conversation and their opinion.
You might want to check out the upcoming webinar Eric will be doing for us on “Real Estate Appraisal Program Updates and Surviving the Safety and Soundness Exam”.
You can find more info and register here: https://mycomplianceresource.com/event-registration/?ee=231.
I am not aware of any specific guidance related to bi-weekly mortgage payments. You would need to look to the requirements in 1026.43.
1026.43(c)(5) Payment calculation. (i) General rule. Except as provided in paragraph (c)(5)(ii) of this section, a creditor must make the consideration required under paragraph (c)(2)(iii) of this section using:
(A) The fully indexed rate or any introductory interest rate, whichever is greater; and
(B) Monthly, fully amortizing payments that are substantially equal.
Comment 1026.43(c)(5)(i)-3. Monthly, fully amortizing payments. Section 1026.43(c)(5)(i) does not prescribe the terms or loan features that a creditor may choose to offer or extend to a consumer, but establishes the calculation method a creditor must use to determine the consumer’s repayment ability for a covered transaction. For example, the terms of the loan agreement may require that the consumer repay the loan in quarterly or bi-weekly scheduled payments, but for purposes of the repayment ability determination, the creditor must convert these scheduled payments to monthly payments in accordance with § 1026.43(c)(5)(i)(B). Similarly, the loan agreement may not require the consumer to make fully amortizing payments, but for purposes of the repayment ability determination under § 1026.43(c)(5)(i), the creditor must convert any non-amortizing payments to fully amortizing payments.
Small Creditor QM:
1026.43(e((5)B) For which the creditor considers at or before consummation the consumer’s monthly debt-to-income ratio or residual income and verifies the debt obligations and income used to determine that ratio in accordance with paragraph (c)(7) of this section, except that the calculation of the payment on the covered transaction for purposes of determining the consumer’s total monthly debt obligations in paragraph (c)(7)(i)(A) shall be determined in accordance with paragraph (e)(2)(iv) of this section instead of paragraph (c)(5) of this section;1026.43(e)(2)(iv) For which the creditor underwrites the loan, taking into account the monthly payment for mortgage-related obligations, using:
(A) The maximum interest rate that may apply during the first five years after the date on which the first regular periodic payment will be due; and
(B) Periodic payments of principal and interest that will repay either:
(1) The outstanding principal balance over the remaining term of the loan as of the date the interest rate adjusts to the maximum interest rate set forth in paragraph (e)(2)(iv)(A) of this section, assuming the consumer will have made all required payments as due prior to that date; or
(2) The loan amount over the loan term;
and
