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Response from kowsley:
There is no requirement for the fee to be broken down if the seller agrees to provide $3,000 as a general credit toward the borrower’s closing costs; however, the contract should be checked to determine if that was requested in the contract. If the seller agreed to pay specific fees to make up the $3,000 then yes the seller should be able to see a breakdown of the costs.This q&a might also be helpful:
Your identification of the borrower would still be good assuming you complied with the requirements of 232.5(b)(3).
The regulations says you may make a determination using the safe harbor methods (DOD database or consumer report) and it is deemed to be conclusive so long as it is done timely and you maintains a record of the information. Timely is considered to be when the consumer initiates the transaction, applies for the account, or 30 days prior to either of these events. If you as the creditor develop an offer of credit for the consumer (prescreen offer) that determination is good if the consumer responds to your offer within 60 days. If they respond after 60 days then the original determination isn’t good and you would need to make another determination.
But keep in mind that the MLA does not apply to residential mortgage loans, which is credit secured by an interest in a dwelling (1-4 residential structure), including a transaction to finance the purchase or initial construction of the dwelling, any refinance transaction, home equity loan or line of credit, or reverse mortgage.
Below are laws/regulations with training requirements. Keep in mind that examiners will expect to see training on other high risk areas (fair lending, UDAAP, etc.) not on this list as well as areas where your financial institution might need specific training due to audit findings, new products, etc.
BSA/AML:
12 CFR 21.21(c)(4);
12 CFR 208.63(c)(4);
12 CFR 326.8(c)(4);
12 CFR 748.2(c)(4)Regulation CC: 12 CFR 229.19(f)
Bank Protection Act/Physical Security: 12 CFR 21.3(a)(3);
12 CFR 208.61(c)(1)(iii);
12 CFR 326.3(a)(3)Information Security: Interagency Guidelines Establishing Information Security Standards III(c)(2)
FCRA/ID Theft Red Flags: 12 CFR 222.90(e)(3);
12 CFR 41.90(e)(3);
12 CFR 334.90(e)(3);
12 CFR 717.90(e)(3)Reg Z/Loan Originator: 12 CFR 1026.36(f)(3)(iii)
I assume you do not use the Risk Based Pricing notices and are asking about the exception notices (see 12 CFR 1022.72-74). If a credit score is not included you would use model form H-5 for transactions both secured by, and not secured by, a dwelling. Section 609(g) of the FCRA only requires the Notice to the Home Loan Applicant if a credit score is used
609(g)(1)(D): Any person who makes or arranges loans and who uses a consumer credit score, as defined in subsection (f), in connection with an application initiated or sought by a consumer for a closed end loan or the establishment of an open end loan for a consumer purpose that is secured by 1 to 4 units of residential real property (hereafter in this subsection referred to as the “lender”) shall provide the following to the consumer as soon as reasonably practicable: …
(D) Notice to home loan applicants. A copy of the following notice, which shall include the name, address, and telephone number of each consumer reporting agency providing a credit score that was used…Under this exemption, if the property is located in an area that meets definition of rural then the second appraisal would not be required.
1026.7(a)(6) states you must disclose the amount of any finance charge debited or added to the account during the billing cycle, using the term finance charge.
You look to 1026.4 to determine if a fee is a finance charge. I think Comment 1026.4(c)(7)-3 best addresses the fees you mentioned.
Charges assessed during the loan term. Real estate or residential mortgage transaction charges excluded under §1026.4(c)(7) are those charges imposed solely in connection with the initial decision to grant credit. This would include, for example, a fee to search for tax liens on the property or to determine if flood insurance is required. The exclusion does not apply to fees for services to be performed periodically during the loan term, regardless of when the fee is collected. For example, a fee for one or more determinations during the loan term of the current tax-lien status or flood-insurance requirements is a finance charge, regardless of whether the fee is imposed at closing, or when the service is performed. If a creditor is uncertain about what portion of a fee to be paid at consummation or loan closing is related to the initial decision to grant credit, the entire fee may be treated as a finance charge.
Let me know if you still have questions.
Unfortunately there isn’t an exception for this type of transaction, so you would need the second appraisal unless one of the exemptions in 1026.35(c)(2) or (c)(4)(vii) apply.
The statute doesn’t distinguish between business or personal account nor does it mention using the SSN vs EIN to determine coverge. It does say the account holder must be a natural person and the name of the account holder must appear in the financial institution’s records as the direct or beneficial owner. If you have a sole proprietor account that meets these criteria the account would be covered under the rule even if the sole proprietor has an EIN. Again, the account holder would need to meet the criteria above and you would need to do an account review to determine if there are protected funds/protected amount.
We recommend that you disclose the first rate adjustment at 18 months and disclose subsequent rate adjustments at the regular 12 month frequency.
The requirement for the ULI, including the LEI portion, is in 1003.4(a)(1) of the revised rules effective 1-1-18.
The requirement for the LEI is it be issued by:
(1) A utility endorsed by the LEI Regulatory Oversight Committee; or
(2) A utility endorsed or otherwise governed by the Global LEI Foundation (GLEIF) (or any successor of the GLEIF) after the GLEIF assumes operational governance of the global LEI system.Here is a link to GLEIF page with LEI issuing organizations: https://www.gleif.org/en/about-lei/how-to-get-an-lei-find-lei-issuing-organizations. One of the organizations on that list is Business Entity Data B.V. (GMEI Utility).
We are hosting a HMDA webinar that will cover this on April 10. It is HMDA Implementing the New Rules Part 2 – Completing the Revised LAR and is accessible by clicking here.. This webinar will cover in detail the information that must be included on the revised LAR, including the LEI as part of the ULI, so you might want to check it out.
Below is information on the GMEI resource (that will be included in our manual) for obtaining an LEI:
The GMEI utility creates and assigns globally accepted Legal Entity Identifiers (LEIs) in a standard format (ISO 17442). The system validates the accuracy of the associated reference data and stores all the information in a public database free for all to use and redistribute.
The GMEI utility is available at https://www.gmeiutility.org/index.jsp.
We agree with you timob1973. If a third party is doing the flood determination then it should be disclosed in Section B “Services You Cannot Shop For”, assuming they can’t shop. (see commentary below).
If the flood determination is being done by the lender and the fee is being paid to the lender and lender retains the fee (which doesn’t happen much anymore) then it could be include as part of the origination charge.Comment 1026.37(f)(2) Services you cannot shop for.
1. Services disclosed. Items included under the subheading “Services You Cannot Shop For” pursuant to § 1026.37(f)(2) are for those services that the creditor requires in connection with the transaction that would be provided by persons other than the creditor or mortgage broker and for which the creditor does not permit the consumer to shop in accordance with § 1026.19(e)(1)(vi).2. Examples of charges. Examples of the services and amounts to be disclosed pursuant to § 1026.37(f)(2) might include an appraisal fee, appraisal management company fee, credit report fee, flood determination fee, government funding fee, homeowner’s association certification fee, lender’s attorney fee, tax status research fee, third-party subordination fee, title – closing protection letter fee, title – lender’s title insurance policy, and an upfront mortgage insurance fee, provided that the fee is charged at consummation and is not a prepayment of future premiums over a specific future time period or a payment into an escrow account.
Yes, you can use a modification to lower the interest rate. If the modification doesn’t meet the definition of a refinance under Regulation Z (1026.20(a)) the ATR/QM rules would not be applicable. If the modification is a refinance the ATR/QM rules would be applicable.
You will need to consider restrictions and requirements under Fair Credit Reporting Act and Telephone Consumer Protection Act.
Reg Z, 1026.35(b)(1) says:
Except as provided in paragraph (b)(2) of this section, a creditor may not extend a higher-priced mortgage loan secured by a first lien on a consumer’s principal dwelling unless an escrow account is established before consummation for payment of property taxes and premiums for mortgage-related insurance required by the creditor, such as insurance against loss of or damage to property, or against liability arising out of the ownership or use of the property, or insurance protecting the creditor against the consumer’s default or other credit loss.If you aren’t requiring hazard insurance because the borrower is covered under the mutual aid society then you would not be required to escrow for hazard insurance premiums. (Note: This would not extend to premiums for flood insurance required under federal law.) You would be required to escrow for property taxes.
