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There hasn’t been any change in the force-place notification. You must send the 45-day notice upon making a determination that the flood insurance coverage is inadequate or has expired, such as upon receipt of the notice of cancellation or expiration from the insurance provider or as a result of an internal flood policy monitoring system. You must notify the borrower that the borrower should obtain flood insurance, at the borrower’s expense, in an amount at least equal to the amount required under § 339.3, for the remaining term of the loan.
You may send one or more additional notices prior to the expiration date as a courtesy to assist the borrower. However, you must still send the mandated 45-day notice following the lapse of the borrower’s policy.
Can you explain the transaction a little more? Is it one transaction or are these two separate loans? If separate, does the down payment assistance loan meet the definition of a purchase under 1026.37?
1.)If a loan has a residence and 4 other buildings (garage, pool house, workshop and lawn mower storage shed), which buildings would be considered valid in the exemption rule as long as they do not have the capability of a residence. (Meaning they do not have a sink, bathroom or kitchen) The workshop is not used for business purpose.
If it is part of a residential but detached (which I’m assuming all of these are) you could use the detached structure exemption as long the structure isn’t used as a residence or for business purposes. They do not necessarily have to have a sink, bathroom or kitchen to be used as a residence – those are general guidelines. You need to make a determination for each structure. (If I were an examiner I would probably question the pool house, workshop and garage more than the storage shed, so make sure your file is well documented as to why they meet the exemption).
2.) There is no limit to exemptions on a loan as long as they fit the criteria? Correct
3.) This does away with the 10% of the homeowner policy covers the detached garage rule? I believe you the NFIPs still allow for allocation of 10% of the policy coverage toward a detached garage. Talk to the insurance agent about that.
4.) Does the residence have to value enough to cover the loan by itself without the detached structure if it is exempt from the flood requirement?
That is a safety and soundness concern and your financial institution will need to make that determination. It completely makes sense for those structures that don’t contribute a lot of value to your collateral. But you could have a residence that has a very large, nice garage that isn’t used for business or residential purposes but add significant value to the property – what position would your FI be in if there was a loss of that structure? We have heard from some of our members that they will always use the exemption if possible, some that will never use it, but most say it will be on a case-by-case basis.– See more at: https://mycomplianceresource.com/forums/topic/exempt-structure-rule/#sthash.WuGLWYNM.dpuf
You will need to determine the value. FEMA says there are two options for these buildings
functional building cost value and demolition/removal cost value. The FEMA Q&A #s 9-10 beginning on p. 35932 gives some guidance on this. https://www.fema.gov/media-library-data/20130726-1742-25045-4927/interagency_q_a.pdf.From the information you’ve given you seem to have it correct with the deposit listed in on the LE for the purchase transaction. If I’ve misunderstood something let me know.
1026.37(H)(1)(iv):(iv) Deposit. (A) In a purchase transaction as defined in paragraph (a)(9)(i) of this section, the amount that is paid to the seller or held in trust or escrow by an attorney or other party under the terms of the agreement for the sale of the property, disclosed as a negative number, labeled “Deposit”;
(B) In all transactions other than purchase transactions as defined in paragraph (a)(9)(i) of this section, the amount of $0, labeled “Deposit”;
Commentary:
37(h)(1)(iv) Deposit.
1. Section 1026.37(h)(1)(iv)(A) requires disclosure of a deposit in a purchase transaction. The deposit to be disclosed under § 1026.37(h)(1)(iv)(A) is any amount that the consumer has agreed to pay to a party identified in the real estate purchase and sale agreement to be held until consummation of the transaction, which is often referred to as an earnest money deposit. In a purchase transaction in which no such deposit is paid in connection with the transaction, § 1026.37(h)(1)(iv)(A) requires the creditor to disclose $0. In any other type of transaction, § 1026.37(h)(1)(iv)(B) requires disclosure of the deposit amount as $0.You would not be able to issue the worksheet after you have issued the LE.
From the preamble to the final rule: The Bureau is deleting the proposed timing requirement that the written estimate be provided before the consumer has indicated an intent to proceed with the transaction. The Bureau believes that this requirement
suggests that a written estimate could be provided even though the Loan Estimate
had been provided. The Bureau believes receiving a written estimate after the Loan Estimate has been provided will confuse consumers and create compliance burdens for industry.There may be more guidance on this later, but as far as I know, there is nothing in the regulation or commentary that specifically addresses this. The regulation does say that you must disclose what was disclosed on the LE. Based on that I would say you should disclose the amounts you disclosed on the LE then, if deemed necessary, factor in $0 for those fee amounts from the loan estimate when you are doing the side calculation to determine tolerance.
Kristin – I agree with your conclusions.
I am basing my answers off of the regulations at 1026.31(l)(i) and its commentary:
1026.31(l):
(l) Comparisons. Under the master heading, “Additional Information About This Loan” required by paragraph (k) of this section, in a separate table under the heading “Comparisons” along with the statement “Use these measures to compare this loan with other loans”:(1) In five years. Using the label “In 5 Years”:
(i) The total principal, interest, mortgage insurance, and loan costs scheduled to be paid through the end of the 60th month after the due date of the first periodic payment, expressed as a dollar amount, along with the statement “Total you will have paid in principal, interest, mortgage insurance, and loan costs”;
If you haven’t seen the press release from the CFPB, it hits the high points. You can find it here: https://www.consumerfinance.gov/newsroom/cfpb-finalizes-rule-to-facilitate-access-to-credit-in-rural-and-underserved-areas/
My husband and I were on our honeymoon in St. Thomas. We got to our hotel, checked-in and headed for our room. Once there, we slid the key card in, opened the door and quickly realized the room was already occupied. As fast, and as quietly, as possible we shut the door and booked it back to the lobby. The best part is we were upgraded to a two-floor suite just for our inconvenience – that was pretty awesome!
If you have a second mortgage loan that does not fall under the exemption of 1026.3(h) do you still need to show all the Estimated Taxes, Insurance & Assessments on page 1 of the LE?
I see nothing in the regulation that says it is not required.
Also, do you need to complete the Prepaids section F on page 2? This is all appearing on the LE for the first mortgage but I see nothing that exempts this for a second mortgage. – See more at: https://mycomplianceresource.com/forums/topic/trid-2nd-mtg-loans/#sthash.LtzeL8FP.dpuf
As for the prepaids, from the language in the regulation it seems these would only be required to be disclosed if they are due before the first perioddic payment.
Look at 1026.37(l)(1)(i) and 1026.38(0)(1) for the calculation (see below).
Paragraph 37(l)(1)(i).
1. Calculation of total payments in five years. The amount disclosed pursuant to § 1026.37(l)(1)(i) is the sum of principal, interest, mortgage insurance, and loan costs scheduled to be paid through the end of the 60th month after the due date of the first periodic payment…Paragraph 38(o)(1) Total of payments.
1. Calculation of total of payments. The total of payments is calculated in the same manner as the “In 5 Years” disclosure pursuant to § 1026.37(l)(1)(i), except that the disclosed amount reflects the total payments through the end of the loan term. For guidance on the amounts included in the total of payments calculation, see comment 37(l)(1)(i)-1.Loan Costs are outlined in 1026.37(f).
I can’t understand how it would apply.
Reg E defines account as (b)(1) “Account” means a demand deposit (checking), savings, or other consumer asset account (other than an occasional or incidental credit balance in a credit plan) held directly or indirectly by a financial institution and established primarily for personal, family, or household purposes.
Perhaps it is due to the commentary below but I still don’t see how that would be triggered by telephone advances from the LOC since credit accounts aren’t covered by Reg E.
Comment 1005.7(a) states:
7(a) Timing of Disclosures
1. Early disclosures. Disclosures given by a financial institution earlier than the regulation requires (for example, when the consumer opens a checking account) need not be repeated when the consumer later enters into an agreement with a third party to initiate preauthorized transfers to or from the consumer’s account, unless the terms and conditions differ from those that the institution previously disclosed. This interpretation also applies to any notice provided about one-time EFTs from a consumer’s account initiated using information from the consumer’s check. On the other hand, if an agreement for EFT services to be provided by an account- holding institution is directly between the consumer and the account-holding institution, disclosures must be given in close proximity to the event requiring disclosure, for example, when the consumer contracts for a new service.
