[rcooper]

aschliebe I agree with your calculation, but I’m not sure I’m fully understanding mdunker’s listed costs. Here’s a hypothetical example just so we’re clear:

Owner’s title insurance premium: $600
Lender’s title insurance premium: $500
Simultaneous issuance premium: $ 350

$600 (owner’s title premium) + $350 (simultaneous issuance premium) = $950
$950 – $500 (lender’s title premium) = $450 disclosed for owner’s title

Commentary to 1026.37(g)(4)-2:Simultaneous title insurance premium rate in purchase transactions. The premium for an owner’s title insurance policy for which a special rate may be available based on the simultaneous issuance of a lender’s and an owner’s policy is calculated and disclosed pursuant to § 1026.37(g)(4) as follows:

i. The title insurance premium for a lender’s title policy is based on the full premium rate, consistent with § 1026.37(f)(2) or (f)(3).

ii. The owner’s title insurance premium is calculated by taking the full owner’s title insurance premium, adding the simultaneous issuance premium for the lender’s coverage, and then deducting the full premium for lender’s coverage.

There is also a discussion of this calculation method in the preamble to the final rule beginning on page 853: https://files.consumerfinance.gov/f/201311_cfpb_final-rule-preamble_integrated-mortgage-disclosures.pdf.

[rcooper]

Could this larger discount be based on a family or personal relationship where the circumstances make it clear that it is that relationship rather than the business of the bank that is the motivating factors? If so, seems it would be acceptable.

https://www.fdic.gov/regulations/laws/rules/5000-2300.html

https://www.occ.gov/publications/publications-by-type/comptrollers-handbook/_pdf/m-ia.pdf, p. 41-42.

[rcooper]

I am assuming so, but does this loan meet the definition of a simultaneous loan? If so, there are specific rules under the general repayment ability rules and the QM rules in 1026.43 explaining how you should consider a simultaneous loan in your underwriting.

In my opinion, even if it isn’t a simultaneous loan, you would still need to at least consider it. The general ATR rules 1026.43(c)(2)(vi) says that you must consider the consumer’s current debt obligations, alimony and child support.

Comment 1026.43(c)(2)(vi)-1 says: …creditors should consider whether debt obligations in forbearance or deferral at the time of underwriting are likely to affect the consumer’s ability to repay based on the payment for which the consumer will be liable upon expiration of the forbearance or deferral period and other relevant facts and circumstances, such as when the forbearance or deferral period will expire.

Under the QM rules, Appendix Q and the section on projected obligations states that if a loan is scheduled to begin to or come due within 12 months it should be included in the monthly obligations. 1026.43(e)(5)(b) – QM Rules refers to compliance with Appendix Q but also with 1026.43(c)(2)(vi). And the commentary to section says it should be considered if it will affect the consumer’s ability to repay when the deferral period ends.

[rcooper]

There aren’t any changes to the ARM program disclosures.

[rcooper]

I agree that once you determine flood insurance is required you have a changed circumstance and would follow the rules for a revised loan estimates under 1026.19(e)(3)(iv). I don’t believe determining a loan is in a flood zone (and requires flood insurance) after issuing the LE would be considered not acting in good faith.

[rcooper]

I’m not familiar with Indiana law. I’ll forward to Jack who may very possibly know the answer. If he does, you should hear from him within a couple of days.

Thanks for your patients.

[rcooper]

Prior to June 15, 1976 they were called mobile homes. As of June 15, 1976 they were required to meet HUD standards and are called manufactured homes (they have red certification labels). Here is a HUD FAQ on mobile/manufactured and modular homes:
https://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/mhs/faq

Here is a link to one of Jack’s Blog posts from January 2015 addressing this same question: https://mycomplianceresource.com/what-is-a-manufactured-home/

[rcooper]

aslauter,
That doesn’t seem to make sense to me either. The general lender credits should be included in “J” and carry over to the Total Closing Costs in the Calculating Cash to Close table. Here’s some information on general lender credits from Reg Z that might be helpful. Let us know what your thoughts are after reading this. Thanks.

1026.38(i) states the Calculating cash to close/Total closing costs/subheading “Final,” should state the amount disclosed under paragraph (h)(1) of this section.

1026.38(h)(1) is the sum of the costs disclosed as borrower-paid pursuant to paragraph (h)(2) and the amount disclosed in paragraph (h)(3) (General Lender Credits – See Commentary below) disclosed under the subheading “Total Closing Costs (Borrower-Paid).”

Comment 38(h)(3)-1 states that when the consumer receives a generalized credit from the creditor for closing costs, the amount of the credit must be disclosed under § 1026.38(h)(3). However, if such credit is attributable to a specific loan cost or other cost listed in the Closing Cost Details tables, pursuant to § 1026.38(f) or (g), that amount should be reflected in the Paid by Others column in the Closing Cost Details tables under § 1026.38(f) or (g).

[rcooper]

From the commentary 1026.19(b)(2)(viii)(B)-1: The disclosure form must state the initial and maximum interest rates and payments for a $10,000 loan originated at an initial interest rate (index value plus margin adjusted by the amount of any discount or premium) in effect as of an identified month and year for the loan program disclosure.

The loan program disclosure must be revised once a year as soon as reasonably possible after the new index value becomes available. You should also revise the loan program disclosure if there are changes to the loan program.

[rcooper]

I agree – this exclusion only applies to loans secured by residential property.

[rcooper]

Compliance amnesia – it happens to all of us:)

TILA does apply to construction-only loans and you do need to provide TIL disclosures. See Reg Z, 1026.17(c)(6) and Appendix D.

You are probably thinking of the RESPA disclosures that aren’t required for construction-only transactions. The new integrated disclosure rules, effective August 1, 2015, will apply to construction-only loans.

[rcooper]

You are correct and I understand how this will cause a headache for the bank. This is probably a conversation you should have with your LOS to determine what your options are and what their capabilities will be.

Also, if will you post your question under our LOS forum and include the name of your vendor, during our next CMG sessions we’ll ask the group if they have any information they can provide.

[rcooper]

I’m assuming we’re talking about the new Loan Estimate so my answers are based on those portions of Regulation Z. Since you are requiring the borrower to select an attorney from a list you aren’t allowing them to shop so it would be a 0% tolerance charge(1026.19(e)(1)(vi). I don’t believe it would be an origination charge since it isn’t being paid to you as the creditor/loan originator (1026.37(f)(1)) so it would be included in the services you cannot shop for. “Lender’s Attorney Fee” would be included under “Services You Cannot Shop For” (1026.37(f)(2)). If an attorney’s fee is for conducting closing or any component of title insurance services then it should include the word “title” in the description. The commentary also gives a list of what constitutes “title insurance services”: https://www.bankersonline.com/regs/12-1026/12-1026-037.html#37f.

[rcooper]

If I understand you correctly, I believe you are saying the loan was consummated on 4/6 (meaning closing disclosures and note delivered/signed) but the rescission notice wasn’t delivered until the following day. If this is the case and you allowed the consumer three business to rescind before providing the funds then you should be fine. (If the circumstances are different let us know.)

Reg Z 1026.23 (Rescission Closed-End Rules):

The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.

[rcooper]

In my opinion, the CFPB must have known that there would be smaller shareholders with less than 25% stake in some third party service providers that would not meet the definition of affiliate but might still receive dividends or other compensation based on their ownership yet they didn’t include them in them in the fees that must be included in the 0% tolerance. Because of that I believe you would still be subject to the 10% tolerance for title insurance since you are passing the fee along to a unaffiliated third party as it is defined in this in 1026.19(e).

[Author]

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