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tballard,
I apologize for not seeing your post sooner.I’m not sure what the memo you received is talking about, but there haven’t been any changes to the prohibition on charging fees (other than credit report fee) prior to providing the early disclosures. Reg Z will be re-arranged a little on August 1, 2015 due to the integrated disclosures. I’ve linked here to BankersOnline’s copy of Reg Z showing the changing that will be effective in August 1, 2015. As you see, the prohibition on charging for appraisal before early disclosures are provided is still there and is it also in Reg X.
Reg Z, 1026.19(a)(1)(ii) and (e)(2): https://www.bankersonline.com/regs/12-1026/12-1026-019.html#19e
Reg X, 1024.7(a)(4): https://www.bankersonline.com/regs/12-1024/12-1024-007.htmlIt seems the simplest thing is to charge the fee only when it his charged by the investor. That eliminates the “why are you charging/retaining rate lock extension fees on some loans but not all” question. Where did you get your rate lock agreement (forms vendor, investor, in-house doc, etc.) and can you make changes to that wording “will” to “may”? As with any change, I recommend ensuring your forms vendor or investor allows for the change and if it is an in-house form having it reviewed by counsel.
Based on my understanding of your question, it just sounds like your construction loan actually exceeds 12 months and therefore doesn’t meet the exemption. If you applied the ATR requirements to the construction phase as well then you should be fine. Going forward ensure your construction phase is 12 months or less (not necessarily 12 monthly payments or less) so it will be exempt from complying with the ATR/QM requirements. See commentary below.
From the commentary:
2. Construction phase of a construction-to-permanent loan. Under § 1026.43(a)(3)(iii), a construction phase of 12 months or less of a construction-to-permanent loan is exempt from § 1026.43(c) through (f). A construction-to-permanent loan is a potentially multiple-advance loan to finance the construction, rehabilitation, or improvement of a dwelling that may be permanently financed by the same creditor. For such a loan, the construction phase and the permanent phase may be treated as separate transactions for the purpose of compliance with § 1026.43(c) through (f), and the construction phase of the loan is exempt from § 1026.43(c) through (f), provided the initial term is 12 months or less. See § 1026.17(c)(6)(ii), allowing similar treatment for disclosures. Where the construction phase of a construction-to-permanent loan is renewable for a period of one year or less, the term of that construction phase does not include any additional period of time that could result from a renewal provision. For example, if the construction phase of a construction-to-permanent loan has an initial term of 12 months but is renewable for another 12-month term before permanent financing begins, the construction phase is exempt from § 1026.43(c) through (f) because the initial term is 12 months. Any renewal of one year or less also qualifies for the exemption. The permanent phase of the loan is treated as a separate transaction and is not exempt under § 1026.43(a)(3)(iii). It may be a qualified mortgage if it satisfies the appropriate requirements.Only the consumer (borrower and any co-borrowers) information should be used in determining their ability to repay. If you want a co-signer you can consider that persons dti separately from the borrower’s dti.
I think it is prudent of your bank to verify the co-signers dti and employment to ensure they are a viable co-signer. But keep in mind the borrower(s) needs to be able to meet the ATR requirements on his/her/their own.
I apologize we missed your question. I’m sure you found your answer, but I believe you are correct – IMO the acquisition appraisal would not satisfy the HPML “flip” appraisal requirement. There isn’t a requirement in Reg B to perform an appraisal, but there are delivery requirements for appraisals and valuations.
I can’t speak as to what others are doing, but see page 39 bullet #5 – it might provide some insight.: https://files.consumerfinance.gov/f/201401_cfpb_atr-qm_small-entity-compliance-guide.pdf.
You might get more feedback if you post this in the CMG forum.
I don’t know of any regulatory requirements that state what you must report.Look at your contract with the credit bureaus to see if it provides for any requirements. And like you mentioned, if your agreement with FM or others have requirements then you should follow those. Consistency is important, so you should report all loans of the type that you report and you should report both borrower and co-borrower information to avoid unequal treatment.
Here’s a similar question that you might find useful: https://mycomplianceresource.com/forums/topic/fair-credit-or-udaap/
SAFE Act training requirements for state-licensed MLOs was effective August 1, 2009. The Reg Z loan originator training requirement as effective January 1, 2014. As a Compliance Masters Group member, you can find detailed information on the training requirement in the “Required Training for Loan Originators” training manual presented to the Compliance Masters Group on April 3rd and 4th of this year.
I believe you should wait until the loan is 120 days delinquent to begin foreclosure. Also see this bulletin from the CFPB: https://files.consumerfinance.gov/f/201310_cfpb_mortgage-servicing_bulletin.pdf.
From the information you’ve given, this form appears to be connected to the specific loan. Because of this, in a refinance situation where the original note is paid off and a new loan is made, I believe you would need to have the form signed again in order for it to be applicable to the new transaction.
You need to look to 1024.30 for the coverage requirements of 1024.41(f) (i.e. the 120 day foreclosure rule), but you are correct. HELOCs are not covered, so the 120 foreclosure rule would not apply to HELOCs.
Business accounts are not covered by Reg E and should not receive the Reg E disclosures. By providing the Reg E disclosure to businesses you are informing them of rights that do not apply to them by regulation. If you inform them of these rights via disclosure/contract then it could be deemed deceptive if an issue occurs and you do not honor your agreement or disclosure provided. Something else to consider is your periodic statement disclosure language – if your bank utilizes the Reg E short form error resolution notice on periodic statements, the language either should not be included on business account statements or there should be a clear disclosure that it applies only to consumer accounts. As for MC’s zero liability, generally speaking it applies to transactions processed through MC. It will not apply to PIN based transactions.
Here’s a link to MC’s zero liability page: https://www.mastercard.us/zero-liability.html.Based on the information you have given, I believe you need to report what the customer marks, even if it seems like it doesn’t truly represent the person. It could be an accident or there could be a reason that it is marked the way it is. Either way, you should report what the person marked. On the other hand if a bank employee completed the section based on visual observation and they marked it incorrectly by mistake, in that situation I think you should correct the information to reflect what was actually observed.
