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The revised loan estimate rules only discuss providing for zero tolerance and 10% tolerance items for resetting tolerance. If it is an unlimited tolerance item you would not need to redisclose the LE since those items can change. Assuming it was originally disclosed (or lack of disclosure) in good faith, the later addition of that fee would not be a issue. If you did not disclose in good faith (you should have known, fee standard for transaction/area, but didn’t disclose or underdisclosed) it would become a zero tolerance item. I think you could provide an informational disclosures to the consumer (19(e)(3)(iv)-4).
Again, was it disclosed (or not disclosed) in good faith (should you have known/did you know)? (See below – I bolded info that might be helpful.)
1026.19(e)(3)(iii)-3. Good faith requirement for property taxes or non-required services chosen by the consumer. Differences between the amounts of estimated charges for property taxes or services not required by the creditor disclosed under § 1026.19(e)(1)(i) and the amounts of such charges paid by or imposed on the consumer do not constitute a lack of good faith, so long as the original estimated charge, or lack of an estimated charge for a particular service, was based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the consumer informs the creditor that the consumer will obtain a type of inspection not required by the creditor, the creditor must include the charge for that item in the disclosures provided under § 1026.19(e)(1)(i), but the actual amount of the inspection fee need not be compared to the original estimate for the inspection fee to perform the good faith analysis required by § 1026.19(e)(3)(iii). The original estimated charge, or lack of an estimated charge for a particular service, complies with § 1026.19(e)(3)(iii) if it is made based on the best information reasonably available to the creditor at the time that the estimate was provided. But, for example, if the subject property is located in a jurisdiction where consumers are customarily represented at closing by their own attorney, even though it is not a requirement, and the creditor fails to include a fee for the consumer’s attorney, or includes an unreasonably low estimate for such fee, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor’s failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii). Similarly, the amount disclosed for property taxes must be based on the best information reasonably available to the creditor at the time the disclosure was provided. For example, if the creditor fails to include a charge for property taxes, or includes an unreasonably low estimate for that charge, on the original estimates provided under § 1026.19(e)(1)(i), then the creditor’s failure to disclose, or unreasonably low estimation, does not comply with § 1026.19(e)(3)(iii) and the charge for property tax would be subject to the good faith determination under § 1026.19(e)(3)(i).
You’re correct there is typically a 30 day waiting period. However, if purchasing flood insurance in connection with making, increasing, extending or renewing a mortgage loan there is not a 30 day waiting period. See this link: https://www.floodsmart.gov/flood-insurance-cost/terms
If you have a contract stating that the builder is responsible for the fee and not the responsbility of the borrower then it would not need to be disclosed on the LE/CD.
If you have a contract stating that the builder is responsible for the fee and not the responsbility of the borrower then it would not need to be disclosed on the LE/CD.
I don’t believe this is specifially addressed in Regulation X or Z. I believe both are referring to escrow related to the collateral that is part of the transaction. What basis would you have to escrow for a property that is not part of the transaction? Is this a customer request?
I think this blog article that Jack put together will answer your questions. It breaks down the requirement for the LE and the CD.
This is one we hadn’t heard before – that the community number would be different because the policy was under the grandfathering rule. Our initial thought was that while the zone/rate is affected (actual zone and rating zone showing on the dec sheet along with notation about it a grandfathered) the community number would not be affected. To confirm, we reached out to FEMA (FEMA Map Service Center (877.336.2627 or msc.fema.gov/portal/search) which stated the only reason the community number would have changed would be due to annexing of the community (e.g. community originally split and then combined or or vice versa), not grandfathering or a map change. They recommed you contact the county’s flood plan manager to determe if any annex had occurred.
I hope this helps.
Thanks for the question! My thought it you would not report any of the income since you did not rely on any of it for your decision as given in the example above: “For example, if an institution, pursuant to lender and investor guidelines, does not rely on an applicant’s commission income because it has been earned for less than 12 months, the institution does not include the applicant’s commission income in the income reported.”
I’ve asked Jack to give his thoughts as well.
The flood reg states:
12 CFR 323(c)(2) Compliance aid for mandatory acceptance. An FDIC-supervised institution may determine that a policy meets the definition of private flood insurance in § 339.2, without further review of the policy, if the following statement is included within the policy or as an endorsement to the policy: “This policy meets the definition of private flood insurance contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation.”From insurance sources I’ve spoken with and from review of policies, it seems the declarations sheet is generally part of the insurance policy -and some policies will state such in their definitions of “Declarations Page/Sheet” or “Policy” so it should be sufficient. The Private Flood Insurance final rule state the following in the preamble which I believe supports that you may be able to rely on the dec sheet in some instances (I bolded info below):
The Agencies acknowledge that under existing force placement requirements, a declarations page is sufficient to evidence a borrower’s purchase of flood insurance. However, a declarations page may be insufficient for a regulated lending institution to make a determination that the institution must accept a private flood insurance policy in satisfaction of the flood insurance purchase requirement if the declarations page does not provide enough information for the institution to determine that the policy meets the statutory definition of “private flood insurance.” In these circumstances, the regulated lending institution should request additional information about the policy to aid it in making its determination.
After I read your question again, I think I might have misread the first time. Is this an electronic application or a paper application?
I’m not sure of the exact circumstances, so it depends. A link is acceptable if you meet the criteria I put in bold below. (And you do not need to comply with ESIGN for this disclosure.)
Comment 1026.19(b)-2(v). Form of electronic disclosures provided on or with electronic applications. Creditors must provide the disclosures required by this section (including the brochure) on or with a blank application that is made available to the consumer in electronic form, such as on a creditor’s Internet Web site. Creditors have flexibility in satisfying this requirement. There are various methods creditors could use to satisfy the requirement. Whatever method is used, a creditor need not confirm that the consumer has read the disclosures. Methods include, but are not limited to, the following examples:
A. The disclosures could automatically appear on the screen when the application appears;
B. The disclosures could be located on the same web page as the application (whether or not they appear on the initial screen), if the application contains a clear and conspicuous reference to the location of the disclosures and indicates that the disclosures contain rate, fee, and other cost information, as applicable;
C. Creditors could provide a link to the electronic disclosures on or with the application as long as consumers cannot bypass the disclosures before submitting the application. The link would take the consumer to the disclosures, but the consumer need not be required to scroll completely through the disclosures; or
D. The disclosures could be located on the same web page as the application without necessarily appearing on the initial screen, immediately preceding the button that the consumer will click to submit the application.
This fact sheet gives examples that should be just what you’re looking for. Since the Reg B doesn’t define business day you’re left to define it. For the purpose of the examples in the fact sheet business day does “not” include Saturdays. Keep in mind, under Regulation Z, for purposes of the deadlines for delivering the initial disclosure on appraisals and also for delivering a copy of the appraisal, a “business day” is defined as when “the creditor’s offices are open to the public for carrying on substantially all of its business functions.” See the TILA Mortgage Loan Appraisal Rule small entity compliance guide.
A CMG member who is keeping the excessive tranfer/withdrawal fee for savings accounts shared with us they are using the language below as a statement message. When creating a statement message, or before using a sample message provided by another banker, make sure if fits your banks process.
“Due to recent changes by the Federal Reserve Board, customers with Savings or Money Market Accounts who exceed six (6) withdrawals per month will no longer be required to switch to a transaction (checking) account.
This change does not affect the current fee structure of your account. Withdrawals over the six (6) per month limit will be assessed their normal excessive fee. See account disclosures for details. If you have any question, please call 1-800-***-****.”
I don’t think it would be required and it could be confusing to send a rate change notice if the rate isn’t changing. 1026.20(c) states:
Rate adjustments with a corresponding change in payment. The creditor, assignee, or servicer of an adjustable-rate mortgage shall provide consumers with disclosures, as described in this paragraph (c), in connection with the adjustment of interest rates pursuant to the loan contract that results in a corresponding adjustment to the payment. To the extent that other provisions of this subpart C govern the disclosures required by this paragraph (c), those provisions apply to assignees and servicers as well as to creditors. The disclosures required by this paragraph (c) also shall be provided for an interest rate adjustment resulting from the conversion of an adjustable-rate mortgage to a fixed-rate transaction, if that interest rate adjustment results in a corresponding payment change.
