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There is no exception given from the 120 timeframe for defaults resulting from non-payment of taxes and insurance.
1024.41: (f) Prohibition on foreclosure referral. (1) Pre-foreclosure review period. A servicer shall not make the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process unless:
(i) A borrower’s mortgage loan obligation is more than 120 days delinquent;
(ii) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
(iii) The servicer is joining the foreclosure action of a subordinate lienholder.You are only required to give the Reg B valuation/appraisal notice on loans secured by a first lien on a dwelling. There are HPML appraisal rules that also require a disclosure – this could include loans secured by a junior lien as well as first liens. If you have a loan that is covered by both the Reg B valuation rule and the HPML appraisal rule you can satisfy both disclosure requirements by providing the Reg B appraisal notice.
Thanks for your comment/suggestion on the procedures. We’ll certainly take a look at them and notify you and all Compliance Master Group members if we make changes. In the meantime, you may customize the procedures to fit your bank and include more information as you see fit. It is certainly reasonable to include adverse reporting requirements under 1024.35(i); if you do include this information you may also want to include the information under 1024.35(g).
In regard to your second question, you are correct unless one of the requirements in 1024.35(g) are met which includes: 1) duplicative notice of error; 2) overboard notice error; or 3) untimely notice of error. Also, read beginning on page 205-206 of the preamble linked below. It explains the CFPB’s reasoning behind the adverse information timing requirement.
https://files.consumerfinance.gov/f/201301_cfpb_final-rule_servicing-respa-preamble.pdf
1. I don’t see an exemption for older loans so my interpretation is that it would apply to all High Cost Mortgage loans on your books.
2. I’ve never heard of a requirement to track re-disclosures. Make sure your file is well documented.
Yes, you are now determining ability to repay in compliance with the 1026.43 requirements rather than the 1026.35(e) requirements since they have expired.
If a loan is to finance the initial construction of a dwelling it is exempt from the High Cost Mortgage requirements. Otherwise, unless it meets one of the other exemptions in 1026.32(a)(2)(listed below), it is not exempt.
(2) Exemptions. This section does not apply to the following:
(i) A reverse mortgage transaction subject to § 1026.33;
(ii) A transaction to finance the initial construction of a dwelling;
(iii) A transaction originated by a Housing Finance Agency, where the Housing Finance Agency is the creditor for the transaction; or
(iv) A transaction originated pursuant to the United States Department of Agriculture’s Rural Development Section 502 Direct Loan Program.
There haven’t been changes to the finance charge yet. Here’s the link to the CFPB’s homeownership counselor tool: https://www.consumerfinance.gov/find-a-housing-counselor/
I found this RESPA roundup from 2010 that addresses VOEs: https://www.hud.gov/offices/hsg/rmra/res/roundupdecember.pdf
I agree there are steering concerns. In order to negate those you would need to present the applicant with loans options for each type of transaction (fixed rate, variable/adjustable rate, or reverse mortgage) in which they expressed an interest.
You can find what needs to be presented as part of the loan options in 1026.36(e)(3).
There are certain hardship modification/refinance programs offered by the federal government and some offered by specific banks that include the provisions mentioned in your question. I am not aware of any specific requirement that applies to all banks engaging in hardship modifications/refinances.
New RESPA rules related to loss mitigations include an appeal option, but those rules apply to RESPA-related mortgage loans secured by a borrower’s principal dwelling.
Jack’s Compliance Resource offers many products including policy and procedure updates, Director/Senior Manager Updates, Training Manuals, Flowcharts, Checklists and more. To see our Reg Z products click here:
Reg Z MarketplaceThe regulation doesn’t specify what is required as part of the criminal background check. You can obtain these through law enforcement or a commercial company. If you obtain through a commercial company just ensure you do due diligence as you would on any third party service provider.
Jack’s Compliance Resource offers many products including policy and procedure updates, Director/Senior Manager Updates, Training Manuals, Flowcharts, Checklists and more. To see our Reg Z products click here:
Reg Z MarketplaceIn order to meet the QM requirements, you would use the highest rate possible in the first five years after the first payment is due, so if the non-discounted rate is a possibility (meaning the discounted rate is conditional and can revert to the non-discounted rate) you would use the non-discounted rate.
Response by jholzknecht:
The ability to repay rules do not specifically address preferred rate loans. Robin’s reply provides a safe course of action for General Rule QMs. If you utilize one of the other ability-to-repay options the response may be different.Jack’s Compliance Resource offers many products including policy and procedure updates, Director/Senior Manager Updates, Training Manuals, Flowcharts, Checklists and more. To see our Reg Z products click here:
Reg Z MarketplaceFrom your information, it seems Bank A is acting as a mortgage broker for loans that Bank B is closing/creditor.
Jack’s Compliance Resource offers many products including policy and procedure updates, Director/Senior Manager Updates, Training Manuals, Flowcharts, Checklists and more. To access Jack’s Compliance Resource products visit our marketplace by clicking here:
Jack’s Compliance Resource MarketplaceForeclosure is a state law process. If under the law of your state the Demand Letter is the first notice, then it cannot be sent until the consumer is 120 days past due.
If the borrower makes a legal payment (in U.S. Dollars and meets any other requirement you may impose) the bank must accept the payment and credit the payment as of the date of receipt, unless other payment conditions have been established.
It is hard to image this scenario becoming common. Apparently the consumer has the ability to make a monthly payment, but chooses to remain delinquent thereby destroying his or her credit history and paying continuing late charges.
Jack’s Compliance Resource offers many products including policy and procedure updates, Director/Senior Manager Updates, Training Manuals, Flowcharts, Checklists and more. To see our Reg X products click here:
Reg X Marketplace
