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If there was a contract beyond the rental agreement indicating the payments were going toward the purchase such as a land contract or a rent to own contract I think RofR would apply. It wouldn’t be considered a residential mortgage transaction and therefore wouldn’t be exempt from RofR. See below:
From the Official Staff Interpretations for 12 CFR 1026.2(a)(24):
5. Acquisition. i. A residential mortgage transaction finances the acquisition of a consumer’s principal dwelling. The term does not include a transaction involving a consumer’s principal dwelling if the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title.ii. Examples of new transactions involving a previously acquired dwelling include the financing of a balloon payment due under a land sale contract and an extension of credit made to a joint owner of property to buy out the other joint owner’s interest. In these instances, disclosures are not required under §1026.18(q) (assumability policies). However, the rescission rules of §§1026.15 and 1026.23 do apply to these new transactions.
iii. In other cases, the disclosure and rescission rules do not apply. For example, where a buyer enters into a written agreement with the creditor holding the seller’s mortgage, allowing the buyer to assume the mortgage, if the buyer had previously purchased the property and agreed with the seller to make the mortgage payments, §1026.20(b) does not apply (assumptions involving residential mortgages).
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 MarketplaceYou can use the ATR rules or any of the QM rules for which you qualify. And you can use a different option for each loan if you choose – you aren’t required to choose the same option for all of your loans.
The options that allow you to make balloon loans are the general ability to repay rules – 1-26.43(c)(2), the temporary balloon QM – 1026.43(e)(6) or the balloon QM – 1026.43(f). Remember, that under the general ability to repay rules that a higher priced covered transaction (HPCT) requires you include the highest payment in the payment schedule (the balloon payment) in the payment calculation which will likely significantly increase the debt-to-income ratio and make it difficult for you to qualify borrowers under the ATR for higher priced covered transactions (HPCT).
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 MarketplaceI believe you are thinking about the High Cost Mortgage requirement under 1026.34(a)(4)(ii). It is linked here: https://www.ecfr.gov/cgi-bin/text-idx?SID=a73fc1358d918790ff49be8da05ce6f6&node=12:8.0.2.8.18.5.1.5&rgn=div8
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 MarketplaceIf you don’t have a security interest in the mobile home then RESPA is not applicable.’
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 MarketplaceYou are correct. The 210-240 notice is intended to give the borrower notice that the rate will be changing and to give them an estimate of what that rate will change to (if you know what that rate will be at the time you make the initial/210-240 notice you will need to put it in, but most creditors won’t know the rate this far in advance so an estimate is sufficient – see the details of 1026.20(d)). This would ideally give them time to shop around for a new loan if they can’t afford the new rate.
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 Marketplace1) You are correct on the timing of the notices. However, you can purchase insurance before day 46, but you must wait until at least the 46th day to charge the borrower. And if they prove they had coverage during the notification period then you would have to absorb the cost of the overlapping forced-placed insurance.
Commentary: Paragraph 37(c)(1)(i).
1. Assessing premium charge or fee. Subject to the requirements of § 1024.37(c)(1)(i) through (iii), if not prohibited by State or other applicable law, a servicer may charge a borrower for force-placed insurance the servicer purchased, retroactive to the first day of any period of time in which the borrower did not have hazard insurance in place.2)You are correct on the renewal notice – you must wait 45 days before you charge the borrower.
3) When a delinquent consumer’s escrow account has insufficient funds to cover payment of the consumer’s hazard insurance premium, generally, you will have to advance the funds through escrow to continue coverage. You can add this cost to the escrow balance or otherwise seek reimbursement from the consumer for the funds you advance.
Examples from the Commentary:
17(k)(5)(ii)(A) when inability exists:
1. Examples of reasonable basis to believe that a policy has been cancelled or not renewed. The following are examples of where a servicer has a reasonable basis to believe that a borrower’s hazard insurance policy has been canceled or not renewed for reasons other than the nonpayment of premium charges:
i. A borrower notifies a servicer that the borrower has cancelled the hazard insurance coverage, and the servicer has not received notification of other hazard insurance coverage.
ii. A servicer receives a notification of cancellation or non-renewal from the borrower’s insurance company before payment is due on the borrower’s hazard insurance.
iii. A servicer does not receive a payment notice by the expiration date of the borrower’s hazard insurance policy.Reg X 1024.17(k):
(B) When inability does not exist. A servicer shall not be considered unable to disburse funds from the borrower’s escrow account because the escrow account contains insufficient funds for paying hazard insurance premium 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 MarketplaceThis is something that isn’t clearly stated in the rule. Until we have further information, we assume it applies to loans with policies expiring after the effective date.
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 Marketplace1026.21(e)(4) Small servicers.
(i) Exemption. A creditor, assignee, or servicer is exempt from the requirements of this section for mortgage loans serviced by a small servicer.
(ii) Small servicer defined. A small servicer is a servicer that either:
(A) Services, together with any affiliates, 5,000 or fewer mortgage loans, for all of which the servicer (or an affiliate) is the creditor or assignee; or
(B) Is a Housing Finance Agency, as defined in 24 CFR 266.5.Since you only service loans that you own or originated (as in the case of the 20 that you originated then sold) and you service, together with any affiliates, fewer than 5,000 mortgages loans you are eligible for the exemption.
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 MarketplaceEffective 1-10-14 you need to include the NMLS # on the credit application, the note/loan contract and the security instrument.
The SAFE Act requires that a registered MLO must provide the NMLS# upon request, before acting as a mortgage loan originator, and through the originator’s initial written communication with a consumer, if any, whether on paper or electronically (that could mean a business card, letter, email, etc.). And Fannie Mae and Freddie Mac have their own requirements for inclusion of the NMLS#.
The 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.
You’re going to be calculating the DTI in accordance with the ATR/QM rules that you choose to comply with. If the resulting DTI is over your policy limit then it would be an exception.
1026.21(e)(4) Small servicers.
(i) Exemption. A creditor, assignee, or servicer is exempt from the requirements of this section for mortgage loans serviced by a small servicer.
(ii) Small servicer defined. A small servicer is a servicer that either:
(A) Services, together with any affiliates, 5,000 or fewer mortgage loans, for all of which the servicer (or an affiliate) is the creditor or assignee; or
(B) Is a Housing Finance Agency, as defined in 24 CFR 266.5.Since you only service loans that you own or originated (as in the case of the 20 that you originated then sold) and you service, together with any affiliates, fewer than 5,000 mortgages loans you are eligible for the exemption.
This is something that isn’t clearly stated in the rule. Until we have further information, we assume it applies to loans with policies expiring after the effective date.
1) You are correct on the timing of the notices. However, you can purchase insurance before day 46, but you must wait until at least the 46th day to charge the borrower. And if they prove they had coverage during the notification period then you would have to absorb the cost of the overlapping forced-placed insurance.
Commentary: Paragraph 37(c)(1)(i).
1. Assessing premium charge or fee. Subject to the requirements of § 1024.37(c)(1)(i) through (iii), if not prohibited by State or other applicable law, a servicer may charge a borrower for force-placed insurance the servicer purchased, retroactive to the first day of any period of time in which the borrower did not have hazard insurance in place.2)You are correct on the renewal notice – you must wait 45 days before you charge the borrower.
3) When a delinquent consumer’s escrow account has insufficient funds to cover payment of the consumer’s hazard insurance premium, generally, you will have to advance the funds through escrow to continue coverage. You can add this cost to the escrow balance or otherwise seek reimbursement from the consumer for the funds you advance.
Examples from the Commentary:
17(k)(5)(ii)(A) when inability exists:
1. Examples of reasonable basis to believe that a policy has been cancelled or not renewed. The following are examples of where a servicer has a reasonable basis to believe that a borrower’s hazard insurance policy has been canceled or not renewed for reasons other than the nonpayment of premium charges:
i. A borrower notifies a servicer that the borrower has cancelled the hazard insurance coverage, and the servicer has not received notification of other hazard insurance coverage.
ii. A servicer receives a notification of cancellation or non-renewal from the borrower’s insurance company before payment is due on the borrower’s hazard insurance.
iii. A servicer does not receive a payment notice by the expiration date of the borrower’s hazard insurance policy.Reg X 1024.17(k):
(B) When inability does not exist. A servicer shall not be considered unable to disburse funds from the borrower’s escrow account because the escrow account contains insufficient funds for paying hazard insurance premium charges.Not all modifications are TDR. Here’s a link to an FDIC training powerpoint I found that might help you determine what you have: http://www.fdic.gov/news/conferences/sf_region/2012-02-28.ppt
