Forum Replies Created
-
Posts
-
First, read the commentary linked below, I think it will help you determine which of your employees can be excluded from the LO requirements. Official Staff Interpretations, Paragraph 36(a) #4 linked here: https://www.bankersonline.com/regs/12-1026/12-1026-036.html
Second, you will not need to run new credit reports or background checks if your screening process complied with applicable statutory or regulatory background standard (e.g. SAFE Act – I’ve heard some bankers reference Section 19 of the FDIA so if your bank complies with that you may have that option).
From the Official Staff Interpretations, Paragraph 34(f)(3)(i)(2):
2. Retroactive obtaining of information not required. Section 1026.36(f)(3)(i) does not require the loan originator organization to obtain the covered information for an individual whom the loan originator organization hired as a loan originator before January 1, 2014, and screened under applicable statutory or regulatory background standards in effect at the time of hire. However, if the individual subsequently ceases to be employed as a loan originator by that loan originator organization, and later resumes employment as a loan originator by that loan originator organization (or any other loan originator organization), the loan originator organization is subject to the requirements of § 1026.36(f)(3)(i). [amended by 9/13/13 final rule.]
Finally, I believe 1026.36(f)(3)(ii), is referring to individuals who are not licensed in accordance with 1008.103, regardless of the date they were hired.If there is any type of agreement which indicates that rent went towards the purchase of the property then I would apply RofR.
Here’s a link to the Official Staff Commentary at ecfr.gov:
https://www.ecfr.gov/cgi-bin/text-idx?SID=f68e5376a89c216d53f0503aa7c3aabd&node=12:8.0.2.8.18&rgn=div5#12:8.0.2.8.18.7.1.11.63The small creditor QM refers to c(7) under the general ATR rules. There are special rules there for balloon, interest only and neg. am loan but it doesn’t mention deferred payments in general or student loans. Appendix Q does address deferred/student loans, but Appendix Q doesn’t technically apply to the small creditor QM.
Jack may offer some insight on this.
You are not required to begin the notice process 45 days before renewal. I believe the point Jack was making was that unlike force-placing flood insurance, where you are required to wait to start the force-place process until the policy expires which often creates a 15 day gap of no insurance after the grace period end, you are not required to wait until the policy expires to begin the notification process.
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).
§22.7 Forced placement of flood insurance.
If a bank, or a servicer acting on behalf of the bank, determines at any time during the term of a designated loan that the building or mobile home and any personal property securing the designated loan is not covered by flood insurance or is covered by flood insurance in an amount less than the amount required under §22.3, then the bank or its servicer shall notify the borrower that the borrower should obtain flood insurance, at the borrower’s expense, in an amount at least equal to the amount required under §22.3, for the remaining term of the loan. If the borrower fails to obtain flood insurance within 45 days after notification, then the bank or its servicer shall purchase insurance on the borrower’s behalf. The bank or its servicer may charge the borrower for the cost of premiums and fees incurred in purchasing the insurance.These q&a’s may help answer your question: https://www.ffiec.gov/hmda/faqreg.htm#loan Take a look at number 2 under “loan purpose”.
You may place a copy of the list in the file, but it isn’t required. If you have the copy in the file I would document on the copy when it was delivered. If you decide not to keep a copy you’ll need detailed procedures of how and when the list should be pulled; you should also add either a memo to the file or document it on your loan checklist that it was delivered and when.
HPML has its own triggers and HPML escrow has some exemptions. The HPCT threshold does not affect the HPML triggers. If your loan is 1.5% or more above the APOR on a first lien transaction subject to the HPML rules then you are required to escrow unless you meet one of the HPML escrow exemptions. The HPCT status indicates whether or not you will attain a safe harbor or rebuttable presumption of compliance for your QM. If your loan is NOT a HPCT and you meet the QM requirements you have a safe harbor; if it is a HPCT and you meet the QM requirements then you have a rebuttable presumption of compliance. As a small creditor under (e)(5), (e)(6), or (f) of 1026.43 you are given more room for a safe harbor – the definition of the HPCT gives small creditors up to 3.5% or more above the APOR before it becomes a HPCT. Again, HPCT won’t affect your escrow requirements under the HPML rules.
If it is a HELOC they are not included. If it is a covered loan and it closes in your bank’s name then it should count towards the 500 since it was originated by your bank. Look at 1026.35(b)(2)(iii)(B)&(c).
1026.43(e)(5) Qualified mortgage defined—small creditor portfolio loans. (i) Notwithstanding paragraph (e)(2) of this section, a qualified mortgage is a covered transaction:
(A) That satisfies the requirements of paragraph (e)(2) of this section other than the requirements of paragraph (e)(2)(vi) and without regard to the standards in appendix Q to this part;
I agree with your interpretation. If you have a QM then you are exempt from the HPML appraisal requirements including the additional requirements for a flip.
I agree with your concerns. We think you should either do a refi for the full amount owed ($110,000) or do two new notes – one a regular $100,000 refi and then a second $10,000 refi with no interest accrual until some date in the future. Either of these would make for a cleaner and more properly disclosed transaction.
