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After looking at this again, I want to clarify a few points:
1) If you have an LO who is an MLO and registered under the SAFE Act you can use that background information. If you have LO who is not an MLO then you’ll need to obtain the criminal background check through local law enforcement or a private provider.2) Reg Z does not specifically mandate fingerprinting. You’ll need to check with local law enforcement or your private background check provider to determine if they need back fingerprints in order to run the national background check – I have since heard that some may be able to provide the criminal background check without fingerprinting.
As you know the waters become muddy when one requirement is referencing another but they are not exactly the same.
The regulation states that job status may be verified orally if you document the information obtained orally. It does not give a bank statement as an example of verification of employment status.
In order to have a federal criminal background check fingerprints are required as they are used to scan the FBI database. The regulation also states that if you are an institution registered with the NMLS you will be obtaining the background checks through the NMLS (which requires fingerprints). And if you are not you will be obtaining them through law enforcement or a commercial servicer – but they will still need to e similar to the NMLS. So, yes, you will need to do fingerprinting.
p. 11378
The Bureau disagrees with some
commenters’ assertions that the
provisions would result in significantly
higher compliance burden compared
with existing requirements. For
example, as further discussed below, a
depository institution will not be
required to obtain multiple criminal
background reports or undertake
multiple reviews of a criminal
background report. Instead, the required
criminal background report is the same
report the institution already obtains
under Regulation G after submission of
the individual’s fingerprints to the
NMLSR (12 CFR 1007.103(d)(1)(ix) and
1007.104(h)).You can do the short year analysis. Keep in mind this will change your computation year.
1024.17(b): Escrow account computation year is a 12-month period that a servicer establishes for the escrow account beginning with the borrower’s initial payment date. The term includes each 12-month period thereafter, unless a servicer chooses to issue a short year statement under the conditions stated in §1024.17(i)(4).
1024.17(i)(4)(i): Effect of short year statement. The short year statement shall end the “escrow account computation year” for the escrow account and establish the beginning date of the new escrow account computation year. The servicer shall deliver the short year statement to the borrower within 60 days from the end of the short year.
Your loans may or may not be marketable if they lose their QM status – it will depend on what the investor requires. But in reality it will be most likely be more difficult to sell loans that are not QMs.
And you may be thinking about the temporary QM – Special Rules option. See page 31 of the CFPB’s ATR/QM Small Entity Compliance Guide linked here: https://files.consumerfinance.gov/f/201310_cfpb_atr-qm-small-entity_compliance-guide.pdf
I agree, I haven’t seen anything that would indicate you have an exception from 120 day rule for this type of situation. There are two reasons that foreclosure could begin sooner:
1) The foreclosure is based on a borrower’s violation of a due-on-sale clause; or
2) The servicer is joining the foreclosure action of a subordinate lienholder. [Note: As amended by 9/13/13 final rule.]Another option is possibly a deed in lieu of foreclosure, but you would need to consult with your attorney on your options and best course of action.
The presumption of compliance and rebuttable presumption of compliance apply only to the QM options.
What I have dealt with in the past did have waiting periods (e.g. 30,60, 90 days) for their overdraft programs and certain other requirements such as recurring deposits as well.
Here’s a link to a similar post where the question states exact language from their contract regarding the look back period. https://mycomplianceresource.com/forums/topic/regulation-z-arm-notices/
Loans made prior to January 10, 2015 with look backs of less than 45 days can continue to send the notice 25 days before. So if you have loan programs with short or no look back period make sure you update those programs in time to be effective 1-10-15.
In my opinion number one would be questionable since the customer would not be consenting electronically. Number two sounds more in line with the requirements. I have heard some banks include a code or information within the initially emailed document that the customer must retrieve and email back to the bank in order to prove they can open and read the document.
Here’s a link to information from the FDIC’s exam manual: https://www.fdic.gov/regulations/compliance/manual/pdf/X-3.1.pdf.Loans with no look back or a look back less than 45 days originated prior to January 10, 2015 are and will remain subject to the 25/120 day timeframe. Loans with look back periods of 45 days or more must use the 60/120 day timeframe beginning January 10, 2014. All ARMs (with the exception of frequently adjusting and ARMs adjusting soon after consummation) loans established after January 10, 2015 (regardless of look back period) are subject to the 60/120 timeframe. So you basically have a year after the effective date to make sure your ARM programs include a sufficient look back period to meet the 60/120 timeframe by January 10, 2015.
1026.43(c)(2)(i) states you must verify current income. I recommend obtaining what information you need to ensure that the income is current. And, yes, bank statements will suffice for verifying income.
It sounds like you have a look back period. You’ll just need to make sure notes originated on or after January 10, 2015 include a look back period that allows you time to send the 60 day notice. Loan prior to January 10, 2015 you can continue to send the 25 day notice if your look back period is not sufficient to send the 60 day notice.
Foreclosure is heavily affected by unique state law so we won’t be doing policy and procedures on that. However in a few weeks we will be developing procedures related to loss mitigation options. Foreclosure will be come somewhat into the picture on that topic.
Jack presented a fair lending risk assessment in July 2012. If you were not a member at that time you may purchase it at a discount. Please email Amy at amy@mycomplianceresource.com or Robin at robin@mycomplianceresource.com or call us at 888-760-5646 and we can help you.
