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The flood regs address the intial force-placement. See Q&A #10 from this interagency q&a on renewal of a force placed policy.
Also, the MPPP has rules related to renewal of MPPP policies – see page #11. https://www.fema.gov/media-library-data/1478271984247-21328c353d6c693452112933906eb219/MPPP_Guidelines_Requirements_2017FY.PDF. I think for a renewal of a force-placed policy you can use the same protocol outlined for the MPPP.
I can’t think of anything either. I think this would be a proactive conversation to have with your regulator – may gain some info plus it shows you’re concerned about getting everything right as you grow.
You would need to provide the material disclosures to anyone who has the right to rescind in accordance with the required timeframes (e.g. deliver CD three business days prior to consummation).
1026.23(a)(3)(i) The consumer may exercise the right to rescind until midnight of the third business day following consummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer’s interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.
1026.17(d) Multiple creditors; multiple consumers. If a transaction involves more than one creditor, only one set of disclosures shall be given and the creditors shall agree among themselves which creditor must comply with the requirements that this part imposes on any or all of them. If there is more than one consumer, the disclosures may be made to any consumer who is primarily liable on the obligation. If the transaction is rescindable under §1026.23, however, the disclosures shall be made to each consumer who has the right to rescind.
I’m not aware of any guidance specific related to determining ATR during the pandemic. I think for this situation you’d rely on the projected income rules in in II-E of Appendix Q.
I’ll send this over to Jack to see if he has any additional information.
I assume the agent has looked into an NFIP policy (and maybe private policies too) and this is the result of the property value being deemed below the NFIP deductible? Is that accurate? If so, it would not be insurable because the owner would be purchasing something that would never be of benefit them. If the value of the property is not below the NFIP deductible it seems demolition value would be one option to consider in determining the insurable value. You want to ensure adequate coverage but not more coverage than the customer will ever receive the benefit of.
Look at Q&A #9 on p. 8: https://www.fema.gov/media-library-data/20130726-1742-25045-5644/interagency_q_as.pdf. The proposed q&a #9 from 2009 specifically referenced demolition as a method to determine value. The finalized q&A linked here from 2011 doesn’t specifically mention it; rather, they leave it open to various methods and do not exclude demolition as an option.
I’m not aware of any exception to the 90 days. FRB Consumer Affairs Letter: https://www.federalreserve.gov/supervisionreg/caletters/caltr1804.htm. See paragraph #2 regarding state law,”[t]he law does not affect any state or local law that provides longer time periods or other additional protections for tenants.”
I always find the regulators’ exam procedures helpful. Here are the PTAF procedures from the FDIC: https://www.fdic.gov/regulations/compliance/manual/5/v-16.1.pdf.
See below. I bolded the info applicable to your quesiton.
1026.17(d) “Multiple creditors; multiple consumers. If a transaction involves more than one creditor, only one set of disclosures shall be given and the creditors shall agree among themselves which creditor must comply with the requirements that this part imposes on any or all of them. If there is more than one consumer, the disclosures may be made to any consumer who is primarily liable on the obligation. If the transaction is rescindable under §1026.23, however, the disclosures shall be made to each consumer who has the right to rescind.”
Thanks for the details.
19(f)(1)(iii)-2. Other forms of delivery. Creditors that use electronic mail or a courier other than the United States Postal Service also may follow the approach for disclosures provided by mail described in comment 19(f)(1)(iii)-1. For example, if a creditor sends a disclosure required under § 1026.19(f) via email on Monday, pursuant to § 1026.19(f)(1)(iii) the consumer is considered to have received the disclosure on Thursday, three business days later. The creditor may, alternatively, rely on evidence that the consumer received the emailed disclosures earlier after delivery. See comment 19(e)(1)(iv)-2 for an example in which the creditor emails disclosures and receives an acknowledgment from the consumer on the same day. Creditors using electronic delivery methods, such as email, must also comply with § 1026.38(t)(3)(iii). For example, if a creditor delivers the disclosures required by § 1026.19(f)(1)(i) to a consumer via email, but the creditor did not obtain the consumer’s consent to receive disclosures via email prior to delivering the disclosures, then the creditor does not comply with § 1026.38(t)(3)(iii), and the creditor does not comply with § 1026.19(f)(1)(i), assuming the disclosures were not provided in a different manner in accordance with the timing requirements of § 1026.19(f)(1)(ii). (emphasis added)
You are not requied to get acknowledgement of receipt of the email just like you aren’t required to get acknowledgement of receipt of snail mail. “Section 1026.19(f)(1)(iii) provides that if any disclosures required under § 1026.19(f)(1)(i) are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail.” Getting acknowledgement of the email will allow you deem the disclosure received earlier; if you don’t get acknowledgement receipt is deemed to be 3 business days after the email is sent. Assuming you have complied with esign you should not need to send the disclosures via mail. I hope that helps.
Can you explain the situation a little futher? I don’t think I have enough information to provide a response. Thanks.
Commentary 1005.17(b)-4 states:
What is meant by a ‘reasonable opportunity’ to affirmatively consent or opt in?
Comment 205.17(b)-4 External Site of the Official Staff Commentary addresses the question of reasonable opportunity to provide affirmative consent. It states that a financial institution provides a consumer with a reasonable opportunity to provide affirmative consent when, among other things, it provides reasonable methods by which the consumer may affirmatively consent, including:
By mail. The institution provides a form that the consumer can fill out and mail to affirmatively consent to the service.
By telephone. The institution provides a readily available telephone line that consumers may call to provide affirmative consent.
By electronic means. The institution provides an electronic means for the consumer to affirmatively consent. For example, the institution could provide a form that can be accessed and processed on its website, where the consumer may click on a check box to indicate consent and confirm that choice by clicking on a button that affirms the consumer’s consent.
In person. The institution provides a form that the consumer can complete and present at a branch or office to affirmatively consent to the service.
Are these loans for a family member to purchase the homestead?
I don’t know of any specific guidance. I’ll ask Jack to weigh in with info he might have. Off the top of head, I think creating a checklist to include legal documents to ensure the collateral is enforceable, determine any disclosures that might be necessary, look at the viability of the loan, consider any potential compliance issues (BSA, privacy, FCRA are a few that come to mind that you might need to deal with and there are probably more). There does seem to potentially be a lot of risk here on various levels and taking these without any due diligence only increases the risk. I’d work with an attorney to determine the bank has what it needs to be able to rely on the collateral.
I think you’d need the floor, but it has been a while since I’ve looked closely at ARM disclosures. I’ll ask Jack to weigh in.
The FRB has updated its Reg D FAQs to address Reg CC applicablity to savings accounts: https://www.federalreserve.gov/supervisionreg/savings-deposits-frequently-asked-questions.htm. See #13.
13. How did the recent amendments to Reg D impact Reg CC?
On April 24, 2020, the Board of Governors issued an interim final rule amending its Regulation D to delete the six per month limit on convenient transfers from “savings deposits.” Among other things, the interim final rule amended the definition of “transaction account” in 12 CFR 204.2(e) such that the definition now includes accounts described in 204.2(d)(2) (savings deposits).Regulation CC provides that an “account” subject to Regulation CC includes accounts described in 12 CFR 204.2(e) (transaction accounts) but excludes accounts described in 12 CFR 204.2(d)(2) (savings deposits). Because Regulation CC continues to exclude accounts described in 12 CFR 204.2(d)(2) from the Reg CC “account” definition, the recent amendments to Regulation D did not result in savings deposits or accounts described in 12 CFR 204.2(d)(2) now being covered by Regulation CC.
Under 1026.19(b)(2)(iii) you’re required to give “an explanation of how the interest rate and payment will be determined, including an explanation of how the index is adjusted, such as by the addition of a margin.”
also:
(vii) Any rules relating to changes in the index, interest rate, payment amount, and outstanding loan balance including, for example, an explanation of interest rate or payment limitations, negative amortization, and interest rate carryover.Official Interpretation
Paragraph 19(b)(2)(vii)
1. Rate and payment caps. The creditor must disclose limits on changes (increases or decreases) in the interest rate or payment.Does that help?
Chris,
I’m inclined to think it would be covered for Reg Z purposes:1026.3(a)-10 says:
10. Trusts. Credit extended for consumer purposes to certain trusts is considered to be credit extended to a natural person rather than credit extended to an organization. Specifically:i. Trusts for tax or estate planning purposes. In some instances, a creditor may extend credit for consumer purposes to a trust that a consumer has created for tax or estate planning purposes (or both). Consumers sometimes place their assets in trust, with themselves or themselves and their families or other prospective heirs as beneficiaries, to obtain certain tax benefits and to facilitate the future administration of their estates. During their lifetimes, however, such consumers may continue to use the assets and/or income of such trusts as their property. A creditor extending credit to finance the acquisition of, for example, a consumer’s dwelling that is held in such a trust, or to refinance existing debt secured by such a dwelling, may prepare the note, security instrument, and similar loan documents for execution by a trustee, rather than the beneficiaries of the trust. Regardless of the capacity or capacities in which the loan documents are executed, assuming the transaction is primarily for personal, family, or household purposes, the transaction is subject to the regulation because in substance (if not form) consumer credit is being extended.
It does not seem as though it would fit the exemption of business, commercial, agricultural, or organizational credit and does seem it would, in substance, be consumer credit. If question still remains, it is safer to disclose when there is uncertainty. Reg Z 1026.3(a) states:
1. Primary purposes. A creditor must determine in each case if the transaction is primarily for an exempt purpose. If some question exists as to the primary purpose for a credit extension, the creditor is, of course, free to make the disclosures, and the fact that disclosures are made under such circumstances is not controlling on the question of whether the transaction was exempt. (See comment 3(a)–2, however, with respect to credit cards.)
