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If a valuation is developed in connection with the application, then you must provide a copy to the applicant, even if you do not use the valuation or you use it only for a limited purpose. If it there are multiple versions of the same valuation then you send the latest version, but what you are talking about sounds like different valuations so I think a copy of each would have to be sent to the applicant regardless of whether or not it was used.
As for your Loan Evaluation with Photos, if it doesn’t assign a value then IMO it wouldn’t be a valuation. If, on the other hand, it is an internal valuation of the subject property then a copy should be provided to the applicant. I’m just wondering how you can use the Loan Evaluation to determine if the HVE is reasonable if some sort of value isn’t assigned as part of the evaluation. It sounds similar to an appraisal review, is it? The SMEG states that an appraisal review that does not itself state a different estimate from the appraisal would not be a valuation you must provide to the applicant. It depends on what your Loan Evaluation does/contains in regards as to whether a copy should be sent.
Yes, effective January 18, 2014, the ECOA Valuations Rule does not cover second liens and other subordinate loans and loans that are not secured by a dwelling (such as loans secured solely by land).
Yes, see in the ATR rules below that it references the high cost mortgage points and fees test.
1026.43(e)(3): Limits on points and fees for qualified mortgages. (i) A covered transaction is not a qualified mortgage unless the transaction’s total points and fees, as defined in § 1026.32(b)(1), do not exceed…And I haven’t heard anything on the CFPBs list of homeownership counselors. Let’s hope they have it available by the effective date of January 10th.
I am not aware of anything that would prohibit this, but I think it would be prudent to run it by your regulator, if you feel comfortable doing so.
If you qualify for the small servicer exemption the periodic statement requirements won’t apply so you would not be required to send coupon books. If you are using the coupon book exemption (only applies to fixed rate loans), then I would agree that you will need to send a coupon book to each borrower.
This is something I have discussed with Jack previously in regards to the points and fees test. He pointed me to the Bank Holding Company Act, https://www.law.cornell.edu/uscode/text/12/1841.
12 USC 1841
(k) Affiliate.— For purposes of this chapter, the term “affiliate” means any company that controls, is controlled by, or is under common control with another company.
(a)(2) Any company has control over a bank or over any company if—
(A) the company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 per centum or more of any class of voting securities of the bank or company;
(B) the company controls in any manner the election of a majority of the directors or trustees of the bank or companyThe notice is required at least 60 days before the first payment at the adjusted level. In most situations, this should allow time as the payment correlated with the new rate won’t be due until the month following the interest rate change. So, typically, a creditor will have the new rate 45 days before the rate change, but approximately 75 days before the payment at the new rate, which should give the creditor plenty of time to send the rate change notice before the new payment is due.
1026.20(c)(2): Timing and content. Except as otherwise provided in paragraph (c)(2) of this section, the disclosures required by this paragraph (c) shall be provided to consumers at least 60, but no more than 120, days before the first payment at the adjusted level is due. The disclosures shall be provided to consumers at least 25, but no more than 120, days before the first payment at the adjusted level is due for ARMs with uniformly scheduled interest rate adjustments occurring every 60 days or more frequently and for ARMs originated prior to January 10, 2015 in which the loan contract requires the adjusted interest rate and payment to be calculated based on the index figure available as of a date that is less than 45 days prior to the adjustment date. The disclosures shall be provided to consumers as soon as practicable, but not less than 25 days before the first payment at the adjusted level is due, for the first adjustment to an ARM if it occurs within 60 days of consummation and the new interest rate disclosed at consummation pursuant to § 1026.20(d) was an estimate.
This is what the signed application is intended to do. I don’t think there is any harm in it and it might help in some situations; your legal counsel could give you a more informed recommendation of what might help reduce liability. Of course, it wouldn’t release you from verifying information you rely on to determine the applicant’s ability-to-repay.
The Reg B appraisal and valuation delivery rules apply to first liens on a dwelling. However, there are rules for providing an appraisal disclosure and a copy of the appraisal for HPML’s in 1026.35 which would apply to subordinate liens on the consumer’s principal dwelling. https://www.ecfr.gov/cgi-bin/text-idx?SID=7f4eca7c248c25d4dfbb06e5f05f0f71&node=20130213y1.44
I believe this would be considered reasonably reliable. I would try to implement a procedure to obtain these documents from a third party (other than the applicant/borrower) when possible. See page 15 of the CFPB’s small entity compliance guide: https://files.consumerfinance.gov/f/201308_cfpb_atr-qm-implementation-guide_final.pdf .
As for the social security income, IMO you would need the letter to determine whether the benefit is set to expire in three years. See excerpt from Appendix Q below.
Regulation Z, Appendix Q, B-11. Social Security Income. Social Security income must be verified by a Social Security Administration benefit verification letter (sometimes called a “proof of income letter,” “budget letter,” “benefits letter,” or “proof of award letter”). If any benefits expire within the first full three years of the loan, the income source may not be used in qualifying.
Notes:
i. If the Social Security Administration benefit verification letter does not indicate a defined expiration date within three years of loan origination, the creditor shall consider the income effective and likely to continue. Pending or current re-evaluation of medical eligibility for benefit payments is not considered an indication that the benefit payments are not likely to continue.
ii. Some portion of Social Security income may be “grossed up” if deemed nontaxable by the IRS.You may not furnish any adverse information for 60 days after you receive the notice, regardless of the status of the investigation.
It is in the proposed integrated mortgage disclosure rules. You can find the proposal at the CFPB’s website: https://www.consumerfinance.gov/regulations/#proposed. Once you’re in the document search for “integrated closing disclosure”. You should find what you’re looking for under proposed “Section 1026.38”.
