Forum Replies Created
-
Posts
-
If you’re providing disclosures through the mobile app then e-sign would come into play. And your Reg E disclosure may need to be revised and re-disclosed. The article below offers some insight on these topics. https://www.aba.com/Products/bankcompliance/Documents/SeptOct12CoverStory.pdf
The requirement to ensure compliance with the prohibition on steering is to provide options for each type of transaction for which the applicant expressed an interest (types of transactions include: fixed rate, adjustable rate and reverse mortgage loans). Also take a look at the commentary below:
Official Interpretations to 12 CFR 1026.36(e)(1)(2)(ii):
…A loan originator who is an employee of the creditor on a transaction may not obtain compensation that is based on the transaction’s terms or conditions pursuant to §1026.36(d)(1), and compliance with that provision by such a loan originator also satisfies the requirements of §1026.36(e)(1) for that transaction with the creditor. However, if a creditor’s employee acts as a broker by forwarding a consumer’s application to a creditor other than the loan originator’s employer, such as when the employer does not offer any loan products for which the consumer would qualify, the loan originator is not an employee of the creditor in that transaction and is subject to §1026.36(e)(1) if the originator is compensated for arranging the loan with the other creditor.If you believe the applicant will not qualify for secondary market (make sure you retain what your belief is founded on) and the only options are in-house loans (and you comply with 1026.36(d)(1) which also shows compliance with 1026.36(e) according to the commentary above) then I agree with your interpretation that the form wouldn’t technically be required to show compliance. However, in my opinion, procedures are often more sound and easier to understand when you apply them across the board rather than leaving it to the discretion of each individual employee.
To answer your last question, “if the borrower qualifies for secondary market loans, should you include an in-house loan on the options sheet?”, it depends. If you offer loans in-house that qualify for the type of transaction for which the applicant expressed an interest and it satisfies one of the option requirements (lowest rate, lowest rate with no junk, and the loan with the lowest total dollar amount of discount points, origination points or origination) you should. You may include an in-house option even if it doesn’t meet one of these requirements, but remember if this results in more than three options, remember to highlight loan options that meet the option requirements. And also remember that presenting the consumer more than four options will not likely help the consumer make a decision.
There isn’t anything in the SAFE Act that suggests there would be any restrictions with the MLO changing jobs and registering with a new employer, even if loans are in progress with the current employer. I recommend, if there are loans in progress, the NMLS ID number of the MLO taking over/closing the loans be used where required on any remaining/closing documents. Either way, if there is a new MLO or if there is a loan originator who meets the de minimis exception in the SAFE Act closing the loan, I would recommend a nice letter to the applicant(s) informing them of their new MLO and include his/her NMLS #, if applicable. This would show a good faith attempt to inform the borrower(s) whom they are dealing with, which goes to the intent of the law (and be sure to keep a copy in the loan file).
Below is an excerpt from
-
Regulation Z Official Staff Interpretations, Paragraph 36(g)(1)(ii).
This is effective 1-10-14. I think it follows the same line of thought, that there could be two different loan originators during the course of the loan, disclosing the applicable NMLS # at the time.
1. Multiple individual loan originators. If more than one individual meets the definition of a loan originator for a transaction, the name and NMLSR ID of the individual loan originator with primary responsibility for the transaction at the time the loan document is issued must be included. A loan originator organization that establishes and follows a reasonable, written policy for determining which individual loan originator has primary responsibility for the transaction at the time the document is issued complies with the requirement. If the individual loan originator with primary responsibility for a transaction at the time a document is issued is not the same individual loan originator who had primary responsibility for the transaction at the time that a previously issued document was issued, the previously issued document is not required to be reissued merely to change a loan originator name and NMLSR ID.We are unaware of any federal law that mandates the order of posting payments. As long as the payment order is properly disclosed in your contract, we don’t see a UDAAP concern.
The exemptions are listed below. There is nothing that indicates FHA loans would be exempt from these requirements.
1026.35(c)(2): Exemptions. The requirements in paragraphs (c)(3) through (6) of this section do not apply to the following types of transactions:
(i) A qualified mortgage as defined in 12 CFR 1026.43(e).
(ii) A transaction secured by a new manufactured home.
(iii) A transaction secured by a mobile home, boat, or trailer.
(iv) A transaction to finance the initial construction of a dwelling.
(v) A loan with maturity of 12 months or less, if the purpose of the loan is a “bridge” loan connected with the acquisition of a dwelling intended to become the consumer’s principal dwelling.
(vi) A reverse-mortgage transaction subject to 12 CFR 1026.33(a).
and
1026.35(c)(4)(vii): Exemptions from the additional appraisal requirement. The additional appraisal required under paragraph (c)(4)(i) of this section shall not apply to extensions of credit that finance a consumer’s acquisition of property:
(A) From a local, State or Federal government agency;
(B) From a person who acquired title to the property through foreclosure, deed-in-lieu of foreclosure, or other similar judicial or non-judicial procedure as a result of the person’s exercise of rights as the holder of a defaulted mortgage loan;
(C) From a non-profit entity as part of a local, State, or Federal government program under which the non-profit entity is permitted to acquire title to single-family properties for resale from a seller who acquired title to the property through the process of foreclosure, deed-in- lieu of foreclosure, or other similar judicial or non-judicial procedure;
(D) From a person who acquired title to the property by inheritance or pursuant to a court order of dissolution of marriage, civil union, or domestic partnership, or of partition of joint or marital assets to which the seller was a party;
(E) From an employer or relocation agency in connection with the relocation of an employee;
(F) From a servicemember, as defined in 50 U.S.C. Appx. 511(1), who received a deployment or permanent change of station order after the servicemember purchased the property;
(G) Located in an area designated by the President as a federal disaster area, if and for as long as the Federal financial institutions regulatory agencies, as defined in 12 U.S.C. 3350(6), waive the requirements in title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, as amended (12 U.S.C. 3331 et seq.), and any implementing regulations in that area; or
(H) Located in a rural county, as defined in 12 CFR 1026.35(b)(2)(iv)(A).1. If it is a loan covered by section 1026.43 then you must make a reasonable and good faith determination at or before consummation that the consumer has the ability to repay the loan according to its terms. You may choose to comply with the general ATR requirement or, in order to gain the safe harbor/rebuttable presumption of compliance, one of the QM requirements. Either way you will need to comply with this section if you have a covered loan.
2. No, there is no exemption for more than 25+ acres that I am aware of, but there is an exemption for vacant land. See a coverage summary from the CFPB’s Small Entity Compliance Guide below:
The Bureau’s ATR/QM rule applies to almost all closed-end consumer credit transactions secured by a dwelling including any real property attached to the dwelling. This means loans made to consumers and secured by residential structures that contain one to four units, including condominiums and co-ops. Unlike some other mortgage rules, the ATR/QM rule is not limited to first liens or to loans on primary residences. However, some specific categories of loans are excluded from the rule. Specifically, the rule does not apply to:
•Open-end credit plans (home equity lines of credit, or HELOCs)
•Time-share plans
•Reverse mortgages
•Temporary or bridge loans with terms of 12 months or less (with possible renewal)
•A construction phase of 12 months or less (with possible renewal) of a construction-to-permanent loan
•Consumer credit transactions secured by vacant land
3. Originated loans would not include denied applications.The GMI should be collected at application, so if it is a telephone application and the applicant(s) chose not to provide the information then that is what you indicate. Visual observation at closing is outside of the application process so you would not be required to complete the GMI at closing.
Just to clarify cjernigan1211’s question, if an application is taken over the phone and the applicant has indicated that he/she chooses not to provide the GMI then you should notate that. If however, as cjernigan1211 stated above, the applicant comes in to complete the application process you should notate the GMI based on visual observation at that point as it is still part of the application process. Here’s a link to the 2013 A Guide to HMDA Reporting Getting it Right : https://www.ffiec.gov/hmda/pdf/2013guide.pdf
See pgs.B-1 and D-10.I don’t see a problem with registering your loan officers through the NMLS even if they don’t typically act as an MLO. Many banks did this as a precautionary measure with employees they weren’t quite sure about. It’s been a while since I’ve looked at the NMLS registration process, but I believe there is still a background check requirement, but that’s handled through the registry as part of the registration process. And, as you already know, they’ll have to renew their registration annually.
We don’t see an exemption either. There may be guidance later on that clears this up, but for now we believe the safest interpretation is to apply the rules to these as well.
Take a look at 1026.43(e)(5) for the rules you need to follow as a lender making loans under the small creditor portfolio option. You will not need to use Appendix Q, but you will need to consider DTI as outlined in 1026.43(e)(5)(i)(B). Also, you will not have to abide by the 43% DTI cap if you are using the small creditor portfolio QM option. Here’s a link to 1026.43 (the commentary is also a good place for additional information):
https://www.ecfr.gov/cgi-bin/text-idx?SID=d7bde6371e95b688a396f863c3ddd6f3&node=20130612y1.42Official Staff Interpretations to 12 CFR 1026.43(c)(4): 3. Tax-return transcript. Under § 1026.43(c)(4), a creditor may verify a consumer’s income using an Internal Revenue Service (IRS) tax-return transcript, which summarizes the information in a consumer’s filed tax return, another record that provides reasonably reliable evidence of the consumer’s income, or both. A creditor may obtain a copy of a tax-return transcript or a filed tax return directly from the consumer or from a service provider. A creditor need not obtain the copy directly from the IRS or other taxing authority. See comment 43(c)(3)-
IMO, in order for a tax return provided by the consumer to be deemed reasonably reliable you would need evidence that the tax return provided was filed.Since this post I have come across information (preamble from HPML final rules) that indicates that early disclosures are now being considered material disclosures and should be given to non-borrowers who have the right to cancel. Going forward, I recommend giving the early TIL, as well as the final TIL, to all individuals with the right to cancel.
