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As long as you don’t charge the customer for the appraisal until after they have received the early disclosures and indicated their intent to proceed then you should be able to charge for the appraisal. I’m not sure this process is beneficial to the bank – if the applicant doesn’t qualify or the applicant chooses not to go through with the loan, then the bank is stuck with the appraisal fee.
This link should take you to Appendix Q of Regulation z: https://www.ecfr.gov/cgi-bin/text-idx?SID=e28939d213b4e6cc71cde5510e672f66&node=20130130y1.10.
What section of Regulation O are you looking at regarding “maintenance” of a loan – this will help me understand your question better? Without specifically knowing what you’re looking at I would look to how extension of credit is defined in 12 CFR 215.3. Specifically it says
[a]n extension of credit is a making or renewal of any loan, a granting of a line of credit, or an extending of credit in any manner whatsoever, and includes.. (5) An increase of an existing indebtedness…
I’m assuming the loan has already closed and the borrower now wants credit life? And, if you offer credit life, the borrower has probably already received disclosures and signed the form stating they don’t want credit life. Assuming this is your bank’s practice, your file, and the fact that the insurance was purchased after closing, should be enough to indicate it wasn’t required as part of the transaction.
Don’t forget the Consumer Protection in Sales of Insurance disclosures. See https://www.ecfr.gov/cgi-bin/text-idx?c=ecfr&SID=4cf4f0f3dd01875260a4abb198bcf3ad&tpl=/ecfrbrowse/Title12/12cfr343_main_02.tpl
It sounds like you have a changed circumstance. As a result, you may reissue the GFE if you choose, but are not required to do so. If you choose not to you’ll have to abide by the tolerances you’ve disclosed. If you decide to re-disclose the GFE you have 3 days from when you learn of the changed circumstance. Take a look at 12 CFR 1024.7(f).
As for the TIL, if you are out of tolerance you need to re-disclose the initial TIL and wait 3 days after it is delivered to close. Take a look at 12 CFR 1026.22 and 1026.19(a)(2).
Also, you could have some situations like the one you’ve described that are counteroffers. If that happens, make sure to follow your procedures for that process. Counteroffers aren’t required to be written; however, if they aren’t accepted you must send an adverse action notice per Reg B.
Hi Carrie. The definition of small servicer is found in Regulation Z, 12 CFR 1026.41(e):
(4) Small servicers. (i) Exemption. A creditor, assignee, or servicer is exempt from the requirements of this section for mortgage loans serviced by a small servicer.
(ii) Small servicer defined. A small servicer is a servicer that either:
(A) Services 5,000 or fewer mortgage loans, for all of which the servicer (or an affiliate) is the creditor or assignee; or
(B) Is a Housing Finance Agency, as defined in 24 CFR 266.5.
(iii) Small servicer determination. In determining whether a small servicer services 5,000 or fewer mortgage loans, a servicer is evaluated based on the number of mortgage loans serviced by the servicer and any affiliates as of January 1 for the remainder of the calendar year. A servicer that crosses the threshold will have six months after crossing the threshold or until the next January 1, whichever is later, to comply with any requirements for which a servicer is no longer exempt as a small servicer.The link to the regulation is here: https://www.ecfr.gov/cgi-bin/text-idx?SID=0502519f6a0cfb1d719118337266cbc8&node=20130214y1.75
From my understanding of the information you have provided, these loans would not be subject to HOEPA/12 CFR 1026.32. However, if you were to do a refinance, home-improvement, etc. involving one of these properties that loan would be subject to HOEPA. And, as you mentioned, the HOEPA exemptions will be changing January 10, 2014.
IMO, I think it would depend on the situation. If you have forced placed because the customer didn’t obtain insurance as agreed/required, you have to purchase it and, as a result, add it to the loan amount (per your agreement); if the customer then obtains insurance and you cancel the policy you purchased you wouldn’t need to refund interest for the period that the customer failed to provide insurance. However, if after the customer provides you with a policy and you don’t promptly credit their account with the refund and continue to charge interest then you should refund it in that situation. Or if insurance was force-placed in error, then interest should be refunded. Be mindful of UDAAP – you don’t was a process in place that consistently charges customers for something that isn’t needed. Also make sure you’re familiar with the new force place requirements in RESPA under 12 CFR 1024.37, for hazard insurance, effective January 10, 2014.
From the information you’ve given it doesn’t sound like you have a permissible purpose to pull a credit report on the spouse since they won’t have any connection to the transaction (e.g. co-signor, co-applicant, etc). Look at the FCRA section 604 for permissible purposes. Section 604(c)(1) gives information on pulling a credit report for transactions not initiated by the customer – basically, it has to consist of a firm offer of credit (prescreen/solicitation of credit). Section 604(a) gives the general permissible purposes. 604(a)(3)(A) or (F) is your permissible purpose for you applicant, but it wouldn’t cover the non-applicant spouse.
Researching prior statements for the UT in question would prevent situations like this from occurring. Going forward I recommend researching prior statements to verify the bank was notified within the appropriate time frames (within 60 days of when the UT first transmitted on a statement) and to determine if the UT was preventable (if the bank had been aware), both of which will affect the amount of the customer’s liability.
From the information you provided, it sounds like you weren’t technically liable for the claim you already paid, but if you revoke it now you are out of your timeframes for handling the dispute, so if you reopen it, you may create more headaches for yourself later on.
IMO, that may work for the requirements in Reg X, but probably wouldn’t for Reg Z. Reg Z doesn’t use the same definition of mortgage loan in 1026.41 as is used in Reg X. And if you’re wanting to use the small servicer exemption under 1026.41(e)(4) then I think you would have to use the definition of mortgage loan as defined in that section.
Commentary 12 CFR 1026.41(e)(4)(ii) Small servicer defined.
Small servicers that do not qualify for the exemption. A servicer that services any mortgage loans for which a servicer or an affiliate is not the creditor or assignee is not a small servicer. For example, a servicer that owns mortgage servicing rights for mortgage loans that are not owned by the servicer or an affiliate, or for which the servicer or an affiliate was not the entity to whom the obligation was initially payable, is not a small servicer.
Reg Z 1026.41 defines a mortgage loan as any closed end consumer credit transaction secured by a dwelling. From my understanding of your situation, I would say you do not meet the small servicer exemption requirements since you are servicing another creditors mortgage loans. However, if you don’t own the servicing rights you may qualify under the subservicer provision. If you and the master servicer both meet the small servicer requirements that may be an option. See commentary 12 CFR 1025.41(e)(4)(ii)(2).Section 3, General Rules of the Flood Insurance Manual, May 2013 states:
To be insurable under the NFIP, a mobile home:
••Must be affixed to a permanent foundation.
A permanent foundation for a manufactured
(mobile) home may be poured masonry slab
or foundation walls, or may be piers or block
supports, either of which support the mobile
home so that no weight is supported by the
wheels and axles of the mobile home.
••Must be anchored if located in a Special
Flood Hazard Area (SFHA). For flood insurance
coverage, all new policies and subsequent
renewals of those policies must be based
upon the specific anchoring requirements
identified below:
A manufactured (mobile) home located within
an SFHA must be anchored to a permanent
foundation to resist flotation, collapse, or
lateral movement by providing over-the-top or
frame ties to ground anchors; or in accordance
with manufacturer’s specifications; or in
compliance with the community’s floodplain
management requirements.Commentary 12 CFR 1026.41(e)(4)(ii) Small servicer defined.
Small servicers that do not qualify for the exemption. A servicer that services any mortgage loans for which a servicer or an affiliate is not the creditor or assignee is not a small servicer. For example, a servicer that owns mortgage servicing rights for mortgage loans that are not owned by the servicer or an affiliate, or for which the servicer or an affiliate was not the entity to whom the obligation was initially payable, is not a small servicer.
Reg Z 1026.41 defines a mortgage loan as any closed end consumer credit transaction secured by a dwelling. From my understanding of your situation, I would say you do not meet the small servicer exemption requirements since you are servicing another creditors mortgage loans. However, if you don’t own the servicing rights you may qualify under the subservicer provision. If you and the master servicer both meet the small servicer requirements that may be an option. See commentary 12 CFR 1025.41(e)(4)(ii)(2).I recommend using your regulator’s fair lending exam manual as a guide for your internal fair lending review. It will likely give you sample questions to use to determine if a spouse’s information was used without cause. And ways you can determine if discrimination may have occurred is a file comparison where you compare originated vs. denials and originated control group vs. originated prohibited basis group and compare the underwriting criteria to determine if the denial or different terms were justifiable. In the case of discrimination against a pregnant person, I would think that would have to be through a note in the file, observation, or reported by the customer.
Again, your regulator’s fair lending exam manual is a good place to start your internal assessment.
