total training solutionsttsmedia.ttstrain.com/culending101120315.pdf · 2015. 11. 30. · if >...

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Total Training Solutions

LENDING COMPLIANCE 101

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with

ANNE LOLLEY

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CONTACT INFORMATION

Anne Lolley____

[email protected]

877-778-5192 x4

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PURPOSE OF THIS WEBINAR

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Rules appear overwhelming. . . unrelated

Here: All rules covered in one place

Note: Summaries . . . no detailed information

Reference booklet Part 1: Federal compliance requirements (listed alphabetically)

Part 2: Supplemental memos, charts, sample forms

Part 3: Index

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NO MEMORIZING / NOTE TAKING!

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SOME REGS HAVE A NEW HOME

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Regulations transferred to CFPB . . .Regulation B: Equal Credit OpportunityRegulation C: Home Mortgage DisclosureRegulation E: Electronic Fund TransfersRegulation F: Fair Debt Collection Practices ActRegulation M: Consumer LeasingRegulation P: Privacy of Financial InformationRegulation V: Fair Credit ReportingRegulation X: Real Estate Settlement Procedures ActRegulation Z: Truth in LendingRegulation DD: Truth in Savings

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FEDERAL COMPLIANCE REQUIREMENTS

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APPRAISALS AND EVALUATIONS

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Every loan secured by real property

OVER $250,000 – APPRAISAL

Exception – Business loan $1 million or less

Exception – Refinancings

$250,000 OR LESS – EVALUATION

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May use existing A/E if still valid–must document!

Be sure to review

Before loan is closed

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EVALUATION

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BANK SECRECY ACT - PURPOSE

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Applicable if loan is: Over $10,000

Not secured by real estate

Document purpose of loan

No general terms Business Personal NOT ACCEPTABLE Personal expenses

APURPOSE

All consumer loans - except loans to purchase real estate

Prohibits: Confession of judgment

Assignment of wages

Pyramiding late fees

Security interests in existing household goods

Requires Notice to Cosigner

CREDIT PRACTICES RULE

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A

Technically repealed . . .but principles remain sound.

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CUSTOMER IDENTIFICATION PROGRAM (CIP)

New customers only

Before closing: IDENTIFY Name

Date of birth

Address

Taxpayer identification number (SSN or EIN)

Reasonable time after closing: VERIFY Driver’s license

Other as required by bank policy

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ENVIRONMENTAL RISK

Loans secured by real property

Initial analysis• Present and past uses of property

• Governmental contacts

If problem – investigate further as per policy

Due diligence will protect against: Liability on mortgaged property

Worthless collateral

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A

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EQUAL CREDIT OPPORTUNITY ACT – REG B

Every loan—including business/ag

Prohibits discrimination

Monitoring requirements If loan is to purchase/refinance principal dwelling + secured by dwelling

Ethnicity, race, sex, marital status and age

Substitute monitoring programs okay (HMDA)

Written application Purchase/refinancing of applicant’s dwelling

Secured by same dwelling

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A

ECOA – REG B . . . CONTINUED

Adverse action notices Consumer Large business – gross revenues >$1 million Small business – can use consumer rules

Intent to apply for joint credit

Signature requirements – individual applications Individual qualifies – cannot require another signer Individual does not qualify – can require another signer Security documents – can require all owners to sign

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ECOA – REG B . . . CONTINUED

Copy-of-Appraisal Rules

Applies to all loans (including commercial) Applies to loans secured by first lien on dwelling

Copy-of-Appraisal Notice (3 business days after application)

Provide Copy of Appraisal Must be received at least 3 business days before closing If mail/e-mail: Allow 3 business days for delivery (then wait 3 days) Applicant can waive timing

Must receive waiver at least 3 days before closing

Still provide copy by closing

No charge for copies

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E-SIGN ACT

Electronic disclosures to consumers

Permitted if: Disclosure (before consent)

Electronic consumer consent

Disclosure: Right to have paper documents

Right to withdraw consent

Whether consent applies to a particular transaction

Categories of records that may be electronically provided

How to withdraw consent and update contact information

How to obtain a paper copy and whether a fee will be charged

Hardware and software requirements

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A

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FAIR CREDIT REPORTING ACT – REG V

Risk-Based Pricing Disclosures

Applies to consumer loans with risk-based pricing

Two options - Option 2 is usual option If risk-based pricing

Give Credit Score Notice

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TRIGGERED BY RISK-BASED PRICING,NOT BY PULLING CREDIT REPORT . . .

BUT MUST GET CREDIT REPORTTO COMPLETE THE NOTICE!

TWO TYPES OF NOTICES

1. SECURED BY REAL ESTATE

2. NOT SECURED BY REAL ESTATE

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FAIR HOUSING

Loans to finance or refinance: Purchase/construction/improvement/repair/maintenance of a dwelling

Secured by a dwelling

Prohibits discrimination

Advertising rules Indicate that lender will not discriminate

Logo or spoken words

Required Poster - Equal Housing Lender Poster (NCUA)

Equal Housing Opportunity Poster (HUD)

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A

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FLOOD DISASTER PROTECTION ACT

Make, increase, extend or renew a loan secured by a building

Determination Whether building in SFHA Whether community participates in NFIP

Notice If building is in flood hazard area

Must be acknowledged At least 10 days before closing

Require insurance If building in flood hazard area AND Community participates in flood program

Force place if necessary Old rule – after 45-day notice New rule – can force place immediately

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FLOOD INSURANCE . . . CONTINUED

AMOUNT OF INSURANCE

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OUTSTANDING PRINCIPAL BALANCE

OF THE LOAN

“INSURABLE VALUE

ORLESSER

OF

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Manufactured homes – if it can’t be hauled off to avoid flood, subject to flood insurance rules.

Escrowing premiums – if bank requires escrow account for other purposes (taxes, insurance), must also escrow flood insurance premiums.

New escrow rules coming

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New rule on detached structures: Insurance not required if structure:

On residential property

Detached from primary residence

Not used as a residence

Lender may require insurance

Effective March 21, 2014

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HOME MORTGAGE DISCLOSURE ACT – REG C

HMDA institutions - Assets in excess of $44 million Home/branch in MSA

Must report data on these loans Home-purchase

Home improvement SPECIAL DEFINITIONS Refinancing

Changes on the way

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HOMEOWNERS PROTECTION ACT

When PMI on home mortgage

From Homeowners Protection Act of 1998

Not applicable if FHA/VA loan or lender-paid PMI

Termination/cancellation rules 20% equity – cancel upon request

22% equity – automatically terminate

Required disclosures and notices Initial

Annual

At cancellation or termination

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EXCEPTIONS

HIGH-RISK LOANPAYMENTS NOT CURRENT

OTHER LIENS

SEE BOOKLET FOR SAMPLE ANNUAL DISCLOSURE

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HUD HOMEOWNERSHIP COUNSELING NOTICE

If delinquent homeowner

Provide within 45 days of delinquency

Includes SCRA Notice

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LOAN-TO-VALUE LIMITS

All loans secured by real estate

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LOAN CATEGORY LOAN-TO-VALUE LIMITS

RAW LAND 65%

LAND DEVELOPMENT 75%

CONSTRUCTION• COMMERCIAL, MULTI-FAMILY, NON-RESIDENTIAL• 1-TO-4 FAMILY RESIDENTIAL

80%85%

IMPROVED PROPERTY 85%

OWNER-OCCUPIED 1-TO-4 FAMILYAND HOME EQUITY

IF > 90% GET MORTGAGE INSURANCE OR COLLATERAL

CONSIDERED “BEST PRACTICES” FOR CREDIT UNIONS

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PRIVACY OF CONSUMER FINANCIAL INFORMATION

Consumer loans New customer

New policy

Initial privacy notice - at or before closing Annual privacy notice

Can be posted on website (in some cases)

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REAL ESTATE SETTLEMENT PROCEDURES ACT

Loan secured by real property with dwelling/MH

Exemptions 25 acres or more Business/ag loans Construction/bridge loans

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SEE BOOKLET FOR NIFTY

“CHEAT SHEET”

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RESPA . . . CONTINUED

SOME EXEMPTIONS FOR SMALL SERVICERS

Services 5,000 or fewer mortgage loans and is the creditor of every loan it services

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Application Rule Name

SSN

Property address

Monthly income

Estimate of property value

Loan amount requested

Any other information deemed necessary by lender

Continuity of Contact with Delinquent Consumers Assign personnel to help by 45th day

Ensure personnel can be reached by phone

Ensure timely responses to phone messages

SMALL SERVICERS EXEMPT

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Early Disclosures – within 3 days of application Settlement Cost Booklet

Good Faith Estimate

Servicing Disclosure

List of Homeownership Counseling Organizations

Early Intervention with Delinquent Consumers Establish contact by 36th day

Written information by 45th day

Error resolution Acknowledge within 5 business days

Correct and notify within 7 business days (extensions possible)


NOT REQUIRED IF:DENIED / WITHDRAWN WITHIN 3 DAYS

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Escrow Requirements Limits and calculation rules

Initial Escrow Account Statement

Annual Escrow Account Statement

Force-Place Insurance Cannot charge until two notices

Cancel duplicate insurance within 15 days

Refund fees for overlapping coverage

If escrow . . . cannot force-place (exception for small servicers)

Rule does not cover flood insurance

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List of Homeownership Counseling Organizations 3 business days after application

10 organizations closest to applicant’s location

Information Requests Acknowledge within 5 business days

Provide requested information within 10 business days (30 days for some)

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Loss Mitigation Procedures - Generally Help consumers apply for loss mitigation

Evaluate application within 30 days

Inform of options

Evaluate appeals

Refrain from foreclosure during evaluation

Special Loss-Mitigation Rules for Small Servicers Cannot file for foreclosure unless loan is more than 120 days delinquent

No judgment/sale if consumer is performing on loss mitigation agreement


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Required Policies & Procedures Providing information

Loss mitigation

Oversight of service providers

Transferring information

Error-resolution and information-requests

Settlement Statement at closing (HUD-1/1A)

Unearned Fee Prohibition


REFERRAL FEE CHECKLIST

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SECURITIES EXCHANGE ACT – REG U

Loan is secured by stock

Purchase secured stock – limited to 50%of market value

Secured by margin stock and loan >$100,000 –U-1 form

Custody/control of secured stock –SEC verification

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SERVICEMEMBERS CIVIL RELIEF ACT

Persons in military service Active duty National Guard – active duty >30 days

Formerly Soldiers and Sailors Act

Existing loan – lower rate to 6%

Limits on foreclosure

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MORE INFORMATION IN BOOKLET

SERVICE MEMBERS & DEPENDENTS RULE

Loans detrimental to service members

Payday loans

Vehicle title loans

Tax refund anticipation loans

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• 91 days or less• $2,000 or less• Holding check/EFT authorization

• 181 days or less• Secured by existing vehicle

Repay withtax refund

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SERVICE MEMBERS . . . CONTINUED

Identify borrower – Active service member or dependent? Special identification form

If active service member/dependent Calculate and disclose MAPR (includes credit insurance) Statement – financial assistance available Disclosures - written and oral Protective loan limitations

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TENANTS IN FORECLOSURE

When bank forecloses on residential property with tenants

Helping Families Save Their Homes Act of 2009

Provide notice of need to vacate

90 days in advance

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TRUTH IN LENDING – REG Z

Consumer-purpose loans

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EXEMPT

NON-REAL ESTATE LOANS OVER $54,600

Increased to $54,600 for 2015

ORIGINALLY $25,000

TRUTH IN LENDING . . . CONTINUED

Ability-to-Repay

For closed-end loans secured by a dwelling

Exempt loans: HELOCs

Temporary/bridge loans of 12 months or less

Reasonable, good faith determination of ability-to-repay

Consider and verify: Income or assets

Employment status

Monthly mortgage payment

Monthly payment on simultaneous loan secured by same property

Monthly payments for property taxes and insurance

Debts, alimony and child-support obligations

Monthly debt-to-income (DTI) ratio (no specific threshold)

Credit history

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Qualified Mortgages

Easier alternative to ATR requirements

Usual features (but some exceptions): No negative amortization, balloon payment, interest-only

DTI cannot exceed 43%

Limited points and fees

Bank benefits

Presumption of ATR compliance (in case you’re sued)

Eased underwriting requirements

Loan exempt from special HPML appraisal rules

FOUR TYPESGeneral

Temporary

Balloon-Payment

Small-Creditor Portfolio

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Adjustable-Rate-Mortgages Disclosures Secured by borrower’s principal dwelling Greater than one year

Advertising Rules – for consumer loans

Credit Card Applications and Solicitations

Early Disclosures (ELYTIL)

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High-Cost Mortgages (HOEPA loans)

Formerly called “HOEPA” loans

Applies if: Secured by borrower’s principal dwelling

High rates or fees, certain prepayment penalties

Special disclosures and restrictions

New triggers (purchase-money loans now covered)

Cannot close without a certificate of homeownership counseling

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Higher-Priced Mortgage Loans

Applies when: Loan is secured by consumer’s principal dwelling APR exceeds APOR by 1.5% (1st mortgage) / 3.5% (2nd mortgage)

Escrow requirements

Special appraisal rules

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HPML Appraisal Rules

Appraisal required No existing appraisals

No evaluations

Appraiser must visit interior

Give right-to-copy notice within 3 business days after application

Must be received at least 3 business days before closing Allow 3 business days for delivery (or as otherwise evidenced)

No timing waiver permitted

Additional appraisal for some flipped properties

EXEMPT

Qualified mortgagesBridge loans 12 months or less

Initial constructionSecured by manufactured home

Streamlined refinancings$25,500 or less

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HPML Escrow Rules

5-year minimum

Exemption for small banks in rural/underserved counties

Most covered loans in rural/underserved counties

No more than 500 first-lien dwelling loans in prior year

Less than $2.028 billion in assets

No escrow accounts for consumer loans Okay if bank complied with earlier HPML escrow rules

Can maintain those existing escrow account

NOTE NEW RULES THAT CHANGE THE

DEFINITION OF “RURAL”

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HELOCs – special disclosures and rules

Loan Originator Rules

Compensation restrictions

Prohibition on steering

Qualification requirements

Screening requirements

Training requirements

Name/NMLSP on loan documents (application, note, mortgage)

Prohibition on financing credit insurance

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Payoff Statements –Within 7 days

Periodic Statements (Open-End)

Periodic Statements (Mortgage Loans)

Prompt Crediting of Payments

Same ole, same old (credit on day of receipt)

Clarifies rules for partial payments

Effective cutoff time – must notify in writing

SMALL SERVICERS

EXEMPT

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Private Education Loans

If any part of a loan is for post-secondary educational expenses

Three new disclosures: At application

At loan approval

After borrower accepts

Self-certification form

Three-day right of rescission

Not applicable if:

Open-end credit or Secured by real estate

EDUCATIONAL EXPENSES

• Tuition and fees• Books• Supplies• Miscellaneous personal expense• Room and board

CONSIDER

Revising loan policy to prohibit . . . unless:

(1) Open-end credit or (2) Secured by real estate

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Right of Rescission

Applies to a loan secured by consumer’s principal dwelling

Exemptions

Residential mortgage transaction [loan to buy/build] Refinancing with no new money

Can cancel within 3 business days

Give Notice of Right to Rescind

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SATURDAY IS ALWAYS A “BUSINESS DAY”

SEE DETAILED MEMO ON PAGE 30

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TRID (Integrated Disclosures)

Loan Estimate 3 business day after application

7 business day before closing

Home Loan Toolkit Settlement Cost Booklet

3 business day after application

Not required if refi or junior lien

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CONSUMER-PURPOSE

CLOSED-END

SECURED BY REAL PROPERTY


List of Settlement Providers If consumer can shop for provider

3 business days after application

Closing DisclosureReceived 3 business days before closing

Allow 3 business days for delivery

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FEDERAL COMPLIANCE REQUIREMENTS

MEMOS AND CHARTS

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SUPPLEMENTAL MEMOS AND CHARTS

Compliance Rules and Commercial Loans - 27

Appraisal and Evaluation Chart – 28

Adverse Action Requirements – 29

Right-of-Rescission Memo - 30

Right-of-Rescission Applicability Chart – 34

RESPA Applicability Cheat Sheet - 35

RESPA and Referral Fees Checklist– 36

Crediting Loan Payments Memo – 37

PMI Annual Disclosure – 38

Tenants in Foreclosure Sample Notice – 39

Servicemembers Civil Relief Act Memo – 40

Business Documents – 43

Business Day Definitions – 44

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Anne Lolley877‐778‐5192 [email protected]

TTS800‐831‐[email protected]

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