Hot Topics 1 ? View from the Street. TILA/MDIALearning to Count ?it helps if the day the TIL disclosure is provided or the day the TIL disclosure is received is counted as ?DAY ZERO"1. General vs Specific ?business days"Use ?general" only for providing early disclosures. For most businesse
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1. Hot Topics 1 – View from the Street By
GVP, Compliance Manger
2. Hot Topics 1 – View from the Street TILA/MDIA
Learning to Count –it helps if the day the TIL disclosure is provided or the day the TIL disclosure is received is counted as “DAY ZERO”
1. General vs Specific “business days”
Use “general” only for providing early disclosures. For most businesses, this means you don’t have to count Saturday
2. Collecting or disbursing Money – midnight rule applies to :
Collecting non-refundable fees
Disbursing funds in connection with transactions subject to rescission
3. Closing wait periods
Can close “ON” the 7th business day after Creditor provides initial TIL
Can close “ON” 3rd business day after revised APR/TIL is received
3. Hot Topics – View from the Street TILA/MDIA
Learning to Read – why did the APR change?
Fees did not change — why is the APR different? Check the interest rate.
Fees did not change – the system must be wrong. Look at the payment schedules, they are different. You added PMI.
Fees did not change – I swear! Oh—you mean that fee is a finance charge?
If I reduced per diem interest why does the APR increase – call a mathematician!
4. Hot Topics – View from the Street HOEPA – Higher Price Mortgage Loans (HPMLs)
RED – Loan programs which by nature will violate HPML rules or prohibitions or your investors will not purchase
Streamline refis – No Doc – Low Doc - Stated Income (is anyone doing these?) loan programs
C/P loans with PPP if loan does not convert to permanent phase; other programs with PPP
FHA – consult legal counsel
HPML indicator needed in system for delivery of ARMS
YELLOW – Calculating HPML trigger
Lock date – re-locks – extensions – what you allow the LOB to do behind the scenes with “locking” may hurt you.
Make sure the calculations that triggers HPML and rate spreads are the same for origination, servicing, and HMDA reporting—otherwise you will have a mess.
GREEN – run a production test –In most cases a very small percentage of production will fall into this category, and with good documentation and an “ability to repay” credit policy, these loans will enjoy the “presumption of compliance”. Maintain the “presumption of compliance” – violation of HPML rules is considered a “deceptive practice”
5. Hot Topics – View from the Street HOEPA - Prohibited practices apply to all loans, not just primary residence
Appraisal Prohibited Practices - a creditor may not rely on a tainted appraisal in making the credit decision. Fighting the inevitable round robin selection of appraisers.
Servicing Prohibited Practices –Compliance Officers – Don’t forget Servicing. Servicing also needs the know about HPML loans due to state laws starting to use this designation – eg NC, CT.
Advertising Rules – Although your Marketing department is aware, need to communicate to the field. Reminder needed.
6. Hot Topics – View from the Street RESPA REFORM - “The State of Denial”
Yes, it is going into effect January 1, 2010
Yes, it does apply to all GFEs issued on or after 1/01/2010
Yes, you must disclose ALL settlement charges no matter if a third party is paying
Yes, you must disclose all settlement charges you are aware of
(or should be aware of) for the loan program chosen by the borrower, the type of transaction (purchase or refi) and charges required by the state or locale.
Yes, you should attach a list of providers for services that the borrower can shop for—even if the borrower knows who they are going to use up front. What if the borrower changes their mind?
Yes, originator service/admin fees and settlement agent admin/overhead fees are no longer separately itemized
Yes, “Total Estimated Settlement Charges” will be a shopping tool
7. Hot Topics – View from the Street RESPA REFORM –Forewarned is Forearmed
Start Communications with the Field NOW
Start Communication with your Settlement Agents SOON
Obtain a list of loan programs that require special settlement services – two(2) appraisals; well inspection, etc
Check state laws which may require an additional settlement service – eg Florida title agent may require a survey, if a copy of a previous survey is not available.
How will you obtain reliable quotes for settlement and title fees and other settlement service services?
Does your list of providers co-ordinate with the quotes you will be providing? In other words—does your provider stand ready, willing and able to stand by the quote?
Revise Closing Instructions
8. Hot Topics – View from the Street Proposed TILA Reform
One Word – COMMENT