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#1257756 - 09/28/09 02:39 PM
Re: New Reg Z Final Rule - Just Published
lucyc
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10K Club
Joined: Jul 2003
Posts: 17,400
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Wouldn't it be safe to say that as long as the delay in posting a payment until the next business day doesn't result in a late fee or negative reporting we wouldn't have to backdate the transaction? Sec. 226.36 Prohibited acts or practices in connection with credit secured by a consumer's principal dwelling. c) Servicing practices. (1) In connection with a consumer credit transaction secured by a consumer's principal dwelling, no servicer shall-- (i) Fail to credit a payment to the consumer's loan account as of the date of receipt, except when a delay in crediting does not result in any charge to the consumer or in the reporting of negative information to a consumer reporting agency, or except as provided in paragraph (c)(2) of this section; Except on payoffs, mortgage interest is calculated for the previous month so (i) above would allow for an earlier reasonable cut-off for mortgage payments only, correct?
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#1257796 - 09/28/09 03:03 PM
Re: New Reg Z Final Rule - Just Published
Truffle Royale
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Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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What about those consumer loans that are on simple interest calculations, such as home equities (not HELOCs, they are exempt see (d)) secured by the primary residence? Not crediting those payments on the date of receipt will cost the borrower additional days interest.
This goes back to Randy's contention that if you do not intend to post payments received after your cut off then you must inform the borrowers in writing of your payment application policy for "conforming" payments.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1257833 - 09/28/09 03:41 PM
Re: New Reg Z Final Rule - Just Published
Dan Persfull
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100 Club
Joined: Sep 2009
Posts: 213
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Would a creditor be in violation of the fee imposition requirement of MDIA, if a broker orders an appraisal before submitting the package to the creditor but the borrower doesn't pay for the appraisal until close?
In this situation, the borrower has obviously incurred the appraisal fee, but it has not been imposed on them until close and well after they have received the ETIL. Does incur and impose mean the same thing for MDIA purposes?
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#1258437 - 09/29/09 02:47 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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Gold Star
Joined: Aug 2008
Posts: 380
Texas
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I may be a little late on this, but I was glad to finally see it in black and white. From the newly released Revised Exam Procedures for Reg Z issued by the Fed on 9/21/09 (CA-09-9):
Page 8
"Credit secured by real property or a dwelling (closed-end credit only): - The disclosed finance charge is considered accurate if it does not vary from the actual finance charge by more than $100. - Overstatements are not violations."
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In the end, it's all just a bunch of paper....
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#1258493 - 09/29/09 03:53 PM
Re: New Reg Z Final Rule - Just Published
Truffle Royale
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Gold Star
Joined: Jun 2007
Posts: 447
New England
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Page 23 states this:
• Mortgage transactions, if it is within one-eighth of 1 percentage point for regular transactions or one-quarter of 1 percentage point for irregular transactions or:
i. The rate results from the disclosed finance charge, and the disclosed finance is considered accurate under §§ 226.18(d)(1) or 226.23(g) or (h) (§ 226.22(a)(4)); or
ii. The disclosed finance charge is calculated incorrectly but is considered accurate under §§226.18(d)(1) or 226.23(g) or (h) and either:
(A) the finance charge is understated and the disclosed APR is also understated but is closer to the actual APR than the APR that would be considered accurate under § 226.22(a)(4); or
(B) the disclosed finance charge is overstated and the disclosed APR is also overstated but is closer to the actual APR than the APR that would be considered accurate under § 226.22(a)(4).
iii.For example, in an irregular transaction subject to a tolerance of 1/4th of 1 percentage point, if the actual APR is 9.00% and a $75 omission from the finance charge corresponds to a rate of 8.50% that is considered accurate under § 226.22(a)(4), a disclosed APR of 8.65% is considered accurate under §226.22(a)(5). However, a disclosed APR below 8.50% or above 9.25% would not be considered accurate.
So does that mean if the finance charge is overstated, we don't have to worry about the APR tolerance? I'm confused...
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Sometimes the questions are complicated and the answers are simple. - Dr. Suess
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#1258502 - 09/29/09 04:03 PM
Re: New Reg Z Final Rule - Just Published
ahanna
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Diamond Poster
Joined: Nov 2004
Posts: 2,309
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I may be a little late on this, but I was glad to finally see it in black and white. From the newly released Revised Exam Procedures for Reg Z issued by the Fed on 9/21/09 (CA-09-9):
Page 8
"Credit secured by real property or a dwelling (closed-end credit only): - The disclosed finance charge is considered accurate if it does not vary from the actual finance charge by more than $100. - Overstatements are not violations."
The wording you cited is not new. It was in the two prior versions of the exam procedures, the ones with the 7/30/09 and changes and the ones with the 8/20/09 changes. I didn't go back any further.
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Opinions expressed are my own and not necessarily those of my employer. They are not legal advice.
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#1258571 - 09/29/09 04:54 PM
Re: New Reg Z Final Rule - Just Published
Reads Regs
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Joined: Nov 2002
Posts: 20,656
The Swamp
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A violation of an APR and a re-disclosure for tolerance issues with the disclosure changes are not necessarily the same issue, IMHO. Based on some of the guru's indepth anaylsis, without some real digging on "what happened to make what happened happen" it still doesn't SAY you don't have to redisclose for overdisclosure.
At this point, we continue to redisclose over or under by the tolerances.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1258954 - 09/29/09 11:12 PM
Re: New Reg Z Final Rule - Just Published
BNKO
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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Would a creditor be in violation of the fee imposition requirement of MDIA, if a broker orders an appraisal before submitting the package to the creditor but the borrower doesn't pay for the appraisal until close?
In this situation, the borrower has obviously incurred the appraisal fee, but it has not been imposed on them until close and well after they have received the ETIL. Does incur and impose mean the same thing for MDIA purposes? Since the appraisal guidelines indicate that an appraiser has to be directly engaged by the financial institution - what would a broker be doing ordering an appraisal anyway??
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1259913 - 10/01/09 01:25 PM
Re: New Reg Z Final Rule - Just Published
rlcarey
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Joined: Nov 2002
Posts: 20,656
The Swamp
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In the Banker's Compliance Consulting Blog this am, a Q&A from the FRB Q&A was given regarding the overstated APR. This did not look any different than the analysis I did on the mortgage loan exceptions for an argument on overstated APR's being okay so long as it was due to the rate lowering from application to lock-in and/or closing rates earlier in this thread.
Is that was this was trying to say? Are we now saying that overstatements are okay so long as it's due to a lowering of a rate or fee from beginning to end???
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1259982 - 10/01/09 02:38 PM
Re: New Reg Z Final Rule - Just Published
RR Joker
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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That's exactly what this is saying. Overstated APR's are OK as long as the APR & FC are overstated "together". Here's the Q&A from the Philadelphia FRB: 6. Are corrected disclosures required when the APR is overstated on the early disclosures? What if this overstatement is the result of fees being waived at or near consummation?
The rule specifies that if the APR is inaccurate as determined under §226.22(a), a corrected disclosure is required and the three-business-day waiting period prior to consummation would apply. Sections 226.22(a)(2) and (a)(3) state that APRs are considered accurate if they are not more than one-eighth (for regular transactions) or one-quarter (for irregular transactions) of 1 percent, respectively, above or below the actual APR, as determined in accordance with §226.22(a)(1). Thus, some overstated APRs may require corrected disclosures just as understated APRs do.
However, paragraphs (a)(4) and (a)(5) contain additional tolerances for APR accuracy on mortgage loans. Specifically, for a mortgage loan, the disclosed APR is considered accurate under §226.22(a)(4) if the rate is overstated but results from the disclosed finance charge which is also overstated. Further, under §226.22(a)(5), a disclosed APR that is closer to the actual APR than the APR that would be considered accurate under §226.22(a)(4) is also considered accurate. Creditors should closely examine these two paragraphs when determining whether an APR that is overstated is inaccurate and thus requires corrected disclosures and a three-business-day waiting period.
Note that §226.17(f) may also require a corrected disclosure (but no three-business-day waiting period) before consummation. This requirement is triggered if any aspect of the earlier disclosure, as opposed to only the APR, has become inaccurate.Here's a link to the entire article: http://www.philadelphiafed.org/bank-reso...arter/q3_03.cfmAlso, here's a link to our blogs (they're free): http://www.bankerscompliance.com/blog
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#1260091 - 10/01/09 04:12 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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Member
Joined: Jun 2009
Posts: 78
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So, this is probably a hugely dumb question, but can anyone give an example why an APR would be overstated that is NOT due to the finance charge? The only reason I can think of is that the system is calculating APR incorrectly, but I'm sure there must be others. I'd just like to have examples for when an overstated APR would require re-disclosure
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#1260315 - 10/01/09 07:28 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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10K Club
Joined: Aug 2002
Posts: 47,530
Bloomington, IN
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What if the applicant negotiates a better rate than the one disclosed on the ETIL? Would you consider the APR was overstated then due to an over stated finance charge? I would find that to be a stretch. The APR wasn't overstated due to an overstated finance charge, it was overstated due to a change in rate.
I would consider the following an "overstated" finance charge.
A $500 appraisal fee was included in the PPFC causing the APR to be overstated. In this case the finance charge was overstated due to a fee being included in the finance charge that shouldn't have been. In this case I would agree with the released opinion. But again as I've asked in the past who are you going to make responsible for checking these to make sure you have an legitimate overstated finance charge and ARR and therefore don't have to redisclose?
I don't think a reduction in rate would qualify for not redisclosing because I don't feel in that case the APR was overstated due to an overstated finance charge.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#1261172 - 10/02/09 07:55 PM
Re: New Reg Z Final Rule - Just Published
lucyc
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100 Club
Joined: Jun 2007
Posts: 173
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If it would mean the borrower pays another day's interest, then I don't think you could say that the delay didn't result in "any charge to the customer."
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#1261176 - 10/02/09 08:01 PM
Re: New Reg Z Final Rule - Just Published
Dan Persfull
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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.
I don't think a reduction in rate would qualify for not redisclosing because I don't feel in that case the APR was overstated due to an overstated finance charge. Dan, the interest is the bulk of the finance charge...it isn't limited to PPFC...this was the argument my FRB guy gave me as to why overstatement due to a rate change was not a problem... He did give an example (true story) of when this wouldn't fly...and it had to do with some company that just arbitrarily entered an APR onthe eTIL because it would be "close", instead of calculating it...dumb, but true.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1261486 - 10/05/09 01:21 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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Member
Joined: Jun 2009
Posts: 78
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You're right that it's not likely. One example would be where a customer decides to buy down the rate and pays a discount fee. The interest rate would go down, but the FC would go up. When I tested this the FC went down, not up. Yes, they're adding a PPFC, but because of the lower rate the interest paid over the term of the loan is less, therefore the total FC is lower also. Am I missing something?
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#1261750 - 10/05/09 05:50 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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Power Poster
Joined: Jan 2004
Posts: 3,626
State of confusion
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I apologize if this has been addressed, if I fax the redisclosure documents per the customers request, is that considered hand delivered for 3 day wait or mail for a 6 day wait?
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#1261781 - 10/05/09 06:13 PM
Re: New Reg Z Final Rule - Just Published
Truffle Royale
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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So...are we back to the mind frame, that if the rate lowers, causing the original disclosure to be overstated, then you still have your 3 day wait...BUT if a fee lowers, or is estimated high initally...maybe you don't have to redisclose?
This is pretty silly...so who is going to want to ponder for 3 days on accepting a lower rate...I mean we are redisclosing if this happens...but really!
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1271719 - 10/22/09 05:26 PM
Re: New Reg Z Final Rule - Just Published
RR Joker
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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So...are we back to the mind frame, that if the rate lowers, causing the original disclosure to be overstated, then you still have your 3 day wait...BUT if a fee lowers, or is estimated high initally...maybe you don't have to redisclose?
This is pretty silly...so who is going to want to ponder for 3 days on accepting a lower rate...I mean we are redisclosing if this happens...but really! did anything more ever come out on this that maybe I missed? It seems like it should be an easy answer, but even the way the regulation is written goes around your elbow to get to your nose.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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