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#1272063 - 10/22/09 08:06 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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Posts: 20,656
The Swamp
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I've read that...unless I'm missing something it says nothing more than we've debated all along. I know Dan's stance is that if the rate changes (lower), he finds it a stretch to be considered a finance charge error, but that if a fee was overstated, that would likely be okay.
MY FRB pretty much said it differently and elluded to if your rate lowered prior to closing it fit the special mortgage APR tolerance section because the rate is 9/10's of the total finance charge...but if it changed, it wasn't because it was wrong to begin with...it just changed! But even they aren't giving a straight answer. It should be a simple yes, or no...but nobody seems to want to bite and give an opinion written in English! It seems all Philly did was quote the sections that have exited forever.
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#1272122 - 10/22/09 08:45 PM
Re: New Reg Z Final Rule - Just Published
David Dickinson
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I like that description better...but one factor remains (at least to me, I'm being bullheaded!) ...if the rate lowers (not because it was bought down, it just is lower at time of closing but not due to additional points buying it down) are you including that in "they both came down together"...seems like it...the rate lower, thus the FC lowers, thus they came down together?
I'm sorry to be so specific...but it's because of the last few posts above all of these not thinking that way (after the Philly interpretation)...I've thought THIS way all along after tracking the regulatory cites way back...but have been defeated, including some regulatory teleconferences that have skirted direct questions pertaining to this particular scenario!
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Say you'll haunt me - Stone Sour
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#1299553 - 12/04/09 11:22 PM
Re: New Reg Z Final Rule - Just Published
RR Joker
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Diamond Poster
Joined: Jun 2006
Posts: 1,194
South
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I like that description better...but one factor remains (at least to me, I'm being bullheaded!) ...if the rate lowers (not because it was bought down, it just is lower at time of closing but not due to additional points buying it down) are you including that in "they both came down together Since interest is a finance charge, it would seem like the FC and APR "came down together." I am also interested in someone else's weigh in on RR's comment here. We are lowering rates from application to closing without buy-downs, and it is causing us to be more than 1/8 off on the final APRs.
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#1299722 - 12/07/09 02:08 PM
Re: New Reg Z Final Rule - Just Published
Princess Romeo
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And Princess, that's what my examiner elluded to, too. The rate is the bulk of the finance charge. I think what everyone is stuck on is that lowering the rate doesn't constitute an error , per se. He didn't seem concerned at all with tolerance on a decrease...but due to the arguments against that in this thread, I've been leary of accepting it as "ok". I broke down the entire FC track in the reg several pages ago and came to the conculsion (with the mortgage exceptions) that it was fine and not considered a tolerance issue...but I just haven't made myself allow it...I really wish we could get an official regulatory opinion on that one way or another. And I don't mean the one that didn't really SAY anything!  Following is a small piece of correspondence with the FRB on this same subject matter. Q: I’m so sorry to beat this to death, but, for example. eTIL is disclosed at a rate of 8%, but prior to closing the rate goes down to 7%...that would apply to your meaning below? A: Not if the 8% was caused by a typo or programming error. The 8% would have to directly reflect the disclosed finance charge. Years ago there was a bank that noticed the APR was usually about 1/2% higher than the note rate, so instead of bothering to calculate the APR they just added 1/2% to the note rate. An overdisclosure by them would not have been caused by an overstatement of the finance charge. Now, the above tells me that if you didn't "make it up" or type it incorrectly, then a simple lowering of the rate would not be considered a tolerance issue. I'm wondering if any of those that have taken the OTHER stance, have since changed their minds? Anyone?
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Say you'll haunt me - Stone Sour
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#1300666 - 12/08/09 02:28 PM
Re: New Reg Z Final Rule - Just Published
Kathleen O. Blanchard
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What they meant (and this was from my personal rep there, so he was speaking "frankly") was if it changed due to your screw-up, it didn't count. If it changed, but was previously correct, and it went down prior to closing, but was still correct, you were okay.
My take from that (and yes, a simple yes or no would be very nice) is, that if you were correct all along and the market dropped and you redisclose but are still correct, no re-disclosure is necessary.
As he stated to me in an earlier conversation, but has been taken exception to in this thread...is simply this. What is the largest bulk of the finance charge? (interest rate). If you interest rate drops, you are okay within the definitions regarding tolerance on mortgage loans.
The argument in this thread, however, infers only if a FEE changes due to an ERROR. I don't get that interpretation at all. AND, I don't see any major recordkeeping or decision making necessary for a simple rate drop. That's why I'm wondering if Dan/David, whomever, has changed their mind about this since it was last discussed.
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Say you'll haunt me - Stone Sour
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#1300990 - 12/08/09 06:24 PM
Re: New Reg Z Final Rule - Just Published
RR Joker
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Joined: Jun 2006
Posts: 1,194
South
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I contacted the regional director of compliance at the FDIC about this yesterday. He said that he would prefer if I outlined my inquiries in writing, and then he would respond. This is what I sent: Per your request during our phone conversation this morning, I am submitting my inquiry in writing.
Currently our Bank has taken the position that we do not want to originate higher priced mortgage loans. What is happening is we are providing customers with a higher disclosed APR on the early TIL disclosure, and by the time we are ready for closing rates have fallen so low that when we make a rate adjustment the APR on the final TIL has decreased by more than 1/8%. Currently, we are redisclosing and making the borrowers wait an additional three (3) business days to close.
Our question is: Is it the opinion of your division of the FDIC that this WILL or WILL NOT trigger redisclosure with an additional three (3) business day wait to close as dictated by 12 CFR §226.19(a)(2)(ii)? We understand that there has been a lot of debate over this issue, and even some informal communications made by the FDIC that an overstated FC/APR would require redisclosure and extra waiting.
Points we’d like to make:
• Regulation Z seems to make it fairly clear that an overstated FC/APR is not considered out of tolerance for a mortgage transaction. Reference: 12 CFR § 226.22(a)(4), 226.18(d)(1). Our interpretation is that as long as the finance charge and APR come down together, then there is no redisclosure requirement. In our case it is the interest rate that is causing the APR to decrease, and since interest is 9/10’s of the finance charge we feel that it is unnecessary to redisclose and require our customers to wait an additional three (3) business days to close.
• The Federal Reserve has made this point clear in a series of Q&A’s published in the third quarter issue of the Consumer Compliance Outlook. Refer to question number six (6).
• A reduction in the interest rate is beneficial to the consumer, so an issue such as requiring them to wait an additional three (3) business days to close the loan is contradictory to the spirit of this rule. About 3 hours later he called me back. He said that he thought we were thinking this out correctly, but he was not allowed to reply in writing. So after listening to him read some information on the FDIC's intranet that sounded very similar to the FED Q&A, he basically agreed that it was ok for us not to require redisclosure and the extra 3 day waiting period to close with our situation. I still would have preferred to receive this in writing. However, we are considering changing our procedures based on this.
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#1364127 - 03/25/10 06:43 PM
Re: New Reg Z Final Rule - Just Published
time flies when you're having fun
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Power Poster
Joined: Nov 2008
Posts: 4,132
Somewhere in the middle
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HPML Question?
The Escrow requirement for HPML that take effect on April 1. If the loan app began before April 1, but the loan closes after April 1, will the escrow rule apply?
I am reading through Z 226.(b)(3) but cannot find the clarification.
Thanks
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#1364285 - 03/25/10 08:16 PM
Re: New Reg Z Final Rule - Just Published
DD Regs
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Posts: 5,568
New Jersey
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On page 44605 of the 7/30/2008 Federal Register, it states:
"The final rules on escrows in 226.35(b)(3) are effective for covered loans, (including refinancings and assumptions in 226.20) for which the creditor receives an application on or after April 1, 2010."
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#1364468 - 03/26/10 03:31 AM
Re: New Reg Z Final Rule - Just Published
Sinatra Fan
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Joined: Nov 2008
Posts: 4,132
Somewhere in the middle
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Thanks SF just what I needed. I found where ABA and BOL had posting, but neither gave the reference.
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#1388338 - 05/10/10 03:14 PM
Re: New Reg Z Final Rule - Just Published
Jerod Moyer
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Joined: May 2010
Posts: 19
Ohio
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I would like to get the group's opinion on a scenario involving the MDIA re-disclosure waiting period. If the TIL APR has changed, but not enough so to be considered inaccurate under 226.22, we are not required to re-disclose. However, if the TIL is re-disclosed anyway in that scenario, would the MDIA 3-day waiting period apply simply because you provided a corrected disclosure? In this scenario, the TIL is being re-disclosed each time the GFE is re-disclosed because they are both included in the same doc package. However, assuming the APR was not considered inaccurate at that time (although it may have changed slightly since the last disclosure), do we still need to abide by the waiting period? Thoughts?
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#1388353 - 05/10/10 03:25 PM
Re: New Reg Z Final Rule - Just Published
Truffle Royale
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New Poster
Joined: May 2010
Posts: 19
Ohio
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I agree and that is exactly what I am working on. Thanks for your thoughts!
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#1396575 - 05/26/10 07:05 PM
Re: New Reg Z Final Rule - Just Published
inCompliance
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100 Club
Joined: Jun 2007
Posts: 133
Central Arkansas
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ETIL is given and shows:
APR:6.831
F/C: $28,524.28
Amt. Financed: $66,676.30
A current TIL is made and shows:
APR:6.830
F/C $28,863.95
Amt. Financed: $66,700.00
Is redisclosure required b/c the F/C is understated on the E-TIL by more than $100?
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#1398022 - 05/30/10 10:38 PM
Re: New Reg Z Final Rule - Just Published
Frank
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Posts: 3,238
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Yes
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#1429445 - 08/16/10 02:23 PM
Re: New Reg Z Final Rule - Just Published
lucyc
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We are adding a borrower at the last minute on a residential loan. Do we have to wait seven days before closing? If so, can we get the borrowers to execute a waiver so we don't have to implement the seven day period?
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Say you'll haunt me - Stone Sour
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