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#1248409 - 09/10/09 09:09 PM Re: Regulation Z changes - 10-01-09 EmilyAnn
David Dickinson Offline
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Emily Ann: I addressed this above - there certainly can be loans that are HOEPA that aren't HPML because of the fees test.

To addresses Space Needle: HOEPA requires you to determine the borrower's repayment ability - see §226.34(a)(4). HPML requires the same thing - see §226.35(b)(1).
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#1248445 - 09/10/09 09:44 PM Re: Regulation Z changes - 10-01-09 David Dickinson
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My apologies...I read through half the thread, got distracted and then jumped to the end. Your explanation was very thorough.

Thanks!

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#1249043 - 09/11/09 07:24 PM Re: Regulation Z changes - 10-01-09 EmilyAnn
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Trying to finish my training materials and want to make sure I will be training the lenders and their staff correctly.

1. If we do not have a HPML/HOEPA, do we still have to go through the documentation of consumer's ability to repay if income is verified verbally with the employer?

2. If no, we would not have to be concerned about the term of the balloon loans, right?

The more I work with this, the more confused I seem to be. I think it must be time to retire.
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#1249083 - 09/11/09 07:50 PM Re: Regulation Z changes - 10-01-09 Bagweaver
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Goldie -
Originally Posted By: Oldie But Goldie
Trying to finish my training materials and want to make sure I will be training the lenders and their staff correctly.

1. If we do not have a HPML/HOEPA, do we still have to go through the documentation of consumer's ability to repay if income is verified verbally with the employer? No

2. If no, we would not have to be concerned about the term of the balloon loans, right? You are correct.


The more I work with this, the more confused I seem to be. I think it must be time to retire.
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#1249092 - 09/11/09 07:59 PM Re: Regulation Z changes - 10-01-09 ktac MITCH
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Reg Z Comment 34(a)(4)(ii)2 states the following: Income and assets--co-applicant. If two persons jointly apply for credit and both list income or assets on the application, the creditor must verify repayment ability with respect to both applicants unless the creditor relies only on the income or assets of one of the applicants in determining repayment ability.

Can someone help me interpret this correctly? Does this mean that repayment ability must be verified collectively for both individuals using their combined income and assets? That's how I'm reading it...however, I could see it being interpreted to mean that repayment ability has to be verified separately for each individual based on their respective income and assets (as if each were applying on their own for credit, meaning both would have to qualify for credit individually).

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#1249118 - 09/11/09 08:17 PM Re: Regulation Z changes - 10-01-09 ktac MITCH
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Thank you so much. I'm so glad its Friday!
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#1249131 - 09/11/09 08:30 PM Re: Regulation Z changes - 10-01-09 Dan Persfull
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Originally Posted By: Dan Persfull
Quote:
I'm stuck on "does not include a transaction to finance the initial construction of a dwelling"....do they mean construction loans that include permanent financing or loans for construction only, where a new vehicle will be put in place to cover the permanent financing?


Your construction permanent loan would be for the initial construction of the dwelling, therefore I would opine it would be exempt.


Dan, I've been tied up last couple days in meetings...but was catching up....the above statement is throwing me off. I could understand a construction-only loan...but how is a constr/perm loan exempt when you normally think of it in the same light as a "purchase" transaction?
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#1249293 - 09/11/09 10:41 PM Re: Regulation Z changes - 10-01-09 RR Joker
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I have read this post twice to make sure I didn't see my question already answered so here goes.

If the loan qualifies as a HPML but the purpose of the loan is not a HMDA reportable purpose (such as debt consolidation or vacation, etc) do we have to report the loan on the HMDA lar?
If yes, this means I have to retrain all of my lenders to start gathering HMDA data at application for loan purposes that I have finally trained them to not gather hmda information.

Am I confused (or more confused than normal) confused

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#1249376 - 09/13/09 08:13 PM Re: Regulation Z changes - 10-01-09 pacar
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Has anyone answered this question yet? I didn't see it yet, but may have missed it. We are not going to change our cutoff times. If I am understanding correctly, if we have a written procedure stating that the borrower must submit payments by cutoff times, we would be compliant in not separating out the payments recieved after cutoffs or after hours. We would then need to send notice to existing borrowers and have it noted on new note terms. Am I understanding correctly??
Thanks!

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#1249378 - 09/13/09 08:30 PM Re: Regulation Z changes - 10-01-09 TLC.17
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This was a reply question to the below post by pacar.... smirk
Poster: pacar
Subject: Re: Regulation Z changes - 10-01-09
____________________________________________
Quick question regarding Crediting of Payments:

Comment for 226.36(c)(2)(3) states in the implied guidelines that a payment can be made any time during normal business hours.

Our Drive Up is open late most nights, and the tellers accept many payments. These would, under today's practices, be credited on the following business day as part of normal posting.

Am I correct in assuming that, unless we specifically state a cutoff time in writing, these payments received after hours should be pulled out so they can be manually backdated to the date of receipt?

How are the rest of you approaching this? And how about payments left in the Night Drop?

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#1249439 - 09/14/09 01:16 PM Re: Regulation Z changes - 10-01-09 TLC.17
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Somewhere in the middle
I have a question about internet rate boards for loans. Is there some changes as to how you can display rates coming in October and end of year?

We currently show our rates and APR for out loans products. Then have some sample payments listed below. Is this not going to fly come October 1? Will we just have to say, we have loans, call us or see an office?
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#1249467 - 09/14/09 02:00 PM Re: Regulation Z changes - 10-01-09 DD Regs
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Our bank has looked into if we have loans that are HPML's. Currently all our ARM products woulbe classified as HPML. We can do the requirements to have presumption of compliance. Managemetn is now questioning if all our loans are considered higher priced, would regulators then come back and considered violations as predatory lenders? We are a small bank rural community so our rates are generally a little higher thang bigger mega banks. Anyone have any thoughts?

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#1249543 - 09/14/09 03:06 PM Re: Regulation Z changes - 10-01-09 river girl
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Originally Posted By: river girl
If the loan qualifies as a HPML but the purpose of the loan is not a HMDA reportable purpose (such as debt consolidation or vacation, etc) do we have to report the loan on the HMDA lar?

If it's not HMDA reportable, it never goes on your LAR.
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#1249556 - 09/14/09 03:15 PM Re: Regulation Z changes - 10-01-09 ahkcompliance
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I posted the same question #1247293 - 09/09/09 01:21 PM. I don't think I ever got a reply. But I'll share my thoughts.

We are a small community s&l with the exact same issue, however are rates are very competative so we know the other community banks in the area must have the same issue since their rates are slightly higher.

I have spoken with my management and we are contemplating changing our underwriting guidelines to underwrite all our RESPA loans as if they are all HPML. This way we don't have to figure out if the loan is or is not a HMPL. We have an internal RESPA taskforce and really don't see a downside of going with a more conservative underwriting policy as this is pretty how we underwrote loans many-many years ago. We are also concerned about being labeled a predatory lender however we know we are not, never have been and never will be.

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#1249590 - 09/14/09 03:38 PM Re: Regulation Z changes - 10-01-09 ahkcompliance
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Has anyone seen any guidance or best practices to prove compliance with the evasion provison for HPML's. We currently do a lot of PLOC's due to the current rate enviromnment. Many of this are 100% funded after the recission period.

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#1250073 - 09/15/09 02:16 AM Re: Regulation Z changes - 10-01-09 bstritecky
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"Managemetn is now questioning if all our loans are considered higher priced, would regulators then come back and considered violations as predatory lenders? "

I'm not sure I understand. Violations of the HPML provisions will be just that - violations of Regulation Z. The mere making of HPMLs is not predatory lending.

"we are contemplating changing our underwriting guidelines to underwrite all our RESPA loans as if they are all HPML. This way we don't have to figure out if the loan is or is not a HMPL."

Except for the escrow requirements.
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#1250134 - 09/15/09 01:10 PM Re: Regulation Z changes - 10-01-09 RR Joker
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Currently we are advertising that we have no closing costs associated with our HELOC products. I believe that effective October 1 if we continue to advertise no closing costs that becomes a trigger term and requires additional disclosures, can anyone help me clarify this? Also, if it does require additional disclosures for advertising no closing costs, where could I find these at? Thank you.

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#1250138 - 09/15/09 01:14 PM Re: Regulation Z changes - 10-01-09
Deena Offline
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This is actually already in effect and has been for years. See the OSC to 226.16(d)(1).

16(d) Additional Requirements for Home Equity Plans

1. Trigger terms. Negative as well as affirmative references trigger the requirement for additional information. For example, if a creditor states no annual fee, no points, or we waive closing costs in an advertisement, additional information must be provided. (See comment 16(d)–4 regarding the use of a phrase such as no closing costs. ) Inclusion of a statement such as low fees, however, would not trigger the need to state additional information. References to payment terms include references to the draw period or any repayment period, to the length of the plan, to how the minimum payments are determined and to the timing of such payments.
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#1250160 - 09/15/09 01:54 PM Re: Regulation Z changes - 10-01-09 RR Joker
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Quote:
but how is a constr/perm loan exempt


A const/perm loan is for the initial construction (and long term financing) of the dwelling. Since it is for the initial construction of the dwelling then how is it not exempt?
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#1250357 - 09/15/09 06:22 PM Re: Regulation Z changes - 10-01-09 Dan Persfull
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Okay- I guess I have really been focused on the real estate secured mortgage rates and HPMLs and today I have just realized that our mobile home with no land loans could also be a HPMLs (I did think about the escrow part, just did not connect to the underwriting part- too much in my brain). So we are to use the same APOR tables, right, and everything that goes with the HPMLs? I am slightly paniced right now. Thanks for everyones help in all of these changes.
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#1250447 - 09/15/09 07:35 PM Re: Regulation Z changes - 10-01-09 Dan Persfull
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FINALLY ABOVE the gnat line
Originally Posted By: Dan Persfull
You have a discounted rate which is what is illustrated in my above cite. If you use the payment shown for the fully indexed rate it would meet the requirement for the presumption of compliance. Let's say the fully indexed rate won't be reached until the second rate change due to a cap. Your stream will look similar to:

60 X $100
12 X $125
288 X $175

You would use the $175 for repayment ability.



I am totally confused by this. We don't offer that type of product. Our ARMs are 10-15-20 year term loans that have an interest rate based on an index + a margin. The rates change either every 3 years or every 5 years based on the plan chosen. The rate limitations can vary based on plan - for example one plan has a cap of 16% and another plan has a cap of 2% per rate change. Both have a floor of 6%.

Today the rate would be 6% since prime +1 isn't greater than 6%.
In three years - depending on the plan and the movement of the index, the rate could be 8% or 16%. There isn't an alternative payment stream to choose from on the note.

HELP!
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#1250471 - 09/15/09 07:53 PM Re: Regulation Z changes - 10-01-09 waldensouth
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You have 3/3 and 5/5 ARMs with either a 10, 15 or 20 year term.

I assume your floor is 6% therefore you don't have a discounted or a premium rate and that is why you only show one payment stream. You would base your repayment ability on the disclosed "fully indexed rate" at the time of consummation. In this case your floor rate.
Last edited by Dan Persfull; 09/15/09 07:56 PM. Reason: To add an additional comment.
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#1250476 - 09/15/09 07:57 PM Re: Regulation Z changes - 10-01-09 Dan Persfull
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FINALLY ABOVE the gnat line
So no "gyrations" and recalculations unless we have discounted rates? YEAH - much easier to explain.
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#1250592 - 09/15/09 09:37 PM Re: Regulation Z changes - 10-01-09 waldensouth
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Can someone please tell me if the implementation of the HPML requirements affect what is already in affect under HOEPA. In other words, are there particluar loans that are currently subject to HOEPA that after 10/1/09 will no longer be subject to HOEPA (temporary and bridge loans)?

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#1250607 - 09/15/09 09:57 PM Re: Regulation Z changes - 10-01-09 Denovo Co
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Giant side of TX
The ammendments did not change any existing HOEPA requirements, just created a new "segment" of loans between 'prime' and 'HOEPA'
AND added some requirements that apply to all Mortgage Loans
 Lender must provide the Early TIL within 3 business Days of receiving an application
 Lender can not charge a fee (except for credit report) until after the consumer receives the Early TIL (and GFE as applicable)
 Lender can not coerce, influence, or encourage an appraiser to misstate a value
 Making a loan when you know that prohibited conduct occurred
 Servicers must credit payments on the day they are received
 Can not “Pyramid” late fees
 Must provide an accurate payoff statement within a “reasonable” time after requested
 The advertising requirements
ETC ......
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