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#1258953 - 09/29/09 11:10 PM
Re: Regulation Z changes - 10-01-09
P*Q
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100 Club
Joined: Jul 2004
Posts: 141
A Mile High
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We advertise rates on our website. However, to access them, the consumer must go through our mortgage rate calculator. Our marketing department is trying to argue that this is "direct personal contact" under Reg. Z and is, thus, not an advertisement. I'm not buying it. In all likelihood I'm going to have the calculator taken down until we can disclose an entire payment stream for our adjustable rate mortgages.
The other issue we have is that we have a mortgage rate sheet that our lenders pass out for inquires. This seems more like a "direct personal contact", but we have always treated it as an advertisement. I will probably pull the plug on this as well.
I sure wish I could come up with the Federal Register when "direct personal contact" was added to the Commentary. I'd love to read the discussion. Can anyone point me in the right direction?
PQ - If you are advertising rates for variable rate loans you have to include the rate at adjustment (based on today's index and margin) and all the payment streams (basically, it is going to look like the payment section of the TIL). Oh yes, it is ugly...very ugly.
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My employer will rapidly disavow any connection of any kind to any posting I have made or may now or in the future make.
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#1258974 - 09/30/09 12:34 AM
Re: Regulation Z changes - 10-01-09
Compliance Geek
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10K Club
Joined: Jul 2001
Posts: 84,330
Galveston, TX
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"Direct personal contacts, such as follow-up letters, cost estimates for individual consumers, or oral or written communication relating to the negotiation of a specific transaction."
A website calculator does not rise to the level of negotiating a specific transaction nor is a rate sheet that you pass out for inquiries.
I don't think you need anymore of a definition than found above in the commentary to make that determination.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#1259018 - 09/30/09 12:30 PM
Re: Regulation Z changes - 10-01-09
rlcarey
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Power Poster
Joined: Aug 2002
Posts: 3,094
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If you only include the composite APR on discounted variable rate products, you don't have to disclose info about the discount period, (pmt stream, duration of the initial term, correct?
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Opinions are my own and not of my employer.
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#1259185 - 09/30/09 03:20 PM
Re: Regulation Z changes - 10-01-09
ahou
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Gold Star
Joined: Jun 2007
Posts: 447
New England
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If we have a borrower who is self-employed, and the loan is a HPML, do we have to verify the information on the tax returns by getting the tax transcripts, or can we just use the tax returns?
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Sometimes the questions are complicated and the answers are simple. - Dr. Suess
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#1259189 - 09/30/09 03:21 PM
Re: Regulation Z changes - 10-01-09
ahou
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100 Club
Joined: Jul 2004
Posts: 141
A Mile High
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I would love it if this was true. However, doesn't the commentary to 226.24(c) and 226.24 (f) rule it out? (4) i. A creditor or seller may promote the availability of the initial rate reduction in such transactions by advertising the reduced simple annual rate, provided the advertisement shows with equal prominence and in close proximity the limited term to which the reduced rate applies and the annual percentage rate that will apply after the term of the initial rate reduction expires. See § 226.24(f). Feel free to correct me if I'm misunderstanding (I've misunderstood a lot lately) .
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My employer will rapidly disavow any connection of any kind to any posting I have made or may now or in the future make.
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#1259228 - 09/30/09 03:41 PM
Re: Regulation Z changes - 10-01-09
P*Q
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Gold Star
Joined: Jun 2007
Posts: 447
New England
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That's where I went with it, but I'm not getting much support. I think it makes sense to verify the amounts to prove that the tax returns that we have is the same as what was submitted to the IRS.
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Sometimes the questions are complicated and the answers are simple. - Dr. Suess
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#1259305 - 09/30/09 04:41 PM
Re: Regulation Z changes - 10-01-09
Truffle Royale
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100 Club
Joined: Sep 2009
Posts: 213
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I finally got around to updating my advertising checklists with the new requirements effective tomorrow - better late than never If anyone is interested in using them, I'm happy to share, but I'm new to BOL and don't know how to get things posted. Can someone show me the ropes?
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#1259319 - 09/30/09 04:58 PM
Re: Regulation Z changes - 10-01-09
BNKO
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Power Poster
Joined: Apr 2001
Posts: 4,828
Between the lines
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I finally got around to updating my advertising checklists with the new requirements effective tomorrow - better late than never If anyone is interested in using them, I'm happy to share, but I'm new to BOL and don't know how to get things posted. Can someone show me the ropes? YEAH! Email it to Michele Petry mpetry@bankersonline.com and she can help you with it.
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#1259378 - 09/30/09 05:48 PM
Re: Regulation Z changes - 10-01-09
SMQ, CRCM
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New Poster
Joined: Apr 2009
Posts: 7
Boscobel, WI
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So what do you do if you calculate their DTI ratio when figuring their "ability to pay" and it is higher than the acceptable ratio based on our underwriting standards?
I can't find anything on it...
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#1259420 - 09/30/09 06:13 PM
Re: Regulation Z changes - 10-01-09
Truffle Royale
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Platinum Poster
Joined: Apr 2005
Posts: 639
Out there
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Ok, laugh but I can't find this answer....a term shorter than 7 years...so is that 73 months? 6 years + 1 month? or 84 months? or 85 months?
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#1259503 - 09/30/09 06:59 PM
Re: Regulation Z changes - 10-01-09
YHWB
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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We are using 85 months as the balloon date to circumvent any question.
As far as exceeding your DTI...it mentions "using generally accepted qualification standards" or something close...and as you are probably aware, even the secondary market standards vary.
We will not autodecline at our DTI limit...but will build in mitigating factors such as adequate residuals, cash assets, etc as possible remedies.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1259540 - 09/30/09 07:22 PM
Re: Regulation Z changes - 10-01-09
RR Joker
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New Poster
Joined: Apr 2009
Posts: 7
Boscobel, WI
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Does the down payment fall in the category of verification of assets relied upon for the repayment of the loan?
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#1259550 - 09/30/09 07:30 PM
Re: Regulation Z changes - 10-01-09
P*Q
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Member
Joined: Jul 2009
Posts: 79
Minnesota
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We've added an 85 month balloon note, too. Adjustable rate with one rate change in 42 months--2 percent cap--external index. Does anyone see any issues with doing this?
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#1259752 - 09/30/09 09:33 PM
Re: Regulation Z changes - 10-01-09
Truffle Royale
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100 Club
Joined: Jan 2004
Posts: 180
Oklahoma
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The calculator on FFIEC website asks for Lock In Date. We only change our rates maybe twice a year. We currently do not have the customer sign any kind of "lock" agreement. Does this mean we have to use the date we close the loan?
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"Life isn't about waiting for the storm to pass...it's about learning to Dance in the rain." - Unknown
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#1259767 - 09/30/09 10:05 PM
Re: Regulation Z changes - 10-01-09
RR Joker
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10K Club
Joined: Nov 2000
Posts: 18,765
Central City, NE
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DAvid, I'm not following the conversation with you and Burgess...please help clarify this for me. Within the exceptions to "refinancing" in .20(a), the first one (not considering #2-reduction in rate/payment) refers to single pay loans...if the 5-year loan was not a single pay...then I would think it would be a refinance, not a "renewal". (1) A renewal of a single payment obligation with no change in the original terms. What this section is saying is (my paraphrase) "even if you refinance the loan (with a new loan), you don't have to give new TIL disclosures." This, of course is applying only to single pay loans with not other changes.
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#1259783 - 09/30/09 10:26 PM
Re: Regulation Z changes - 10-01-09
sjlee
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Diamond Poster
Joined: May 2005
Posts: 1,813
Giant side of TX
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The calculator on FFIEC website asks for Lock In Date. We only change our rates maybe twice a year. We currently do not have the customer sign any kind of "lock" agreement. Does this mean we have to use the date we close the loan? IMO - The key in to be consistant. Just as what date has been used previously as the "lock date" for the HMDA Rate Spread Calculator. We use the date on our "Loan Approval Sheet" - This is what shows the loan terms, including the rate; collat; etc. and is signed (by the lender or committee) and dated. For us that is when the bank is commiting to do the loan at X% Rate. I think using the note date could be reasonable - there is a prior post by Dan Persfull indicating that they don't lock any rate and it could change during processing if their "Stated Rate" for that product changes, so for his institution the note date makes sense.
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My opinions are just that, and might be worth what you paid for them.
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#1259901 - 10/01/09 01:16 PM
Re: Regulation Z changes - 10-01-09
David Dickinson
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10K Club
Joined: Nov 2002
Posts: 20,656
The Swamp
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DAvid, I'm not following the conversation with you and Burgess...please help clarify this for me. Within the exceptions to "refinancing" in .20(a), the first one (not considering #2-reduction in rate/payment) refers to single pay loans...if the 5-year loan was not a single pay...then I would think it would be a refinance, not a "renewal". (1) A renewal of a single payment obligation with no change in the original terms. What this section is saying is (my paraphrase) "even if you refinance the loan (with a new loan), you don't have to give new TIL disclosures." This, of course is applying only to single pay loans with not other changes. Exactly my point. I don't believe the previous question on this was referring to a single pay...I believe it was referring to a 5-yr balloon...perhaps I misinterpreted it...I just didn't want someone thinking they could "renew" a 3-5 etc amortizing balloon loan under the exceptions to refinancings.
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My opinion only. Not legal advice. Say you'll haunt me - Stone Sour
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#1260008 - 10/01/09 02:57 PM
Re: Regulation Z changes - 10-01-09
ktac MITCH
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100 Club
Joined: Jan 2004
Posts: 180
Oklahoma
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The key on checking the rate spread is that you have to use the Final APR, correct? So if you check the rate spread today and you are under 1.5%, but the APR changes 1/8 a week later, you go check it again and the Average Prime Offer rate has changed and it could become a HPML. Am I on the right track with this?
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CRCM
"Life isn't about waiting for the storm to pass...it's about learning to Dance in the rain." - Unknown
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