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#1534030 - 04/11/11 07:50 PM HPML and Renewals
beegee Offline
Diamond Poster
Joined: Feb 2004
Posts: 1,087
South
Its my understanding that if we "renew" a loan - then HPML does not apply.

Are there any changes in the regulatory pipeline that may change this?

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Lending Compliance
#1535050 - 04/13/11 05:02 PM Re: HPML and Renewals beegee
moon Offline
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moon
Joined: Oct 2008
Posts: 3
Georgia
I was under the same impression and found out last week I was wrong. Renewals with no new money using a personal residence as collateral to consumers for consumer purposes are subject to RESPA and can still be subject to HPML. HPML applies to any consumer purpose loan secured by a principal dwelling....including renewals. HPML can also apply if it is a mobile home only loan (no land) as long as the MH is the consumer's principal dwelling.

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#1535057 - 04/13/11 05:10 PM Re: HPML and Renewals moon
beegee Offline
Diamond Poster
Joined: Feb 2004
Posts: 1,087
South
Thanks moon - I'm not sure thats accurate. Here is a recent relative post on this.

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1534678#Post1534678

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#1535058 - 04/13/11 05:11 PM Re: HPML and Renewals moon
raitchjay Online
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Joined: Oct 2009
Posts: 8,674
OK
I'm never sure what is meant when i see the term "renewal", but if it means a simple modification/extension/deferral (which is what i always assume it means), the HPML rules do not currently apply.
_________________________
I'm fixin' to fix that.

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#1535061 - 04/13/11 05:13 PM Re: HPML and Renewals raitchjay
beegee Offline
Diamond Poster
Joined: Feb 2004
Posts: 1,087
South
Exactly

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#1535871 - 04/14/11 08:24 PM Re: HPML and Renewals beegee
Hi Offline
Member
Joined: Jun 2003
Posts: 54
I was the one that posted the question in the post you refered to. We posed the question to an individual who performs compliance consulting and below is the answer we received, which basically is "depends on regulator and how they interpret". Got to love all the gray areas!!! I miss those days when you could rely on what was in print.

"I wish this was an easy question to ask, but it really depends upon the examining agencies and, without sound silly, when and how a bank asks the question. Briefly, here's the problem: a renewal versus a refinancing.
There's no question that if a bank is refinancing a balloon on a consumer RE note, the HPML spread must be verified to determine if the refinance will be a HPML. But, since by definition, a renewal usually involves an extension-type agreement and technically, the original note/obligation is not being replaced - regulation Z disclosures/provisions are not applicable. However, at a convention a few months ago that I attended, representatives from several of the examining agencies (not all of them, however) said that if the renewal rate is going to go up - then the spread from the APOR to the new renewal rate must be verified for HPML purposes. In my little, non-legal opinion, I think this is ridiculous. But, I'm not the one regulating banks.

My suggestion to you is to possibly review your question with your regulator. With the agencies issuing all kinds of opinions lately (look at the FDIC Overdraft Guidance) that are not the same between all the agencies, this is one example of a very gray overall scenario. I don't believe there would be any question that the HPML provision would not need to be reviewed if the renewal rate is going to be the same or even being lowered from the original note rate; I just don't know for sure what we need to do if the renewal rate is going to be higher than the original note rate.

Sorry for the grayness, but isn't that the wonderful part of compliance!!??!!?!?!?"

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