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#1652473 - 01/18/12 09:21 PM Re: Flood Notice 10 days prior to closing tlevandoski
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
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Bloomington, IN
Quote:
If the 10 days reference has been removed the regulation


The 10 day rule never appeared in the regulation. It was only in the MPFIG. The 10 days is a "suggested" number of days to provide the notice before closing. The regulation says:

Timing of notice. The bank shall provide the notice required by paragraph (a) of this section to the borrower within a reasonable time before the completion of the transaction,

If I provide you the notice today and you acknowledge its receipt and you come back to me tomorrow and say hey Dan I've got my flood insurance, here's the documentation so lets close then I gave you reasonable notice to obtain the insurance. The "reasonability" of the timing would have to take into consideration the nature of the specific transaction.
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Flood Compliance
#1652481 - 01/18/12 09:45 PM Re: Flood Notice 10 days prior to closing tlevandoski
rlcarey Offline
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rlcarey
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Galveston, TX
If you provided the notice and the customer obtained flood insurance, there is no way to say this was not provided in a reasonable time (as long as you didn't have this information sitting on someones desk for weeks).

As the register says:"a borrower should receive notice timely enough to ensure that (1) the borrower has the opportunity to become aware of the borrower’s responsibilities under the NFIP; and (2) where applicable, the borrower can purchase flood insurance before completion of the loan transaction."

If you have your ducks in a row, I would be calling your ombudsman.
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#1652494 - 01/18/12 09:49 PM Re: Flood Notice 10 days prior to closing tlevandoski
lucyc Offline
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lucyc
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Agreed.

Thanks

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#1967817 - 10/07/14 08:37 PM Re: Flood Notice 10 days prior to closing tlevandoski
RVFlyboy Offline
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RVFlyboy
Joined: Oct 2000
Posts: 5,984
Soaring over Georgia
Reopening this thread because we have a pending issue with examiners.

Our process is to order the determination at application and send the notice to the borrower same day we receive the determination. We request borrower sign, date and return to us. Sometimes the borrower does not date their signature.

We are now being told we will have several violations because we have acknowledgements that are signed but not dated.

I can't find anything in the regulation that requires the borrower's acknowledgement be dated. If we can document our process is to send as soon as we receive determination, and we can document via the borrower's signature that they did receive the notice, and the borrower has flood insurance in place at closing, is this a legitimate violation citation?
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#1967828 - 10/07/14 09:01 PM Re: Flood Notice 10 days prior to closing tlevandoski
rlcarey Offline
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rlcarey
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Galveston, TX
Legitimate?? Legitimate is only in the eyes of the examiners.

I think they are grasping at straws - but straws they are.

There is a reason why there is a date space on the form. Who is to say when anybody signs a form if it is not dated. I have banks that would at least stamp the form with a "received on" stamp if it lacked a date by the borrower.

I would make the argument regarding your procedures but I am afraid the chips will fall where they may.
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#1967857 - 10/07/14 09:41 PM Re: Flood Notice 10 days prior to closing tlevandoski
David Dickinson Offline
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David Dickinson
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Central City, NE
Do you have documentation of when the notice was sent? Maybe you kept a copy with "sent on ____". I always recommend banks fill in the date as the date they sent it. Many borrowers sign but don't date the form (as you indicate). This practice would end all future arguments.
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#1976466 - 11/14/14 05:06 PM Re: Flood Notice 10 days prior to closing tlevandoski
Mrs. Rizzo Offline
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Mrs. Rizzo
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Curled up by the fire...
Do any of you specify in your policy that the 10 days are business or calendar? I would assume business days, as that offers the consumer additional time.
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#1976499 - 11/14/14 05:51 PM Re: Flood Notice 10 days prior to closing tlevandoski
rlcarey Offline
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rlcarey
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Galveston, TX
Why would you ever say something about a 10 day period in your policy. That would be loading the gun while pointed at your own foot. There is no 10-day requirement.
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#1976542 - 11/14/14 07:28 PM Re: Flood Notice 10 days prior to closing tlevandoski
John Burnett Online
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John Burnett
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Cape Cod
The problem with these "reasonable time" requirements is that we always want definition, and quickly the process becomes more important than the fact of the notice -- the conveying of the information. I agree there should be no mention of ten days (business or calendar, Mayan, Gregorian or otherwise) in policy. If the process is memorialized in procedures, refer to the wording of the rule (a reasonable time before closing).

Then I would follow David's suggestion of supplying the date on the signature line on the copy mailed to the customer and the copy retained for the record. If the customer fails to return the signed notice (many forget), have them sign the bank's copy at the closing (with the mailing date already on it to ensure they don't reflexively supply the current date).
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#1976546 - 11/14/14 07:31 PM Re: Flood Notice 10 days prior to closing tlevandoski
rlcarey Offline
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rlcarey
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Galveston, TX
ewwww - Not sure I really like that process. Sort of fudging the truth as the date is suppose to reflect the date the signature was obtained and the notice was delivered. I think that sets a bad precedent for lending staff and they will think they can do this for everything. Heck - just date everything for the borrow so we can make sure we always meet our three business day deadlines, etc.


Just send the dang thing with a return receipt and be done with it if the person isn't sitting across from you to sign it.

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#1976550 - 11/14/14 07:39 PM Re: Flood Notice 10 days prior to closing tlevandoski
David Dickinson Offline
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David Dickinson
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Central City, NE
Randy: I understand what you're saying. The bank needs to demonstrate when it was sent. You know well that people don't return things or always bring in the copy sent to them. Probably the best approach is to document "sent to customer on ____".

But let me ask: what's the difference between the bank dating the form vs. not dating the form but sending it certified mail or return receipt? The bank is simply noting when it was sent out by dating the form. If the bank doesn't date the form, there's still a "problem" when the notice is signed and dated at closing by the borrower.
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#1976560 - 11/14/14 08:16 PM Re: Flood Notice 10 days prior to closing tlevandoski
rlcarey Offline
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rlcarey
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Galveston, TX
Well, I have always experienced (maybe in error - but it has matched with the regulator expectations in my region) that just mailing has never been seen as delivered when it comes to the flood notice. Unlike some of the other regulations that specifically allow for the fact that disclosures are considered delivered when mailed. It's roots I believe are in the old MPFIG which stated:

Lenders must retain a record or evidence of the borrower’s receipt of the notice throughout the period the lender owns the loan. This record can be the borrower’s statement or initials that the notice was received directly, or the U.S. Postal Service return receipt in either hard copy or electronic format.

Right or wrong, a signature with date or some sort of return receipt are the only acceptable evidence that most examiners consider in this region.
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#2006727 - 04/08/15 01:24 PM Re: Flood Notice 10 days prior to closing tlevandoski
Disneyfan Offline
Member
Joined: Dec 2005
Posts: 59
kansas
We have evidence of the borrower receipt of the notice. My question is, is there a requirement that the customer sign the actual notification and have this in our file?

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#2006946 - 04/08/15 09:42 PM Re: Flood Notice 10 days prior to closing Disneyfan
Disneyfan Offline
Member
Joined: Dec 2005
Posts: 59
kansas
Any thoughts about the signaure requirement on the notificaiton? Thank you!

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#2007633 - 04/13/15 03:12 PM Re: Flood Notice 10 days prior to closing tlevandoski
John Burnett Online
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John Burnett
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Cape Cod
I think that Randy's response covers it. If you don't have the borrower's signature on some other form of receipt (certified mail, FedEx, etc.), you need it on the notification form, either the one sent to the borrower or the one that you (we hope) retained in file.
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#2008336 - 04/15/15 07:54 PM Re: Flood Notice 10 days prior to closing tlevandoski
David Dickinson Offline
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David Dickinson
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Central City, NE
Sorry for the delay in my response. I've been gone for about 1 ½ weeks.
Quote:
Lenders must retain a record or evidence of the borrower�s receipt of the notice throughout the period the lender owns the loan. This record can be the borrower�s statement or initials that the notice was received directly, or the U.S. Postal Service return receipt in either hard copy or electronic format.

Right or wrong, a signature with date or some sort of return receipt are the only acceptable evidence that most examiners consider in this region.

Let me clarify. Flood notices have a signature line and date next to it. I should have clarified, I'm not saying loan officers/processors should date this line. I'm recommending the date line that most have in the top right corner along with the note #, internal use area.

In my experience, I've never had an examiner criticize a bank if this date is a reasonable period of time prior to closing. IOW, no examiner has cited a bank for proving they mailed the Flood Notice a reasonable period of time prior to closing but the notice is signed and dated by the borrower at closing.
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#2095989 - 08/30/16 03:08 PM Re: Flood Notice 10 days prior to closing tlevandoski
Compliance504 Offline
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Joined: Dec 2008
Posts: 716
Tennessee
Is it ten business or calendar days? I'm not remembering what to use in the absence of the designation in rules/guidance....

I need to know for a spreadsheet calculation for a review......

Thanks!

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#2095999 - 08/30/16 03:28 PM Re: Flood Notice 10 days prior to closing tlevandoski
John Burnett Online
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John Burnett
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Cape Cod
Since ten days is only a suggestion and not a rule (the rule is that the notice be provided a reasonable period of time before closing), if you absolutely must have something definite, I'd suggest you use calendar days.
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#2096020 - 08/30/16 03:53 PM Re: Flood Notice 10 days prior to closing tlevandoski
Compliance504 Offline
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Joined: Dec 2008
Posts: 716
Tennessee
Thanks so much, John!!!

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#2098323 - 09/13/16 08:32 PM Re: Flood Notice 10 days prior to closing tlevandoski
complynewbie13 Offline
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Joined: Dec 2014
Posts: 146
Minnesota
We have had 3 cases in the last week where we are working on a "change-in-terms" to reset the balloon of a HELOC and they are in a flood zone. They are working on the paper work for the change-in-terms, but the loan officer wants the customer to come in and sign the modification next week. This doesn't leave us 10 days between disclosing the flood notice and the change-in-terms date. Do you think we are safe to just send the notice as soon as we begin working on the file and then close as soon as we can since the customer already has existing flood insurance in the file? I am very hung up on the 10 days but don't want to delay closing...because that could possible cause a loan to have to be completely redone if we don't get the "change-in-terms" done before the loan matures. On new loans we always pull the flood and send out the notice ASAP after we receive the application (generally with the early disclosures) but I feel like this is extreme with a renewal or change-in-terms. The law just says it must be provided in "sufficient time" and they later explain that that is to generally mean 10 days.... Has anyone else gotten in trouble for this? I feel like it not giving the 10 days on a renewal or modification could definitely be argued.

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#2098345 - 09/13/16 09:52 PM Re: Flood Notice 10 days prior to closing tlevandoski
David Dickinson Offline
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David Dickinson
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Posts: 18,762
Central City, NE
You do not need to delay closing to meet the arbitrary 10 day "rule". Get the borrowers the notice as soon as possible. If they come to closing with the proper amount of insurance, you gave them a reasonable period of time.
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