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#1955883 - 08/21/14 08:28 PM
Pre-Closing Review, So what?
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Member
Joined: Nov 2013
Posts: 55
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We have just implemented a second review process for our portfolio and secondary market loans that are scheduled before allowing the loan to close. Using samples of checklists, I have created checklists to use in my review. The problem that I am encountering is: When I come to a sloppy, incomplete mortgage application that has errors, (blanks, inconsistent information), I am writing up what I find or, don't find, in that file. What do most banks do to correct the mistakes and omissions on the application? Do I insist that the loan file be returned to the lender for them to correct the application, that the customer has signed (I can't figure that out, they aren't even reading it) ? Some of the application information is not really a reg. violation. Just wrong or missing information. But, in my pre-closing review, if I note that the GMI is missing, for example, when it should've been asked, I know for a non-HMDA bank, that we have violated Reg. B. Should I require that the lender produce the GMI, ( I think they can pull off a sheet on Compliance One), and have the customer sign (when appropriate) to avoid certain violation or if I let it close without the GMI information? Or is a violation a violation, regardless and just allow the loan to close? Notice to the Home Loan Applicant, another example, if incorrect, I note the problem, have the Lender correct but is there a timing element? Certain errors, require re-disclosure and a closing waiting time. I am just really uncertain as to what I should expect the lender to correct and how, or delay closing if necessary. I am constantly told, I report, I don't enforce. But if I am expected to delay a closing, I need guidance. Thank you.
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#1956104 - 08/22/14 03:01 PM
Re: Pre-Closing Review, So what?
Truffle Royale
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Member
Joined: Nov 2013
Posts: 55
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Thank you for your answers. I have met with our processor and underwriter this morning and we will tweak the way we have been stumbling through this process. I felt in the beginning of this process we would use the errors that I found as a tool to train the lenders, repetitive findings indicate a breakdown with training, uncaring lenders or maybe the system. Now, after seeing the same thing over and over again with no-one really caring what condition their documents are in, I am wasting too much time and as you said "Management has to back you or you can review till you're blue and nothing will change" this compliance officer will become a serial killer. I am quickly becoming discouraged. Thank you again for your direction.
Can I ask another question while I am on a roll? We are a small rural bank and our lenders are spread out quite a distance from each other and closings happen without the lender attending. What do you do on the final application that is signed by the borrower at closing and calls for the lender to sign. Do you send the final to the lender to sign? Is the original application with the lenders signature OK? Just curious about how to go about that here. Thank you!
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#1956138 - 08/22/14 03:49 PM
Re: Pre-Closing Review, So what?
Mari Keller
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Power Poster
Joined: Jun 2003
Posts: 7,658
Florida
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Mari, one of the main reasons to have the final signed is due to the reps and warranties to the information in the final. If there are differenes, and potentially a charge-off because some of the information used in underwriting (and reported on the final application) is false (mis-stated/inaccurate, etc.) then the creditor could use the signature on the final application to say the borrower lied, and present it in court.
One of the reps & warranties in signing from the 1003 - . "(1) the information provided in this application is true and correct as of the date set forth opposite my signature and that any intentional or negligent misrepresentation of this information contained in this application may result in civil liability, including monetary damages, to any person who may suffer any loss due to reliance upon any misrepresentation that I have made on this application, and/or in criminal penalties including, but not limited to, fine or imprisonment or both under the provisions of Title 18, United States Code, Sec. 1001, et seq.;"
Last edited by Rocky P; 08/22/14 07:22 PM. Reason: added wording
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#1956525 - 08/25/14 02:31 PM
Re: Pre-Closing Review, So what?
Mari Keller
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Diamond Poster
Joined: Sep 2008
Posts: 2,474
Midwest
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I do a pre-closing review. We only primarily do in-house loans. The goal is to prevent errors from occurring. If you find something that needs better documentation or can be fixed, we get it fixed. However, that sometimes does delay the closing if you need to re-disclosure. Management has to be behind you for you to be able to do that.
I use the errors that I find that cannot be fixed as training opportunities.
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#1957835 - 08/28/14 04:27 PM
Re: Pre-Closing Review, So what?
Mari Keller
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New Poster
Joined: Mar 2012
Posts: 24
Arkansas, USA
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Anyone who can help - Because of continuous violations of the Flood Disaster Protection Act, we have a pre-closing review for all real estate loans that are found to be in the flood zone. (Don't bother, it still doesn't help.) Anyway, I am looking for where in the Regulation or Q&As it states that a lender can accept an existing policy with the loss payee clause, a policy declaration page with agent's signature and date, OR a new policy application with agent's signature and date and proof of payment for that new coverage. I have been looking for this for two days!! Thanks!!
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#1958165 - 08/29/14 02:58 PM
Re: Pre-Closing Review, So what?
Mari Keller
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New Poster
Joined: Mar 2012
Posts: 24
Arkansas, USA
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Hi, JL - Thanks for your response; I appreciate you taking your time to help me.
In this instance, the file has a "Change Endorsement". The customer already had a policy - expiring 9/24/14. The agent sent us a "Change Endorsement"; 1) the effective date is shown at the top as 09/24/14, the date the policy will renew, AND 2) the page isn't signed or dated by the agent. I don't think the signature and date not being present applies because I don't think the "Change Endorsement" is sufficient evidence of coverage. But even if the "Change Endorsement" was sufficient, it's past dated at the top, and it's not signed and dated at the bottom.
What does the community think about the "Change Endorsement"? Is it sufficient? (Assuming all the information was stated and correct on the form.) I don't think that it is, but I want to try to give my folks the best information I can.
I appreciate any comments anyone can offer!
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AFS Compliance, ALLL, Accounting,Community Banking
Not every day is meant for flying; reserve the cape for days you need it!
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