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#2129293 - 05/04/17 08:50 PM Mortgage loan assumption
mac444 Offline
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Posts: 77
If a request to assume a mortgage, say death of owner and daughter/son wants to assume the current mortgage, would this be subject to TRID?

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TRID - TILA/RESPA Integrated Disclosures Rule
#2129312 - 05/04/17 10:27 PM Re: Mortgage loan assumption mac444
rlcarey Offline
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rlcarey
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Galveston, TX
No. In the August 12 2016 CFPB webinar, they clarified this:

Ayoubi: And a follow-up question on assumption: [Bullet 2] Would a successor-in-interest be
considered a “subsequent purchaser” for the purpose of the assumption disclosure?

Arculin: This question relates directly to the Bureau’s July 11, 2014 Interpretative Rule, which clarified
that when a successor-in-interest who previously acquired title to a dwelling agreed to be added as an
obligor or substituted for an existing obligor on a credit transaction secured by that dwelling, the creditor’s
written acknowledgement of the successor as obligor is not subject to the ability to repay rule – that
section is § 43 of Regulation Z – because such a transaction does not constitute an assumption as
defined in § 20(b).

A few things. That interpretative rule was about the applicability of the ability to repay rule, not directly
related to the TILA-RESPA Integrated Disclosures. However, it did provide an interpretation of § 20(b)
where assumption is defined in Reg Z, which is not unique to the ability to repay rule. In fact, § 20
explains when post-consummation events, both a refinancing under § 20(a) and an assumption under §
20(b), constitute new transactions under Regulation Z and thus require new disclosures to be provided to
consumers. The Integrated Disclosure Rules and the requirements to provide new disclosures to
consumers will, like existing disclosure rules under TILA that are used today, tie to these definitions.
Accordingly, because the Interpretative Rule provides guidance on whether or not a creditor’s substitution
of the successor-in-interest as obligor constitutes an assumption according to § 20(b) [and] clarifies that
in the factual scenario described in that Interpretative Rule [that] it does not, that guidance also would be
applicable to the issue of whether new disclosures are required to be provided under § 1026.19(e) and (f).
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#2129587 - 05/08/17 05:54 PM Re: Mortgage loan assumption mac444
mac444 Offline
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Joined: May 2011
Posts: 77
Thank you for the info! Can you please provide the link or power point for this webinar as I'm not finding it in the outlook live webinar index?

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#2129606 - 05/08/17 07:04 PM Re: Mortgage loan assumption mac444
rlcarey Offline
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rlcarey
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Galveston, TX
I'm sorry, it was August 26, 2014. I have no idea where that date I typed came from???
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#2129645 - 05/09/17 12:25 AM Re: Mortgage loan assumption mac444
mac444 Offline
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Joined: May 2011
Posts: 77
Thank you!

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#2156013 - 12/05/17 02:39 PM Re: Mortgage loan assumption mac444
Compliance NABW Offline
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I was just working on the same issue. This is the Interpretive Rule the CFPB referenced in the paste Randy took from the webinar.
http://files.consumerfinance.gov/f/201407_cfpb_bulletin_mortgage-lending-rules_successors.pdf

It would also seem that the RoR does not come into play here either, as the substitution of the heir on the obligation is not a "residential mortgage transaction" based on the following:

12 CFR 1026.2(a)(24) - 5

ACQUISITION.

A residential mortgage transaction finances the acquisition of a consumer's principal dwelling. The term does not include a transaction involving a consumer's principal dwelling if the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title.

The CFPB noted this in the Interpretive Rule as a reason why such a situation is not considered an "Assumption," i.e. because the successor has already acquired interest in the dwelling.
Last edited by Justin C.; 12/05/17 02:57 PM.
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#2156327 - 12/06/17 09:41 PM Re: Mortgage loan assumption mac444
Docs Offline
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Justin C. said It would also seem that the RoR does not come into play here either, as the substitution of the heir on the obligation is not a "residential mortgage transaction" Actually, if the transaction is not a "residential mortgage transaction" [RMT] then it would be subject to RoR if no other exemptions apply. However, if a transaction is a RMT then it is exempt from RoR.
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#2156397 - 12/07/17 02:19 PM Re: Mortgage loan assumption mac444
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Here's the full text .2(a)(24)-5

5. Acquisition. i. A residential mortgage transaction finances the acquisition of a consumer's principal dwelling. The term does not include a transaction involving a consumer's principal dwelling if the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title.

ii. Examples of new transactions involving a previously acquired dwelling include the financing of a balloon payment due under a land sale contract and an extension of credit made to a joint owner of property to buy out the other joint owner's interest. In these instances, disclosures are not required under §1026.18(q) (assumability policies). However, the rescission rules of §§1026.15 and 1026.23 do apply to these new transactions.

iii. In other cases, the disclosure and rescission rules do not apply. For example, where a buyer enters into a written agreement with the creditor holding the seller's mortgage, allowing the buyer to assume the mortgage, if the buyer had previously purchased the property and agreed with the seller to make the mortgage payments, §1026.20(b) does not apply (assumptions involving residential mortgages).
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