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#2190290 - 08/23/18 03:43 PM UCD on business purpose
Truffle Royale Offline

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Quote:
From FNMA:
Yes, based on the requirements for UCD, both GSEs not just Fannie Mae, but also Freddie Mac have been requiring a Closing Disclosure for all investment property loans. We understand that these loans are considered Non-TRID, however, being that UCD is a GSE requirement that is the requirement that needs to be met in order for a successful loan delivery. We have been communicating this since last year thru various means, such as conferences, FAQs, UCD Advisory Forums, Webinars, etc.


I was just forwarded this today with a list of loans that will now have to have CDs. Anyone else hit this yet? Are you just treating investment (business purpose) as TRID with LEs, etc., or just doing a CD at the end for FNMA? I'm not ashamed to admit that this has me baffled. What are the GSEs thinking????

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TRID - TILA/RESPA Integrated Disclosures Rule
#2190343 - 08/23/18 05:37 PM Re: UCD on business purpose Truffle Royale
Skittles Online
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Our secondary market group treats these loans exactly like consumer purpose loans with LEs, CDs, etc. I think it's overkill, but the investors are requiring them.
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#2190357 - 08/23/18 05:54 PM Re: UCD on business purpose Truffle Royale
raitchjay Offline
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(Disclaimer: we don't sell loans on the secondary market)

Is there any kind of actual logic that these investors use to require this overkill? I'm always curious as to what they feel like they are actually accomplishing.
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#2190361 - 08/23/18 06:01 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

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None that I know of raitchjay. That's the part that is really bugging me. FNMA has never been one to exhibit 'my sandbox, my rule' logic before. To say pppffftt on TRID re: business purpose is so unlike them. But I suppose just doing LE & CD for everything will be easier for those that now try to decide what is business purpose and what isn't. :sigh:

Anyone else doing this or something different? I'm just not finding any info out there in research. Just doing LE & CDs on business purpose loans makes me feel like I'm following the Pied Piper off the bridge.

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#2190390 - 08/23/18 06:50 PM Re: UCD on business purpose Truffle Royale
rlcarey Offline
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Since they now are digitizing most everything - everything has to fall into the cookie cutter. Plus, they are shortly going to be exiting the rental market.
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#2190429 - 08/23/18 08:56 PM Re: UCD on business purpose rlcarey
Truffle Royale Offline

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Quote:
Plus, they are shortly going to be exiting the rental market.

Translation we won't be able to sell investment properties to FNMA anymore??? I hadn't heard that. Was it in a bulletin or did you get that from one of your sources, Randy? That will make it easier for us to put a finger in the dike for the short while rather than revamp procedures.

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#2190444 - 08/23/18 10:40 PM Re: UCD on business purpose Truffle Royale
rlcarey Offline
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OK - I may have slightly misread this the other morning before enough coffee:

https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/SFR-Decision-8212018.pdf
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#2190543 - 08/24/18 05:14 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

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It's noon and that still sounds like the GSEs are moving out of consumer rental type business.

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#2190681 - 08/27/18 04:35 PM Re: UCD on business purpose Truffle Royale
MonicaMc Offline
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We sell our mortgage loans to Freddie and have always issued LEs and ran UCD on Investment property loans. We will not be affected by their decision to not enter the rental market. Current requirements for 1-4 units and 6 or less properties financed will stay, for now.

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#2191289 - 08/30/18 06:57 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

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So you're doing TRID on non-TRID loans. Have you had any issues like having to cure on a loan that really doesn't qualify for TRID?
That's what I'm concerned about. You give an LE and a CD and you're bound by all the TRID rules.

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#2191315 - 08/30/18 08:34 PM Re: UCD on business purpose Truffle Royale
Luv2run Offline
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FWIW we also sell to Freddie and also use the TRID disclosures on 1-4 family rental units. We issue the LE and the CD. We do not do many of these so I cannot say there have been many (if any) that would require a cure when it's all said and done.
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#2191319 - 08/30/18 08:49 PM Re: UCD on business purpose Truffle Royale
Darth HMDA, CRCM, CAMS Offline
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In my past employer we ran our rentals as consumer mortgages as well because we sold to Fannie/Freddie. If we issued TRID's we would cure tolerance violations as if they were consumer loans.

I wouldn't feel confident making the argument that we decided to treat them as consumer loans but decided we didn't need to make them whole due to a bank error, tolerance change, whatever.

And hey the black hole is vanishing so most of the expensive fees we had to eat will be disappearing (rate lock fees after CD).

best of luck.
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#2191335 - 08/31/18 01:20 AM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

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Luv2run, we don't do tons either but until June we were doing them on HUDs so no tolerance worries.

Darth, I agree the hole vanishing is reassuring.

Bottom line tho, I HATE one hand of the government octopus forcing me to do the exact opposite of what the octopus's other hand is telling me to do. mad

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#2191347 - 08/31/18 01:13 PM Re: UCD on business purpose Truffle Royale
Dan Persfull Offline
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We do not provide a LE for rental property loans. We do provide the CD due to UCD requirements but we do not provide it 3 business days before closing. We do not treat these loans as consumer and we do not make any cures if any fees increase.

Using the CD is not treating or documenting the loan as a consumer loan, it is nothing more than a glorified disbursement/settlement statement.
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#2191375 - 08/31/18 02:31 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

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This^^^ is just what I was hoping someone would tell me! ok...now to get my LOS to do this too.
Thanks, Dan.

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#2231138 - 02/17/20 05:02 PM Re: UCD on business purpose Truffle Royale
Brooke H Offline
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I realize this is an old thread, but those of you that are treating Investment properties the same way as other consumer mortgages, how do you handle HMDA reporting? Do you mark these as business/commercial? Do you report the rate spread?

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#2231140 - 02/18/20 01:11 PM Re: UCD on business purpose Truffle Royale
rlcarey Offline
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UCD compilation requirements for investor purposes and reporting for HMDA are oil and water. One is an investor requirement and the other is a Federal regulation. You have to comply with both requirements. Just because you calculate an APR and deliver a CD on a business purpose loan, does not make it a consumer loan for HDMA.
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#2231162 - 02/18/20 04:19 PM Re: UCD on business purpose Truffle Royale
Brooke H Offline
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Thank you, rlcarey. That was what I was thinking, but like to bounce it off others to make sure I'm on the right path.

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