Skip to content
BOL Conferences
Thread Options
#2190290 - 08/23/18 03:43 PM UCD on business purpose
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
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????

Return to Top
TRID - TILA/RESPA Integrated Disclosures Rule
#2190343 - 08/23/18 05:37 PM Re: UCD on business purpose Truffle Royale
Skittles Online
10K Club
Skittles
Joined: Sep 2002
Posts: 13,965
TN
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.
_________________________
My Opinions Only

Return to Top
#2190357 - 08/23/18 05:54 PM Re: UCD on business purpose Truffle Royale
raitchjay Online
Power Poster
Joined: Oct 2009
Posts: 9,088
OK
(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.
_________________________
I'm fixin' to fix that.

Return to Top
#2190361 - 08/23/18 06:01 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
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.

Return to Top
#2190390 - 08/23/18 06:50 PM Re: UCD on business purpose Truffle Royale
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2190429 - 08/23/18 08:56 PM Re: UCD on business purpose rlcarey
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
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.

Return to Top
#2190444 - 08/23/18 10:40 PM Re: UCD on business purpose Truffle Royale
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
OK - I may have slightly misread this the other morning before enough coffee:

https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/SFR-Decision-8212018.pdf
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2190543 - 08/24/18 05:14 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
It's noon and that still sounds like the GSEs are moving out of consumer rental type business.

Return to Top
#2190681 - 08/27/18 04:35 PM Re: UCD on business purpose Truffle Royale
MonicaMc Offline
100 Club
MonicaMc
Joined: Dec 2013
Posts: 238
Land of Oz
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.

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

10K Club
Joined: Jul 2003
Posts: 17,395
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.

Return to Top
#2191315 - 08/30/18 08:34 PM Re: UCD on business purpose Truffle Royale
Luv2run Offline
Platinum Poster
Joined: Jan 2015
Posts: 610
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.
_________________________
If at first you do succeed....try something harder
-fortune cookie

Return to Top
#2191319 - 08/30/18 08:49 PM Re: UCD on business purpose Truffle Royale
JC (Darth HMDA) Offline
Diamond Poster
JC (Darth HMDA)
Joined: Dec 2013
Posts: 1,399
CA
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.
_________________________
The opinions expressed are mine, do not represent the opinions of my employer, and they are not to be taken as legal advice.

Return to Top
#2191335 - 08/31/18 01:20 AM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
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

Return to Top
#2191347 - 08/31/18 01:13 PM Re: UCD on business purpose Truffle Royale
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
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.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2191375 - 08/31/18 02:31 PM Re: UCD on business purpose Truffle Royale
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,395
This^^^ is just what I was hoping someone would tell me! ok...now to get my LOS to do this too.
Thanks, Dan.

Return to Top
#2231138 - 02/17/20 05:02 PM Re: UCD on business purpose Truffle Royale
Brooke H Offline
Junior Member
Joined: Mar 2015
Posts: 44
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?

Return to Top
#2231140 - 02/18/20 01:11 PM Re: UCD on business purpose Truffle Royale
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,227
Galveston, TX
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.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2231162 - 02/18/20 04:19 PM Re: UCD on business purpose Truffle Royale
Brooke H Offline
Junior Member
Joined: Mar 2015
Posts: 44
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.

Return to Top