My bank is looking at a skip a payment program. I am trying to find out if there are any state limitations or compliance issues for this type of program and if we choose to charge a fee. I am located in Kansas.

Thanks

I see a potential UDAAP/unfair business practice issue in connection with how you may disclose the effect of a skip a payment program. If a customer is permitted to skip a payment then the customer will pay more interest over the life of the loan as compared to the interest they would pay on the loan as originally amortized (because the principal balance will not go down in the month the payment is skipped).

Will you adequately disclose to the borrower that if they decide to skip a payment, their cash flow will improve for the month in which the payment is skipped, but they will ultimately have to pay the skipped payment and more interest over the life of the loan? I can see regulators criticizing a skip a payment program if they think the bank isn't adequately disclosing the long term downside to the borrower in terms of having to pay more interest (which results in a greater profit to the bank).

Don't forget that if it is a real estate secured loan - then you need a new flood determination since you have 'extended' the loan.

Prior threads

http://www.bankersonline.com/forum/ubbth...rue#Post1862442

http://www.bankersonline.com/forum/ubbth...rue#Post1464258

Search on "skip a payment" in quotes to see more.

Can I chime in on this? Are we required to pull a new flood determination on a renewal or extension if we have life of loan monitoring on the current determination? Seems redundant if so.

The regulatory requirement is that a lender can use an existing FHD if it is less than seven years old and if there has not been a map change. Your FHD will reference the specific Flood Insurance Rate Map (FIRM) used to make the flood hazard zone determination. If that FIRM changes, they you would need an updated FHD form in file.

A lender is free to document this in a number of ways according to your own internal policies. That might include 1) pulling a new FHD, 2) internally reviewing to ensure the map used on the FHD has not been updated by using the FEMA Map Service Center (https://msc.fema.gov/portal/home ) and making a notation on the original FHD regarding the review, or 3) using an update feature provided from your FHD provider.

Any of those would be acceptable.

The fact that you might be notified if a property goes into or out of flood zone however may not mean that a map has not been updated, if the flood zone of the property has not changed with a map update.

Thank you Randy. We'll look into a way to re-cert those determinations and provide them to customers.

Well, the FHD does not have to be given to a borrower, only the notice required if they are in a SFHA.