Assumptions & Disclosures-Help Please

Posted By: LostinRegLand

Assumptions & Disclosures-Help Please - 02/24/18 12:34 AM

Hello I have a question on a assumption and how this will work. I have read 1026.20(b) and 1026.2(a)(24)-5 and still have questions.

Scenario LLC owns the property as a spec they had built to sell and now the owners of the LLC have decided to assume the loan into their personal names to make the house their primary residence.

From looking at .20(b)-1 it will meet all three elements so new disclosures are required-LE and CD? From reading I say yes but we haven't made an assumption in years (i have never been a part of an assumption so this in new territory to me) and just want to make sure we will be handling everything properly. Anything else I should take into consideration on the disclosure end? Any other areas I need to read into to get a better understanding of the rules?
Posted By: rlcarey

Re: Assumptions & Disclosures-Help Please - 02/24/18 12:05 PM

If the current loan is to the LLC, the assumption transaction is going to be exempt from Regulation Z.

1026.20(b) - Comment 5. Status of parties. Section 1026.20(b) applies only if the previous debtor was a consumer and the obligation is assumed by another consumer. It does not apply, for example, when an individual takes over the obligation of a corporation.
Posted By: LostinRegLand

Re: Assumptions & Disclosures-Help Please - 02/26/18 04:33 PM

Thank you. I read this three times Friday night but I missed that. I think I was so caught up on what we needed to disclose that I missed the when we didn't need to. Very Helpful
Posted By: LostinRegLand

Re: Assumptions & Disclosures-Help Please - 02/26/18 04:43 PM

To add on to this on Friday I did see a previous post from 2015 where a similar question was asked -Loan to LLC to build home, LLC was being dissolved and owners were assuming the loan. The purpose of the loan was slightly different as the home was occupied by the LLC members son but it was still an individual taking over the obligation of a corporation and the answer on that question looks like it was yes follow the assumption rules. Just trying to determine what was different on that one then on my question. https://www.bankersonline.com/forum/ubbthreads.php/ubb/showflat/Number/2010817/Searchpage/1/Main/234342/Words/%22dwelling+secured+loanassumption%22/Search/true/dwelling-secured-loan-assumption#Post2010817
Posted By: rlcarey

Re: Assumptions & Disclosures-Help Please - 02/26/18 05:03 PM

Not sure - you are going to have to wait for Dan for the basis of that post.
Posted By: Dan Persfull

Re: Assumptions & Disclosures-Help Please - 02/26/18 06:51 PM

5. Status of parties. Section 1026.20(b) applies only if the previous debtor was a consumer and the obligation is assumed by another consumer. It does not apply, for example, when an individual takes over the obligation of a corporation.

In all my years in compliance I can honestly say I have never seen, or probably more accurately stated never registered in my mind this specific citation.
Posted By: LostinRegLand

Re: Assumptions & Disclosures-Help Please - 02/26/18 08:41 PM

Thank you for responding. Makes me feel better that I still overlook stuff. smile

Have a great day
Posted By: MonicaMc

Re: Assumptions & Disclosures-Help Please - 09/21/18 09:13 PM

Assumption question--
We have a VA purchase Assumption. A vet is assuming the loan of another vet.
Terms of the current loan - loan amount, term, rate and P & I - should be the same for the new Assumption loan.
The current owner has made additional principle payments over the 7 years he has owned it, so using the current terms, the P & I doesn't match on the new loan. It sounds like re-amortizing a loan is not the normal practice, so is not something our Servicing dept is wanting to do.
Here is my question. If we do some changes in our system to get the P & I on the new loan to match the current loan, then our term will be wrong (maturity date will not match the current mortgage filed) on the LE/CD. The difference is about 6 years. Wouldn't it be not in good faith to disclose all of the current terms, even though we know the term/maturity date is incorrect? Or are we okay because at the higher P & I payment, the loan will mature sooner than the term shown?