Vendor Guru Q&A - Lending

Latest Lending - Forced Placed Topics

Property Not In A Mandatory Purchase Flood Zone

10/09/2016

What approach do other lenders take when a property is not in a mandatory purchase flood zone, but "maps-in" during the origination of the loan? In some institutions, we've had a process to verify the flood zone prior to close, but others have allowed loans to close and immediately put the loan into the 45-day flood letter cycle?

Backdating of Force Placed Insurance

07/17/2016

I have a question related to long backdating (or just backdating) for force placed insurance. I am not finding a lot of information regarding backdating polices other than the standard 45 days that is required when placing a policy that has lapsed or expired. Does anyone know if there are current lawsuits concerning backdating a policy to an 'effective date' and charging the customer for that time even if nothing happened to their dwelling? For example, when we charge the customer on the 45th day of a new policy, but it is back dated to when their policy expired or lapsed, is this seen as a UDAAP issue with consumers? In essence we are charging them for a policy when they did not have a claim, so I am unsure what recommendations I should make regarding backdating polices. And, there are no kickbacks, this is simply a backdating question and premiums for servicing. I hope this makes sense! I am having difficulty finding any litigation and/or trends regarding this. Any feedback is welcomed. I am familiar with the process of 1024.37 however am looking a little deeper into the effective dates of polices placed, hazard or flood. Also cannot find much on Fannie Mae or Freddi Mac.

Expiration of Flood Premiums

07/03/2016

We are on a loan audit at a client's bank. Loans with collateral located in a flood zone are escrowed to pay the premiums. This bank allowed a policy to expire and didn't pay the premium until 3 days after the expiration of the policy. I know I read somewhere in the new rules within the last 2 years that bank's have the responsibility of paying flood premiums timely, before the expiration of the policy. Did I dream this or is it part of the new rules? If so, where can I find it.

Mortgage Impairment Policy

12/12/2015

The bank has a mortgage impairment policy that states the lender is covered in the event of a loss due to flood damage in the amount equal to the outstanding loan amount or the limits imposed by the flood regulation, whichever is less. Is this type of coverage sufficient to serve as a "force placement of flood insurance" in the event a borrower allows their flood policy to lapse and they have not responded to the banks request for a new policy? In the regulation it reads we have to force place on behalf of the borrower...the borrower is not covered in this case, only the outstanding loan amount is. I am interested in your thoughts. Also, we do not charge the borrower for any force place coverage in this situation.

New HPML Rules Defined

12/04/2022

Under the new QM/ATR rules that take effect on Oct 1, 2022, when does a loan become HPML? Is it still based on the 1.5%-1st lien, 3.5%-2nd lien, or does it now go by the new thresholds in the price-based tiers, for instance, 1st lien is less than $68,908 has a 6.5% threshold between the APR & APOR?

When is a new flood policy required on a new loan?

12/04/2022

Does flood insurance need to be in effect the day before a loan closes or the day of is sufficient?

HMDA "Purpose" when paying a tax lien

12/04/2022

We have a HELOC that is going to pay off a tax lien on a dwelling. Should the purpose be reported as "Refinance" or "Other" for HMDA purposes?

Automated exception reports

12/04/2022

What are the potential benefits of automated exception reports?

Auditing Bank Sold Insurance

11/27/2022

We receive submitted applications from our website that are considered complete per TRID. Upon receiving the submitted application, we attempt to directly contact the applicants by phone or email regarding the application and items needed to make a loan decision. If we do not receive any contact from the applicant, what are the notification requirements? Should the app be considered incomplete and we send a Notice of Incompleteness and if there is still no response by a certain date, we can close the file? Also, what would the timing requirements be to send the notice and then to be able to close the file?

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