The CFPB issued a proposed rule on May 2, 2019 that would change the HMDA reporting requirements and could have a significant impact on smaller financial institutions. The proposed rule would increase the closed-end coverage threshold from 25 to 100 loans originated in the previous two years. Additionally, it proposes to extend the current open-end threshold of 500 lines of credit until January 1, 2022. The proposed rule would also incorporate new interpretations and procedures into Regulation C. If this were to become part of the HMDA regulation, it would not take effect until January 1, 2020.
Last year, Regulatory Solutions completed TRID reviews on traditional mortgage loans, lot loans, constructions loans and construction/perm loans as well as home equity loans for lenders. While the number of exceptions varied per loan review, there were common TRID exceptions that occurred. Here are the top 5 TRID exceptions that Regulatory Solutions noted during our loan reviews:
Disclosure issues in Block H of the Closing Costs Details table on page 2 of the Closing Disclosure. For example, the Real Estate Commissions fees are not always disclosed in Block H. These fees are required to be disclosed in Block H per 1026.38(g)(4) comment 4.
Disclosure issues in Block B of the Closing Costs Details table showing the services that the borrower did not shop for on page 2 of the Closing Disclosure. For example, sometimes one or more of the Title fees are being placed in Block B when the borrower did not choose a service provider from the Settlement Service Provider List. Only fees that the borrower did not shop for should be placed in Block B per 1026.38(f)(2).
The Amount Financed section of the Loan Calculations table on page 5 of the Closing Disclosure was not calculated correctly. Non-prepaid finance charges are being included in the calculation.
The contact information for the participants in the transaction was not correct in the Contact Information table on page 5 of the Closing Disclosure. Lenders are still leaving out email addresses and contact information.
The breakdown and other disclosure issues of the amount for taxes and other government fees listed in Block E of the Closing Costs Details table on page 2 of the Closing Disclosure. For example, the Transfer Taxes listed in Block E do not list the name of the government entity that is assessing the tax, which is required by 1026.38(g)(1)(ii).
While the portfolio loans we reviewed have similar TRID exceptions, they will occasionally have different reporting problems than loans sold in the secondary market. One of the most common exceptions for portfolio loans is the incorrect loan purpose being listed on the Loan Estimate and the Closing Disclosure. Whether the loan should be listed as a refinance or as construction are the two most confused loan purposes for portfolio loans.
Regulatory Solutions provides comprehensive TRID reviews to ensure compliance with TILA-RESPA requirements. Contact us today to find out how we can assist you with your TRID and other lending compliance reviews.
On May 1, 2019 the Consumer Financial Protection Bureau posted a factsheet regarding whether Loan Estimates (LE) and Closing Disclosures (CD) were required for assumption transactions. The factsheet consists of a flowchart and a narrative discussion to assist lenders in making the determination of whether a loan would require the TILA-RESPA Integrated Disclosures. The factsheet can be found at https://files.consumerfinance.gov/f/documents/cfpb_tila-respa-factsheet.pdf.
Regulatory Solutions specializes in TRID loan reviews, please contact us to schedule your review today.
Fannie Mae recently updated its Selling Guide with announcement SEL-2019-03 which includes the requirement that lenders notify Fannie Mae using the self-report functionality in Loan Quality Connect within 30 days if the lender’s post-closing quality control cycle is in arrears more than one 30-day cycle. Fannie Mae requires that mortgage loan post-closing quality control reviews must be completed within 120 days from the month of the loan closing. If you need assistance in meeting this timing requirement, please contact Regulatory Solutions for all your post-closing quality control needs.
The FFIEC has released the 2019 edition of the “Guide to HMDA Reporting: Getting it Right!” which is available at https://www.ffiec.gov/hmda/. The new edition contains information regarding the amendments made to HMDA by the Economic Growth, Regulatory Relief, and Consumer Protection Act and updated HMDA interpretive and procedural rules issued by the Consumer Financial Protection Bureau. 2019 is the year to Get it Right! Regulatory Solutions has developed proprietary HMDA scrub software and has the expertise to scrub your HMDA data on a monthly or quarterly basis. Our HMDA scrubs compare your HMDA LAR to source documents. An exception report is issued to enable you to make corrections and a summary of exceptions is provided to assist you in addressing any systemic issues. Contact Regulatory Solutions today to begin your HMDA Scrubs.
Have you revised your Quality Control Program yet to meet the new reporting requirements for HMDA? If not, it could play a part in your ability to sell loans to certain government agencies. FHA in particular requires that a lender’s Quality Control Program be compliant with the Home Mortgage Disclosure Act’s reporting requirements. The Quality Control Program should ensure that the information you are reporting is accurate and that the report itself is not only correct but is made timely. With the passing of the new HMDA regulation which became effective at the beginning of 2018, and for those lenders that became exempt from reporting the expanded data fields with the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act, you should ensure that your current Quality Control Program has been revised to meet the applicable HMDA reporting requirements.
At Culp QC, we provide services to meet all of your HMDA needs. We are capable of not only ensuring that your Quality Control Program meets the reporting requirements for federal agencies and federal regulations, but can also perform full HMDA scrubs.
In the mortgage world when you say the words quality control, post closing quality control loan file reviews immediately come to mind. Did you know that non-originated loan reviews are also considered a part of quality control? Freddie Mac’s Quality Control Best Practices states that as part of your quality control process you should include a random sample of your declined loan applications. In addition, FHA requires that you review a random statistical sample of rejected applications within 90 days from the end of the month in which the decision was made. Regulatory Solutions can assist you with these monthly non-originated reviews to ensure you ae in compliance with agency and regulatory requirements including the Equal Credit Opportunity Act (ECOA).
We are just over half way through the new year under the new Regulation C rules which changed the Home Mortgage Disclosure Act (“HMDA”) reporting requirements. Have you scrubbed your HMDA data in accordance with the new rules? If not, let Regulatory Solutions help! We have developed proprietary HMDA software to assist in the data integrity review of your HMDA data. Our software produces exception based reports so that you know exactly what corrections need to be made by loan number. The report also provides you with a total number of exceptions and percentages based on data points. If you are interested in Regulatory Solutions scrubbing your HMDA data, please contact us at 855.734.7655.
Did you know that your HMDA data plays an important role when you are selling your loans to various agencies? Do you have the right procedures in place for the 2018 Quality Control HMDA requirements?
Most agencies require the lender to submit various HMDA data points as part of the purchasing process. With the new HMDA regulation that just took effect in January 2018, this means that the expanded GMI will play a key role in the purchasing process for most agencies. Freddie Mac in particular specifically requires the lender report the GMI, Rate Spread, and HOEPA information for each loan that Freddie Mac purchases.
Fannie Mae, FHA, and Rural Housing require more than just the reporting of HMDA data points. Before these agencies will consider purchasing loans from your institution, you must show that you have procedures in place and are complying with the current HMDA regulation as part of your Quality Control Program. FHA has an additional requirement that the HMDA information that is being reported be accurate.
At Culp QC, a division of Regulatory Solutions we are here to help. We provide in-depth Quality Control reviews, HMDA scrubs and other regulatory services to help you with your compliance needs.
A pre-funding / pre-closing quality control loan review must include 10% of all VA-guaranteed mortgages each month. As with other quality control policies, there must be procedures in place to notify senior management of any deficiencies found in the course of the review. Also, the quality control plan must establish an effective method for senior management to address and correct these deficiencies. If a pattern emerges from the deficiencies found, then there should be corrective instructions provided to the applicable employee.
The pre-funding (pre-closing) quality control loan plan must also provide a procedure for promptly reporting any violation of a regulation or false statements to the VA. It must also contain procedures for the Lender to remain up to date with any future VA pre-funding (pre-closing) requirements. Like with FHA, the Lender must check that no one involved in the origination or underwriting process is debarred or suspended.
USDA/RHS has not established any specifics for a pre-funding quality control loan review process when dealing with RHS loans. Merely that a Lender must have an effective pre-funding review process.
Culp QC, a division of Regulatory Solutions, is available to assist you with your pre-funding/pre-closing quality control reviews. Culp QC, a division of Regulatory Solutions, will provide you with the independent solution you need to ensure your prefunding files are reviewed in accordance with agency guidelines.
I must tell you that you folks have been a “breath of fresh air” in working with us to get the system and process down.