RESPA Section 8 & Hosting Lending Events

In this Compliance Clip (video), Adam discusses the compliance challenges when a lender wants to host a lending event and invite Realtors, title companies, or other settlement service providers. Networking, of course, is essential to the lending function of any creditor, but RESPA Section 8 provides some strict prohibitions that every lender should be aware of as significant fines can be assessed when the rules are ignored or not followed.

On October 16, 2018, the OCC, Federal Reserve, and FDIC published new FAQs regarding appraisals and evaluations for real estate transactions.  These FAQs clarify existing regulatory requirements and guidance that is found in two previous issuances:the 2010 Interagency Appraisal and Evaluation Guidelines and the 2016 Interagency Advisory on Use of Evaluations in Real Estate-Related Financial Transactions.

On October 15, 2018, the OCC issued a Bulletin (2018-38) announcing the updating of three booklets: “Agricultural Lending,” “Oil and Gas Exploration and Production Lending,” and “Trade Finance and Services.”  These booklets are part of the Comptroller’s Handbook and are used by examiners for their supervision and examinations of these areas.

True or False: Lender credits should never decrease.

Well, the TRID best practice over the years has said that once a lender credit is listed on the LE, it should never decrease.  This philosophy seems to align with that of the CFPB who views a decrease of a lender credit to be the equivalent of an increase of a fee.  In fact, the preamble to the final TRID rule states that “lenders are not permitted to reduce the lender credits they provided to the borrower under current Regulation X.”

So, this means that a lender credit should never be reduced, right?  Well, not exactly.

Flood Insurance for a Building with No Value

Is flood insurance required for an old dilapidated building that has no value to either the owner or lender? Adam uses this Compliance Clip (video) to answer this question and provide the regulatory guidance used to support his answer. As flood insurance penalties are easily assessed for even just a few violations, financial institutions need to ensure they don't get washed out with rogue lenders not following the rules. Oh yeah, there might even be a flood pun or two in this video.

On October 3, 2018, the main federal regulators, along with FinCEN, released a statement regarding instances in which banks and credit unions may decide to enter into collaborative arrangements to share resources to manage their Bank Secrecy Act (BSA) and anti-money laundering (AML) obligations more efficiently and effectively.  While this guidance may not be beneficial for a majority of financial institutions, this may be beneficial for very small institutions with a low-risk profile and less-complex structures, or those institutions who are owned by the same organization.

One of the biggest challenges that came with the January 1, 2018 HMDA changes relates to the difference between a refinance and a cash-out refinance.  On the surface, it would not seem to be that difficult but the specifics can actually get quite complicated. Therefore, it is imperative that each HMDA reporter fully understand the difference between a cash out refinance and a refinance.

Among the many changes in TRID 2.0 - which went into effect on October 1, 2018 - the CFPB has provided a few changes in relationship to the written provider list.  The final amendments to the written provider list are significantly better than what the CFPB originally proposed and provide creditors with guidance on how to deal with circumstances where a creditor did not provide the written list of providers or failed to disclose a required service on the list. The changes, however, can be quite confusing upon initial review. Therefore, it is important for each financial institution to fully understand the TRID 2.0 changes that relate to the written list of service providers.

On September 28, 2018, FinCEN, the OCC, Federal Reserve, FDIC, and NCUA released joint guidance which grants financial institutions an exemption from CIP requirements for loans extended to customers to facilitate purchases of property and casualty insurance policies.  The justification for this exemption is based on the fact that these types of loans present a low risk of money laundering due to their very specific purpose. Those entities that extend loans to customers for such purposes should…

As the October 1, 2018 compliance date of TRID 2.0 is quickly approaching, it is important for each financial institution to ensure that all applicable changes to the integrated disclosure rules have been both understood and effectively implemented.  Released on July 7, 2017, the 2017 final rule (known as TRID 2.0) amends and clarifies certain mortgage disclosure provisions implemented in Regulation Z. These changes are required for any application received on or after October 1, 2018.

On September 21, 2018, FinCEN released an advisory on the FATF-identified jurisdictions with AML/CFT deficiencies.   This advisory, known as FIN-2018-A004, relays information to US financial institutions regarding countries the Financial Action Task Force (FATF) has identified as having deficiencies.  FATF is an intergovernmental body comprised of…

Denial Reasons of Excessive Obligations & Insufficient Income

This Compliance Clip (video) discusses the difference between two denial reasons found on most adverse action notices: 1) Excessive Obligations in Relationship to Income and 2) Insufficient Income for the Amount of Credit Requested. Adam discusses why most denial forms have these two different, but distinct debt-to-income (DTI) options and explains the best practice for when to use each reason - which might not be what you think.

When a customer doesn’t pay their flood insurance premiums and allows their flood insurance to lapse, financial institutions are required to force-place flood insurance for an appropriate amount.  While customers who allow their flood insurance coverage to lapse often do so because they can’t or don’t want to pay for such coverage, it can be difficult for financial institutions to collect for the premiums (or cost) of the force-placed flood insurance.

On Monday, September 10, 2018, the FDIC released a Financial Institution Letter (FIL-46-2018) seeking comment on a proposal to retire certain FILs to an inactive status.  Specifically, the proposal is targeting 374 of the 664 risk management supervision-related FILs issued over nearly two decades that are considered to either be outdated or that convey regulations or other information that is still in effect but available elsewhere on the FDIC’s website.  

The early bird discount for our Compliance Class on the HMDA partial exemption and the CFPB’s interpretive and procedural rule is ending on Monday, September 17, 2018.  This comprehensive Compliance Class webinar includes: 1) a ready-to-play instructional video, 2) a comprehensive training manual, 3) a step-by-step guide for how to determine eligibility for the partial exemption, 4) an exemption reporting cheat sheet, 5) an executive summary of the rule to share with management or the Board, and 6) a Q&A of frequently asked questions. Those interested in the class can take advantage of an Early Bird special through September 17, 2018 that saves $50 off the regular price and allows early enrollees to submit questions for the final Q&A.