The CFPB, the CD, and the Realtors…….

Before you go any further, the key word is PROPOSED.
1.   The CFPB has issued a proposed rule with request for public comment containing both substantive amendments and technical corrections (collectively, Proposed Amendments) to the final TILA-RESPA Integrated Disclosure (TRID) rule that became effective on October 3, 2015.  In a press release the CFPB advised that the Proposed Amendments are “intended to formalize guidance in the rule, and provide greater clarity and certainty.”  Comments are due on or before October 18, 2016.  The CFPB is proposing that the final rule based on the proposal would be effective 120 days after publication in the Federal Register, but is expressly requesting comment on the timeframe to implement the Proposed Amendments. THIS MEANS MOST LIKELY EARLY IN 2017.
2.   Four of the Proposed Amendments that are highlighted by the CFPB in the press release would (1) create a tolerance for the total of payment calculation; (2) exclude recording fees and transfer taxes from the one percent fee limit that applies to the TRID rule exemption for down payment assistance and similar subordinate lien loans often made by housing finance agencies, non-profits, and similar entities; (3) amend the scope of the TRID rule to cover units in a cooperative, whether or not they are considered real property; (4) clarify how a creditor may provide separate Closing Disclosures to the consumer and the seller through the removal of information that raises privacy concerns.THE REALTORS HAVE BEEN COMPLAINING ABOUT NOT RECEIVING THE CD – IF YOU HAVE BEEN GIVING IT TO THE REALTOR YOU MAY HAVE BEEN VIOLATING THE CURRENT PRIVACY RULES – AND IF THIS NEW PROPOSAL IS APPROVED THIS CHANGE WILL HAPPEN AFTER JANUARY, SO DON’T START PASSING OUT CDs LIKE CANDY UNTIL IT IS OK TO DO SO. 
3.   In addition to the CD/Realtor item, the CFPB proposal would make numerous other changes including a change that addresses the so-called “black hole” by providing creditors with greater flexibility to use the Closing Disclosure to reset tolerances.  Currently, only the Loan Estimate may be used to reset tolerances, subject to an exception that permits a creditor to use a Closing Disclosure to reset tolerances in a limited situation.  Essentially, the exception applies when the creditor would not have sufficient time after learning of a change to be able to issue a new Loan Estimate and also satisfy the pre-consummation waiting period requirements under the TRID rule.  The exception has proven to be too narrow in many cases resulting in creditors having to absorb increases in fees or require that the consumer reapply for a loan.  OR CHARGE THE BROKER A CURE FEE. To address these unintended consequences, the CFPB proposes to expand the exception to include both (1) the current situation that is based on the timeframe between when a creditor learns of a change requiring revised disclosures and the consummation of the loan, and (2) any situation in which a Closing Disclosure has already been issued.
4.   Other topics addressed by the Proposed Amendments include affiliate charges, the calculating cash to close table, construction loans, decimal places and rounding, escrow account disclosures, escrow cancellation notices, the treatment of gift funds, the written list of service providers (no surprise there), the distinction between model forms and sample forms, principal reductions, the summaries of transactions table, the total interest percentage calculation, and informational updates to the Loan Estimate.

5.  Now about us. We are attorney owned and our attorney has 24 years experience as a Mortgage Banker. That should speak for itself. Most of our competition does not have that combination of experience. They sell you “policies” and walk away. The CFPB recently identified this type of off the shelf no relationship compliance program as a red flag for examiners. We don’t do that. We offer annual engagements at one price and are with you all year for training, updates, and all your Q&A.

Request our Engagement Package today and we can have your Compliance Program  in really good shape within three weeks.
And you will feel much better about not having to face the regulators alone. But if you try to engage us after you have received your Audit Letter, the price will go up.

 (800) 656-4584

Read my Report on updated EXAM PROCEDURES

This may be the most important update you will ever read about the CFPB and their current Exam strategy.

Recently we obtained specific information about the CFPB’s current Exam Procedures. The information is credible and shows with great clarity what the CFPB expects to accomplish in an exam. It also confirms the CFPB has asked the states to incorporate CFPB and FFIEC procedures into state audits.

The CFPB has also created an Exam Rating System and asked the states to adopt it.  We have been seeing this rating system in use for six months in certain states. It is probably coming to your neighborhood soon.

Read my report and trust me this is worth your time.

CFPB Exam Objectives and Procedures 052616

Call us if you have any questions.

Nelson A. Locke, Esq.

(800) 656-4584

Expert Lender Services Web Site

 

CFPB annotates LE and CD – why?

This information came to me directly from the CFPB.

“In emails sent to CFPB email subscription holders, the CFPB announced the publication of new annotated versions of the Loan Estimate and Closing Disclosure that include citations to sections in Chapter 2 of the Truth in Lending Act (TILA). The CFPB sent an original email on May 12, and then an updated email on May 13 that includes a direct link to the annotated forms. The emails provide that the citations are to TILA sections referenced in the Integrated Mortgage Disclosure final rule.

The use of the Loan Estimate and Closing Disclosure are required by the TILA/RESPA Integrated Disclosure (TRID) rule which became effective October 3, 2016. The rule incorporates both RESPA and TILA disclosure requirements, and the requirements are set forth in Regulation Z under TILA. Based on the varying nature of liability under RESPA and TILA, the CFPB addressed in the preamble to the TRID rule the sections of TILA, RESPA and/or the Dodd-Frank Act that it used as legal authority for the various TRID rule sections.

In a December 29, 2015 letter to the MBA, Director Cordray addressed TRID rule liability concerns. The Director noted that “As a general matter, consistent with existing [TILA] principles, liability for statutory and class action damages would be assessed with reference to the final closing disclosure issued, not to the loan estimate, meaning that a corrected closing disclosure could, in many cases, forestall any such private liability.” The industry took this to mean that in many cases errors in the Loan Estimate could be cured through a correct Closing Disclosure. However, by issuing a Loan Estimate with citations to TILA sections the CFPB appears to have raised the issue of whether there is TILA liability for Loan Estimate errors.

Also, the annotated disclosures provide that both the Adjustable Payment (AP) Table and Adjustable Interest Rate (AIR) Table were adopted based on TILA section 128(b)(2)(C)(ii). However, the preamble to the TRID rule reflects that only the AP Table was adopted based on such section, and that the AIR Table was adopted based on general CFPB rulemaking authority.

As we reported, recently the CFPB also announced its intention to re-open the rulemaking corresponding with the TRID rule. Perhaps the CFPB can use the rulemaking initiative to better address industry concerns regarding TRID rule liability.”

Compliance Manual Cover Image B 111914

Until such time as we see more clarity my advice to Compliance Services Clients is to promptly cure any discrepancy whether it is in the LE or the CD.  

For now, the fact that the CFPB is citing to the actual law tells me some big time auditing of your LE and CD may be coming soon.

Respectfully,

 Nelson A. Locke, Esq.

Compliance Expert and Attorney

Office (800) 656-4584

Cell (305) 951-2785

http://www.lockelaw.us

http://expertlenderservices.com

Identity Theft Scam involving Realtors, Brokers, and Lenders

Well, the criminals have discovered yet another way to steal identities and money.

Title Company Wire Scam 032916

I would strongly suggest you take a good hard look at any requests from closing agents that involve wires, and verify the request is valid. Further, keeping in mind the requirements of the Financial Services Modernization Act of 1999 – DO NOT transmit any of this non-public information in an unsecured manner. Always use a drop box or a password protected email.

This is getting crazier and crazier. Don’t take chances. Protect your data, trust but verify.

Call us if you would like to discuss our Compliance Services.  Ask about the Audit Protection Plan – included with our program.

(800) 656-4584

Do I really need to look at the SDN List?

Yes. And it only takes about 30 seconds, so why fight this? Either you, or your credit agency, or your lender must do this, but it will come down to YOU if the law is violated. Is peace of mind worth 30 seconds?

Compliance Manual Cover Image B 111914

You must and you can do so at the Treasury Department Link below.

There is no legal or regulatory requirement to use software or to scan. There is a requirement, however, not to violate the law by doing business with a target or failing to block property. OFAC realizes that financial institutions use software that does not always provide an instantaneous response and may require some analysis to determine if a customer is indeed on OFAC’s Specially Designated Nationals List (or any of OFAC’s other sanctions lists). The important thing is not to conclude transactions before the analysis is completed.

Every transaction that a U.S. financial institution engages in is subject to OFAC regulations. If a bank knows or has reason to know that a target is party to a transaction, the bank’s processing of the transaction would be unlawful. Yes, you Brokers and Lenders are engaging in financial services so you should fit into this description.

There is no minimum or maximum dollar amount subject to the regulations.

U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located, all persons and entities within the United States, all U.S. incorporated entities and their foreign branches. In the cases of certain programs, foreign subsidiaries owned or controlled by U.S. companies also must comply. Certain programs also require foreign persons in possession of U.S.-origin goods to comply. If you specialize in Foreign National Loans, I would say you probably need to be extra careful.

HERE IS THE LINK TO THE OFAC SDN List.

https://sanctionssearch.ofac.treas.gov/

Respectfully,

Nelson A. Locke, Esq.

Compliance Expert and Attorney

Office (800) 656-4584

Cell (305) 951-2785

http://www.lockelaw.us

http://expertlenderservices.com

 

What constitutes proper “changed circumstances”?

 

Hi Folks, we wanted to address a few TRID issues this week.

We hear a lot of comments each week from our clients about how TRID implementation is working. Some clients are in the “TRID Groove” closing their loans in less than 30 days without any LE or CD issues.

Others tell us that almost every deal has a glitch of one kind or another. Most of those clients are Brokers, not Lenders. This demonstrates that the Lender is going to do what the Lender wants to protect himself regarding TRID, and the Broker may be jumping through those hoops for a while until things really settle down.

We thought it might be helpful to send you a few TRID related documents that have been available on this Blog. The first document is a TRID Quick Reference. This is a good one to make copies of and pass around.  Trid Simplified 090115

The next document is a Changed Circumstances Matrix that has been available on the internet for a few months now. It is pretty clear and appears to have been widely accepted by compliance companies and lenders alike. Changed Circumstances TRID 022216

Finally, we have a recording training session here on the blog – it is 30 minutes long and uses plain English. Go take a listen.

If you are uncomfortable with your compliance effort you can call us at (800) 656-4584.

What’s on your compliance shelf?  Why worry? Just call us.

This is what should be on your Compliance Shelf.

Hi Folks,

We get asked a lot what we mean when we talk about the power of the Compliance Shelf. So I decided to tell you and show you a few pictures. These are from clients of ours.

When you are visited by your regulator it goes pretty far if he or she notices a dedicated area for your Compliance Manuals and Notes (the “Compliance Shelf”). The mere existence of this shelf creates an impression that your company takes compliance seriously. So you come out of the audit gate having impressed the regulator with your preparation. That good first impression.

What does a strong Compliance Shelf look like? It has your Audit Policies and Procedures, your MLO Policies and Procedures, your Regulatory Reference Book, an Advertising Log (back two years), a Customer Complaint Log (back two years), and finally, your QC Manual and Audit Report Log, with copies of all audits and management response. Here are two examples – the one on the right was recently audited by Texas and passed.

Books   WP_20160112_001

But please, don’t think for a moment that just making this impression will save your audit from disaster. You need to live by your policies and procedures. You need to know what they mean and you need to put them into practice.

Compliance is not a part time thing. You must form a “habit of compliance”. Every day, every file. That’s how you have good audit results. It has to be your company culture. Your “shelf” is just part of the big picture.

So, what’s on YOUR “Compliance Shelf”?

Want to learn more? Call us at (800) 656-4584. Over and out.

(Thanks to Eddie and Fred for providing us with these outstanding pictures.)