CFPB revises HMDA changes on October 17th…………

Things have changed again with HMDA, good for brokers and smaller lenders.

On Oct. 16, 2017, the CFPB published a new chart, the Reportable HMDA Data: A regulatory and reporting overview reference chart  (“Reporting Reference Chart”). The changes relate to raising the reporting threshold volume numbers on open ended credit to where most brokers and small lenders may find themselves exempt.

HMDA 010118 Flow Chart

I need to clarify a HMDA comment I made in an earlier blog. A broker does not have to report to HMDA a credit decision made regarding a pre-qual. But the broker does have to comply with ECOA and send the consumer an adverse action notice. Some pre-quals never get to a lender – thus the duty falls on the broker who decides not to pursue the loan. “Six items or not.” You can never go wrong sending an Adverse Action Notice. Its a best business practice.

Let us hear from you.

Nelson A. Locke, Esq.

Compliance Services USA

http://www.expertlenderservices.com

(800) 656-4584

 

 

What is the Uniform Closing Dataset and do I have to file this effective September 25th, 2017?

https://www.fanniemae.com/singlefamily/uniform-closing-dataset

The Uniform Closing Dataset Protocol (UCD) is a component of the Uniform Mortgage Data Program® (UMDP®), an ongoing effort by Fannie Mae and Freddie Mac at the direction of our regulator, the Federal Housing Finance Agency, to provide a common industry dataset to support the Consumer Financial Protection Bureau’s (CFPB) Closing Disclosure.

You as the Broker may be required to file this information. Some Lenders are asking for evidence you filed it as a pre-closing condition while others are doing it for you. You need to be aware of what it is and how to do it, in case you become responsible for the actual submission.

I suggest you contact the lenders that you broker Fannie and Freddie loans with and see what they choose to do. Further, this may affect VA and USDA. I’m not clear on that yet.

Here is a Industry Cheat Sheet for your use. This may help you. https://www.fanniemae.com/content/fact_sheet/ucd-fact-sheet.pdf

As always, contact us via email with any questions, but not until AFTER you have read these links please. The answer may be there.

Nelson A. Locke, Esq.

Compliance Services USA

(800) 656-4584

 

 

 

 

To advise your clients of the recent Equifax NPI mega-breach……

Here is a letter format you can use as either an email or a printed letter. It might be a good idea to include a copy of this with new loan applications for the next 180 days or so. It might even be a good idea to link your website to the below press release, you could do this on your IMPORTANT DISCLOSURE page.

EQUIFAX CYBERSECURITY INCIDENT

Dear Client,

Equifax announced recently that they had experienced a “cybersecurity incident potentially impacting approximately 143 million US customers.” Because your recent mortgage transaction with us may have involved a credit pull from Equifax, we felt you should read the attached Equifax press release.

https://investor.equifax.com/news-and-events/news/2017/09-07-2017-213000628

Equifax states it has established a dedicated website which can be accessed at this link www.equifaxsecurity2017.com to help consumers determine if their information has been potentially impacted and to sign up for credit file monitoring and identity theft protection.

Sincerely,

Your Name, NMLS Number, Address, and Phone.

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Thanks for reading.

Nelson A. Locke, Esq.

http://www.expertlenderservices.com

 

 

Quit guessing when you make a job offer or hire a new MLO.

nl@lockelaw.us

Hi folks,

I get a lot of requests from clients who are hiring new MLO or other staff and are unsure of what they need to do to have a good solid hiring package.

So I created one for you. It is about 50 pages long and includes everything from an offer letter all the way to a copy of the generic HR manual. All you should do is pick the pages you need and put them to use.

If you would like this,please click below and send a request. It is FREE to current clients and $250 to non-clients.

Our Compliance Program includes all your Manuals, Annual Training, electronic media audits, Safe Act and DF Certification, and our exclusive Audit Protection Plan. Our annual fee works out to about 150 bucks a month. All inclusive. We accept credit cards. When the regulator sends the audit letter – you are NOT alone.

To send a contact request for this package, click here. nl@lockelaw.us

If you received a file named MLO Hiring Package already, it had two missing pages. I have already re-sent MLO Hiring Packaged FIXED to you. If you have the old one, just destroy it.

CLICK HERE to view our Web Site.

Compliance Services USA
(800) 656-4584

Discussion of the October 2017 RESPA TILA changes …….

Comments on changes to the 2017 RESPA TILA Rule HERE. 201707_cfpb_Executive-summary-of-2017-TILA-RESPA-rule1

This is a poorly named Rule Change. Compliance is optional from October 2017 to October 2018. Compliance will become mandatory for applications received on or after October 1st 2018. Many are under the impression these changes must be implemented this October. Not so. You can implement changes according to any plan you create before October 2018, but you must have all changes in place October 2018.

Here are the key points and please remember, these are mandatory in October 2018.
1. Choice to use a CD versus an LE when checking tolerances and good faith. This is the creditors choice, not the broker.
2. Servicers will be required to provide consumer disclosures regarding partial payment policy and notice of the closing of an escrow account that was subject to RESPA.
3. You must treat cooperatives as if they were real property and provide the required RESPA TILA disclosures, regardless of how your state classifies cooperatives. Some presently call them personal property and claim they are exempt from these disclosures.
4. Now, Loans to Trusts are subject to all disclosures. Trusts will be treated as if the credit extended to natural (not artificial) persons. This is curious and should be sending a message to those of you who bundle 1 to 4 family units into new LLCs and claim exemption from RESPA-TILA. Small commercial is on the radar for RESPA TILA.
5. There are clarifications regarding construction loans. If there are going to be two phases, you must provide two GFE within three days of receiving the application for the particular phase. If only one transaction, then only one disclosure. There are many clarifications regarding how to allocate costs – see page 5 of the report attached above.
6. Simultaneous closings of a purchase money first and second – allows you to disclose the loans combined. I always recommended this. The law says your client has to understand the big picture. Have you ever seen a client try to add together two sets of GFE or LE or CD?
7. Tolerances now say if overstated, still ok. If understated more than $100, not OK.
8. If you fail to allow a consumer to shop for settlement services, there is ZERO tolerance.
9. Loan Estimate guidance is on pages 7 and 8.
10. Written list of Providers – see page 10 bottom. If you don’t use the special layout for the disclosure, you might lose the safe harbor.
11. SHARING DISCLOSURES – you can do it. Just be sure to correct so that what you send to the seller, for example, is what applies to the seller and NOT the buyer. And vice versa. You can leave the information you want to protect – off the form by providing it as blanks.

Respectfully,

Nelson A. Locke, Esq.
Mortgage Industry Compliance Expert
Attorney and Expert Witness
7800 Preston Road – Suite 118
Plano, TX 75024
Office (800) 656-4584
Cell (305) 951-2785
http://www.lockelaw.us
http://expertlenderservices.com

HMDA, ECOA, Adverse Action Notices, and Broker Shops.

Mortgage Industry Compliance Consulting

Hi Folks,confused the two subjects captioned above have been driving us nuts so we dug deeper to determine what the best advice might be. Many of our clients, especially the Brokers, feel they are exempt from both subjects. Turns out, maybe not. If I do the “lawyer thing” and sound a bit vague it’s because it is hard to interpret these masterfully written regulations. We do our best to understand them for you. We look to see where the evidence tips the scale before deciding which approach to recommend. We always take the approach that should keep you out of trouble. Sometime that means more work for you. But it’s far better than an “administrative action” for failure to comply.

Plus, it might make you a better lender or broker because you will have more of your OWN data to evaluate for opportunities or trends.

First, let’s look at HMDA…

View original post 219 more words

2018 HMDA Reporting and Accuracy Testing by the Regulators

The CFPB has released information about accuracy requirements for HMDA reporting starting in 2018.

There is controversy as to whether Brokers must file. See my earlier post regarding the language of the regulation. More than likely, you will have to report.

Under the new guidelines, there are revised thresholds for requiring resubmission, and for assessing if a full review of the sample will be performed based on errors in the initial smaller set of loans.  Assessment of the data will be conducted on an individual data field basis.  The new testing sample sizes and thresholds are available at this blog from Ballard Spahr

The “LAR” is the HMDA Loan Application Register. This is where you will enter your HMDA data. For institutions with fewer than 30 LAR entries, the resubmission threshold is still 3, so the effective resubmission threshold percentage is higher than 10%.  As is the case currently, even if the thresholds are not met an institution can be required to correct one or more data fields and resubmit one or more data fields in its HMDA LAR if examiners have a reasonable basis to believe that errors in the field or fields will likely make analysis of the HMDA data unreliable.

The HMDA LAR and your MCR will eventually be compared for consistency. I have suggested to some clients, that keeping two logs might be a good idea. One for QM/TRID/RESPA residential loans, and one for pure commercial transactions. It may make the job easier for you down the road.

Any Questions? You can reach us at (800) 656-4584. Thanks.