ABA Banking Journal - May 2014 - (Page 36)

ABA COMPLIANCE CENTER | INBOX RESPA change reflects CFPB read of people's need Q. The MS-2 Notice (transfer of servicing) under RESPA has been modified to eliminate the reference to Section 6 of RESPA. In addition, the Qualified Written Request language pertaining to error resolution has been removed from the notice as well. Does this information still need to be provided to the borrower? If so, how and where? A.You are correct that the model notice has been revised. And yes, the information is still required. The Consumer Financial Protection Bureau addressed this issue in the preamble to the Final Rule. The bureau proposed to remove this requirement from the servicing transfer notice in new Section 1024.33(b)(4), and decided to adopt Section 1024.33(b) (4) without a requirement to provide information about complaint resolution, as proposed. The bureau believed that borrowers are best served by providing notice that clearly and concisely explains that servicing of their mortgage is being transferred, and that detailed information about the error resolution and information request process may not always be optimally located in the transfer notice. Specifically, the bureau expects servicers may decide to inform borrowers at a time and in a manner more beneficial than at the time of transfer. The bureau agreed that borrowers should be notified of rights in connection with errors and inquiries, but believes borrowers should be informed of the error resolution and information request process through mechanisms not necessarily dependent on transfer. To address this, the bureau added a requirement in Section 1024.38(b) (5) that servicers maintain policies and procedures to ensure disclosure of procedures for submitting written notices and information request. Among other things, a servicer may comply by including in periodic statements a notice informing borrowers that they have certain rights related to 36 | ABA BANKING JOURNAL | MAY 2014 resolving errors and requesting information about their account, and that they may learn more by contacting the servicer, and a statement directing them to a website with more information. (See 78 Fed. Reg 10730, Feb. 14, 2013, http://tinyurl.com/n9a46ua) (Response provided January 2014) Three days, one way or t'other Q. If a commercial loan applicant wants to waive the timing requirement for providing copies of the valuation under the new Regulation B appraisal rules, must they still request the waiver three business days prior to consummation? A.Yes. If the loan is for a one-to-fourfamily dwelling and secured by a first lien, the appraisal must be provided promptly or no later than three business days before closing. If the customer agrees to waive receipt of the appraisal, the waiver must be obtained three days before closing. (Response provided January 2014.) Appraisals and rejections Q. If an appraisal was ordered on a denied, incomplete, or withdrawn loan secured by a first lien on a one-to-four family dwelling, must the bank provide a copy of that appraisal/valuation even if the borrower has not paid for it? A.Yes. Also, you cannot charge fees for photocopying or postage to mail copies of appraisals or other written valuations nor condition providing copies on payment of an appraisal fee. If you receive a completed valuation, you must promptly provide it to the applicants, even if they do not pay. (See Section 1002.14(a)(3).) According to the CFPB's updated Small Entity Guide, dated Jan. 13, 2014: "To ensure payment, you can collect payment before ordering the appraisal or other written valuation, subject to restrictions for some mortgages under Regulation Z (ยง 1026.19(a)(ii)). Alternatively, if you collect payment at closing, you can also provide the copy at that time if you obtain a waiver." http://tinyurl.com/nmvgrpc (Response provided January 2014.) NMLS data and new Reg Z rules Q. New Reg Z Loan Originator Compensation rules say the NMLS number for originator and bank must be on the application, note, and mortgage. To what loan types does this apply? Does it apply to open-end credit? A. According to the CFPB's Small Entity Guide Loan Officer Compensation, dated Jan. 13, 2014, http://tinyurl.com/qg67vt9, the rules pertaining to identification under Section 1026.36(b) apply to almost all closed-end consumer credit transactions secured by a dwelling (including any real property attached to it). This includes consumer loans secured by residential structures that contain oneto-four units, including condos and co-ops. It is not limited to first liens or to loans on primary residences. The provisions on compensation, qualification, identification, and the establishment and maintenance of written policies and procedures do not apply to: * Open-end credit plans including HELOCs * Time-share plans (Response provided January 2014) Leslie Callaway, CRCM, ABA Compliance Project Manager, and Mark Kruhm, CRCM, ABA Senior Compliance Analyst, and other ABA experts, answer member questions here. Member banks may submit them to: compliance@aba.com. Disclaimer: Our answers do not provide, nor are they intended to substitute for, professional legal advice. Answers were current as of date shown at the end of each item. http://www.tinyurl.com/nmvgrpc http://www.tinyurl.com/n9a46ua http://www.tinyurl.com/qg67vt9

Table of Contents for the Digital Edition of ABA Banking Journal - May 2014

Chairman's View
Editor's Column
The Economy
Bank Notes
ABABJ Online
Picture This
Who will fill the chair?
Pass the Aspirin
Midsize Standouts
Doing well by doing good
Tech Topics
Compliance Inbox
ABA At Your Service
First Person

ABA Banking Journal - May 2014

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