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
ABA BANKING JOURNAL
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 (§ 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."
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
* Time-share plans (Response provided
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: email@example.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.
Table of Contents for the Digital Edition of ABA Banking Journal - May 2014
Who will fill the chair?
Pass the Aspirin
Doing well by doing good
ABA At Your Service
ABA Banking Journal - May 2014