ABA Banking Journal - September 2011 - (Page 50)

ABA COMPLIANCE CENTER | INBOx Special Edition: Focus on lending questions The ABA Compliance Center staff put together a special focus on current lending questions, recognizing how much has been changing. Additional Q&A online at www.ababj.com/blog/461 SAFE Act: To post, or not to post? Q. Beyond posting a notice in the lobby or loan reception area, what other ways are there to make the mortgage loan originator identifiers available to the public? A. The SAFE Act requires a mortgage originator to provide the unique identifier “upon request or prior to acting as a mortgage loan originator,” but does not prescribe specific methods for doing so. Therefore, it is possible to publish a list on the web site; to place or make available printed lists in lobbies/reception areas; to include the identifier on business cards, email signature lines, and letterhead, or any other reasonable method determined by the institution. (Response provided July 18, 2011) SAFE Act: Who’s on first? Q. There is much discussion on whether any compliance disclosures must have the mortgage loan officer’s unique identifier on them: Is this required, and, if so, which disclosures require this information? A. The requirement under the SAFE Act is to provide the unique identifier upon request or prior to a person acting as a mortgage loan originator. Fannie Mae and Freddie Mac currently have a requirement that this information appear on the loan application for loans which they will purchase. This is not required if you keep all of your mortgage loans in portfolio; however, the failure to do so could affect any future sales of loans or, potentially, merger options. In addition, you should be aware that section 1402 of the Dodd-Frank Act has a provision amending the Truth in Lending Act that requires the identifier to be placed on “all loan documents.” However, this amendment is not self-effectuating and will require regulations to be promulgated. At this point in time, regulations have not been proposed. (Response provided Aug. 2, 2011) Regulation Z/MDIA: Overstated APRs Overdone Q. Has there been any additional clarification on whether an overstated APR requires re-disclosure of an “early” TIL when the general tolerances (e.g., 0.125% for “regular” transactions and 0.250% for “irregular” transactions) are exceeded (i.e., APR goes down by more than 1/8 or ¼ of a percent)? A. The Federal Reserve Bank of Philadelphia’s publication, Consumer Compliance Outlook, 1st Quarter 2011, includes an article titled “Mortgage Disclosures Improvement Act: Corrected Disclosures for an Overstated APR.” This article provides an overview of the requirements as well as an example of when an overstated APR would, in fact, require redisclosure under 226.19(a)(2)(ii). Find it at http://tinyurl.com/43sqhd2 (Response provided Aug. 3, 2011) Reg Z/Transfer of Mortgage Disclosure Q. We are merging with another institution, resulting in an entirely new entity. Must we send a Notice of Sold or Transfer of Mortgage Loan disclosure? If so, should we send the disclosure as of our “legal merger date” or our “data conversion date”? (Dates won’t be the same.) A. According to the Commentary to 226.39(a)(1)-4 of Regulation Z: “Disclosures are required under this section when, as a result of a merger, corporate acquisition, or reorganization, the ownership of a mortgage loan is transferred to a different legal entity.” The disclosure should be mailed or delivered on or before the 30th calendar day following the “date of transfer,” which is defined in Section 226.39(b)(2) as “at the covered person’s option, … either the date of acquisition recognized in the books and records of the acquiring party, or the date of transfer recognized in the books and records of the transferring party.” Therefore, the successor institution, as the “covered person,” has the option to disclose using either date. For clarification on whether the “legal merger date” or the “data conversion date” is the date recognized by either the acquiring or transferring party, you will need to consult with legal counsel. (Response provided Aug. 4, 2011) Regulation Z/Transfer of Mortgage Disclosure & RESPA Q. If we merge with another institution and take on a new name and address (including location where loan payments will be accepted), are we required to provide the RESPA Notice of Assignment, Sale, or Transfer (Transfer of Servicing) Disclosure and/or the Reg Z Notice of Transfer of Mortgage Loan (Transfer of Mortgage) Disclosure? If both, can these be sent together? A. According to HUD’s Regulation X Section 3500.21(d)(1)(i)(B), transfers resulting from mergers or acquisitions of servicers or subservicers are not considered an assignment, sale, or transfer of the servicing of the loan. However, because you indicate that the name and address for the payments (and perhaps other 50  |  ABA BANKING JOURNAL  |  september  2011 http://www.ababj.com/blog/461 http://www.tinyurl.com/43sqhd2

Table of Contents for the Digital Edition of ABA Banking Journal - September 2011

ABA Banking Journal - September 2011
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking
Pass the Aspirin
Tech Topics
Cover Story: Mobile money at stake
Insurance revival
The long and short of annuities
Compliance Inbox
ABA Resources
ABA Annual Convention
First Person

ABA Banking Journal - September 2011

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