July 14, 2020
Q&A regarding flood insurance, FDIC issues rule, CFPB updates, New PPDocs features and more!
Read more below!
Agencies release proposed revisions to Interagency Questions and Answers regarding flood insurance
June 26, 2020. The five federal financial institution regulatory agencies proposed new questions and answers for inclusion in the Interagency Questions and Answers in light of changes to flood insurance requirements under the agencies' joint rule regarding loans in special flood hazard areas.
The proposal incorporates new questions and answers in several areas, including:
- The escrow of flood insurance premiums
- The detached structure exemption to the mandatory purchase of flood insurance requirement
- Force-placement procedures
The proposal also revises existing questions and answers to improve clarity and reorganizes questions and answers by topic. Separately, the agencies plan to propose new questions and answers at a later date on the private flood insurance requirements implemented by their February 2019 final rule.
The agencies invite comment on this proposal. Comments on the proposed questions and answers must be submitted on or before September 4, 2020. Press release
FDIC issues rule to codify permissible interest on transferred loans
June 26, 2020. The FDIC is issuing a final rule to clarify that the valid interest rate for a loan is determined when the loan is made, and will not be affected by a subsequent sale, assignment, or other transfer of the loan. The rule:
- Codifies longstanding FDIC guidance through a formal rulemaking process to provide the public with an opportunity to comment.
- Addresses marketplace uncertainty regarding the enforceability of the interest rate terms of a loan agreement following a bank’s assignment of a loan to a non-bank.
- Promotes safety and soundness by giving certainty to banks that sell loans into the secondary market as a way to meet deposit withdrawal demands, pay debt obligation, and make new loans.
- Supports the stability of the nation’s financial system by ensuring that the FDIC can satisfy its statutory duty as conservator or receiver to maximize the return on sale or disposition of assets and minimize the loss to the Deposit Insurance Fund.
For more background information, click to read the FDIC's Fact Sheet.
Texas Joint Regulatory Agencies request comments on potential home equity rule changes
June 25, 2020. The Joint Regulatory Agencies (comprised of Savings and Mortgage Lending, Office of Consumer Credit Commissioner (OCCC), Texas Department of Banking, and Texas Credit Union Department) (the “Agencies”) held an online webinar on amendments to home equity interpretations resulting from rule review. Stakeholders were invited to listen and participate, and a PPDocs representative was on the call.
A stakeholder meeting notice and precomment draft were posted by OCCC on behalf of the Agencies at: https://occc.texas.gov/publications/rules. On this webpage, click the link labeled “Home Equity Lending Rule Review.” The precomment draft contains rule changes that remain in the drafting phase. The Agencies are requesting precomments to determine whether further drafting, including rule changes in addition to those in the precomment draft, is necessary.
The Agencies will accept informal precomments on the draft amendments until July 15 at 5:00 p.m. If all proceeds as planned, any amendments the Agencies propose should be final in November.
CFPB releases factsheet on TRID title insurance disclosures and FAQ on lender credits
June 9, 2020. The CFPB released a Factsheet on TRID Title Insurance Disclosures and frequently asked questions on lender credits, the total of payments disclosure, the optional signature line, and separating consumer and seller information.
CFPB announces availability of new CHARM booklet
June 9, 2020. The CFPB announced the availability of an updated consumer publication, the Consumer Handbook on Adjustable Rate Mortgages booklet, also known as the CHARM booklet, required under RESPA and the Truth in Lending Act. The CFPB said that this version of the CHARM booklet is updated to align with the Bureau's educational efforts, to be more concise, and to improve readability and usability.
The updated consumer publication is available for download through PPDocs or on the CFPB's website at www.consumerfinance.gov/learnmore
CFPB proposes Reg. Z amendments to address LIBOR sunset
June 5, 2020. The CFPB is proposing to amend Regulation Z generally to address the sunset of LIBOR, which is expected to be discontinued after 2021. Some creditors currently use LIBOR as an index for calculating rates for open-end and closed-end products. The CFPB is proposing changes to open-end and closed-end provisions to provide examples of replacement indices for LIBOR indices that meet certain Regulation Z standards. The CFPB also is proposing to permit creditors for home equity lines of credit (HELOCs) and card issuers for credit card accounts to transition existing accounts that use a LIBOR index to a replacement index on or after March 15, 2021, if certain conditions are met. The proposal also addresses change-in-terms notice provisions for HELOCs and credit card accounts and how they apply to accounts transitioning away from using a LIBOR index. Lastly, the Bureau is proposing to address how the rate re-evaluation provisions applicable to credit card accounts apply to the transition from using a LIBOR index to a replacement index. Comments must be received on or before August 4, 2020.
July 2020 Frequently Asked Question
Question: I received this audit warning unexpectedly: “all fees paid to the lender must be in Section A. Only fees paid to third parties can be placed in Section B.” I have two fees that we have always disclosed as being payable to the lender “FBO the third-party service provider.” I thought RESPA required us to do so because those two fees (flood and credit bureau) are deposited into one of our general ledger accounts. Then we write one check per month to the service provider for all the flood certs and credit bureaus we pull. I have not received this error before. Has something changed or am I just overlooking a mistake on my part?
Answer:
Any fee payable to the lender or mortgage broker must be listed in Section A of the Closing Disclosure. Any closing cost listed in Section B must identify the third party that is ultimately receiving the payment of the fee.
There is no specific guidance in TRID that allows the use of “FBO” on a Closing Disclosure. The regulation indicates that the lender must disclose “the name of the person ultimately receiving the payment.” The use of FBO is a business decision for the lender. However, when you choose to use an FBO designation in Section B, the “Paid To” must be “Other” and not the “Lender.”
We recently added this audit because we found that some clients were placing lender fees in Section B. When these fees are listed as paid to the lender, they often have a detrimental effect on certain tests for points and fees limitations.
Citation
Regulation Z, 1026.38(f)(2) Services borrower did not shop for. Under the subheading “Services Borrower Did Not Shop For” and in the applicable columns as described in paragraph (f) of this section, an itemization of the services and corresponding costs for each of the settlement services required by the creditor for which the consumer did not shop in accordance with § 1026.19(e)(1)(vi)(A) and that are provided by persons other than the creditor or mortgage broker, the name of the person ultimately receiving the payment for each such amount, and the total of all such itemized amounts that are designated borrower-paid at or before closing. Items that were disclosed pursuant to § 1026.37(f)(3) must be disclosed under this paragraph (f)(2) if the consumer was provided a written list of settlement service providers under § 1026.19(e)(1)(vi)(C) and the consumer selected a settlement service provider contained on that written list.
New admin guide for PPDocs!
We have introduced a few new features for admins within PPDocs.
- Contact Sharing
- Template Sharing
- Profile Sharing
All these new features come with the ability to lock down your users ability to edit the shared item. Giving the administrator full control.
You can find the new guide here: PPDocs Admin Guide