By Leslie Callaway, CRCM, CAFP; Mark Kruhm, CRCM, CAFP; and Rhonda Castaneda, CRCM
Q Below the mortgage servicing guidelines, would a bank lose its small servicer exemption if it originates mortgage loans that it sells to an investor however nonetheless companies?
A In case your bank originated the loan, the bank nonetheless qualifies as a small servicer if all different situations are met.
Remark 2 to §1026.41(e)(4)(ii) of Regulation Z explains that to qualify as a small servicer, the servicer should service solely mortgage loans for which the servicer (or an affiliate) is the creditor or assignee. “To be the creditor or assignee of a mortgage loan, the servicer (or an affiliate) must either currently own the mortgage loan or must have been the entity to which the mortgage loan obligation was initially payable (that is, the originator of the mortgage loan).”
In your case, the mortgage loan was initially payable to the bank. After all, the bank should meet the opposite situation that, along with any associates, it companies 5,000 or fewer mortgage loans for which the servicer (or affiliate) is the creditor or assignee. (Response offered June 2020.)
Q If, on account of forbearance or related promotion, a house fairness line of credit score buyer just isn’t required to make a cost for a time frame (for instance, three months), is a periodic assertion nonetheless required beneath Regulation Z?
A Sure. Below, §1026.5(b)(2)(i) and the associated commentary, periodic statements are required in any billing cycle on which a finance cost has been imposed or on which an account has a debit or credit score stability of $1 or extra. Merely eradicating or not imposing curiosity doesn’t, by itself, eradicate the requirement to supply an announcement. Exceptions to this assertion requirement are restricted to conditions the place an account is deemed “uncollectible”; delinquency assortment actions have began; the account has been charged off and no further charges or curiosity will likely be charged; or the place furnishing the assertion would violate federal regulation. Furthermore, different provisions of the regulation may be affected by the date the periodic statements are mailed or delivered, similar to §1026.13 which referring to billing error resolutions. (Response offered June 2020.)
Q A person borrower on a client unsecured line of credit score has requested that the bank add an extra borrower to the account. Does Regulation Z require the bank to supply the brand new borrower account-opening disclosures?
A No. Part 1026.5(d) explains, “If there is more than one consumer, the disclosures may be made to any consumer who is primarily liable on the account.” (Totally different guidelines apply in transactions topic to the best of rescission.) Nonetheless, there may be authorized or related provisions (for instance, state or contract regulation) that may warrant offering a duplicate of the settlement and different info to the brand new borrower. Please test with authorized counsel for steering. (Response offered June 2020.)
Q Is there any truthful lending danger related to consideration of foster care funds as earnings, assuming the applicant offered it voluntarily?
A No, assuming the identical consideration is made for all equally located candidates. Notice that there’s typically no prohibition in contemplating earnings from any supply. Nonetheless, there are restrictions on what info lenders may request. For instance, §1002.5(d) in Regulation B signifies a creditor may not inquire whether or not earnings acknowledged in an software is derived from alimony, little one assist or separate upkeep funds. Nonetheless, that prohibition doesn’t prolong to foster care funds, which seem to not qualify as such. (Response offered June 2020.)
Solutions are offered by Leslie Callaway, CRCM, CAFP, director of compliance outreach and growth; Mark Kruhm, CRCM, CAFP, senior compliance analyst; and Rhonda Castaneda, CRCM, senior compliance analyst, ABA Regulatory Coverage and Compliance. Solutions don’t present, nor are they supposed to substitute for, skilled authorized recommendation. Solutions have been present as of the response date proven on the finish of every merchandise.
