Frequently Asked Questions Relating to TRID

Today the CFPB posted four Frequently Asked Questions relating to TRID. Three of the questions relate directly to corrected closing disclosures and the three business-day waiting period before consummation and the fourth question relates to the model forms. You can read the CFPB questions and answers at https://www.consumerfinance.gov/policy-compliance/guidance/tila-respa-disclosure-rule/tila-respa-integrated-disclosure-faqs/.

Regulatory Solutions provides comprehensive TRID reviews to ensure you are in compliance with the TILA-RESPA requirements. If you would like to discuss how we can assist you with your TRID reviews, please contact us at Betsy.reynolds@regulatorysol.com or Rhonda.wannemuehler@regulatorysol.com.

2019 HMDA Asset-Size Exemption

The Consumer Financial Protection Bureau announced the adjusted asset-size exemption threshold for depository institutions for HMDA (Regulation C). The exemption threshold has been increased from $45 million to $46 million. Based on this adjustment, banks, savings associations, and credit unions with assets of $46 million or less as of December 31, 2018 are exempt from collecting data in 2019. Remember, 2018 HMDA data is reportable by March 1, 2019. If you need assistance with scrubbing your HMDA data for 2018, contact Regulation Solutions today!

Data Points Covered by Partial Exemptions

The Bureau of Consumer Financial Protection issued an interpretive and procedural rule on August 31, 2018, to implement and clarify section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended certain provisions of the Home Mortgage Disclosure Act (HMDA). The rule allows certain insured depository institutions and insured credit unions (based on thresholds for the number of closed-end and/or open-end loans originated during a given year) to be partially exempt for certain data point reporting.  Below is a chart detailing the data points covered by the partial exemptions and the correct code to use on the HMDA LAR to signify exemption.

Regulatory Solutions has developed proprietary software to complete your HMDA Scrubs. Please contact us today to discuss how we can help you ensure your HMDA data is correct

 

Data Points Covered by Partial Exemptions

Data Points Covered by Partial Exemptions Correct Code for Exemption
§ 1003.4(a)(1)(i) – Universal Loan IdentifierUnique, within the insured depository institution, loan or application identifier that can be up to 22 characters
§ 1003.4(a)(9)(i) – Property Address (street address, city, zip code)Exempt
§ 1003.4(a)(12) – Rate SpreadExempt
§ 1003.4(a)(15) – Credit Score1111
§ 1003.4(a)(15) – Name and Version of Credit Scoring Model1111
§ 1003.4(a)(16) – Reasons for Denial1111 (Leave the remaining Reason for denial data fields blank)
§ 1003.4(a)(17) – Total Loan Costs or Total Points and FeesExempt
§ 1003.4(a)(18) – Origination ChargesExempt
§ 1003.4(a)(19) – Discount PointsExempt
§ 1003.4(a)(20) – Lender CreditsExempt
§ 1003.4(a)(21) – Interest RateExempt
§ 1003.4(a)(22) – Prepayment Penalty TermExempt
§ 1003.4(a)(23) – Debt-to-Income RatioExempt
§ 1003.4(a)(24) – Combined-Loan-to-Value RatioExempt
§ 1003.4(a)(25) – Loan TermExempt
§ 1003.4(a)(26) – Introductory Rate PeriodExempt
§ 1003.4(a)(27) – Non-Amortizing Features
Balloon Payment
Interest-Only Payment
Negative Amortization
Other Non-Amortizing Features
1111 (enter code for each one)
§ 1003.4(a)(28) – Property ValueExempt
§ 1003.4(a)(29) – Manufactured Home Secured Property Type1111
§ 1003.4(a)(30) – Manufactured Home Land Property Interest1111
§ 1003.4(a)(32) – Multifamily Affordable UnitsExempt
§ 1003.4(a)(33) – Submission of Application1111
§ 1003.4(a)(33) – Initially Payable to Your Institution 1111
§ 1003.4(a)(34) – Mortgage Loan Originator IdentifierExempt
§ 1003.4(a)(35) – Automated Underwriting System (AUS)1111 (Leave the remaining AUS blank)
§ 1003.4(a)(35) – Automated Underwriting System Result1111 (Leave the remaining AUS results blank)
§ 1003.4(a)(36) – Reverse Mortgage Flag1111
§ 1003.4(a)(37) – Open-End Line of Credit Flag1111
§ 1003.4(a)(38) – Business or Commercial Purpose Flag1111

Denied/Non-Originated Quality Control Reviews

In the mortgage world when you say the words quality control, post closing quality control loan file reviews immediately come to mind. Did you know that non-originated loan reviews are also considered a part of quality control?  Freddie Mac’s Quality Control Best Practices states that as part of your quality control process you should include a random sample of your declined loan applications.  In addition, FHA requires that you review a random statistical sample of rejected applications within 90 days from the end of the month in which the decision was made.   Regulatory Solutions can assist you with these monthly non-originated reviews to ensure you are in compliance with agency and regulatory requirements including the Equal Credit Opportunity Act (ECOA).

HMDA Scrubs And The New Reg C Rules

We are just over half way through the new year under the new Regulation C rules which changed the Home Mortgage Disclosure Act (“HMDA”) reporting requirements. Have you scrubbed your HMDA data in accordance with the new rules? If not, let Regulatory Solutions help! We have developed proprietary HMDA Scrub software to assist in the data integrity review of your HMDA data. Our software produces exception-based reports so that you know exactly what corrections need to be made by loan number. The report also provides you with a total number of exceptions and percentages based on data points.

If you are interested in Regulatory Solutions scrubbing your current HMDA data, please contact us at 855.734.7655 or email us through our contact page.

 

Commercial/Business Purpose Loans Under New HMDA Reporting

Now that the first quarter of HMDA reporting under the news rules is complete – one consistent question we receive is regarding whether a particular commercial/business purpose loan is HMDA reportable?

Under Regulation C if a closed-end mortgage loan or an open-end line of credit is for commercial/business purpose and is secured by a dwelling and is for a home purchase, refinance (dwelling secured loan replacing dwelling secured loan) or home improvement then it is HMDA reportable.   Remember that on home improvement it must also be secured by a dwelling. Non-dwelling secured loans for the purpose of home improvement are no longer reportable. Also, remember a dwelling is not limited to just a 1-4 family structure but includes multifamily dwellings that contain five or more dwelling units and includes a manufactured home community.

You must look both at purpose and security to determine if the commercial/business loan is reportable. For example, if the purpose of the loan is for cash flow and it is secured by the owner’s primary dwelling, then the loan would not be HMDA reportable because the purpose is not home purchase, refinance or home improvement.  However, if the borrower asks to refinance a loan secured by their dwelling for cash flow purposes for their business, the loan would be HMDA reportable because the purpose is refinance as a dwelling secured loan which replaces a dwelling secured loan.

Regulation C Section 1003.3(c)(10) and the official interpretations set forth the rules regarding closed-end mortgage loan or an open-end line of credit that is or will be made primarily for a commercial or business purpose.

Using our proprietary HMDA Scrub software, Regulatory Solutions is your source for HMDA Scrubs. Please call us at 855-734-7655 for details.

Pre-funding/Pre-closing Quality Control Review – FHA

FHA requires that pre-funding (pre-closing) quality control loan reviews should occur each month and that the loans selected for review must have been approved by an FHA Direct Endorsement underwriter before the pre-funding (pre-closing) quality control loan review can take place. According to FHA, the review should be 10% or less of the sample size and the review staff should operate independently from the Lender’s loan production or administration process. If nine or fewer FHA loans were closed during the prior month, then at least one FHA loan must be selected for pre-funding (pre-closing) quality control loan review. FHA also requires that the Lender verify that none of the participants in the transaction are debarred or suspended under an LDP and FHA program.

The following documents must be a part of the pre-funding (pre-closing) quality control loan review: appraisal; mortgage application, eligibility, and all underwriting documents; disclosures and legal compliance; mortgage origination documents; handling of mortgage documents; credit reports (a new report does not have to be ordered); any outstanding debt obligations; verifications of employment and deposit; self-employment information; source of funds; underwriting completeness and accuracy; property flipping restrictions; prohibited restrictive covenants; QM; Loan Estimate; any discrepancies in the loan file; and verification of any condition clearance. The results of the reviews must be reported to senior management on a monthly basis. The feedback that is provided should be used to create Action Plans so as to prevent the same mistakes from happening in the future. Any conflicting information in these documents should be resolved with the underwriter and any discrepancies found have to be resolved before closing. FHA also requires that if any discoveries of fraud or material misrepresentations are found during the review, they should be reported immediately to HUD/FHA.

Regulatory Solutions is available to assist you. Just visit our pre-funding/pre-closing quality control reviews page.  Regulatory Solutions will provide you with the independent solution you need to ensure your pre-funding files are reviewed in accordance with agency guidelines.

Regulatory Solutions Re-Certified by WBENC

Regulatory Solutions LLC was recently re-certified as a Women’s Business Enterprise (WBE) by the Women’s Business Enterprise National Council South, a regional certifying partner of the Women’s Business Enterprise National Council (WBENC). Regulatory Solutions is a women owned, privately held company which specializes in lending compliance particularly pre-funding and post-closing quality control loan file reviews, servicing reviews and HMDA scrubs on a nationwide basis.

WBENC’s national standard of certification includes an in-depth review of the business to confirm the business is at least 51% owned, operated, controlled and managed by a woman or women. WBENC is the nation’s largest third-party certifier of businesses owned and operated by women. It is recognized by more than 700 corporations across the US and many federal and government agencies that rely on WBNEC’s certification as an integral part of their supplier diversity programs.

Certification is the cornerstone of WBENC’s value proposition. The WBENC certification standard is the most relied upon certification of women-owned businesses. Certification is administered throughout the 50 United States, Puerto Rico, and the Virgin Islands by 14 Regional Partner Organizations. The ongoing goal for WBENC certification is to be the most valued certification of women-owned, operated, and controlled businesses, which is recognized by public, private, non-profit and government entities.

Get more information at wbenc.com.

Regulatory Solutions Associates Earn NAMU Certification

Four Regulatory Solutions quality control and compliance analysts recently completed the required training and passed the exam requirements to earn the National Association of Mortgage Underwriters (NAMU) certification as Certified Mortgage Quality Specialists. Ross Page, Lindsey Wood, Yvonne Price and Robin Pounders recently received the certification and all joined Regulatory Solutions last year as a part of the company’s expansion.

“Our growth since 2011 has propelled us into one of the premiere mortgage quality control service providers in the country,” said Betsy Reynolds, President of Regulatory Solutions, a Certified WBENC Women’s Business Enterprise. “To keep our clients up to speed on constantly changing laws, rules and regulations, it is important that our associates have the most advanced training and certifications available.”

Ross Page joined Regulatory Solutions in June 2016 and serves as a quality control verification analyst. Previously he was with Sterne Agee/Stifel and is a 2016 graduate of The University of Alabama. Lindsey Wood graduated from Auburn University in 2012 and Samford University’s Cumberland School of Law in 2016 and worked in the financial and legal fields before joining Regulatory Solutions as an associate and compliance analyst last year. After working several years in senior underwriting and mortgage loan officer positions, Yvonne Price joined Regulatory Solutions in 2016 as a quality control analyst.

Robin Pounders also joined Regulatory Solutions in 2016 as a quality control analyst performing pre-funding and servicing quality control loan reviews to ensure accuracy and compliance with regulatory and agency requirements. She started her career in the mortgage industry in 1998 at New South Federal Savings Bank and worked in the banking and mortgage fields in a variety of mortgage loan related roles before joining Regulatory Solutions.

Read the full article on al.com.

Regulatory Solutions Expands With The Acquisition Of Outsource Mortgage Consultants

Our latest acquisition means we now serve clients all over the Southeast. In July 2016, Regulatory Solutions LLC acquired the assets of Outsource Mortgage Consultants, Inc., located in Lexington Kentucky, a provider of quality control post closing audit services to the mortgage industry for the past twenty-two years. Outsource Mortgage Consultants operates as a separate business unit of Regulatory Solutions under the Outsource Mortgage Consultants name. With this acquisition, the company increased its presence in the States of Kentucky, Indiana and North Dakota.

“Five years ago we started as two industry veterans who set out to provide practical real world regulatory compliance assistance to financial institutions and mortgage companies,” said Betsy Reynolds, president of Regulatory Solutions. “We now serve clients all over the Southeast and expect our growth to continue nationwide. It is an exciting time for us as we continue to serve our clients with quality regulatory solutions.”