Managing the Compliance Risk of Today s Mortgage Loans 30 th Annual Consumer Compliance Seminar April 29, 2015 Mollie Newsome Sudhoff, CRCM, CRP 0 Risky business Biggest Risk in Mortgage Lending today? Change The risk of not being prepared for change Not listening to/responding to the data Not listening to the Compliance Officer or Chief Risk Officer or both 1 Current Trends "Before, you threw something over the wall, and the risk managers said yes or no," says William Hartmann, KeyCorp's chief risk officer. "Now we're more involved in the development of the strategy or the plan. (WSJ- 6-25-2014) Remember the 6 P s 2 Today's Mortgage Loans 1
Managing the Compliance Risk of Today s Mortgage Loans 6 P s of Performance Planning 3 P s PRIOR PLANNING and Preparation Prevents POOR PERFORMANCE 4 Preparation and Planning How to be ready for the future: Envision change and be prepared Continuously Conduct Risk Analysis Rigorously identify the types of risk and make sure each is evaluated. Ask questions about things that are not yet problems. 5 Today's Mortgage Loans 2
Strategic Planning Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 6 Planning to stay ahead Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 7 ATR/QM Credit Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 8 Today's Mortgage Loans 3
Types of Risk--- Strategic Reputation Credit Interest Rate (IRR) Ask questions about other areas Liquidity Price Operational Compliance 9 Plan for the worst case Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 10 Pricing Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 11 Today's Mortgage Loans 4
Operations/Vendor Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 12 Now the real challenge Types of Risk--- Strategic Reputation Credit Interest Rate Risk Liquidity Price Operational Compliance 13 Risk Strategies Don t leave compliance up to lenders Give them a road map Give them GPS Set up traffic cameras 14 Today's Mortgage Loans 5
Don t give a map of Disneyland to get to Epcot Center. 15 Managing the Compliance Risk of Today s Mortgage Loans Create a package for each type of loan Key Requirements- Checklists (See suggested checklist attached) What if---challenges to Anticipate»Utilize available resources»hmda Cheat-sheets etc. 16 Learn from mistakes Have Risk Anticipation and Management built into the CMS Prepare the roadmap for the lender Give the lender/processor tools along the way Test periodically to see if the tools are working Revise the plan if needed 17 Today's Mortgage Loans 6
Managing the Compliance Risk of Today s Mortgage Loans Compliance Risk Advertising RESPA-Section 8 Marketing Underwriting ATR/QM Third-Party Risk Vendor Management 18 Change can be good Compliance Risk TRID i.e. change New Regulatory Requirements Forms Timing Content Third-Party Disclosure preparation testing 19 Reporting Compliance Risk Reporting HMDA/CRA FCRA Law Enforcement 20 Today's Mortgage Loans 7
Reporting Compliance Risk Reporting Disclosure Timing Accuracy Content Beware of UDAAP 21 Sharing Compliance Risk Sharing Privacy Affiliates Loan officers Other employees 22 Compliance Risk Data Integrity System Structure Retrievable records Backup Security Data Integrity 23 Today's Mortgage Loans 8
Compliance The ABZ s Regulation B Regulation C Regulation E Think payment processing The ABZ s 24 Compliance The ABZ s Regulation H/Flood Hazard Determination Regulation O- Loans to Insiders Regulation P - Privacy The ABZ s 25 Compliance The ABZ s Regulation S- Fees Think UDAAP too The ABZ s 26 Today's Mortgage Loans 9
The ABZ s Compliance The ABZ s Regulation V- Fair Credit reporting Act Permissable Purpose Negative Information Risk Based Pricing Quality of Reported Data 27 The Hot Buttons Compliance The CFPB Hot Buttons Mortgage Servicing Transfers Reporting to Credit Bureaus Vendor Management (Think TRID) Service Member Issues Fair Lending (but beyond mortgage) 28 The Hot Buttons Compliance The CFPB Hot Buttons Vendor Management/Third Party Relationships Can t emphasize this enough 29 Today's Mortgage Loans 10
The Hot Buttons Compliance The CFPB Hot Buttons Dodd-Frank Implications New Regulations such as TILA/RESPA Integration Complaints Management UDAAP (where everything is caught) 30 Pulling it together Compliance Management System Mortgage Policies Underwriting Quality Control Procedures for closing etc. 31 CMS Compliance Management System Three Lines of Defense COSO Front Line i.e., Lenders Compliance/Legal/Risk Management Audit 32 Today's Mortgage Loans 11
Three Lines of Defense COSO First Line 1. Front Line i.e., Lenders- Make sure lenders have training, tools, techniques to put together the proper loan package 33 Compliance/Legal/Risk Three Lines of Defense COSO 2. Compliance/Legal/Risk Management Upfront planning Mid-course review (Monitoring) Follow up and accountability 34 AUDIT Three Lines of Defense COSO 3. Audit Independent review Fix things the first time»repeat violations cause increased scrutiny and potential for regulatory actions! 35 Today's Mortgage Loans 12
Thank you! Mollie Newsome Sudhoff, Manager msudhoff@crosscheckcompliance.com CrossCheckCompliance 312.346.4600 main 847.476.1128 mobile 810 W. Washington Boulevard, Chicago, IL 60607 www.crosscheckcompliance.com 36 Today's Mortgage Loans 13
Managing the Compliance Risk of Today s Mortgage Loans Resources for Mortgage Loan Risk Management Planning and Monitoring Mortgage Risk Monitoring Checklist o Application Closing checklists Detailed Product Checklist Examples 810 W. Washington Boulevard Chicago, IL 60607 312-346-4600
Mortgage Risk Monitoring Checklist 4 Pg TRID Portrait Before and after 8-1-2015 Application Phase-Prior 8/1/2015 1. Did the loan officer complete an initial loan application? 1002.(c) Application Phase- App on or After 8/1/2015 Did the loan officer complete an initial loan application? 1002.(c) OR Does the lender have six key pieces of information 1. Name 2. Income 3. SSN 4. Property address 5. Est val of property 6. Loan Amount Loan 1 Loan 2 2. Government monitoring Information? 1002 and or 1003 Government monitoring Information? 1002 and or 1003 3. Did the lender complete a personal identification form for all borrowers (no expired documentation, signed, etc. may be combined with Patriot Act Disclosure BSA CIP Did the lender complete a personal identification form for all borrowers (no expired documentation, signed, etc. may be combined with Patriot Act Disclosure BSA CIP 4. Is the initial loan application signed by the applicant and the loan officer? 1002.4 Is the initial loan application signed by the applicant and the loan officer? 1002.4 a. NMLS #s d. NMLS #s b. Intent to apply/apply jointly? e. Intent to apply/apply jointly? c. Other? f. Other? 5. Does the loan application require information on a prohibited information as defined by Reg Does the loan application require information on a prohibited information as defined by Reg B? B? 6. Credit insurance app disclosure? Credit insurance app disclosure? 7. ARM Program disclosure & CHARM booklet if rate is adjustable. ARM Program disclosure & CHARM booklet if rate is adjustable. 8. If HELOC If HELOC a. HELOC Program/App Disclosure HELOC Program/App Disclosure b. HELOC Booklet (when your (Not TRID) home is on the line) HELOC Booklet (when your home is on the line) At or within 3 days of application before 8/1/2015 At or within 3 days of application rec on or after 8/1/2015 1. *# Good Faith Estimate of Closing Costs? *# Loan Estimate? If Change in Circumstance may issue new one. Can t issue new one after Closing Disclosure. 2. HUD Settlement Booklet? HUD Settlement Booklet? Loan 1 Loan 2 3. *# Preliminary TIL No Prelim TIL see Loan Estimate 4. *Servicing Transfer Disclosure (1 st lien) *Servicing Transfer Disclosure (1 st lien) 5. Notice to Home Loan Applicant Notice to Home Loan Applicant 6. # Intent to Proceed (not before gfe) # Intent to Proceed (Not before LOAN ESTIMATE) 7. Homeownership Counseling List (w/in 30 days and app zip code based) Homeownership Counseling List (w/in 30 days and app zip code based) 8. Appraisal Disclosure (1 st Lien or HPML) Appraisal Disclosure (1 st Lien or HPML) Page 1 Mortgage Risk Monitoring Checklist 4 Pg TRID Portrait Prepared by Mollie Sudhoff, CrossCheck Compliance, LLC.
Mortgage Risk Monitoring Checklist 4 Pg TRID Portrait Before and after 8-1-2015 Prior to closing Prior to closing- App rec on or after 8/1/2015 1. Flood Hazard Determination Form Flood Hazard Determination Form Loan 1 Loan 2 2. Flood Notice (If in a flood Zone and signed Flood Notice (If in a flood Zone and signed 3. Verify CIP Verify CIP 4. ***If HCML, is there an Escrow Account or documentation of exemption? 5. If high-cost mortgage, a. HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind) and b. is there Written Certification of Counseling Obtained? c. Escrow ***If HCML, is there an Escrow Account or documentation of exemption? If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind) and is there Written Certification of Counseling Obtained? Escrow 6. APR within tolerance (APR win) APR within tolerance (APR win) Total Interest Percentage (TIP) on Loan Estimate? 7. Copy of appraisal Copy of appraisal 8. ATR/Verifications: a. Income or assets Status ( reg & HELOC) ATR/Verifications: b. Income or assets Status ( reg & HELOC) c. Employment Status ( reg & HELOC) d. Employment Status ( reg & HELOC) e. DTI f. DTI g. Other loan pmt h. Other loan pmt i. MDR/Residual income j. MDR/Residual income k. Monthly pmt l. Monthly pmt m. Credit History n. Credit History o. Mortgage related obligation payments Status ( reg & HELOC) p. Current Obligations for (HELOC) 9. HUD-1 or HUD 1A Available 1 day before closing if requested. q. Mortgage related obligation payments Status ( reg & HELOC) r. Current Obligations for (HELOC) Closing Disclosure provided 3 days before CONSUMMATION (SEE ( 1026.2(a)(13)) Page 2 Mortgage Risk Monitoring Checklist 4 Pg TRID Portrait Prepared by Mollie Sudhoff, CrossCheck Compliance, LLC.
Mortgage Risk Monitoring Checklist 4 Pg TRID Portrait Before and after 8-1-2015 Closing Checklist before 8/1/2015 Closing Checklist for app received on or after 8/1/2015 1. If secured by personal residence, is RofR signed If secured by personal residence, is RofR signed 2. Proceeds advanced after midnight of the 3 business day? Proceeds advanced after midnight of the 3 business day? 3. Insurance a. Hazard b. Flood c. Other? Insurance Hazard Flood Other? 4. Sale of Insurance Disclosure, if required. Sale of Insurance Disclosure, if required. 5. Privacy Disclosure Privacy Disclosure 6. Final Truth In lending: a. Demand feature? b. Loan cannot be assumed. c. Collateral is described d. Credit Insurance y/n e. Late charge disclosed. f. Filing fees g. No prepayment penalty h. No refund of FC i. AF Itemization unless HUD-1 is provided See Closing Disclosure for Demand feature? Assumption Late payment Filing fees prepayment penalty AF Itemization unless HUD-1 is provided Total of payments Finance Charge Amount Financed Annual Percentage Rate Total Interest percentage 7. HMDA Data collected properly HMDA Data collected properly 8. Add Loan to HMDA LAR Add Loan to HMDA LAR *If application is for construction/permanent financing: A Servicing Transfer Disclosure, Good Faith Estimate and Preliminary Truth in Lending disclosure, for both the construction phase and the permanent financing, must be provided within 3 business days of the initial application. *** HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Certain flipped transactions require a second appraisal. This document is to be used as a guide for internal monitoring of mortgage loan compliance. Mortgage loan files are very detailed and files generally reflect 100-600 pages o f applications, verifications, disclosures, notes, contracts, appraisals, and security agreement. While this list may not be exhaustive, it is reflective of questions that will generally assist the reviewer in focusing on key risk indicators. Use with caution, this document is not legal advice. Page 3 Mortgage Risk Monitoring Checklist 4 Pg TRID Portrait Prepared by Mollie Sudhoff, CrossCheck Compliance, LLC.
PURCHASE/CONSTRUCTION (Fixed Rate/HMDA) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: PURPOSE/COMMENTS: At application: 1. Application ** Date Received: (Includes NMLS Names/IDs) In person Dropped off Mailed Phone Electronic 2. Government Monitoring Information (race, sex, ethnicity) - Do not collect for construction only loans 3. CIP information obtained (name, physical address, SSN, date of birth) 4. Evidence of Intent to Apply Reg B If more than 1 applicant 5. Credit insurance application disclosure (provided orally and in writing at time insurance product solicited/offered) Within 3 business days of application: 1. Good Faith Estimate* (may not charge fees (except credit report) until applicant has received) 2. HUD Settlement Booklet 3. Preliminary Truth in Lending* (may not charge fees (except credit report) until applicant has received) 4. Servicing Transfer Disclosure* (only if 1 st lien) 5. Notice to Home Loan Applicant (or as soon as reasonably practical after the credit report is pulled) 6. Intent to Proceed (must be after the GFE is received by applicant and prior to charging fees) 7. Homeownership Counseling List (must be obtained within last 30 days and based on applicant s zip code) 8. Appraisal Disclosure (1st lien or HPML) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile homes) 2. Flood Notice (if in flood zone) (Provide reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. Higher-Priced Mortgage Loan*** Escrow Account (Unless Exempt) Appraisal Requirements (Unless Exempt) 5. APR Within Tolerance.125% tolerance for a Regular Transaction.250% tolerance for an Irregular Transaction 6. Copy of Appraisal (1st lien: Provide promptly and at least 3 business days prior to closing) (Other lien HPML: Provide at least 3 business days prior to closing) 7. If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind) Written Certification of Counseling Obtained (If high-cost mortgage) 8. Ability to Repay (Using third-party verification) Income or Assets Employment Status Monthly Payment (this loan) Debts Monthly Debt Ratio/Residual Income Credit History Monthly Payment (Simultaneous Loans) Monthly Payment: Mortgage Related Obligations 1 Day Prior To Closing: (only if requested by borrower - otherwise the HUD-1 may be provided at closing) 1. HUD-1 Closing: 1. Right of Rescission signed (Bridge loans only) (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed (compare to Final TIL for accuracy; Include NMLS Names/IDs) 3. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) 4. Sale of Insurance disclosure (if an insurance product is sold in connection with the loan) 5. Privacy Disclosure (if not an existing customer) 6. Final Truth in Lending Disclosure (compare to note) Demand feature Filing fees Loan cannot be assumed No prepayment penalty Collateral is described No refund of Finance Charge Credit insurance Amount Financed itemized (N/A if a HUD-1 is provided) Late charge After Closing: 1. Notice of Transfer (if loan is sold to another institution) 2. Complete HMDA Proof Sheet 3. Record on HMDA-LAR Final Loan File Review: *If application is for construction/permanent financing: A Servicing Transfer Disclosure, Good Faith Estimate and Preliminary Truth in Lending disclosure, for both the construction phase and the permanent financing, must be provided within 3 business days of the initial application. ** Cannot include verification documentation *** HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Certain flipped transactions require a second appraisal. Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
REFINANCE (Fixed Rate/HMDA) (includes refinanced home equity loans) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: _ PURPOSE/COMMENTS: At application: 1. Application * Date Received: (Includes NMLS Names/IDs) In person Dropped off Mailed Phone Electronic 2. Government Monitoring information (race, sex, ethnicity); Includes mobile home loans 3. CIP information obtained (name, physical address, SSN, date of birth) 4. Evidence of Intent to Apply Reg B If more than 1 applicant 5. Credit insurance application disclosure (provide orally and in writing at time insurance product solicited/offered) Within 3 business days of application: 1. Good Faith Estimate (may not charge fees (except credit report) until applicant has received) 2. Preliminary Truth in Lending (may not charge fees (except credit report) until applicant has received) 3. Servicing Transfer Disclosure (only if 1 st lien) 4. Notice to Home Loan Applicant (or as soon as reasonably practical after the credit report is pulled) 5. Intent to Proceed (must be after the GFE is received by applicant and prior to charging fees) 6. Homeownership Counseling List (must be obtained within last 30 days and based on applicant s zip code) 7. Appraisal Disclosure (1 st lien or HPML) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile homes) 2. Flood Notice (if in flood zone) (reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. If high-cost mortgage, HCM disclosure 3 business days before closing (each borrower/consumer with right to rescind) Written Certification of Counseling Obtained (if High-Cost Mortgage) 5. Higher-Priced Mortgage Loan** Escrow Account (Unless Exempt) Appraisal Requirements (Unless Exempt) 6. Ability to Repay (Using third-party verification) Income or Assets Employment Status Monthly Payment (this loan) Debts Monthly Debt Ratio/Residual Income Credit History Monthly Payment (Simultaneous Loans) Monthly Payment: Mortgage Related Obligations 7. APR Within Tolerance.125% tolerance for a Regular Transaction.250% tolerance for an Irregular Transaction 8. Copy of Appraisal (1 st lien: Provide promptly and at least 3 business days prior to closing) (Other lien HPML: Provide at least 3 business days prior to closing) 1 Day Prior To Closing: (only if requested by borrower - otherwise the HUD-1 may be provided at closing) 1. HUD-1 or HUD-1A Closing: 1. Right of Rescission signed (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed (Compare to Final TIL for accuracy; Include NMLS Names/IDs) 3. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) 4. Sale of Insurance disclosure (if an insurance product is sold in connection with the loan) 5. Privacy Disclosure (if not an existing customer) 6. Final Truth in Lending disclosure (compare to note) Demand feature Loan cannot be assumed Collateral is described Credit insurance Late charge Filing fees No prepayment penalty No refund of Finance Charge Amount Financed itemized (N/A if a HUD-1 is provided) After Closing: 1. Notice of Transfer (if loan is sold to another institution) 2. Complete HMDA Proof Sheet 3. Record on HMDA-LAR Final Loan File Review: *Cannot include verification documentation ** HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
HOME IMPROVEMENT/HOME EQUITY (Fixed Rate/HMDA) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: _ PURPOSE/COMMENTS: At application: 1. Application * Date Received: _ (Includes NMLS Names/IDs) In person Dropped off Mailed Phone Electronic 2. Government Monitoring Information (race, sex, ethnicity) Improvement collect if secured by a dwelling or if non-dwelling secured and classified by the bank as improvement loan Equity do not collect unless a refinance 3. CIP information obtained (name, physical address, SSN, date of birth) 4. Evidence of Intent to Apply Reg B If more than 1 applicant _ 5. Credit insurance application (provide orally and in writing at time insurance product solicited/offered) disclosure 6. Evidence of Intent to Apply Reg B If more than 1 applicant Within 3 business days of application: 1. Good Faith Estimate (may not charge fees (except credit report) until applicant has received) 2. Preliminary Truth in Lending (may not charge fees (except credit report) until applicant has received) 3. Servicing Transfer Disclosure (only if 1st lien) 4. Notice to Home Loan Applicant (or as soon as reasonably practical after the credit report is pulled) 5. Intent to Proceed (must be after the GFE is received by applicant and prior to charging fees) 6. Homeownership Counseling List (must be obtained within last 30 days and based on applicant s zip code) 7. Appraisal Disclosure (1 st lien or HPML) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile homes) 2. Flood Notice (if in flood zone) (Provide reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind) Written Certification of Counseling Obtained (if High-Cost Mortgage) 5. If Higher-Priced Mortgage Loan** Escrow Account (Unless Exempt) Appraisal Requirements (Unless Exempt) 6. APR Within Tolerance.125% tolerance for a Regular Transaction.250% tolerance for an Irregular Transaction 7. Copy of Appraisal (1 st lien: Provide promptly and at least 3 business days prior to closing) (Other lien HPML: Provide at least 3 business days prior to closing) 8. Ability to Repay (Using third-party verification) Income or Assets Employment Status Monthly Payment (this loan) Debts Monthly Debt Ratio/Residual Income Credit History Monthly Payment (Simultaneous Loans) Monthly Payment: Mortgage Related Obligations 1 Day Prior To Closing: (only if requested by borrower - otherwise the HUD-1 may be provided at closing) 1. HUD-1 or HUD-1A Closing: 1. Right of Rescission signed (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed (Compare to Final TIL for accuracy; Include NMLS Names/IDs) 3. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) 4. Sale of Insurance disclosure (if an insurance product is sold in connection with the loan) 5. Privacy Disclosure (if not an existing customer) 6. Final Truth in Lending disclosure (compare to note) Demand feature Loan cannot be assumed Collateral is described Credit insurance Late charge Filing fees No prepayment penalty No refund of Finance Charge Amount Financed itemized (N/A if a HUD-1 is provided) After Closing: 1. Complete HMDA Proof Sheet 2. Record on HMDA-LAR Final Loan File Review: *Cannot include verification documentation. ** HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
PURCHASE/CONSTRUCTION (Adjustable Rate Mortgage/HMDA) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: PURPOSE/COMMENTS: At application: 1. Application ** Date Received: _ (Include NMLS Names/IDs) In person Dropped off Mailed Phone Electronic 2. Government Monitoring Information (race, sex, ethnicity) (Includes mobile home loans) 3. ARM Program disclosure & CHARM booklet. (only if loan is secured by the consumer s principal dwelling and for a term greater than one year). 4. CIP information obtained (name, physical address, SSN, date of birth) 5. Evidence of Intent to Apply Reg B If more than 1 applicant 6. Credit insurance application disclosure (provide orally and in writing at time insurance product solicited/offered) Within 3 business days of application: 1. Good Faith Estimate* (may not charge fees (except credit report) until applicant has received) 2. HUD Settlement Booklet 3. Preliminary Truth in Lending* (may not charge fees (except credit report) until applicant has received) 4. Servicing Transfer Disclosure* (only if 1 st lien) 5. Notice to Home Loan Applicant (or as soon as reasonably practical after the credit report is pulled) 6. Intent to Proceed (must be after the GFE is received by applicant and prior to charging fees) 7. Homeownership Counseling List (must be obtained within last 30 days and based on applicant s zip code) 8. Appraisal Disclosure (1 st lien or HPML) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile homes) 2. Flood Notice (if in flood zone) (Provide a reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. Higher-Priced Mortgage Loan*** Escrow Account (Unless Exempt) Appraisal Requirements (Unless Exempt) 5. APR Within Tolerance.125% tolerance for a Regular Transaction.250% tolerance for an Irregular Transaction 6. Copy of Appraisal (1 st lien: Provide promptly and at least 3 business days prior to closing) (Other lien HPML: Provide at least 3 business days prior to closing) 7. If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind) Written Certification of Counseling Obtained (if High-Cost Mortgage) 8. Ability to Repay (Using third-party verification) Income or Assets Employment Status Monthly Payment (this loan) Debts Monthly Debt Ratio/Residual Credit History Monthly Payment (Simultaneous Loans) Monthly Payment: Mortgage Related Obligations 1 Day Prior To Closing: (only if requested by borrower - otherwise the HUD-1 may be provided at closing) 1. HUD-1 Closing: 1. Right of Rescission signed (Bridge Loans only) (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed (Compare to Final TIL for accuracy; Include NMLS Names/IDs) 3. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) 4. Sale of Insurance disclosure (if an insurance product is sold in connection with the loan) 5. Privacy Disclosure (if not an existing customer) 6. Final Truth in Lending disclosure (compare to note) Demand feature Filing fees Loan cannot be assumed No prepayment penalty Collateral is described No refund of Finance Charge Credit insurance Amount Financed itemized (N/A if a HUD-1 is provided) Late charge 7. Initial Rate Change Notification If term greater than one year, secured by principal dwelling, and first adjusted payment is due within 210 days of closing After Closing: 1. Notice of Transfer (if loan is sold to another institution) 2. Complete HMDA Proof Sheet 3. Record on HMDA-LAR Final Loan File Review: *If construction/permanent financing: A Servicing Transfer Disclosure, Good Faith Estimate and Preliminary Truth in Lending disclosure, for both the construction phase and the permanent financing, must be provided within 3 business days of the initial application. **Cannot include verification documentation. ***HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Certain flipped transactions require a second appraisal. Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
REFINANCE (Adjustable Rate Mortgage/HMDA) (includes refinanced home equity loans) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: _ PURPOSE/COMMENTS: At application: 1. Application * Date Received: _ (Include NMLS Names/IDs) In person Dropped off Mailed Phone Electronic 2. Government Monitoring Information (race, sex, ethnicity) (Includes Mobile home loans) 3. ARM Program disclosure and CHARM booklet. (only if loan is secured by the consumer s principal dwelling and for a term greater than one year). 4. CIP information obtained (name, physical address, SSN, date of birth) 5. Credit insurance application disclosure (provide orally and in writing at time insurance product solicited/offered) 6. Evidence of Intent to Apply Reg B If more than 1 applicant Within 3 business days of application: 1. Good Faith Estimate (may not charge fees (except credit report) until applicant has received) 2. Preliminary Truth in Lending (may not charge fees (except credit report) until applicant has received) 3. Servicing Transfer Disclosure (only if 1 st lien) 4. Notice to Home Loan Applicant (or as soon as reasonably practical after the credit report is pulled) 5. Intent to Proceed (must be after GFE is received by applicant and prior to charging fees) 6. Homeownership Counseling List (must be obtained within last 30 days and based on applicant s zip code) 7. Appraisal Disclosure (1 st lien or HPML) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile home loans) 2. Flood Notice (if in flood zone) (Provide a reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP Information 4. If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind Written Certification of Counseling Obtained (if High-Cost Mortgage) 5. If Higher-Priced Mortgage Loan** Escrow Account (Unless Exempt) Appraisal Requirements (Unless Exempt) 6. APR Within Tolerance.125% tolerance for a Regular Transaction.250% tolerance for an Irregular Transaction 7. Copy of Appraisal (1 st lien: Provide promptly & at least 3 business days prior to closing) (Other lien HPML: Provide at least 3 business days prior to closing 8. Ability to Repay (Using third-party verification) Income or Assets Employment Status Monthly Payment (this loan) Debts Monthly Debt Ratio/Residual Income Credit History Monthly Payment (Simultaneous Loans) Monthly Payment: Mortgage Related Obligations 1 Day Prior To Closing: (only if requested by borrower - otherwise the HUD-1 may be provided at closing) 1. HUD-1 or HUD-1A Closing: 1. Right of Rescission signed (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed Compare to Final TIL for accuracy (Include NMLS Names/IDs) 3. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) 4. Sale of Insurance disclosure (if an insurance product is sold in connection with the loan) 5. Privacy Disclosure (if not an existing customer) 6. Final Truth in Lending disclosure (compare to note) Demand feature Filing fees Loan cannot be assumed No prepayment penalty Collateral is described No refund of Finance Charge Credit insurance Amount Financed itemized (N/A if a HUD-1 is provided) Late charge Variable rate information (if applicable) 7. Initial Rate Change Notification If term greater than one year and first adjusted payment is due within 210 days of closing After Closing: 1. Notice of Transfer (if loan is sold to another institution) 2. Complete HMDA Proof Sheet 3. Record on HMDA-LAR Final Loan File Review: *Cannot include verification documentation. **HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
HOME IMPROVEMENT/HOME EQUITY (Adjustable Rate Mortgage/HMDA) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: _ PURPOSE/COMMENTS: At application: 1. Application * Date Received: (Include NMLS Name/ID) In person Dropped off Mailed Phone Electronic 2. Collect government monitoring information (race, sex, ethnicity) Improvement collect if secured by a dwelling or if non-dwelling secured and classified by the bank as improvement loan Equity do not collect unless a refinance 3. ARM Program disclosure and CHARM booklet. (only if loan is secured by the consumer s principal dwelling and for a term greater than one year). 4. CIP information obtained (name, physical address, SSN, date of birth) 5. Credit insurance application (provided orally and in writing at the time an insurance product is solicited or offered) Disclosure 6. Evidence of Intent to Apply Reg B If more than 1 applicant Within 3 business days of application: 1. Good Faith Estimate (may not charge fees (except credit report) until applicant has received) 2. Preliminary Truth in Lending (may not charge fees (except credit report) until applicant has received) 3. Servicing Transfer Disclosure (only if 1 st lien) 4. Notice to Home Loan Applicant (or as soon as reasonably practical after the credit report is pulled) 5. Intent to Proceed (must be after the GFE is received by applicant and prior to charging fees) 6. Homeownership Counseling List (must be obtained within last 30 days and based on applicant s zip code) 7. Appraisal Disclosure (1 st lien or HPML) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile homes) 2. Flood Notice (if in flood zone) (reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind Written Certification of Counseling Obtained (if High-Cost Mortgage) 5. If Higher-Priced Mortgage Loan** Escrow Account (Unless Exempt) Appraisal Requirements (Unless Exempt) 6. APR Within Tolerance.125% tolerance for a Regular Transaction.250% tolerance for an Irregular Transaction 7. Copy of Appraisal (1 st lien: Provide promptly and at least 3 business days prior to closing) (Other lien HPML: Provide at least 3 business days prior to closing) 8. Ability to Repay (Using third-party verification) Income or Assets Employment Status Monthly Payment (this loan) Debts Monthly Debt Ratio/Residual Income Credit History Monthly Payment (Simultaneous Loans) Monthly Payment: Mortgage Related Obligations 1 Day Prior To Closing: (only if requested by borrower - otherwise the HUD-1 may be provided at closing) 1. HUD-1 or HUD-1A Closing: 1. Right of Rescission signed (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed Compare to Final TIL for accuracy (Include NMLS Names/IDs) 3. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) 4. Sale of Insurance disclosure (if an insurance product is sold in connection with the loan) 5. Privacy Disclosure (if not an existing customer) 6. Final Truth in Lending disclosure (compare to note) Demand feature Filing fees Loan cannot be assumed No prepayment penalty Collateral is described No refund of Finance Charge Credit insurance Amount Financed itemized (N/A if a HUD-1 is provided) Late charge Variable rate information (if applicable) 7. Initial Rate Change Notification If term greater than one year, secured by principal dwelling, and first adjusted payment is due within 210 days of closing After Closing: 1. Complete HMDA Proof Sheet 2. Record on HMDA-LAR Final Loan File Review: *Cannot include verification documentation. **HPML escrow rules do not apply to construction loans, bridge loans or other temporary financing with a term of 12 months or less, HELOCs, or Reverse Mortgages. HPML appraisal requirements do not apply to construction loans, bridge loans with a term of 12 months or less (if in connection with the purchase of a primary dwelling); Qualified Mortgages; streamlined 1st lien refinancings meeting certain conditions; smaller dollar loans; loans secured by manufactured homes (until 7-18-15), mobile homes, boats, or trailers; or reverse mortgages. Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
HOME EQUITY LINE OF CREDIT (HMDA) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: _ PURPOSE/COMMENTS: At application: 1. Application Date Received: In person Dropped off Mailed Phone Electronic Reporting HELOCs for HMDA bank is optional, therefore: If the bank does not report HELOCs: Only Collect Government Monitoring Information if the HELOC is used to purchase and is secured by a primary residence (to meet Reg B requirements) and do not report on the LAR. If the bank does report HELOCs: Collect Government Monitoring Information. 2. Home Equity Line of Credit Program/Application Disclosure 3. Home Equity Line of Credit Booklet When Your Home is on the Line or What You Should Know About Home Equity Lines of Credit 4. CIP information obtained (name, physical address, SSN, date of birth) 5. Appraisal Disclosure If a first lien, provide no later than 3 business days after application 6. Credit insurance application Disclosure (provided orally and in writing at the time an insurance product is solicited or offered) 7. Evidence of Intent to Apply Reg B If more than 1 applicant 8. Notice to Home Loan Applicant (as soon as reasonably practical after the credit report is pulled) 9. Homeownership Counseling List Provide no later than 3 business days after application (must be obtained within last 30 days and be based on zip code of applicant) Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No (includes mobile homes) 2. Flood Notice (if in flood zone) (Provide a reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. Copy of Appraisal If a first lien, provide promptly & at least 3 business days prior to closing 5. If high-cost mortgage, HCM disclosure 3 business days prior to closing (each borrower/consumer w/ right to rescind) Written Certification of Counseling Obtained (if high-cost mortgage) If high-cost mortgage: Ability to Repay using third-party verification: Income or Assets Employment Current Obligations Mortgage-Related Obligations Closing: 1. Right of Rescission signed (also required on purchase money loans) (2 copies to each consumer who has an ownership interest and property is their primary residence) Advance money on 2. Note signed (must match terms of Program Disclosure) 3. Insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) Hazard insurance Flood insurance 4. Privacy Disclosure (if not an existing customer) Final Loan File Review: Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653
AGRICULTURAL/COMMERCIAL REAL ESTATE LOAN (HMDA) BORROWER: SSN: LOAN OFFICER: _ CLOSING DATE: _ PURPOSE/COMMENTS: At application: 1. Application Date Received: _ 2. Government Monitoring Information (race, sex, ethnicity) Collect GMI for home purchase loans (unless the loan is primarily for agricultural purposes), home improvement loans, and refinance loans 3. CIP information obtained (name, physical address, SSN or EIN, date of birth-if applicable) 4. Evidence of Intent to Apply Reg B If more than 1 applicant Within 3 business days of application: 1. Appraisal Disclosure If secured by 1 st lien on a dwelling Prior to closing: 1. Flood Hazard Determination Form In Flood Zone? Yes No 2. Flood Notice (if in flood zone) (Provide a reasonable time prior to closing or no later than commitment) signed by borrowers 3. Verify CIP information 4. Copy of Appraisal (If secured by 1 st lien on a dwelling Provide promptly and at least 3 business days prior to closing) Closing: 1. Note signed 2. Insurance Hazard insurance Flood insurance (Verify flood zone; adequate coverage; effective date; and mortgagee info) Final Loan File Review: Banker s Compliance Consulting Version 1.2 Updated 6/20/14 1-800-847-1653