BEST-EVER CONSUMER CHECKLISTS - OnCourse Learningttsmedia.ttstrain.com/CUChecklistsHO040815.pdf · 2015. 4. 7. · Use this checklist for an original or refinanced loan that is: Consumer

Copyright © TTS and Anne Lolley Best‐Ever Checklists for Credit Unions April 8, 2015 For questions call 877‐778‐5192 x4 (toll‐free) 1

Modified for Credit Unions

BEST-EVER CONSUMER CHECKLISTS The Checklists

Anne Lolley with Total Training Solutions 877‐778‐5192 X4 (toll‐free) [email protected]

WEBINAR OF APRIL 8, 2015

CHECKLISTS INCLUDE THE NEW INTEGRATED DISCLOSURE REQUIREMENTS.USE ONLY FOR LOAN APPLICATIONS RECEIVED ON OR AFTER AUGUST 1, 2015.


____________________

Checklist 1 – Secured by Real Estate & Dwelling .............................................................. 3

Checklist 1A – HPML Secured by Real Estate & Dwelling ................................................. 5

Checklist 2 – Secured by Real Estate – No Dwelling ......................................................... 7

Checklist 3 – NOT Secured by Real Estate or Dwelling ..................................................... 9

Checklist 4 – Secured by Manufactured Home .............................................................. 10

Checklist 5 – Temporary Loan (Initial Construction) ...................................................... 12

Checklist 6 – Temporary Loan (Non‐Construction) ........................................................ 14

Checklist 7 – Bridge Loan (For New Principal Dwelling) ................................................. 16

Checklist 8 – Home Equity Line of Credit (HELOC) ......................................................... 18

Checklist 9 – Ability to Repay and Qualified Mortgages ................................................. 20


Use this checklist for an original or refinanced loan that is:

Consumer purpose Closed-end Secured by real estate and a dwelling Not a higher-priced mortgage loan (HPML)

AAPPPPLLIICCAANNTTSS

LLOOAANN NNUUMMBBEERR

AAPPPPLLIICCAATTIIOONN DDAATTEE

1

LOAN TYPE 2

New loan Refinancing - new money Refinancing – no new money

LIEN STATUS 3

First mortgage Junior mortgage

DWELLING TYPE 4

Principal dwelling of applicant Principal dwelling of non-applicant Not a principal dwelling

ENVIRONMENTAL RISK ANALYSIS 5

Past and present uses _____________________________________

Government contacts______________________________________

RESPA? 6

Yes No

RIGHT OF RESCISSION? 7

Yes No

HPML? 8

HIGH-COST? 9

Yes No

HMDA? 10

Yes No

If loan is secured by the consumer’s principal dwelling, determine whether the APR exceeds the APOR by:

1.5% ‐ first mortgage 2.5% ‐ jumbo mortgage 3.5% ‐ junior mortgage

Generally, RESPA will apply to this loan, even if it is a refi or a junior mortgage. RESPA will NOT apply, however, if this loan is secured by more than 25 acres.

Generally, ROR will apply if loan is secured by a principal dwelling. But ROR will not apply if:

Loan is to buy applicant’s principal dwelling and is secured by same dwelling; or

Same-lender refi with no new money

If loan is secured by consumer’s principal dwelling, determine whether any of these triggers will make this a high-cost mortgage:

High APOR High points and fees Prepayment penalties

HMDA applies if loan is:

To purchase a dwelling and secured by a dwelling

A home improvement loan

A refinancing (old and new loan secured by dwelling)

WHEN APPLICATION FORM IS PROVIDED

If (i) adjustable rate, (ii) secured by borrower’s principal dwelling and 11 (iii) greater than one year, give ARM disclosures:

Consumer Handbook on Adjustable Rate Mortgages Disclosure for each ARM program in which applicant is interested

AT APPLICATION

Obtain or prepare written application 12

Determine and document whether joint/individual credit 13

IF HMDA APPLIES ‐ 14 Obtain monitoring information (ethnicity, race, sex) Inform applicant: Federal government requests information Inform applicant: Lender is required to note ethnicity, race, sex

IF NEW CUSTOMER ‐ Follow bank’s CIP rules 15

AS SOON AS POSSIBLE

IF RISK‐BASED PRICING ‐ Provide Credit Score Notice to each applicant 17

WITHIN 3 BUSINESS DAYS AFTER APPLICATION

IF TELEPHONE APPLICATION – Provide ARM disclosures now: 11


IF FIRST MORTGAGE ‐ Provide ECOA copy‐of‐appraisal notice 18

Provide Loan Estimate 19

Deliver, mail or e‐mail no later than 3rd business day after application Deliver, mail or e‐mail no later than 7th business day before closing Not required if denied/withdrawn within 3 business days

Provide list of settlement providers (if consumer can shop for provider) 19


Provide Settlement Cost Booklet 19

Deliver, mail or e‐mail no later than 3 business days after application Not required if refinancing or junior lien

IF RESPA APPLIES – Provide the following disclosures: 20 List of homeownership counseling organizations Affiliated Business Arrangement Disclosure Statement (if necessary)

NOT REQUIRED IF APPLICATION IS DENIED OR WITHDRAWN WITHIN THREE BUSINESS DAYS

PRIOR TO CLOSING

ABILITY TO REPAY ‐ 21

Using General ATR Requirements Use 8 factors Verify with 3rd party data

General Qualified Mortgage Use highest payment in first 5 years after first payment Consider/verify income/assets/debts/obligations (Use Appendix Q)

Temporary Qualified Mortgage ‐ Use GSE guidelines

Balloon Payment Qualified Mortgage Use scheduled payments . . . but no need to consider balloon payment Consider/verify income/assets/debts/obligations (Append Q not required)

Small‐Creditor Portfolio Qualified Mortgage Use highest payment in first 5 years after first payment Consider/verify income/assets/debts/obligations (Append Q not required)

CREDIT UNION ‐ APRIL 2015 ‐ HMDA

IF THIS LOAN IS A HPML, USE CHECKLIST 11‐‐AA

IF HPML/TEMPORARY/BRIDGE LOAN USE SPECIAL CHECKLISTS


FLOOD INSURANCE ‐ 23

Obtain flood hazard determination IF FLOOD HAZARD AREA ‐ give notice and get acknowledgement IF FHA AND COMMUNITY PARTICIPATES ‐ require flood insurance

APPRAISAL OR EVALUATION ‐ 24

Order new appraisal Conduct new evaluation SELECT ONE Use existing appraisal or evaluation (must verify validity)

Review appraisal or evaluation

IF FIRST MORTGAGE ‐ Deliver, mail or e‐mail copy of appraisal 18

Must be received at least 3 business days before closing (note mailbox rule) Timing waiver permitted (if received at least 3 business days before closing)

Deliver, mail or e‐mail Closing Disclosure 19

Must be received no later than 3 business days before closing (note mailbox rule)

IF HIGH‐COST MORTGAGE ‐ 26 High‐cost mort disclosure (must be received 3 business days before closing) If ROR applies, give disclosure to each consumer entitled to rescind Obtain written certification of homeownership counseling

IF NEGATIVE AMORTIZATION AND FIRST‐TIME BORROWER ‐ Obtain 27 documentation showing homeownership counseling

Provide revised Loan Estimate (if necessary) 19

Permitted if changed circumstances/consumer request/Loan Estimate expired Only if exceeds tolerance Deliver, mail or e‐mail within 3 business days after receiving information Must be received no later than 4 business days before closing (note mailbox rule)

Provide corrected Closing Disclosure (if necessary) 19

If APR/loan product/prepayment penalty – received 3 business days before closing Otherwise – may provide at closing

ADVERSE ACTION (IF APPLICABLE)

Application denied ‐ Provide Notice of Action Taken 28 No decision within 30 days ‐ Provide Notice of Action Taken Application withdrawn ‐ Indicate in initialed, dated note in file

PREPARE/GATHER DOCUMENTS FOR CLOSING (LOAN PROCESSORS)

Promissory note /Truth‐in‐Lending Disclosures 29

Note and mortgage must contain bank/lender name and NMLSR 29

IF RIGHT OF RESCISSION APPLIES ‐ 30

Notice of ROR (two copies for each consumer entitled to rescind) Copy of Closing Disclosure for each consumer entitled to rescind

IF RESPA APPLIES ‐ Initial Escrow Account Disclosure (if escrow) 31

IF HMDA APPLIES ‐ Collect and document required data 14

IF NEW CUSTOMER OR NEW PRIVACY POLICY ‐ Privacy Notice 32

WAITING PERIODS BEFORE CLOSING

Closing cannot occur until: 34 7th business day after delivering/mailing initial Loan Estimate

4th business day after consumer received revised Loan Estimate

3rd business day after applicant received high‐cost mortgage disclosure

3rd business day after applicant received copy of appraisal/evaluation

3rd business day after applicant received initial Closing Disclosure

3rd business day after applicant received corrected Closing Disclosure (if correction deals with APR/loan product/prepayment penalty)

SEE BOOKLET FOR DEFINITION OF “BUSINESS DAY”

AT CLOSING

PROMISSORY NOTE/TRUTH‐IN‐LENDING DISCLOSURES ‐ 29

Signed by borrower and lender? Unsigned pages initialed by borrowers? Note and mortgage contain bank/lender name and NMLSR?


Notice of ROR (two copies to each consumer entitled to rescind) Copy of Closing Disclosure to each consumer entitled to rescind

IF RESPA APPLIES – Initial Escrow Disclosure (at closing or within 45 days) 31

IF NEW CUSTOMER OR NEW PRIVACY POLICY ‐ Provide Privacy Notice 32

AFTER CLOSING

IF RIGHT OF RESCISSION APPLIES ‐ Wait 3 business days before funding 30


If settlement event results in change to amount paid by consumer Deliver/mail/e‐mail within 30 calendar days after receiving information

NOTES AND REMINDERS

Private mortgage insurance – disclosure/termination requirements 39 Referral fee ‐ consider checklist Borrower is a service member ‐ special rules Negative information to consumer reporting agency ‐ notice to customer

NOTES AND INSTRUCTIONS


Use this checklist for a higher-priced mortgage loan (HPML) that is:

Consumer purpose Closed-end Secured by real estate




1

LOAN TYPE 2

New loan Refinancing ‐ new money Refinancing – no new money

LIEN STATUS 3

First mortgage

Junior mortgage


Past and present uses _______________________________________________ Government contacts________________________________________________

RESPA? 6

Yes No


Yes No

HIGH-COST? 9

Yes No

HMDA? 10

Yes No

Generally applies (even if refinancing or junior mortgage). But will NOT apply if secured by more than 25 acres.

ROR will apply unless:


Same-lender refinancing with no new money.

Determine whether any of these triggers will make this loan a high-cost mortgage:



To purchase a dwelling & secured by a dwelling


A refinancing (old & new loan secured by dwelling)




AT APPLICATION





AS SOON AS POSSIBLE





COPY‐OF‐APPRAISAL NOTICE ‐ Provide copy‐of‐appraisal notice 18 Only required if HPML or non‐HPML first mortgage









PRIOR TO CLOSING







FLOOD INSURANCE 23



IF TEMPORARY OR BRIDGE LOANUSE SPECIAL CHECKLISTS


IF HPML USE THESE SPECIAL APPRAISAL RULES ‐ 25

Order new appraisal (evaluations and existing appraisals not permitted) Review appraisal

Deliver, mail or e‐mail copy of appraisal 18

Must be received at least 3 business days before closing (note mailbox rule) Timing waiver not permitted

Additional appraisal for some flipped properties (exempt if in rural county)

IF LOAN IS IS AN EXEMPT HPML, USE THE APPRAISAL RULES BELOW

GENERAL APPRAISAL/EVALUATION RULES ‐ 24



If first mortgage – provide copy of appraisal 18



Must be received at least 3 business days before closing (note mailbox rule)


IF FIRST‐MORTGAGE HPML ‐ Establish escrow for taxes/insurance 35 Only if loan exceeds 12 months Many small institutions are exempt

IF NEGATIVE AMORTIZATION AND FIRST‐TIME BORROWER – 27 Obtain documentation showing homeownership counseling


Permitted if changed circumstances/consumer request/Loan Estimate expired Only if exceeds tolerance Deliver, mail or e‐mail within 3 business days after receiving information Must be received no later than 4 days before closing (note mailbox rule)






Promissory note /Truth‐in‐Lending Disclosures 29















AT CLOSING







AFTER CLOSING


Wait 3 business days before advancing funds (Saturday is a business day)



NOTES AND REMINDERS

Private mortgage insurance – disclosure/termination requirements 39

Referral fee ‐ consider checklist

If borrower is service member ‐ special rules

Negative information to consumer reporting agency ‐ notice to customer


HPML IS EXEMPT FROM HPML APPRAISAL RULES IF:

Qualified mortgage Streamlined refinancing Loan of $25,500 or less


Use this checklist for original and refinanced loans that are:

Consumer purpose Closed-end Secured by real estate on which there is no dwelling



1 AAPPPPLLIICCAATTIIOONN DDAATTEE

THIS LOAN IS NOT SECURED BY A DWELLING, SO THE FOLLOWING RULES WILL NOT APPLY:

ABILITY‐TO‐REPAY ARM DISCLOSURES COPY‐OF‐APPRAISAL REQUIREMENTS

CREDIT SCORE DISCLOSURES HIGH‐COST MORTGAGE RULES

HOMEOWNERSHIP COUNSELING HPML RULES NMLSR DOCUMENTATION REQUIREMENTS

RESPA RIGHT OF RESCISSION WAITING PERIODS

LOAN TYPE 2

New loan Refinancing ‐ new money Refinancing ‐ no new money

HMDA? 10

Yes No


Past and present uses ______________________

________________________________________

Government contacts______________________

________________________________________

HMDA applies if:

Proceeds will be used for home improvement; and

Bank classifies the loan as “home improvement”

LIEN STATUS 3


AT APPLICATION





AS SOON AS POSSIBLE









PRIOR TO CLOSING















USE THIS CHECKLIST IF THE LOAN IS SECURED BY VACANT LOTS, BARE GROUND, FARM BUILDINGS OR COMMERCIAL BUILDINGS.



Promissory note/Truth‐in‐Lending Disclosures 29









AT CLOSING


Signed by borrower and lender? Unsigned pages initialed by borrowers?


AFTER CLOSING



OTHER NOTES AND REMINDERS

If borrower is service member ‐ special rules 39





Consumer purpose Closed-end NOT secured by real estate or dwelling

AAPPPPLLIICCAANNTTSS LLOOAANN NNUUMMBBEERR


THIS LOAN IS NOT SECURED BY REAL ESTATE OR A DWELLING,

SO THE FOLLOWING RULES WILL NOT APPLY:

ABILITY‐TO‐REPAY APPRAISAL/EVALUATION RULES ARM DISCLOSURES COPY‐OF‐APPRAISAL REQUIREMENTS ENVIRONMENTAL RISK ANALYSIS

CREDIT SCORE DISCLOSURES FLOOD INSURANCE HIGH‐COST MORTGAGE RULES HOMEOWNERSHIP COUNSELING HPML RULES

INTEGRATED DISCLOSURES NMLSR REQUIREMENTS RESPA RIGHT OF RESCISSION WAITING PERIODS

LOAN TYPE 2 New loan Refinancing ‐ new money Refinancing – no new money

HMDA? 10

Yes No

HMDA applies if:

Proceeds will be used for home improvement; and

Bank classifies the loan as home improvement

LIEN STATUS 3 First mortgage Junior mortgage

AT APPLICATION





AS SOON AS POSSIBLE





Promissory note/Truth‐in‐Lending disclosures 29

IF LOAN IS OVER $10,000 ‐ Records must show purpose of loan 36



AT CLOSING


Signed by borrower and lender? Unsigned pages initialed by borrowers? If over $10,000, does note (or other records) show purpose of loan? 36


OTHER NOTES AND REMINDERS

If borrower is service member ‐ special rules 39




USE THIS CHECKLIST FOR UNSECURED LOANS AND LOANS SECURED BY PERSONAL PROPERTY USE CHECKLIST 4 FOR LOANS

SECURED BY MANUFACTURED HOMES



Consumer purpose Closed-end Secured by manufactured home used as dwelling Not secured by real estate




THE FOLLOWING RULES WILL NOT APPLY TO THIS LOAN:

APPRAISAL/EVALUATION RULES ENVIRONMENTAL RISK ANALYSIS

HPML APPRAISAL RULES INTEGRATED DISCLOSURES

RESPA

BUT SINCE THIS LOAN INVOLVES A DWELLING, IT COULD TRIGGER:

ABILITY‐TO‐REPAY ARM DISCLOSURES

ECOA COPY‐OF‐VALUATION REQUIREMENTS FLOOD INSURANCE (SOMETIMES) HIGH‐COST MORTGAGE RULES

HMDA HPML ESCROW REQUIREMENTS NMLSR REQUIREMENTS

RIGHT OF RESCISSION WAITING PERIODS

LOAN TYPE 2


DWELLING TYPE 4

Principal dwelling of applicant Principal dwelling of non‐applicant Not a principal dwelling

LIEN STATUS 3


FLOOD? 23

Yes No


Yes No

HIGH‐COST? 9

Yes No

HPML? 8

Yes No

HMDA? 10

Yes No

Flood insurance rules apply if the manufactured home cannot be quickly hauled away from encroaching flood waters

ROR will apply unless:


Same‐lender refinancing with no new money

If manufactured home is consumer’s principal dwelling, determine whether any of these triggers make this a high‐cost mortgage:


If manufactured home is consumer’s principal dwelling, determine whether the APR exceeds the APOR by:



To purchase a dwelling and secured by a dwelling


A refinancing (old and new loan secured by a dwelling)




AT APPLICATION





AS SOON AS POSSIBLE






PRIOR TO CLOSING







FLOOD INSURANCE ‐ 23 Obtain flood hazard determination IF FLOOD HAZARD AREA ‐ give notice and get acknowledgement IF FHA AND COMMUNITY PARTICIPATES ‐ require flood insurance




Must be received at least 3 business days before closing (note mailbox rule) Timing waiver permitted – must be received at least 3 business days before closing


IF FIRST‐LIEN HPML – Establish escrow account (SOME EXEMPTIONS) 35

IF NEGATIVE AMORTIZATION AND FIRST‐TIME BORROWER ‐ 27 Obtain documentation showing homeownership counseling




Promissory note /Truth‐in‐Lending disclosures 29


IF LOAN IS OVER $10,000 ‐ records must show purpose of loan 36


Notice of ROR (two copies for each consumer entitled to rescind) Copy of Closing Disclosure to each consumer entitled to rescind




Closing cannot occur until: 34




AT CLOSING


Signed by borrower and lender? Unsigned pages initialed by borrowers? Note and mortgage contain bank/lender name and NMLSR? If over $10,000, does note (or other records) show purpose of loan? 36


Notice of ROR (two copies for each consumer entitled to rescind) Copy of Closing Disclosure to each consumer entitled to rescind


AFTER CLOSING


NOTES AND REMINDERS



If borrower is service member ‐ special rules




Use this checklist for temporary construction loans:

Consumer-purpose (applicant is a consumer, not a contractor) Closed-end (but may have multiple advances) Initial construction of applicant’s principal dwelling Temporary (anticipating permanent loan) Secured by dwelling being constructed, by current dwelling . . . or both

AAPPPPLLIICCAANNTTSS LLOOAANN NNUUMMBBEERR


1

THESE RULES WILL NNOOTT APPLY:

ABILITY TO REPAY (IF 12 MONTHS OR LESS) HIGH‐COST MORTGAGE RULES HMDA

HPML APPRAISAL/ESCROW RULES _______________

BUT THESE RULES COULD APPLY:

ABILITY TO REPAY (IF MORE THAN 12 MONTHS) RESPA

LOAN TYPE 2


DWELLING TYPE 4



Past and present uses _________________

___________________________________

Government contacts_________________

___________________________________

LIEN STATUS 3


RESPA? 6 Yes No

MULTIPLE ADVANCE LOANS 37 USE APPENDIX D


Yes No

Generally, temporary construction loans are exempt from RESPA. RESPA will apply, however, if the loan is secured by less than 25 acres and:

Term is two years or more; or

Some proceeds used (by first user) to buy the property.

When a closed‐end loan provides for multiple advances, banks must comply with TIL’s Appendix D when estimating disclosures. Under Appendix D, the lender must assume that one‐half of the commitment amount is outstanding for the term of the loan.

If this loan (i) is to build the consumer’s principal dwelling and (ii) the loan is secured by that dwelling, it is a “residential mortgage transaction” and is exempt from the ROR rules. But if the loan is secured by the applicant’s current dwelling, ROR applies, even if it is also secured by the new dwelling.




AT APPLICATION




AS SOON AS POSSIBLE














PRIOR TO CLOSING

ABILITY TO REPAY – ONLY IF LOAN EXCEEDS 12 MONTHS 21







INDICATE ONE TYPE



____ Obtain flood hazard determination ____ IF FLOOD HAZARD AREA ‐ give notice and get acknowledgement ____ IF FHA AND COMMUNITY PARTICIPATES ‐ require flood insurance








IF NEGATIVE AMORTIZATION AND FIRST‐TIME BORROWER ‐ 27 Obtain documentation showing homeownership counseling








Promissory note/Truth‐in‐Lending Disclosures 29














AT CLOSING







AFTER CLOSING




NOTES AND REMINDERS



Borrower is a service member ‐ special rules




Use this checklist for:

Consumer-purpose Closed-end Non-construction temporary loan Secured by real estate and old/new dwelling Examples: HHoommee iimmpprroovveemmeenntt llooaannss and "sseeaassoonniinngg" loans




1

WILL NOT APPLY

ABILITY TO REPAY (IF 12 MOS OR LESS) HMDA

HPML ESCROW (IF 12 MOS OR LESS) RESPA

LOAN TYPE 2


DWELLING TYPE 4



Past and present uses _______________________

_________________________________________

Government contacts_______________________

_________________________________________

LIEN STATUS 3



Yes No

HIGH-COST? 9

Yes No

HPML? 8

Yes No

MULTIPLE ADVANCE LOANS 39 USE APPENDIX D

If this loan is secured by the applicant’s current dwelling, ROR applies, even if it is also secured by the new dwelling (in the case of a bridge loan).

If loan is secured by consumer’s principal dwelling, determine whether any of these triggers will make this a high‐cost mortgage:


If loan is secured by consumer’s principal dwelling, determine whether the APR exceeds the APOR by:


Some home improvement loans provide for multiple advances. In such a case, lenders must comply with TIL’s Appendix D when estimating disclosures. Under Appendix D, the lender will assume that one‐half of the commitment amount is outstanding for the term of the loan.




AT APPLICATION




AS SOON AS POSSIBLE





COPY‐OF‐APPRAISAL NOTICE ‐ Provide copy‐of‐appraisal notice 18 Only required if HPML or non‐HPML first mortgage







PRIOR TO CLOSING

ABILITY TO REPAY ‐ ONLY IF LOAN EXCEEDS 12 MONTHS 21






FLOOD INSURANCE ‐

Documents

BEST-EVER CONSUMER CHECKLISTS - OnCourse Learningttsmedia.ttstrain.com/CUChecklistsHO040815.pdf · 2015. 4. 7. · Use this checklist for an original or refinanced loan that is: Consumer