Topic: CFPB 2014 Mortgage Rules: Appraisals for Higher-Priced Mortgage Loans
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Does a request for a modification of an existing loan constitute an “application” under Regulation B, triggering the requirement to send an appraisal notice within three business days? Typically, our modifications involve extending the maturity date or lowering interest rate.
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The answer depends on the specific type of modification and how the request is made. Regulation B’s appraisal notice requirements apply whenever you receive an application for an extension of credit secured by a first lien on a dwelling. Therefore, you must determine whether each modification request involves an “application” for an “extension of credit.”…
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Is a temporary bridge loan with a term shorter than one year subject to the higher-priced and high-cost loan provisions? Are there any other issues with the interest rate or escrow requirements?
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A bridge loan is covered by the high-cost mortgage requirements, but not the higher-priced mortgage requirements, in Regulation Z. A bridge loan secured by the borrower’s principal dwelling may qualify as a “high-cost mortgage” if the interest rate exceeds 6% or 8% over the average prime offer rate, or if it has points and fees…
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Assuming that we meet the small creditor and the rural/underserved loan prerequisites, do we qualify for the exemption from the escrow account requirements for higher-priced mortgage loans? We stopped using escrow accounts for first-lien higher-priced mortgage loans after January 1, 2014, and we have not established escrows for any consumer after that date.
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Yes, you will qualify for the small creditor exemption from the higher-priced mortgage loan escrow requirements, provided that you (and your affiliates) do not maintain an escrow account for any extension of credit secured by real property or a dwelling for which a loan application is received on or after January 1, 2014. In addition:…
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If we have a loan closing on Friday, April 4, the new ECOA appraisal rules require us to provide a copy of the appraisal by Tuesday, April 1 (per the example in the CFPB’s Small Entity Compliance Guide). If we are mailing the appraisal, does that mean we have to mail the appraisal by March 28 so that it arrives by April 1?
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We agree with your analysis, but with the proviso that for higher-priced mortgage loans, a different definition of “business day” will apply which may require a different mailing date. Based on the ECOA appraisal regulation and staff commentary, if you are mailing an appraisal to a borrower, it must be placed in the mail six…