Topic: Loan Documentation
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Our commercial loan processing software (LaserPro) permits us to set a maximum lien amount either at the loan amount, twice the loan amount, or a set amount that we enter. When and why should we use those options?
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Because your question pertains specifically to LaserPro, we contacted LaserPro’s legal counsel (with LaserPro’s permission) and discussed the three lien amount options you described. LaserPro’s counsel told us that the three options are intended to permit lenders to set a maximum lien amount that can cover any future advances and any other notes that are…
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Our current policy is to notify all refinance customers of a right of rescission, even if we are not extending any additional funds and we are refinancing one of our own loans. Are we creating a problem by giving this disclosure in transactions where the right of rescission does not apply?
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As a general rule, we recommend that you do not deliver a notice of a right of rescission (ROR) when the customer (or other consumer who has an ownership interest in the property securing the loan) is not entitled to Regulation Z’s right of rescission. The ROR under Regulation Z does not apply to a…
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After we rejected a loan application, the applicant came to us with additional cash flow information. Should we treat this additional information as a new application, and how should we report this in our HMDA register?
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Your bank has the flexibility to determine whether it will categorize the applicant’s furnishing of additional cash flow information as a new application or as a continuation of a prior application. Both the Home Mortgage Disclosure Act (HMDA) regulations and the adverse action notice regulations under the Equal Credit Opportunity Act (ECOA) define an “application”…
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We had a question about the first payment due date for a loan. What is the maximum time frame we can set for a loan’s first payment? Can we wait sixty days after loan closing before the first payment is due?
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We are not aware of any Illinois laws that would govern the maximum time frame for a loan’s first payment. We would recommend checking your loan documents to ensure that you are disclosing that interest will start accruing during the first sixty days after loan closing, before the first loan payment is due. If you…
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Our mortgages state that we are a “banking corporation” and it uses an ampersand (&) instead of the word “and.” Do we need to change our mortgage forms?
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We would recommend describing the mortgagee as a “corporation,” as we are not aware of any business entity that would be referred to as a banking corporation. As to the use of an ampersand in the name of the mortgagee (rather than spelling out “and”), we do not believe that this minor discrepancy would create…
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One of our title policies lists the homeowners as “John Doe and Jane Doe in joint tenancy.” However, the mortgage lists them as “John Doe and Jane Doe husband and wife.” Do we need to amend the mortgage or the title policy?
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Based on our discussion of this issue with an attorney for a title insurance company, we do not believe that a slight discrepancy between a title insurance policy and the corresponding mortgage (for example, John and Jane joint tenancy versus John and Jane husband and wife) would affect your coverage under the title insurance policy.…
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Do we need customer signatures on GFEs that we redisclose due to changed circumstances? What about commitment letters and rate lock acknowledgments?
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Without the specific facts of each situation, we cannot give a specific answer to your question about obtaining a signature on redisclosed GFEs. We are not aware of any explicit legal requirement to have an applicant sign the GFE, though some investors may impose additional requirements on the loans they purchase. (Also note that an…
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Is a signature required on the HUD-1 Settlement Statement?
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We do not believe that a signature is required on a HUD-1 Settlement Statement, although the RESPA regulations do permit you to add a signature line to the HUD-1 form. 12 CFR 1024.9(a)(7). However, we are aware that some bank policies require customers to sign acknowledgments of HUD-1 (and GFE) forms.
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Does Illinois have any requirements as far as a customer signing loan disclosures and scanning them back to the bank?
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Disclaimer: The Electronic Commerce Security Act (ECSA) was repealed and replaced with the Uniform Electronic Transaction Act (UETA), effective June 25, 2021. Please note that this change may affect the continued accuracy of this guidance as it pertains to the ECSA. We do not see any problems with accepting scanned versions of customer signatures on loan…