Topic: Mortgage Loans
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We originate business loans secured by manufactured home communities, including both the land and the sites for the manufactured homes. There are at least five sites in each of these manufactured home communities, and in some cases, we also take the manufactured homes in the communities as collateral. To comply with the Home Mortgage Disclosure Act (HMDA), how should we report the “Manufactured Home Secured Property Type” and “Manufactured Home Land Property Interest” for these loans? We have been reporting “not applicable” for both fields but are unsure whether this is correct.
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We believe reporting “not applicable” for these two fields is correct if the manufactured home communities contain five or more sites. The CFPB’s official interpretations for Regulation C (which implements HMDA) state that for both of the reporting requirements referenced in your question — “Manufactured Home Secured Property Type” and “Manufactured Home Land Property Interest”…
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We are interested in charging a returned check fee for loan payments made by check that are dishonored. This fee would be charged on both the consumer and commercial side and would be applied only to new loans going forward. We are working on a new disclosure for this fee. However, we first want to know whether Illinois law allows this, and if so, whether there is a maximum amount that we can charge for this kind of fee.
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We believe that Illinois law allows banks to charge returned check fees for both consumer and commercial loans, provided that the fee is properly disclosed and agreed to by the borrower. Additionally, we do not believe there is a maximum amount for returned check fees for loan payments, provided the fee is set according to…
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We are currently assessing a “fax/email” fee when we send payoff statements for home equity lines of credit (HELOCs). Are there any prohibitions against this practice under state law?
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No, other than Regulation Z’s prohibition against charging fees for payoff statements for high-cost mortgage loans, we are not aware of any law prohibiting charging fees for sending payoff statements, provided the borrower has agreed to the fee in the loan documents. Regulation Z requires that for consumer loans secured by a consumer’s dwelling, the…
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If we purchase a bank’s assets as part of a merger, what do we need to file for mortgages that we purchased from the bank to protect our mortgage liens? Should we record assignments of the mortgages to ensure that we can foreclose?
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Ideally, we believe that a purchasing bank should record assignments of the mortgages it acquires. Although recording assignments reflecting the acquisition of mortgage notes is unnecessary to preserve your mortgage lien and priority position as to third parties, recording an assignment could protect your bank from having its lien extinguished as a non-record claimant in…
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We are aware that Illinois passed a law last year to allow remote online notarizations once implementing rules have been finalized. Has the law gone into effect yet, and is remote notarization allowed for real estate e-closings with a mortgage?
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No, fully electronic remote notarizations using electronic signatures and electronic notary seals (as opposed to remote notarizations using traditional wet ink signatures) have not yet been authorized in Illinois. Fully electronic remote online notarizations will be authorized under the Illinois Notary Public Act once the Secretary of State finalizes its implementing rules. The Secretary of…
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We are extending a closed-end mortgage loan secured by a second lien on a home (we have the first lien as well). Should we use the right of rescission notice contained in model form H-8 (General) or H-9 (Refinancing With Original Creditor)? Our Loan Department thinks we should use form H-9 because the extension of new money can be thought of as a refinance, even though we identified the transaction as a home equity loan, not a refinance, on our TRID disclosures.
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We do not recommend using form H-9 unless the transaction is satisfying and replacing your original loan and meets the definition of a “refinancing” under Regulation Z. Whether a transaction is considered a “refinancing” depends on the specific circumstances of the second lien and your contract with the borrower. Under Regulation Z, a refinancing occurs,…
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Freddie Mac’s Single-Family Seller/Servicer Guide states that servicers may not restrict a transfer of ownership of a mortgaged premises if the security instrument contains an “unenforceable” due-on-transfer clause. What is an “enforceable” due-on-transfer clause? Additionally, our mortgage permits, but does not require, acceleration if the property is sold or transferred without our prior consent. How would Freddie Mac treat such a provision?
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We believe that under the Garn–St Germain Depository Institutions Act of 1982, due-on-transfer clauses are generally enforceable unless they fall into the exceptions enumerated in that law and the OCC’s implementing regulations (which apply to both state-chartered and federally-chartered banking organizations). Garn–St Germain generally preempts state laws that attempt to limit lenders’ ability to enforce…
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We extend loans in Missouri and Illinois, and we charge a document preparation fee. We believe that Missouri law requires us to refer to this fee as an “origination fee.” For consistency, can we call this fee an “origination fee” in Illinois?
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Any fees you charge must be disclosed clearly and conspicuously and agreed to by your customers. We believe that switching to an “origination fee” label has some potential to confuse customers, unless your disclosures otherwise make it clear that the fee is being charged for the service of preparing loan documents. As explained below, we…
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In most Illinois counties, we are charged an “erecording” fee when electronically recording release deeds. Does Illinois law permit us to charge this fee to our borrowers, or do we have to absorb it?
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We believe you are permitted to charge borrowers an erecording fee when electronically recording a release deed (or release of mortgage) under Illinois law — provided your customers have agreed to the fee. Although Section 4.1 of the Interest Act appears to prohibit lenders from charging borrowers for “expenses, including recording fees and otherwise” when…
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We are considering a referral program in which we would pay customers $25 if an individual they refer opens a checking account at our bank. We are aware that there are prohibitions on paying referral fees in relation to mortgage loans, but we are not aware of similar prohibitions for deposit accounts. Are there any prohibitions on paying referral fees related to deposit accounts?
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No, we are not aware of any prohibitions on paying referral fees related to deposit accounts. However, you do have a duty to maintain your customers’ privacy. As a result, we recommend obtaining a new deposit account customer’s authorization before notifying the referring party that they are entitled to a fee. As you noted, the…