Sudhoff- Managing the Compliance Risk of Today's Mortgage Loans 1

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Managing the Compliance

Risk of Today’s Mortgage

Loans

Florida Bankers Association 30th_{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)

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Managing the Compliance Risk of Today’s Mortgage Loans

6 P’s of Performance

Planning

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

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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

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Ask questions about

other areas

Types of

Risk---Strategic

Reputation

Credit

Interest Rate (IRR)

Liquidity

Price

Operational

Compliance

9

Plan for the worst case

Types of

Risk---Strategic

Reputation

Credit

Interest Rate Risk

Liquidity

Price

Operational

Compliance

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Pricing

Types of

Risk---Strategic

Reputation

Credit

Interest Rate Risk

Liquidity

Price

Operational

Compliance

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Operations/Vendor

Types of

Risk---Strategic

Reputation

Credit

Interest Rate Risk

Liquidity

Price

Operational

Compliance

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Now the real challenge

Types of

Risk---Strategic

Reputation

Credit

Interest Rate Risk

Liquidity

Price

Operational

Compliance

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Risk Strategies

Don’t leave compliance up to lenders

–Give them a road map

–Give them GPS

–Set up traffic cameras

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Don’t give a map of Disneyland to get to Epcot Center….

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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.

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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

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Compliance Risk

• Advertising—RESPA-Section 8

• Marketing

• Underwriting—ATR/QM

• Third-Party Risk – Vendor

Management

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Change can be good

Compliance Risk

–TRID—i.e. change

• New Regulatory Requirements

–Forms

–Timing

–Content

• Third-Party Disclosure preparation

testing

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Reporting

Compliance

Risk

–Reporting

• HMDA/CRA

• FCRA

• Law Enforcement

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Reporting

Compliance

Risk

–Reporting

• Disclosure

–Timing

–Accuracy

–Content

–Beware of UDAAP

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Sharing

Compliance Risk

–Sharing

• Privacy

–Affiliates

–Loan officers

–Other employees

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Data Integrity

Compliance Risk

–Data Integrity

• System Structure

–Retrievable records

–Backup

–Security

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The ABZ’s

Compliance—The ABZ’s

–Regulation B

–Regulation C

–Regulation E

• Think payment processing

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Compliance—The ABZ’s

–Regulation H/Flood Hazard

Determination

–Regulation O- Loans to Insiders

–Regulation P - Privacy

The ABZ’s

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The ABZ’s

Compliance – The ABZ’s

–Regulation S- Fees

• Think UDAAP too

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The ABZ’s

Compliance – The

ABZ’s

–Regulation

V-Fair Credit

reporting Act

• Permissable

Purpose

• Negative

Information

• Risk Based

Pricing

• Quality of

Reported Data

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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)

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The Hot Buttons

Compliance –The CFPB Hot Buttons

–Vendor Management/Third Party

Relationships

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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)

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Pulling it together

Compliance Management System

–Mortgage Policies

• Underwriting

• Quality Control

• Procedures for closing etc.

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CMS

Compliance Management System

–Three Lines of Defense – COSO

• Front Line – i.e., Lenders

• Compliance/Legal/Risk Management

• Audit

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First Line

–Three Lines of Defense –

COSO

1. Front Line – i.e.,

Lenders-–Make sure lenders have training,

tools, techniques to put together the

proper loan package

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Compliance/Legal/Risk

–Three Lines of Defense –

COSO

2. Compliance/Legal/Risk

Management

–Upfront planning

–Mid-course review (Monitoring)

–Follow up and accountability

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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!

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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

Thank you!

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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

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8/1/2015

1. Did the loan officer complete an initial loan

application? 1002.(c) 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 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

b. Intent to apply/apply jointly? c. Other?

d. NMLS #s

e. Intent to apply/apply jointly? f. Other?

5. Does the loan application require information on a prohibited information as defined by Reg B?

Does the loan application require information on a prohibited information as defined by Reg 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

a. HELOC Program/App Disclosure b. HELOC Booklet (when your

home is on the line)

If HELOC

• HELOC Program/App Disclosure (Not TRID)

• 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

Loan 1 Loan 2

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? 3. *# Preliminary TIL No Prelim TIL see Loan Estimate 4. *Servicing Transfer Disclosure (1st_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 (1st_{Lien or HPML)} _{Appraisal Disclosure (1}st_{Lien or HPML)}

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8/1/2015

1. Flood Hazard Determination Form Flood Hazard Determination Form 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? ***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 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)

q. Mortgage related obligation payments Status ( reg & HELOC) r. Current Obligations for (HELOC) 9. HUD-1 or HUD 1A Available 1 day before closing if

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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.

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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 1st_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 (includes mobile homes)

In Flood Zone? _____ Yes _____ No _______

_______

2. Flood Notice (if in flood zone) signed by borrowers

(Provide reasonable time prior to closing or no later than commitment) _______ 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:______________________________________________________

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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 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 (1st_{lien or HPML)}

Prior to closing:

In Flood Zone? _____ Yes _____ No

_______ _______

(reasonable time prior to closing or no later than commitment)

_______ 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

_______ 8. 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)

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

_______ 6. Final Truth in Lending disclosure (compare to note) _____ Demand feature _____ Filing fees

After Closing:

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.

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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 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

_______ 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)

Prior to closing:

_______

(Provide reasonable time prior to closing or no later than commitment) _______ 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**

(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)

After Closing:

_______ 1. Complete HMDA Proof Sheet _______ 2. Record on HMDA-LAR

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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 1st_lien)

Prior to closing:

_______

(Provide a reasonable time prior to closing or no later than commitment) _______ 3. Verify CIP information

_______ 4. Higher-Priced Mortgage Loan***

(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 ________________

_______ 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:

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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.

_______ 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

_______ 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 (1st_{lien or HPML)}

Prior to closing:

_______ 1. Flood Hazard Determination Form (includes mobile home loans)

_______

(Provide a reasonable time prior to closing or no later than commitment) _______ 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)

_______ 7. Copy of Appraisal (1st_{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

_______ 2. Note signed Compare to Final TIL for accuracy (Include NMLS Names/IDs) _______ _____ _____ 3. Insurance Hazard insurance Flood insurance

_____ 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:

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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.

_______ 4. CIP information obtained (name, physical address, SSN, date of birth) _______ 5. Credit insurance application

Disclosure

(provided orally and in writing at the time an insurance product is solicited or offered) _______ 6. Evidence of Intent to Apply – Reg B If more than 1 applicant

Prior to closing:

_______

(reasonable time prior to closing or no later than commitment) _______ 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)

(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

_______ 2. Note signed Compare to Final TIL for accuracy (Include NMLS Names/IDs) _______ _____ _____ 3. Insurance Hazard insurance Flood insurance

_____ 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:

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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

(includes mobile homes)

In Flood Zone? _ Yes _ No

_______

2. Flood Notice (if in flood zone)

signed by borrowers

(Provide a reasonable time prior to closing or no later than commitment)

_______

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

Hazard insurance

Flood insurance

(Verify flood zone; adequate coverage; effective date; and mortgagee info)

_______

4. Privacy Disclosure

(if not an existing customer)

Final Loan File Review:______________________________________________________

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