07/15/2002
I know you have to disclose how much hazard insurance could cost on the good faith estimate, but do you have to disclose it on the HUD 1 or HUD 1A?
07/15/2002
The FDIC recently completed a compliance examination at our bank. TheCompliance Report of Examination identified significant violations ofRESPA. In the first violation the bank was cited for not detailing thenames, addresses, and telephone numbers of each lender-designatedservice, [Section 3500.7(e)(1)(iii)] and for not describing the natureof any relationship between each and the bank [Section3500.7(e)(1)(ii). In the second violation, the bank was cited forproviding mortgage servicing disclosure statements that did notdisplay the bank's servicing transfer record for the most recent threecalendar years [Section 3500.21(b)(3)(ii)]. Finally, in the thirdviolation, the bank was cited for having five mortgages that containedGood Faith Estimates and HUD-1 or HUD-1A statements that did notreflect an estimate for hazard insurance.I am new to the compliance arena and I have been assigned the task ofcorrecting these violations. Since these mortgage loans are already onthe books, should the bank issue "correct" Good Faith Estimates,Servicing Disclosure Statements, and HUD-1 or HUD-1A's that reflectestimates for hazard insurance? Or should the bank take note of theviolations and not make any corrections because this problem is akinto "closing the barn door after the horse has already left"? Anyrecommendations that you can offer to correct these violations iswelcomed!
09/03/2001
The new consumer protection laws will be in effect soon and I am still somewhat confused in regards to the Federal Credit Application Disclosure. Could you please try and clarify this for me: The disclosure states that Federal Law prohibits you from conditioning the extension of credit on either: 1. My purchase of an insurance product or annuity from you or from any of your affiliates OR 2. My agreement NOT to obtain or a prohibition on me from obtaining, an insurance product or annuity from an unaffiliated entity. As I understand this A lender cannot condition a loan based on them purchasing insurance from my bank or any other insurance company. In a discussion this morning there was a disagreement by another lender that we can base a loan approval on the condition that the consumer have insurance just that we cannot base the approval or condition on them purchasing the insurance from us directly.