Filed under: Uncategorized
This month’s special guest is Ginny Brady from Ufirst Federal Credit Union and The Boardcast. Brian and Hal are off this month leaving Faith, Guy and Rob to hold down the fort. Also this month we are trying something a little different with a behind the scenes web cam video of the show as it was recorded:
Here are the topics:
–Why is important to involve young people in the credit union movement?
–Credit Unions as safe places to put money: a share insurance primer.
–From a director’s perspective, how should credit unions use new media today?
–What should a credit union look for in hiring a compliance officer?
–Handling member death issues where there is no estate.
–The Federal Reserve Board’s Final Rule amending Reg Z for home mortgage loans.
The CIiCU hosts are:
Farleigh Wada Witt,
Attorneys at Law
121 SW Morrison Street, Suite 600
Portland, Oregon 97204
Messick & Weber P.C.
The Madison Building, 108 Chesley Drive
Media, Pennsylvania 19063-1712
American Airlines Credit Union
P.O. Box 619001
DFW Airport, TX
Weltman, Weinberg & Reis Co., L.P.A.
323 W. Lakeside Avenue, Suite 200
Cleveland, Ohio 44113
Direct download: CIiCU_28_final.mp3
July 15, 2008
By John L. Day, Jr., Esq.
On Monday, July 14, 2008, the Federal Reserve Board approved a final rule for home mortgage loans to “better protect consumers and facilitate responsible lending”. The rule is designed to prohibit unfair, abusive or deceptive home mortgage lending practices and restrict certain other mortgage practices.
The final rule, which amends Regulation Z (Truth in Lending) and was adopted under the Home Ownership and Equity Protection Act (HOEPA), largely follows a proposal released by the Board in December 2007.
The rules adopt the following protections for ALL loans secured by a consumer’s principal dwelling:
- Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home’s value
- Servicers are prohibited from pyramiding late fees
- Servicers are required to credit consumer’s loan payments as of the date of receipt
- Servicers are required to provide a payoff statement within a reasonable time of request, generally five days from receipt
- Creditors must provide a good faith estimate of the loan costs within three days after a consumer applies for any mortgage loan, even where the debtor is refinancing
- Consumers cannot be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumers’ credit histories
The final rule established new requirements for “higher-priced mortgage loans”, intended to capture virtually all loans in the subprime market, but generally exclude loans in the prime market. To provide an index, the Federal Reserve Board will publish the “average prime offer rate”, based on a survey currently published by Freddie Mac. A loan is “higher-priced” if it is a first mortgage and has an annual percentage rate that is 1.5 percentage points or more above this index, or 3.5 percentage points if it is a subordinate-lien mortgage. This definition overcomes certain technical problems with the original proposal, which was 3% over prime for first mortgages and 5% over prime for subordinate-liens, but the expected market coverage is similar.
For “higher-priced mortgage loans” there are new consumer protections:
- Prohibits a lender from making a loan without regard to a consumer’s ability to repay the loan from income and assets other than the home’s value.
- A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan
- To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a “pattern or practice”
- A creditor must consider a “piggyback” second-lien transaction of which it has knowledge that is used to finance part of the down payment on the house
- Prohibits a creditor from extending credit to a consumer based on the value of the consumer’s collateral without regard to the consumer’s repayment ability
- Requires creditors to verify the income and assets they rely upon to determine repayment ability
- Bans any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years
- Requires creditors to establish escrow accounts for property taxes and homeowner’s insurance for all first-lien mortgage loans
The new rules take effect on October 1, 2009, except for the new escrow requirement, which will be phased in during 2010.
If you have any questions on this information, please contact Mr. John L. Day, Jr., Esq.
Mr. Day is a partner in the Bankruptcy Department of the Real Estate Default Group at Weltman, Weinberg & Reis Co., L.P.A. in Cincinnati, Ohio. Mr. Day can be reached at (513) 723-2206 or via e-mail at firstname.lastname@example.org.
Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A., an organization providing comprehensive creditor representation. The information contained in this advisory is a summary of legal information and is not intended to constitute legal advice on specific matters or create an attorney-client relationship. Contact any of our offices or visit our website at realestatedefaultgroup.com for more real estate related information, company facts and attorney profiles.(c)2008
Filed under: bank secrecy act, compliance, contracts, credit unions, currency transaction reports, discrimination, Equal Credit Opportunity Act, Fraud Prevention, lending, marketing, mortgages, negotiation, Regulation B, seminars, suspicious activity reports, trust accounts, Truth in Lending Act, Truth in Savings Act, Uncategorized, vendors
Summer and fall are shaping up to be a very busy seminar season for Rob! Below is a list of venues where he will be presenting through the end of the year as well as information on how to sign up to attend these seminars.
July 16, 2008: Rob will be teaming up with CU Conferences for their Annual Credit Union Strategic Lending Conference in Williamsburg, VA. He will be presenting a seminar on “Regulations in Lending” which will give a general overview of Regulation Z and offer advice on how to keep in compliance and what traps to avoid. The types and timing of disclosures in open-end and closed-end lending will be discussed. Rob will also focus on common mistakes made in lending documents concerning Regulation Z as well as covering new developments such as the bankruptcy legislation that amended Truth in Lending. If you are interested in attending this seminar, please click here.
August 7, 2008: Rob will be presenting an audio conference for the Illinois Credit Union League on “Regulation Z,” covering the same topics as listed above. To sign up for this seminar, please click here.
September 9, 2008: Rob will be teaming up with the MD/DC Credit Union Association to present a seminar on “Fortifying Your Frontline: Account Options, Compliance Issues & Fraud Prevention” in Columbia, MD. For a member to have faith in their credit union, expertise needs to start at the front line. A member who doesn’t have confidence in a credit union’s member service staff may not trust other departments to handle their additional financial needs. Taking care of members at the front line takes care of the bottom line. This seminar will review issues concerning account options, compliance and fraud prevention and is meant to help front line employees make a good first impression on new members and keep existing members faithful full service users. If you are interested in attending this seminar, please click here.
September 16, 2008: Rob will be presenting a seminar on “Marketing Compliance and Negotiating and Reviewing Vendor Contracts” for the Wisconsin Credit Union League Marketing Conference in Milwaukee, WI. This seminar will help marketing professionals and other credit union employees avoid the traps and pitfalls associated with marketing credit union products so that they can confidently get their message across to credit union members. Rob will review advertising rules for share accounts and related products, what trigger terms are under TISA and what constitutes full disclosure, what constitutes and advertisement under TILA and differences between disclosures. This seminar will also cover negotiating and reviewing vendor contracts. The audience will learn about preparing for contract negotiation, debating the terms of a contract and making proposals and counter proposals. Click here for more information as the seminar gets closer:
September 17 & 18 2008: Rob will be presenting a seminar on “Trust Accounts” as part of the 2008 CUNA/OCUL Mini-Seminar Series. This seminar is designed to cover trusts from the credit union’s perspective. Attendees will learn about the various types of trusts, how trusts are set up with the credit union and related operational issues. Click here for more information on the September 17 seminar in Dublin and here for more information on the September 18 seminar in Toledo:
September 24, 2008: Rob will be attending the 2008 CUNA Attorney’s Conference in Charleston, SC to speak on “Credit Unions and New Media Issues.” More informaton is soon to come. To find out more about the CUNA Attorney’s Conference, please click here.
October 17, 2008: Rob will be presenting a seminar on “Advertising Compliance” and “Dealing With the Death of a Member” for NAFCU’s Regulatory Compliance Seminar in San Francisco, CA. The Advertising Compliance portion will cover the topics mentioned in the September 16 seminar above, while Dealing With the Death of a Member will cover the issues that a credit union must be aware of when dealing with a member’s death. For more information on this seminar, please click here.
November 4, 2008: Rob will be presenting a seminar on the “Bank Secrecy Act” at the CUES Network Conference in Las Vegas, NV. Credit unions are increasingly caught between stricter regulations concerning member data and increasingly broad powers of government to acquire this data. Rob will review how to stay in compliance when filing Suspicious Activity Reports and Currency Transaction Reports by walking through the Bank Secrecy Act. For more information on this seminar, please click here.
November 5, 2008: Rob will be presenting a seminar on “Lending Compliance” to the West Virginia Credit Union League. See the seminar description for July 16 above for more information. The information on the seminar is not yet available on the West Virginia Credit Union League website.
November 12, 2008: Rob will be presenting a seminar on “Mortgage Lending Regulations” to the Washington Credit Union League in Seattle, WA. See the September 16 seminar description above for more information on the content of this seminar. This page should have more information on the seminar as it gets closer.
November 13, 2008: Rob will be teaming up with the Kansas Credit Union Association to present a webinar on “Director and Officer Liability.” This seminar will prepare directors and officers for their legal responsibilities in the roles they play at the credit union. Rob will identify potential liabilities directors and officers face under federal and state law including FIRREA. The implications of the Sarbanes Oxley Act will also be discussed. As the seminar gets closer, more information should be available here.
December 2, 2008: Rob will present an audio conference on “Regulation B” to the Illinois Credit Union League. Guarding against unlawful discrimination in the lending process is still very important today even though other regulations seem to be getting more press. Rob will discuss the elements of unlawful discrimination under Regulation B and the Equal Credit Opportunity Act and offer tips as to how to guard against it. He will also discuss recent cases where financial institutions have run into trouble and the consequences of violating Regulation B. To sign up for this seminar, please click here.