UPDATED CFPB HPML APPRAISAL RULES UNDER REG Z
Mortgage loans are considered higher-priced mortgage loans when interest rates above a certain threshold and they are secured by a consumer’s principal dwelling with a first or second mortgages. At this point the property must have specific type of appraisals.
- Appraisers-licensed or certified and compliant with USPAP and FIRREA. They must visit and inspect the interior of the premises and submit written report.
- Obtain an additional appraisal at your own expense if the property’s seller acquired the dwelling within the past 180 days and is reselling it for a price that exceeds certain thresholds.
- Provide a disclosure within three business days of application explaining the consumer’s rights with regard to appraisals.
- Give consumers free copies of the appraisal reports performed in connection with the loan at least three days before consummation of the transaction
REMEMBER: Even if it is a business transaction using a single family property as security, the borrower must be given notice of right to appraisal pursuant to ECOA. The rule however does not cover junior liens. This rule under ECOA is effective Jan. 18, 2014. See 12 CFR Part 1002.
- Require creditors to notify applicants within three business days of receiving an application of their right to receive a copy of appraisals developed.
- Require creditors to provide applicants a copy of each appraisal and other written valuation promptly upon its completion or three business days before consummation (for closed-end credit) or account opening (for open-end credit), whichever is earlier.
- Permit applicants to waive the timing requirement for providing these copies. However, applicants who waive the timing requirement must be given a copy of all appraisals and other written valuations at or prior to consummation or account opening, or, if the transaction is not consummated or the account is not opened, no later than 30 days after the creditor determines the transaction will not be consummated or the account will not be opened.
- Prohibit creditors from charging for the copy of appraisals and other written valuations, but permit creditors to charge applicants reasonable fees for the cost of the appraisals or other written valuations unless applicable law provides otherwise. Show citation box
Keep reading and rereading anything to do with CFPB. The more you read, the more you will remember and the less likelihood you will violate the rules.
QM, CFPB AND HUD: CAUGHT BETWEEN THE FIRE AND THE DEEP BLUE SEA
The Housing and Urban Development Department will be using disparate impact analysis to enforce fair lending laws and ECOA on the one hand, and the CFPB’s Qualified Mortgage standards on the other hand may give the appearance of disparate impact.
None of the agencies involved have stated that they are not going to pursue lenders for disparate impact violations that result from a decision to only fund QM loans.
The regulators for each of the agencies involved should modify the rules to ensure no conflict exists. If they do not clear up the confusion before the CFPB’s Jan. 10 compliance date then lenders doing only qualified mortgages pursuant to CFPB can arguably be in violation of HUD via ECOA and the FHA. Because of this all lenders should document the business justification for each loan and especially loan denial very carefully. If done properly, then the file should speak for itself.
Document the reason why a person is not qualified very carefully and do the same for qualified loans. Failure to document could lead to action by the CFPB or HUD via ECOA and FHA.
CALIFORNIA WOMAN SENTENCED TO OVER THREE YEARS IN FEDERAL PRISON FOR MORTGAGE FRAUD
On June 25, Tara Denise Bonelli was sentenced to 37 months in prison by United States District Judge Edward J. Davila in San Jose, Calif. for defrauding investors of over $3,000,000.
Bonelli pleaded guilty in federal court to wire fraud. She admitted that, beginning no later than May 2006, and continuing to at least until October 2008, she promoted false and fraudulent real estate investments by knowingly making false promises about how investor funds were to be invested and repaid.
In May 2004, Bonelli founded Vista Holding Co., a holding company that owned and operated eight entities.
Bonelli told investors that their money would be used to purchase properties for resale or conversion to condominiums and to engage in the business of foreclosure assistance. In some instances, to lure their investments, Bonelli promised a return of up to 1000%. Rather than use investor money for the stated purpose, Bonelli used some of the investor funds to pay for her personal expenses.
Under the plea agreement, Bonelli pleaded guilty to one count that encompassed the loss due to fraud in all of the counts, which was over $3,000,000. The sentencing court also ordered that Bonelli pay restitution.
The prosecution is the result of a two-year investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation Division (usattynd62713)
Starts her company in 2004. Fraud runs 2006 to 2008. Criminal investigation starts 2009 and continues to 2011 when indicted and now goes to prison for a little over three years and there is no parole in the federal criminal system. As I have explained the federal criminal investigations take about two or more years but the prosecution has 10 years to file the criminal charges from the date of the last event. This is why anyone that suspects they are under investigation should consult with their attorney immediately rather than wait it out. There are many sound defense reasons for doing this. So if anyone suspects they are under investigation see an attorney now!
TWO DENVER REAL ESTATE INVESTORS PLEAD GUILTY TO MORTGAGE FRAUD
Roger Howard pled guilty before U.S. District Court Judge R. Brooke Jackson to three counts of wire fraud and one count of money laundering. Howard, who is free on bond, is scheduled to be sentenced by Judge Jackson on Aug. 26. Howard’s co-defendant Oai Quang Luong to three counts of wire fraud on May 22, and is scheduled to be sentenced on Aug. 15.