Pub. 2 2021 Issue 3

cbak.com 10 In Touch TILA. Q: Our flood vendor no longer separates out the life of the loan portion of the fee. Should the entire fee now be considered a prepaid finance charge? A: Yes, though it will have a minimal (if any) impact on the annual percentage rate (APR) and finance charge disclosures (well within tolerances). The Official Staff Commentary on Regulation Z states, “If a creditor is uncertain about what portion of a fee to be paid at consummation or loan closing is related to the initial decision to grant credit, the entire fee may be treated as a finance charge.” BSA. Q: If a legal entity has multiple accounts (or multiple loans), does the beneficial ownership information need re- certified for each new account even if the beneficial ownership information remains unchanged and was previously verified? From what I understand from the Beneficial Owner FAQ (#10), the bank is able to receive verbal or written consent that the beneficial owner information remains unchanged. Is my understanding of this correct? We would probably need to retain that written/verbal consent on file, presumably. A: Your reading is correct. Once the bank has confirmed the information (memorialized on the proper form), then it can continue to rely on that confirmation and its information – as long as you specifically ask the customer whenever any subsequent account/loan is opened if it is still correct and up to date, and clearly document this inquiry with its customer response. Of course, if they say, “No, there’s been some change” or something similar, then you pull out a new form for them to fill in before proceeding any further. HMDA. Q: We have always said that we do not have a preapproval or a prequalification program. HMDA has been reported as NA or borrower did not request preapproval to this question since before I joined the mortgage department. If a consumer wishes to see what they qualify for, they have to apply. A comprehensive review of creditworthiness is determined via application, a full review of income, deposits, and credit history. Many times they even have an address, which is one of six criteria to be considered an “application” under HMDA. So, we call that an application. We disclose all the proper up-front disclosures each time and report to HMDA that application. We give a letter of approval subject to clear title, appraisal, verification of missing pieces, and sometimes require PMI review. Now, as I read the definition of a “preapproval program” in Regulation C, it appears that this is so close to what we call an application that it makes me wonder if we are still OK to say we do not have a preapproval program. A: From your description, it sounds like the bank does have a “preapproval program” under HMDA. The basic purpose of that reporting field is to explain longer time frames for fair lending exams. The best course would be to incorporate the preapproval program in bank policy and begin reporting it correctly. Of course, when the applicants start out with a property when they approach the bank, it is an “application” rather than a request for preapproval. TILA. Q: We need to correct the purpose of the loan disclosed on a Closing Disclosure (CD) from “refinance” to “home equity.” Does this call for a corrected CD and a new waiting period? Q&A from CBC Members BY WILLIAM J. SHOWALTER, CRCM, CRP SENIOR CONSULTANT; YOUNG & ASSOCIATES, INC. A s s o c i a t e M e m b e r