Pub. 2 2014 Issue 2

www.uba.org 6 COMPLIANCE CORNER Clarification and Helpful Tidbits Courtesy of Compliance Alliance In response to the plea for help from banks across the Commonwealth and the Nation, Compliance Alli- ance was formed to increase the effectiveness of banks’ compliance programs and to facilitate broad industry initiatives directedat address- ing a variety of compliance functions for member banks and concerns of common interest. The primary goal of Compliance Alliance is to provide quality compliance services and allow more hours for the bank’s com- pliance personnel to focus on strategic bank-specific functions. In each edition, Utah Bank- er will provide a short article from the Compliance Al- liance. T he new servicing rules are in full swing and there is still much confusion on who is required to comply with what rule, when the servicer needs to send disclo- sures and what needs to be included. There were servicing changes to both Reg Z and RESPA: Reg Z Changes: 1026.20(b) – ARM Disclosures Any servicer of a closed-end ARM must now provide an initial disclosure between 210 and 240 days before the initial payment adjust- ment and a subsequent disclosure between 60 and 90 days prior to each adjustment (includ- ing the initial adjustment if the first notice was an estimate). The regulations provide a shorter window of 25 days for the subsequent notice if the lookback period is less than 45 days and the loan was originated prior to January 2015. Note: This requirement applies to all loans, even loans originated prior to 2014. Model forms can be found in Appendix H-4(D)(1)- (4) of Regulation Z. 1026.41 – Periodic Statements for Resi- dential Mortgage Loans (small servicers exempt) For any closed-end consumer transaction secured by a dwelling, the amendment re- quires a periodic statement that includes the amount due, an explanation of the amount due, a past payment breakdown, transac- tion activity, partial payment information, contact information, account information and delinquency information (if applicable). Alternatively, the servicer can provide a coupon book that includes the amount due, contact information, account information and information on how the customer can obtain the other information that would otherwise be required on the periodic state- ment. Reverse mortgages and loans secured by a timeshare plan are exempt from this re- quirement as well as any loan for which the consumer debtor has filed for bankruptcy. Sample forms are provided in Appendix H-30(A) – (D) of Regulation Z. RESPA Changes: 1024.35 – Error Repletion Procedures The amendment lays out new rules when a Qualified Written Request includes a notice of “error.” An error is defined as: (1) Failure to accept a payment that conforms to the servicer’s written re- quirements for the borrower to follow in making payments. (2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law. (3) Failure to credit a payment to a bor- rower’s mortgage loan account as of the date of receipt in violation of 12 CFR 1026.36(c)(1). (4) Failure to pay taxes, insurance premi- ums, or other charges, including charges that the borrower and servicer have vol- untarily agreed that the servicer should collect and pay, in a timely manner as required by §1024.34(a), or to refund an escrow account balance as required by §1024.34(b). (5) Imposition of a fee or charge that the ser- vicer lacks a reasonable basis to impose upon the borrower. (6) Failure to provide an accurate payoff balance amount upon a borrower’s request in violation of section 12 CFR 1026.36(c)(3). (7) Failure to provide accurate information to a borrower regarding loss mitigation options and foreclosure, as required by §1024.39. (8) Failure to transfer accurately and timely information relating to the servicing of a