Reporting of the Introductory Rate Period New HMDA Regulation
Under the new HMDA regulation, an institution must now report the introductory interest rate period. If there is one involved in the transaction, you must report the number of months from the day the loan closed until the first day that the interest rate may change. If the introductory interest rate period is measured in days, then the institution should report the number of whole months that the period meets and disregard any of the remainder. For instance, if the introductory interest rate period is 40 days, then the institution should report the term as being “1” on their HMDA LAR. If the period is less than one whole month, then the institution should still report the period as being “1”.
There are circumstances where “not applicable” will be reported on the HMDA LAR. One instance is with preferred rates. This data point is not required to be reported when the introductory interest rate period is based on preferred rates. That is unless the terms of the loan provide that the preferred rate will expire at a defined time. Preferred rates occur when the terms of the loan state that the initial rate is fixed but that it may increase or decrease if a certain event occurs, for example if an employee of the financial institution decides to find other employment. The other instance where this data point is reported as “not applicable” is when you are reporting on a fixed rate transaction.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.
Institutions Will Report Prepayment Penalty Term In 2018
Come 2018, an institution will have to report the term of the prepayment penalty on their HMDA LAR. There are several instances where this data point should be reported as “not applicable”. This is when the application is not subject to Regulation Z, it is for a reverse mortgage, when it is a purchased loan, and if the transaction does not involve a prepayment penalty. If there is a prepayment penalty, then the term must be reported in months.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.
Regulatory Solutions Acquires Assets of Culp QC, Inc.
Birmingham, Ala. – Regulatory Solutions LLC is pleased to announce that it has acquired the assets of Culp QC, Inc., a provider of quality control, post closing audit services to the mortgage industry. This transaction will significantly increase Regulatory Solutions’ business as well as its presence throughout the United States. Culp QC will continue to operate as a separate division of Regulatory Solutions under the Culp QC name with offices in Owensboro, Kentucky. Terms are undisclosed.
“We are excited to welcome Culp QC’s employees and clients to our growing company,” said Betsy Reynolds, president and founder of Regulatory Solutions. “Culp QC is a great fit as we both share a common approach in providing quality products and services to the mortgage industry.”
Bruce Culp has grown Culp QC over the last 22 years and is retiring after 45 years in the mortgage business. “I feel confident that Culp QC will be in great hands,” he said. “Regulatory Solutions has the same unwavering focus on customer service as we do and an unmatched attention to detail. Their innovative technologies in providing quality control services will give Culp QC the ability to grow its business and provide exciting new services to clients.”
According to Reynolds, in 2011 she set out to provide practical real world regulatory compliance assistance to financial institutions and mortgage companies. “We now serve clients all over the Southeast and expect our growth to continue nationwide,” she said. “It is an exciting time for us as we continue to serve our expanding client base with quality regulatory solutions.” Last year, the company acquired the assets of Outsource Mortgage Consultants, Inc., in Lexington, Kentucky.
Regulatory Solutions: Regulatory Solutions, a certified Women’s Business Enterprise, is located in Birmingham, Alabama, and provides regulatory and compliance consulting services to banks, mortgage companies, credit unions and investors on a nationwide basis. The company specializes in post closing, pre-funding and servicing quality control reviews for the mortgage industry.
Culp QC, Inc.: Culp QC, Inc. located in Owensboro, Kentucky was founded in 1995 by Bruce Culp, is a leading provider of quality control services nationwide. Bruce Culp, its founder will be retiring after 45 years in the mortgage business.
Property Value Must Be Reported Under 2018 HMDA Regulation
Under the 2018 HMDA regulation, the value of the property that is (or will be used) to secure the loan must be reported. This data point depends upon which value the institution uses to determine the loan-to-value ratio. If the institution relies on the appraisal for this determination, then the appraised value is reported. The other option that an institution can rely on is the purchase price of the property. When entering the property value, the institution should enter the full amount with rounded to the nearest dollar. It is important to note that the method that is chosen should remain consistent throughout the HMDA LAR.
If the file was closed for incompleteness or withdrawn before a credit decision was made, then this data point should be reported as “not applicable”. This remains true even if the institution determined a value for the property before final action was taken. When an institution makes a credit decision without relying on the property value, then “not applicable” should also be entered on the HMDA LAR.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.