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Executive Letter: 2023 Brings Adjusted Regulatory Thresholds

Rose Oswald PoelsBy Rose Oswald Poels

Happy New Year! As we step into 2023, there are several thresholds which have been adjusted by both state and federal regulators which go into effect now that the new year has arrived. Below is a collection of thresholds effective January 1, 2023, including a link to pull each publication for reference.

  • Based upon the annual percentage increase in the CPI-W as of 06/01/2022, the exemption threshold for Regulation Z (Truth in Lending Act) will increase to $66,400, up from $61,000.
  • Based upon the annual percentage increase in the CPI-W as of 01/01/2022, the exemption threshold for Regulation M (Consumer Leasing Act) will increase to $66,400, up from $61,000.
  • Based on the CPI-W in effect as of 06/01/2022, the exemption threshold under Regulation Z for HPML appraisals will increase to $31,000, up from $28,500.
  • Based on the 8.6 percent increase in the average of the CPI-W for the 12-month period ending in November 2022, the asset-size threshold to be exempt from collecting HMDA data in 2023 is adjusted to $54 million, up from $50 million.
  • The dollar amount of the maximum allowable charge for disclosures by a consumer reporting agency (CRA) to a consumer pursuant to FCRA section 609 for the 2023 calendar year is $14.50.
  • The asset-size threshold which exempts creditors from the requirement to establish an escrow account for HPMLs will be:
    • For creditors and their affiliates that regularly extended covered transactions secured by first liens, the asset-size threshold is adjusted to $2.537 billion, up from $2.336 billion; and
    • The exemption threshold for certain insured depository institutions with assets of $10 billion or less is adjusted to $11.374 billion, up from $10.473 billion.
  • Based on the CPI-W in effect as of 06/01/2022, the dollar amount thresholds for HOEPA and QM-related loans have been adjusted as follows:
    • For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages will be $24,866.
    • The adjusted points-and-fees dollar trigger for high-cost mortgages will be $1,243.
    • For QMs under the General QM loan definition in § 1026.43(e)(2), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) will be:
      • 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $124,331;
      • 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $74,599 but less than $124,331;
      • 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $74,599;
      • 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $124,331;
      • 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $74,599; or
      • 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $74,599.
    • For all categories of QMs, the thresholds for total points and fees will be:
      • 3 percent of the total loan amount for a loan greater than or equal to $124,331;
      • $3,730 for a loan amount greater than or equal to $74,599 but less than $124,331;
      • 5 percent of the total loan amount for a loan greater than or equal to $24,866 but less than $74,599;
      • $1,243 for a loan amount greater than or equal to $15,541 but less than $24,866; and
      • 8 percent of the total loan amount for a loan amount less than $15,541.
  • For open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00.
  • Based upon the CPI-W, the CRA regulation has adjusted the asset-size thresholds used to define “small bank” and “intermediate small bank” to be:
    • Small bank means a bank that, as of December 31 of either of the prior two calendar years, had assets of less than $1.503 billion.
    • Intermediate small bank means a small bank with assets of at least $376 million as of December 31 of both of the prior two calendar years and less than $1.503 billion as of December 31 of either of the prior two calendar years
  • The DFI has established the interest rate that must be paid on required escrow accounts under section 138.052(5) of the Wisconsin Statutes. The new rate is 0.11%.
  • The FDIC Designated Reserve Ratio remains 2 percent for 2023.
  • The OCC assessment rates are reduced for the general assessment fee schedule. OCC has maintained assessment rates from 2022 for the independent trust and independent credit card fee schedules. Also, there is no inflation adjustment to assessment rates.
  • Contribution limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased to $22,500, up from $20,500. The limit on annual contributions to an IRA increased to $6,500, up from $6,000.
  • Multifamily loan purchase caps for Fannie Mae and Freddie Mac will be $75 billion for each enterprise, for a combined total of $150 billion. The caps reflect an anticipated contraction of the multifamily originations market this year. FHFA will require that at least 50 percent of Fannie’s and Freddie’s multifamily business be mission-driven affordable housing.
  • The conforming loan limit values for mortgages to be acquired by Fannie Mae and Freddie Mac in 2023 for one-unit properties will be $726,200, an increase from $647,200.
  • New loan limits for FHA’s Single Family Title II Forward and Home Equity Conversion Mortgage (HECM) insurance programs, based upon property size and location, range from $472,030 to $3,142,800.

I am looking forward to this new year and excited about what 2023 may bring. Be sure to stay connected with WBA through our various releases and publications, and through our social media channels.

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Legal Q&A: New Interest Rate on Residential Mortgage Loan Escrow Accounts

Wisconsin DFI sets escrow interest rate at 0.09% for 2022

By Scott Birrenkott

Q: Has the Wisconsin Department of Financial Institutions set the Interest Rate on Required Residential Mortgage Loan Escrow Accounts for 2022?

A: Yes. The Wisconsin Department of Financial Institutions, Division of Banking (DFI), has calculated the interest rate required to be paid on escrow accounts for residential mortgage loans subject to Wisconsin Statute Section 138.052(5) to be 0.09% for 2022. The interest rate shall remain in effect through December 31, 2022.

Note that while Wisconsin Section 138.052 previously required financial institutions to pay interest on the balance on any required escrow accounts, Wisconsin Act 340 modified this requirement so that it only applies to loans originated prior to the effective date of the Act (April 18, 2018). Thus, financial institutions must continue to pay interest on required escrow accounts prior to April 18, 2018. Any escrow account associated with a loan originated after the effective date of Act 340, 138.052 no longer requires payment of interest. Wis. Stat. Section 138.052 applies to loans secured by a first lien or first lien equivalent in a 1-4 family dwelling that is used as the borrower’s principal residence.

The escrow rate notice may be found here.

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Year-end Frequently Asked Escrow Questions

While there has not been a recent significant change to escrow requirements, it is WBA’s understanding that many banks pay taxes from escrow by December 20 every year. Around this time, many questions arise as to State and Federal requirements regarding escrow accounts. Furthermore, given the lingering impacts of the COVID-19 pandemic, many borrowers may have been, or currently are, in deferral or forbearance, resulting in insufficient escrow balances. This article presents several questions and answers to refresh banks on relevant requirements, and important considerations, regarding escrow accounts both with respect to the pandemic, and more generally.

Q1: Does Wisconsin have rules regarding disbursements from tax escrows?

A1: Yes. Wis. Stat. section 138.052(5m) governs escrow accounts required to be maintained to pay taxes or insurance in connection with consumer-purpose loans secured by a first lien real estate mortgage or equivalent security interest in the borrower’s principal dwelling. For example, the requirement applies to covered purchase money, refinance, and home equity transactions but does not apply to loans that are business or agricultural purpose, or manufactured home transactions. It also does not apply to voluntary escrow accounts. If a bank maintains a voluntary escrow account, it should ensure it has adequate documentation to evidence that fact. 

For covered loans, banks must provide an escrow notice before closing giving the borrower options regarding how the bank will make payments from the amount escrowed: 

Escrow agent sends a check by December 20 to the borrower for the amount held in escrow for the payment of property taxes made payable to the borrower or to the borrower and the taxing authority. 

  1. Escrow agent pays the property taxes by December 31 if the escrow agent has received a tax statement for the property by December 20.  
  1. Escrow agent pays the property taxes when due.  

This notice is not required under section 138.052(5m) if the escrow agent’s practice is to pay the borrower the amount held in escrow for the payment of property taxes by December 20, or to send a check in the amount of the funds held in escrow for the payment of property taxes, made payable to the borrower and taxing authority. 

Regardless of whether a notice under state law may not be required, banks are reminded that a voluntary agreement is still required under the Real Estate Settlement Procedures Act (RESPA) to pay property taxes annually as permitted under Wis. Stat. section 138.052(5m). See the discussion below regarding the interconnection between state and federal law.  

Q2: Does RESPA have rules regarding disbursements from tax escrows? 

A2: Yes. RESPA section 1024.17(k) prescribes rules that apply to escrow accounts established in connection with RESPA-covered loans to pay taxes, insurance, or other charges. If the terms of the loan require the borrower to make payments to an escrow account, the bank must make disbursements in a timely manner. A timely manner means payment by the disbursement date, so long as the loan account is not more than 30 days overdue. 

If a taxing authority offers a bank a choice between annual and installment disbursements, RESPA includes additional requirements. Generally, disbursements must be made on an installment basis depending on whether the taxing authority offers a discount, or charges additional fees, for installment disbursements.  In Wisconsin, where taxes may be paid in annual or installment payments, and the taxing authority does not offer a discount for payments on an annual basis nor does it impose any additional charge or fee for installment payments, the bank must make disbursements on an installment basis, unless the bank and borrower agree to another disbursement alternative. 

Most property taxes in Wisconsin may be payable in two installments. If the first installment is paid by January 31, the second installment may be paid by July 31. Because no discount is available for making annual payments, and no penalty is imposed for making installment payments, RESPA requires property taxes payable in this manner to be disbursed on an installment basis, unless the borrower voluntarily agrees, in writing, to an annual disbursement.

Q3: How do the requirements under Wis. Stat section 138.052(5m) and RESPA section 1024.17 work together?

A3: RESPA preempts State law only to the extent of any inconsistency. Generally, escrows governed by section 138.052(5m) must also comply with RESPA, and banks must disburse tax escrows in installments, or as otherwise agreed to by the borrower. Thus, banks will want to consider their written agreement as to the borrower’s choice of disbursement methods, and as discussed in Q1 above, a bank may pay by December 20 by check.  

As RESPA requires taxes to be disbursed in installments, and State law allows more flexibility in how taxes are paid, in order for bank to disburse money from a required escrow account, annually under the section 138.052(5m) December 20 method, RESPA requires the customer’s voluntary agreement of that option. And, while notice under section 138.052(5m) may not be required, RESPA still requires the customer’s voluntary agreement to pay by December 20; see the discussion in Q2. FIPCO’s WBA Tax Escrow Option Election form meets the requirements under Wis. Stat. 138.052(5m) and also serves as the voluntary agreement to disburse property taxes out of escrow in any method other than installments to comply with RESPA.  

Q4: What if a deficiency occurs before disbursement?

A4: As discussed in Q2, RESPA generally requires the bank to disburse funds in a timely manner. If a deficiency exists, the bank must still cover the amount due. Upon advancing the funds, the bank may seek repayment from the borrower after performing an escrow account analysis.  

If the deficiency is less than one month’s escrow account payment, then the bank: 

  1. May allow the deficiency to exist and do nothing to change it; 
  1. May require the borrower to repay the deficiency within 30 days; or 
  1. May require the borrower to repay the deficiency in 2 or more equal monthly payments. 

If the deficiency is greater than or equal to 1 month’s escrow payment, the bank may allow the deficiency to exist and do nothing to change it or may require the borrower to repay the deficiency in two or more equal monthly payments. 

If the borrower is not current, then the bank may recover the deficiency pursuant to the terms of the mortgage loan documents. For example, language within the WBA 428 Real Estate Mortgage states that if the escrowed funds held by bank are not sufficient to pay the escrow account items when due, bank may notify consumer in writing, and consumer shall pay bank the amount necessary to make up the deficiency in a manner described by bank or as otherwise required by applicable law.  

Furthermore, for loans that are not covered by RESPA (i.e., the escrow account is not required), the bank will need to determine how the deficiency will be covered, either by the borrower, or the bank, pursuant to the terms of its agreement. 

Q5: How does a payment deferral or forbearance affect escrow considerations? 

A5: As a result of the pandemic, bank may have deferred or forborne payments for some of its borrowers. Bank should consider its deferral and forbearance agreements to confirm whether this deferral or forbearance included escrow payments. Even if it did not, financial distress caused by the pandemic may have resulted in more escrow shortages and deficiencies than typical. Banks should consider how they are monitoring loans for payments, and accounting for expected, and unexpected shortages. Specific attention may need to be paid to escrow balances for loans in deferral, forbearance, or modification. Banks should identify loans that will be short, and determine how the deficiency will be handled, with the above considerations in mind.

Q6: What is the escrow rate for 2022, as set by 138.052? 

A6: At time of this release, the Wisconsin Department of Financial Institutions, Division of Banking, has not yet released the 2022 interest rate required to be paid on escrow accounts for residential mortgage loans subject to Wisconsin Statute Section 138.052(5). WBA will continue to monitor and will report the 2022 rate once released. Once set, the 2022 interest rate shall remain in effect through December 31, 2022.

Q7: Does 138.052 require Wisconsin banks to pay interest on escrow accounts?  

A7: Not for loans originated after April 18, 2018. 2017 Wisconsin Act 340 eliminated the requirement that a financial institution pay interest on escrow accounts for residential mortgage loans originated on or after the effective date of the Act. Thus, a Wisconsin financial institution is not required by law to pay interest on any escrow account maintained in association with a loan originated on or after April 18, 2018. 

Wisconsin Section 138.052 previously required financial institutions to pay interest on the balance on any required escrow accounts. As discussed above, 138.052 applies to consumer-purpose loans secured by a first lien or first lien equivalent in a 1-4 family dwelling that is used as the borrower’s principal residence. Banks must continue to pay interest on escrow accounts they required prior to the effective date of Act 340. However, for any escrow account associated with a loan originated after the effective date of Act 340, 138.052 no longer requires payment of interest. A bank should also consider the terms of its contract as to whether any payment of interest is part of the agreement.

Q8: Bank is closing loan in December for which bank will require escrow for the payment of taxes. The first mortgage payment will be February. Can bank escrow for 2020 taxes to be paid in 2021? 

A8. No. RESPA’s escrow collection rules are prospective in nature. Bank should only collect for 2021 taxes to be paid either in December 2021 in a lump sum (with borrower’s permission as outlined above) or in installments. Bank should not collect for anything between December 1 and 31 because nothing is owing during that time as the bank should only be collecting for 2021 taxes. Bank should not be collecting for 2020 taxes for payment in 2021. Borrower should be on his/her own to pay 2020 taxes.  

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Legal Q&A: Delivery of Instruments to Mortgage Borrowers Requirements in Wisconsin

By Scott Birrenkott

Q: Does Wisconsin Require Delivery of Instruments to Mortgage Borrowers after Payoff?

A: Yes. Wisconsin requires delivery of the instrument, and, depending on the transaction, other payoff requirements.

WBA is frequently asked whether banks must provide a copy of a note to the borrower at time of payoff. Wisconsin law requires provision of a payoff statement, and for Wisconsin Consumer Act transactions, the bank must provide a copy of the “instrument.” A copy of the note would meet that requirement.

Wisconsin’s payoff statement requirements can be found under Wis. Stat. section 708.15(3). That section requires that the bank must file and give the secured creditor notification within 30 days after receiving full payment or performance of the secured obligation. Additionally, for loans covered by the Wisconsin Consumer Act, Wis. Stat. section 422.306 provides several requirements regarding receipts, accounting, and evidence of payment. One such requirement is that the bank must give or forward to the customer instruments which acknowledge payment in full. It also requires release of any security interest when there is no outstanding secured obligation.

“Instrument” is a defined term under Uniform Commercial Code Article 9. An “instrument” means a negotiable instrument or any other writing that evidences a right to the payment of a monetary obligation, is not itself a security agreement or lease, and is of a type that in ordinary course of business is transferred by delivery with any necessary endorsement or assignment.

A note would meet the definition of “instrument” under Article 9. WBA is also frequently asked whether it must be the “original” instrument or a reproduction of such item provided to the borrower. This question is not addressed within the statutes. Thus, the bank should check with its practices in relation to the requirements. For example, it could be that the bank has a practice of providing the original stamped “paid,” to provide the borrower with documentation that the obligation has had been paid directly on the original. It might also be a decision which is made as a matter of best practice, as then there can be no question as to whether the original was paid.

If you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or wbalegal@wisbank.com.

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Convergence of Boomers, Boomerangers, Housing Costs and the Pandemic Boosts Interest in Multigenerational Homes

At a time when aging baby boomers need a bit of help, more adult children need a place to stay, and housing costs keep climbing, some families are turning to multigenerational homes.

While the COVID-19 pandemic appears to have accelerated such family togetherness nationwide, the use of a house by multiple generations of a clan already had been rising amid changing demographics and housing expenses, according to residential real estate experts.

An analysis by the nonprofit newsroom Wisconsin Watch and the Center for Public Integrity found the state has about 325,000 multigenerational households, or 13% of all households. Most are concentrated in Kenosha, Milwaukee, Racine, Rock, and Waukesha counties. Nationally the rate is about 18%.

“I kind of do think it’s going to continue as a trend, because you have parents a lot of times who are in a little bit of a need of assistance,” said Steve Bechtolt, vice president-mortgage lending for The Bank of New Glarus. “They are not ready for full-time assistance in relation to going to a nursing home, but they could use some help. And I think you are seeing them moving in with children.”

According to the National Association of Realtors, before the pandemic there was an even split between buyers who purchased a multigenerational house either to accommodate aging parents or to provide space for adult children who came back home — so-called boomerang kids — or those who never left. But now aging parents is the No. 1 reason.

While older parents have their grown children to assist them if needed in a multigenerational home, the fact that many seniors are willing to help with childcare for grandkids also figures into the strategy of a house containing three generations of the same family.

Still, there are plenty of parents providing a place for their adult children. The percentage of adult children living at home has never been higher, according to a Pew Research Center analysis last year.

Drawing on U.S. Census data, Pew found 52% of young adults resided with one or both of their parents. Young adults living with their parents grew for all major racial and ethnic groups, men and women, and metropolitan and rural residents, Pew said. Growth was sharpest for the youngest adults — those ages 18 to 24 — and for white young adults, Pew found.

The New York Times reported this summer that shifts in how families live and work, brought on by the pandemic, were creating a surge of baby boom households with multiple generations in the U.S.

But some say it’s been occurring to a lesser degree for years. One reason is the simple economics of sharing space.

Christine Buckman, universal loan officer at First Bank of Baldwin, said over the last five years she has periodically seen people who want to purchase a house for more than one generation of a family.

Some of the driving factors, she said:

  • Convenience to help with aging and/or widowed parents
  • Traditional cultures where it is commonplace to have elders or parents live with the family
  • Snowbird parents who find it wasteful to keep an empty home in Wisconsin while they are in the South six months of the year.

Buckman, who is vice chair of the Wisconsin Bankers Association Mortgage Banking Committee, cited an example involving a married woman with two young children and her parents, who owned a house in Wisconsin and a condo in Florida.

“The parents decided to sell their home in Wisconsin and the parents, daughter and her husband proceeded to design a new custom home for construction together,” Buckman said. “It was designed as one home with two separate wings, so to speak.”

A main foyer leads to the daughter’s family living area, and the foyer also leads to a second living quarters that provides a separate living room, bathroom, small kitchenette, and bedroom.

“The idea being they could leave all the doors open and come and go from each other’s space, but if privacy was desired or needed, the doors could be closed to separate the living areas as well,” Buckman explained.

It was a great solution for the grandparents who were in Wisconsin less than half of the year because it eliminated the expense and upkeep of an unused property while they were in the South. It also gave the grandparents a chance to spend quality time with their daughter and grandchildren in the summers.

“We did have to structure the loan with all four adults as borrowers,” Buckman said. “They were all on deed as well. They worked out the other logistics on financials between themselves.”
The grandparents used proceeds from the sale of their Wisconsin home for a large down payment, while the mortgage payments, taxes and insurance were the responsibility of the daughter and her husband.

The custom home cost more than $900,000, but the strategy worked, she said.

“Pooling their resources and qualifications allowed them to achieve a beautiful property to serve their whole family of three generations,” Buckman said.

Having multiple buyers of a house can be tricky, said Chris Boland, vice president-consumer lending manager for North Shore Bank.

“Multigenerational housing doesn’t necessarily mean multigenerational ownership, although sometimes in these situations the whole family wants to be equivalent owners of the property,” said Boland, who is based in the Green Bay area. “The challenge that presents is that all four of them need to qualify. If somebody has a detrimental credit situation it can make it difficult for the whole transaction to work because of that one individual.”

Over the past few years, some home builders have been featuring “in-law suites” and other convertible space in the houses they are putting up.

David Belman, president of Belman Homes in Waukesha, said a true in-law suite is like an apartment attached to a house.

It typically has a family room, a small dining area, a kitchenette, and a bedroom with a bathroom.

“They have their own private space so they can cook, eat and sleep there, but they can also connect in with the rest of the home if they want to be part of the family,” Belman said.

It’s hard to include all those apartment-like features unless lots in a subdivision are big enough, however, Belman said.

Belman said an alternative for homes built by his company is a first-floor room than can be converted for use as bedroom/bathroom or office.

“I have a really popular floor plan that has a first-floor bedroom-full bath, but it’s not the master suite,” Belman said. “It’s a flexible living space.”

It could be used by an older parent or adult child.

“They would still use the kitchen and their home – they’d be living in the home fully – but they have their own space, their own bathroom,” Belman said. “And down the road, if they’re not there, that room can then be used as an office, a craft room, a sitting room. Home offices are really popular right now just because of COVID.”

While multigenerational homes may be drawing more interest from the general population, they have been common among some groups for years, said Miguel Pesqueira, vice president-community banking manager for North Shore Bank in West Allis.

“From the CRA point of view — the Community Reinvestment Act — we have seen this multigenerational living forever,” Pesqueira said. “It’s really more of a way of life for low-income minority individuals. It’s not uncommon to have grandma and husband and wife and children and grandkids all living under the same roof.”

Even though the pandemic may be a current impetus, Pesqueira said he believes more people from the broader population will pursue multigenerational housing.

“The middle class is shrinking, and I think this is a way of addressing that shrinking budget, by pulling family together,” Pesqueira said.

Buckman said among factors that would seem to encourage multiple generation homes is the increasing longevity of grandparents, and their willingness to provide daycare for grandchildren.

Said Boland: “I think it’s something were definitely going to see more of.”

Paul Gores is a journalist who covered business news for the Milwaukee Journal Sentinel for 20 years.

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Forbearance Resource for Homeowners

By Scott Birrenkott

The Wisconsin Bankers Association has provided a resource to assist homeowners with questions regarding options as forbearance periods end and the pandemic still lingers. Generally, there are a few ways borrowers can make up their missed payments. However, the method of repayment can vary depending on the loan. Not all borrowers will be eligible for all options. Borrowers are encouraged to ask their servicer about available options.

Download: Assistance for Homeowners in Forbearance

 

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Welcome Back, Old Friend – Section 8 of RESPA is a Hot Topic Again

The below article is the Special Focus section of the September 2019 Compliance Journal. The full issue may be viewed by clicking here.

Section 8 of the Real Estate Settlement Procedures Act (RESPA)1 – the prohibition against kickbacks and unearned fees – is back and compliance officers are taking note. In the last year, we have seen a significant increase in RESPA section 8 questions, many of which involve a determination as to whether certain marketing activities are permissible. This is due, in part, to evolving technology which provides a platform to facilitate marketing relationships between settlement service providers, along with recent regulatory and case law developments. Some of these arrangements are simple, while others extraordinarily complex. Either way, I sense bit of panic from compliance officers any time there’s a new opportunity to market the institution’s mortgage area that may implicate RESPA (and for good reasons – penalties and reputation to name a couple!). Not all these arrangements are problematic, especially in light of the recent PHH decision and developments out of the Consumer Financial Protection Bureau (CFPB), but some arrangements should still make your ears perk up. 

So, how do we analyze whether a marketing opportunity presents a RESPA Section 8 issue? Let’s discuss.

When we consider marketing activities under RESPA, there are two primary provisions of RESPA Section 8 that are relevant to our analysis: (1) Section 8(a) which delineates prohibited activity,2 and (2) Section 8(c) which prescribes permissible activities.

Sections 8(a)– Prohibited Activity

The first is Section 8(a) of RESPA which prohibits illegal kickbacks – the giving or receiving of a “thing of value” for referrals made between settlement service providers. Specifically, Section 8(a) prohibits any person from giving or accepting any fee, kickback, or thing of value pursuant to an agreement or understanding for the referral of a settlement service involving a federally related mortgage loan (a.k.a. consumer mortgage loans).3 There are three elements to an illegal kickback under Section 8(a): 

  1. A “thing of value” – for example, money, defrayed costs, special contract terms, a promise to provide future referrals, and things (such as sporting event tickets or office supplies); 
  2. An “agreement or understanding”, whether oral, written, or established by practice; and 
  3. A “referral”, which is defined in two ways: (a) oral or written action that has the effect of affirmatively influencing selection of a settlement service provider, or (b) when a person is required to use a particular settlement service provider.  

All of these components must be present to be considered a prohibited activity under RESPA. Thus, when a potential RESPA-implicating opportunity presents itself, each of these components must be analyzed in detail. 

Section 8(c) of RESPA – Permissible Activity

Notwithstanding the prohibitions in Sections 8(a), the second relevant provision, contained in Section 8(c) of RESPA, sets forth permissible activity. Relevant here, RESPA specifically permits the following:

  • “normal promotional or educational activities that are not conditioned on the referral of business and that do not involve the defraying of expenses that otherwise would be incurred…”;4 and 
  • “payment to any person of a bona fide salary or compensation or other payment for goods or facilities actually furnished or for services actually performed.”5   

These permissible activity exceptions are generally relied upon in order to create relationships between settlement services providers (e.g. the institution and a realtor). 

Importantly, there are some general principles that have developed over time, via administrative interpretations, case law, and enforcement actions that must be true in order for the marketing activity to be permissible pursuant to one of these exceptions:

  • Services must actually be performed or goods must actually be provided. For example, advertising must actually be provided. Any payment for advertising that does not actually occur will be considered an unlawful kickback.
  • The payment for such services or goods must be bona fide. That is, payment must be reasonable market value. Any excess payment above reasonable market value will be seen as an illegal kickback.6

Now, assuming the marketing activity meets the parameters of one of the Section 8(c) exceptions, the activity receives a “safe harbor” from a RESPA Section 8 violation. Note, however, that the “safe harbor” rule was not the prevailing opinion of the CFPB under the reign of Director Richard Cordray, which was a significant departure from previous, longstanding interpretations of RESPA under the Department of Housing and Urban Development (HUD). However, in perhaps one of the most contentions of RESPA cases in recent history, PHH Corporation v. Consumer Financial Protection Bureau,7 the Court of Appeals for the D.C. Circuit confirmed that Section 8(c) of RESPA provides a safe harbor so long as the activity meets the parameters of the Section 8(c) exceptions. 

Analysis When Considering Marketing Opportunities

With that RESPA background in mind, if your institution is considering a marketing opportunity involving federally related mortgage loans, I suggest engaging in the following analysis:

  • Might this be deemed a prohibited activity under RESPA Section 8(a) or 8(b)?
    • That is, could this be considered an illegal kickback under Section 8(a) in that all three elements are present, as described above and restated here:
      • A “thing of value”; 
      • An “agreement or understanding”; and
      • A “referral”
    • Or, is this impermissible fee splitting under 8(b)?
      • Though not often arising in the marketing context and, consequently, not thoroughly discussed herein, the institution should consider applicability

If NO, that’s the end of your analysis – no Section 8 concern
If MAYBE or YES, continue to (2) and (3).

  • Is the activity “saved” by the Section 8(c) educational and marketing exception; or
  • Is the activity “saved” by the Section 8(c) “bona fide payment for services actually performed” exception?

Let’s take a couple of common marketing opportunities and run through the analysis:

Hosting a Complementary Educational Seminar for Settlement Service Providers

If an institution chooses to host a complementary educational seminar for real estate professionals, such an event may be considered to violate Section 8(a) of RESPA because it’s certainly the provision of a “thing of value” provided in hopes of generating business (or, in other words, referrals from those settlement service providers). In fact, previous HUD Guidance states that such educational events implicitly positions settlement service providers to refer business to the institution. We can question whether there is an “agreement or understanding”, but let’s just assume that the conduct is indicative of such. The question then becomes whether this can be redeemed by the “normal promotional and marketing” exception under 8(c).

Whether an educational seminar meets the safe harbor exception is very much dependent upon the facts and circumstances at hand. Consider the following:

  • Is the event in any way conditioned on past, present, or future referrals of business? For example, does the institution provide an incentive for attendees to refer business back to the institution? Or, does the institution only invite settlement service providers that have previously referred business to the institution? If so, the safe harbor is unlikely to be met.
    • Note that who is invited can make a difference here. The more “open” the attendance list (e.g. not just settlement services providers located near your branches or those who have previously referred business your way), the more likely the seminar is to pass muster.
  • Does the seminar defray costs of the attendees? For example, if the seminar provides a course required to receive or maintain licensure, that would be defraying a cost ordinarily incurred and would be, consequently, unlawful.

The most challenging aspect here is to remain referral-neutral. Pay careful to this component in your analysis.

Advertising with a Realtor

Recently, a number of institutions have been given the opportunity to advertise their services on a realtor’s website or jointly advertise with a realtor on a separate platform (e.g. Zillow). I think we could all agree that this is prohibited activity under Section 8(a). Thus, we turn to whether it can be saved under either of the relevant Section 8(c) exceptions delineated above.

Of course, facts matter here. The following should be considered:

  • Is the advertising conditioned on past, present, or future referrals of business? For example, if the institution and the realtor enter into a contractual arrangement for direct advertising, does the agreement discuss future business or incentives for referrals? Pay close attention to contract language, if a contract exists, and remain referral-neutral in order to meet the exception. 
  • Is the institution paying for the advertising? If the advertising is free, this will not meet the exception as the institution’s costs will be defrayed. 
  • Is the institution paying reasonable market value for the advertising? Assuming the institution is paying for the advertising, is the institution paying reasonable market value? Remember, any payment above reasonable market value will be seen as an illegal kickback. 

One of the challenges with meeting these relevant Section 8(c) exceptions is to get the fee structure exactly right. If the institution is obtaining free advertising or is receiving “below market rate” advertising, you run the risk of receiving “defrayed costs” or not making a bona fide payment for the advertising. In contrast, if you pay above market rate, the portion of the payment above market rate kicks you back into prohibited activity under Section 8(a). To this end, we always suggest drafting a business justification to demonstrate that the fee paid is fair market value and maintaining it in your files. To determine market value, we suggest considering the following:

  1. Look internally for evidence of similar transactions (e.g. is the price similar to the institution’s other advertising costs for the type of media, duration, etc.);
  2. Look externally to determine if the price is consistent with the price third parties would incur for similar services (e.g. other financial institutions in the area); and
  3. Management should exercise its best judgment based on the internal and external evidence. 

Furthermore, you should be especially careful when navigating joint marketing arrangements when a third party is involved. For example, Zillow offers lenders and real estate agents the opportunity to jointly advertise via the Zillow online platform. In this program, Agent invites up to five lenders to jointly market with Agent. Lender then pays Zillow for the opportunity to advertise with Agent. The advertising fees paid by lender, in turn, reduce the amount the Agent pays Zillow for Agent’s advertising. The more the lender spends, the more often the lender is featured (versus other lenders with whom the Agent advertises). Though this program was being investigated by CFPB for violations of RESPA Section 8 and UDAAP, the investigation quietly concluded and Zillow announced in a June 2018 SEC filing that the company had received a letter from the Bureau indicating that it would not be pursuing enforcement action. 

The Zillow case is comforting to institutions insomuch as the CFPB validated that these types of marketing arrangements can lawfully exist. However, they do not come without scrutiny. In these types of arrangements, institutions should pay considerable attention to how the fee structure flows through the parties, in addition to the considerations above. In my experience, these arrangements can be incredibly complex and always invite risk. It’s prudent to get legal counsel involved before agreeing to participate in this kind of arrangement.

To conclude, RESPA Section 8 questions can be complex, rife with competing interpretations from HUD, CFPB and the courts, and require wading through unchartered waters with ever-changing leadership at the CFPB. Given that penalties are steep, as permitted by statute – recent RESPA CFPB enforcement actions have imposed penalties ranging from $35,000 to $265,000 and the amount at issue in the PHH case was $109 million – these questions deserve attention, thorough analysis, and often times, involvement of counsel. 

WBA wishes to thank Atty. Lauren C. Capitini, Boardman & Clark, llp for providing this article. 

  1. 12 U.S.C. § 2607.  Implementing Regulation X is codified at 12 C.F.R. § 1024.14.
  2. Note that section 8(b) prohibits the giving or accepting of a “portion, split, or percentage of any charge made or received” for rendering settlement services other than for services actually performed.  In other words, institutions cannot share a portion of or split fees with other settlement service providers when rendering settlement services unless the payment given/received is for “services actually performed”.  Though a very important component of RESPA to understand, this provision is not often relevant in the marketing context.
  3. 12 U.S.C. § 2607(a) and 12 C.F.R. § 1024.14(b).
  4. 12 C.F.R. § 1024.14(g)(1)(vi).
  5. 12 C.F.R. § 1024.14(g)(1)(iv).
  6. See PHH Corporation v. Consumer Financial Protection Bureau, 839 F.3d 1 at 41 (D.C. Cir. 2016).
  7. 839 F.3d 1 (D.C. Cir. 2016).  The court’s interpretation of RESPA was upheld by a petition for rehearing en banc by the D.C. Circuit Court of Appeals.  PHH, No. 15-1177 (Jan. 31, 2018).

By, Ally Bates

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Who Must Sign The Mortgage?

The below article is the Special Focus section of the May 2019 Compliance Journal. The full issue may be viewed by clicking here.

When originating a mortgage loan, banks often find themselves asking “who needs to sign the mortgage”. It’s a great question and the trite, lawyerly answer, is “it depends”! Given the fact that Wisconsin is a community property state and has a marital property act which includes homestead protections, the answer is not necessarily easy.

There are, of course, certain straightforward scenarios that follow the “General Rule”. The General Rule is this: only those parties in title to the property securing the loan are required to sign the mortgage. Of course, there is an exception to the General Rule – when you have a married person(s) in title to the property securing the loan, the spouse of the titled individual may be required to sign the mortgage.

The following hypotheticals demonstrate application of the General Rule.

  1. Mom and Daughter, both unmarried individuals, are borrowers on a loan. The loan will be secured by Mom’s home, for which Mom is the sole titleholder. Though Mom and Daughter are both borrowers, only Mom must sign the mortgage as the sole titleholder.
  2. Same facts as (1) above, except both Mom and Grandma are in title to the property. Grandma is unmarried. In this case, though Mom and Daughter are borrowers, Mom and Grandma must sign the mortgage because they are both titleholders.
  3. Son and Son’s Wife are borrowers on the loan and Dad is a Guarantor. The loan will be secured by a home in which Son and Son’s wife permanently reside, but Dad and Uncle are the titleholders. Dad and Uncle are both unmarried. In this case, Dad and Uncle must sign the mortgage. Son and Son’s Wife are not required to sign the mortgage despite the fact that they are married and the property is their permanent residence – in this case, neither spouse is in title to the property and thus no exceptions to the General Rule apply, as described in further detail below.

Of course, every good rule has exceptions. In this case, the exception to the General Rule is as follows: If a married person is in title to the property securing the loan, the spouse of that individual will also be required to sign the mortgage if the conveyance alienates either or both spouses’ homestead interest, even if the spouse is not in title. See Wis. Stats §706.02(1)(f). This requirement to obtain the spouse’s signature (the “exception”), however, does not apply to purchase money mortgages. See Wis. Stats §706.02(1)(f). In other words, if the mortgage is a purchase money mortgage, you’re back to the General Rule and the spouse of the married titleholder will not be required to sign the mortgage if the spouse is not going to be listed as an owner of the property, even if the property is homestead property or either or both spouses.  

Thus, assuming the bank is not originating a purchase money mortgage, the bank must require signatures of all titleholders PLUS the spouse of a married titleholder if the property is the homestead property of either or both spouses. 

Banks should note that a “homestead” is defined under Wis. Stats. § 706.01(7) as “the dwelling, and so much of the land surrounding it as is reasonably necessary for use of the dwelling as a home, but not less than one-fourth acre, if available, and not exceeding 40 acres.” Customers should indicate to the Bank whether the property is homestead property and such information should be contained on the mortgage itself.

If the bank does not obtain the signature of the married titleholder and the spouse of the titleholder, the mortgage is void and unenforceable. This interpretation of Wis. Stats. § 706.02(1) and (1)(f) was recently confirmed in a 2017 court case – U.S. Bank National Association v. Charles E. Stehno III, 2017 WI App. 57 (August 30, 2017). In Stehno, the Bank attempted to foreclose on mortgages signed by Charles Stehno in December 2002 and April 2003. The property was Stehno’s homestead at the time he signed the mortgages. However, the mortgages were not signed by his then-spouse, Candice Wells. Therefore, according to the court, the mortgages were invalid from the start against both spouses because only Stehno signed them. 

The following hypotheticals demonstrate application of the Exception to the General Rule:

  1. Husband and Wife are refinancing their homestead property. They are both listed as borrowers on the loan. Husband is the sole titleholder on the property. Both Husband and Wife must sign the mortgage because it’s conveying an interest in the homestead property of both spouses on a non-purchase money loan.
  2. Daughter and Daughter’s Husband are borrowers on second mortgage loan. The property securing the loan is titled in Dad’s name only and it’s Dad’s homestead property. Dad is married to Stepmom who does not live in the property. Both Dad and Stepmom must sign the mortgage because this is a non-purchase money loan which conveys the homestead interest of one spouse.
  3. Daughter and Son are refinancing their parents’ homestead property and are borrowers on the loan. Dad is married to Mom and the property securing the loan is both Dad’s and Mom’s homestead. Dad and Grandma are in title to the property. Grandma is unmarried. Dad, Mom, and Grandma must sign the Mortgage. Dad and Grandma must sign because they are titleholders. Mom must sign because this is a non-purchase money loan which conveys the homestead interest of Mom and Dad.
  4. Husband and Wife are looking to originate a purchase money mortgage loan for which they will both be borrowers. The loan will be secured by property held by husband only. Husband only will live in the property as his homestead. In this case, only husband must sign the mortgage because this is a purchase money loan and, therefore, the Exception to the General Rule does not apply.

In summary, taken altogether, the signatures needed on a mortgage are as follows: (1) All titleholders and (2) if the loan is not secured by a purchase money mortgage, the spouse of any married titleholder to the extent the property is the homestead of one or both spouses.

Finally, it’s best to obtain a title insurance policy that lists the owners of the property being mortgaged. Title insurance companies will also list the names of all individuals required to sign the mortgage so banks may have additional comfort that the correct individuals are signing the mortgage.

WBA wishes to thank Atty. Lauren C. Capitini, Boardman & Clark, llp for providing this article.

Learn more about the Wisconsin Marital Property Act at the June session of the WBA Compliance Forum.

By, Ally Bates

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Breaking: Recent Bank Failures: What Does It Mean to Your Institution? FREE Webinar

Doubtless we’ve all heard by now of the sudden and unexpected closures of Silicon Valley Bank and others last week. You’ve also likely heard federal regulators announced plans to support depositors of the two banks and prop up consumer confidence in the banking industry. What exactly happened here? Are more bank failures expected? What were the actions the regulators took to guarantee the deposits of these banks’ customers?

In this short webinar, we’ll address the problems faced by Silicon Valley Bank and other recently failed banks, and anticipate questions your customers may be asking you. We’ll sort our way through what has happened and ensure you’re prepared with the right information to understand the present situation, as well as address concerns throughout the industry.

What You’ll Learn

  • What has happened so far?
  • Will it happen to other financial institutions?
  • Is the industry in trouble?
  • Regulatory and government responses
  • Impact on FDIC deposit insurance
  • New assessment fee
  • Communication and management
  • What to tell concerned customers
  • Future outlook

Who Should Attend
Anyone in the financial institution that would like an update on current events. Especially front-line personnel who may need to respond to questions from the public.

Instructor Bio
Carl Pry is a Certified Regulatory Compliance Manager (CRCM) and Certified Risk Professional (CRP) who is a Managing Director for Treliant Risk Advisors in Washington, D.C. Through his working career, as well as through his experience as a banking attorney and officer, he has provided a variety of regulatory compliance and financial performance services to financial institutions and other clients throughout the country. He has written extensively regarding consumer and commercial compliance, tax, audit, and financial institution legal issues, and is a frequent contributor to and currently serves on the Editorial Advisory Board for the ABA Bank Compliance magazine. He has spoken at scores of banking, compliance, and state bar associations, and has conducted training sessions for financial institutions across the country.

Registration 

  • Free

 

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Mastering TRID: Navigating Loan Estimates & Changed Circumstances

Change happens in every aspect of our life, and the mortgage loan process is no exception. Changes happen for a variety of reasons. Whether they are initiated by the borrower or information relied on by the lender was changed or was inaccurate, your bank must be prepared to recognize opportunities to issue a revised Loan Estimate that enables critical tolerance levels to be reset as a result of a valid changed circumstance.

Join us as we review what defines valid TRID changed circumstances and how to issue a revised Loan Estimate in a timely manner. Loan file documentation is critical to support the reason for the change and to clearly identify the fees that were directly impacted as a result of the situation. This webinar is designed to ensure that you are prepared to capture this opportunity to issue a revised Loan Estimate and properly support the lender’s reaction to a change.

What You’ll Learn

  • Recognize valid changed circumstances which permit the issuance of a revised Loan Estimate
  • Determine when a revised Loan Estimate must be issued
  • Distinguish when a revised disclosure was issued for informational purposes
  • Explain the timing requirements associated with a valid changed circumstance
  • Develop documentation to support resetting baselines for tolerance testing
  • Importance in documenting the fees impacted as a result of the changed circumstance

Who Should Attend
This webinar is designed for mortgage lenders, loan processors, loan review staff, auditors, and compliance officers.

Instructor Bio
Molly Stull began her banking career on the teller line while working on her undergraduate degree and has continued working in the financial industry ever since. Some of her experience includes roles in operations, business resumption planning, consumer compliance, and conducting audits. Her favorite role is ensuring that her audience, whether on the sports field or in the financial industry, understands the “why” behind the rule. Her wealth of financial knowledge and her numerous years of experience enable her to relate the material to the audience.

Registration Option

  • Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts – $279
  • Available Upgrades:
    • 12 Months OnDemand Playback + $110
    • 12 Months OnDemand Playback + CD  + $140
    • Additional Live Access + $75 per person
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American Mortgage Conference

The Premier Conference for the Mortgage Industry

Hosted by the North Carolina Bankers Association and American Bankers Association, in partnership with WBA and 17 other state associations, the American Mortgage Conference brings together leading experts in the financial services industry, mortgage practitioners of every kind, policy makers and investors to discuss important issues in the mortgage field and to analyze what progress is being made in Washington.

This program will qualify for CRCM credits. Stay tuned for details!

Please visit the conference website for full conference details, travel and hotel lodging information, and to register online.

Registration Information:

The early bird registration of $700/banker attendee will be available through April 3, 2023, after which point regular registration fees of $900/banker attendee will go into effect.

Due to event commitments, registration fees are non-refundable after April 3, 2023.

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HMDA Essentials

Financial institutions have settled into the 2018 HMDA revisions. The world of HMDA has changed in a dramatic fashion. On April 16, 2020, the Consumer Financial Protection Bureau (CFPB) published a final rule amending Regulation C to set the thresholds for reporting data about:

  • Closed-end mortgage loans, so that institutions originating fewer than 25 closed-end mortgage loans in either of the two preceding calendar years will not have to report such data effective July 1, 2020.
  • Open-end lines of credit at 200 open-end lines of credit effective January 1, 2022, upon the expiration of the temporary threshold of 500 open-end lines of credit.

What You’ll Learn

  • A thorough explanation of which institutions are covered by HMDA and Regulation C
  • A review of which loans are and are not reportable
  • Detailed information on how to complete the LAR
  • Information regarding amendments related to the collection of ethnicity, race, and sex of applicants and borrowers
  • Detail on the data submission and public availability requirements

Who Should Attend
The program is designed for loan officers, compliance officers, loan processors and clerks and auditors.

Presenter
Kimberly Boatwright is EVP and Director of Risk and Compliance at Compliance Resource, LLC, and has more than two decades of experience working in the financial services industry. Ms. Boatwright is a well-regarded financial industry risk and compliance professional with a strong background in program development and implementation. She is a thought leader who specializes in Fair Lending, Anti-Money Laundering, OFAC, and consumer compliance. During her career, she has worked for and consulted with all types of financial institutions helping to establish and evolve compliance and risk programs. She is a frequent public speaker, trainer, and author on compliance and risk management topics. Boatwright is a Certified Regulatory Compliance Manager and a Certified Anti-Money Laundering Specialist.

Registration Options

  • Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts – $279
  • Available Upgrades:
    • 12 Months OnDemand Playback + $110
    • 12 Months OnDemand Playback + CD  + $140
    • Additional Live Access + $75 per person
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The Effective Selling System for Banking – A 4 Part Series

It’s a fact — the top 7% of lenders and relationship managers, the very best in banking, follow a consistent process for “selling” and bringing in new relationships. This system helps them to develop strong sales behaviors so that they become masterful at repeatedly prospecting, qualifying, asking engaging and relevant questions and bringing in new relationships.

Included Webinars

  • The Effective Selling System for Banking Part 1: Maximize the Initial Call
  • The Effective Selling System for Banking Part 2: Are They Really a Prospect?
  • The Effective Selling System for Banking Part 3: Gain Clarity & Commitment with Your Prospect
  • The Effective Selling System for Banking Part 4: Present to get a Decision

Series Details

The Effective Selling System for Banking Part 1: Maximize the Initial Call
February 17, 2023, 10:00 am CST
In order to maximize your first meeting with your prospect, you must have a compelling phone call and you must be different from every other banker they have met with. This webinar will teach you an approach to differentiate yourself.

What You’ll Learn

  • To break through with a compelling phone call
  • To best open the meeting and ask a series of strong qualifying questions
  • To uncover if they have compelling reasons to leave their current bank
  • To follow an effective sales system to improve your closing rate and field fewer “think it overs”

The Effective Selling System for Banking Part 2: Are They Really a Prospect?
March 1, 2023, 10:00 am CST
It is your job to find out if your prospect has the capacity to invest their time, money and resources to fix a problem or take advantage of an opportunity. This webinar will help lenders and relationship managers learn the art of knowing the right questions to ask, when to ask them, and how to listen to understand. These are skills that take practice.

What You’ll Learn

  • A series of qualifying questions to uncover if your prospect has the time, money, and resources to make a decision
  • How to uncover if a prospect really qualifies to do business with you and your bank
  • How to follow an effective sales system to improve your closing rate and field fewer “think it overs”

The Effective Selling System for Banking Part 3: Gain Clarity & Commitment with Your Prospect
March 17, 2023, 10:00 am CDT
Ever wonder why you did not get that new relationship when you thought you had done everything you could possibly do? Often, the mistake can be found at the commitment stage. You failed to get clarity on the decision-making process and timeline. This webinar will show you a better way to uncover this with your prospect.

What You’ll Learn

  • An approach to gain clarity on what is agreed to
  • How to get an agreement to make a decision at proposal time
  • How to follow an effective sales system to improve your closing rate and field fewer “think it overs”

The Effective Selling System for Banking Part 4: Present to get a Decision
March 24, 2023, 10:00 am CDT
Making a presentation does not always lead to a sale, but it should if we do the right things on the first, second, and third base of the sales process. This webinar will show you a way to improve the likelihood you will close the business when you get to the presentation table.

What You’ll Learn

  • Understand the specific steps to take in order to close more business as you present your solutions
  • Provide a scorecard to help you determine if you have thoroughly qualified the prospect to do business with you
  • How to follow an effective sales system to improve your closing rate and field fewer “think it overs”

Who Should Attend
Lenders, relationship managers, business bankers, new business development, sales managers, sales leaders, trainers.

Presenter
Dan Fischer, sales development expert, has 28 years of financial sales and sales management experience working in the banking and insurance industries. During that time, he has developed a life-long passion for coaching along with an understanding of how to motivate salespeople. Using all the many tools and techniques from his past experience, Fischer is focused on helping salespeople and sales leaders become top quartile in their efforts. When he is not at work, Fischer can usually be found with his wife of 33 years and family. Fischer’s “Why” gets him up every morning… “to inspire, motivate and have a positive impact on people through my passion to help them achieve beyond what they imagined.”

For 27 years, Anthony Cole Training Group has been helping banks and other financial service organizations close their sales opportunity gap by helping them sell better, coach better and hire better. Our Mission: Grow People, Grow Organizations.

Registration Option

  • Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts – $695
  • Available Upgrades:
    • 12 Months OnDemand Playback + $280
    • 12 Months OnDemand Playback + CD  + $400
    • Additional Live Access + $200 per person
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Construction Loans: Nailing the Details

Residential construction lending has so many facets and so many requirements that need to be considered…from safety & soundness guidelines to compliance requirements and with any project we must be ready for unexpected challenges. This webinar will explain the requirements so that you will be ready to nail the details for any residential construction loan request!

This session will cover underwriting issues, compliance requirements, and the special documentation needed for residential construction lending from start to finish, including best practices for managing draw requests! In addition, sample policy language, checklists, and other tools will be offered and discussed.

What You’ll Learn

  • Underwriting considerations (maturities, advances, LTV issues, appraisal guidelines, etc.)
  • Construction contract/agreement with the borrower
  • Explanation of construction loan documentation
  • How to use Appendix D to estimate your disclosures
  • TRID requirements for various scenarios – single close/multiple close; single disclosures/multiple disclosures
  • Appraisal considerations including best practices for inspections
  • Flood FAQs relating to construction loans
  • How to control the disbursement of funds
  • Preparing the borrower for the escrow shock
  • Toolkit Includes:
    • Inspection Report
    • Construction Draw Schedule
    • Construction Loan Checklist
    • Sample Loan Estimate and Closing Disclosure completed for various scenarios
    • Flood Calculation Worksheet

Who Should Attend
This webinar will be of value to anyone involved in the administration of residential construction loans including Lenders, Loan Processors, Compliance Officers, and Auditors.

Instructor Bio
Molly Stull began her banking career on the teller line while working on her undergraduate degree and has continued working in the financial industry ever since. Some of her experience includes roles in operations, business resumption planning, consumer compliance, and conducting audits. Her favorite role is ensuring that her audience, whether on the sports field or in the financial industry, understands the “why” behind the rule. Her wealth of financial knowledge and her numerous years of experience enable her to relate the material to the audience.

Registration Option

  • Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts – $279
  • Available Upgrades:
    • 12 Months OnDemand Playback + $110
    • 12 Months OnDemand Playback + CD  + $140
    • Additional Live Access + $75 per person
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GSB – Digital Banking School

Banking continues to evolve — and as consumer preferences have moved from lobby to service multi-channel, multi-touch interactions, the demand for digital banking services has grown exponentially.

This shift — plus pressure from new and non-traditional competitors for all types of financial services — has led to an entirely new banking landscape. To remain competitive today — and viable tomorrow — community banks need to devote attention, staffing and financial resources to innovation, digital product mix, online customer engagement, technological advances, vendor partnerships and more.

GSB’s Digital Banking School is the first school of its kind — focused exclusively on demystifying these sometimes-intimidating topics — to help community banks move into and/or grow in the digital banking space.

This immersive experience will showcase the key elements of a bank’s effective digital strategy and will be led by industry thought leaders who are experts in digital banking and innovation.

What You’ll Gain

  • Defining the Game
  • Get off the Sidelines — Why Digital Banking?
  • Which Version Do You Want to Play?
  • Create Your Team — The People Factor in Digital Banking
  • What Equipment Do You Need?
  • Building the Foundation to Help You Achieve Digital Banking Success
  • Promoting Your Digital Bank and Building Your Brand
  • Technology & Risk: Cybersecurity Challenges

Who Should Attend

Given the scope of all that’s involved in digital banking, we encourage broad participation across all various areas of the bank — and that’s why we’ve priced this school with a single, affordable per-bank fee. We encourage community bank CEOs to attend, along with leadership teams from operations, retail strategy, lending, business development, marketing, technology, project management, cybersecurity and compliance. All will benefit from the program and be better positioned to make the important shifts that drive digital banking success.

When: April 3–27, 2023

Program Fee: $3,300/bank

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Fair Lending Essentials

Discrimination can be obvious, subtle, or unintended. Charges of discrimination can come from any direction. Risk comes in the form of penalties, regulatory enforcement actions, civil liability, or damage to a bank’s reputation, to mention a few. The best defense against these threats and risks is developing and maintaining a sound, fair lending compliance management system.

Over the years, Fair Lending violations have led to consent decrees that include: significant civil monetary penalties, reimbursement to borrowers, and burdensome remedial action to prevent further violations

What You’ll Learn

  • Basic fair lending concepts
    • Laws and regulations
    • Bases of discrimination
    • Types of discrimination
  • How to build and maintain a fair lending compliance management system, including policies and procedures
  • How to conduct a fair lending risk assessment
    • Evaluating inherent and residual risk
      • For various loan products (commercial, real estate, consumer, etc.)
      • For various aspects of the process (application, underwriting, pricing, advertising, collection)
    • Rating risk
  • How to mitigate fair lending risk
    • Reviewing policies and procedures for fair lending problems and eliminating those concerns
    • Training – Who, How, When, and What
    • Monitoring/Auditing
      • Exceptions
      • HMDA data
      • Pricing
      • Marketing/Advertising

Who Should Attend

The program is designed for the Board of Directors, senior management, loan department management, compliance officers, loan officers, marketing officers, auditors, and others with responsibilities related to the marketing, origination, and servicing of loans.

Presenter
Kimberly Boatwright is EVP and Director of Risk and Compliance at Compliance Resource, LLC, and has more than two decades of experience working in the financial services industry. Ms. Boatwright is a well-regarded financial industry risk and compliance professional with a strong background in program development and implementation. She is a thought leader who specializes in Fair Lending, Anti-Money Laundering, OFAC, and consumer compliance. During her career, she has worked for and consulted with all types of financial institutions helping to establish and evolve compliance and risk programs. She is a frequent public speaker, trainer, and author on compliance and risk management topics. Kimberly is a Certified Regulatory Compliance Manager and a Certified Anti-Money Laundering Specialist.

Registration Options

Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts $279

  • Available Upgrades:
    • 12 Months OnDemand Playback + $110
    • 12 Months OnDemand Playback + Digital Download +$140
    • 12 Months OnDemand Playback + CD + $140
    • Additional Live Access + $75 per person
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Lending Hot Topics

Rules and regulations specific to lending tend to change on a pretty regular basis, and 2022 was no exception. Join Regulatory Compliance Counsel Michael Christians for this 90-minute session that will focus both on changes that occurred in 2022 as well as changes scheduled to occur in 2023.

What You’ll Learn

  • Changes to the General Definition of a Qualified Mortgage
  • Changes to the Home Mortgage Disclosure Act
  • The Transition Away from the LIBOR Index
  • Revised Regulation Z Thresholds for 2023
  • The Supplemental Customer Information Form
  • And much more!

Who Should Attend
Anyone involved in the lending process would benefit from the information covered during this session, including loan officers, loan processors, and lending department management. In addition, compliance professionals and internal audit staff are also encouraged to attend.

Instructor Bio
As principal of Michael Christians Consulting, LLC, Michael Christians assists financial institutions and organizations across the country with ensuring their compliance programs conform to Federal laws and regulations. He provides counsel relative to current rules, assists with the strategic implementation of upcoming regulatory changes and offers customized education and training services. Michael has more than two decades of experience in the financial services industry with a primary focus on consumer compliance. He obtained his Juris Doctorate from Drake University Law School. He is a member of the Iowa State Bar where he is licensed to practice law.

Registration Options

Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts $279

  • Available Upgrades:
    • 12 Months OnDemand Playback + $110
    • 12 Months OnDemand Playback + Digital Download + $140
    • 12 Months OnDemand Playback + CD + $140
    • Additional Live Access + $75 per person
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Mortgage Lending Compliance Overview

The mortgage lending process is a complicated web of rules, disclosures, timeframes, appraisals, contracts, and more. Each strand is intricately woven together with the others. Can you successfully navigate the compliance complexities or will you hit a snag?

After This Webinar You’ll Be Able To:

  • Understand the requirements for adverse action notices
  • Define “finance charge” and understand how it affects the loan’s APR
  • Explain the three-day right of rescission and know when it applies and how it is calculated
  • Distinguish between services the borrower can shop for and the lender selects
  • Recognize when an affiliated business disclosure must be provided
  • Describe what constitutes a valid change of circumstance

Webinar Details
From application through closing, a variety of laws, rules, and regulations apply to the mortgage lending process. This webinar will cover it all, including fair lending, advance disclosure timing requirements, gathering government monitoring information, appraisal requirements, handling changes, and knowing when revising disclosures is permissible and when it is not. This webinar will touch on all the important issues regarding the generation of first and subordinate lien loans and home equity lines of credit (HELOC).

Who Should Attend?
This informative session is designed for mortgage loan officers, processors, originators, employees responsible for HELOCs, compliance staff, and audit professionals.

Take-Away Toolkit

  • Fair lending model policy
  • Finance charge chart
  • Adverse action table
  • Links to internet resources
  • Employee training log
  • Interactive quiz
  • PDF of slides and speaker’s contact info for follow-up questions
  • Attendance certificate provided to self-report CE credits

NOTE: All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your agency is prohibited. Print materials may be copied for eligible participants only.

Presenter

Mary-Lou Heighes – Compliance Plus, Inc.

Mary-Lou Heighes is president and founder of Compliance Plus, Inc., which has assisted financial institutions with the development of compliance programs since 2000. She provides compliance training for trade associations and financial institutions. Heighes has been an instructor at regulatory compliance schools, conducts dozens of webinars, and speaks at numerous conferences throughout the country.

Involved with financial institutions since 1989, Heighes has over 25 years’ compliance experience. Before starting Compliance Plus in 2000, she spent five years working as a loan officer, marketer, and collector. She also worked at a state trade association for seven years providing compliance assistance and advising on state and federal legislative issues that affect financial institutions.

Registration Options

  • $245 – Live Webinar Access
  • $245 – OnDemand Access + Digital Download
  • $350 – Both Live & On-Demand Access + Digital Download
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608-441-1200

4721 S Biltmore Ln.
Madison, WI 53718

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