If a borrower doesn’t qualify for a loan under the ATR rule, can we rely on a guarantor’s income?
No, you may not use a guarantor’s income to qualify a loan under the ATR rule. Under the ATR rule, you have to consider the “borrower’s” ability to repay a loan(12 CFR 1026.43), and the guarantor is not considered a borrower under the ATR rules. The creditor can only rely on the borrower’s and any co-borrower’s income and assets to document ATR.
If a mortgage loan is charged off, am I still required to provide the borrower with a Regulation Z escrow closing notice if I close his or her escrow account? The account is just a typical escrow for taxes and insurance and was not set up as the result of the customer’s delinquency.
Yes—a charged-off debt is not extinguished and is still the borrower’s obligation, so in the event you terminate the borrower’s escrow account, you still must send them the escrow closing notice as required by 12 CFR §1026.20(e) of Regulation Z, unless their obligation to pay the loan back was completely extinguished beforehand.
If we run a background check on a potential MLO that we may employ, what would ‘trigger’ us to NOT employ them – in other words, are there specified infractions that would trigger us to not employ them? The SAFE Act seems to be silent on this.
The SAFE act doesn't speak to that - presumably someone failing the background check would be turned down by the NMLSR. Reg Z, however, does prohibit certain people from being loan originators which would prevent someone from being an LO if they were convicted of a felony related to fraud or dishonesty.
12 CFR 1026.36 (f)
ii. Determine on the basis of the information obtained pursuant to paragraph (f)(3)(i) of this section and any other information reasonably available to the loan originator organization, for any individual whom the loan originator organization hired on or after January 1, 2014 (or whom the loan originator organization hired before this date but for whom there were no applicable statutory or regulatory background standards in effect at the time of hire or before January 1, 2014, used to screen the individual) and for any individual regardless of when hired who, based on reliable information known to the loan originator organization, likely does not meet the standards under this paragraph (f)(3)(ii), before the individual acts as a loan originator in a consumer credit transaction secured by a dwelling, that the individual loan originator:
Since the appraisal notice is now on the Loan Estimate, do we still have to provide it for non-TRID loans?
Yes. While providing a Loan Estimate satisfies the appraisal notice requirement, it does not replace the notice. For non-TRID loans, you will still be required to provide the appraisal notice on any loan secured by a first lien on a 1-4 residence.
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