Real Estate Settlement Procedures Act (RESPA) Review PDF

 Date Completed Notice to Borrower of Transfer of Mortgage Servicing 1. Determine whether the credit union has transferred or received mortgage servicing rights. 2....

 Date Completed Notice to Borrower of Transfer of Mortgage Servicing 1. Determine whether the credit union has transferred or received mortgage servicing rights. 2. If it has transferred servicing rights, determine whether notice to the borrower was given at least 15 days prior to the transfer. 3. If it has received servicing rights, determine whether notice was given to the borrower within 15 days after the transfer. 4. Determine whether the notice by transferor and transferee includes the following information: The effective date of the transfer The name, consumer inquiry addresses, and a toll free or collect call telephone number for an employee or department of the servicing transferee servicer A toll-free or collect call telephone number for an employee or department of the transferor servicer that can be contacted by the borrower for answers to servicing transfer inquiries The date on which the present servicer will cease accepting payments and the date the new servicer will begin accepting payments relating to the transferred loan Any information concerning the effect of the transfer on the availability of terms of optional insurance and any action the borrower must take to maintain coverage A statement that the transfer does not affect the terms or conditions of the mortgage, other than terms directly related to its servicing A statement of the borrowers rights in connection with complaint resolution Responsibilities of Servicer 1. Through a review of late notices or otherwise, if is the transferor servicer received payment, determine that no late fees have been imposed and that no payments have been treated as late within 60 days following a transfer or servicing.  Date Completed 2. Determine that the credit union, as loan servicer for mortgage loans and refinancings subject to RESPA, responds to borrower inquiries relating to these loans as prescribed in the regulation, including: Provide the notice of receipt of inquiry for qualified written correspondence from borrowers within 20-business days (unless the action requested is taken within that period and the borrower is notified in writing of that action). Provide written notification of the corrections taken on the account, or statement of the reasons the account is correct or explanation of why the information requested is unavailable no later than 60-business days after receipt of the qualified written correspondence from the borrower. Determine that the credit union does not provide information to any consumer reporting agency regarding overdue payment when investigating a qualified written request from borrower regarding disputed payments during this 60-business day period. No Fees for RESPA Disclosures 1. Determine whether the credit union charges a fee specifically for preparing and distributing the HUD-1 forms, escrow statements or documents required under the Truth in Lending Act. Purchase of Title Insurance 1. If the credit union owns the property being sold determine whether it requires or gives the impression that title insurance is required from a particular company. Payment or Receipt of Referral or Unearned Fees 1. Determine if management is aware of the prohibitions against payment or receipt of kickbacks and unearned fees. 2. Through interviews with credit union management and personnel, file reviews, review of GFE, and HUD-1 and HUD-1A, determine if federally related mortgage loan transactions are referred by brokers, affiliates, or other parties. Identify those parties. Also, identify persons or entities to which the credit union refers services in connection with a federally related mortgage transaction. Identify the types of services rendered by the broker, affiliate or service provider; By review of the credit union’s general ledger or otherwise, determine if fees were paid to the credit union or any parties identified.  Date Completed Confirm that any fees paid to the broker, affiliate, service provider, or other party, meet the regulatory requirements and are for goods or facilities actually furnished or services actually performed. This includes payments to an affiliate or the affiliate’s employees. Affiliated Business Arrangements 1. Determine from the HUD-I or HUD-I A and from interviews with credit union management if an affiliated business arrangement exists between a referring party and any provider of settlement services. If so, determine which providers the lender requires and that the Affiliated Business Arrangement disclosures statement was provided as required. 2. Other than an attorney, credit reporting agency, or appraiser representing the lender, determine if the use of a provider was required. Escrow Accounts If the credit union maintains escrow accounts in connection with a federally related mortgage loan, complete the following procedures. 1. Determine whether the credit union performed an initial escrow analysis and provided the initial escrow statement required. The statement must contain the following: Amount of monthly payment Portion of the monthly payment being placed in escrow Charges to be paid from the escrow account during the first 12 months Disbursement dates Amount of cushion 2. Determine if the statement was given to the borrower at settlement or within 45 days after the escrow account was established. This statement may be incorporated into the HUD-l statement. 3. Determine whether the credit union performs an annual analysis of the escrow account. 4. Determine whether the annual escrow account statement is provided to the borrower within 30 days of the end of the computation year. 5. Determine if the annual escrow statement contains the following: Amount of monthly mortgage payment and portion that was placed in escrow Amount of past year’s monthly mortgage payment and portion that went into escrow  Date Completed Total amount paid into escrow during the past computation year Total amount paid out of escrow account during same period for taxes, insurance, and other charges Balance in the escrow account at the end of the period How a surplus, shortage, or deficiency is to be paid/handled If applicable, the reason why estimated low monthly balance was not reached 6. Determine whether monthly escrow payments following settlement are within the limits of the regulations. Date Completed Regulation X—Qualified Written Request for Information or Notice of Error (12 CFR 1024.35 and 12 CFR 1024.36) 1 Does the credit union have procedures to respond to a. qualified written request or notice of error from the borrower? (Select a sample of errors received during the review period or read policies and procedures and interview staff about the procedures if no qualified written requests for information or notices of error were received.) 1 If the property is in foreclosure, does the credit a union respond before the foreclosure date?. 1 If the error reported was in reference to a payoff b amount of the loan, did the credit union respond. within 7 days? 1 If the request for information was for the owner or c servicer of the loan, did the credit union respond. within 10 business days?  Date Completed 2 Does the credit union conduct an investigation within. 30 or 45 business days of the request? Note: The investigation periods for both a reported error or request for information may be extended to 45 business days only if the credit union notified the borrower about the reason for the extension. 3 Does the credit union have procedures to make. appropriate corrections in the account of the borrower, including the crediting of any late charges or penalties, and transmit to the borrower a written notification of the correction? 4 After conducting an investigation, does the credit. union provide the borrower with a written explanation or clarification, which must include: To the extent applicable, a statement of the servicer’s reasons for concluding that the account is correct and the name and telephone number of an employee, office, or department of the servicer that can provide assistance to the borrower? o r Information requested by the borrower or an explanation of why the information requested is unavailable or cannot be obtained by the servicer, and the name and telephone number of an employee, office, or department of the servicer that can provide assistance to the borrower? 5 Does the credit union, during the 60-business-day. period beginning on the date the servicer receives a qualified written request from a borrower relating to a dispute on the borrower’s payments, refrain from providing adverse information regarding any payment that is the subject of the qualified written request to any consumer reporting agency? Regulation X—Escrow Statements (12 CFR 1024.17) 1 Select a sample of loans with escrow accounts and. conduct the following inquiries: Did the member receive a properly completed annual escrow account statement within 30 days of the end of the computation year? Did the escrow account statement contain: — Amount of current monthly payment and portion of the monthly payment being placed into the escrow account? — Amount of the past year’s monthly mortgage payment and the portion of the monthly payment that went into the escrow account? — Total amount paid into escrow for the 12-month  Date Completed period? — Total amount paid for taxes, insurance, and other charges? — Balance in the escrow account at the end of the period? — An explanation of how any surplus is being handled by the servicer? — An explanation of how any shortage is to be paid by the borrower? — If applicable, why the estimated low monthly balance was not reached? 2 Did the credit union use the aggregate accounting. method to determine escrow limits? 3 Is the escrow cushion no greater than that allowed by. 12 CFR 1024.17(c)(5)? 4 If the credit union is the servicer of the loan, did. it change the monthly payment amount or the accounting method of the escrow account? 5 Did the credit union provide to the member an initial. escrow account statement within 60 days of the transfer of servicing? 6 Were the payments made promptly from the escrow. account? 7 Does the credit union have procedures to ensure that. surpluses are returned to the member within 30 days of the analysis if over $50? 8 Does the credit union have procedures to ensure that. shortages and deficiencies are collected in accordance with 12 CFR 1024.17(f)? 9 Does the credit union have procedures to ensure that. short-year statements are mailed according to 12 CFR 1024.17(i)(4)? Note: The credit union should have procedures to issue short-year statements when loans pay off, servicing transfers, or the credit union changes its escrow year. 1 Does the credit union have procedures to refund escrow 0 amounts remaining after a loan payoff within 20 days?. Note: The credit union may transfer the escrow funds in a refinance to the new escrow account if the loan originator or servicer is the same. Regulation X—Force-Placed Hazard Insurance (12 CFR 1024.37(k)(5)) 1 Does the credit union have procedures not to force. place hazard insurance on a mortgage loan unless it has a reasonable basis to believe that the borrower  Date Completed has failed to comply with the mortgage loan contract’s requirement to maintain hazard insurance? 2 Does the credit union have procedures not to charge a. fee for force-placed hazard insurance unless it: Delivered to the borrower a written notice with the disclosures and notice required by Regulation X at least 45 days before the fee or premium is charged? Did not receive verification that the borrower has hazard insurance in place continuously during that 45 day period? 3 Do the notices and disclosures provided by the credit. union comply with the requirements of the regulation, and are they in a format that is substantially similar to the appropriate model form in Appendix MS-3 of Regulation X? 4 Does the credit union send the first notice as soon as. it determines that hazard insurance has lapsed and another notice in 30 days? 5 If a borrower provides proof of hazard insurance. coverage, does the credit union cancel any force-placed insurance policy and refund within 15 days any premiums paid for periods in which the borrower’s policy was in place? 6 Does the credit union have procedures to continue the. borrower’s hazard insurance payments from the borrower’s escrow account, even if there is insufficient money in the escrow account? Note: Small servicers, as defined in 12 CFR 1026.41(e), may purchase force-placed insurance and charge the cost of that insurance to the borrower if the cost to the borrower of the force-placed insurance is less than the amount the small servicer would need to disburse from the borrower’s escrow account to ensure that the borrower’s hazard insurance premium charges were paid in a timely manner. However, the servicer must follow the notice procedures noted above. A schedule of all transactions credited or debited to the mortgage loan account, including any escrow account as defined in 12 CFR 1024.17(b) and any suspense account A copy of the security instrument that establishes the lien securing the mortgage loan Any notes created by servicer personnel reflecting communications with the borrower about the mortgage loan account To the extent applicable, a report of the data fields relating to the borrower’s mortgage loan account created by the servicer’s electronic  Date Completed systems in connection with servicing practices Copies of any information or documents provided by the borrower to the servicer in accordance with the procedures set forth in 12 CFR 1024.35 or 12 CFR 1024.41 7 Does the credit union keep records of actions taken by. mortgage servicing staff in relation to each mortgage loan for one year after the loan is paid off or servicing is transferred? Regulation X—Early Intervention for Delinquent Borrowers (12 CFR 1024.39) See Exhibit 13.12 containing the CFPB’s Factsheet on Delinquency for more detailed information about when the borrower is delinquent (new definition in Regulation X effective October 19, 2017). Note: The following requirements do not apply to credit unions that qualify as small servicers under 12 CFR 1026.41(e). 1 Does the credit union make a good faith effort to. establish live contact with a delinquent borrower not later than the 36th day of the borrower’s delinquency and, promptly after establishing live contact, inform such borrower about the availability of loss mitigation options if appropriate? Note: Under the mortgage servicing rule, you are partially exempt from certain provisions of the early intervention rules with respect to a mortgage loan when any borrower on that loan is a debtor in bankruptcy or invokes the Fair Debt Collection Practices Act’s (FDCPA’s) cease communication protections. You are exempt from the live contact early intervention requirements on a mortgage loan when either of the following conditions are met: (1) any borrower on the loan is a debtor in bankruptcy; or (2) you are a debt collector under the FDCPA with respect to the mortgage loan, and any borrower on the loan has invoked the FDCPA’s cease communication protection with respect to that loan. (12 CFR 1024.39(c), 12 CFR 1024.39(d)) 2 Does the credit union provide the delinquent borrower. with a written notice with the information stated in the regulation at 12 CFR 1024.39(b)(2)? Note: The credit union may use model clauses in Appendix MS of the regulation to comply with the notice requirements. Regulation X—Continuity of Contact (12 CFR 1024.40) 1 Does the credit union assign personnel to a delinquent. borrower by the time the servicer provides the borrower with the written notice noted above but in any event, not later than the 45th day of the  Date Completed borrower’s delinquency? 2 Does the credit union make available to a delinquent. borrower, via telephone, personnel assigned to the borrower to respond to the borrower’s inquiries and, as applicable, assist the borrower with available loss mitigation options until the borrower has made, without incurring a late charge, two consecutive mortgage payments in accordance with the terms of a permanent loss mitigation agreement? 3 If a borrower contacts the personnel assigned to the. borrower and does not immediately reach the employee, does the credit union have procedures in place to ensure that an employee responds to the borrower in a timely manner? Note: The credit union should have procedures for situations in which credit union personnel cannot reach the borrower or when the borrower is unresponsive. (See CFPB guidance on mortgage servicing rules issued on October 15, 2013 at http://www.consumerfinance.gov/guidance/.) 4 Does the servicing personnel assigned to a delinquent. borrower perform the following functions: Provide the borrower with accurate information about: — Loss mitigation options available to the borrower from the owner or assignee of the borrower’s mortgage loan? — Actions the borrower must take to be evaluated for such loss mitigation options, including actions the borrower must take to submit a complete loss mitigation application, and, if applicable, actions the borrower must take to appeal the servicer’s determination to deny a borrower’s loss mitigation application for any trial or permanent loan modification program offered by the servicer? — The status of any loss mitigation application that the borrower has submitted to the servicer? — The circumstances under which the servicer may make a referral to foreclosure? — Applicable loss mitigation deadlines established by an owner or assignee of the borrower’s mortgage loan or the regulation? Retrieve, in a timely manner: — A complete record of the borrower’s payment history? — All written information the borrower has provided to the servicer and, if applicable, to prior servicers in connection with a loss  Date Completed mitigation application? Provide the required documents and information to other persons required to evaluate a borrower for loss mitigation options made available by the servicer, if applicable? Provide a delinquent borrower with information about the procedures for submitting a notice of or an information request? Regulation X—Loss Mitigation Procedures (12 CFR 1024.41) The following requirements apply only if the credit union does not qualify as a small servicer under 12 CFR 1026.41(e) AND it offers loss mitigation programs. Note: Although not subject to loss mitigation procedures, a small servicer must not make the first notice or filing required by applicable law for any judicial or nonjudicial foreclosure process unless a borrower’s mortgage loan obligation is more than 120 days delinquent. Further, a small servicer must not make the first notice or filing required by applicable law for any judicial or nonjudicial foreclosure process and will not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, if a borrower is performing pursuant to the terms of an agreement on a loss mitigation option. 1 Does the credit union offer loss mitigation programs?. If not, skip this section. 2 Does the credit union have specific procedures for. information that must be included in a completed loss mitigation application? 3 Does the credit have procedures to review loss. mitigation applications in accordance with Regulation X? 4 If a loss mitigation application is incomplete, does. the credit union send a proper notice and disclose both the reason the application is incomplete and the timeframe within which the member must provide the missing information? 5 If a borrower’s complete loss mitigation application. was denied for any trial or permanent loan modification option available to the borrower, did the credit union send a notice to the borrower? 6 Did the denial notice state:. The specific reasons for the servicer’s determination for each such trial or permanent loan modification option? If applicable, that the borrower may appeal the servicer’s determination for any such trial or permanent loan modification option, the deadline  Date Completed for the borrower to make an appeal, and any requirements for making an appeal? 7 Was the appeal allowed within 14 days after the credit. union provided the offer of the loss mitigation option? 8 Was the appeal application reviewed by different. employees than those who originally reviewed the loss mitigation application? 9 Does the credit union require that a borrower accept. or reject an offer of a loss mitigation option after an appeal no earlier than 14 days after the credit union provided the notice? 1 Does the credit union have procedures to ensure that 0 it does not make the first notice or filing required. by applicable law for any judicial or nonjudicial foreclosure process unless: A borrower’s mortgage loan obligation is more than 120 days delinquent? The foreclosure is based on a borrower’s violation of a due-on-sale clause? or The servicer is joining the foreclosure action of a subordinate lienholder? Note: Effective October 19, 2017, this item will read: The servicer is joining the foreclosure action of a superior or subordinate lienholder? 1 If a borrower submits a complete loss mitigation 1 application during the preforeclosure review or before. the credit union has made the first notice or filing required by applicable law for any judicial or nonjudicial foreclosure process, does it not make the first notice or filing required by applicable law for any judicial or nonjudicial foreclosure process, except under certain circumstances allowed by the regulation? 1 If a borrower submits a complete loss mitigation 2 application after the credit union has made the first. notice or filing required by applicable law for any judicial or nonjudicial foreclosure process but more than 37 days before a foreclosure sale, does it not move for foreclosure judgment or order of sale, or conduct a foreclosure sale, except under certain circumstances allowed by the regulation? 1 Does the credit union have procedures to meet the loss 3 mitigation requirements more than once in the life of. a loan for borrowers who become current on payments at any time between the borrower’s prior complete loss mitigation application and a subsequent loss mitigation application? (Effective October 19, 2017) Policies and Procedures for Successors in Interest  Date Completed Under Regulation X, a person is a successor in interest if a borrower transfers an ownership interest in a property securing a mortgage loan to the person by means of one of the five categories of transfers listed below: 1 A transfer by devise, descent, or operation of law on. the death of a joint tenant or tenant by the entirety; 2 A transfer to a relative resulting from the death of a. borrower; 3 A transfer where the spouse or children of the. borrower become an owner of the property; 4 A transfer resulting from a decree of a dissolution of. marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; or 5 A transfer into an inter vivos trust in which the. borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property. 6 Does the credit union have policies and procedures to. confirm a potential successor in interest’s identity and ownership interest when notified? For example, the credit union may be notified of the existence of a potential successor in interest when: You receive notice that a transfer of ownership or of an ownership interest in the property has taken place; A person notifies you that a borrower has been divorced, legally separated, or died; or A person other than a borrower submits a loss mitigation application. 7 Do the procedures ensure that the credit union can:. Promptly facilitate communication with any potential successors in interest regarding the property upon receiving notice of the death of a borrower or of any transfer of the property securing a mortgage loan? Promptly determine what documents the servicer reasonably requires to confirm the person’s identity and ownership interest in the property, and promptly provide a description of those documents to the person and how the person may submit a written request for a description of the documents required for confirmation (including the appropriate address)? Upon the receipt of such documents, promptly make a confirmation determination and notify the person  Date Completed that the servicer has: — Confirmed the person’s status? — Determined that additional documents are required (and what those documents are)? or — Determined that the person is not a successor in interest?