Monday, June 10, 2013

IDS's Response to June Regulations

Now that the Final Rule for the Escrow Requirements under the Truth-in-Lending Act (Reg Z) has become effective, have you run into any issues understanding the changes IDS has undergone in order to respond to this new rule? Well Just to clarify the action our company has taken in regards to this rule, I've decided to include an excerpt from IDS's Implementation Plans:

I.    Implementation Plan for the Final Rule for the Escrow Requirements under the Truth-in-Lending Act (Regulation Z)

Implementation: IDS is implementing a setting/variable that identifies creditors that are exempt from this rule. Exempted creditors are those that meet ALL of the following requirements: (1) during the preceding calendar year, the creditor extended more than 50% of its total covered transactions, secured by a first lien, on properties that are located in counties designated either “rural” or “underserved” by the CFPB; (2) during the preceding calendar year, the creditor and its affiliates together originated 500 or fewer covered transactions, secured by a first lien; (3) as of the end of the preceding calendar year, the creditor had total assets of less than two billion dollars (adjusted yearly); and (4) neither the creditor nor its affiliate maintains an escrow account for any extension of consumer credit secured by real property or a dwelling that the creditor or its affiliate currently services, other than (i) escrow accounts established for first-lien higher-priced mortgage loans on or after April 1, 2010, and before June 1, 2013 or (ii) escrow accounts established after consummation as an accommodation to distressed consumers to assist such consumers in avoiding default or foreclosure.

The anticipated escrow audit will pass if all the exemptions are met and if the transaction does NOT have a “forward financing commitment.”

IDS is making sure that (1) its HPML audit fails on Jumbo Loans only if it breaks the new Jumbo threshold (2.5%) and (2) HELOCs and investment properties are exempt from the HPML Test.

IDS is also making sure that the following transactions do not require escrows: (1) a transaction secured by shares in a cooperative; (2) a transaction to finance the initial construction of a dwelling (construction-only escrows are still required on the permanent financing portion of a construction-perm loan); (3) a temporary or “bridge” loan with a term of twelve months or less; (4) a reverse mortgage; and (5) transactions involving investment properties.

Though this implementation plan has already been, well, implemented, maybe this brings some clarity as to how IDS deals with regulation changes. We will have IDS's full implementation plan document available by July 1, 2013 for clients to view in the message section of the start screen after clients have logged in to their IDS accounts. For any questions or concerns regarding these changes contact the IDS Compliance team at 800-554-1872.  

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