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Mortgage Servicing and Loan Modifications: 17(e) Effect of Subsequent Events

1. Events causing inaccuracies. Subject to § 1026.19(e) and (f), inaccuracies in disclosures are not violations if attributable to events occurring after the disclosures are made. For example, when the consumer fails to fulfill a prior commitment to keep the collateral insured and the creditor then provides the coverage and charges the consumer for it, such a change does not make the original disclosures inaccurate.

Mortgage Servicing and Loan Modifications: 17(f) Early Disclosures

1. Change in rate or other terms. Redisclosure is required for changes that occur between the time disclosures are made and consummation if the annual percentage rate in the consummated transaction exceeds the limits prescribed in § 1026.17(f) even if the prior disclosures would be considered accurate under the tolerances in § 1026.18(d) or 1026.22(a). To illustrate:

i. Transactions not secured by real property or a cooperative unit.

Mortgage Servicing and Loan Modifications: 17(g) Mail or Telephone Orders—Delay in Disclosures

1. Conditions for use. Except for extensions of credit subject to § 1026.19(a) or (e) and (f), when the creditor receives a mail or telephone request for credit, the creditor may delay making the disclosures until the first payment is due if the following conditions are met:

i. The credit request is initiated without face-to-face or direct telephone solicitation. (Creditors may, however, use the special rule when credit requests are solicited by mail.)

Mortgage Servicing and Loan Modifications: 17(h) Series of Sales—Delay in Disclosures

1. Applicability. Except for extensions of credit covered by § 1026.19(a) or (e) and (f), the creditor may delay the disclosures for individual credit sales in a series of such sales until the first payment is due on the current sale, assuming the two conditions in § 1026.17(h) are met. If those conditions are not met, the general timing rules in § 1026.17(b) apply.

2. Basis of disclosures. Creditors structuring disclosures for a series of sales under § 1026.17(h) may compute the total sale price as either:

Mortgage Servicing and Loan Modifications: 17(i) Interim Student Credit Extensions

1. Definition. Student credit plans involve extensions of credit for education purposes where the repayment amount and schedule are not known at the time credit is advanced. These plans include loans made under any student credit plan, whether government or private, where the repayment period does not begin immediately. (Certain student credit plans that meet this definition are exempt from Regulation Z. See § 1026.3(f).)

Mortgage Servicing and Loan Modifications: 19(a)(1)(i) Time of Disclosures

1. Coverage. Section 1026.19(a) requires early disclosure of credit terms in reverse mortgage transactions subject to § 1026.33 that are secured by a consumer’s dwelling that are also subject to the Real Estate Settlement Procedures Act (RESPA) and its implementing Regulation X. To be covered by § 1026.19(a), a transaction must be a Federally related mortgage loan under RESPA. “Federally related mortgage loan” is defined under RESPA (12 U.S.C. 2602) and Regulation X (12 CFR 1024.2(b)), and is subject to any interpretations by the Bureau.

Mortgage Servicing and Loan Modifications: 19(a)(1)(ii) Imposition of Fees

1. Timing of fees. The consumer must receive the disclosures required by this section before paying or incurring any fee imposed by a creditor or other person in connection with the consumer’s application for a mortgage transaction that is subject to § 1026.19(a)(1)(i), except as provided in § 1026.19(a)(1)(iii). If the creditor delivers the disclosures to the consumer in person, a fee may be imposed anytime after delivery.

Mortgage Servicing and Loan Modifications: 19(a)(1)(iii) Exception to Fee Restriction

1. Requirements. A creditor or other person may impose a fee before the consumer receives the required disclosures if it is for obtaining the consumer’s credit history, such as by purchasing a credit report(s) on the consumer. The fee also must be bona fide and reasonable in amount. For example, a creditor may collect a fee for obtaining a credit report(s) if it is in the creditor’s ordinary course of business to obtain a credit report(s).

Mortgage Servicing and Loan Modifications: 19(a)(3) Consumer’s Waiver of Waiting Period Before Consummation

1. Modification or waiver. A consumer may modify or waive the right to a waiting period required by § 1026.19(a)(2) only after the creditor makes the disclosures required by § 1026.18. The consumer must have a bona fide personal financial emergency that necessitates consummating the credit transaction before the end of the waiting period. Whether these conditions are met is determined by the facts surrounding individual situations.

Mortgage Servicing and Loan Modifications: 19(a)(4) Notice

1. Inclusion in other disclosures. The notice required by § 1026.19(a)(4) must be grouped together with the disclosures required by § 1026.19(a)(1)(i) or § 1026.19(a)(2). See comment 17(a)(1)-2 for a discussion of the rules for segregating disclosures. In other cases, the notice set forth in § 1026.19(a)(4) may be disclosed together with or separately from the disclosures required under § 1026.18. See comment 17(a)(1)-5.xvi.

Mortgage Servicing and Loan Modifications: Section 19(b)-1 through (b)-5

1. Coverage. Section 1026.19(b) applies to all closed-end variable-rate transactions that are secured by the consumer’s principal dwelling and have a term greater than one year. The requirements of this section apply not only to transactions financing the initial acquisition of the consumer’s principal dwelling, but also to any other closed-end variable-rate transaction secured by the principal dwelling.

Mortgage Servicing and Loan Modifications: 19(e)(1)(i) Creditor.

1. Requirements. Section 1026.19(e)(1)(i) requires early disclosure of credit terms in closed-end credit transactions that are secured by real property or a cooperative unit, other than reverse mortgages. These disclosures must be provided in good faith. Except as otherwise provided in § 1026.19(e), a disclosure is in good faith if it is consistent with § 1026.17(c)(2)(i).

Mortgage Servicing and Loan Modifications: 19(e)(1)(ii) Mortgage broker.

1. Mortgage broker responsibilities. Section 1026.19(e)(1)(ii)(A) provides that if a mortgage broker receives a consumer’s application, either the creditor or the mortgage broker must provide the consumer with the disclosures required under § 1026.19(e)(1)(i) in accordance with § 1026.19(e)(1)(iii). Section 1026.19(e)(1)(ii)(A) also provides that if the mortgage broker provides the required disclosures, it must comply with all relevant requirements of § 1026.19(e).

Mortgage Servicing and Loan Modifications: 19(e)(1)(iii) Timing.

1. Timing and use of estimates. The disclosures required by § 1026.19(e)(1)(i) must be delivered not later than three business days after the creditor receives the consumer’s application. For example, if an application is received on Monday, the creditor satisfies this requirement by either hand delivering the disclosures on or before Thursday, or placing them in the mail on or before Thursday, assuming each weekday is a business day.

Mortgage Servicing and Loan Modifications: 19(e)(1)(iv) Receipt of early disclosures.

1. Mail delivery. Section 1026.19(e)(1)(iv) provides that, if any disclosures required under § 1026.19(e)(1)(i) are not provided to the consumer in person, the consumer is considered to have received the disclosures three business days after they are delivered or placed in the mail. The creditor may, alternatively, rely on evidence that the consumer received the disclosures earlier than three business days.

Mortgage Servicing and Loan Modifications: 19(e)(1)(v) Consumer’s waiver of waiting period before consummation.

1. Modification or waiver. A consumer may modify or waive the right to the seven-business-day waiting period required by § 1026.19(e)(1)(iii) only after the creditor makes the disclosures required by § 1026.19(e)(1)(i). The consumer must have a bona fide personal financial emergency that necessitates consummating the credit transaction before the end of the waiting period. Whether these conditions are met is determined by the circumstances of the individual situation.

Mortgage Servicing and Loan Modifications: 19(e)(1)(vi) Shopping for settlement service providers.

1. Permission to shop. Section 1026.19(e)(1)(vi)(A) permits creditors to impose reasonable requirements regarding the qualifications of the provider. For example, the creditor may require that a settlement agent chosen by the consumer must be appropriately licensed in the relevant jurisdiction. In contrast, a creditor does not permit a consumer to shop for purposes of § 1026.19(e)(1)(vi) if the creditor requires the consumer to choose a provider from a list provided by the creditor.

Mortgage Servicing and Loan Modifications: 19(e)(2)(i)(A) Fee restriction.

1. Fees restricted. A creditor or other person may not impose any fee, such as for an application, appraisal, or underwriting, until the consumer has received the disclosures required by § 1026.19(e)(1)(i) and indicated an intent to proceed with the transaction. The only exception to the fee restriction allows the creditor or other person to impose a bona fide and reasonable fee for obtaining a consumer’s credit report, pursuant to § 1026.19(e)(2)(i)(B).

Mortgage Servicing and Loan Modifications: 19(e)(2)(i)(B) Exception to fee restriction.

1. Requirements. A creditor or other person may impose a fee before the consumer receives the required disclosures if the fee is for purchasing a credit report on the consumer. The fee also must be bona fide and reasonable in amount. For example, a creditor or other person may collect a fee for obtaining a credit report if it is in the creditor’s or other person’s ordinary course of business to obtain a credit report.