• Multiple signer rules on a loan includes more than borrowers, co-borrowers and joint intent rules. Remember, co-signers are required to be given a notice before they become obligated and a guarantor can be a "co-signer" for Reg. AA.
  • The flood zone designation on an insurance policy must match the flood certification form.
  • When improvements on property are in a Special Flood Hazard area but you believe the improvements are above and out of the flood danger, only FEMA can approve an amendment so that insurance is not required. Neither the builder, the surveyor or the lender can waive insurance.
  • There are two primary types of Letter of Map Changes from FEMA:
    • Letter of Map Amendment (LOMA) - applied for if property is believed to be on a naturally high elevation which is above the 100-year flood plain.
    • Letter of Map Revision (LOMR) - applied for if property is believed to be elevated out of the 100 year flood plain, for example due to fill being brought to the site.
  • "Dragnet" or "cross collateralization" clauses can be helpful to secure a loan, but can trigger other requirements such as rescission and flood verifications.
  • A change in a flood zone designation may change the cost of a borrowers flood policy. The bank needs to ensure that premiums are paid, or be prepared to force-place coverage.
  • CRA outreach programs can be good for the bank. But if they result in a spike of denied minority applicants the bank needs to explain what happened. Fair lending could be negatively impacted.
  • National banks are not required to display an Equal Housing Lender logo on advertisements. But it is a best practice to do so.
  • Disclosures required to be made when an application is delivered, such as a CHARM booklet, have the same timing requirements if an application is delivered electronically, such as on a web site. Mailing it within three business days is not acceptable.
  • Examining agencies have issued many warnings against unsafe or unsound lending practices such as predatory lending. One or more of these may be deemed predatory lending:
    • Making unaffordable loans based on the assets of the borrower rather than on the borrower's ability to repay an obligation;
    • Inducing a borrower to refinance a loan repeatedly in order to charge high points and fees each time the loan is refinanced ("loan flipping"); or
    • Engaging in fraud or deception to conceal the true nature of the loan obligation, or ancillary products, from an unsuspecting or unsophisticated borrower."
  • In 2007 flood penalties were at a three year high, $1,563,398 which averages to $4,283 per day.
  • The six most common flood penalties are:
    1. Adequate insurance not in place at closing
    2. Multiple buildings not insured
    3. Contents not insured
    4. Insurance not maintained for the life of the loan
    5. 45-day notification not provided before force placing insurance
    6. Master or blanket insurance policies not in compliance with rules
  • Documenting joint intent doesn't have to require a written statement from each party.
  • The John Warner National Defense Authorization Act can impact your procedures even if you don't have borrowers in the military service. Dependants are included, and these are defined more as the IRS defines them, than by being spouses, sons or daughters.
  • There are three types of loans covered under JWNDAA, but the definitions can actually make these categories broader than they seem:
    1. Payday loans.
    2. Vehicle title loans.
    3. Tax refund anticipation loans
  • Lenders need to determine, based on the broad definitions, if they make covered loans. If so, you have to identify covered borrowers and disclose as necessary under the JWNDAA rules.
  • Your regulator is charged with auditing for JWNDAA compliance and should ask for your procedures addressing this rule.
  • FCRA/FACTA Red Flags Identity Theft rules are mandatory Nov. 1, 2008. You must have a program in place that is appropriate to the size and complexity of your bank. It must be appropriate to the nature and scope of your activities and it must be flexible.
  • Common HMDA errors include:
    • inaccurate rate spread calculations
    • inaccurate identification of HOEPA-covered loans
    • errors in reporting the lien position of the loan
    • not identifying all non-secured home improvement loans
    • not identifying refinanced business purpose loans secured by the borrower’s dwelling
    • incorrectly classifying some loans as temporary due to focusing on the term instead of the purpose.