Mortgage Servicing

There’s a misconception out there that the mortgage servicing requirements are a “big bank” thing, and that’s not entirely true. While there is a large servicer element to these requirements, small servicers can’t just ignore them altogether. One area where small servicers don’t get an exemption from the requirements is information requests. When you have an information request, there are several timeframes you must abide by.

Click on the video to listen to Jerod explain more.

On July 28th, we hosted a Mortgage Servicing webinar where we get into what both large and small servicers need to know.  If these requirements have you scratching your head, be sure to check it out On Demand.


Have you ever had one of your consumer mortgage customers inquire about information related to the loan that you’re servicing on their behalf? Hi there. This is Jerod Moyer with Banker’s Compliance Consulting. The answer is probably yes. Right? Of course you have. The question then is, all right, how did they go about it? Did they just drop by and ask you for this, or that, or the other thing, or did they pick up the phone and just call you. If it’s a request for information that falls within those buckets, then you probably just revert to plain, old, everyday customer service in how you handle that information request.

However, if they actually pick up their pen and they put it to paper or they type it out and submit it formally … What do I mean by that? Giving you their name, the account information, and then the information that they’re actually seeking out. Well, that’s going to fall under regulatory requirements. In other words, you’re going to have I’s to dot and T’s to cross if it’s formally submitted. What’s that mean? Well, what it means is you have to respond by acknowledging that you’ve simply received the request for information within five days. You have 10 days to acknowledge and respond with the request if it’s related to contact information, and then everything else kind of has this 30 day element tied to it.

Here’s the deal. There’s a misconception out there that mortgage servicing is a big bank thing, and it’s just not entirely true. Yeah, there’s a large servicer element to this. In other words, some small servicers get out of some parts of mortgage servicing. Information requests is not an area where there is a small servicer exemption. So, everybody that is a financial institution that services mortgage loans has to comply with this five, 10, 30 day timeframe that I referred to in this short, little video here today.

Mortgage serving is just one of the compliance topics that we have training on within our library at I’d invite you and your teams to check out the other compliance topics that we cover, or better yet, pick up the phone and give us a call. We can chat with one another and figure out how we may be able to partner with you to meet the challenges that you face as it relates to the regulatory compliance requirements. Let’s have a discussion.


Overdraft Compliance

Be sure to JOIN US on July 30, 2020, for our webinar, “Overdrafts”. 

What regulations come into play when you’re dealing with overdraft compliance?  The Truth in Savings Act (Regulation DD) and The Electronic Funds Transfer Act (Regulation E), are the most obvious players but they aren’t all you need to consider.  The Truth in Lending Act (Regulation Z), Equal Credit Opportunity Act (Regulation B) and a little thing called UDAAP (Unfair, Deceptive or Abusive Acts or Practices) all potentially have some skin in the game. 

Click on the video to listen to Jerod explain more.


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Proposed Flood Insurance Q & A

Be sure to JOIN US on August 4, 2020, for our webinar, “New Flood Insurance Q & A Proposal”. 

In case you missed it, the Federal Reserve, Farm Credit Administration, FDIC, NCUA and OCC recently proposed revisions to the Interagency Questions and Answers Regarding Flood Insurance.  In addition to reorganizing the Q&As and making changes to provide more clarity on some existing topics, new Q&As were added to address escrows, the detached structure exemption, and force-placement.  One proposed area of change relates to lender expectations when dealing with flood zone discrepancies between the flood determination and the policy.

Click on the video to listen to Jerod explain more.

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Ready for more training flood training? See it here –

How about a little regulatory relief? Who wouldn’t go for that, right? Hi there, this is Jerod Moyer with Banker’s Compliance Consulting. Today’s relief comes in the form of flood insurance and the frequently asked questions. We currently have a set that’s out there. They recently proposed an updated version of that. Now, what’s that mean for all of us? Well, many of the Q&As will remain mostly unchanged. They’ve added some, and then they made some pretty big revisions to some others.

You need to be aware of these, but today I want to tackle one thing that I thinks pretty cool and that’s where this regulatory relief comes into play. They’re going to relieve some of your burden and we don’t always get that in our industry, but today you’re going to. So there’s a Q&A out there currently that says, “If you have a discrepancy between the flood determination that the bank has obtained and what the insurance industry has come up with or what the borrower thinks it is, you’re supposed to resolve the discrepancy, make that effort.”

And it also goes on to state that “If you don’t do that and there’s this pattern in practice, you could be cited for violations.” And so we’ve all got this practice where we duke it out with the insurance industry, with the borrower to make sure that these policies match these determination forms. Well, one of the proposed Q&As out there and I say proposed, because that’s what it is. But I really think this is probably something they’re already applying in practice. We just haven’t heard a lot about it.

So I think that even before it’s finalized, you might be able to go here. Now, maybe it’s best to check with your regulator, but I don’t think they’d be doing things this way if it wasn’t already something they were applying. So here’s what the new question and answer reveals about flood zone discrepancies. And I think this is super cool. First off, and this is the minor part of it, but you should consider documenting discrepancy. I think that’s a great idea, a great best practice. Make sure you tell the story.

Require the appropriate amount of insurance, that would be the lesser of calculation. And here it comes, here’s the super cool part. You’re no longer required to burden the resolving of the discrepancy. Okay? And that’s a great thing. Document the story and move on. You don’t have to work to get this thing resolved. And better yet, the regulatory agencies are not going to be citing you for violations when flood determination forms don’t match up with your policy declarations page.

Now you may be thinking, “Well, am I going to get the appropriate amount of money relative to the policy if there’s a loss?” Yes, what will have to happen is that the borrower will have to make up the difference in the event that there’s a loss between what they were paying and what the full policy premium should have been for the correct zone. But I think we’ll be able to make that stuff happen in the event that there is one of those type of floods that occur.

So that’s just one of the many Q&As. Make sure you check out the rest of them and get yourself up to speed. If you’ve got feedback, give that to the regulators, but there should be a new set of final Q&As coming down the road. Thanks.


Appraisal Clip E-Sign

Our experts make sure that we teach based upon the current environment. Jerod Moyer taught the Regulations B & Z Appraisal Requirements webinar. He starts out talking about E-Sign. Find the full program here –


Let’s go beyond coverage. Let’s talk a little bit about e-sign, let’s get this out of the way right away. So today we’re going to talk about a disclosure that’s required to leave the bank and go to the customer, as well as a free copy of the appraisal. Those are the two Reg B requirements. We’re also going to talk about Reg Z and they have very much the same thing.

So how does these requirements that we provide a disclosure and that we provide a free copy, how do they intersect with electronic communication? Suffice it to say, we’re probably doing a lot more of that today with this pandemic, because we’re not seeing customers face to face as much as we did in the past. And in fact, as an industry, we’ve been encouraged to communicate electronically more with our customers to help stop the spread of COVID-19 and such.

So where does e-sign come into play? Well, let’s talk a little bit about e-sign first, make sure we all have a general understanding of it. E-sign is a two part process. There is a consent and an acknowledgment. In other words, if I’m your customer and you want to offer me the opportunity to communicate with you electronically, you don’t just get to do that.

You can’t just start communicating with me electronically with regulatory disclosures that are required to leave the bank. What you have to do is get me to consent that, yes, I would in fact, like to communicate with you electronically, one, and two, you have to send me something and I have to acknowledge that I can view the information that you’re communicating to me. And that’s a onetime process. It doesn’t have to happen with each and every disclosure and piece of information that’s exchanged, but it does have to happen the first time.

If you don’t have a consent followed by an acknowledgement done through the e-sign requirements, any communication that happens relative to a disclosure or a document that is supposed to go from the bank to the customer, even though you know it and I know it and the dog knows it, and you get a return receipt from the email, it doesn’t happen in the eyes of the courts. You will lose because it has to be e-sign compliant in order to count when you go to court.

So you want to make sure these disclosures that leave the bank, these free copies that I want to talk about today, they leave the bank and they go down what we call the e-sign compliance channel. If they don’t, or if you’re unsure, go talk to your IT department and find out how you can get e-sign compliant, or you’re just going to have to default to in-person or mailbox communication, which always works, just might delay some things.

So let’s take a closer look at page one, Roman numeral three, if you’ll note that there’s a paragraph there that basically says what I just said, “Today’s requirements are subject to e-sign, however, there’s a carve out. With respect to the appraisal notice,” that I’m going to talk about here in a little bit, so I don’t want to get too much into what it is, but that notice we’re about to talk about, there’s an exception for it.

If the notice is provided in connection with an online application, in other words, if I go to a web page and you’ve got your application there, and this disclosure that we haven’t talked about yet is also there, on an online webpage, then you don’t have to follow e-sign and that’d be letter C at the bottom of page number one, it’s Roman number three. But that exception only applies relative to a webpage where you have an app and the disclosures also placed there.

If we’re talking about applications outside of a webpage, then the notice when you send it, has to be e-sign compliant. You can’t just email it out. Again, you can always drop it in the mail, but you can’t just hit send via email. That’s what this is saying. The free copy, when we get there a little bit later, that always has to be e-sign compliant. You can’t just email it to anyone. It has to go through that consent and acknowledgement process. So that’s e-sign and electronic communication, make sure you’re following the rules there.


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TRID Construction Loan Application Clip

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There’s a couple of different ways construction applications come in. Some of you may simply do construction only. In other words, we’re only going to take requests for credit and process them for the construction financing. We’re going to let some other financial institution do the permanent financing. So, we only take construction loans for the construction phase of the project. We let XYZ Bank down the street, in the next city, in the next town, in the next state, wherever, they do permanent financing. This is our niche, just to do construction. That would be one application for one loan. That’s pretty straightforward.

We go down to the bottom of page letter C, some of you are listing an offer, a little bit of a different production. You do a construction to perm all in one closing. So it’s a construction to perm all in one, one app for one loan. So far, things are pretty consistent whether your letter B, we only do the construction financing, or whether it’s letter C, you do construction and perm, one product, one application, one loan. That’s the takeaway. It’s one app for one loan. It’s a very simple streamlined process.

Many of you listening probably offer a product that goes something like this. You do two phase financing. In other words, I walk in and I say, “I want to build my dream house,” and you process as two different phases. Two different products. I want to be careful with the whole phase/product thing here because some of you who are listening are going, “Well, I do construction to perm all in one. That’s two phases.” Yeah, but it’s one product. One loan. One closing. One application for that one loan, one loan closing, has this built in term where it converts to from construction to permanent financing. One loan, one closing.

Letter D on page number two is different than that what this is, is you have two different loan products: a construction loan product, and when that matures you’re going to convert it or refinance it into a permanent loan product with a new closing and a new maturity date. So, this is where things get a little more complex in the TRID will because they give you some options. What they said is you can turn it into a single app that is for two loans: construction only, followed by permanent financing. Or, you can treat it as two separate applications. Someone who comes and applies for a construction loan, and you do that, and then they apply separately at the same institution for a permanent loan.

There’s three different ways to go about this, I’m going to back up for a moment. We’re going to go to page two, letter D, number one. I wrote next to letter D1, “Path of least resistance.” This is the way I was taught. This is the way when I started working at Bankers Compliance Consulting, and I was able to go out and teach, this is how I taught other bankers. To me, this is the simplest approach. There’s another one, and I’ll come back to it. But when somebody comes into the bank, think about the other side of the desk, the consumer side of this. The consumer walks in and says, “Hey, I want to build my dream home.” “Yeah, we can take care of that. We do that.”

I lay a bunch of stuff down on your desk, and the six items or whatever it is. You’re taking information from me one time for two different loan products. Then you’ll issue me a loan estimate for the construction loan estimate, for the permanent, within three days of getting the sixth item for TRID. There’s no question about what the process is. Somebody wanted to build their dream home. You can help. Here’s the disclosures within the three days of the sixth item for the two different products.

The other alternative option is to have people come in and apply and say, “I want to build my dream home,” and you direct them to the person that takes the construction app. That person only talks construction. They only deal with construction. What you’re going to do is you have a separate process for the permanent financing. When the construction lending person is done, they’ll say, “All right, now you need to go apply for the perm loan. That happens up on the third floor down the street in one of our other offices.” The idea is they wrote this into TRID to allow for procedural flexibility. I still believe the path of least resistance is one app for two loans.

People don’t come in and say, “Oh, I’d like a construction loan. Thank you. I’ll be back in a couple of weeks to talk about permanent financing.” No, people walk in and say, “I want to build my dream home,” and you say, “Yeah, we can help you out. We have two different products. We’ll take your information for both and we’ll process it.” That’s the path of least resistance. I bring that up for this reason, what we want to make sure is that we’re not discouraging people from moving forward with the process. There also can be some issues that crop up if you’re taking two apps for two loans: one for construction, one for permanent. What happens if I sit down and talk construction with somebody and I never move forward with it, and you happen to be HMDA bank?

Now you have to report that construction app because you had no plans for permanent financing, because it never got that far. So, you’ve got to be careful with some of the issues that come up if you take two separate applications as it relates to number two on page number two in your materials.