Rules in March 2024 Release

Federal

ECS has updated the rules under the HOEPA Review to include additional detailed messaging in existing PASS and FAIL status messages with dynamic messaging, while also introducing new PASS, WARNING, and INFO status messages for users who submit Federal High Cost Loans to the HOEPA Review, where applicable.

All Federal High Cost loans receive a FAIL status message under the High Cost Review. Once a loan is flagged as a Federal High Cost loan, the HOEPA Review will apply to the loan, if applicable. ECS has updated the applicability logic for the rules under the HOEPA Review. Prior to this release, the HOEPA Review (and the following prohibited predatory practice rules for Federal High Cost loans) only fired if there was a prepayment penalty.

Pre-Loan Counseling Certification (High Cost)(01/14)

Pre-Loan Counseling Certification (WARNING)(1000403)

A lender cannot extend a High-Cost Mortgage to a consumer unless it receives written certification the consumer obtained counseling on the advisability of the mortgage from an approved counselor. The counseling must occur after the consumer receives either the good faith estimate or the disclosures required by 12 CFR 1026.40. (12 CFR 1026.34(a)(5))

Federal - Section 32 Disclosure Required (High Cost)

Federal High Cost Section 32 Sign Date Does Not Exist(1000039)

This is a Federal High Cost Loan. The loan file contains a Section 32 Sign Date. (12 CFR 1026.31(c) and 1026.32(c))

Federal High Cost Section 32 Sign Date Does Not Exist(1000039)

This is a Federal High Cost Loan. Since the loan file does not contain a Section 32 Sign Date, the System assumes the creditor did not furnish the Federal High Cost Section 32 disclosures at least 3 business days prior to consummation, in violation of Reg Z. (12 CFR 1026.31(c) and 1026.32(c))

Section 32 Sign Date < 3 Business Days before Consummation Date(1000039)

This is a Federal High Cost Loan. The Section 32 Sign Date of (_) is less than 3 business days before the Consummation Date of (_). Under Reg Z, a creditor must furnish the Federal High Cost Section 32 disclosures at least three business days before consummation. Section 32 Disclosures are considered furnished when received by the consumer, which would be documented by the consumer's signature. (12 CFR 1026.31(c) and 1026.32(c))

Section 32 Sign Date After Consummation Date(1000039)

This is a Federal High Cost Loan. The Section 32 Sign Date of (_) is not after the Consummation Date of (_). Under Reg Z, a creditor must furnish the Federal High Cost Section 32 disclosures at least 3 business days before consummation. Section 32 Disclosures are considered furnished when received by the consumer, which would be documented by the consumer's signature. For example, if disclosures were furnished on a Friday, consummation could occur any time on Tuesday, the third business day following receipt of the disclosures. (12 CFR 1026.31(c) and 1026.32(c) and the Official Staff Commentary)

Section 32 Sign Date After Consummation Date(1000039)

This is a Federal High Cost Loan. The Section 32 Sign Date of (_) is after the Consummation Date of (_). Under Reg Z, a creditor must furnish the Federal High Cost Section 32 disclosures at least 3 business days before consummation. Section 32 Disclosures are considered furnished when received by the consumer, which would be documented by the consumer's signature. For example, if disclosures were furnished on a Friday, consummation could occur any time on Tuesday, the third business day following receipt of the disclosures. (12 CFR 1026.31(c) and 1026.32(c) and the Official Staff Commentary)

Section 32 Sign Date >= 3 Business Days before Consummation Date(1000039)

This is a Federal High Cost Loan. The Section 32 Sign Date of (_) is 3 or more business days before the Consummation Date of (_). Under Reg Z, a creditor must furnish the Federal High Cost Section 32 disclosures at least 3 business days before consummation. Section 32 Disclosures are considered furnished when received by the consumer. (12 CFR 1026.31(c) and 1026.32(c))

Section 32 Sign Date Equals Consummation Date(1000039)

This is a Federal High Cost Loan. The Section 32 Sign Date of (_) is not the same day as the Consummation Date of (_). Under Reg Z, a creditor must furnish the Federal High Cost Section 32 disclosures at least 3 business days before consummation. Section 32 Disclosures are considered furnished when received by the consumer, which would be documented by the consumer's signature. For example, if disclosures were furnished on a Friday, consummation could occur any time on Tuesday, the third business day following receipt of the disclosures. (12 CFR 1026.31(c) and 1026.32(c) and the Official Staff Commentary)

Section 32 Sign Date Equals Consummation Date(1000039)

This is a Federal High Cost Loan. The Section 32 Sign Date of (_) is the same day as the Consummation Date of (_). Under Reg Z, a creditor must furnish the Federal High Cost Section 32 disclosures at least 3 business days before consummation. Section 32 Disclosures are considered furnished when received by the consumer, which would be documented by the consumer's signature. For example, if disclosures were furnished on a Friday, consummation could occur any time on Tuesday, the third business day following receipt of the disclosures. (12 CFR 1026.31(c) and 1026.32(c) and the Official Staff Commentary)

Federal - Maximum Late Fee (01/14)

Late Fee May Not Exceed 4% (High Cost)(01/14)(1000395)

You submitted a late fee amount of ($_) and a (_%) Late Fee Percent. In connection with a Federal High-Cost Mortgage any late payment charge must be specifically permitted by the terms of the loan contract or open-end credit agreement and may not exceed 4% of the amount of the payment past due. No such charge may be imposed more than once for a single late payment. (12 CFR 1026.34(a)(8)(i))

Late Fee May Not Exceed 4% (High Cost)(01/14)(1000395)

You submitted a late fee amount of ($_) and a (_%) Late Fee Percent. In connection with a Federal High-Cost Mortgage any late payment charge must be specifically permitted by the terms of the loan contract or open-end credit agreement and may not exceed 4% of the amount of the payment past due. No such charge may be imposed more than once for a single late payment. (12 CFR 1026.34(a)(8)(i))

Federal - Minimum Grace Period (01/14)

Grace Period Must Be 15 Days or More (High Cost)(01/14)(1000396)

The grace period in this transaction is (_) days. In connection with a Federal High-Cost Mortgage a late payment charge may be imposed only if the payment is not received by the end of the 15-day period beginning on the date the payment is due. (12 CFR 1026.34(a)(8)(ii))

Grace Period Must Be 15 Days or More (High Cost)(01/14)(1000396)

The grace period in this transaction is (_) days. In connection with a Federal High-Cost Mortgage a late payment charge may be imposed only if the payment is not received by the end of the 15-day period beginning on the date the payment is due. (12 CFR 1026.34(a)(8)(ii))

Federal - Modification Fee (High Cost)(01/14)

Modification Fee Prohibited in a High-Cost Mortgage(1000400)

The Borrower was not charged a Modification Fee. A lender may not charge a fee to modify, renew, extend, or amend a Federal High-Cost Mortgage, or to defer any payment due under the terms of such mortgage. (12 CFR 1026.34(a)(7))

Modification Fee Prohibited in a High-Cost Mortgage(1000400)

The Borrower was charged a ($_) Modification Fee. A lender may not charge a fee to modify, renew, extend or amend a High-Cost Mortgage, or to defer any payment due under the terms of such mortgage. (12 CFR 1026.34(a)(7))

Federal - Demand Feature (High Cost)(01/14)

High-Cost Mortgage with Demand Feature(1000402)

You designated this High-Cost Mortgage as not having a demand feature. (12 CFR 1026.32(d)(8))

High-Cost Mortgage with Demand Feature(1000402)

You designated this High-Cost Mortgage as having a demand feature. A demand feature that permits the lender to accelerate the indebtedness by terminating the High-Cost Mortgage in advance of the original maturity date and to demand repayment of the entire outstanding balance is not allowed, except in the following circumstances: (1) There is fraud or material misrepresentation by the consumer in connection with transaction; (2) The consumer fails to meet the repayment terms which results in a default in payment; or (3) There is any action or inaction by the consumer that adversely affects the lender's security interest. (12 CFR 1026.32(d)(8))

Federal - Ability to Repay Documentation Type Restriction (HELOC)(High Cost)(01/14)

Full Documentation Required on HELOC (Warning)(High-Cost)(1000404)

You did not supply a Documentation Type on this Federal Open-End High-Cost Mortgage. A lender must determine a borrower's repayment ability, using the borrower's current and expected income, employment, assets other than the collateral, current obligations, and mortgage-related obligations. The methodology and standards set forth in 12 CFR 1026.34(a)(4) should be applied to determine a lender's compliance with this requirement.(12 CFR 1026.32 & 1026.34)

Full Documentation Required on HELOC (High-Cost)(1000404)

You submitted a Documentation Type of (_). In connection with an open end, High-Cost Mortgage, a lender shall not extend credit without regard to the consumer's repayment ability as of account opening, including the consumer's current and reasonably expected income, employment, assets other than the collateral, and current obligations including any mortgage related obligations that are required by another credit obligation undertaken prior to or at account opening, and are secured by the same dwelling that secures the high-cost mortgage. The methodology and standards set forth in 12 CFR 1026.34(a)(4) should be applied to determine a lender's compliance with this requirement. (12 CFR 1026.32; 1026.34)

Full Documentation Required on HELOC (High-Cost)(1000404)

You submitted a Documentation Type of (_). In connection with an open end, High-Cost Mortgage, a lender shall not extend credit without regard to the consumer's repayment ability as of account opening, including the consumer's current and reasonably expected income, employment, assets other than the collateral, and current obligations including any mortgage related obligations that are required by another credit obligation undertaken prior to or at account opening, and are secured by the same dwelling that secures the high-cost mortgage. The methodology and standards set forth in 12 CFR 1026.34(a)(4) should be applied to determine a lender's compliance with this requirement. (12 CFR 1026.32; 1026.34)

Federal - No Financed Points & Fees (High Cost)(01/14)

Financed Points and Fees Not Allowed(1000405)

You submitted a loan with ($_) in financed points and fees. A creditor that extends credit under a High-Cost Mortgage may not finance charges that are required to be included in the calculation of points and fees. (12 CFR 1026.34(a)(10))

Financed Points and Fees Not Allowed(1000405)

You submitted a loan with ($_) in financed points and fees. A creditor that extends credit under a High-Cost Mortgage may not finance charges that are required to be included in the calculation of points and fees. (12 CFR 1026.34(a)(10))

CER-22940

ECS has updated the rules under the TIL-ROR Review and Massachusetts State Review to include WARNING status messages instead of FAIL status messages for users who submit Federal High Cost Loans to the TIL-ROR Review and Massachusetts State Review, where applicable.

In Encompass, certain users do not submit a document signing date (field ID 1887), which serves as the date field ECS utilizes to determine whether a Federal High Cost Section 32 disclosure is provided to the consumer on a Federal High Cost loan. Consequently, ECS will return a WARNING status message in these circumstances.

Federal - Right of Rescission Variance Failure (TILA)

Right of Rescission Variance Failure (TIL)(Last CD Sent/Received)(1000866)

The disclosed "Right to Cancel Expire Date" (_) is earlier than the system calculated "Right to Cancel Expire Date" (_). Under Regulation Z, funds may not be disbursed to the borrower until the expiration of the rescission period. (12 CFR 1026.23(c) and Official Staff Commentary)

Right of Rescission Variance Failure (TILA)(1000866)

The disclosed "Right to Cancel Expire Date" (_) is earlier than the system calculated "Right to Cancel Expire Date" (_). Under Regulation Z, funds may not be disbursed to the borrower until the expiration of the rescission period. (12 CFR 1026.23(c) and Official Staff Commentary)

Federal - Right of Rescission (Loan Disbursement Violation) (TILA)

Right of Rescission (Loan Disbursement Violation)(TIL)(1000867)

The loan disbursement date (_) is earlier than, or the same day as, the calculated "Right to Cancel Expire Date" (_). Under Regulation Z, funds may not be disbursed to the borrower until after the expiration of the rescission period. (12 CFR 1026.23(c) and Official Staff Commentary)

Right of Rescission (Loan Disbursement Violation)(TIL)(Last CD Sent/Received)(1000867)

The loan disbursement date (_) is earlier than, or the same day as, the calculated "Right to Cancel Expire Date" (_). Under Regulation Z, funds may not be disbursed to the borrower until after the expiration of the rescission period. (Reg Z, 12 CFR 1026.23(c) and Official Staff Commentary)

Massachusetts - Right of Rescission Disclosure Variance (10/2015)

Massachusetts Right of Rescission Variance Failure (Last CD Sent/Received)(1000876)

The disclosed "Right to Cancel Expire Date" (_) is earlier than the system calculated "Right to Cancel Expire Date" (_). Under the Massachusetts Truth in Lending Act, funds may not be disbursed to the borrower until the expiration of the rescission period, which is midnight of the third business day following consummation, delivery of the notice required by 209 CMR 32.23(2), or delivery of all material disclosures, whichever occurs last. (M.G.L. c. 140D, 10(a); 209 CMR 32.23; 12 CFR 1026.2(a)(6); 1026.23)

Massachusetts Right of Rescission Variance Failure (10/2015)(1000876)

The disclosed "Right to Cancel Expire Date" (_) is earlier than the system calculated "Right to Cancel Expire Date" (_). Under the Massachusetts Truth in Lending Act, funds may not be disbursed to the borrower until the expiration of the rescission period, which is midnight of the third business day following consummation, delivery of the notice required by 209 CMR 32.23(2), or delivery of all material disclosures, whichever occurs last. (M.G.L. c. 140D, 10(a); 209 CMR 32.23; 12 CFR 1026.2(a)(6); 1026.23)

Massachusetts - Right of Rescission (Loan Disbursement)(10/2015)

Massachusetts Right of Rescission (Loan Disbursement Violation)(1000877)

The loan disbursement date (_) is earlier than, or the same day as, the calculated "Right to Cancel Expire Date" (_). Under the Massachusetts Truth in Lending Act, funds may not be disbursed to the borrower until after the expiration of the rescission period, which is midnight of the third business day following consummation, delivery of the notice required by 209 CMR 32.23(2), or delivery of all material disclosures, whichever occurs last. (M.G.L. c. 140D, 10(a); 209 CMR 32.23; 12 CFR 1026.2(a)(6); 1026.23)

Massachusetts Right of Rescission (Loan Disbursement Violation)(Last CD Sent/Received)(1000877)

The loan disbursement date (_) is earlier than, or the same day as, the calculated "Right to Cancel Expire Date" (_). Under Massachusetts Truth in Lending Act, funds may not be disbursed to the borrower until after the expiration of the rescission period, which is midnight of the third business day following consummation, delivery of the notice required by 209 CMR 32.23(2), or delivery of all material disclosures, whichever occurs last. (M.G.L. c. 140D, 10(a); 209 CMR 32.23; 12 CFR 1026.2(a)(6); 1026.23)

CER-22940

State Rules

ECS has been updated to include additional detailed messaging in the existing FAIL status message with dynamic messaging and a new PASS status message for users who submit a loan in the state of Alaska, where applicable and available.

CER-21987

ECS has been updated to refine the treatment of fees charged to borrowers for loans in compliance with Section 3:1-16.2 of the New Jersey Mortgage Loans, Fees, Obligations Provisions (N.J.A.C. 3:1-16.2). This update will cause users to receive a FAIL status response under RH 63450 New Jersey-Fees Not Allowed (MLFOP)(First Lien) and RH 1001176 New Jersey-Fees Not Allowed (MLFOP)(First Lien)(Renovation) if any of the itemized fees are paid by anyone other than the lender.

Fees charged to the borrower, offset by lender credits, are excluded from the NJ Prohibited Fees test. However, fees paid by the Borrower, Seller, Other Third Party, or Broker are included in the assessment.

CER-22925

On February 2, 2024, the New Jersey Department of Banking and Insurance (the Department) issued Bulletin 24-01 in accordance with the New Jersey Home Ownership Security Act of 2002 (the Act), N.J.S.A. 46: 10B-22 et seq. The Act requires an annual adjustment of the maximum principal amount that will, subject to other triggering provisions, result in a loan being considered a "high cost home loan." Bulletin 24-01 serves as notice that the maximum principal amount of a loan that may be considered a high cost home loan will be increased from $556,429.97 to $581,206.50. The adjusted amount of $581,206.50 is effective for all loans closed on or after January 1, 2024.

On December 14, 2023, ECS was updated to reflect that the maximum principal amount of a loan that may be considered a high cost home loan was increased to $581,206.77, effective for all loans closed on or after January 1, 2024. Based upon the Department’s Bulletin 24-01, ECS has now been adjusted downward by 27 cents to reflect the $581,206.50 amount.

ECS has been updated for new High Cost Applicability Threshold amounts for 2024.

  • For loans closed on or after January 1, 2024, ECS will adjust the New Jersey high cost tests for loans secured by a 1-2 unit dwelling located in New Jersey to include loans up to the new established ceiling of $581,206.50.

  • Existing rules will be retained in the System for loans closed prior to January 1, 2024.

CER-22446

ECS has been updated to accommodate users submitting junior lien loans under the provisions of the New York Part 80 Act App (3 NYCRR 80.8(a)). This regulation permits lenders to offer junior mortgage loans under certain conditions, with exemptions for loans exceeding $250,000 when combined with existing unpaid principal balances on loans secured by the same property.

New York Rules Impacted—

  • RH 4850 New York - Prepayment Penalty Part 80 (Open End)
  • RH 7090 New York - Fees Not Allowed (Part 80)
  • RH 18830 New York - Prepayment Penalty (Closed End)(Part 80)
  • RH 22100 New York - No Neg Am Balloon (Part 80)
  • RH 35120 New York - Flood Fees Not Allowed (Part 80)
  • RH 50720 New York - Interest Fees Not Allowed (Part 80)
  • RH 52470 New York - Application & Processing Fee Warning (Part 80)
  • RH 53360 New York - Balloon Payment (Part 80)

This update to the New York Part 80 Act App Rule logic limits the Act to junior lien loans that are less than or equal to $250K after adding the existing first lien loan amount to the new junior lien loan amount. This determination is based on the combined total of the new junior lien loan amount and the existing first lien loan amount.

CER-22924

The Maximum Brokerage Commission Rule for loans under Tenn. Code Ann. § 47-14-113 has been updated in ECS to address limitations on fees paid by the borrower to the lender. The amendment exempts Tennessee Industrial Loan & Thrift (TILT) Act registrants making loans under TILT's authority from the 2% "brokerage commission" limitation, subject to TILT's additional restrictions.

Tennessee Rule Impacted—

  • RH 1001426 Brokerage Commissions To Lender Must Be <= 2%

The update limits the brokerage commission to 2% of the loan amount for junior lien loans under the Tennessee Residential Lending, Brokerage, and Servicing Act for the submission of Tennessee loans.

CER-22902

The definition of points and fees for both first and junior lien loans under Utah High Cost points and fees threshold test for the submission of Utah loans has been updated in ECS. The updated Utah points and fees test reflects the definition of “points and fees” as it existed under 12 CFR 226.32, prior to January 10, 2014.

The Utah High Cost Threshold tests have also been updated for both first and junior lien loans to apply only to lenders that are required to hold a license under the Utah Residential Mortgage Practices and Licensing Act. This means depository financial institutions are exempt from the Utah High Cost Threshold tests.

Utah Rules Affected—

  • RH 56750 Utah - High Cost (First Liens)
  • RH 56760 Utah - High Cost (Junior Liens)
  • RH 1000272 Utah - High Cost (First Liens)(01/14)
  • RH 1000273 Utah - High Cost (Junior Liens)(01/14)

CER-22857

System

As of June 3, 2024, Fannie Mae will discontinue the publication of the following indices:

  • Fannie Mae Conventional Fixed-Rate 15 yr Mortgage, 60 Day
  • Fannie Mae Conventional Fixed-Rate 15 yr Mortgage, 90 Day
  • Fannie Mae Conventional Fixed-Rate 30 yr Mortgage, 30 Day
  • Fannie Mae Conventional Fixed-Rate 30 yr Mortgage, 60 Day
  • Fannie Mae Conventional Fixed-Rate 30 yr Mortgage, 90 Day

As a result, users submitting loans with consummation dates on or after June 3, 2024 will encounter an ERROR message if any of the discontinued indices mentioned above are selected.

Fannie Mae Conventional Fixed-Rate Mortgage (RNY) Indices

System Validation - Fannie Mae Conventional Fixed-Rate Mortgage (RNY)(1001428)

The requested index rate is no longer published for the (_) index you submitted. The following indices are not published after June 2, 2024: FNMA Fixed 15Y 60D, FNMA Fixed 15Y 90D, FNMA Fixed 30Y 30D, FNMA Fixed 30Y 60D, and FNMA Fixed 30Y 90D. Please resubmit your loan using a valid index. (https://singlefamily.fanniemae.com/media/37336/display; https://singlefamily.fanniemae.com/pricing-execution/historical-daily-required-net-yields)

To avoid receiving the above ERROR status message for loans submitted with consummation dates on or after June 3, 2024, users are advised to select an alternative available index.

Please refer to the Fannie Mae announcement for further details regarding the discontinued indices.

CER-22128

Current Section

Current Section

Rules in March 2024 Release