SECUREN 2017 FALL CONFERENCE Shannon Price Kudulis, Reisinger & Price, LLC

HMDA/REGULATION C Agenda Institutional coverage Transactional coverage Reportable data Filing HMDA suggestions

INSTITUTIONAL COVERAGE Asset threshold as of 12/31/2017 (currently $44 million) Has office in a Metropolitan Statistical Area (MSA) Made at least 1 purchase money 1st mortgage loan or a refi of a 1st mortgage loan secured by a 1-4 family dwelling in previous year Federally insured or regulated Made at least 25 closed-end mortgage loans in 2016 & 2017 Made at least 500 HELOC loans in 2016 & 2017

TRANSACTIONAL COVERAGE All Dwelling-secured loans: Closed-end mortgages HELOC’s Reverse Mortgages A “dwelling” is a residential structure, whether or not attached to real property

What is a dwelling? Single-family structure Principal residence Second home Vacation home Investment property

what is a dwelling? Multi-family structures Apartment building Mobile home park Condo building

WHAT IS NOT A DWELLING? Rv/camper/boat/travel trailer Houseboats Mobile homes constructed before 6/15/1976 Hotels RV parks Hospitals

EXCLUDED TRANSACTIONS Loans secured by lien on unimproved land Temporary financing (e.g. construction loans) Loans less than $500 Loans for agricultural purposes Loans for business/commercial purposes UNLESS loan is for home purchase, home improvement, or refinancing

Your business is our business Kudulis, Reisinger, and Price, LLC

DATA POINTS Total of 48 data points 9 from the current rule are unchanged 14 modified data points from the current rule 25 new data points

NEW DATA POINTS Borrower and Underwriting Information Age Credit score and scoring model Debt-to-Income Ratio Loan-to-Value Ratio Application Channel (whether application submitted directly to you and initially payable to you) Automated Underwriting System – name and result

NEW DATA POINTS Property Information Property value Property address Total Units Mobile Home Secured Property Type (mobile home + land vs. mobile home only) Mobile Home Land Property Interest (does the borrower own the land on which the mobile home is located) Multi-Family Affordable Units (only applies to multifamily dwellings)

NEW DATA POINTS Loan Product Features Total Loan Costs Origination Charges Discount Points Lender Credits Interest Rate Prepayment Penalty Term Loan Term (months) Introductory Rate Period (months) Non-Amortizing Features (balloon, interest only, negative amortization) Reverse Mortgage Open-End Line of Credit Business or Commercial Purpose NMLS ID of loan originator

MODIFIED/EXISTING DATA POINTS Borrower and Underwriting Information Ethnicity, Race & Sex (additional sub-populations) Gross Annual Income Application Date Action Taken and Date Action Taken Reason for Denial

MODIFIED/EXISTING DATA POINTS Property Information Property Location (state, county & census tract) Construction Method (site-built or manufactured home) Occupancy Type (principal, secondary, investment) Lien Status

MODIFIED/EXISTING DATA POINTS Loan Product Features Loan Purpose (purchase, refi, cash-out refi, home improvement, other) Loan Type (whether conventional or FHA, VA, or USDA) Loan Amount (exact, not rounded to nearest $1,000) Preapproval Rate Spread above APOR HOEPA Status Type of Purchaser

MODIFIED/EXISTING DATA POINTS Identifiers Legal Entity Identifier (LEI) - # issued to the FI by a utility endorsed by the Global LEI Foundation or LEI Regulatory Oversight Committee https://www.gleif.org/en/about-lei/how-to-get-an-lei-find-lei-issuing-organizations Universal Loan Identifier (ULI) - # for each loan or application that is unique.

FILING HMDA DATA Data collected in 2018 and reported in 2019 will be filed with the CFPB Submit data via web interface Submit by March 1, 2019 File format verification tool https://cfpb.github.io/hmda-platform-tools/file-format-verification/ HMDA Platform Release Notes https://github.com/cfpb/hmda-platform

DISCLOSURE STATEMENT HOME MORTGAGE DISCLOSURE ACT STATEMENT The HMDA data about our residential mortgage lending are available online for review. The data show geographic distribution of loans and applications; ethnicity, race, sex, age, and income of applicants and borrowers; and information about loan approvals and denials. These data are available online at the Consumer Financial Protection Bureau’s website (www.consumerfinance.gov/hmda). HMDA data for many other financial institutions are also available at this website.

Your business is our business Kudulis, Reisinger, and Price, LLC

OTHER ISSUES Pre-Qualifications vs. Pre-Approvals Pre-Qualification: request for a preliminary determination whether the applicant would likely qualify for credit or for a determination on the amount of credit for which the applicant will likely qualify. Pre-Approval: written commitment resulting from a comprehensive review of the creditworthiness of the applicant, including such verification of income, resources, and other matters as is typically done as part of a normal credit evaluation.

OTHER ISSUES A financial institution reports the data for the calendar year during which the application was acted upon, even if the institution received the application in a previous calendar year. Quarterly reporting is required for institutions that reported a combined total of 60,000 applications and covered loans in the preceding calendar year.

OTHER ISSUES Only one FI reports each originated covered loan as an origination. If more than one FI was involved in the origination of a covered loan, the FI that made the credit decision approving the application before closing reports the loan as an origination. In the case of a loan application that does not result in an origination, a FI reports the action it took on that application if it made a credit decision on the application or was reviewing the application when the application was withdrawn or closed for incompleteness.

EXAMPLES FI “A” received an application and forwarded it to FI “B”, who reviewed the application and approved the loan. The loan closed in FI “A”’s name, then FI “B” purchased the loan from FI “A.” FI “B” reports the loan as an origination & not a purchase. FI “A” does not report the loan at all FI “A” received an application and forwarded it to FI “B,” but FI “B” denied the application. FI “A” does not report the application. FI “B” reports the loan as a denial.

EXAMPLES FI “A” received an application, approved it and closed the loan in its name. FI “B” did not review the application, but after closing it then purchased the loan from FI “A.” FI “A” reports the loan as an origination. FI “B” reports the loan as a purchase. FI “A” reviewed an application and approved it, using underwriting criteria provided by a 3rd party. The 3rd party didn’t review the application or make the credit decision. FI “B” reports the loan as a purchase if it purchases the loan and does not report at all if it chooses not to accept the loan.

REVISED LOAN APPLICATION

URLA COMING JULY 1, 2019

ADDITIONAL RESOURCES

Additional resources

Regulatory compliance Retain records for 5 years from date account is closed Regulatory compliance When we know your strengths and weaknesses, and understand your risks and challenges, we can play a strong, supporting role in helping you solidify and secure operations and move your business forward. Kudulis, Reisinger, and Price LLC

What should we discuss further? Shannon Price 205-251-3151 shannon@krpfirm.com

SUCCESSORS IN INTEREST The Rule, effective April 19, 2018, requires servicers to maintain policies & procedures reasonably designed to ensure they can: Promptly facilitate communication with successors in interest regarding property securing a mortgage loan when they receive notice of death of a borrower or any transfer of the property; Promptly determine what documents are required to confirm the successor’s identity, and provide the person with a description of the documents required; Promptly notify the successor, upon receipt of the documents, that they have confirmed their status as a successor or have determined that additional documents are required.

SUCCESSORS IN INTEREST A successor in interest is someone who has acquired an ownership interest in one of the following situations: On the death of a joint tenant On the death of a relative When the spouse or children of the borrower become an owner Resulting from a divorce or legal separation Through an inter-vivos trust in which the borrower is and remains a beneficiary and retains occupancy rights A person does NOT have to assume liability for the loan in order to be confirmed as a successor.

SUCCESSORS IN INTEREST The Servicer is NOT required to conduct a search for potential successors in interest if it has not received actual notice of their existence. When a Servicer receives a written request from a person that: Indicates they may be a successor in interest; Includes the name of the borrower from whom the person received an ownership interest; and Provides information that enables the servicer to identify the mortgage loan account The Servicer must: Within 5 days, provide a written acknowledgement of receipt Within 30 days, provide a written description of the documents required to confirm the person’s identity and ownership interest

SUCCESSORS IN INTEREST OPTIONAL NOTICE IN RESPONSE: You have confirmed the successor’s identity & ownership interest in the property; The successor is not legally liable for the debt (unless he/she assumes it), but the lender retains its security interest and can foreclose; The successor may be entitled to receive notices & communications To receive such notices, the succession must provide an executed acknowledgement form; Whether or not the acknowledgement form is submitted, the successor is entitled to submit a notice of error, request for information or request for payoff.

SUCCESSORS IN INTEREST TILA / REG. Z Confirmed successors are considered consumers re: Prompt payment processing Periodic statements Mortgage transfer disclosures Interest rate adjustment notices Escrow cancellation notices RESPA / REG. X Confirmed successors are considered consumers re: Error and information requests Early intervention and continuity of contact Loss mitigation Escrow and force-placed insurance provisions Mortgage servicing transfers

DELINQUENCY Servicers may not make the 1st notice or filing required under applicable law for any judicial or non-judicial foreclosure process unless: The mortgage loan is more than 120 days delinquent; The foreclosure is based on a borrower’s violation of a due on sale clause; or The servicer is joining the foreclosure of a superior or subordinate lienholder. Delinquency – begins on the date a periodic payment sufficient to cover principal, interest, and (if applicable) escrow becomes due and unpaid and continues until such time as no periodic payment is due and unpaid.

DELINQUENCY “ROLLING” DELINQUENCIES Payments due on the 1st. Borrower fails to make January 1st payment. On January 31, Borrower is 30 days delinquent. On February 3rd, Borrower makes a periodic payment. On February 4th, Borrower is 3 days delinquent.

DELINQUENCY Borrower fails to make payments due on January 1st, February 1st and March 1st. On April 1st, Borrower is 90 days delinquent. On April 29, Borrower makes a full periodic payment. On April 30, Borrower is 88 days delinquent.