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REG. Z COMPLIANCE AND MORTGAGE COUPON BOOKS

PRESENTED BY DENHARDT SOLUTIONS

    

 

  • WHAT IS REG. Z AND HOW DO I KNOW IF I NEED TO COMPLY?

     

    Escrow Requirements under the Truth in Lending Act (Regulation Z)

    AGENCY: Bureau of Consumer Financial Protection.

    ACTION: Final rule; official interpretations.

    SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is publishing a final rule that amends Regulation Z (Truth in Lending) to implement certain amendments to the Truth in Lending Act made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Regulation Z currently requires creditors to establish escrow accounts for higher-priced mortgage loans secured by a first lien on a principal dwelling. The rule implements statutory changes made by the Dodd-Frank Act that lengthen the time for which a mandatory escrow account established for a higher-priced mortgage loan must be maintained. The rule also exempts certain transactions from the statute’s escrow requirement. The primary exemption applies to mortgage transactions extended by creditors that operate predominantly in rural or underserved areas, originate a limited number of first-lien covered transactions, have assets below a certain threshold, and do not maintain escrow accounts on mortgage obligations they currently service.

    DATES: The changes to the coupon books take place January 1, 2014

    EXEMPTION: The rule creates an exemption from the escrow requirement for small creditors that operate predominately in rural or underserved areas. Specifically, to be eligible for the exemption, a creditor must: (1) make more than half of its first-lien mortgages in rural or underserved areas; (2) have an asset size less than $2 billion; (3) together with its affiliates, have originated 500 or fewer first-lien mortgages during the preceding calendar year; and (4) together with its affiliates, not escrow for any mortgage it or its affiliates currently services, except in limited instances. Under the rule, eligible creditors need not establish escrow accounts for mortgages intended at consummation to be held in portfolio, but must establish accounts at consummation for mortgages that are subject to a forward commitment to be purchased by an investor that does not itself qualify for the exemption.

    Small servicers exemption – services 5,000 or fewer mortgage loans or is a Housing Finance agency as defined in 24 CFR 266.5

    Information obtained from http://www.consumerfinance.gov/regulations/escrow-requirements-under-the-truth-in-lending-act-regulation-z/

  • CAN I USE COUPON BOOKS INSTEAD OF PERIODIC STATEMENTS FOR FIXED RATE MORTGAGES?

     

    YES

     

    The below information is required to be printed on each coupon:

    1. The payment due date

    2. Amount due

    3. The amount of late fee and the date on which it will be charged

    See next page for example of a current coupon produced by Denhardt Solutions.

  • STANDARD MORTGAGE COUPON

     

    Image is of our standard mortgage coupon – we can create a custom coupon with your necessary information. Custom message area is in the middle left of the coupon. Message could read "Contact 555-555-5555 for your current payoff balance".

  • ADDITIONAL ITEMS REQUIRED BY REG. Z

     

    The following information needs to be contained in the coupon books but does not need to be included on each coupon:

    1. The outstanding principal balance at the beginning of the time period covered by the coupon book

    2. The current interest rate

    3. The date the interest rate will change

    4. The amount of any prepayment penalty

    5. HUD’s toll-free telephone number or counseling organizations and the web address for either the Bureau’s information page or homeownership counselors or HUD’s list of homeownership counselors and counseling organizations

    6. Contact information on where consumers can get more information about their loans

    A custom insert would be bound into the book or you could use an 8 ½ x 11 page inserted with the book into the envelope. See next slide for sample insert.

  • SAMPLE INSERT

     

    This insert will contain a combination of variable data and static data. The variable data will come in your data file and you will need to work with your core processer to ensure this information is contained in the file and that we have an updated record layout. You will also have to provide us with the static information. More than one insert may need to be used.

  • COUPON BOOK COST VS. STATEMENT COST
    PER MORTGAGE

     

    Coupon Books

    1 - 12 Coupon Mortgage Book = $1.56

    1 - insert bound into book = $ .10

    Postage = $ .46

     

     

    Per item total $2.12/annually

    • This per item total is once a year per consumer/mortgage
    • Estimated cost per year for 10,000 mortgages = $21,200.00←

     

    Statements

    Processing* = $.19

    #10 Single Window Envelope = $.04

    #9 Return Envelope = $.03

    Package Price = $ .26

    Postage = $ .46

    Per item total $ .72/monthly

    • This per item total is once a month for 12 months per consumer/mortgage
    • Estimated cost per year for 10,000 mortgages = $86,400.00←

    *Processing includes paper and generic backer

    Prices shown are examples only – please call for exact pricing

  • IN CLOSING

     

    • Using payment coupon books will keep you compliant with Reg. Z
    • Using payment coupon books vs. periodic statements is more economical
    • Contact Carrie Denhardt Clark for more information and pricing:
      952-890-9039 or cclark@denhardtsolutions.com
Denhardt Solutions provides Payment Books and other quality banking products and bank supplies to community, independent and larger financial institutions throughout Minnesota, the Midwest, and the Unites States.