Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

News Now

Washington
Fed weighs in When do loan mods equal adverse actions
WASHINGTON (1/5/10)—Prompted by questions from consumer compliance examiners, the Federal Reserve last month issued a letter addressing whether adverse action notices under Equal Credit Opportunity rules are required for mortgage loan modification declinations, including those made under to the U.S. Department of Treasury's Making Home Affordable Modification Program (HAMP). Although credit unions have steadily been working with members on loan modifications—in fact, at a much accelerated rate compared to banks—few lenders are yet involved with the administration’s HAMP program. However, if the administration—through Freddie Mac and Fannie Mae—decides to move forward with ideas to tweak the program through such things as assistance with principal reductions, credit union use of the HAMP program may increase, as might that of other lenders. The December letter, signed by the Fed’s Sandra Braunstein, director of the division of consumer and community affairs, states that the “equal credit” rule (Regulation B) “makes clear that such notice requirements are inapplicable to borrowers in default (Reg. B, § 202.(c)(2)(ii)).” However, the letter also notes “a major caveat in that regard.” The letter outlines four questions to be answered to determine whether declining a HAMP or other loan modification constitutes a disclosure-triggering adverse action:
* First, is there an extension of credit? * Second, is there an application? * Third, was the application for extension of credit declined? * Fourth, was the borrower currently delinquent or in default?
The letter concludes: “Even if an adverse action notice is not required under Regulation B, borrowers may find it helpful to receive from institutions information regarding why their mortgage loan modification request was declined. "For example, we understand that Treasury has directed HAMP servicers to provide written notice to a borrower that has been evaluated for HAMP but is not offered a trial period plan or modification, or is at risk of losing eligibility for HAMP because the borrower has failed to provide the required financial documentation.” Use the resource link to access the Fed letter.
Other Resources

RSS





print
News Now LiveWire
Maine credit unions put Food Mobile on the road to relieving hunger in rural areas http://t.co/R0xpt6BAZE
3 hours ago
.@TheNCUA's Matz: PALS should be exempt from Military Lending Act proposal #NewsNow http://t.co/Vy9uNhOIEr
3 hours ago
#NewsNow Iowa loan growth 3 times national bank rate http://t.co/fUvudPLg5d
6 hours ago
.@ICBA tallies its Home Depot data breach costs: $90M, 7.5M cards http://t.co/iJgRDC2AKZ
7 hours ago
.@icul's Jury elected treasurer of @WOCCU exec committee http://t.co/HEF1UChN8f
8 hours ago