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6/29/2017

Fair Housing


The Fair Housing Act protects individuals who fall within one of the protected classes established under the law. The protected classes include:
  • Race
  • Color
  • Religion
  • Sex
  • Familial status
  • National origin
  • Handicap
  • Aggrieved persons have one year to file an action with HUD for violations of the Fair Housing Act.  When discriminatory acts or practices are ongoing, an aggrieved person must file a claim with HUD within one year of the last incident of discrimination (24 C.F.R. §103.35).  HUD’s Office of Fair Housing and Equal Opportunity will help aggrieved persons file their claims (24 C.F.R. §103.20).
    When HUD receives a complaint or helps an aggrieved person submit a complaint, it has 10 days from the date that the complaint is filed to serve a notice of the complaint on the respondent (24 C.F.R. §103.202).  After receiving a copy of the complaint, the respondent has 10 days to file an answer (24 C.F.R. §103.203).  HUD will provide notices to the aggrieved person and to the respondent of the right to resolve the alleged violations in federal court.  This notice will advise the parties that the statute of limitations for pursuing an action in court is two years from the date that the discriminatory practice occurred or two years after the last incident of an ongoing discriminatory practice occurred.

  • When neither the aggrieved person nor the respondent elects to resolve violations in court, HUD will pursue the process of conciliation by initiating an investigation. HUD must attempt to complete its investigation within 100 days of the date that a complaint is filed (24 C.F.R. §103.225). While conducting an investigation, HUD will seek voluntary cooperation from a respondent in providing access to records and documents and to individuals who may be able to provide information that is relevant to the complaint.  When necessary, HUD may subpoena documents and testimony, but only with the approval of HUD’s General Counsel (24 C.F.R. §103.215(b)).  

Investigations continue until HUD determines whether there is reasonable cause to believe that discrimination has occurred, or until the parties enter a written conciliation agreement. The goals of a conciliation agreement include:
  • Securing relief for the aggrieved persons, such as monetary and/or injunctive relief to eliminate discriminatory practices
  • Obtaining assurance that the respondent will eliminate any discriminatory practices, and
  • Vindicating the public interest through provisions that require the respondent to:
    • Participate in remedial efforts to eliminate discriminatory practices and prevent future discrimination, and
    • Comply with reporting requirements and monitoring activities
(24 C.F.R. §§103.310; 103.315; 103.320)
When an aggrieved party and a respondent enter a conciliation agreement, HUD has authority to monitor the efforts of the respondent to comply with the agreement. If HUD finds reasonable cause to believe that a respondent is not complying with the terms of a conciliation agreement, it must refer the matter to the Attorney General and recommend the filing of a civil action in federal court to enforce the agreement’s terms (24 C.F.R. §103.335).
HUD will issue a charge in cases in which conciliation is not achieved and its investigation shows reasonable cause to believe that a discriminatory housing practice occurred (24 C.F.R. §103.405(a)(3)).  A charge includes a written statement of the facts on which HUD is relying to find reasonable evidence of discrimination.  Within three business days of issuing a charge, HUD’s General Counsel will schedule a hearing with HUD’s administrative law judge and provide the charges and notifications regarding the hearing to the aggrieved person and the respondent.  HUD, the aggrieved person, or the respondent may then elect to pursue the claims in a judicial hearing in court instead of resolving them in an administrative hearing.  This decision must be made within 20 days of receipt of the charge (24 C.F.R. §103.410).
HUD’s regulations that outline the procedures for administrative hearings are extensive, and these rules cover both the pre-hearing and hearing processes. If a hearing is completed, HUD’s administrative law judge must issue an initial decision within 60 days of the end of the hearing. The decision will become final within 30 days after it is issued.
If an administrative law judge finds that a discriminatory housing practice, such as an unfair mortgage lending practice, has occurred or is about to occur, he/she can order the respondent to pay damages to the aggrieved person, issue other relief, such as injunction relief, and impose civil penalties.
HUD regulations authorize civil penalties of up to (per violation):
  • $16,000, if no prior administrative or civil hearings resulted in a finding that the respondent violated federal, state, or local fair lending laws
  • $42,500, if administrative or civil hearings conducted within the preceding five years resulted in a finding that the respondent committed one other violation of federal, state, or local fair lending laws
  • $70,000, if administrative or civil hearings conducted within the preceding seven years resulted in a finding that the respondent committed two or more violations of federal, state, or local fair lending laws

(24 C.F.R. §180.671(a))
An administrative law judge may impose separate penalties when a hearing results in a finding that there is more than one separate and distinct discriminatory housing practice (24 C.F.R. §180.671(e)). When a claim of discrimination under the Fair Housing Act is resolved through an administrative hearing, HUD has the authority to subpoena witnesses and documents. A person that willfully fails to respond to a subpoena may be subject to a criminal penalty of up to $100,000, imprisonment for up to one year, or both. These criminal penalties also apply if a person willfully:
  • Makes a false statement in a report or document that HUD subpoenas
  • Fails to produce accurate reports, documents, or other records, or
  • Mutilates or alters documentary evidence
  • At any time after its receipt of a complaint, if HUD determines that a civil rights matter demands “prompt judicial action,” it may ask the Attorney General to file a civil action. HUD will consult with the Civil Rights Division of the Department of Justice (DOJ) before determining that judicial action is needed (24 C.F.R. §103.500(a)). Reasons for HUD to make a referral to the DOJ may include the failure of a respondent to comply with a conciliation agreement (24 C.F.R. §103.335). The Attorney General also has authority to bring an enforcement action when there is “reasonable cause” to believe that an individual or entity is engaging in a “pattern or practice” of discrimination (42 U.S.C. §3614(a)).

  • For decades, courts disputed the legality of housing discrimination claims that were based on the theory of disparate impact.  Under the disparate impact theory, liability may result from a policy or practice that limits members of a protected class from access to mortgages or housing, even though the intention of the policy or practice is not to discriminate.  For example, if a lender has a policy of limiting its lending transactions to those involving loan amounts of $200,000 and above, this neutral policy has the effect of making home loans unavailable to borrowers who are shopping for lower-cost housing.  When these borrowers are minorities or members of other protected classes, the policy has an unintended discriminatory effect, which is illegal under the disparate impact theory.







The catchall phrase “or otherwise make unavailable” has been the focus of countless arguments both for and against the disparate impact theory, including an argument that ultimately made its way to the Supreme Court. In July 2015, with a close vote of 5 to 4, the Court upheld the disparate impact theory. During the months that preceded the Court’s ruling, participants in the lending industry predicted that a decision to uphold the disparate impact theory would lead to more litigation under the Fair Housing Act and create a number of compliance challenges for mortgage lenders.
In particular, lenders expressed concern about the dual challenge of avoiding liability under the disparate impact theory while complying with the Ability to Repay (ATR) Rule and the Qualified Mortgage (QM) Rule. The ATR Rule requires a thorough evaluation of a loan applicant’s repayment ability and prohibits the extension of mortgage credit based on the ability of a consumer to make initial low payments based on an introductory interest rate that will adjust to a higher rate when the initial rate expires. The QM Rule gives lenders the incentive to make qualified mortgages by extending a presumption of compliance with the ATR Rule to those that make fully-amortizing mortgages with terms that do not exceed 30 years and that limit the extension of these loans to borrowers whose debt-to-income ratios do not exceed 43%.








HMDA Quiz



If an applicant chooses not to provide demographic information for an application taken in person, the loan originator must:

Correct. If an applicant chooses not to provide demographic information for an application taken in person, the loan originator must note this fact on the form and then determine the applicant’s ethnicity, race, and sex based on visual observation or surname.


In 2018, a non-depository institution will be subject to HMDA’s data collection and reporting requirements if it had a home or branch office in an MSA on the preceding December 31 and:

Correct. If a non-depository institution meets the loan-volume threshold and had a home or branch office in an MSA on the preceding December 31, it will be subject to HMDA’s data collection and reporting requirements. In 2018, there will no longer be an asset-size threshold for non-depository institutions.




The practice of refusing to offer home loans to residents living in particular areas is known as:

Correct. The practice of refusing to offer home loans to residents living in particular areas is known as redlining.


The _______ is responsible for enforcing the Home Mortgage Disclosure Act and for writing implementing regulations, which are known as __________.

Correct. The CFPB is the agency that is responsible for implementing and enforcing HMDA, and the implementing regulations for HMDA are known as Regulation C.


Each of the following descriptions of ethnicity is found on the HMDA data collection form; however, if a loan applicant refuses to self-identify his/her ethnicity, a loan originator is limited to choosing which of the following aggregated descriptions based on the applicant’s appearance or surname?

Correct. When collecting data on the basis of visual observation or surname, loan originators must limit their selections to the aggregated categories. When an applicant elects not to self-identify his/her ethnicity, the loan originator is limited to reporting the applicant’s ethnicity as “Hispanic or Latino” or “Not Hispanic or Latino.”

HMDA After January 2018

In 2018, the reporting requirements  extend to more mortgage transactions. Today 2017 June, the HMDA reporting requirements apply only to closed-end home purchase and home improvement loans and refinances.
As of January 1, 2018, the following loan types will be subject to reporting requirements:
  • Closed-end home purchase loans
  • Closed-end refinances
  • Closed-end home improvement loans
  • Open-end mortgages
  • Home equity lines of credit
  • Reverse mortgages
(12 C.F.R. §1003.2(e))

The applicability of HMDA and Regulation C does not depend on the use of a home as a principal dwelling.  Therefore, even loans that are secured by second homes, vacation homes, or rental properties are subject to the law (Official Interpretations to 12 C.F.R. §1003.2(f), 1.).  Simply stated, HMDA applies to all dwelling-secured loans, and amended Regulation C broadly defines the term “dwelling” to include most residential structures, including detached homes, individual condominium or cooperative units, manufactured homes, multifamily structures, and multifamily communities (12 C.F.R. §1003.2(f)).

Small companies must comply, keep records and report.
Seems like small mortgage banking or brokerages must hire legal
staff to keep up with the law

Exempt  from HMDA’s reporting requirements:
  • Loans secured by unimproved or vacant land, unless the lender knows that loan proceeds will be used within two years of closing to construct a dwelling
  • Construction loans or bridge loans
  • Loans for less than $500
  • Loans secured by property used for agricultural purposes
  • Loans secured by property used primarily for business or commercial purposes

Other exemptions include transactions for the purchase of servicing rights to a loan, mortgage loans acquired through mergers and acquisitions, and the purchase of mortgage-backed securities. These exemptions are currently scattered throughout the regulations, but the new rules that are effective in 2018 place the HMDA exemptions in Section 1003.3(c) of Regulation C.

Data Collected for HMDA Reporting until December 2017


  • Loan information:
    • An identifying number for the loan or loan application
    • The purpose of the loan (home purchase, refinancing, home improvement)
    • Lien status
    • An indication of whether the related dwelling is owner-occupied
    • Loan type (conventional, FHA, VA)
    • Type of dwelling securing the loan (one- to four-family dwelling, multifamily dwelling, manufactured home)
    • Loan amount
    • Application date
    • Action taken on the loan (approval or denial) and date the action is taken
  • Location of the property related to the loan application
  • Demographic information about the applicant (gender, race, ethnicity, and gross income)
  • Loan purchase information
  • Loan pricing information (used to identify reverse redlining)
  • Denials for pre-approval requests and information on approvals that led to loans 

  • 2018,  data collection categories, consisting of the current plus the new categories:
    • Identifiers for loans and lenders: A universal loan identifier made up of 45 alpha-numeric characters will identify the loan or loan application, and a 20-character alpha-numeric code will identify the financial institution involved in the transaction.
    • Underwriting information: The information related to underwriting will include the loan applicant’s credit score, credit scoring model, LTV ratio, DTI ratio, property value, and reason(s) for denying a loan application.
    • Demographic information: In addition to information already reported, loan originators must report an applicant’s age and must offer applicants the option of providing more details on their race and ethnicity.
    • Loan terms and pricing: New rules require the reporting of a loan’s (or a proposed loan’s) APR, difference between the APR and average prime offer rate, loan costs, points, lender credits, amounts disclosed as borrower-paid, interest rate, prepayment penalty provisions, loan term, number of months between origination and rate changes for ARMs, interest-only payments, balloon payments, and any payment provisions resulting in negative amortization.
    • Property information:  address, census tract, value of the property, and its use as a residence, second home, or investment property.
    • Identification of loan originator: Data reported for each transaction must include the NMLS unique identifier of the mortgage loan originator who provided loan origination services for the loan or application.
    • Disposition: Lenders must report approvals, denials, and an applicant’s withdrawal of an application. Denials of requests for preapprovals are also reported, and even if an approval does not lead to the origination of a mortgage, the approval must be reported.
    • Loan application channel: Lenders must indicate whether a consumer submitted an application directly to a lender or to a mortgage broker.
    (12 C.F.R. §1003.4(a))

HMDA

Concern for the decline of urban neighborhoods was a significant factor that led to HMDA’s enactment.  The law and its requirements continue to focus on lenders that are located in metropolitan statistical areas (MSAs).  An MSA is an urbanized area with a population of at least 50,000, which includes an urban center and surrounding areas that are economically and socially tied to it.  The Office of Management and Budget uses census data to identify MSAs.
ThinkstockPhotos-78806645.jpg

HMDA
Banks and small lenders now monitored by the CFBP
The first step in determining whether a financial institution must comply with HMDA is to establish whether it has a home or branch office in an MSA. Institutions that only operate outside of an MSA are not subject to the law’s data collection and reporting requirements. For example, a financial institution that exclusively serves rural areas is not subject to HMDA.
Financial institutions that are located in an MSA are subject to HMDA requirements if they meet established thresholds. Historically, depository and non-depository institutions have been subject to very different loan-volume and asset-size thresholds, but beginning on January 1, 2018, there will be a uniform loan-volume threshold for both types of institutions.
The new loan-volume threshold for depository and non-depository institutions is:
  • The origination of at least 25 closed-end mortgage loans in each of the two preceding calendar years, or
  • The origination of at least 100 open-end lines of credit in each of the two preceding calendar years
(12 C.F.R. §§1003.2(g)(1)(v), (g)(2)(ii))

If a non-depository institution meets the loan-volume threshold and had a home or branch office in an MSA on the preceding December 31, it is subject to the data collection and reporting requirements of HMDA. As previously mentioned, in 2018, there will no longer be an asset-size threshold for non-depository institutions (12 C.F.R. §1003.2(g)(2)).

If a depository institution meets the loan volume threshold and home or branch office in an MSA on the preceding December 31, it is subject to HMDA if it also:
  • Meets an annually-adjusted asset-size threshold (this threshold will allow small banks and credit unions to escape the burden of HMDA data collection and reporting requirements)
  • Originated at least one home purchase loan or refinance of a home purchase loan in the preceding calendar year, and
  • Meets one or more:
    • It is a federally insured or regulated institution (e.g. it is an FDIC bank or a Federal Reserve bank)
    • It makes federally insured or guaranteed loans (e.g. FHA loans or VA loans), or
    • It makes loans intended for sale to Fannie Mae or Freddie Mac

(12 C.F.R. §1003.2(g)(1))

6/23/2017

Get your Offer Accepted and Sit Pretty



You know the basics: sit come, and down for dog training 
 but Real Estate is not that simple. In this Seller's Market it
is difficult to get your offer accepted. Here's a list of strategies to get into your next home.
Simple commands to get Seller to Accept your offer:

Know the location and market you are shopping in advance. I can share Home Scouting app

https://hbsr.homescouting.com/SignIn   password is 9497849699




 
  1. Get in ASAP to view the property, before broker preview. Be respectful and quiet while walking through the home, take notes, or images. Discuss with your agent in the car.
  2. Write thank you note to listing agent addressed to seller 
  3. Get clean offer in immediately with every line exact
  4. Make your highest and best offer first without a list of requests
  5. Have loan pre-approval from lender who can close in 20 days. Write the contract with 7 day contingencies. Make sure lender writes that they can complete appraisal in 7 days ad final approval in 10 days. Get your paperwork in to lender BEFORE making offers.  You agent can note that if seller needs more time to rent back, that may be possible
  6. Large earnest money deposit
  7.  Show large down payment, cross out account numbers
  8. Write a personal letter about why you love this house the details why it suits your needs

Work with local agent who is well respected and lender also who is respected.
Your auntie from 200 miles away may not have the clout that a buyer's agent in the neighborhood has. Same with lender, an online lender or big box bank may not close on time


Want apply to get you loan pre- approved?

https://carolinegerardo.eaglehm.com/

apply now

6/02/2017

Win $1000 Easy Peasy