what loans are covered under reg z

v. Based on these assumptions, the monthly payment for the non-standard mortgage for purposes of determining whether the standard mortgage monthly payment is lower than the non-standard mortgage monthly payment (see 1026.43(d)(2)(ii)) is $1,359. (4) Offer through a mortgage broker. For purposes of 1026.43(c)(2)(iii), a creditor must determine the consumer's ability to repay the covered transaction using the payment calculation methods set forth in 1026.43(c)(5). However, 1026.43(c)(2)(v) does not require a creditor to include in the evaluation of the consumer's monthly payment for mortgage-related obligations payments to such associations imposed in connection with the extension of credit, or imposed as an incident to the transfer of ownership, if such obligations are fully satisfied at or before consummation. See interpretation of Paragraph 43(b)(13)(i) in Supplement I. First, the creditor must determine the tier into which the loan falls based on the loan amount. 3. 1. The fully indexed rate of 7.5 percent, which is the index value of 4.5 percent as of March 15, 2015 (the date on which the application for a refinancing is received) plus the margin of 3 percent. At the time a creditor offers a consumer an alternative covered transaction without a prepayment penalty under 1026.43(g)(3), the creditor may know the amount of some, but not all, of the points and fees that will be charged for the transaction. Assuming that the consumer makes the minimum periodic payments for as long as possible, the maximum loan amount is $207,662, which is reached at the end of the third year of the loan (on the due date of the 36th monthly payment). For purposes of 1026.43(e)(3)(iv)(B), interest is calculated using the contract interest rate applicable during the period from consummation until the payment described in 1026.43(e)(3)(iv) is made to the consumer. Real property. (i) A document or other record prepared or reviewed by an appropriate person other than the consumer, the creditor, or the mortgage broker, as defined in 1026.36(a)(2), or an agent of the creditor or mortgage broker; 1. A qualified mortgage under 1026.43(e)(5) retains its qualified mortgage status if it is sold, assigned, or otherwise transferred to another person pursuant to: A capital restoration plan or other action under 12 U.S.C. In determining whether monthly, fully amortizing payments are substantially equal, creditors should disregard minor variations due to payment-schedule irregularities and odd periods, such as a long or short first or last payment period. See also comment 43(a)(3)-2. If Creditor B sells the qualified mortgage, it will lose its qualified mortgage status under 1026.43(e)(5) unless the sale qualifies for one of the 1026.43(e)(5)(ii) exceptions for sales three or more years after consummation, to another qualifying institution, as required by supervisory action, or pursuant to a merger or acquisition. For a loan amount greater than or equal to $64,648 but less than $107,747: $3,232; C. For a loan amount greater than or equal to $21,549 but less than $64,648: 5 percent of the total loan amount; D. For a loan amount greater than or equal to $13,468 but less than $21,549: $1,077; E. For a loan amount less than $13,468: 8 percent of the total loan amount. In particular, the creditor must have information reflecting that the total of closing costs imposed in connection with the transaction is less than 1 percent of the amount of credit extended and include no charges other than recordation, application, and housing counseling fees, in accordance with 1026.43(a)(3)(vii)(E). Section 1026.43(b)(8) includes in the evaluation of mortgage-related obligations premiums and similar charges identified in 1026.4(b)(5), (7), (8), or (10) that are required by the creditor. Deferral of principal repayment. Average prime offer rate is defined in 1026.35(a)(2); higher-priced covered transaction is defined in 1026.43(b)(4). (7) Monthly debt-to-income ratio or residual income . One month after consummation, the interest rate adjusts and will adjust monthly thereafter based on the specified index plus a margin of 3.5 percent. Under 1026.43(f)(1)(i), for a mortgage that provides for a balloon payment to be a qualified mortgage, the mortgage must satisfy the requirements for a qualified mortgage in paragraphs (e)(2)(i)(A), (e)(2)(ii), and (e)(2)(iii). The creditor is not obligated to investigate beyond reasonable underwriting policies and procedures to determine whether a simultaneous loan will be extended at or before consummation of the covered transaction. Section 1026.43(c)(5) requires creditors to calculate the payment differently than 1026.43(e)(2)(iv). The loan agreement provides for a fixed interest rate of 6 percent. If the loan is not considered a private education loan and is over $50,000, then the loan is not covered under TILA and Regulation Z, and a creditor is not required to provide any disclosures to the consumer. **Classifying and counting income, assets, debt obligations, alimony, and child support. 1. 2. B. iv. See interpretation of Paragraph 43(e)(7)(iv)(A)(2) in Supplement I. Where a range for the maximum interest rate during the first five years is provided, the highest rate in that range is the maximum interest rate for purposes of 1026.43(e)(2)(iv). The definition of covered transaction restates the scope of the rule as described at 1026.43(a). 1026.12 Special credit card provisions. Payment calculation - home equity line of credit. Second, the payment calculation must be based on substantially equal monthly payments of principal and interest that will fully repay the outstanding principal balance over the term of the loan remaining as of the date the loan is recast. 2. However, if the consumer will pay the special assessment on a recurring basis after consummation, regardless of whether the consumer's payments for the special assessment are escrowed, 1026.43(c)(2)(v) requires the creditor to include this recurring special assessment in the evaluation of the consumer's monthly payment for mortgage-related obligations. See comment 43(e)(2)(vi)-4 for how to determine the annual percentage rate of such a loan. For example, if a consumer's application states that the consumer earns a salary and is paid an annual bonus and the creditor relies on only the consumer's salary to evaluate the consumer's repayment ability, the creditor need verify only the salary. The maximum loan amount of $229,219 as of March 1, 2019. One month after the first day of the first full calendar month following consummation, the interest rate adjusts and will adjust monthly thereafter based on the specified index plus a margin of 3.5 percent. Unless one of these exceptions applies, a covered transaction cannot become a qualified mortgage as a seasoned loan under 1026.43(e)(7) if legal title to the debt obligation is sold, assigned, or otherwise transferred to another person before the end of the seasoning period. F. Chapters 9 through 11 of the U.S. Department of Agricultures Handbook for the Single Family Guaranteed Loan Program, revised March 19, 2020. ii. The loan consummates on September 15, 2014, and the first monthly payment is due on November 1, 2014. To determine the maximum loan amount, assume that the initial interest rate increases to the maximum lifetime interest rate of 10.5 percent at the first adjustment (i.e., the due date of the first periodic monthly payment) and accrues at that rate until the loan is recast. See comment 36(e)(3)-3 for guidance in determining which step-rate mortgage has a lower interest rate. The loan agreement provides for an annual interest rate adjustment cap of 2 percent, and a lifetime maximum interest rate of 12 percent. The commentary to 1026.17(c)(1) and other provisions in subpart C address how to determine the annual percentage rate disclosures for closed-end credit transactions. The institution is not a "creditor" and Regulation Z does not apply unless at least one of the following tests is met: 1) The institution extends consumer credit regularly and a) The obligation is initially payable to the institution and b) The obligation is either payable by written agreement in more than four installments or is subject to a finance charge 2) The institution is a card issuer . For example, the rule and commentary do not specify how much income is needed to support a particular level of debt or how credit history should be weighed against other factors. The creditor complies with 1026.43(c)(2)(v) if it does not include the special assessment in the determination of mortgage-related obligations. 1. Creditors may rely on guidance provided under comment 17(c)(2)(i)-1 in determining if information is reasonably available. The first five years after the date on which the first regular periodic payment will be due end on May 1, 2019. 7. The loan amount is $200,000, and the loan has a six-year loan term but is amortized over 30 years. 2. That is, a creditor must determine the fully indexed rate without taking into account any periodic interest rate adjustment cap that may limit how quickly the fully indexed rate may be reached at any time during the loan term under the terms of the legal obligation. (1) General requirement. The regulation covers topics such as: Annual percentage rates Credit card disclosures Periodic statements Mortgage loan disclosures Mortgage loan servicing requirements Mortgage loan appraisal requirements Additional resources Consumer FAQs Mortgages Credit cards Auto loans Student loans Other resources ** Date of the recast. 2. (1) Definitions. 3. For an adjustable-rate mortgage, creditors should assume the interest rate increases after consummation as rapidly as possible, taking into account the terms of the legal obligation. The amount paid to the consumer pursuant to 1026.43(e)(3)(iv) may be offset by the amount paid to the consumer pursuant to 12 CFR 1024.7(i) or 1026.19(f)(2)(v), to the extent that the amount paid to the consumer pursuant to 12 CFR 1024.7(i) or 1026.19(f)(2)(v) is being applied to fees or charges included in points and fees pursuant to 1026.32(b)(1). Under 1026.43(b)(13)(i), a third-party record includes a document or other record prepared by the consumer, the creditor, the mortgage broker, or the creditor's or mortgage broker's agent, if the record is reviewed by an appropriate third party. A covered transaction must not include a prepayment penalty unless: (i) The prepayment penalty is otherwise permitted by law; and. (F) The creditor complies with all other applicable requirements of this part in connection with the transaction. Section 1026.43(c)(2)(v) does not require a creditor to include special assessments in the evaluation of the consumer's monthly payment for mortgage-related obligations if the special assessments are fully satisfied at or before consummation. The first interest rate adjustment occurs on September 1, 2018. 2. (b) Definitions. Under 1026.43(g)(5), a creditor that is a loan originator must present an alternative covered transaction without a prepayment penalty that satisfies the requirements of 1026.43(g)(3) offered by either the assignee for the covered transaction or another person, if that other person offers a transaction with a lower interest rate or a lower total dollar amount of origination points or fees or discount points. For example, if the loan amount is $55,000, the loan falls into the tier for loans greater than or equal to $20,000 but less than $60,000, to which a 5 percent cap on points and fees applies. 1026.21 Treatment of credit balances. iii. Answer: by Randy Carey: The collateral is never a determining factor when determining whether or not a transaction is covered under Regulation Z. Creditor's determination. Assume further that the consumer receiving the refinancing has a credit score below this threshold, and therefore would not normally qualify for the rate discount available to consumers with high credit scores. **Scope of threshold for transactions secured by a manufactured home. (B) Interest on the dollar amount described in paragraph (e)(3)(iv)(A) of this section, calculated using the contract interest rate applicable during the period from consummation until the payment described in this paragraph (e)(3)(iv) is made to the consumer. See interpretation of Paragraph 43(g)(2) Limits on prepayment penalties in Supplement I, (i) Must not apply after the three-year period following consummation; and. 6. Under 1026.43(a)(3)(iii), a construction phase of 12 months or less of a construction-to-permanent loan is exempt from 1026.43(c) through (f). Assume further that this special assessment will become the consumer's obligation upon consummation of the transaction, that the consumer is permitted to pay the special assessment in twelve $100 installments after consummation, and that the mortgage loan will not be originated pursuant to a government program that contains specific requirements for prorating special assessments. The outstanding principal balance at the end of the fourth year (after the 48th payment is credited) is $188,218. For purposes of 1026.43(d)(5)(i), however, the fully indexed rate is calculated within a reasonable period of time before or after the date the creditor receives the consumer's written application for the standard mortgage. For example, if a credit report states the existence and amount of a consumer's debt obligation, the creditor is not required to obtain additional verification of the existence or amount of that obligation. In general, creditors should determine whether the monthly, fully amortizing payments are substantially equal based on guidance provided in 1026.17(c)(3) (discussing minor variations), and 1026.17(c)(4)(i) through (iii) (discussing payment-schedule irregularities and measuring odd periods due to a long or short first period) and associated commentary. (3) For a negative amortization loan under paragraph (d)(1)(i)(C) of this section, the maximum loan amount, determined after adjusting for the outstanding principal balance.

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