Menu
Banking Exchange Magazine Logo
Menu

More help for mortgage modifiers

  • |
  • Written by  Lucy Griffin
  • |
  • Comments:   DISQUS_COMMENTS

The “10 Steps to Defusing Loan-Mod Bombs” article (published online at www.bankingexchange.com and in the May print and digital editions of Banking Exchange) cautions banks about the compliance traps that banks need to watch out for when helping consumers with mortgage refinancings and modifications, including the prohibition under the Home Mortgage Disclosure Act (HMDA) against requesting government monitoring information (race, sex, and ethnicity) from borrowers for loan modifications. Banks that are following the Obama Administration’s new Homeowner Affordability Modification Program (HAMP) have additional compliance challenges in knowing when the normal rules don’t apply.

On April 21, 2009, the U.S. Treasury Department issued Supplemental Directive 09-02 that makes an exception to the normal rules concerning requests for government monitoring information for mortgage loans. The new directive requires loan servicers who are participating in the HAMP to request, as part of the HAMP Hardship Affidavit, the borrowers’ race, ethnicity, and sex, even if the loan is not normally subject to data collection compliance requirements. 

The process is familiar. The loan servicer is required to request the government monitoring information.  If the borrowers elect not to provide the information, and the Hardship Affidavit is completed in a face-to-face interview, the servicer is required to record the information based on visual observation or surname. If the Hardship Affidavit is handled over the telephone, by internet, or through the mail, and the borrowers refuse to provide the information, the servicer is required to ask for the information, but not required to record it based on visual observation or surname. 

The directive explains that the additional request for government monitoring information is authorized under the Equal Credit Opportunity Act and Regulation B, which allows a creditor to obtain information required by a regulation, order, or agreement issued by, or entered into with, a court or an enforcement agency (including the attorney general of the United States or a similar state official) to monitor or enforce compliance with the ECOA, Regulation B or other federal or state statutes or regulations. The Treasury Department intends to use the borrower characteristic information to monitor loan servicers’ compliance with fair-lending laws. 

back to top

Sections

About Us

Connect With Us

Resources

Webinar: From KYC to IDV

How three leading banks are utilizing cutting-edge
digital tools to onboard, win, and wow customers

Time/Date: June 23, 2021 11:00 a.m. ET

Digital adoption, already moving at warp speed, accelerated seven years into the future during the COVID-19 pandemic. As the number of bank branches continues to fall, with at least one study predicting all branches will disappear by 2034 (Fox Business) and foot traffic declining (Vox), today’s most innovative banks are charting a new, digital-first path to win over customers while increasing security, meeting KYC compliance requirements, and winning customers to drive revenue.

In this webinar, you’ll hear from John Baird, Founder & CEO of Vouched, Tyler Crawford, COO of Bankers Healthcare Group, Anand Sathiyamurthy, CPO of Flagstar Bank and Daniel Sheehan, Chairman & CEO of Professional Bank as they describe their vision for digital transformation and how customer expectations are changing to digital first. They’ll also explore how fostering an innovation mindset creates new ways to tackle complex KYC problems and allows them to quickly compete in new markets and win customers.

REGISTER NOW!

This webinar is brought to you by:
Vouched Logo