When is an application an application?

According to the Real Estate Settlement Procedures Act

§ 3500.2 Definitions. (a) Statutory terms. All terms defined in RESPA (12 U.S.C. 2602) are used in accordance with their statutory meaning unless otherwise defined in paragraph (b) of this section or elsewhere in this part. (b) Other terms. As used in this part: {{6-30-05 p.6992}}

Application means the submission of a borrower's financial information in anticipation of a credit decision, whether written or computer-generated, relating to a federally related mortgage loan. If the submission does not state or identify a specific property, the submission is an application for a prequalification and not an application for a federally related mortgage loan under this part. The subsequent addition of an identified property to the submission converts the submission to an application for a federally related mortgage loan.

According to the Equal Credit Opportunity Act (Reg. B)

202.2
(f) Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested. The term application does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit. A completed application means an application in connection with which a creditor has received all the information that the creditor regularly obtains and considers in evaluating applications for the amount and type of credit requested (including, but not limited to, credit reports, any additional information requested from the applicant, and any approvals or reports by governmental agencies or other persons that are necessary to guarantee, insure, or provide security for the credit or collateral). The creditor shall exercise reasonable diligence in obtaining such information.

According to Home Mortgage Disclosure (Reg C)

§ 203.2 Definitions. In this regulation: (a) Act means the Home Mortgage Disclosure Act ("HMDA") (12 U.S.C. 2801 et seq.), as amended.
(b) Application.
(1) In general. Application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by a financial institution for the type of credit requested.
(2) Preapproval programs. A request for preapproval for a home purchase loan is an application under paragraph (b)(1) of this section if the request is reviewed under a program in which the financial institution, after a comprehensive analysis of the creditworthiness of {10-29-04 p.7272} the applicant, issues a written commitment to the applicant valid for a designated period of time to extend a home purchase loan up to a specified amount. The written commitment may not be subject to conditions other than:

(i) Conditions that require the identification of a suitable property;
(ii) Conditions that require that no material change has occurred in the applicant's financial condition or creditworthiness prior to closing; and
(iii) Limited conditions that are not related to the financial condition or creditworthiness of the applicant that the lender ordinarily attaches to a traditional home mortgage application (such as certification of a clear termite inspection).

According to U.S. Department of Housing and Urban Developement

Application: the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.

FDIC has a booklet "Mortgage Loan Prequalifications: Applications or Not"
A Guide For Complying With Regulations B and C

So which one do we use? Your comments are welcome.

This is what mortgage lenders are up against

"The way lenders got (home buyers) in the beginning was to give them this easy-street financing that just goes berserk when the rates explode," Suzanne Gravette Acker, of the Coalition on Homelessness and Housing in Ohio told the Dayton Daily News in late January. "Lots of people this year are going to find their mortgage doubles or even triples."

Quote from the Dayton Daily News, Tuesday, February 23, 2007 article link on the left.
"Ohio 7th, Dayton area 51st for January foreclosures" written by Lisa Bernard

February 22, 2007

"Cordray said there are three main factors for the upsurge in foreclosures around Ohio.One cause is the slow growth in the Ohio economy and job losses, he said.

A second key reason, according to Cordray, is that there's never been any real regulation of the mortgage lending industry in Ohio.

And a third factor is an increase in the complexity of some mortgage products, leading to a greater need for personal finance education, said the state treasurer.

As for regulation of the mortgage lending industry, Ohio legislators passed Senate Bill 185 last summer, taking effect New Year's Day.According to Cordray, the new law will tighten up a number of practices in the state and prevent some of "the very aggressive sub-prime lending" that got people into houses but on a short-term basis, with balloon payments and other things that weren't going to last for people."

Quote from Wilmington News Journal Tuesday February20, 2007 "Treasurer talks foreclosures Numbers high for Clinton County" Gary Huffenberger Staff Writer Article link on the left

Has anyone seen the rule for the Mortgage Loan Origination Disclosure Statement

Rule 1301:8-7-15 seems to be missing. This is the rule in regards to the Mortgage Loan Origination Disclosure Statement or MLODS. All the other rules are there but that one. I have found the rule in some of the drafts but not in the final version of the rules.

If any one has found this missing rule please let me know.

CSPA

The sections that seem to apply are in the Ohio Revised Code 1345.01 to 1345.13. So says SB185. I only find up to 1345.091.

In the Ohio Revised Code you must go to Section 13 then 1345.01. I have included the law links below.

The list below contains the parts of CSPA that directly speak to mortgage companies. Now all of CSPA applies, but these part are directed to the mortgage industry.

1321.57 Authorized interest and charges
1343.011 Residential mortages; discount points; prepayment and refinancing penalties.
1345.01(H)(J)(K) Definitions section
1345.031 Unconscionable acts or practices concerning residential mortgages
1345.09 (C)(2)Private remedies
1345.091 Liability of assignee or purchaser of mortgage loan for value

SB 117 would have limited damages under CSPA, but it seems to be in limbo at this time. The Ohio House and Senate is suing the Ohio Secretary of State over whether the bill was able to be allowed to be vetoed by the governor. (Look at the article from the Toledo Blade)

I have placed two links to an Ohio Supreme Court recent decision that talks about damages allowed. One from the Ohio Supreme Court and one from a law firm.

I am not sure how we can keep up with how CSPA is being applied. It seems like a moving target that I am not sure how to get my arms around. Any suggestions????

Revised Consumer Handbook on Adjustable-Rate Mortgages

In case you did not see this, The Federal Reserve Board and the Office of Thrift Supervision revised the Consumer Handbook on Adjustable-Rate Mortgages (the CHARM booklet).

Enclosed is the link to the announcement.
http://www.federalreserve.gov/boarddocs/press/bcreg/2006/20061226/default.htm

You can continue using the old one until October 1, 2007, then you will have to use the new revised booklets. The revised booklets are available for FREE from The Federal Reserve. The address is on the announcement.