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Beneficial Ownership Rule and Owner of Collateral
Issue/Inquiry
Under the Beneficial Ownership Rule, what is the Bank’s responsibility when the borrower is an individual, but the owner of the collateral is a limited liability company, trust, or an estate?
HMDA Reporting When a Loan is Closed by Another Lender
Issue/Inquiry
The Bank table funds residential mortgage loans made by mortgage companies. The Bank underwrites the loans and issues a commitment to the mortgage company, not the loan applicant. The loans are closed in the name of the mortgage company and bought by the Bank the same day. The Bank has reported the loans on its HMDA LAR as “Code 6 – Purchase” and completes all the fields appropriate for a purchase. Is this correct?
Flood Insurance Escrow When Property Is No Longer in a Flood Zone
Issue/Inquiry
The Bank has a loan for which it escrows for flood insurance. However, it recently received a life-of-loan determination that the property was no longer in a Special Flood Hazard Area. Should the Bank obtain verification to determine whether a mistake was made? In addition, if flood insurance is no longer required, should the Bank give the borrower an option to continue the escrow or refund the escrow balance to the borrower?
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