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Federal Reserve System 12 Cfr Part 226 Regulation z Docket No R-1378 Truth in Lending e9-27742

Federal Reserve System 12 Cfr Part 226 Regulation z Docket No R-1378 Truth in Lending e9-27742

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Published by Deontos
To bring better understanding to WHO the "real parties in interest" are in loan securitization.

To use document excerpts for identifying "the creditor" officially in QWRS's.

From livinglies.wordpress.com:

ANONYMOUS, on January 6th, 2010 at 4:20 pm Said:

Try including your request to identify the actual creditor in a Qualified Written Request. Use the Federal Reserve Interim Opinion for May 2009 to support the definition of ‘”creditor”. Emphasize that the creditor is the entity who currently reports your mortgage on their accounting balance sheet. Let them know that a creditor is NOT a mortgage servicer, trust or trustee – and is not security holders (many times leveraged with derivatives) in asset-backed trusts (this is only for pass-through of cash payments).

ANONYMOUS, on January 7th, 2010 at 12:25 pm Said:

Read the section under “Mortgage Transfer Disclosures”.
(See blue highlighted heading of document.)

Remember that under securitization only current payments can be passed-through. Thus, foreclosures are charged off and removed from trust by derivatives or by direct sale of collection rights. There can be no legal title to charged-off loans – only transfer of the right to collection. Legal title to homes is not acquired until after homes are sold at foreclosure auction.

Investors in “pass through” or “Real Estate Mortgage Investment Conduits (REMICs) have only a “beneficial” interest in the loan “pool” pass-through, and therefore do not hold mortgage title on their balance sheets. The Federal Reserve is clear as to definition of creditor (covered person) under the TILA amendment interpretation.

The party who will write-off mortgage loan on their balance sheet is creditor (covered person) according to TILA Fed Res opinion. If collection rights are sold (write-off accounts cannot be sold) then that party is current creditor to whom the debt must be paid. At this point the SPV has nothing do to with the loan – it is written off – gone – but the right to collect remains – need to know with whom since trustee/trust no longer has it.
To bring better understanding to WHO the "real parties in interest" are in loan securitization.

To use document excerpts for identifying "the creditor" officially in QWRS's.

From livinglies.wordpress.com:

ANONYMOUS, on January 6th, 2010 at 4:20 pm Said:

Try including your request to identify the actual creditor in a Qualified Written Request. Use the Federal Reserve Interim Opinion for May 2009 to support the definition of ‘”creditor”. Emphasize that the creditor is the entity who currently reports your mortgage on their accounting balance sheet. Let them know that a creditor is NOT a mortgage servicer, trust or trustee – and is not security holders (many times leveraged with derivatives) in asset-backed trusts (this is only for pass-through of cash payments).

ANONYMOUS, on January 7th, 2010 at 12:25 pm Said:

Read the section under “Mortgage Transfer Disclosures”.
(See blue highlighted heading of document.)

Remember that under securitization only current payments can be passed-through. Thus, foreclosures are charged off and removed from trust by derivatives or by direct sale of collection rights. There can be no legal title to charged-off loans – only transfer of the right to collection. Legal title to homes is not acquired until after homes are sold at foreclosure auction.

Investors in “pass through” or “Real Estate Mortgage Investment Conduits (REMICs) have only a “beneficial” interest in the loan “pool” pass-through, and therefore do not hold mortgage title on their balance sheets. The Federal Reserve is clear as to definition of creditor (covered person) under the TILA amendment interpretation.

The party who will write-off mortgage loan on their balance sheet is creditor (covered person) according to TILA Fed Res opinion. If collection rights are sold (write-off accounts cannot be sold) then that party is current creditor to whom the debt must be paid. At this point the SPV has nothing do to with the loan – it is written off – gone – but the right to collect remains – need to know with whom since trustee/trust no longer has it.

More info:

Published by: Deontos on Jan 08, 2010
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60143
Federal Register
/Vol. 74, No. 223/Friday, November 20, 2009/Rules and Regulations
8. Amend Appendix A to part 325 byrevising footnote 39 to read as follows:
Appendix A to Part 325—Statement of Policy on Risk-Based Capital
* * * * *
II ***C.***
* * * * *
39
This category would also include a first-lien residential mortgage loan on a one-to-four family property that was appropriatelyassigned a 50 percent risk weight pursuant tothis section immediately prior tomodification (on a permanent or trial basis)under the Home Affordable MortgageProgram established by the U.S. Departmentof Treasury, so long as the loan, as modified,is not 90 days or more past due or innonaccrual status and meets other applicablecriteria for a 50 percent risk weight. Inaddition, real estate loans that do not meetall of the specified criteria or that are madefor the purpose of property development areplaced in the 100 percent risk category.
* * * * *
Department of the TreasuryOffice of Thrift Supervision
12 CFR Chapter V 
For reasons set forth in the commonpreamble, the Office of ThriftSupervision amends part 567 of ChapterV of title 12 of the Code of FederalRegulations as follows:
PART 567—CAPITAL
9. The authority for citation for part567 continues to read as follows:
Authority:
12 U.S.C. 1462, 1462a, 1463,1464, 1467a, 1828 (note)
PART 567—CAPITAL
10. Section 576.1 is amended in thedefinition
Qualifying mortgage loan
 byrevising paragraph (4) to read as follows
§567.1Definitions.
* * * * *
Qualifying mortgage loan
* * * * *(4) A loan that meets the requirementsof this section prior to modification ona permanent or trial basis under the U.S.Department of Treasury’s HomeAffordable Mortgage Program may beincluded as a
qualifying mortgage loan,
so long as the loan is not 90 days ormore past due.* * * * *
Dated: November 10, 2009.
John C. Dugan,
Comptroller of Currency.
By order of the Board of Governors of theFederal Reserve System, November 12, 2009.
Jennifer J. Johnson,
Secretary of the Board.
Dated at Washington DC, this 12th day of November 2009.Federal Deposit Insurance Corporation.
Valerie J. Best,
Assistant Executive Secretary.
Dated: October 29, 2009.By the Office of the Thrift Supervision.
John E. Bowman,
Acting Director.
[FR Doc. E9–27776 Filed 11–19–09; 8:45 am]
BILLING CODE 6714–01–P; 6210–01–P; 4810–33–P;6720–01–P
FEDERAL RESERVE SYSTEM12 CFR Part 226
[Regulation Z; Docket No. R–1378]
Truth in Lending
AGENCY
:
Board of Governors of theFederal Reserve System.
ACTION
:
Interim final rule; request forpublic comment.
SUMMARY
:
The Board is publishing forpublic comment an interim final ruleamending Regulation Z (Truth inLending). The interim rule implementsSection 131(g) of the Truth in LendingAct (TILA), which was enacted on May20, 2009, as Section 404(a) of theHelping Families Save Their HomesAct. TILA Section 131(g) becameeffective immediately upon enactmentand established a new requirement fornotifying consumers of the sale ortransfer of their mortgage loans. Thepurchaser or assignee that acquires theloan must provide the requireddisclosures in writing no later than 30days after the date on which the loan issold or otherwise transferred orassigned. The Board is issuing thisinterim rule, effective immediately uponpublication, so that parties subject to thestatutory requirement have guidance onhow to comply. However, to allow timefor any necessary operational changes,compliance with the interim final ruleis optional for 60 days from the date of publication; during this period, coveredpersons would continue to be subject tothe statute’s requirements. The Boardseeks comment on all aspects of theinterim rule.
DATES
:
This interim final rule iseffective November 20, 2009; however,to allow time for any necessaryoperational changes, compliance withthis interim final rule is optional until January 19, 2010. Comments must bereceived on or before January 19, 2010.
ADDRESSES
:
You may submit comments,identified by Docket No. R– 1378, byany of the following methods:
Agency Web Site: http:// www.federalreserve.gov 
. Follow theinstructions for submitting comments at
http://www.federalreserve.gov/ generalinfo/foia/ProposedRegs.cfm.
Federal eRulemaking Portal: http:// www.regulations.gov.
Follow theinstructions for submitting comments.
E-mail:regs.comments@federalreserve.gov.
Include the docket number in thesubject line of the message.
Fax:
(202) 452–3819 or (202) 452–3102.
Mail:
Address to Jennifer J. Johnson,Secretary, Board of Governors of theFederal Reserve System, 20th Street andConstitution Avenue, NW., Washington,DC 20551.All public comments will be madeavailable on the Board’s Web site at
http://www.federalreserve.gov/ generalinfo/foia/ProposedRegs.cfm
assubmitted, unless modified for technicalreasons. Accordingly, comments willnot be edited to remove any identifyingor contact information. Publiccomments may also be viewedelectronically or in paper in Room MP–500 of the Board’s Martin Building (20thand C Streets, NW.,) between 9 a.m. and5 p.m. on weekdays.
FOR FURTHER INFORMATION CONTACT
:
PaulMondor, Senior Attorney, or StephenShin, Attorney; Division of Consumerand Community Affairs, Board of Governors of the Federal ReserveSystem, Washington, DC 20551, at (202)452–2412 or (202) 452–3667. For usersof Telecommunications Device for theDeaf (TDD) only, contact (202) 263–4869.
SUPPLEMENTARY INFORMATION
:
I. Background
The Truth in Lending Act (TILA), 15U.S.C. 1601
et seq.,
seeks to promote theinformed use of consumer credit byrequiring disclosures about its costs andterms. TILA requires additionaldisclosures for loans secured byconsumers’ homes and permitsconsumers to rescind certaintransactions that involve their principaldwelling. TILA directs the Board toprescribe regulations to carry out itspurposes and specifically authorizes theBoard, among other things, to issueregulations that contain suchclassifications, differentiations, or otherprovisions, or that provide for such
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60144
Federal Register
/Vol. 74, No. 223/Friday, November 20, 2009/Rules and Regulations
1
RESPA is implemented by Regulation X, 24 CFRpart 3500, which is issued by the Department of Housing and Urban Development (HUD).
adjustments and exceptions for anyclass of transactions, that in the Board’sjudgment are necessary or proper toeffectuate the purposes of TILA,facilitate compliance with TILA, orprevent circumvention or evasion of TILA. 15 U.S.C. 1604(a). TILA isimplemented by the Board’s RegulationZ, 12 CFR part 226. An Official Staff Commentary interprets the requirementsof the regulation and provides guidanceto creditors in applying the rules tospecific transactions.
See
12 CFR part226, Supp. I.On May 20, 2009, the HelpingFamilies Save Their Homes Act of 2009(the ‘‘2009 Act’’) was signed into law.Public Law 111–22, 123 Stat. 1632.Section 404(a) of the 2009 Act amendedTILA to establish a new requirement fornotifying consumers of the sale ortransfer of their mortgage loans. Thepurchaser or assignee that acquires theloan must provide the requireddisclosures no later than 30 days afterthe date on which the loan is acquired.This provision is contained in TILASection 131(g), 15 U.S.C. 1641(g), whichapplies to any consumer credittransaction secured by the principaldwelling of a consumer. Consequently,the disclosure requirements in Section131(g) apply to both closed-endmortgage loans and open-end homeequity lines of credit (HELOCs).Section 131(g) became effectiveimmediately upon enactment on May20, 2009, and did not require theissuance of implementing regulations.Mortgage loans sold or transferred on orafter that date became subject to therequirements of Section 131(g), andfailure to comply can result in civilliability under TILA Section 130(a).
See
15 U.S.C. 1640(a). Accordingly, asdiscussed below, the Board finds thereis good cause for issuing an interim rulethat is effective immediately uponpublication, so that parties subject to therule have guidance on how to interpretand comply with the statutoryrequirements.Under the Real Estate SettlementProcedures Act (RESPA), consumersmust be notified when the servicer of their mortgage loan has changed.
1
The2009 Act’s legislative history reflectsthat, in addition to the informationprovided under RESPA, the Congressintended to provide consumers withinformation about the identity of theowner of their mortgage loan. In somecases, consumers that have an extendedright to rescind the loan under TILASection 125, 15 U.S.C. 1635, can assertthat right against the purchaser orassignee.
See
TILA Section 131(c), 15U.S.C. 1641(c). Among other things, the2009 Act seeks to ensure that consumersattempting to exercise this right knowthe identity of the assignee and how tocontact the assignee or its agent for thatpurpose.
See
155 Cong. Rec. S5098–99(daily ed. May 5, 2009); 155 Cong. Rec.S5173–74 (daily ed. May 6, 2009). Thelegislative history indicates, however,that TILA Section 131(g) was notintended to require notice when atransaction ‘‘does not involve a changein the ownership of the physical note,’’such as when the note holder issuesmortgage-backed securities but does nottransfer legal title to the loan. 155 Cong.Rec. S5099.
II. Summary of the Interim Final Rule
Consistent with the legislative intent,this interim final rule implementsSection 404(a) of the 2009 Act byapplying the new disclosurerequirements to any person or entitythat acquires ownership of an existingconsumer mortgage loan, whether theacquisition occurs as a result of apurchase or other transfer orassignment. A person is covered by therule only if the person acquires legaltitle to the debt obligation. AlthoughTILA and Regulation Z generally applyonly to persons to whom the obligationis initially made payable and thatregularly engage in extending consumercredit, Section 404(a) and the interimfinal rule apply to persons that acquiremortgage loans without regard towhether they also extend consumercredit by originating mortgage loans.However, the interim final rule appliesonly to persons that acquire more thanone mortgage loan in any 12-monthperiod.To comply with the interim rule, acovered person must mail or deliver therequired disclosures on or before the30th day following the date that thecovered person acquired the loan. Thedisclosure need not be given, however,if the covered person transfers or assignsthe loan to another party on or beforethat date. This exception seeks toprevent the confusion that could resultif consumers receive outdated contactinformation for parties that no longerown their loan. For example, a coveredperson that acquires a mortgage loan onMarch 1 must mail or deliver thedisclosures on or before March 31.However, if the covered person sells orassigns the loan to a third party onMarch 31 (or earlier), the coveredperson need not provide the disclosures, but subsequent purchasers would haveto comply with the rule.
III. Legal Authority
General Rulemaking Authority 
As noted above, TILA Section 105(a)directs the Board to prescriberegulations to carry out the act’spurposes. 15 U.S.C. 1604(a). Section 404of the 2009 Act became effectiveimmediately without any requirementthat the Board first issue implementingrules. Nevertheless, the Board finds thatthe legislative purpose of Section 404will be furthered and its effectivenessenhanced by the issuance of rules thatspecify the manner in which coveredpersons can comply with its provisions.In addition, the Board believes thatimplementing regulations will facilitatecovered persons’ compliance with thestatutory provisions.TILA also specifically authorizes theBoard, among other things, to:
Issue regulations that contain suchclassifications, differentiations, or otherprovisions, or that provide for suchadjustments and exceptions for anyclass of transactions, that in the Board’sjudgment are necessary or proper toeffectuate the purposes of TILA,facilitate compliance with the act, orprevent circumvention or evasion. 15U.S.C. 1604(a).
Exempt from all or part of TILA anyclass of transactions if the Boarddetermines that TILA coverage does notprovide a meaningful benefit toconsumers in the form of usefulinformation or protection. The Boardmust consider factors identified in theact and publish its rationale at the timeit proposes an exemption for comment.15 U.S.C. 1604(f).
Authority To Issue Interim Final RulesWithout Notice and Comment 
The Administrative Procedures Act(APA), 5 U.S.C. 551
et seq.,
generallyrequires public notice beforepromulgation of regulations.
See
5U.S.C. 553(b). Unless notice or a hearingis specifically required by statute,however, the APA also provides anexception ‘‘when the agency for goodcause finds (and incorporates thefinding and a brief statement of reasonstherefore in the rules issued) that noticeand public procedure thereon areimpracticable, unnecessary, or contraryto the public interest.’’ 5 U.S.C.553(b)(B).As an initial matter, neither TILA northe 2009 Act specifically requires theBoard to provide notice or a hearingwith respect to this rulemaking.
See
TILA Section 105(a), 15 U.S.C. 1604(a).In addition, the Board finds that thereis good cause to conclude that providingnotice and an opportunity to comment before issuing this interim final rule
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60145
Federal Register
/Vol. 74, No. 223/Friday, November 20, 2009/Rules and Regulations
2
See
Public Law 103–325, Title III, §302(b), Sept.23, 1994, 108 Stat. 2214, codified at 12 U.S.C.4802(b).
would be impracticable and contrary tothe public interest. The statutoryrequirements in Section 404 becameeffective upon enactment on May 20,2009, as noted above. Covered personsmust comply with those requirementseven if the Board does not issue thisinterim final rule.This interim final rule implements therequirements contained in the 2009 Act but also interprets the statutory text toresolve issues and ambiguities notdirectly addressed by the statute.Providing notice and opportunity forcomment on these matters beforeissuing these rules is not in the publicinterest because the legislation waseffective upon enactment. As a result,persons covered by Section 404(a)already must be in compliance with thelaw or face potential liability forviolations. The Board is issuing finalrules at this time so that coveredpersons receive immediate guidance onhow they can comply with the law in amanner that effectuates its purposes andavoids potential liability. The Board’sissuance of a notice of proposedrulemaking for public comment wouldnot serve this purpose because it wouldnot provide certainty regarding acovered person’s compliance obligationsuntil the rules were finalized. Byclarifying that Section 404(a) of the 2009Act covers persons that acquiremortgage loans even if they are not‘‘creditors’’ as defined under TILA, theinterim final rule also ensures thatconsumers will receive the notice thatwas intended by the legislation.Consequently, the Board finds that theuse of notice and comment procedures before issuing these rules would beimpracticable and would not be in thepublic interest. Interested parties willstill have an opportunity to submitcomments in response to this interimfinal rule.
Authority To Issue Interim Final RulesThat Are Effective Immediately 
This interim final rule is effectiveupon publication in the
FederalRegister
. Institutions may rely on therules immediately to ensure they arecomplying with the statutoryrequirements. However, to allow timefor any necessary operational changes,compliance with the interim final rulesis optional until January 19, 2010.During this 60-day period, institutionscontinue to be subject to the statute’srequirements.The APA generally requires that rules be published not less than 30 days before their effective date.
See
5 U.S.C.553(d). As with the notice and commentrequirement, however, the APAprovides an exception when ‘‘otherwiseprovided by the agency for good causefound and published with the rule.’’ 5U.S.C. 553(d)(3). Similarly, Section 302of the Riegle Community Developmentand Regulatory Improvement Act of 1994 generally requires that newregulations and amendments to existingregulations prescribed by a Federal banking agency, which imposeadditional reporting, disclosure, or othernew requirements on insured depositoryinstitutions, take effect on the first dayof the calendar quarter that begins on orafter the date on which the regulationsare published in final form.
2
There is anexception, however, when ‘‘the agencydetermines, for good cause publishedwith the regulation, that the regulationsshould become effective before suchtime.’’ 12 U.S.C. 4802(b)(1)(A).The interim final rule implementsstatutory disclosure requirements thathave been in effect since May 20, 2009.For the reasons discussed above, theBoard finds there is good cause to makethese rules effective immediately. Theserules are intended to interpret andclarify the statutory requirements andprovide compliance guidance. TheBoard will consider public commentson the provisions before adoptingfurther rules.Finally, TILA Section 105(d) generallyprovides that a regulation requiring anydisclosure that differs from thedisclosures previously required shallhave an effective date no earlier than‘‘that October 1 which follows by atleast six months the date of promulgation.’’ To the extent that theinterim rule contains disclosurerequirements that are already in effectunder the statute, Section 105(d) doesnot apply. Moreover, the Board believesthat the effective date mandated by the2009 Act for the specific disclosuresrequired under section 404 overrides thegeneral provision in TILA Section105(d).
IV. Section-by-Section Analysis
Section 226.39—Mortgage Transfer Disclosures
39(a) ScopeSection 226.39(a) defines the scope of the interim rule’s coverage. Thedisclosure requirements of §226.39apply to any ‘‘covered person,’’ withcertain exceptions that are specified inthe rule. For purposes of the rule, a‘‘covered person’’ includes any naturalperson or organization (as defined insection 226.2(a)(22) of the regulation)that acquires more than one existingmortgage loan in any 12-month period.Consistent with the statute, the ruleapplies to all consumer mortgagetransactions secured by the principaldwelling of a consumer, whether thetransaction is a closed-end loan or anopen-end line of credit.Generally, TILA and Regulation Zapply to parties that regularly extendconsumer credit. However, Section404(a) of the 2009 Act is not limited topersons that extend credit by originatingloans. Section 404(a) imposes thedisclosure duty on the ‘‘creditor that isthe new owner or assignee of the debt.’’The Board believes that to give effect tothe legislative purpose, the term‘‘creditor’’ in Section 404(a) must beconstrued to refer to the owner of thedebt following the sale, transfer orassignment, without regard to whetherthat party would be a ‘‘creditor’’ forother purposes under TILA orRegulation Z. The Board declines tolimit Section 404(a) to parties thatoriginate consumer loans because suchan interpretation would exempt asignificant percentage of mortgagetransfers which are acquisitions bysecondary market investors that do notextend consumer credit and are not‘‘creditors’’ for purposes of otherprovisions of Regulation Z.The Board also believes that Section404(a) of the 2009 Act does not alter thedefinition of ‘‘creditor’’ as currentlyused in TILA or Regulation Z. Thus, thefact that a person purchases mortgageloans and provides disclosures under§226.39 does not by itself make thatperson a ‘‘creditor’’ for purposes of TILA and Regulation Z (even if thedisclosure provided under Section404(a) uses the term ‘‘creditor’’).Accordingly, in describing the personssubject to the requirements of §226.39,the interim final rule uses the term‘‘covered person’’ rather than the term‘‘creditor.’’Under the interim final rule, thedisclosure requirements in §226.39apply only to persons that acquire morethan one consumer mortgage transactionin any 12-month period. Generally,TILA and Regulation Z cover onlyparties that are regularly engaged inconsumer credit transactions, who areexpected to have the capacity to putsystems in place to ensure compliancewith the rules. There is no indication inthe legislative history that Section 404was intended to apply more broadly.For example, individual homeownersmight choose to facilitate the sale of their home by providing seller financingand accepting the buyer’s promissorynote for a portion of the purchase price.At a later date, ownership of the debtobligation might be transferred to
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