Academic journal article ABA Banking Journal

Homeownership Counseling Required

Academic journal article ABA Banking Journal

Homeownership Counseling Required

Article excerpt

Q. Has homeownership counseling been revived?

A. FDIC's Consumer Examination Manual states: "The Housing and Urban Development Act of 1968 (12 USC 1701 x (c)(5)) was amended with regard to the homeownership counseling notification requirements. The homeownership counseling provisions have been extended to Sept. 30, 2000."

Here's what's required. All creditors that service conventional mortgage Loans and loans insured by the Department of Housing and Urban Development (HUD) must notify a homeowner who fails to pay any amount by the due date, under the terms of the home loan, of the availability of homeownership counseling. The notification must be made within 45 days from the payment date, unless the homeowner pays the amount before the expiration of the 45-day period.

The creditor must provide the homeowner with the notification of the availability of any homeownership counseling it offers and either: the HUD-approved nonprofit homeowner-ship counseling organizations; or the HUD toll-free telephone number (1-800-569-4287) through which the homeowner can obtain a list of the HUD-approved nonprofit organizations that serve the homeowner's residential area.

Bankers should note that this requirement does not apply to loans guaranteed by the Department of Veterans Affairs or in situations in which the amount overdue is paid before the expiration of 45-day period.

CHECKING ACCOUNTS IN THE SHOWROOM?

Q. Let's say a bank had an auto dealer who places auto o loan paper with the bank. Could the bank have the dealer open checking accounts at the dealership, from which monthly payments may be deducted?

A: This is permitted for national banks, with conditions. (The o Comptroller (OCC) published 12 CFR 7.4004 in the Federal Register on 11/4/99, page 63971.) The conditions are:

"(a) General rule. …

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