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Lending and Loan Documentation

Missouri Changes Garnishment Fee

Missouri recently amended Mo. Rev. Stat. §525.230 to allow for higher fees to be charged by financial institutions in processing garnishment orders. Previously, the statute allowed a financial institution to charge a fee equal to the greater of $8 or 2% of the amount to be garnished, for the trouble and expense of processing the garnishment and paying over any garnished funds to the court.

How Small is Small?

Lenders that participate in Small Business Administration (“SBA”) loan programs should be aware that the SBA recently issued an interim final rule to increase monetary based small business size standards.  These standards are based on criteria such as receipts, assets, net worth and income.

Real estate is back. So is construction lending. Be prepared.

A bank’s commercial construction lending portfolio often covers a wide variety of projects ranging from residential developments, apartments, condominiums and hotels, to office buildings and shopping centers.  Every type of commercial construction project requires a borrower with requisite expertise and skills to construct and market the project. Accordingly, a bank’s construction lending team not only needs to believe the project is a viable one, but they must also have the requisite expertise and skill to understand if a borrower’s budget is appropriate for the project. Understanding the budget process helps to make sure that the loan will accommodate both the initial project costs as well as reasonable cost overruns.

Recent Developments concerning TILA Rescission Rights

Under the Truth in Lending Act (“TILA”), consumers are granted a right of rescission for mortgage loan transactions. Normally, a mortgage lender provides the consumer notice of this rescission right, and the consumer has three business days to rescind the transaction. If the mortgage lender does not provide the required TILA disclosures, the right to rescind is extended from three business days to three years. The Eight Circuit and the Eastern District of North Carolina have both recently provided additional guidance with respect to a consumer’s rescission rights and the rescission process.

Reliance on Reg. Z Model Forms May Be Misplaced

Lenders beware! A federal district court recently held that despite a lender’s use of a model form, the disclosure provided by the lender did not adequately notify the borrower of his rescission rights under the Truth in Lending Act (“TILA”) and Regulation Z.  In the case of Simmons v. CitiMortgage Inc. the United States District Court for the District of Utah the borrowers successfully sued the lender to enforce their rescission rights.

Do Spousal Waivers Violate Reg B?

The reach of the Equal Credit Opportunity Act (“ECOA”) and Regulation B (“Reg B”) has become a popular conversation topic among banking professionals. As part of that conversation, many commentators have questioned whether Regulation B prohibits the use of a spousal waiver.

Do LLC’s Need Operating Agreements?

Did you know that most states do not require that a limited liability company adopt a formal operating agreement? In fact, only five states, including California, Delaware, Maine, Missouri and New York, require that an LLC maintain an operating agreement. Therefore, the question often arises as to whether a customer needs or should have an operating agreement.

Happy Holidays from the CFPB: 1,088 Pages of New Disclosure Rules that will Present Some Interesting Practical Problems for Implementing Banks

Just in time for the holidays, the CFPB gifted the banking industry another 1,088 pages of final mortgage disclosure rules. 

New Homeownership Counseling Requirements Bookmark This Page and Update Your Mortgage Loan Procedures

Last week, the CFPB launched a website tool to help consumers find local housing counseling agencies to answer their questions or address their concerns about home ownership.  This tool can also be used by banks to generate a list of approved counselors for borrowers in connection with mortgage loan applications. 

Reminder of Fee Changes for Certain Missouri Loans

As you may be aware, Section 408.140 of the Missouri Revised Statutes, concerning loan fees for small loans, has recently been modified.  We previously blogged about the changes regarding short term cash advance fees.  As we indicated, with respect to open-end credit tied to a transaction account, the maximum credit advance fee that may be charged by a lender is now the lesser of $75 or 10% of the amount advanced.  This change became effective August 28, 2013.

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