It’s the end of the year…but many things to look forward to…

January 21st a BIG day for regulations:

 

  • ATR/QM Rule  –  Ability to Repay/Qualified Mortgage; Issued May, 2011, originally  to come out in final 4/12 – Rule before January 21, 2013, implementation date unknown
  • HOEPA Rule – High Cost Mortgage Loans (Reg Z)  issued July  9, 2012, Comments submitted  September 9 – Rule before January 21, 2013, implementation date unknown
  • Loan Officer Compensation Rule – Mortgage Originator Standards (Reg Z) issued August 17, 2012, Comments due October 16, 2012 – Rule before January 21, 2013, implementation date unknown
  • Servicing Rule – Mortgage Servicing (Regulation X; Reg Z) issued August 10,  2012, Comments due October 9, 2012 – Rule before January 21, 2013, implementation date unknown
  • Escrow Rule  – Requirements for Escrow Accounts  (Reg Z)  Rule before January 21, 2013, implementation date unknown
  • ECOA Appraisal Disclosure Rule – Final rule before January 21, 2013, implementation date unknown

More to look forward to later in the year:

 

  • HUD Disparate Impact Rule –   Final rule issuance date and implementation date unknown
  • QRM rule – Six rule makers (not including CFPB) Final rule to be published after QM. Effective date unknown
  • RESPA-TILA Integration Rule – TILA/RESPA Mortgage Disclosure Integration (Regulation X;  Reg Z) Proposed rule issued July 9, 2012, First comments due  and submitted September 7, 2012, Second (main set) due November 6, 2012.  Final rule and effective date unknown
  • Basel III Rule- Three rule makers ( FRB, OCC & FDIC) Issued June 7, Comments due October 22, 2012. Final Rule, effective date, unknown
  • HMDA Pre-Rule –  Home Mortgage Disclosure Act (Reg C) Proposal and final rule dates unknown
  • Loan Originator Anti-Steering Rule – Proposal and final rule dates unknown

Happy New Year to all..

MBA Files Comment letter on Basel III

Yesterday MBA sent their comment letter on Basel III covering Regulatory Capital Rules:

A. Regulatory Capital, Implementation of Basel III: Minimum Regulatory Capital
Ratios, Capital Adequacy, Transition Provisions and Prompt Corrective Action
(Regulatory Capital Rule)

B. Standardized Approach for Risk-Weighted Assets: Market Discipline and
Disclosure Requirements (Standardized Approach)

C. Advanced Approaches Risk-based Capital Rule: Market Risk Capital Rule
(Advanced Approach)

The 84 page letter focused on issues in the following areas of real estate finance:

  • Impact on the Mortgage Market from Basel III
  • Mortgage Servicing Rights (both residential and commercial/multifamily)
  • Residential Mortgage Loans
  • Multi-family/Commercial Real Estate Loans
  • Securitization Exposures
  • Fannie Mae and Freddie Mac MBS (both residential and multifamily)
  • Commercial and Multifamily Servicer Cash Advance
  • Financing Independent Mortgage Companies
  • Off-Balance Sheet Exposure

MBA Basel III Comment Letter

 

FTC Staff Submits Comment to CFPB on Mortgage Disclosure Forms

On October 2, 2012 the Federal Trade Commission’s staff submitted a comment to the CFPB on proposed disclosure forms designed to help consumers understand the features, costs, and risks of home mortgage loans.  The comment is in response to a CFPB Notice of Proposed Rulemaking regarding disclosures consumers receive when they apply for and close on a mortgage loan.

It states that the disclosures developed by the CFPB will likely improve the information that consumers receive under current federal regulations; they are generally simpler and less technical, and should be easier to understand.

The comment encourages the CFPB to conduct controlled quantitative testing before finalizing a rule to help ensure that the proposed disclosures effectively convey key mortgage terms to consumers and are not misinterpreted or misunderstood.  The comment notes that quantitative testing should focus on the actual performance of the disclosures in conveying the desired information to consumers, and include control groups that allow for valid comparisons to existing disclosures.  In 2007, an FTC staff study found that then-existing mortgage disclosures failed to convey key mortgage costs and terms to many consumers, and that better disclosures could be created to help consumers make informed decisions about mortgage products.

The Commission vote approving the comment was 5-0.

CFPB – Extends time for comments on proposed changes to the definition of the finance charge

CFPB announced the following today:

“One part of our proposed rule to improve the disclosures consumers receive when applying for and closing on a mortgage was a change to the current definition of “finance charge.” The finance charge is intended to reflect the cost of credit for consumers as a dollar amount. It’s used to calculate the Annual Percentage Rate or “APR.”

The proposed rule would eliminate numerous exceptions that exclude common costs (such as title insurance) from the finance charge. We want APR to be a more accurate reflection of the overall cost of credit. However, higher APRs and finance charges could affect the number of loans subject to other legal requirements and protections, such as special disclosures and restrictions for high-cost mortgages.  In another rulemaking, we also proposed an adjustment that would prevent that from happening, by changing the coverage test for the high-cost mortgage protections to account for the higher APRs.

Comments on the proposed changes to the definition of the finance charge and the proposed change to the high-cost mortgage coverage test were originally due on September 7, 2012. Based on the feedback received, the Bureau now believes that it is appropriate to provide the public with additional time to prepare their comments. These comments are now due November 6, 2012. All other deadlines under both proposed rules remain unchanged.”

sample-loan-estimate
sample-closing-disclosure_no-seller
sample-closing-disclosure_separate-to-seller

Testimony on Ability to Repay – Qualified Mortgage Rules

On Wednesday July 11, 2012 the House Subcommittee on Financial Institutions and Consumer Credit held a hearing addressing consumer and market perspectives of mortgage reforms made by The Dodd-Frank Wall Street Reform and Consumer Protection Act. Both consumer and industry members provided testimony, including the Mortgage Bankers Association and American Bankers Association.  The ongoing CFPB rulemaking to implement the Dodd-Frank ability to repay rule and special status under the rule for qualified mortgages was the focus of both trade groups’ testimony.

Both trade groups agreed that a qualified mortgage should be broadly defined so that qualified loans can be made to a wide range of borrowers. It is generally viewed by the trade groups as well as the consumer groups that if this is not done many deserving consumers will not be able to obtain mortgage loans.

The other point made by all was the need for a safe harbor, without a clear definition the threat of litigation might significantly limit lending through the tightening of already conservative underwriting standards and with some lenders actually exiting the business.

Both trade groups recently submitted letters during the comment period on the ability to repay rule including litigation costs.

MBA Testimony
ABA Testimony
ABA-Ability to Repay
MBA-Ability to Repay

CFPB Targets Reverse Mortgages

CFPB Report to Congress on reverse mortgages recently issued indicates that the reverse mortgage industry should expect more scrutiny and regulation from the CFPB.  Among the CFPB’s  key findings in the report is that  existing disclosures and available counseling may not sufficiently protect borrowers and  “stronger regulation, supervision of reverse mortgage companies, and enforcement of existing laws may also be necessary.”

The CFPB also posted on its website a new four-page CFPB Consumer Guide on reverse mortgages and updated the answers to common reverse mortgage questions posted on its website.

The CFPB has also issued a notice and request for information on topics identified in the study as warranting further research “to help determine if additional consumer education or regulatory action is needed.”

CFPB Publishes RESPA-TILA Disclosure Regulation

Released today, comments due as follows:

Comments regarding the proposed amendments to 12 CFR §§ 1026.1(c) and 1026.4 must be received on or before September 7, 2012. For all other sections including proposed amendments, comments must be received on or before November 6, 2012.

Send to:

You may submit comments, identified by Docket No. CFPB-2012-0028 or RIN 3170-AA19, by any of the following methods:

• Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

• Mail/Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street, NW, Washington, DC 20552.

Instructions: All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking.

Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commentators are encouraged to submit comments electronically. In general, all comments received will be posted without change to http://www.regulations.gov.

Integrated Disclosure Reg Z-Reg X

Small Bus Rev Panel Final Report

View the following file at Regulations.Gov:

Evolution of the Integrated Disclosure

 

 

HOEPA Proposed Changes to Regulation Z and Regulation X

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amends the Truth in Lending Act by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protection Act of 1994 (HOEPA), by revising and expanding the triggers for coverage under HOEPA, and by imposing additional restrictions on HOEPA mortgage loans, including a pre-loan counseling requirement.

The Dodd-Frank Act also amends the Truth in Lending Act and the Real Estate Settlement Procedures Act by imposing certain other requirements related to homeownership counseling. The Bureau is proposing to amend Regulation Z (Truth in Lending) and Regulation X (Real Estate Settlement Procedures Act) to implement the Dodd-Frank Act’s amendments to the Truth in Lending Act and the Real Estate Settlement Procedures Act.

DATES: Comments must be received on or before September 7, 2012

ADDRESSES: You may submit comments, identified by Docket No. CFPB-2012-0029 or RIN 3170-AA12, by any of the following methods:

Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

Mail: Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection, 1700 G Street, N.W., Washington, D.C. 20552.

Hand Delivery/Courier in Lieu of Mail: Monica Jackson, Office of the Executive Secretary, Bureau of Consumer Financial Protection, 1700 G Street, N.W., Washington, D.C. 20552.

All submissions must include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. In general, all comments received will be posted without change to http://www.regulations.gov.

High Cost Amendments to Reg x- Reg Z

Richard Cordray named Director of the Consumer Financial Protection Bureau (CFPB)

Richard Cordray
COGNOPS can help with new regulations, disclosures and audits. Contact us today (919) 806-4218
Yesterday, President Obama took the bold political step of using a recess appointment to name Richard Cordray as the Director of the Consumer Financial Protection Bureau (CFPB), effective through the end of the U.S. Senate’s next full session (i.e., year end 2013).

The official announcement was made this afternoon at a campaign-style event in Cleveland, Ohio, a key presidential battleground state. Cordray’s appointment comes over significant objections from both House and Senate Republicans to the governance structure of the bureau. While not objecting to Cordray’s qualifications per se, Republican leaders had been using procedural measures (pro forma sessions) to prevent a recess appointment absent structural changes. Yesterday’s action promises to further exacerbate the political tensions between Democrats and Republicans.

Unless Cordray’s appointment is ultimately found to be unlawful and an injunction issued against the CFPB’s exercise of its new powers, the Bureau will now be able to implement its full range of authority under the Dodd-Frank Act, including the ability to regulate non-bank financial institutions and to issue rules dealing with unfair, deceptive, and abusive acts and practices. Without a Director, the CFPB was limited to using those powers inherited from existing banking regulators. A fully empowered CFPB presents a number of new challenges for our industry.

Although the Dodd-Frank law authorized the consumer agency to regulate the so-called nonbank financial companies, which previously had little supervision, the law was purposely written such that the bureau could not invoke its powers until it had a director. That can now be done.

The bureau had taken responsibility for existing regulations on consumer products at banks and thrifts, it was not able to write new regulations for banking products like mortgages and credit cards until it had a permanent leader.

Are you ready for what is coming? We can help with the new regulations, disclosures and audits. Contact COGNOPS today.