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  • CFPB Proposes Changes to Mortgage Rules for Small Lenders

    Lending

    On January 29, the CFPB announced a proposed rule that would provide regulatory relief to more small lenders. Among other things, the proposed rule would (i) increase the loan origination limit to qualify for “small creditor” status from 500 loans to 2,000 loans annually; (ii) include certain mortgage affiliates in the calculation of small-creditor status; (iii) expand the definition of “rural” to include census blocks that are not in an urban area; and (iv) extend the transition period in which small lenders can make QMs with balloon payments, regardless of location, to April 1, 2016. Comments on the proposed rule are due by March 30.

    CFPB Mortgage Origination Community Banks Qualified Mortgage Agency Rule-Making & Guidance

  • Special Alert: CFPB Finalizes Points-and-Fees Cure and Other Mortgage Rule Amendments

    Lending

    Last week, the CFPB finalized an important amendment to its ATR/QM Rule that provides a mechanism for curing points-and-fees overages on qualified mortgage (“QM”) loans, as well as more minor amendments to its mortgage origination and servicing rules.  The new rules, which were proposed in April, are detailed below.  The discussion below regarding the new origination rules, including the points-and-fees cure, will also appear with the American Bankers Association/BuckleySandler publication, The New CFPB Mortgage Origination Rules Deskbook.  (Click here for information about obtaining copies of the Deskbook.)

    Click here to view the full special alert.

    Questions regarding the matters discussed in this Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.

     

    CFPB Qualified Mortgage Ability To Repay Mortgage Origination

  • CFPB Finalizes Qualified Mortgage Points & Fees Cure

    Lending

    On October 22, the CFPB finalized targeted amendments to the Dodd-Frank Act mortgage rules that took effect in January 2014.  The amendments include:

    • Points and fees cure.  Under the Ability-to-Repay/Qualified Mortgage Rule, loans must meet certain requirements to receive “qualified mortgage” or “QM” status.  In particular, the points and fees charged to a consumer on a QM generally cannot exceed 3 percent of the loan amount.  The amendments permit a lender or secondary market purchaser that discovers, after the loan has closed, that the 3 percent cap was exceeded to retain QM status by refunding the excess amount to the consumer with interest. However, the refund must occur within 210 days after consummation and before the consumer files suit, provides written notice to the lender that the cap has been exceeded, or becomes 60 days past due.  In addition, the creditor must maintain and follow policies and procedures for reviewing points and fees and providing refunds to consumers. Although the CFPB stated that this amendment is intended to encourage lenders to provide access to credit to consumers seeking loans that are at or near the points and fees limit, the provision will expire on January 10, 2021.

    • Debt-to-income cure.  In the April proposal, the Bureau requested comment on the need for a cure for loans that inadvertently exceed the 43% debt-to-income requirement for QMs made under Appendix Q.  The Bureau deferred action on this issue, stating that it is considering the comments and whether to address the issue in a future rulemaking.
    • Ability-to-Repay exemption for non-profits expanded.  Certain 501(c)(3) nonprofit organizations that lend to low- and moderate-income consumers are already exempt from the Ability-to-Repay rule if the organization makes no more than 200 mortgages a year, among other limitations. The CFPB has amended this provision to allow certain non-profit groups to continue extending interest-free, forgivable loans, also known as “soft seconds,” without regard to the 200-mortgage loan limit.
    • Small servicer exemption expanded.  Certain small servicers are exempt from some of the CFPB’s new mortgage servicing rules, so long as they (and their affiliates) service 5,000 or fewer mortgage loans and they (or their affiliate) are the creditor or assignee for all of the loans.  However, some non-profit organizations do not meet this exemption because they service loans, for a fee, from other associated non-profit lenders that are not considered “affiliates,” even though they operate under mutual contractual obligations to serve the same charitable mission, and use a common name, trademark, or servicemark.  Because of this unique corporate structure, these non-profit organizations did not qualify for the small servicer exemption, unlike their for-profit counterparts with similar arrangements.  The final rule expands the small servicer exemption to include these non-profit organizations, so long as they are 501(c)(3) non-profits that service loans on behalf of other non-profits within a common network or group of nonprofit entities, and meet other requirements.

    CFPB Qualified Mortgage Ability To Repay

  • HUD Issues Final Rule To Eliminate Post-Payment Interest On FHA Loans

    Lending

    On August 26, HUD issued its final rule prohibiting mortgagees from charging post-payment interest under FHA’s single family mortgage insurance program. The final rule is responsive to the CFPB’s ATR/QM rule, under which post-payment interest charges will be considered a prepayment penalty in connection with FHA loans closed on or after January 21, 2015. Because prepayment penalties are prohibited on higher-priced FHA loans, the new definition of “prepayment penalty” under the ATR/QM rule would have effectively prohibited the making of higher-priced FHA mortgage loans. Also effective January 21, 2015, HUD’s final rule ensures consistency among FHA single-family mortgage products and provides the same protections for all borrowers. Under the final rule, monthly interest on the debt must be calculated on the actual unpaid principal balance as of the date prepayment is received.

    CFPB FHA Qualified Mortgage Ability To Repay

  • Unofficial Transcripts of the ABA Briefing/Webcast "Mortgage Q&A with the Consumer Financial Protection Bureau"

    Lending

    To address outstanding questions regarding the new mortgage rules that took effect in January 2014, CFPB staff provided non-binding, informal guidance in a webinar hosted by the American Bankers Association (ABA). Specifically, CFPB staff answered questions regarding the mortgage origination rules and the mortgage servicing rules on April 22, 2014.

    With the ABA’s consent, BuckleySandler has prepared a transcript of the webinar that incorporates the ABA’s slides. The transcript is provided for informational purposes only and does not constitute legal opinions, interpretations, or advice by BuckleySandler. The transcript was prepared from the audio recording arranged by the ABA and may have minor inaccuracies due to sound quality. In addition, the transcripts have not been reviewed by the CFPB or the ABA for accuracy or completeness.

    Questions regarding the matters discussed in the webinar or the rules themselves may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.

     

    CFPB Mortgage Origination Mortgage Servicing Qualified Mortgage Ability To Repay

  • Massachusetts Adds "Borrower's Interest" Safe Harbor For QM Loans

    Lending

    Recently, the Massachusetts Division of Banks published final amendments to its regulation concerning documentation and determination of borrower’s interest to establish an additional safe harbor for any home loan that meets the definition of a “Qualified Mortgage” under the CFPB’s ability-to-repay/qualified mortgage rule. A Qualified Mortgage now will be deemed to be in the borrower’s interest under the regulation. The amendments also clarify that the exemption under the borrower’s interest regulation applies to all Qualified Mortgages which are eligible for safe harbor consideration under TILA, including the small creditor exemption, provided that the Qualified Mortgage is not higher cost. The amendments became effective July 18, 2014.

    CFPB Mortgage Origination Qualified Mortgage

  • Special Alert: CFPB Guidance States That Successors Are Not Subject to the ATR/QM Rule

    Lending

    On July 8, the CFPB issued an interpretive rule stating that the addition of a successor as an obligor on a mortgage does not trigger the Ability-to-Repay/Qualified Mortgage Rule (ATR/QM Rule) requirements if the successor previously received an interest in the property securing the mortgage by operation of law, such as through inheritance or divorce.  Creditors may rely on the interpretive rule as a safe harbor under section 130(f) of TILA.

    In adopting the interpretations described below, it appears that the CFPB primarily intended to respond to inquiries from the industry and consumer advocates about situations where one family member inherits a home from another and, in order to keep the home, requests to be added to the mortgage and to modify its terms, such as by reducing the rate or payments.

    Click here to view the special alert.

    *      *      *

    Questions regarding the matters discussed in the Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.

     

    CFPB Mortgage Origination Mortgage Servicing Qualified Mortgage Ability To Repay

  • House Passes Points And Fees Bill; Financial Services Committee Approves Additional CFPB Bills

    Consumer Finance

    On June 9, the House passed by voice vote H.R. 3211, the Mortgage Choice Act of 2013. The bill would amend TILA’s definition of “points and fees” for purposes of the CFPB’s Ability to Repay and HOEPA rules to exclude from the definition insurance held in impound accounts and amounts received by affiliated companies as a result of their participation in an affiliated business arrangement. The bill now moves to the Senate where a similar bill was introduced last year by Senator Joe Manchin (D-WV) but has not yet been considered by the Senate Banking Committee. Later in the week, the House Financial Services Committee approved numerous additional bills related to the CFPB, including:  (i) H.R. 4804, which would establish certain requirements for CFPB examinations, including prohibiting the use of enforcement attorneys; (ii) H.R. 4811, which would establish standards for CFPB guidance, including a notice and comment period, and would declare the CFPB’s fair lending auto finance guidance to have no force or effect; and (iii) H.R. 3770, which would create an independent inspector general for the CFPB.

    CFPB Examination Auto Finance Qualified Mortgage

  • House Financial Services Committee Approves Several Mortgage Bills

    Lending

    On May 22, the House Financial Services Committee resumed activity on a series of bills—several of which are mortgage-related—that it considered earlier this month but for which it had postponed recorded votes. The committee approved all bills previously considered, including (i) H.R. 1779, which would amend TILA’s definition of a “mortgage originator” to exclude manufactured housing retailers unless they received compensation from a lender, mortgage broker, or loan originator, and definition of a “high cost mortgage” for loans under $75,000 to include a higher HOEPA APR trigger and a minimum HOEPA points and fees trigger of the greater of 5% of the transaction amount or $3,000; (ii) H.R. 2673, which would provide that loans retained on an institution’s balance sheet automatically qualify for qualified mortgage treatment under the Ability-to-Repay rule; and (iii) H.R. 4521, which would exempt from mandatory escrow requirements loans secured by a first lien on a consumer’s principal dwelling that are held in portfolio by creditors with assets of $10 billion or less, and would instruct the CFPB to provide regulatory relief for mortgage servicers that annually service 20,000 or fewer mortgage loans.

    CFPB Mortgage Origination Mortgage Servicing U.S. House Qualified Mortgage

  • Special Alert: VA Adopts Its QM Rule

    Lending

    On May 9, 2014, the Department of Veterans Affairs (VA) issued an interim final rule defining what constitutes a “qualified mortgage” (QM) for purposes of the loans it guarantees, insures, or originates. The VA stated that, to quell persistent uncertainty among lenders regarding the treatment of VA loans under the temporary QM definition established by the Consumer Financial Protection Bureau, it was adopting a rule designating all VA loans as QMs and all VA loans other than a subset of VA streamlined refinancings as safe harbor QMs.

    Click here to view our special alert.

    Questions regarding the matters discussed in the Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.

    CFPB Mortgage Origination Qualified Mortgage

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