Category Archives: Regulatory Updates

VA Clarifies Third-Party Verification Requirements

1. Purpose. The purpose of this Circular is to clarify the Department of Veterans Affairs (VA) policy regarding third-party verification requirements for loan underwriting.

2. Background. VA has received inquiries from lenders regarding whether or not thirdparty vendors may verify borrower income, employment, and asset information to determine if a borrower qualifies for a VA-guaranteed home loan

3. Policy. VA accepts third-party verifications, subject to 38 C.F.R. § 36.4340(j) which states, in relevant part,:

a. Lenders are fully responsible for developing all credit information; i.e., for obtaining verifications of employment and deposit, credit reports, and for the accuracy of the information contained in the loan application.

b. Verifications of employment and deposits, and requests for credit reports, and/or credit information must be initiated and received by the lender.

c. In cases where the real estate broker/agent, or any other party requests any of this information, the report(s) must be returned directly to the lender. This fact must be disclosed by appropriately completing the required certification on the loan application, or report and the parties must be identified as agents of the lender.

d. Where the lender relies on other parties to secure any of the credit, or employment information, or otherwise accepts such information obtained by any other party. Such parties shall be construed for purposes of the VA submitted loan documents to be authorized agents of the lender, regardless of the actual relationship between such parties and the lender, even if disclosure is not provided to VA under paragraph (j)(3) of this section. Any negligent or willful misrepresentation by such parties shall be imputed to the lender as if the lender had processed those documents, and the lender shall remain responsible for the quality, and accuracy of the information provided to VA.”

source:https://www.benefits.va.gov/HOMELOANS/documents/circulars/26_17_43.pdf

New CFPB Asset-Size Threshhold Regulation

In response to the recent mortgage crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) that, among other things, expanded protections for consumers receiving higher-priced mortgage loans. Before passage of the Dodd-Frank Act, creditors were required under rules issued by the Federal Reserve Board to set up and administer escrow accounts for a minimum of one year for property taxes and required mortgage-related insurance premiums for higher-priced mortgage loans secured by a first lien on a principal dwelling. This one-year escrow requirement became effective on April 1, 2010, for transactions secured by site-built homes, and on October 1, 2010, for transactions secured by manufactured housing. This small entity compliance guide discusses the Escrow Requirements under the Truth in Lending Act (Regulation Z) Rule (January 2013 Final Rule) and subsequent amendments to the rule. This rule implements statutory changes made by the DoddFrank Act that lengthen the time creditors must collect and manage escrows for higher-priced mortgage loans. The rule is generally referred to in this guide as the TILA Higher Priced Mortgage Loans (HPML) Escrow Rule. The TILA HPML Escrow Rule helps ensure consumers set aside funds to pay property taxes, homeowner’s insurance premiums, and other mortgage-related insurance required by the creditor. The final TILA HPML Escrow Rule, which took effect for applications received on or after June 1, 2013, has three main elements:

1. After you originate a higher-priced mortgage loan secured by a first lien on a principal dwelling, you must establish and maintain an escrow account for at least five years regardless of loan-to-value ratio. You must maintain the escrow account until one of the following occurs: 1) the underlying debt obligation is terminated or 2) after the five-year period, the consumer requests that the escrow account be canceled. However, if you are canceling the escrow account at the consumer’s request, the loan’s unpaid principal balance must be less than 80 percent of the original value of the property securing the underlying debt obligation, and the consumer must not be currently delinquent or in default on the underlying obligation.

2. You do not have to escrow for insurance premiums for homeowners whose properties are located in condominiums, planned unit developments, and other common interest communities where the homeowners must participate in governing associations that are required to purchase master insurance policies.

3. If you operate predominantly in rural or underserved areas and meet certain asset size and other requirements, you may be eligible for an exemption from this rule for certain loans you hold in portfolio.

I. What is the purpose of this guide?

The purpose of this guide is to provide an easy-to-use summary of the TILA HPML Escrow Rule. This guide also highlights issues that small creditors and their business partners might find helpful to consider when implementing the rule.

This guide also meets the requirements of Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, which requires the Bureau to issue a small entity compliance guide to help small businesses comply with the new regulation.

The Bureau believes that responsible creditors were already escrowing as required by the existing escrow provisions of Regulation Z implemented in 2008 by the Federal Reserve Board. You will find the final rule does not expand the universe of transactions to which you must apply the escrow requirements. In fact, it creates an exemption for certain loans made by certain creditors operating predominantly in rural or underserved counties, thus reducing the compliance burden for creditors that meet the exemption’s prerequisites.

Moreover, the final rule provides additional compliance burden relief for creditors by expanding the partial exemption in the existing rule for condominiums to other property types where the governing association has an obligation to maintain a master policy insuring all dwellings, such as planned unit developments.

The compliance burden on creditors for maintaining escrow accounts for additional time for loans where no exemptions apply should be minimal. Since creditors are already maintaining escrow accounts for a larger set of transactions for a shorter period of time under the current rule, the Bureau anticipates that to comply with this rule, many creditors will generally have to make only modest changes to their servicing systems and processes, internal controls, subservicer contracts, or other aspects of their business operations.

The guide summarizes the TILA HPML Escrow Rule, but it is not a substitute for the rule. Only the rule and its Official Interpretations (also known as Commentary) can provide complete and definitive information regarding its requirements. The discussions below provide citations to the sections of the rule on the subject being discussed. Keep in mind that the Official Interpretations, which provide detailed explanations of many of the rule’s requirements, are found after the text of the rule and its appendices. The interpretations are arranged by rule section and paragraph for ease of use. The complete rule, including the Official Interpretations, is available at http://www.consumerfinance.gov/regulations/escrow-requirements-under-thetruth-in-lending-act-regulation-z/.

Additionally, the CFPB has issued additional rules to amend and clarify provisions in the January 2013 Final Rule: the May 2013 Final Rule and the October 2013 Final Rule.

The focus of this guide is the TILA HPML Escrow Rule. This guide does not discuss other federal or state laws that may apply to the maintenance and administration of escrow accounts or other rules to implement other requirements of the Dodd-Frank Act.

At the end of this guide, there is more information about how to read the rule and a list of additional resources.

source:http://files.consumerfinance.gov/f/201401_cfpb_tila-hpml-escrow_compliance-guide.pdf

HMDA Check Digit and Rate Spread Calculator Tools (December 2017)

The CFPB has launched a new online “Digital Check Tool” to be used by companies reporting HMDA data starting January 1, 2018.

More specifically, the new tool supports the Universal Loan Identifier (ULI) requirements of the revised HMDA rule.  The CFPB states on its website that the new tool can be used for two functions.  The first function is to generate a two-character check digit when a company enters a Legal Entity Identifier and loan or application ID.  The second function is to validate that a check digit is calculated correctly for any complete ULI a company enters.

The CFPB also made its rate spread calculator available for use with applications on which the final action occurred on or after January 1, 2018.

source:https://www.consumerfinancemonitor.com/2017/12/28/cfpb-launches-new-hmda-online-tool-continues-rate-spread-calculator/

Fannie Mae Updates Selling Guide

Selling Guide Announcement SEL-2017-09  October 31, 2017 Selling Guide Updates

The Selling Guide has been updated to include changes to the following:

 Servicing Execution Tool™ (SET™) and Servicing Marketplace  Inter Vivos Revocable Trusts

 Consolidation of eSign and Electronic Transactions  Mortgages Paid by Others

 Form 1004D as Optional for Uniform Collateral Data Portal (UCDP)

 Miscellaneous Selling Guide Updates Each of the updates is described below.

The affected topics for each policy change are listed on the Attachment. The Selling Guide provides full details of the policy changes. The updated topics are dated October 31, 2017. In addition, revisions to the Texas Security Instrument are described in this Announcement.

Servicing Execution Tool (SET) and Servicing Marketplace In December 2014, we introduced the Servicing Execution Tool (SET) Bifurcation option for concurrent transfers of servicing via the Pricing & Execution – Whole Loan® (PE-Whole Loan) committing platform, under which the selling representations and warranties for the delivered loans are bifurcated from the servicing duties, obligations, and responsibilities. With this update, we are expanding access to the bifurcation of selling and servicing representations and warranties available through PE-Whole Loan. In addition, we are introducing the Servicing Marketplace, an application designed to enhance and bring new concurrent transfer of servicing options to customers. This expansion is designed to simplify the customer experience related to concurrent transfers of servicing transactions and provide certainty of sale, execution, and process efficiency. In order for a seller to join SET or Servicing Marketplace, the eligibility criteria outlined in the Selling Guide must be met. As a reminder, specific lender approval is required to participate in the SET and Servicing Marketplace solutions. Effective Date Loans delivered against PE-Whole Loan servicing released commitments taken on or after December 4, 2017 will be bifurcated if seller participates in SET or Servicing Marketplace. Inter Vivos Revocable Trusts Normally, Fannie Mae deems property in which no borrower has a direct ownership interest as ineligible collateral. An exception has been granted for inter vivos revocable trusts, a common estate planning tool that may involve instances where no individual borrower has an ownership interest in the mortgaged property. We have made changes to the Selling Guide to clarify the distinction between the individual borrower and the inter vivos revocable trust as owner of an interest in the mortgaged property. We also clarify our expectations for the execution of notes and mortgages. © 2017 Fannie Mae. Trademarks of Fannie Mae. SEL- 2017-09 2 of 4 Effective Date These updates are effective immediately. Consolidation of eSign and Electronic Transactions In line with our continued efforts to simplify and consolidate policies shared by the Selling and Servicing Guide, we have again updated and streamlined duplicative content in a few topics in Part A, Doing Business with Fannie Mae, pertaining to electronic records, signatures, and other electronic transactions. With this update, we have  consolidated into one topic the various policies that pertain to the management of electronic transactions and confirmed that sellers/servicers are authorized to originate, service, and modify loans using electronic records (special approval is still required for electronic promissory notes);  clarified that audio and video recording are not permitted formats except to the extent requested by us in connection with permitted remote notarizations;

 streamlined language to clarify that electronic records must accurately reflect information and formatting as it was presented to the intended beneficiaries and signers;

 required that systems generating electronic records generate them as valid records and be maintained as secure;

 confirmed that recorded mortgages and deeds of trust need not be maintained in paper format;

 confirmed that all electronic signatures must comply with ESIGN, UETA, and applicable law; and

 removed requirements for document custodians from the Guide as they were duplicative of requirements in Fannie Mae’s Requirements for Document Custodians (RDC). There are no policy changes associated with this consolidation of content. The duplicative content was removed from the Servicing Guide in the update published on October 11, 2017, and the consolidated policy now resides within Selling Guide A2-5.1-03, Electronic Records, Signatures, and Transactions. Effective Date These updates are effective immediately. Mortgages Paid by Others We recently updated our policies in the Selling Guide related to multiple financed properties and mortgage debts paid by others. With this update, we are clarifying that when a borrower is obligated on a mortgage, but another party has been making the mortgage payments  the lender may exclude the full monthly housing expense from the DTI ratio, provided the borrower is not using rental income from the applicable property to qualify; that is, the PITIA may be excluded and not just the principal and interest payment;  the mortgaged property must still be included in the borrower’s multiple financed property count and the unpaid principal balance for the mortgage must still be included in the calculation of reserves for multiple financed properties. Effective Date These clarifications are effective immediately. Form 1004D as Optional for Uniform Collateral Data Portal (UCDP) To align with the UCDP Release Notification from September 12, 2017, we updated our policy related to forms that can be submitted to UCDP. Lenders now have the option to submit the Appraisal Update and/or Completion Report, (Form 1004D) directly to the portal for conventional mortgage loans delivered to Fannie Mae. © 2017 Fannie Mae. Trademarks of Fannie Mae. SEL- 2017-09 3 of 4 Effective Date Effective immediately. Miscellaneous Selling Guide Updates  B4-1.3-01, Review of the Appraisal Report. We updated the overview to clarify the purpose of our appraisal report policies.  B5-5.2-03, DU Refi Plus and Refi Plus Property Valuation and Project Standards Condo, Co-op, and PUD Project Review Requirements. To align with our standard policy, we updated the condo, co-op, and PUD project insurance requirements for DU Refi Plus loans to remove the requirement for liability insurance coverage.  A2-4-01, Master Agreement Overview. The Selling Guide contains a list of the types of mortgage loans that currently require negotiated terms in a Master Agreement, which includes second mortgage loans. From time to time, we receive questions as to whether we are currently negotiating second mortgages. As a result, we have added a clarification that we are not approving lenders for or accepting deliveries of second mortgages. Revisions to the Texas Security Instrument Fannie Mae and Freddie Mac have revised the Texas Deed of Trust (Form 3044) to reflect recent changes to state law that affect the date of foreclosure sales. The revised Form 3044 (with a revision date of 10/17) is available on the SingleFamily Security Instruments page on our website. Effective Date Lenders are encouraged to use the updated document immediately, but must do so for mortgage loans with note dates on or after April 1, 2018. Proposed Texas Constitutional Amendments for Home Equity Lending Voters in Texas will be voting on proposed amendments to the Texas constitution on November 7, 2017. These amendments, if passed, will affect home equity lending in Texas, and will become effective on January 1, 2018. Fannie Mae is assessing the potential impact on our Texas home equity legal documents and will provide guidance and updates if the amendments are passed. ***** Lenders who have questions about this Announcement should contact their Customer Delivery Team.

Source: https://www.fanniemae.com/content/announcement/sel1709.pdf

CFPB Publishes Information Regarding Beta Launch HMDA Platform

The FFIEC and HUD have published the following resources for financial institutions required to file Home Mortgage Disclosure Act (HMDA) data:

Announcement

Updated November 2017:

The Bureau launched the beta version of the HMDA Platform.

A new short video introducing the HMDA Platform is now available on CFPB’s YouTube channel.

HMDA Platform

The beta version of the HMDA Platform allows financial institutions to upload sample HMDA files and perform validation on the data; review edits; confirm the test data submission; and conclude the test HMDA filing process.

Technology Preview

The Technology Preview provides resources for financial institutions preparing their systems to file HMDA data with the CFPB.

Filing Instructions Guide

Separate Filing Instructions Guides (FIG) are now available for data collected in 2017 and 2018.

For data collected in 2017

For data collected in or after 2018

For data collected in or before 2016, please visit the FFIEC website  for data submission resources.

Loan/Application Register (LAR) Formatting Tool

The LAR Formatting Tool is intended to help financial institutions, typically those with small volumes of covered loans and applications, to create an electronic file that can be submitted to the HMDA Platform.

File Format Verification Tool (FFVT)

The File Format Verification Tool is provided for filers who wish to confirm that a LAR file is formatted in the required pipe delimited text file format, and meets certain formatting requirements specified in the Filing Instructions Guide. Section 3 of the HMDA Tools Instructions guide provides further information on using the FFVT.

HMDA Loan Scenarios

The HMDA Loan Scenarios is provided as an illustrative aid to help HMDA filers prepare their loan/application register.

Frequently Asked Questions (FAQs)

Do you have additional questions? Please check out the FAQs.

Questions?

For technical questions about reporting HMDA data collected in or after 2017 use this form or email hmdahelp@cfpb.gov.

source :https://www.consumerfinance.gov/data-research/hmda/for-filers

CFPB Issues Updated Small Entity Compliance Guide

1. Introduction For more than 30 years, federal law required lenders to provide two different disclosure forms to consumers applying for a mortgage. The law also generally required two different forms at or shortly before closing on the loan. Two different federal agencies developed these forms separately, under two federal statutes: the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act of 1974 (RESPA). The information on these forms was overlapping, and the language inconsistent. Consumers often found the forms confusing, and lenders and settlement agents found the forms burdensome to provide and explain. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directed the Consumer Financial Protection Bureau (Bureau) to integrate the mortgage loan disclosures under TILA and RESPA Sections 4 and 5. Section 1032(f) of the Dodd-Frank Act mandated that the Bureau propose for public comment rules and model disclosures that integrate the TILA and RESPA disclosures by July 21, 2012. The Bureau satisfied this statutory mandate and issued proposed rules and forms on July 9, 2012. To accomplish this, the Bureau engaged in extensive consumer and industry research, analysis of public comment, and public outreach for more than a year. After issuing the proposal, the Bureau conducted a large-scale quantitative study of its proposed integrated disclosures with approximately 850 consumers, which concluded that the Bureau’s integrated disclosures had on average statistically significant better performance than the pre-existing disclosures under TILA and RESPA. On December 31, 2013, the Bureau published a final rule with new, integrated disclosures – “Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z)” (TILA-RESPA Final Rule). On January 20, 2015 and July 21, 2015, the Bureau issued amendments to the TILA-RESPA Final Rule. Additionally, the Bureau published technical corrections on December 24, 2015, and a

correction to supplementary information on February 10, 2016. On July 7, 2017, the Bureau issued further amendments intended to formalize guidance, and provide greater clarity and certainty (2017 TILA-RESPA Rule or 2017 amendments).1 The 2017 amendments were published in the Federal Register on August 11, 2017. The TILA-RESPA Final Rule, the amendments, and corrections are collectively referred to as the TILA-RESPA Rule in this Guide. The TILA-RESPA Rule provides a detailed explanation of how the forms should be filled out and used. The Good Faith Estimate (GFE) and the initial Truth-in-Lending disclosure (initial TIL) were combined into a single form, the Loan Estimate. Similar to those forms, the Loan Estimate form is designed to provide disclosures that will be helpful to consumers in understanding the key features, costs, and risks of the mortgage loan for which they are applying, and must be provided to consumers no later than the third business day after they submit a loan application. Second, the HUD-1 and final Truth-in-Lending disclosure (final TIL and, together with the initial TIL, the Truth-in-Lending forms) were combined into another form, the Closing Disclosure, which is designed to provide disclosures that will be helpful to consumers in understanding all of the costs of the transaction. This form must be provided to consumers at least three business days before consummation of the loan. The forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The Loan Estimate and Closing Disclosure forms also provide more information to help consumers decide whether they can afford the loan and to facilitate comparison of the cost of different loan offers, including the cost of the loans over time. The TILA-RESPA Rule applies to most closed-end consumer mortgages. It does not apply to home equity lines of credit (HELOCs), reverse mortgages, or mortgages secured by a mobile home or by a dwelling (other than a cooperative unit) that is not attached to real property.2 Itdoes not generally apply to loans made by persons who are not considered “creditors” under TILA.3 Generally, the TILA-RESPA Rule’s provisions were effective on October 3, 2015. The December 2015 corrections were effective on December 24, 2015, and the February 2016 corrections were effective on February 10, 2016. The 2017 amendments are effective and will be incorporated into the Code of Federal Regulations on October 10, 2017. However, compliance with the 2017 amendments is not mandatory on the effective date. Generally, compliance with the amendments is only mandatory for transactions for which a creditor or mortgage broker receives an application on or after October 1, 2018. However, the requirements for the Escrow Cancellation Notice (Escrow Closing Notice) and Mortgage Servicing Transfer Notice Partial Payment Policy Disclosure (Partial Payment Policy Disclosure) provided post-consummation apply starting October 1, 2018 without regard to when the creditor or mortgage broker receives the application. The 2017 amendments include an optional compliance period, which begins on October 10, 2017 and is for transactions for which a creditor or mortgage broker receives an application prior to October 1, 2018. During this period, early compliance with the 2017 amendments is allowed, but not required. Additionally, if a creditor or mortgage broker receives an application prior to October 1, 2018, optional compliance continues to apply to that transaction after October 1, 2018 (except as noted regarding the Escrow Closing Notice and Partial Payment Policy Disclosures). During the optional compliance period (beginning on October 10, 2017 and for transactions with applications received prior to October 1, 2018), the provisions of the 2017 amendments can be implemented all at once or phased in over this period. For example, if a creditor chooses to phase in the 2017 amendments, those changes can be phased-in over the course of a transaction or by application date. Notwithstanding this flexibility, a person cannot phase in the 2017 amendments in a way that would violate provisions of Regulation Z that are not being changed.4 The information provided in this Guide incorporates the changes and clarifications from the 2017 amendments, and explains the TILA-RESPA Rule as of the mandatory compliance date on October 1, 2018. To understand the rule as it existed prior to the 2017 amendments, please review version 4.0 of the Guide, available on the Bureau’s website at https://www.consumerfinance.gov/policy-compliance/guidance/implementationguidance/tila-respa-disclosure-rule/.

1.1 What is the purpose of this guide? The purpose of this Guide is to provide an easy-to-use summary of the TILA-RESPA Rule. This Guide also highlights issues that small creditors, and those that work with them, might find helpful to consider when implementing the TILA-RESPA Rule. This Guide also meets the requirements of Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996, which requires the Bureau to issue a small-entity compliance guide to help small entities comply with these new regulations. You may want to review your processes, software, contracts with service providers, or other aspects of your business operations in order to identify any changes needed to comply with this rule. Changes related to this rule may take careful planning, time, or resources to implement. This Guide will help you identify and plan for any necessary changes. To support rule implementation, the Bureau continues to coordinate with other agencies, publish and update plain-language guides, and publish updates to the Official Interpretations, if needed.

 

This Guide summarizes the TILA-RESPA Rule, but it is not a substitute for the rule. Only the rule and its Official Interpretations (also known as commentary) can provide complete and definitive information regarding its requirements. The discussions below provide citations to the sections of the TILA-RESPA Rule on the subject being discussed. Keep in mind that the Official Interpretations, which provide detailed explanations of many of the TILA-RESPA Rule’s requirements, are found after the text of the rule and its appendices. The interpretations are arranged by rule section and paragraph for ease of use. The 2013 Final Rule and the Official Interpretations, and related corrections and amendments, are available at www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/2013-integratedmortgage-disclosure-rule-under-real-estate-settlement-procedures-act-regulation-x-and-truthlending-act-regulation-z/. The focus of this Guide is the TILA-RESPA Rule. This Guide does not discuss other federal or state laws that may apply to the origination of closed-end credit. The content of this Guide does not include any rules, bulletins, guidance, or other interpretations issued or released after the date on the Guide’s cover page. At the end of this Guide, there is more information about the TILA-RESPA Rule and related implementation support from the Bureau. 1.2 Who should read this guide? If your organization originates closed-end residential mortgage loans, you may find this Guide helpful to determine your compliance obligations for the mortgage loans you originate. This Guide may also be helpful to settlement service providers, secondary market participants, software providers, and other companies that serve as business partners to creditors.

1.3 Where can I find additional resources that will help me understand the TILARESPA Rule? Resources to help you understand and comply with the Dodd-Frank Act mortgage reforms and our regulations, including downloadable compliance guides, are available through the CFPB’s website at www.consumerfinance.gov/policy-compliance/guidance/implementationguidance/. On this website, we also offer the ability to sign up for an email distribution list 20 CONSUMER FINANCIAL PROTECTION BUREAU SMALL ENTITY COMPLIANCE GUIDE: TILA-RESPA INTEGRATED DISCLOSURE RULE v 5.0 through which we announce additional resources and tools as they become available. The eRegulations tool, which is available at www.consumerfinance.gov/eregulations, includes an unofficial version of Regulation Z (12 CFR part 1026), in which the TILA-RESPA Rule is codified. The tool provides updated versions of the regulatory text and commentary in a single location. If after reviewing these materials, as well as the regulation and official commentary, you have a specific regulatory interpretation question about the TILA-RESPA Rule, you can submit it to us on our website at https://reginquiries.consumerfinance.gov/. Please understand that the responses we provide are not official interpretations of the Bureau and are not a substitute for formal legal counsel or other compliance advice. Email comments about the Guide to CFPB_RegulatoryImplementation@consumerfinance.gov. Your feedback is crucial to making this Guide as helpful as possible. The Bureau welcomes your suggestions for improvements and your thoughts on its usefulness and readability. The Bureau is particularly interested in feedback relating to:  How useful you found this Guide for understanding the TILA-RESPA Rule;  How useful you found this Guide for implementing the TILA-RESPA Rule at your business; or  Suggestions you have for improving the Guide, such as additional implementation tips. 21 CONSUMER FINANCIAL PROTECTION BUREAU SMALL ENTITY COMPLIANCE GUIDE: TILA-RESPA INTEGRATED DISCLOSURE RULE v 5.0 2. Overview of the TILARESPA Rule 2.1 What is the TILA-RESPA Rule about? The TILA-RESPA Rule consolidates four disclosure forms that were required under TILA and RESPA for closed-end credit transactions secured by real property or cooperative unit into two forms: a Loan Estimate that must be delivered or placed in the mail no later than the third business day after receiving the consumer’s application, and a Closing Disclosure that must be provided to the consumer at least three business days prior to consummation.

2.2 What transactions does the rule cover? (§ 1026.19(e) and (f)) The TILA-RESPA Rule applies to most closed-end consumer credit transactions secured by real property or a cooperative unit (regardless of whether state law classifies it as real property). Credit extended to certain trusts for tax or estate planning purposes is not exempt from the TILA-RESPA Rule. (Comment 3(a)-10). However, some specific categories of loans are excluded from the rule. Specifically, the TILA-RESPA Rule does not apply to HELOCs, reverse mortgages, or mortgages secured by a mobile home or by a dwelling (other than a cooperative unit) that is not attached to real property. (§ 1026.19(e) and (f)). For further discussion of coverage, see section 4 below.

2.3 What are the record retention requirements for the TILA-RESPA Rule? (§ 1026.25) The creditor must retain copies of the Closing Disclosure (and all documents related to the Closing Disclosure) for five years after consummation. The creditor, or servicer if applicable, must retain the post-consummation Escrow Closing Notice and Partial Payment Policy Disclosure for two years. For additional information, see section 16 below. For all other evidence of compliance with the Integrated Disclosure provisions of Regulation Z (including the Loan Estimate) creditors must maintain records for three years after consummation of the transaction. Creditors are obligated to obtain and retain a copy of the completed Closing Disclosures provided separately by a non-creditor settlement agent to a seller under 1026.38(t)(5), but are not obligated to collect underlying seller-specific documents and records from that third-party settlement agent to support these disclosures. To the extent the creditor does receive documentation related to the seller’s disclosure, such as when the creditor is the settlement agent, or when seller-related documents are provided to the creditor by a third-party settlement agent along with the completed disclosure, the creditor should adhere to the record retention requirements that apply to the Closing Disclosure. 2.4 What are the record retention requirements if the creditor transfers or sells the loan? (§ 1026.25) If a creditor sells, transfers, or otherwise disposes of its interest in a mortgage and does not service the mortgage, the creditor shall provide a copy of the Closing Disclosure to the new owner or servicer of the mortgage as a part of the transfer of the loan file. Both the creditor and the new owner or servicer shall retain the Closing Disclosure for the remainder of the five-year period.

2.5 Is there a requirement on how the records are retained? Regulations X and Z permit, but do not require, electronic recordkeeping. Records can be maintained by any method that reproduces disclosures and other records accurately, including computer programs. (Comment 25(a)-2)

3. Effective Date 3.1 When do I have to start following the TILA-RESPA Rule and using the Integrated Disclosures? The TILA-RESPA Rule generally took effect on October 3, 2015 for applications received on or after October 3, 2015. The Integrated Disclosures (i.e., the Loan Estimate and the Closing Disclosure) must be provided by a creditor or mortgage broker that receives an application from a consumer for a closed-end credit transaction secured by real property on or after October 3, 2015.5 Creditors were required to use the GFE, HUD-1, and Truth-in-Lending forms for applications received prior to October 3, 2015. 3.2 Are there any requirements that take effect regardless of when an application was received? Yes. As discussed in section 13, below, the TILA-RESPA Rule includes some restrictions on certain activity prior to a consumer’s receipt of the Loan Estimate. These restrictions took effect on the calendar date October 3, 2015, regardless of when an application was received. These activities include:

Imposing fees on a consumer before the consumer has received the Loan Estimate and indicated an intent to proceed with the transaction (§ 1026.19(e)(2)(i));  Providing written estimates of terms or costs specific to consumers before they receive the Loan Estimate without a written statement informing the consumer that the terms and costs may change (§ 1026.19(e)(2)(ii)); and  Requiring the submission of documents verifying information related to the consumer’s application before providing the Loan Estimate. (§ 1026.19(e)(2)(iii)) Beginning on October 1, 2018, a creditor must provide the Escrow Closing Notice and Partial Payment Policy Disclosure when required, regardless of when the creditor or mortgage broker received the application.6 (Comment 1(d)(5)-1) For example, for an application received on October 10, 2010, if the escrow account was cancelled on April 14, 2020, the creditor would be required to give the Escrow Closing Notice, because the cancellation occurred after October 1, 2018 and after that time, Escrow Closing Notice and Partial Payment Policy Disclosure are given regardless of when the application was received. (Comment 1(d)(5)-1.v.E) For more information about the Escrow Closing Notice and Partial Payment Policy Disclosure, see section 16 of this Guide. 6 Prior to October 1, 2018, it is acceptable for a creditor to give the Escrow Closing Notice and Partial Payment Policy Notice only to transactions where the application was received on or after October 3, 2015. For example, for an application received on October 10, 2010, if the escrow account was cancelled on December 19, 2016, the creditor would not be required to provide the Escrow Closing Notice because the application was received before October 3, 2015 and the cancellation occurred prior to October 1, 2018. A consumer may indicate an intent to proceed in any manner the consumer chooses, unless the creditor requires a particular manner of communication. (§ 1026.19(e)(2)(i)(A)). For further discussion on intent to proceed, see section 13.5 below. 26 CONSUMER FINANCIAL PROTECTION BUREAU SMALL ENTITY COMPLIANCE GUIDE: TILA-RESPA INTEGRATED DISCLOSURE RULE v 5.0 3.3 Can a creditor use the Integrated Disclosures for applications received before October 3, 2015? No. For transactions where the application is received prior to October 3, 2015, creditors will still need to follow the disclosure requirements under Regulations X and Z as they existed before the Integrated Disclosures were created by the TILA-RESPA Rule. A creditor will need to use the Truth-in-Lending disclosures, GFE, HUD-1, etc., as applicable, for those transactions. 27 CONSUMER FINANCIAL PROTECTION BUREAU SMALL ENTITY COMPLIANCE GUIDE: TILA-RESPA INTEGRATED DISCLOSURE RULE v 5.0 4. Coverage 4.1 What transactions are covered by the TILA-RESPA Rule? (§§ 1024.5; 1026.3; and 1026.19) The TILA-RESPA Rule applies to most closed-end consumer credit transactions secured by real property or a cooperative unit (regardless of whether state law classifies it as real property), but does not apply to:  HELOCs;  Reverse mortgages; or  Chattel-dwelling loans, such as loans secured by a mobile home or by a dwelling (other than a cooperative unit) that is not attached to real property. Consistent with existing rules under TILA, the TILA-RESPA Rule also generally does not apply to loans made by a person or entity that is not considered a creditor under Regulation Z. (§ 1026.2(a)(17)) There is also a partial exemption for certain transactions associated with housing assistance loan programs for low- and moderate-income consumers. (§ 1026.3(h)) However, certain types of loans that are subject to TILA but are not subject to RESPA are subject to the TILA-RESPA Rule’s integrated disclosure requirements, including:  Construction-only loans; and  Loans secured by vacant land or by 25 or more acres.

Source :https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201710_cfpb_KBYO-Small-Entity-Compliance-Guide_v5.pdf

VA Announces Annual Increase in Construction Cost Index and (SAH), (SHA), and (TRA) Grants

Veterans Benefits Administration Circular 26-17-26

Department of Veterans Affairs September 19, 2017

Washington, DC 20420

Annual Increase in Construction Cost Index and Specially Adapted Housing (SAH),

Special Housing Adaptations (SHA), and Temporary Residence Adaptations (TRA) Grants

Purpose. Effective October 1, 2017, the Department of Veterans Affairs (VA) announces that the SAH, SHA, and TRA grant amounts will increase. In order to match the Turner cost of construction increase of 4.88 percent from the Second Quarter 2016 to Second Quarter 2017, the maximum grant amounts for Veterans and Servicemembers eligible for housing assistance under Title 38 U.S.C., Section 2101(a), 2101(b), and 2101A, will increase as follows:

$81,080 – for individuals eligible under Section 2101(a);

$16,217 – for individuals eligible under Section 2101(b);

$35,593 – for individuals eligible under Section 2102A(b)(A); and

$ 6,355 – for individuals eligible under Section 2102A(b)(B).

Rescission: This Circular is automatically rescinded October 1, 2018.

By Direction of the Under Secretary for Benefits

Jeffrey F. London

Director

Loan Guaranty Service

Distribution: CO: RPC 2018

SS(26A1) FLD: VBAFS, 1 each (Reproduce and distribute based on RPC 2018)

(LOCAL REPRODUCTION AUTHORIZED)

Source https://www.benefits.va.gov/HOMELOANS/documents/circulars/26_17_26.pdf

Fannie Mae Provides Additional Guidance on Property Inspections and Servicing-Related Reminders

Lender Letter LL-2017-07                                                September 21, 2017

To: All Fannie Mae Single-Family Sellers and Servicers Reimbursement for Property Inspections and Additional Servicing-Related Reminders

We continue to respond and work with our lenders and servicers to assist homeowners impacted by the recent hurricanes. In doing so, we are providing this Lender Letter with additional guidance and relief. Refer to the disaster resources on our Single-Family and corporate disaster relief pages. As stated in recent Lender Letters related to Hurricanes Harvey and Irma, we will provide reimbursement for property inspection costs incurred by lenders and servicers. We don’t want cost to be an inhibitor to obtaining inspections generally and we want to ensure that inspection costs are not passed on to impacted borrowers. The purpose of this Lender Letter is to describe our reimbursement policies and the process for obtaining them. We also remind servicers of a number of important policies related to inspections, property repair, and reporting of damage. Reimbursement Process We will be utilizing the existing process that is currently in place for expense reimbursement to servicers. All claims must be submitted by the servicer of the loan in the LoanSphere Invoicing™ system. This reimbursement process applies for property inspection costs incurred prior to purchase or securitization of the loan by Fannie Mae, and also for loans currently being serviced. Property Inspections and Reimbursement for Newly Originated Loans Property Inspections Before delivery of a mortgage loan to Fannie Mae where the property may have been damaged by a disaster, we expect the lender to take prudent and reasonable actions to determine whether the condition of the property may have materially changed. We are not prescriptive in how lenders make their representations and warranties around potential impact to property condition as a result of the disaster. “Prudent and reasonable actions” are not restricted to on-site inspection by a licensed or certified appraiser. Lenders may also obtain inspections from appraiser trainees, home inspectors, real estate agents, insurance adjustors, contractors, or any other qualified representatives of their choosing. Technology such as real-time aerial or satellite imagery might also enable lenders to meet this requirement.

PLEASE NOTE We are extending the disaster policies recently communicated in this and recent lender letters to all hurricanes occurring in the U.S. and its territories on or after August 25, 2017 and through the 2017 hurricane season. Where policy termination dates have been identified, we will issue updates as necessary.

Reimbursement The following reimbursement policies will apply to property inspections obtained prior to loan purchase or securitization by Fannie Mae for properties in the disaster area:

 Loans with appraisals: Reimbursement will occur for loans in process that were in the disaster area and have an Appraisal Effective Date prior to the disaster occurring.

 PIW loans: Reimbursement will occur for loans that were closed before the disaster occurred, where the lender intended to sell the loan to us with a property inspection waiver (PIW).

 Lenders, including direct sellers and correspondents who have incurred property inspection costs, will work with the servicer of record to seek reimbursement. (The servicer must submit all requests.)

 We will reimburse for the actual cost of property inspections incurred as a result of the disasters that occurred on or after August 25, 2017, up to a reasonable amount. Note that the reimbursement limits noted below pertaining to existing loans does not apply to newly originated loans, and we are not reimbursing the cost of appraisals.

 Servicers may begin submitting requests for reimbursement on or after October 1, 2017. Reimbursement requests must be made within one year of the invoice date.

 The servicer must maintain copies of the property inspection invoice and results in the loan file and must provide to us upon request. Property Inspection, Reimbursement, Repair, and Reporting Policies for Existing Loans Property Inspections Servicers must determine the extent and nature of the damage pursuant to Servicing Guide, D1-3-01: Evaluating the Damage Caused by a Disaster. If the servicer is unable to contact the borrower to make that determination, the servicer must inspect the property. The following table further outlines the servicer’s responsibilities for inspecting impacted properties based on the mortgage loan status prior to the disaster and the occupancy status of a delinquent mortgage loan (according to the last inspection prior to the disaster). For additional information about inspecting properties impacted by disaster, see Servicing Guide, D2-2-10: Requirements for Performing Property Inspections, and the Property Preservation Matrix and Reference Guide. If the property is in an area impacted by disaster and the mortgage loan is… Then the servicer must… current attempt to achieve Quality Right Party Contact (QRPC) to verify damage and determine the borrower’s intent on filing an insurance claim and completing necessary repairs. If the servicer is not able to achieve QRPC, then the servicer must inspect the property. If the initial inspection report shows damage, the servicer must continue monthly property inspections until the damage is remediated. delinquent and the property is occupied or the occupancy status is unknown attempt to achieve QRPC to verify damage and determine the borrower’s intent on filing an insurance claim and completing necessary repairs. If the servicer is not able to achieve QRPC, then the servicer must inspect the property. If the initial inspection report shows damage, the servicer must continue weekly property inspections © 2017 Fannie Mae. Trademarks of Fannie Mae. LL- 2017-07 3 of 4 until the damage is remediated. After the damage is remediated, the servicer must continue monthly inspections. If the initial inspection shows no damage, the servicer must continue monthly inspections. delinquent and the property is vacant immediately inspect the property. If the initial inspection report shows damage, the servicer must continue bi-weekly inspections until the damage is remediated. Once the damage is remediated, the servicer must continue monthly inspections. If the initial inspection shows no damage, the servicer must continue monthly inspections. The servicer must perform the required inspections using the Property Inspection Report (Form 30) or equivalent, and maintain a copy in the loan file (provided to Fannie Mae upon request). The servicer may exercise discretion in determining whether an interior or exterior property inspection is appropriate depending on the individual circumstances. Reimbursement We are updating our expense reimbursement process to accept requests for required inspection costs on current mortgage loans. Servicers should request reimbursement for these inspection costs under the normal process they follow today using our expense reimbursement system. The servicer should utilize the interior property inspection and/or exterior property inspection line items in its request to expedite processing. The following reimbursement policies will apply to property inspections obtained on existing loans with properties in the disaster area:  We will reimburse the servicer $15 for exterior inspections and $20 when an interior inspection is necessary, in accordance with the amounts in the Defined Expense Reimbursement Limits in Servicing Guide, F-1-06: Expense Reimbursement. However, if the servicer already ordered a more expensive FEMA disaster inspection prior to the date of this Lender Letter, we will reimburse the servicer for those costs.  We will reimburse for all mortgage loans in which Fannie Mae holds the risk of loss and the properties are impacted by disaster on or after August 25, 2017.  Servicers may begin submitting applicable requests for reimbursement on or after October 1, 2017.  Servicers must submit reimbursement requests for inspection costs on current mortgage loans within one year of the invoice date.  For inspections costs on delinquent mortgage loans, refer to the expense reimbursement deadlines in Servicing Guide, E-5-01: Requesting Reimbursement for Expenses. Performing Repairs and Addressing Urgent Conditions Servicers must immediately commence repair work for a delinquent mortgage loan if  the last inspection prior to the disaster showed the property as vacant, and  the servicer determines (through the post-disaster inspection or QRPC) that the property is still vacant and there is damage to the property. Refer to the Servicing Guide, D2-2-10: Requirements for Performing Property Inspections and the Property Preservation Matrix and Reference Guide for additional property preservation requirements and guidance. In addition, servicers are encouraged to address urgent conditions immediately and prior to our approval for matters outside the allowable threshold, in accordance with Fannie Mae’s Bid After The Fact (BATF) process in the Property Preservation Matrix and © 2017 Fannie Mae. Trademarks of Fannie Mae. LL- 2017-07 4 of 4 Reference Guide. We will give deference to servicer decisions on such repairs and will approve BATF requests as long as the repairs and associated costs keep with the intended spirit of our disaster assistance policies and are not materially unreasonable or unnecessary. Reporting Uninsured Loss Events Servicing Guide, B-5-02: Uninsured Loss Events, currently requires the servicer to send a complete report of the damage to its Fannie Mae Servicing Representative. Due to the extensive nature of the hurricane disasters, we are removing this reporting requirement for all loans going forward. Servicers are reminded that they must  determine the extent of the damage;  secure the property in accordance with the requirements in the Servicing Guide and the Property Preservation Matrix and Reference Guide, if applicable;  develop plans with the borrower to repair the property; and  assist the borrower in filing for any disaster relief that may be available. ***** If you have questions about this Lender Letter, please reach out to your Fannie Mae customer delivery team, Portfolio Manager, or our Single-Family Servicer Support Center at 1-800-2FANNIE (1-800-232-6643). Carlos T. Perez Senior Vice President and Chief Credit Officer for Single-Family

Source: https://www.fanniemae.com/content/announcement/ll1707.pdf

CFPB Issues Final Rule Regarding Annual Threshold Adjustments for 2018 HOEPA and QM Loans

AGENCY:

Bureau of Consumer Financial Protection.

ACTION:

Final rule; official interpretation.

SUMMARY:

The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule amending the official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z; this final rule revises, as applicable, the dollar amounts for provisions implementing TILA and amendments to TILA, including under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Bureau is adjusting these amounts, where appropriate, based on the annual percentage change reflected in the Consumer Price Index (CPI) in effect on June 1, 2017.

DATES:

This final rule is effective January 1, 2018.

FOR FURTHER INFORMATION CONTACT:

Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552 at (202) 435-7700.

SUPPLEMENTARY INFORMATION:

The Bureau is amending the official interpretations for Regulation Z, which implements TILA, to update the dollar amounts of various thresholds that are adjusted annually based on the annual percentage change in the CPI as published by the Bureau of Labor Statistics (BLS). Specifically, for open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00 in 2018. For open-end consumer credit plans under the CARD Act amendments to TILA, the adjusted dollar amount for the safe harbor for a first violation penalty fee will remain unchanged at $27 in 2018 and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will remain unchanged at $38 in 2018. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2018 will be $21,032. The adjusted points and fees dollar trigger for high-cost mortgages in 2018 will be $1,052. For the general rule to determine consumers’ ability to repay mortgage loans, the maximum thresholds for total points and fees for qualified mortgages in 2018 will be 3 percent of the total loan amount for a loan greater than or equal to $105,158; $3,155 for a loan amount greater than or equal to $63,095 but less than $105,158; 5 percent of the total loan amount for a loan greater than or equal to $21,032 but less than $63,095; $1,052 for a loan amount greater than or equal to $13,145 but less than $21,032; and 8 percent of the total loan amount for a loan amount less than $13,145.

I. Background

A. Credit Card Annual Adjustments

MINIMUM INTEREST CHARGE DISCLOSURE THRESHOLDS

Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of the Bureau’s Regulation Z implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) require the disclosure of any minimum interest charge exceeding $1.00 that could be imposed during a billing cycle and provide that, for open-end consumer credit plans, the minimum interest charge thresholds will be re-calculated annually using the CPI that was in effect on the preceding June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for this adjustment. When the cumulative change in the adjusted minimum value derived from applying the annual CPI-W level to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) has risen by a whole dollar, the minimum interest charge amounts set forth in the regulation will be increased by $1.00. The BLS publishes consumer-based indices monthly but does not report a CPI change on June 1; adjustments are reported in the middle of the month. This adjustment analysis is based on the CPI-W index in effect on June 1, 2017, which was reported by BLS on May 12, 2017, and reflects the percentage change from April 2016 to April 2017. The CPI-W is a subset of the Consumer Price Index for All Urban Consumers (CPI-U) index and represents approximately 28 percent of the U.S. population. The adjustment analysis accounts for a 2.1 percent increase in the CPI-W from April 2016 to April 2017. This increase in the CPI-W when applied to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) did not trigger an increase in the minimum interest charge threshold of at least $1.00, and the Bureau is therefore not amending §§ 1026.6(b)(2)(iii) and 1026.60(b)(3).

SAFE HARBOR PENALTY FEES

Section 1026.52(b)(1)(ii)(A) and (B) of the Bureau’s Regulation Z implements section 149(e) of TILA, established by the CARD Act.[1Section 1026.52(b)(1)(ii)(D) provides that the safe harbor provision, which establishes the permissible penalty fee thresholds in § 1026.52(b)(1)(ii)(A) and (B), will be re-calculated annually using the CPI that was in effect on the preceding June 1; the Bureau uses the CPI-W for this adjustment. The BLS publishes consumer-based indices monthly but does not report a CPI change on June 1; adjustments are reported in the middle of the month. The CPI-W is a subset of the CPI-U index and represents approximately 28 percent of the U.S. population. When the cumulative change in the adjusted value derived Start Printed Page 41159from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has risen by a whole dollar, those amounts will be increased by $1.00. Similarly, when the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has decreased by a whole dollar, those amounts will be decreased by $1.00. See comment 52(b)(1)(ii)-2. The 2018 adjustment analysis is based on the CPI-W index in effect on June 1, 2017, which was reported by BLS on May 12, 2017, and reflects the percentage change from April 2016 to April 2017. The 2.1 percent increase in the CPI-W from April 2016 to April 2017 did not trigger an increase in the first violation safe harbor penalty fee of $27 or the subsequent violation safe harbor penalty fee of $38, and the Bureau is therefore not amending § 1026.52(b)(1)(ii)(A) and (B) for the 2018 calendar year.

B. HOEPA Annual Threshold Adjustments

Section 1026.32(a)(1)(ii) of the Bureau’s Regulation Z implements section 1431 of the Dodd-Frank Act,[2which amended the HOEPA points and fees coverage test. Under § 1026.32(a)(1)(ii)(A) and (B), when determining whether a transaction is a high-cost mortgage, the determination of the applicable points and fees coverage test is based upon whether the total loan amount is for $20,000 or more, or for less than $20,000. Section 1026.32(a)(1)(ii) provides that this threshold amount be recalculated annually using the CPI index in effect on June 1; the Bureau uses the CPI-U for this adjustment. The CPI-U is based on all urban consumers and represents approximately 88 percent of the U.S. population. The BLS publishes consumer-based indices monthly but does not report a CPI change on June 1; adjustments are reported in the middle of each month. The 2018 adjustment is based on the CPI-U index in effect on June 1, which was reported by BLS on May 12, 2017, and reflects the percentage change from April 2016 to April 2017. The adjustment to the $20,000 figure being adopted here reflects a 2.2 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

Under § 1026.32(a)(1)(ii)(B) the HOEPA points and fees dollar trigger is $1,000. Section 1026.32(a)(1)(ii)(B) provides that this threshold amount will be recalculated annually using the CPI index in effect on June 1; the Bureau uses the CPI-U for this adjustment. The 2018 adjustment is based on the CPI-U index in effect on June 1, which was reported by BLS on May 12, 2017, and reflects the percentage change from April 2016 to April 2017. The adjustment to the $1,000 figure being adopted here reflects a 2.2 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

C. Ability To Repay and Qualified Mortgages Annual Threshold Adjustments

The Bureau’s Regulation Z implements sections 1411 and 1412 of the Dodd-Frank Act, which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling, and establishes certain protections from liability under this requirement for qualified mortgages. Under § 1026.43(e)(3)(i), a covered transaction is not a qualified mortgage if the transaction’s points and fees exceed: 3 Percent of the total loan amount for a loan amount greater than or equal to $100,000; $3,000 for a loan amount greater than or equal to $60,000 but less than $100,000; 5 percent of the total loan amount for loans greater than or equal to $20,000 but less than $60,000; $1,000 for a loan amount greater than or equal to $12,500 but less than $20,000; or 8 percent of the total loan amount for loans less than $12,500. Section 1026.43(e)(3)(ii) provides that the limits and loan amounts in § 1026.43(e)(3)(i) are recalculated annually for inflation using the CPI-U index in effect on June 1. The CPI-U is based on all urban consumers and represents approximately 88 percent of the U.S. population. The BLS publishes consumer-based indices monthly but does not report a CPI change on June 1; adjustments are reported in the middle of each month. The 2018 adjustment is based on the CPI-U index in effect on June 1, which was reported by BLS on May 12, 2017, and reflects the percentage change from April 2016 to April 2017. The adjustment to the 2017 figures being adopted here reflects a 2.2 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

II. Adjustment and Commentary Revision

A. Credit Card Annual Adjustments

MINIMUM INTEREST CHARGE DISCLOSURE THRESHOLDS—§§ 1026.6(B)(2)(III) AND 1026.60(B)(3)

The minimum interest charge amounts for §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for the year 2018. Accordingly, the Bureau is not amending these sections of Regulation Z.

SAFE HARBOR PENALTY FEES—§ 1026.52(B)(1)(II)(A) AND (B)

The safe harbor penalty fee amounts remain unchanged at $27 for § 1026.52(b)(1)(ii)(A) (first violation safe harbor penalty fee) and $38 for § 1026.52(b)(1)(ii)(B) (subsequent violation safe harbor penalty fee) for the year 2018. Accordingly, the Bureau is not amending these sections of Regulation Z. The Bureau is amending comment 52(b)(1)(ii)-2.i to preserve a list of the historical thresholds for this provision.

B. HOEPA Annual Threshold Adjustment—Comments 32(a)(1)(ii)-1 and -3

Effective January 1, 2018, for purposes of determining under § 1026.32(a)(1)(ii) the points and fees coverage test under HOEPA to which a transaction is subject, the total loan amount threshold is $21,032, and the adjusted points and fees dollar trigger under § 1026.32(a)(1)(ii)(B) is $1,052. When the total loan amount for a transaction is $21,032 or more, and the points and fees amount exceeds 5 percent of the total loan amount, the transaction is a high-cost mortgage. When the total loan amount for a transaction is less than $21,032, and the points and fees amount exceeds the lesser of the adjusted points and fees dollar trigger of $1,052 or 8 percent of the total loan amount, the transaction is a high-cost mortgage. The Bureau is amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments for each year, to reflect for 2018 the new loan amount dollar threshold and the new points and fees dollar trigger, respectively.

C. Ability To Repay and Qualified Mortgages Annual Threshold Adjustments

Effective January 1, 2018, for purposes of determining whether a covered transaction is a qualified mortgage under § 1026.43(e), a covered transaction is not a qualified mortgage if, pursuant to § 1026.43(e)(3), the transaction’s total points and fees exceed 3 percent of the total loan Start Printed Page 41160amount for a loan amount greater than or equal to $105,158; $3,155 for a loan amount greater than or equal to $63,095 but less than $105,158; 5 percent of the total loan amount for loans greater than or equal to $21,032 but less than $63,095; $1,052 for a loan amount greater than or equal to $13,145 but less than $21,032; or 8 percent of the total loan amount for loans less than $13,145. The Bureau is amending comment 43(e)(3)(ii)-1, which lists the adjustments for each year, to reflect the new dollar threshold amounts for 2018.

III. Procedural Requirements

A. Administrative Procedure Act

Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, in Regulation Z, comments 32(a)(1)(ii)-1.iv and -3.iv, 43(e)(3)(ii)-1.iv, and 52(b)(1)(ii)-2.i.E in supplement I are added to update the exemption thresholds. The amendments in this final rule are technical and non-discretionary, as they merely apply the method previously established in Regulation Z for determining adjustments to the thresholds. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. The amendments therefore are adopted in final form.

B. Regulatory Flexibility Act

Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).

C. Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 35065 CFR part 1320), the Bureau reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

List of Subjects in 12 CFR Part 1026

Advertising

Consumer protection

Credit

Credit unions

Mortgages

National banks

Reporting and recordkeeping requirements

Savings associations

Truth in lending

Authority and Issuance

For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026—TRUTH IN LENDING (REGULATION Z)

1.The authority citation for part 1026 continues to read as follows:

Authority: 12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.

2.In Supplement I to part 1026—Official Interpretations:

a.Under Section 1026.32—Requirements for High-Cost Mortgages, under 32(a) Coverage, under Paragraph 32(a)(1)(ii), paragraphs 1.iv and 3.iv are added.

b.Under Section 1026.43—Minimum Standards for Transactions Secured by a Dwelling, under 43(e) Qualified mortgages, under Paragraph 43(e)(3)(ii),paragraph 1.iv is added.

c.Under Section 1026.52—Limitations on Fees, under 52(b) Limitations on Penalty Fees, under 52(b)(1)(ii) Safe harbors, paragraph 2.i.E is added.

 

Source: https://www.federalregister.gov/documents/2017/08/30/2017-18003/truth-in-lending-regulation-z-annual-threshold-adjustments-credit-cards-hoepa-and-atrqm

CFPB Issues Proposed Policy Guidance Regarding Disclosure of Loan-Level HMDA Data

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today issued a rule amending the 2015 updates to the Home Mortgage Disclosure Act (HMDA) rule. The Bureau has temporarily changed reporting requirements for banks and credit unions that issue home-equity lines of credit, and clarified the information that financial institutions are required to collect and report about their mortgage lending.

“The Home Mortgage Disclosure Act is a vital source of information on the health and fairness of the mortgage market,” said CFPB Director Richard Cordray. “Today’s amendments show that the Consumer Bureau is committed to ensuring that financial institutions are able to comply with the rule, and to promoting transparency across the largest consumer financial market in the world.”

The Home Mortgage Disclosure Act—originally enacted in 1975—requires most lenders to report information about the home loans that they originate or purchase, as well as applications received. Banking regulators and the public can use this data to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment in order to attract private investment to areas where it is needed, and to identify possible discriminatory lending patterns.

As directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB updated the HMDA regulation in 2015 to improve the quality and type of data reported by financial institutions. Most of the updated requirements take effect in January 2018, and the industry is working to bring operations into compliance.

Reporting Threshold

Under rules that are scheduled to take effect in January 2018, financial institutions would have been required under the Home Mortgage Disclosure Act to report home-equity lines of credit if they made 100 such loans in each of the last two years. Today’s final rule has increased that threshold to 500 loans through calendar years 2018 and 2019 so that the Bureau can consider whether to make a permanent adjustment. This change was initially proposed in July 2017.

This temporary increase in the threshold will provide time for the Bureau to consider whether to initiate another rulemaking to address the appropriate level for the threshold for data collected beginning January 1, 2020.

Clarifications and Technical Corrections

Today’s final rule contains a number of clarifications, technical corrections, and minor changes to the HMDA regulation. These include clarifying certain key terms, such as “temporary financing” and “automated underwriting system.” The changes finalized today will also, for example, establish transition rules for reporting certain loans purchased by financial institutions. Another change will facilitate reporting the census tract of a property, using a geocoding tool that will be provided on the Bureau’s website. These changes were initially proposed in April 2017.

The CFPB is committed to well-tailored and effective regulations and has sought to carefully calibrate its efforts to ensure consistency with respect to consumer financial protections across the financial services marketplace.

The final rule is available at:

http://files.consumerfinance.gov/f/documents/201708_cfpb_final-rule_home-mortgage-disclosure_regulation-c.pdf 

The CFPB is also releasing today an executive summary of the final rule, updates to technical filing instructions, and other implementation materials.  The CFPB hopes that these materials will help financial institutions understand and implement the changes adopted in the final rule.

The regulatory implementation materials are available here: 

https://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/hmda-implementation/

The technical instructions are available here:

 https://www.consumerfinance.gov/data-research/hmda/for-filers

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The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers  to take more control over their economic lives. For more information, visit consumerfinance.gov.  

Source: https://www.consumerfinance.gov/about-us/newsroom/cfpb-temporarily-changes-mortgage-data-rule-reporting-threshold-community-banks-and-credit-unions/

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