Winter 2013 Federal Highlights

CFPB Releases “Ability To Repay/Qualified Mortgage” Rule

The CFPB introduced the long awaited “Ability To Repay/Qualified Mortgage” Rule along with new HOEPA, counseling and escrow rules.  This rule will be effective on January 10, 2014, and includes some surprises, such as a companion proposed rule seeking clarification on loan originator compensation and proposing exemptions and modifications from the ability to repay requirements to best protect consumers.  The comment period for the proposed rule expires on February 25, 2013. 

The CFPB was working fast and furiously to finalize a plethora of regulations due by January 21st.  Mission accomplished!  The agency issued well over 3,000 pages of regulations impacting your business – most of which do not go into effect until next year.  Each of the regulations is listed below with its effective date and the briefest of summaries.  To learn more, contact us or visit  Detailed information is just a call or click away! 

High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act (Regulation Z) and Homeownership Counseling Amendments to the Real Estate Settlement Procedures Act (Regulation X)

Effective January 10, 2014

  • Establishes new thresholds for high-cost loans including a new “points and fees” definition.
  • Imposes new disclosure requirements regarding housing counselors.

Escrow Requirements under the Truth in Lending Act (Regulation Z) 

Effective June 1, 2013 

  • Lengthens the time period for mandatory escrow accounts.
  • Addresses requirements for termination of escrow accounts.

Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z) 

Effective January 10, 2014 

  • Requires lenders to determine a borrower’s ability to repay a loan unless it is a qualified mortgage.
  • Includes limited exceptions for “non-standard” to “standard” refinances and balloon loans made by those in rural or underserved areas. 

2013 Real Estate Settlement Procedures Act (Regulation X) and Truth in Lending Act (Regulation Z) Mortgage Servicing Final Rules 

Effective January 10, 2014 


  • Periodic billing statements
  • Interest-rate adjustment notices for ARMs
  • Prompt payment crediting and payoff statements
  • Force-placed insurance
  • Error resolution and information requests
  • General servicing policies, procedures, and requirements
  • Early intervention with delinquent borrowers
  • Continuity of contact with delinquent borrowers
  • Loss mitigation procedures

Disclosure and Delivery Requirements for Copies of Appraisals and Other Written Valuations Under the Equal Credit Opportunity Act (Regulation B) 

Effective January 18, 2014 

  • Requires notice to consumers regarding their right to appraisal.
  • Requires lender to provide appraisal. 

Appraisals for Higher-Priced Mortgage Loans 

Effective January 18, 2014  

  • Requires interior inspections for “higher risk mortgages.”
  • Additional notice requirements 

Loan Originator Compensation Requirements under the Truth in Lending Act (Regulation Z) 

Effective June 1, 2013 for mandatory arbitration and credit life provisions

Effective January 10, 2014 for rest of rule 

  • Maintains prohibitions on LO comp based on loan term (other than loan amount) or proxy.
  • Adds definition of “proxy.”
  • Limited exemption from dual compensation prohibition to allow mortgage brokers to pay commission to employees even if receive consumer-paid comp.
  • Limited exception for LOs to reduce comp to defray unforeseen settlement cost increases.
  • Allows certain profit sharing plans.
  • Adds LO qualification requirements.
  • Prohibits mandatory arbitration in loan documents.
  • Prohibits financing of credit insurance premiums. 

To learn more, visit or give us a call. 

CFPB Attorney-Client Privilege Protection Bill Signed Into Law 

President Obama has signed into law H.R. 4014, the Attorney-Client Privilege Protection Bill.  This legislation amends the Federal Deposit Insurance Act to clarify that when banks and other supervised entities submit privileged information to the Consumer Financial Protection Bureau (CFPB), the privilege will not be waived as to any third parties and the CFPB can share the privileged information with other federal agencies without affecting the privileged status of the information.

CFPB Issues Final Rule Delaying Implementation of Certain Disclosures Under The Dodd-Frank Act 

The Consumer Financial Protection Bureau (CFPB) issued final regulations delaying the implementation of certain disclosures required under Title XIV of the Dodd-Frank Act.  The Dodd-Frank Act amends TILA to require new disclosures addressing a variety of topics.  Under the Dodd-Frank Act, certain disclosures would be effective on January 21, 2013 absent final regulations setting forth a later effective date.  However, many of the disclosures that would be subject to the statutory implementation deadline are proposed to be included in the TILA-RESPA integrated disclosure.  As such, rather than requiring the implementation of these disclosures twice, the CFPB has exercised its authority to delay the effective date for specific disclosures.  The disclosures set forth below will not go into effect until the TILA-RESPA integrated disclosures rule is effective: 

  • Warning regarding negative amortization features. Dodd-Frank Act section 1414(a); TILA section 129C(f)(1);
  • Disclosure of State law anti-deficiency protections. Dodd-Frank Act section 1414(c); TILA section 129C(g)(2) and (3);
  • Disclosure regarding creditor’s partial payment policy prior to consummation and, for new creditors, after consummation. Dodd-Frank Act section 1414(d); TILA section 129C(h);
  • Disclosure regarding mandatory escrow or impound accounts. Dodd-Frank Act section 1461(a); TILA section 129D(h);
  • Disclosure prior to consummation regarding waiver of escrow in connection with the transaction. Dodd-Frank Act section 1462; TILA section 129D(j)(1)(A);
  • Disclosure of monthly payment, including escrow, at initial and fully-indexed rate for variable-rate residential mortgage loan transactions. Dodd-Frank Act section 1419; TILA section 128(a)(16);
  • Repayment analysis disclosure to include amount of escrow payments for taxes and insurance. Dodd-Frank Act section 1465; TILA 128(b)(4);
  • Disclosure of aggregate amount of settlement charges, amount of charges included in the loan and the amount of such charges the borrower must pay at closing, the approximate amount of the wholesale rate of funds, and the aggregate amount of other fees or required payments in connection with a residential mortgage loan. Dodd-Frank Act section 1419; TILA section 128(a)(17);
  • Disclosure of aggregate amount of mortgage originator fees and the amount of fees paid by the consumer and the creditor. Dodd-Frank Act section 1419; TILA section 128(a)(18);
  • Disclosure of total interest as a percentage of principal. Dodd-Frank Act section 1419; TILA section 128(a)(19);
  • Optional disclosure of appraisal management company fees. Dodd-Frank Act section 1475; RESPA section 4(c);
  • Post-Consummation Escrow Cancellation Disclosure. TILA section 129D(j)(1)(B). 

The delayed implementation of the disclosures above applies to all loans and is not limited to only those loans subject to the TILA-RESPA integrated disclosures proposed rule. 

HOEPA Trigger Amount for 2013 

The Consumer Financial Protection Bureau (CFPB) issued the adjusted points and fees amount under HOEPA for 2013.  The adjusted dollar amount for 2013 is $625.00, effective January 1, 2013.  Therefore, the points and fees threshold for HOEPA beginning January 1, 2013, is the greater of 8% of the total loan amount or $625.00. 

The CFPB also released the annual adjustment amount for consumer credit transactions that are exempt from TILA.  Currently, credit transactions over $51,800 which are not secured by real property, or by personal property used or expected to be used as the principal dwelling of the consumer are exempt from TILA.  This amount is increased to $53,000 effective January 1, 2013.  

Freddie Mac and Fannie Mae Conforming Loan Limits for 2013 

The Federal Housing Finance Agency (FHFA) has released the 2013 conforming loan limits.  The loan limits for 2013 will remain at existing levels.  The maximum conforming loan limits for one-unit properties are $417,000 for most locations, but may be as high as $625,500 in certain high-cost areas.  The 2013 limits apply to loans originated after October 1, 2011 and delivered to Fannie Mae or Freddie Mac in 2013.  An excel spreadsheet detailing the limits by county is available at

Posted in Federal Highlights, Newsletters


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