Winter 2017-2018 Federal Highlights

CFPB Issues Final Rule Amending Regulation B

The Consumer Financial Protection Bureau issued a final rule to amend Regulation B (the Equal Credit Opportunity Act) which will provide additional flexibility for mortgage lenders in the collection of consumer ethnicity and race information. This additional flexibility will help facilitate compliance with Regulation C (the Home Mortgage Disclosure Act).

The rule was effective January 1, 2018, except that the amendment to Appendix B which removed a 2004 version of the “Uniform Residential Loan Application” form is effective January 1, 2022.

FHFA Announces GSE Conforming Loan Limits for 2018

The Federal Housing Finance Agency announced that the maximum conforming loan limit for first mortgages secured by one-unit properties acquired by Fannie Mae and Freddie Mac in 2018 will be $453,100.00, with the exception of several higher-cost areas where higher loan limits will be in effect.

The $453,100.00 amount represents a 6.8% increase from the current $424,000.00 limit that has been in effect since January 1, 2017. The loan limits will also increase in nearly all high-cost counties.

CFPB Adjusts Asset-Size Threshold for Exemption From Escrow Account Requirements for Higher Priced Mortgage Loans

The Consumer Financial Protection Bureau adjusted the asset-size threshold for an exemption from the Truth In Lending Act’s escrow account requirements for higher-priced mortgage loans.

For 2018, the threshold is $2.112 billion. This is a slight increase from 2017, when the threshold was $2.069 billion. If a creditor’s assets, including the assets of certain affiliates, were less than $2.112 billion on December 31, 2017, then the creditor may qualify for the exemption from the escrow account requirements for higher-priced mortgage loans. This threshold will apply for applications received before April 1, 2019. There are also other requirements that the creditor must meet to take advantage of the exemption.

This adjustment also affects the “qualified mortgage” rules under Regulation Z. A “small creditor portfolio loan” that meets certain requirements is considered a “qualified mortgage.” One of these requirements is that the creditor must not exceed the asset-size threshold for the exemption from the escrow account requirement for higher-priced mortgage loans. Further, a qualified mortgage generally may only provide for a balloon payment under certain conditions. One of these conditions is that the creditor must not exceed the asset-size threshold.

Finally, the adjustment also affects the “high-cost mortgage” rules under Regulation Z. Generally, a high-cost mortgage may not provide for a balloon payment. But this limitation does not apply to a “balloon payment qualified mortgage.” As explained above, one of the requirements for a “balloon payment qualified mortgage” is that the creditor not exceed the asset-size threshold.

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