Fall 2019 Federal Highlights

Fannie Mae and Freddie Mac Publish Updates to URLA

Fannie Mae and Freddie Mac (GSEs) published the static components of the updated Uniform Residential Loan Application (URLA), which reflect revisions directed by the Federal Housing Finance Agency announced in August of this year. Changes were made to the following sections:

• Borrower Information and Additional Borrower Information;

• Lender Loan Information;

• Continuation Sheet; and

• Unmarried Addendum.

The GSEs plan to publish a fillable PDF version of the redesigned URLA in early 2020, publish their updated automated underwriting system specifications and supporting documents in November of this year, and announce an updated implementation timeline and mandate before the end of this year.

Dollar Threshold Adjustments in Regulations Z for Determining Exempt Transactions

The Consumer Financial Protection Bureau and the Federal Reserve Board announced final rules amending the official interpretations for Regulation Z (the regulations that implement the Truth in Lending Act) related to the dollar threshold for exempt consumer credit transactions.

Effective January 1, 2020, the exemption threshold amount is increased from $57,200 to $58,300.

Appraisals for Higher-Priced Mortgage Loans Exemption Threshold Adjustments

The Consumer Financial Protection Bureau, Federal Reserve Board, and Office of the Comptroller of the Currency announced increases to the threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans.
Under the Truth in Lending Act, as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, higher-priced mortgage loans must satisfy certain special appraisal requirements, unless exempt. An extension of credit is exempt if equal to or less than the applicable threshold amount as adjusted every year to reflect increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers as of June 1 of the preceding year.

Effective January 1, 2020, the exemption threshold is increased from $26,700 to $27,200.

Bureau Issues Interpretive Rule on Screening and Training Requirements for Mortgage Loan Originators with Temporary Authority

The Bureau of Consumer Financial Protection (“Bureau”) issued an interpretive rule as to whether a loan originator organization is required to perform specific screening of the individual prior to permitting the individual to act as a loan originator operating under temporary authority. The Bureau determined it did not.

Regulation Z, § 1026.36(f)(3) generally requires a loan originator organization that employs an individual loan originator who is not required to be licensed and is not licensed, to complete certain screenings prior to permitting the individual to act as a loan originator and to provide periodic training. With the implementation of temporary authority to originate loans pursuant to the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 amendments to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, it was ambiguous as to whether the above requirement would apply to loan originators acting with temporary authority.

The Bureau determined the most appropriate interpretation is that these requirements do not refer to a loan originator with temporary authority. The loan originator with temporary authority is not an individual loan originator employee who is not required to be licensed, but rather an individual who is required to be licensed but permitted to act while seeking licensure.

The interpretive rule was effective November 24, 2019.

CFPB Indicates It Soon Will Consider Changes to the Loan Originator Compensation Rule

The CFPB indicated that it soon will consider changes to the loan originator compensation rule to allow lenders to adjust LO’s compensation for housing finance authority loans and due to LO errors. Stay tuned!

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