CFPB Updates HOEPA Points and Fees and ATR-QM Thresholds
The CFPB issued a final rule amending the high-cost mortgage thresholds and the qualified mortgage thresholds in Regulation Z. The amendments are effective January 1, 2016.
Under Regulation Z, certain loans with points and fees exceeding specified thresholds are considered “high-cost mortgages.” The thresholds are (1) five percent if the loan amount is $20,000 or more; and (2) the lesser of eight percent or $1,000 if the loan amount is less than $20,000. The $20,000 and $1,000 figures are adjusted annually on January 1st based on changes in the consumer price index.
Effective January 1, 2016, the $20,000 figure is adjusted to $20,350 and the $1,000 figure is adjusted to $1,017.
Also, effective January 1, 2016, the QM points and fees thresholds are revised as follows:
- Three percent of the total loan amount for a loan amount greater than or equal to $101,749;
- $3,052 for a loan amount greater than or equal to $61,050 but less than $101,749;
- Five percent of the total loan amount for a loan amount greater than or equal to $20,350 but less than $61,050;
- $1,017 for a loan amount greater than or equal to $12,719 but less than $20,350; and
- Eight percent of the total loan amount for a loan amount less than $12,719.
CFPB Updates Exam Manual
The CFPB updated the Mortgage Origination and TILA RESPA Integrated Disclosures sections of its examination manual. The updated sections are available on the CFPB’s website.
CFPB Amends Scope of “Small Creditor” and “Rural or Underserved Area” Exceptions
The CFPB issued a Final Rule amending the scope of the exemptions from certain mortgage rules for small creditors and small creditors operating in rural and underserved areas. The rule is effective January 1, 2016.
CFPB Clarifies Supervisory Practices Relating to TRID
The Consumer Financial Protection Bureau (“CFPB”) sent a letter on behalf of the Federal Financial Institutions Examination Council (“FFIEC”) to several industry organizations relating to supervisory and examination practices during the initial months after the effective date of the TILA-RESPA Integrated Disclosure Rule (“TRID”).
The letter says that the CFPB and the FFIEC will “evaluate an institution’s compliance management system and overall efforts to come into compliance, recognizing the scope and scale of changes necessary…to achieve effective compliance.” Institutions are expected to have made a good faith effort to comply with TRID. Examiners will consider:
- The institution’s implementation plan, including actions taken to update policies, procedures, and processes;
- Training of appropriate staff; and
- Handling of early technical problems or other implementation challenges.
CFPB Issuance Compliance Bulletin on MSAs
On October 8th, the CFPB issued Compliance Bulletin 2015-05 regarding marketing service agreements (MSAs). While MSAs are not per se illegal, it is clear that the CFPB is suspicious about the legitimacy of the promotional services under such agreements. The CFPB’s statements in the Bulletin indicate that they believe MSAs are agreements for referrals.
HUD Publishes Updates to Single Family Housing Policy Handbook
HUD published updates to its Single Family Housing Policy Handbook. Most of the updates were effective September 14, 2015.
HUD Announces TRID Policy
HUD posted an announcement on its Lender Performance page relating to its standard for evaluating compliance with the TILA-RESPA Integrated Disclosure Rule (“TRID”). The Announcement says that HUD will not include technical compliance with TRID as an element of its routine quality control reviews. However, HUD expects mortgagees to make good faith efforts to comply with TRID and will evaluate whether the correct disclosure forms were used in connection with the origination of mortgages.
HUD Waives Requirement for Verification of VA Benefits Form
HUD announced that it is temporarily waiving the requirement that a mortgagee obtain a Department of Veterans Affairs (VA) Form 26-8937, Verification of VA Benefits, when documenting a borrower’s VA disability benefits. The announcement says that the waiver is temporary, but it remains in effect until a future announcement from HUD.
Fannie Mae and Freddie Mac Issue Guidance Regarding TRID Compliance
Fannie Mae and Freddie Mac issued guidance relating to their standards for evaluating compliance with the TILA-RESPA Integrated Disclosures Rule (“TRID”).
Fannie Mae and Freddie Mac Announce Origination Defects and Remedies Framework
Fannie Mae and Freddie Mac have announced an “origination defects and remedies framework.” The announcements explain the process that Fannie Mae and Freddie Mac will follow to categorize defects in loan files, allow corrections by lenders, and remedy defects through repurchase requests or repurchase alternatives. The framework set forth in the announcements is effective January 1, 2016.