CFPB Rule – Homeownership Counseling Disclosure
The CFPB released a final rule and website regarding the homeownership counseling disclosure required under RESPA. For applications received on or after January 10, 2014, a lender or mortgage broker must provide a loan applicant with a written list of homeownership counseling organizations that provide relevant counseling services in the loan applicant’s location within three days of application. The list of homeownership counseling organizations must be obtained no earlier than 30 days prior to the time when the list is provided to the loan applicant from either: (i) the website maintained by the CFPB for lenders to use in complying with this requirement; or (ii) data made available by the CFPB or HUD for lenders to use in complying with this requirement, provided that the data is used in accordance with instructions provided with the data.
The CFPB disclosure tool is available at http://www.consumerfinance.gov/find-a-housing-counselor/
CFPB Issues Long-Awaited Integrated Disclosures Rule
On November 20th, the CFPB issued a final rule regarding the integrated RESPA and TILA disclosures. The final rule is effective for applications received by a mortgage broker or lender on or after August 1, 2015 and applies to most closed-end consumer loans.
The final rule provides for two new disclosures: (1) the Loan Estimate, which replaces the Good Faith Estimate and early TILA disclosure; and (2) the Closing Disclosure, which replaces the HUD-1 and TILA disclosure. The Loan Estimate must be provided no later than three business days after receipt of an application. For purposes of the Loan Estimate, “application” means the applicant’s name, income, social security number, property address, estimated value of property, and mortgage loan amount sought.
The Closing Disclosure must be received by the borrower three business days before closing. Unlike the proposal, the final rule provides that re-disclosure along with a new three business day waiting period applies only if the APR increases by more than 1/8th of 1%, the loan product changes, or a prepayment penalty is added. Other changes can be disclosed on a revised Closing Disclosure without delaying closing. The final rule also allows settlement agents to provide the Closing Disclosure.
HUD Releases Final Qualified Mortgage Rule
HUD has issued its final rule defining an FHA qualified mortgage. Under the final ability to repay rule, the government agencies are authorized to issue their own rules defining a qualified mortgage.
The final HUD rule provides that for all FHA Title II mortgages (except manufactured housing loans), an FHA loan is a qualified mortgage if the total points and fees do not exceed the applicable qualified mortgage threshold under Regulation Z (for loans of $100,000 or more this threshold is 3%) and the loan is actually insured by FHA. Please note that this differs from the temporary or patch definition of qualified mortgage under Regulation Z, which provides that a loan must be eligible for purchase, insurance or guaranty by the GSEs or government agencies.
FHA qualified mortgages are safe harbor qualified mortgages if the difference between the APR and the APOR is less than or equal to the applicable annual MIP factor plus 1.15. An FHA qualified mortgage is a rebuttable presumption qualified mortgage if the difference between the APR and the APOR is more than the applicable annual MIP factor plus 1.15.
Title II manufactured housing loans, Title I loans, Section 184 loans and Section 184a loans are FHA qualified mortgages if such loans are insured by FHA. The points and fees restriction does not apply to these loans for purposes of establishing qualified mortgage status.
Certain types of loans are not subject to the ability to repay requirement under Regulation Z and are exempt from the FHA qualified mortgage rule. These include FHA home equity conversion mortgages, bridge loans with a term of 12 months or less, the construction phase of a construction to permanent loan when the construction phase is 12 months or less, and loans made by certain low-income and non-profit lenders.
The FHA qualified mortgage rule was effective January 10, 2014.
2014 Freddie Mac and Fannie Mae Conforming Loan Limits
The Federal Housing Finance Agency has released the 2014 conforming loan limits. The loan limits for 2014 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 2014 limits apply to loans originated after October 1, 2011 and delivered to Fannie Mae or Freddie Mac in 2014. An excel spreadsheet detailing the limits by county is available at http://www.fhfa.gov/webfiles/25847/CLL2014112613Final.pdf
Consumer Financial Protection Bureau Issues Adjusted HOEPA Trigger Amount for 2014
The CFPB has issued the adjusted points and fees amount under HOEPA for 2014. The adjusted dollar amount for 2014 is $632.00, effective January 1, 2014. Therefore, the points and fees threshold for HOEPA beginning January 1, 2014, is the greater of 8% of the total loan amount or $632.00. This threshold will be applicable until the revised HOEPA provisions go into effect on January 10, 2014.