Winter 2019-2020 Federal Highlights

FHFA Announces GSE Conforming Loan Limits for 2020

The Federal Housing Finance Agency announced that the maximum confirming loan limit for one-unit properties acquired by Fannie Mae and Freddie Mac in 2020 will be $510,400.00, with the exception of several higher-cost areas where higher loan limits will be in effect.

The $510,400.00 amount represents a 5.38% increase from the current $484,350.00 limit that has been in effect since January 1, 2019. The loan limits will also increase in nearly all high-cost counties.

CFPB Issues Final Rule Implementing Partial HMDA Exemptions and Extensions of Temporary Coverage Thresholds

The Bureau of Consumer Financial Protection (“Bureau”) issued a final rule amending Regulation C. The final rule largely incorporates the interpretive and procedural rule issued by the Bureau on August 31, 2018 and implements amendments to the Home Mortgage Disclosure Act made by the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The final rule’s amendments to Regulation C include the following:

1. Adjusts the threshold for reporting about open-end lines of credit by extending the temporary threshold of 500 open-end lines of credit to January 1, 2022. This is applicable to both depository and nondepository institutions;

2. Incorporates into Regulations C the interpretive and procedural rule, which includes the following:

a. Clarifies insured depository institutions and insured credit unions covered by a partial exemption may report exempt data fields at their option, but must report all data fields the data point comprises;

b. Clarifies only loans and lines of credit that are otherwise reportable under Regulation C count towards the partial exemption thresholds;

c. Identifies the data points that are covered by the partial exemption;

d. Requires a non-universal loan identifier for certain partially exempt transactions for which a ULI is not reported;

e. Clarifies that an insured depository institution does not qualify for the partial exemption and must comply with HMDA section 304(b)(5) if it received a rating of “needs to improve” during each of its two most recent examinations or a rating of “substantial noncompliance” on its most recent examination.

The provisions were effective January 1, 2020.

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 2020, the threshold will be $2.202 billion. This is increased from 2019, when the threshold was $2.167 billion. Therefore, creditors with assets (including assets of certain affiliates) of less than $2.202 as of December 31, 2019, may qualify for an exemption from the escrow account requirements for higher-priced mortgage loans. This threshold will also apply in certain circumstances during a grace period, with respect to transactions with applications received before April 1, 2021. There are 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. However, 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.

Taxpayer First Act

The Taxpayer First Act was effective December 28, 2019. The Act requires a lender to obtain borrower consent to share tax information received from the Internal Revenue Service with other parties.

The Taxpayer First Act, passed on July 1, 2019, requires a taxpayer’s tax information be used only for the express purpose for which consent was granted. Further, the tax information shall not be disclosed to any other person without the express permission of the taxpayer.

The TRACED Act is Signed into Law

President Donald Trump signed into law the “Pallone-Thune Telephone Robocall Abuse Criminal Enforcement and Deterrence Act.” (“TRACED Act”).

Some key features of the TRACED Act include:

1) Broadens the Federal Communications Commission’s (“FCC”) authority to levy civil penalties of up to $10,000 per call on persons who intentionally disregard telemarketing restrictions;

2) Extends the time the FCC can take civil enforcement action against intentional violations to four years after the robocall is placed;

3) Creates several interagency working groups to identify and report to Congress on improving deterrence and criminal prosecution at the federal and state level of robocall scams;

4) Requires voice service providers to adopt call authentication technologies;

5) Directs the FCC to initiate a rulemaking related to unwanted calls or texts from callers;

6) Directs the FCC to initiate a rulemaking process related to “one-ring” scams; and

7) Requires the FCC to establish a working group to issue best practices to prevent hospitals from receiving illegal robocalls.

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