Happy New Year? It is if you’re a mortgage attorney charging billable hours to lenders that are trying to make sense of an array of pending rules coming out of the Consumer Financial Protection Bureau and other agencies.
The CFPB has promulgated its loan originator compensation final rule, perhaps most notable for what it didn't include. Industry groups had urged the bureau to drop from the final rule its proposed "zero-zero alternative that would have required lenders to offer a loan option with no discount points or origination fees any time they offered a mortgage with such payment features. Industry representatives said...
The CFPB decided to exempt small entities that service fewer than 5,000 loans and service only mortgages that they or an affiliate originated or own from a number of the requirements of its new mortgage servicing final rule. For instance, the bureau exempted small servicers from having to create and maintain new general servicing policies and procedures, and from having to issue monthly statements that would include more information than most community banks currently provide. The new rule also permits...
The already deflated subprime market will likely stay depressed due to the Consumer Financial Protection Bureau’s new ability-to-repay rule, according to industry analysts. The rule singled out higher-priced mortgage originations, offering such loans fewer protections than similar prime mortgages in the form of a rebuttable presumption instead of a safe harbor from litigation. “Not many rebuttable-presumption loans will be made by lenders, and they will carry higher rates due to the ...
Loan originator compensation requirements released this week by the Consumer Financial Protection Bureau aim to prohibit steering to subprime mortgages. The CFPB noted that during the subprime boom, some borrowers who would have qualified for prime loans were steered into subprime loans, with the steering largely tied to LO compensation. “Before the financial crisis, many mortgage borrowers were steered towards risky and high-cost loans because it meant more money for the loan originator,” said Richard Cordray ...
Federal regulators approved a final rule last week to set new appraisal requirements for higher-priced mortgage loans. The requirements include a complete exemption for “qualified mortgages” and certain other originations. Comptroller of the Currency Thomas Curry said the rule, along with the CFPB’s recent ability-to-repay rule, are key components in addressing the “worst economic practices since the Great Depression.” The final rule requires lenders originating HPMLs to obtain ...
Mortgage bankers funded $232.69 billion worth of FHA loans in 2012, a 22 percent jump from the year prior, but the improvement pales in comparison to business gains experienced by Fannie Mae and Freddie Mac, according to exclusive loan-level data compiled by Inside FHA Lending. By comparison, Fannie grew its business by almost 46 percent last year with Freddie improving loan purchases from seller/servicers by 49 percent. Still, it was FHA’s best quarterly showing ($64.03 billion) since the fourth quarter of 2010 when mortgage lenders originated $72.12 billion of product. And not surprisingly, consumers taking out FHA loans ... [2 charts]
Can a lender rely on an approval from the FHA’s automated underwriting system in determining whether a mortgage loan is a “qualified mortgage?” Lawyers at BuckleySandler, a Washington, DC, law firm, indicated some uncertainty after poring over the Consumer Financial Protection Bureau’s final “ability-to-repay” rule governing residential mortgage lending under new Truth in Lending Act regulations. Effective on Jan. 10, 2014, the final rule requires lenders to verify a borrower’s financial information and determine the borrower’s capacity to repay the loan over the long term. It also creates a ...
The Department of Housing and Urban Development is investigating reports that a loan officer of an approved FHA lender had participated in a reverse mortgage borrower’s counseling session, a practice HUD frowns upon but does not directly prohibit. A HUD representative declined to provide details but acknowledged that the report was part of informal discussions between department officials and stakeholders. “That information … has not been officially released in any form,” he said. “Once the details are finalized, we will be advising stakeholders.” The National Reverse Mortgage Lenders Association posted the ...
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