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News Archive

Compliance Compass: ready for January mortgage changes?

 

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Paul Guttormsson

Many new mortgage lending regulations take effect in January 2014. The League has been publishing Compliance Couriers, creating new ii Releases, and updating existing releases over the past year to help credit unions prepare. The Consumer Financial Protection Bureau (CFPB) Dodd-Frank Mortgage Rules Readiness Guide offers practical guidance to help credit unions implement the new rules.

 

Be sure your staff is ready to tackle the following changes related to:

 

  • Nine mortgage servicing requirements (Jan. 10, 2014). The League’s new ii Release No. B075  examines each of these rules.

 

  • Qualified mortgages & ability to repay (Jan. 10, 2014). See ii Release No. B074, which explains how credit unions must determine whether consumers have the ability to repay closed-end, dwelling secured loans. A CU making a "qualified mortgage" will be presumed to have complied with the ability-to-repay rule.

 

  • Loan originators (Jan. 10, 2014). Several changes will apply to "loan originators" who handle closed-end loans secured by a consumer's dwelling. The League’s ii Release No. B071 has been updated with all the changes.

 

  • High-cost under HOEPA (Jan. 10, 2014). The Reg. Z rules on high-cost  mortgages will cover more types of loans, and the tests for high-costs mortgages will change. Our ii Release No. B062 addresses all of these new rules.

 

  • Financing of credit insurance premiums (Jan. 10, 2014). The League has introduced ii Release No. B076 to explain the rules against financing any premiums or fees for credit insurance in connection with a consumer loan (regardless of lien position) that is secured by a dwelling.

 

  • Homeownership counseling disclosures (Jan. 10, 2014). Three rules related to homeownership counseling take effect in January, and all of the relevant ii Releases have been updated to reflect the changes. Credit unions will have to:

 

  • Provide a list of counselors within three days of application. See The League’s ii Release No. B014.

 

  • Confirm that counseling is done before making a closed-end, dwelling-secured loan that "may result in negative amortization" to a "first-time borrower." See ii Release No. B042.

 

  • Confirm that counseling is done before making high-cost mortgages under HOEPA. See The League’s ii Release No. B062.

 

  • Free copies of appraisals (Jan. 18, 2014). New ii Release, No. B077 (coming soon) will explain amendments to Reg. B that will require credit unions to provide home loan applicants with copies of appraisals. Other state and federal rules also require copies to be made available, as the release will explain.

 

  • Appraisals & escrows for higher-priced mortgages loans (Jan. 18, 2014). New rules will require interior appraisals and appraisal notices for certain "higher-priced mortgage loans." An additional appraisal will be required, at no cost to the borrower, if the house is being "flipped." ii Release No. B068 is up-to-date on these rules.

 

Questions? Contact me at (262) 408-6009.


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