In the September 24, 2010, issue of the Federal Register (75 F.R. 58470), the Board of Governors of the Federal Reserve System (FRB) published an interim rule (the Interim Rule) amending the payment schedule disclosure requirements in §226.18 of Regulation Z for closed-end mortgage loans for which a creditor receives applications on and after January 30, 2011. The Interim Rule revises the introductory text of §226.18(g), adds new §§226.18(s) and (t), revises and adds interpretive comments to Supplement I – Official Staff Interpretations, and adds new closed-end model clauses H-4(E) through H-4(K) to Appendix H-Closed-End Model Forms and Clauses. The Interim Rule implements those disclosure provisions of the Mortgage Disclosure Improvement Act of 2008 (Public Law 110-289, §§2501-2503) that amended Section 128 of the Truth in Lending Act (TILA), in pertinent part, by adding subsection 128(b)(2)(C) requiring disclosure of payment examples for loans whose interest rate or payments can change and a “no-guarantee-to-refinance” statement.
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Read articles below for analysis and discussion of recent trends by BM&G’s industry experts.
New Appraiser Independence Requirements Replace HVCC – Fannie Mae Announcement SEL-2010-14
On October 15, 2010, Fannie Mae issued the above Announcement notifying its Sellers that appraisals conducted in connection with single-family mortgage loans (other than government insured or guaranteed loans) delivered to Fannie Mae, with application dates on or after October 15, 2010, must conform to the new Appraiser Independence Requirements (AIRs). In addition, the Announcement states that all conventional, single-family mortgage loans with application dates on or after May 1, 2009 must continue to comply with the Home Valuation Code of Conduct (HVCC) until November 1, 2010. This means that for the next two weeks the AIRs and the HVCC will overlap and on November 1, 2010, HVCC will no longer apply to loans with application dates on or after November 1, 2010.
NMLS Credit Report Authorization Beginning November 1, 2010
The Texas Department of Savings and Mortgage Lending requires all licensees to authorize a credit report through NMLS by no later than December 31, 2010. (The Department also encourages licensees to authorize a credit report through NMLS prior to renewing their license for 2011.) In view of this requirement, we reprinted below the credit report notice (redacted for brevity) from the following NMLS web address: http://mortgage.nationwidelicensingsystem.org/profreq/credit/Pages/default.aspx.
Community Reinvestment Act – Final Rule Regarding Education Loans and Certain Investments and Ventures Impacting a Financial Institution’s CRA Record
In the above-cited issue of the Federal Register, the following federal agencies (collectively, the “federal agencies”) – Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of Thrift Supervision – published a joint final rule (CRA Rule) that, according to the summary published with the CRA Rule, revises the federal agencies’ rules implementing the Community Reinvestment Act as follows: (1) The CRA Rule implements the statutory requirement1 that the federal agencies consider low-cost education loans provided by a financial institution to low-income borrowers as a factor when assessing the institution’s record of meeting community credit needs. (2) The CRA Rule also incorporates the statutory provision2 that allows the federal agencies to consider capital investment, loan participation, and other ventures undertaken by nonminority-owned and nonwomen-owned financial institutions in cooperation with minority-and women-owned financial institutions and low income credit unions as a factor when assessing an institution’s CRA record. For those clients who must comply with the Community Reinvestment Act, we advise you to read the text of and the explanatory preamble to the CRA Rule, which may be accessed at: http://edocket.access.gpo.gov/2010/pdf/2010-24737.pdf.
Designated Transfer Date for Bureau of Consumer Financial Protection Published in the September 20, 2010, issue of the Federal Register
In today’s Federal Register (75 FR 57252) the Secretary of the Treasury published notice that pursuant to Section 1062 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Public Law 111-203), July 21, 2011 is the Designated Transfer Date for the transfer of all of the consumer financial protection functions of the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Federal Trade Commission, the National Credit Union Administration, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, and the Department of Housing and Urban Development (as to HUD, this transfer only relates to RESPA, the SAFE Act, and the Interstate Land Sales Full Disclosure Act).
Final Rule Requiring Registration of Mortgage Loan Originators to Implement the SAFE Act – July 28, 2010 issue of the Federal Register
This memorandum is to advise you that in the above issue of the Federal Register (75 FR 44656) the following named federal agencies – Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (FRB), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision (OTS), Farm Credit Administration (FCA), and National Credit Union Administration (NCUA) – each adopted a parallel final rule (collectively the “Final Rule”) to implement the federal SAFE Act.
FHA Proposed Changes to Risk Management Practices – Reduction of Seller Concessions and New Loan-to-Value and Credit Score Requirements
In today’s Federal Register (75 FR 41217) HUD published notice that in order to enhance FHA risk management practices, FHA is proposing the following changes to its underwriting guidelines: 1. reduce “seller concessions”; 2. introduce a minimum eligibility credit score; 3. reduce the maximum LTV for low credit score borrowers; and 4. tighten underwriting standards for manually underwritten loans.
Community Reinvestment Act Proposed Rule Change to Revise the Term “Community Development”
In today’s Federal Register, the following federal agencies – OCC, FRB, FDIC and OTS – published a proposed rule to revise the definition of “community development.” In pertinent part, the proposed revised definition includes “[l]oans, investments, and services that [s]upport, enable, or facilitate projects or activities that meet the criteria described in Section 2301(c)(3) of the Housing and Economic Recovery Act of 2008 (HERA) … and are conducted in designated target areas identified in plans approved by the United States Department of Housing and Urban Development in accordance with the Neighborhood Stabilization Program (NSP) established by the HERA and the American Recovery and Reinvestment Act of 2009 … .”
Home Warranty Company Payment to Real Estate Broker or Agent Can Be a RESPA Section 8 Violation
In today’s Federal Register, HUD issued the following Interpretative Rule on compensation paid by a home warranty company (HWC) to a real estate broker or agent in connection with the sale of a homeowner warranty to a homebuyer or seller in a transaction involving a federally related mortgage loan: (1) A payment by an HWC for marl
Community Reinvestment Act Regulations: Notice by Federal Agencies to Hold Public Hearings on Potential Regulatory Changes
In today’s Federal Register, the following federal agencies – OCC, FRB, FDIC and OTS – published notice that they will hold joint public hearings to solicit comments that can be used for future revision of the CRA regulations. These public hearing dates and locations are as follows: 1. July 19, 2010-FDIC’s L. William Seidman Center, 3501 Fairfax Drive, Arlington, VA 22201-2305. 2. August 6, 2010-Federal Reserve Bank of Atlanta, 1000 Peachtree Street Northeast, Atlanta, GA 30309. 3. August 12, 2010-Federal Reserve Bank of Chicago, 230 South La Salle Street, Chicago, IL 60614. 4. August 17, 2010-Los Angeles Branch of the Federal Reserve Bank of San Francisco, 950 South Grand Avenue, Los Angeles, CA 90015.