In the March 25, 2016 issue of the Federal Register (81 FR 16074) (click here), the CFPB published an interim final rule expanding eligibility for exemptions designated for small creditors operating in rural or underserved areas. These exemptions include eligibility to generate balloon-payment, higher-cost mortgages; qualified mortgages that contain balloon-payments and exemptions from required escrow accounts for higher-priced mortgage loans. This rule is implemented to comply with the Helping Expand Lending Practices in Rural Communities Act, which amended the Truth in Lending Act. The rule will become effective on March 31, 2016 and will amend 12 CFR part 1026 (Regulation Z)-in particular, paragraphs (b)(2)(iii)(A), (b)(2)(iii)(D)(1), and (b)(2)(iv)(A) of Section 1026.35 and the Official Interpretations to Sections 1026.35(b)(2)(iii) and (iv) and 1026.43(f)(1)(vi) and (f)(2)(ii).
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Read articles below for analysis and discussion of recent trends by BM&G’s industry experts.
Federal Banking Agencies Clarify Expectations for the Use of Property Evaluations
On March 4, 2016, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (the “Agencies”) issued an Interagency Advisory on Use of Evaluations in Real-Estate Related Financial Transactions (SR 16-5, click here), which applies to all state member banks, bank holding companies, and nonbank subsidiaries of bank holding companies, regardless of the asset size of the supervised institution. The advisory clarifies the circumstances under which the use of an evaluation, as opposed to a full USPAP appraisal, in the underwriting of a real estate-related financial transaction complies with the Agencies’ real estate appraisal regulations (Board: 12 CFR 208, subpart E and 12 CFR 225, subpart G; FDIC: 12 CFR 323; and OCC: 12 CFR 34, subpart C) and the Interagency Appraisal and Evaluation Guidelines, click here, (the “Appraisal Regulations”).
CFPB Introduces Application Process to Designate Additional Rural Areas for Purposes of Federal Consumer Financial Law
On March 3, 2016, in order to comply with the requirements of the Helping Expand Lending Practices in Rural Communities Act, the CFPB adopted a procedural rule, published in the March 3, 2016 issue of the Federal Register (81 FR 11099, click here), that will allow mortgage lenders and other interested parties to request areas to be designated as rural for the purposes of federal consumer financial laws. These newly designated rural areas will be in addition to current rural areas, which are determined via a county-by-county basis or by census tracts.
Fannie Mae Selling Guide Announcement SEL-2016-02 Eliminates Continuity of Obligation
On February 23, 2016, Fannie Mae issued Selling Guide Announcement SEL-2016-02 which eliminated its continuity of obligation policy in its entirety. The entire announcement may be found via the above link, as well as the other Updated Selling Guide Topics as a result of this announcement.
The Texas Finance and Credit Union Commissions Request Comments on Readoption, Revision, or Repeal of the Home Equity Interpretations
In today’s issue of the Texas Register (41 TexReg 1503) the Finance Commission of Texas and the Texas Credit Union Commission are requesting comments on readoption, revision, or repeal of the Home Equity Interpretations in the Texas Administrative Code (7 TAC Chapter 153). This is your opportunity to propose clarifications and/or amendments to these Interpretations. See the below Notice for submission instructions:
FEMA Issues Final Rule Identifying Communities Suspended From Participation in National Flood Insurance Program
In the February 17, 2016, issue of the Federal Register (click here) the FEMA issued a final rule listing certain communities that are suspended from participation in the National Flood Insurance Program (NFIP) because of noncompliance with the floodplain management requirements of NFIP. The suspension becomes effective on March 16, 2016. This means that, as of March 16, 2016, flood insurance will no longer be available in those communities. See March 16, 2106, suspension list below.
Rural Housing Service, USDA, Publishes Final Rule Amending Single Family Housing Guaranteed Loan Program (81 FR 6418)
In the February 8, 2016, issue of the Federal Register (click here) the Rural Housing Service (RHS) issued a final rule amending its December 9, 2013, interim final rule (78 FR 73928) to the Single Family Housing Guaranteed Loan Program (SFHGLP). The February 8, 2016, final rule makes changes to the December 9, 2013, interim final rule in response to public comment and further consideration of certain issues by the RHS to the SFHGLP. The February 8, 2016, final rule becomes effective on March 9, 2016.
CFPB Corrects Typographical Error in Supplementary Information to TRID Rule Regarding Application of Tolerances to Certain Fees and Charge
In the February 10, 2016, issue of the Federal Register (81 FR 7032, click here), the CFPB corrected a typographical error in the Supplementary Information to the TILA-RESPA Final Rule published in the December 31, 2013, issue of the Federal Register (78 FR 79730) regarding the applicability of TRID tolerances to property insurance premiums, property taxes, homeowner’s association dues, condominium fees, and cooperative fees under Section 1026.19(e)(3)(iii) of Regulation Z. On page 79830, in the first column, lines 44 through 50, the Supplementary Information to the TILA-RESPA Final Rule in the December 31, 2013, issue of the Federal Register incorrectly states: “The final rule also mirrors current Regulation X in that property insurance premiums, property taxes, homeowner’s association dues, condominium fees, and cooperative fees are subject to tolerances whether or not they are placed into an escrow, impound, reserve, or similar account.” (Emphasis added.)
CFPB’s Compliance Bulletin to Furnishers of Consumer Information Regarding Duties Under FCRA and Regulation V
On February 3, 2016, the CFPB issued Compliance Bulletin 2016-01 (click here), published in the February 4, 2016 issue of the Federal Register (81 FR 5992, click here). This bulletin reminded furnishers of their duties concerning the accuracy and integrity of consumer information reported to consumer reporting agencies. In particular, the CFPB highlighted Section 1022.42 of Regulation V (12 C.F.R. § 1022.42), which details furnisher responsibilities:
CFPB Request for Information Regarding HMDA Resubmission Guidelines
As you are aware the recent amendments to Regulation C (October 28, 2015, Federal Register, 80 FR 66128, click here), which implements HMDA, become effective in stages starting in 2017, with most of the amendments becoming effective in 2018 for reporting in 2019. However, the CFPB Resubmission Guidelines (click here), which describe when HMDA data should be corrected and resubmitted, have not been amended to reflect HMDA data that will be submitted under the Regulation C amendments. In order to rectify this, the CFPB published in the January 12, 2015, Federal Register (81 FR 1405, click here) a Notice requesting information on what changes to the Resubmission Guidelines may be needed.