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In the May 24, 2016, issue of the Federal Register (81 FR 32830, click here), the CFPB published a proposed rule to govern pre-dispute arbitrations agreements in consumer finance transactions that will be confided in new 12 CFR part 1040 when made final. First, the proposed rule would prohibit covered providers of certain consumer financial products and services from using an agreement with a consumer that provides for arbitration of any future dispute between the parties to bar the consumer from filing or participating in a class action with respect to the covered consumer financial product or service. Second, the proposal would require a covered provider that is involved in arbitration pursuant to a pre-dispute arbitration agreement to submit specified arbitral records to the CFPB. The CFPB is also proposing to adopt official interpretations to the proposed rule. The text of the proposed rule and official interpretations are found on pages 32924 through 32929 of the above cited Federal Register.

In the May 16, 2016 issue of the Federal Register (81 FR 30257) (click here), the Consumer Financial Protection Bureau (“CFPB”) published its tenth edition of its Supervisory Highlights. The Supervisory Highlights details CFPB supervisory observations, public enforcement actions, and corrective procedures. As it states recent CFPB regulatory emphases, it provides useful compliance guidance. The tenth edition covered CFPB work done primarily between September 2015 and December 2015.

In the May 3, 2016, issue of the Federal Register (81 FR 26461, click here) the Rural Housing Service (RHS) re-issued a final rule amending its Single Family Housing Guaranteed Loan Program regulations in 7 CFR Part 3555 to provide that a loan guaranteed by RHS is a Qualified Mortgage if it meets certain requirements set forth in 12 CFR 1026.43(e) of Regulation Z. The final rule adds new §3555.109 providing for an RHS qualified mortgage, as set forth below:

In the March 31, 2016, issue of the Federal Register (81 FR 18456, click here) the Rural Housing Service (RHS) published a correction withdrawing the final rule published in the March 29, 2016, issue of the Federal Register (81 FR 17361) that amended its Single Family Housing Guaranteed Loan Program regulations in 7 CFR Part 3555 relating to RHS qualified mortgages under §1026.43(e) of Regulation Z, lender indemnification, and refinancing provisions.

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).

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”).

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.

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.