This memorandum will provide an overview of home equity lending embodied in Article XVI, Section 50, of the Texas Constitution and will also discuss some of the issues lenders face. The full text of Section 50, current to date, is attached to this memorandum (for ease of reference, the home equity and HELOC provisions are highlighted in bold typeface). All references to “sections,” “subsections,” and “parts” in this memorandum refer to the various provisions of Section 50, unless otherwise stated.
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Read articles below for analysis and discussion of recent trends by BM&G’s industry experts.
Rural Housing Service Issues Qualified Mortgage Proposed Rule
In the March 5, 2015, issue of the Federal Register (80 FR 11950, click here) the Rural Housing Service (RHS) issued a proposed rule to amend 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 proposed rule amends §3555.10 by adding a “Qualified mortgage” definition and by adding new §3555.109 providing for an RHS qualified mortgage, as set forth below:
TILA-RESPA Integrated Disclosures Rule Amendments
In the February 19, 2015 Federal Register (80 FR 8767) the Consumer Financial Protection Bureau (CFPB) published a final rule (click here) making the following amendments to the TILA-RESPA Integrated Disclosures Rule: (1) an extension to the timing requirement for providing a revised Loan Estimate when the consumer locks a rate after the initial Loan Estimate is provided; and (2) an amendment to permit language related to new construction loans to be included on the Loan Estimate:
FHA Qualified Mortgage 2015 Points and Fees Adjustments
In the February 17, 2015 issue of the Federal Register (80 FR 8243, click here) the Department of Housing and Urban Development (HUD) announced the 2015 points and fees threshold for FHA qualified mortgages by adopting the Consumer Financial Protection Bureau’s August 14, 2014 final rule amending the qualified mortgage points and fees limit for 2015 (see our August 19, 2014 memorandum, click here).
Proposed Amendments to “Small Creditors” and “Rural” or “Underserved Areas” under Regulation Z
Our January 30, 2015, memorandum is hereby revised to reflect that on February 11, 2015, the Consumer Financial Protection Bureau (CFPB) published in the Federal Register (80 FR 7770) a proposed rule (click here) to amend §1026.35 (Higher-Priced Mortgage Loans), §1026.43 (Ability to Repay/Qualified Mortgage) and their Official Interpretations in Regulation Z to facilitate lending by small creditors, particularly in rural and underserved areas.
Proposed VA ARM Notification Requirements and Look-Back Period
In the January 29, 2015, issue of the Federal Register (80 FR 4812, click here) the Department of Veterans Affairs (VA) published a proposed rule to amend its ARM regulations at 38 CFR 36.4312(d) that, as stated in the proposed rule’s preamble, “would align VA’s disclosure and interest rate adjustment requirements with the implementing regulations of the Truth in Lending Act (TILA), as recently revised by the Consumer Financial Protection Bureau (CFPB). Specifically, the [proposed] rule would amend the timing, content, and format requirements for the disclosures provided to borrowers prior to an interest-rate adjustment. The proposed regulation would also require that an interest-rate adjustment correspond with the interest rate index available 45 days prior to the adjustment.
CFPB Bulletin 2015-01 – Treatment of Confidential Supervisory Information
On January 27, 2015, the CFPB issued Bulletin 2015-01 as a reminder that, with limited exceptions, persons in possession of confidential supervisory information (CSI) are prohibited from disclosing CSI to third parties. To view and/or print the bulletin in full, click this hyperlink. Below is a redaction of the main points of the bulletin:
Annual FHA MIP Reduction Memo (ML 2015-01)
Effective for case numbers assigned on or after January 26, 2015, FHA Mortgage Letter 2015-01 (ML 2015-01) reduces annual MIP rates for FHA Title II forward mortgages and provides FHA lenders the opportunity for cancellation of existing case numbers in order to utilize the MIP rates contained in ML 2015-01.
TILA-RESPA Integrated Disclosures Rule Amendments
Effective August 1, 2015, the Consumer Financial Protection Bureau (CFPB) issued a final rule (click here), amending the TILA-RESPA Integrated Disclosures Rule to (i) extend the time requirement for a revised Loan Estimate when the consumer locks an interest rate after the initial Loan Estimate and (ii) permit language on the Loan Estimate informing borrowers of a revised Loan Estimate for a construction loan that is expected to take more than 60 days to settle. The final rule also amends the TILA Loan Originator Rule to require the loan originator names and NMLSR IDs on the Loan Estimate and the Closing Disclosure. Additionally, the final rule makes non-substantive corrections, including citation and cross-reference updates, and wording changes for clarification purposes, to various provisions of Regulations X and Z as amended or adopted by the TILA-RESPA Integrated Disclosures Rule.
Higher-Priced Mortgage Loan Appraisal Exemption Loan Threshold Adjustment
In the December 30, 2014, issue of the Federal Register (79 FR 78296), the CFPB, FRB and OCC adjusted the loan threshold exemption from the higher-priced mortgage loan appraisal rules. This adjusted loan threshold amount for exemption from the appraisal requirements for higher-priced mortgage loans is raised to $25,500 effective January 1, 2015, and is found in the official staff interpretations for the above Federal agencies respective regulations, as follows: