In the April 25, 2014 issue of the Texas Register (39 TexReg 3333), the Finance Commission of Texas (Commission) published proposed amendments to 7 TAC Chapter 83, Subchapter A, ยงยง83.101, 83.102, 83.203, 83.301 – 83.304, 83.307, 83.309 – 83.311, 83.403 – 83.405, 83.501 – 83.505, 83.601 – 83.604, 83.606, 83.701 – 83.704, 83.708, 83.751, 83.752, 83.754, 83.756, 83.757, 83.801, 83.805, 83.809, 83.828, 83.829, 83.831, 83.836, 83.837, 83.851, and 83.858, concerning Rules for Regulated Lenders. The proposed changes affect rules contained in Division 1, concerning General Provisions; Division 2, concerning Authorized Activities; Division 3, concerning Application Procedures; Division 4, concerning License; Division 5, concerning Interest Charges on Loans; Division 6, concerning Alternate Charges for Consumer Loans; Division 7, concerning Interest and Other Charges on Secondary Mortgage Loans; Division 8, concerning Refunds for Precomputed Loans; Division 9, concerning Insurance; Division 10, concerning Duties and Authority of Authorized Lenders; and Division 11, Prohibitions on Authorized Lenders.
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Read articles below for analysis and discussion of recent trends by BM&G’s industry experts.
Proposed Rule on Minimum Requirements for Appraisal Management Companies
In the April 9, 2014 issue of the Federal Register (79 FR 19521) six federal regulatory agencies, CFPB, FDIC, FHFA, FRB, NCUA and OCC, published a proposed rule (click here) to implement minimum requirements to be applied by States in the registration and supervision of appraisal management companies (AMCs). In a memorandum dated March 24, 2014, we advised our clients of the of the proposed rule before its publication in the Federal Register and provided a redacted summary of the proposed rule taken from the press release issued by the above agencies (memo).
Texas Home Equity Lending Update
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.
FTC and EEOC Issue Guidance on Employer Background Checks To Comply with Federal Nondiscrimination Laws and the FCRA
The Federal Trade Commission (FTC) and Equal Employment Opportunity Commission (EEOC) recently issued a joint publication titled “Background Checks – What Employers Need to Know” (click here) that explains to employers how to comply with the federal nondiscrimination laws and the Fair Credit Reporting Act (FCRA) when obtaining and using background information in making personnel decisions, such as hiring, retention, promoting, and reassignment.
Federal Agencies Issue Proposed Rule on Minimum Requirements for Appraisal Management Companies
Today six federal regulatory agencies, CFPB, FDIC, FHFA, FRB, NCUA and OCC, issued a proposed rule (click here) to implement minimum requirements to be applied by States in the registration and supervision of appraisal management companies (AMCs). Publication of the proposed rule in the Federal Register is expected shortly. In the meantime, a summary of the proposed rule is contained in the press release also released today by the above agencies. The text of the press release, redacted for brevity, is reprinted below:
OCC Removes Rules Transferred to the Consumer Financial Protection Bureau and amends OCC Street, Web Site and FOIA Web Portal Address
For those clients for whom the Office of the Comptroller of the Currency (OCC) is the prudential regulator, this advises you of the final rule published in today’s Federal Register (79 FR 15639) that makes technical amendments to OCC regulations.
FHA Proposes to Prohibit Post-Payment Interest Charges for Prepayment of Loans under the FHA Single Family Mortgage Insurance Program
In the March 13, 2014, Federal Register (79 FR 14200), the Federal Housing Administration (FHA) published a proposed rule (click here) to revise FHA’s regulations to prohibit an FHA approved mortgagee from charging the mortgagor interest through the end of the month in which the mortgage is being prepaid, allowing them instead to charge interest only through the date the mortgage is prepaid. This proposed change to FHA prepayment regulations is in response to the Ability-to-Repay and Qualified Mortgage regulations (ATR/QM Rule) issued by the Consumer Financial Protection Bureau (CFPB), which became effective January 10, 2014. The ATR/QM Rule defines “prepayment penalty” in closed-end transactions as “a charge imposed for paying all or part of the transaction’s principal before the date on which the principal is due.” The ATR/QM Rule specifically excludes a post-payment interest charge currently allowed by FHA regulations as a prepayment penalty for FHA loans consummated before January 21, 2015. However, for FHA loans closed on or after January 21, 2015, a post-payment interest charge will be considered a prepayment penalty by the ATR/QM Rule, thus making it necessary for FHA to amend its regulations.
Consumer Financial Protection Bureau (CFPB) Warns Lenders Again of Duty To Investigate Consumer Credit Report Disputes – CFPB Bulletin 2014-01
On February 27, 2014, the CFPB released Bulletin 2014-01 reminding those persons who furnish consumer information to credit reporting agencies of the person’s duty under the Fair Credit Reporting Act (FCRA) to fully investigate consumer disputes referred to the person by a consumer report agency. Apparently, the CFPB believes that furnishers of credit information to credit reporting agencies did not get the message in the September 4, 2013 CFPB Bulletin 2013-09 on the same subject (see this firm’s 9-05-13 memorandum on CFPB Bulletin 2013-09 on our website www.bmandg.com under Articles). In this current Bulletin 2014-01 the CFPB emphasizes that it is the furnisher’s obligation under the FCRA to investigate disputed information referred to them and it is not sufficient under the requirements of the FCRA to simply direct the consumer reporting agency to delete the item without first conducting an investigation.
Texas Home Equity Loans – Per Diem Interest, Discount Points and Powers of Attorney under the Texas Supreme Court
On January 31, 2014, The Texas Supreme Court published a Supplemental Opinion in the Norwood home equity case cited above. The original opinion adversely affected the use of powers of attorney, declared bona fide discount point to be subject to the three percent fee cap, and placed per diem interest in a doubtful position relative to the three percent fee cap. The Court’s Supplemental Opinion clarifies its original opinion regarding the above.
CFPB Revises HELOC Brochure, CHARM Booklet, and Settlement Cost Booklet/Special Information Booklet
In the January 10, 2014, Federal Register (79 FR 1836), the Bureau of Consumer Financial Protection (CFPB) published a Notice of Availability of the following revised consumer publications related to mortgage loans and home equity lines of credit transactions that are required under the Real Estate Settlement Procedures Act (RESPA), Regulation X, the Truth in Lending Act (TILA), and Regulation Z: