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.
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Read articles below for analysis and discussion of recent trends by BM&G’s industry experts.
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:
Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z)
Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z) Presentation Materials
Constitutional Amendment SJR 18 (Reverse Mortgage) Effective Nov. 22, 2013
This fourth, and last, legislative update prepared by this firm for the 2013 legislative session advises you that constitutional amendment Senate Joint Resolution 18 (SJR 18), which amends Section 50(k), Article XVI, Texas Constitution, to authorize advances under a reverse mortgage for the purchase of a residential homestead property, is now effective. SJR 18 was approved by the voters on November 5, 2013, and became effective on November 22, 2013, when the vote was canvassed, the results were certified by the Texas Secretary of State, and a proclamation was issued by the Governor.
Mortgagee Letter 2013-41 Requires FHA-Approved Lenders to Self-report to FHA
Effective with the November 13, 2013, issuance of Mortgagee Letter 2013-41 (ML 2013-41) by the FHA, all Single Family FHA-approved lenders must self-report to FHA in accordance with the guidance set forth in ML 2013-41. The self-reporting requirements in ML 2013-41cover the following:
Federal Bank Regulatory Agencies Release Final Revisions to Interagency Questions and Answers Regarding Community Reinvestment
On November 15, 2013, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency (“the federal bank regulatory agencies”) issued the following press release on their final revisions to “Interagency Questions and Answers Regarding Community Reinvestment.”
CFPB Requires Lenders to Provide a List of Homeownership Counseling Organizations to Loan Applicants Effective January 10, 2014
In the January 31, 2013 issue of the Federal Register (78 FR 6856) the Bureau of Consumer Financial Protection (CFPB) published a final rule that adds Section 1024.20 to Regulation X to require lenders to provide a loan applicant for a federally related mortgage loan (with certain exceptions) with a written list of homeownership counseling organizations not later than three business days after the lender or mortgage broker receives an application or information sufficient to complete an application. The final rule is effective on January 10, 2014, and applies to transactions for which an application is received on or after that date. The text of the final rule is located on pages 6961-6962 of the above Federal Register and also is reprinted in the attached Exhibit A.