Truth in Lending Act/Regulation Z

A creditor’s inability to reset fee tolerances with a revised Closing Disclosure more than four business days before closing has been one of the more adverse unintended consequences of the TILA-RESPA Integrated Disclosure (“TRID”) regulations that became effective in October 2015. However, a fix is on the horizon. On Thursday, April 26, 2018, the Consumer Financial Protection Bureau (“CFPB”) announced final amendments to TRID to eliminate the timing restrictions that have plagued creditors and, in certain cases, increased creditors’ costs to originate residential mortgage loans. With an effective date 30 days after the final amendments are published in the Federal Register, this change is a welcome relief to mortgage lenders.  Continue Reading A Ray of Light Through the “Black Hole”: TRID Amendment Permits Tolerance Reset with Revised Closing Disclosure

Several of Mayer Brown’s Consumer Financial Services lawyers will be featured at the upcoming Legal Issues and Regulatory Compliance Conference in Los Angeles, sponsored by the Mortgage Bankers Association.

On Sunday, April 29th, Ori Lev will participate on a panel analyzing unfair, deceptive, or abusive acts or practices (UDAAP), as part of the conference’s Applied Compliance track.

On Monday, April 30th, Kris Kully will participate in a panel attempting to look on the bright side of HMDA — how understanding that additional data will be useful not just for lenders’ compliance function, but also for production growth, and perhaps even operational efficiencies.

On Tuesday, May 1st, Krista Cooley will discuss the latest developments in False Claims Act enforcement.

In addition, Phil Schulman will address “TRID 2.0” — with the resolution of the PHH decision, how can lenders work with other service providers to market their loans to potential borrowers? Phil also will participate in the RESPA Section 8 “Deep Dive” Compliance Roundtable later that afternoon.

On Wednesday, May 2nd, Keisha Whitehall Wolfe will participate in what promises to be a lively discussion about “Compliance in Action,” discussing real life examples related to analyzing, addressing, responding to, and resolving compliance issues.

Other Mayer Brown lawyers in the group, including Debra Bogo-Ernst, Holly Bunting, Jon Jaffe, Rebecca LobenherzLarry Platt, and Tori Shinohara also will be on hand.  See you in Los Angeles!

On March 8, the Consumer Financial Protection Bureau (“CFPB”) finalized the amendment to its 2016 Mortgage Servicing Final Rule (“2016 Final Rule”) to clarify the transition timing for mortgage servicers to provide periodic statements and coupon books when a consumer enters or exits bankruptcy.

Under the 2016 Final Rule, mortgage servicers will be required (as of April 19, 2018) to provide modified periodic statements to borrowers who file for a bankruptcy plan and to provide unmodified (i.e., regular) statements to borrowers who subsequently exit such a plan.

However, servicers need time to transition between statement formats. As we described previously, the 2016 Final Rule would have given servicers a single billing cycle to switch the statement format. The industry informed the CFPB about operational complexities with that approach, so the CFPB proposed a rule on October 4, 2017 to address those challenges.

That proposal, which the CFPB has now finalized, replaces the single-billing-cycle transition period with a single-statement transition period. As of the date that a borrower becomes a debtor in bankruptcy, a servicer is exempt from providing the modified statement or coupon book with respect to the next periodic statement or book that would otherwise have been required, but thereafter must provide the modified statement or book.  Similarly, a servicer has a single billing cycle before it must provide a borrower who exits a bankruptcy plan with an unmodified statement or coupon book.  The Official Interpretations illustrate when and how a servicer must comply with those new requirements.

While this new transition period rule may alleviate certain operational challenges with transitioning between the modified and unmodified periodic statements, certain industry trade groups have called upon the CFPB to rethink many of the bankruptcy statement requirements altogether. With the April 19 deadline fast approaching, any additional guidance must come quickly.

The Consumer Financial Protection Bureau announced a final rule to clarify the TILA/RESPA Integrated Disclosure requirements. The rule finalizes many of the CFPB’s earlier proposals, some with modifications. However, the agency still has not formally addressed important issues (like a lender’s ability to cure errors and the disclosure of title insurance premiums where a simultaneous discount applies), and it offers a new proposal to address the “black hole” on resetting fee tolerances. The final regulations will take effect 60 days after publication in the Federal Register.

Mayer Brown’s Legal Update discusses the CFPB’s latest attempt to strike a balance between the disclosure burdens on lenders or closing agents and ensuring consumers receive clear and useful information.

Financial services companies that hoped for immediate regulatory relief when the Trump Administration assumed control may have to wait a bit longer, because the newly announced freeze on federal regulations does not appear to apply across the board.  “Independent regulatory agencies,” such as the Consumer Financial Protection Bureau (“CFPB”), the Federal Reserve Board, the Office of the Comptroller of the Currency (“OCC”), the Federal Deposit Insurance Corporation (“FDIC”), and the Securities and Exchange Commission (“SEC”) may be excluded from that moratorium. Continue Reading How Solid is the “Freeze”? Some Agencies May Be Excluded from White House Regulatory Moratorium

The Consumer Financial Protection Bureau (CFPB) has issued an updated small entity compliance guide for compliance with the Mortgage Servicing Rules after the CFPB’s recent amendments to the rules take effect, generally on October 19, 2017.

The existing guide is still relevant for compliance before the new amendments take effect.

To learn more about the amendments to the Mortgage Servicing Rules, read the Mayer Brown white paper.

The Consumer Financial Protection Bureau (“CFPB”), in its most recent set of Supervisory Highlights, provides a bit of insight into how it interprets its Ability to Repay Rule for loans that are not Qualified Mortgages (“QMs”).  However, it fails to reconcile the Rule’s contradiction that while a lender making a non-QM is not required to consider or verify the borrower’s income if it reasonably finds the borrower’s assets to be sufficient, it is nonetheless required to consider and verify a borrower’s income!  Make sense?

By way of background, the Dodd-Frank Act and CFPB’s regulations generally require lenders making a closed-end residential mortgage loan to reasonably determine that the consumer will be able to repay the loan according to its terms.  If the lender wants to take advantage of a safe harbor of compliance with that requirement, it may choose to make a QM in accordance with the Rule’s strict criteria for those loans.  However, a lender may decide to make non-QMs, for which the Rule offers more underwriting flexibility.  Still, the lender must consider eight specified factors, and verify the amounts of income or assets on which it relies using reasonably reliable third-party records.  Continue Reading CFPB Addresses Non-QMs Under Ability-To-Repay Rule

The Consumer Financial Protection Bureau (CFPB) has offered its new mortgage servicing rule for public inspection today, meaning it is scheduled to be published in the Federal Register on October 19, 2016.  The CFPB informally released the rule on its website in August.

The effective date of the rule is tied to its publication date, so the bulk of its requirements (with some exceptions) will take effect in 12 months, on October 19, 2017.

To learn more about the rule, read our Mayer Brown white paper.

Last week the American Association of Residential Mortgage Regulators (AARMR) hosted its 27th annual regulatory conference in Tampa, Florida. Over 300 attendees gathered to exchange information relating to the licensing, supervision, and regulation of the residential mortgage industry.  Here are some of the highlights from the conference: Continue Reading Reflections on AARMR 2016 from a Former Regulator

Today the CFPB finalized the final mortgage servicing rules update that it proposed at the end of 2014.  The rule adds new protections for mortgage borrowers in financial distress, including provisions that require servicers to:

  • Provide some borrowers with foreclosure protections more than once over the life of the loan;
  • Provide protections to an expanded universe of successors in interest upon the death of a borrower;
  • Provide more information to borrowers in bankruptcy;
  • Notify borrowers when their loss mitigation applications are complete;
  • Comply with specific timing requirements for loss mitigation activities when servicing rights are transferred;
  • Avoid wrongful foreclosures by refraining from pursuing those actions until loss mitigation applications are properly dispositioned;
  • Comply with clear timing requirements for borrower delinquencies.

The final rule also addresses force-placed insurance and periodic disclosure requirements.

Concurrently with that final servicing rule, the CFPB issued an interpretive rule under the federal Fair Debt Collections Practices Act (FDCPA), to address its interplay with the new servicing rules and their requirements related to certain borrower communications.

Most of the new requirements will become effective one year following their publication in the Federal Register, so their effective date will likely be in the fall of 2017.  The requirements addressing successors in interest and periodic statements for borrowers in bankruptcy will become effective 18 months after publication.

Mayer Brown will issue a detailed analysis of the new provisions in an upcoming Legal Update.