A Regulatory & Legislative Advisory for Compliance Professionals
Inside . . .
2 Final QM
Guidelines for VA
3 Mortgage Closing
3 Annual Privacy
4 Other CFPB News
5 FHA Proposal on
6 More CFPB-FHA
Focus on Nonbanks
Bank Secrecy Act
7 Comments on
7 Money Transmitter
CFPB TWEAKS MORTGAGE RULES ON QM ERRORS,
On May 6, the Consumer Financial Protection Bureau published a proposed rule
advancing a number of limited changes to the Ability-to-Repay mortgage rules.
Although the proposed rule is mainly aimed at providing relief to nonprofit entities that
meet certain requirements, the rule contains very important proposals that would
create cure mechanisms for all ATR-covered mortgages. Comments on the proposal
are due by July 7, 2014.
Under the proposal, the CFPB introduced a “cure” provision to the Qualified Mortgage
regulations, for creditors that inadvertently exceed the three percent points and fees
cap. Under the proposal, a lender who intends to originate a QM loan but later finds
that the points and fees exceeded the three percent cap can cure such mistakes if the
Originates the loan in good faith as a qualified mortgage and the loan
otherwise meets the requirements of a qualified mortgage;
Refunds the consumer the dollar amount of the overage within 120 days after
Maintains and follows policies and procedures for post-consummation quality
control reviews of loans and issuing monetary refunds.
In addition, and without advancing an actual proposal, the CFPB is requesting
comment on “whether and how” to provide an opportunity to cure or correct
consummated loans that were originated as QMs in good faith but ended up
exceeding QM’s 43 percent debt-to-income ratio limit. The bureau’s considerations
would extend to corrections where DTI overages result from errors in calculation or
documentation of the debt or income.
Separately, CFPB is soliciting comments on its small creditor special QM category,
which currently affords small entities special treatment where the institution’s assets
do not exceed $2 billion, and total originations in the previous year do not exceed
500. CFPB is seeking input on the appropriateness of the 500-total first lien
origination limit, as well as the requirement that these numerical limits be determined
in the context of any given calendar year. Finally, the bureau is requesting more
general feedback from small creditors on their experiences since the rules took effect
in January and “how their origination activities have changed in light of the new rules.”
Read the proposal.