The American Bankers Association (ABA)
has reminded its members and others in the industry that the next few months
are critical to lenders because of an even dozen new rules and regulations that
are pending. Comment periods are still
open on some of the changes, affected parties need to be preparing to adapt to
others, while some issues will require more time and discussion before any
decisions are made
Get out your calendars.
Comments are due September 7 on two
issues. The Federal Housing Finance
Agency has voiced objections to proposals from the City of Chicago and two
California communities to use eminent domain to seize performing mortgages and
restructure them to reflect current market value of the collateral. FHFA is requesting input on its concerns.
The second comment period ending that
day regards a proposed rule from the Consumer Financial Protection Bureau
(CFPB) that would expand the definition of "high cost mortgages" and increase
restrictions on them. A final rule is
due on or before January 21, 2013.
October 9 is the deadline for comments
on proposed RESPA and Truth in Lending Act (TILA) rules that will require
servicers to provide borrowers with periodic statements, rate reset notices, and
error resolution. ABA has expressed concern
that these new rules will prose an undue burden on servicers, particularly
While the most significant appraisal
reforms are already in place, CFPB has formulated the final Dodd-Frank
appraisal reforms which require physical property visits and new requirements
for appraisal independence. Final
comments are due by October 15.
Comments are also due by October 15 on a
joint proposal from six federal regulators to require lenders writing high-risk
mortgages to provide borrower with a free copy of appraisal reports and imposes
other documentation requirements.
The most recent set of proposed rules governing
loan originator compensation by CFPB are open for comments until October
16. ABA has expressed concern that these
rules will open lenders to massive liability risks.
Final rules for all four of the rules
sets listed above must be finalized on or before January 21, 2013.
After months of draft disclosures CFPB
has invited comments on proposed merged RESPA and TILA forms. ABA has expressed concern that the 1,100 page
CFPB proposal neither adequately simplifies the forms nor takes into account
other pending mortgage reforms. Comments
are due November 6.
In addition to the open comment periods,
ABA also reminded its members and others in the industry of pending issues and
discussions of which they should be aware.
Reform. While a strategic plan was
issued over a year ago by FHFA, it is unlikely that Congress will undertake any
resolution of the Fannie Mae and Freddie Mac conservatorships until after the
election. ABA generally supports FHFA's
proposals but says there are likely to be further develops that will impact the
GSEs in the near term such as the use of income from increased guarantee fees.
Escrow Rule: A Federal Reserve rule
amending TILA to lengthen the time requirement for maintaining escrow accounts
for high-priced mortgages is still pending.
ABA is concerned that the rule imposes heavy disclosure requirements
beyond those mandated by Dodd-Frank and that the Federal Reserve has exceeded
its authority in proposing the rule. ABA
expects a final rule in December.
Lending: ABA said that Fair lending
issues continue to be a top priority for lenders. There is a proposed rule from Housing and
Urban Development (HUD) and other proposals from federal regulators that are likely
to increase federal scrutiny in this area.
to Repay and Qualified Mortgages. The
proposed rule establishes standards for qualified mortgages which are expected
to set the threshold for determining which mortgages meet the ability to repay
standards of Dodd-Frank. ABA said that
this rule risks transforming the mortgage market in ways "that dramatically
harm credit availability, the viability of the mortgage lending business and
the housing recovery." ABA is strongly
advocating for the inclusion of a legal safe harbor over a lesser "rebuttable
presumption" standard. The final rule is
due January 21, 2013.
Retention and Qualified Residential Mortgages.
ABA expects that, following an earlier comment period, the Federal Reserve
and other agencies will re-propose the rule, probably after CFPB finalizes its
own qualified mortgage rulemaking.