Clarifications and updates proposed by the Consumer Financial Protection Bureau (CFPB) for the new Truth in Lending Act (TILA) and RESPA rules were finalized by the Bureau today. The final rule addresses several concerns regarding qualified mortgages, mortgage servicing, and higher-priced mortgage loans (HPMLs) expressed earlier by interested parties.

Most of the changes are technical in nature but of more general interest may be the following changes and interpretations. The new rule:

  • Clarifies how to determine a consumer's debt-to-income ratio under the main definition of qualified mortgages. These changes make more explicit how the lender should evaluate stability of income, analysis of overtime and bonus income, Social Security and self-employment income, and non-earned income such as from rental property or trust funds

  • Clarifies the eligibility standard for certain loans that receive qualified mortgage status because they are eligible for purchase, insurance, or guarantee by certain Federal agencies, Fannie Mae, or Freddie Mac

  • Makes clear that CFPB's RESPA regulations do not preempt the field of servicing regulation.

  • Establishes which mortgage loans to consider in determining status under the small servicer exemption from certain servicing regulations. In addition to other provisions the new rule provides that mortgage loans voluntarily serviced for an unaffiliated entity without renumberation, reverse mortgages, and mortgages secured by timeshares will not be considered in the small servicer determination.

  • Clarifies the continuation of certain exclusions regarding HPMLs, i.e. that construction and bridge loans and reverse mortgages are not subject to requirements regarding repayment abilities and prepayment penalties.

Full "New Rule" available HERE.