|Next Info Memo||List of Info Memos|
|Subject:||Recent Consumer Financial Protection Bureau Actions|
|Date of Memorandum:||11/14/2013|
|Signed By:||Coleman, Robert|
|FCA Contact Person:||Coleman, Robert|
|List of Attachments:|
November 14, 2013
To: Chief Executive Officer
All Farm Credit System Institutions
From: Samuel R. Coleman, Director and Chief Examiner
Office of Examination
Subject: Recent Consumer Financial Protection Bureau Actions
The purpose of this Informational Memorandum (IM) is to provide information regarding several actions the Consumer Financial Protection Bureau (CFPB) has taken since our IM dated July 18, 2013. These actions affect the various mortgage-related regulations the CFPB has issued since January 2013.
On July 24, 2013, the CFPB published, at 78 FR 44685, a final rule that amends and clarifies the Ability-to-Repay/Qualified Mortgage (ATR/QM) provisions of Regulation Z (Truth in Lending); the Mortgage Servicing provisions of Regulation X (Real Estate Settlement Procedures) and Regulation Z; and the Escrow provisions of Regulation Z. The final rule, like the regulatory provisions that it amends, will take effect on January 10, 2014. This final rule:
2. Clarifies the implementation dates for the adjustable-rate mortgage (ARM) disclosure requirements of the TILA Mortgage Servicing regulation (Regulation Z, §1026.20).
3. Clarifies the continued exclusion of construction and bridge loans and reverse mortgages from the requirements regarding repayment ability and prepayment penalties for higher-priced mortgage loans (HPMLs) contained in the Escrows regulation (Regulation Z, §1026.35).
4. Clarifies which mortgage loans to consider in determining small servicer status and the application of the small servicer exemption with regard to master servicer/subservicer relationships. Further, the rule identifies certain types of mortgage loans that are not to be considered in determining small servicer status. As stated in our IM dated July 18, 2013, a small servicer is a servicer, including a System institution, that services 5,000 or fewer mortgage loans, for all of which the servicer is the creditor or assignee. “Small servicers” are exempt from the periodic billing statement requirement under §1026.41 of Regulation Z and have different requirements with respect to force-placed insurance under Regulation Z, §1026.41 and Regulation X, §1024.17.
5. Clarifies the eligibility standards for certain loans that receive Qualified Mortgage status under the ATR/QM regulation because they are eligible for purchase by certain Federal agencies, Fannie Mae, or Freddie Mac (Regulation Z, §1026.43).
6. Clarifies how to determine a consumer’s debt-to-income ratio under the general definition of Qualified Mortgage in the ATR/QM regulation (Regulation Z, Appendix Q to Part 1026).
2. Clarifies and revises the definition of points and fees for purposes of the Qualified Mortgage points and fees cap, as adopted in the ATR/QM regulation, and the high-cost mortgage points and fees threshold, as adopted in the High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act (Regulation Z, §1026.32).
3. Facilitates lending in “rural” and “underserved” areas while the CFPB is re-examining the definitions of these terms. First, it exempts all small creditors, regardless of whether they operate predominantly in rural or underserved counties, from the general prohibition on high-cost mortgages featuring balloon payments so long as the loans meet certain requirements. Second, it makes it easier for certain small creditors to continue qualifying for an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans; because of an update in Census data, some creditors might otherwise have lost their eligibility for the exemption during the CFPB’s re-examination period (Regulation Z, §1026.32 and §1026.35).
4. Clarifies the circumstances under which a loan originator’s or creditor’s administrative staff would be considered to be acting as loan originators under the Loan Originator Compensation regulation (Regulation Z, §1026.36).
5. Clarifies and revises three aspects of the regulations prohibiting creditors from financing credit insurance premiums in connection with certain consumer credit transactions secured by dwellings (Regulation Z, §1026.36).
6. Changes the effective date for provisions of the Loan Originator Compensation regulation covering compensation plans, training, and licensing and registration, so they take effect on January 1, 2014, rather than on January 10, 2014, as originally provided. This change is intended to simplify compliance, since these provisions deal with matters that are often structured on an annual basis and typically do not vary from transaction to transaction (Regulation Z).