All in Regulation Z

CFPB Issues ANPR on QM Fix

Adam Witmer
Regulation Z, Regulatory Update

On July 25, 2019, the CFPB announced an Advance Notice of Proposed Rulemaking (ANPR) seeking information relating to the expiration of the temporary qualified mortgage (QM) provision applicable to certain mortgage loans eligible for purchase or guarantee by the Government Sponsored Enterprises (GSE - i.e. Fannie Mae & Freddie Mac). This provision, also known as the GSE patch, is scheduled to expire no later than Jan. 10, 2021.

As the ANPR states that the Bureau currently plans to allow the GSE Patch to expire around January 2021, financial institutions…

CFPB Issues Final Rule for Payday & Vehicle Title Loans

Adam Witmer
Regulation Z, Regulatory Update

On June 7, 2019, the CFPB issued a final rule to delay the August 19, 2019 compliance date for the mandatory underwriting provisions of the previously issued 2017 final rule on Payday, Vehicle Title, and Certain High-Cost Installment Loans. Compliance with the provisions of the 2017 rule is now delayed by 15 months, to November 19, 2020, so that the CFPB has sufficient time to re-evaluate this rule based on their proposal to reconsider the rule a few months ago. The Bureau is also…

Revised Loan Estimates After Rate Lock

Adam Witmer
Regulation Z, TRID

For years now, I have been advocating that there is only one reason why a revised Loan Estimate must absolutely be issued: when an initially floating rate is subsequently locked.

Sure, there are other reasons a financial institution can issue a revised loan estimate, such as when there is a valid changed circumstance, but the only time a revised Loan Estimate is absolutely required is when an initially floating rate is subsequently locked.

While this reason for a revised loan estimate may seem simple, there are actually some questions that arise with the requirement to provide a revised Loan Estimate from a rate lock.  For example, you may be asking one of the following questions:

  • Is a written rate lock agreement required for the revised Loan Estimate trigger?

  • Is a revised Loan Estimate required after a rate expiration or for a rate extension?

  • Is a revised Loan Estimate required when a rate is locked after a Closing Disclosure has been issued?

  • Is a revised Closing Disclosure required when a rate is locked after a Closing Disclosure has been issued?

CFPB Updates 2019 List of Rural and Underserved Counties

Adam Witmer
Regulation Z, Regulatory Update

Yesterday, 2/12/19, the CFPB released their list of rural and underserved counties.  That list, which can be exported to a PDF, CSV, or an Excel file, can be found here.   In conjunction with updating this list, the CFPB has also updated its “Rural or Underserved Areas Tool” which can be used to provide a safe harbor determination that a property is located in a rural or underserved area.  The tool provides more detail than the county list because the tool includes both locations that are rural because they lie in a non-urban census block as well as locations that are in rural counties while the list only reflects rural status only at the county level.

We understand that this information isn’t the most exciting of information, but it is important to understand how this information impacts community banks and credit unions.  Specifically, the updated rural and underserved information applies to…

New TRID FAQs - Funny Joke or Something Else?

Adam Witmer
TRID, Regulatory Update, Regulation Z

I have spent a bit of time studying comedy.  I’m no expert by any means, but I’m always intrigued by the details of how things work, and comedy is no exception.  I figure that once I understand how something like comedy works, I will be able to better use it and appreciate it.

When we look at the art of comedy, there is one well-known element that seems to be….

(Click here to see how this post relates to the new TRID FAQs - and we promise it does!)

How to Calculate 10% Tolerance Under TRID

Adam Witmer
Regulation Z, TRID

Though estimate tolerance rules have been around before TRID, “good faith,” tolerances, and refunds/cures seem to still be a challenge for many lenders and creditors.  This is concerning as tolerances/cures are one of the higher-risk areas (like rescission) that creditors really need to ensure they are doing appropriately as deficiencies can result in significant fines, penalties, and enforcement actions.  

In reviewing the challenges related to calculating “good faith” and providing appropriate refunds/cures, it appears that there still seems to be quite a bit of confusion relating to how a creditor must calculate tolerances in the 10% tolerance bucket.

TRID 2.0 Total of Payments Tolerance

Adam Witmer
TRID, Regulation Z

The changes made by TRID 2.0 were interesting.  On one hand, a few things made significant changes to the way we have always done things.  On the other hand, however, the majority of changes were fairly minor in nature or didn’t seem to affect the majority of financial institutions.  One question we have received a few times relates to the new TRID 2.0 rules for total of payment tolerances.  When TRID 2.0 was first announced, this seemed to be one of biggest changes included in the rules. Now that TRID 2.0 is in affect, however, some may be wondering what all of the fuss was about relating to the TRID 2.0 tolerances for total of payments.

TRID 2.0 - Best Information Reasonably Available

Adam Witmer
Regulation Z, TRID

One of the significant changes in TRID 2.0 relates to how the “best information reasonably available” can affect calculating good faith and, ultimately, reimbursements.  Under Regulation Z, creditors are required to disclose fees that are anticipated for a loan transaction in “good faith.” Good faith depends on a number of factors (such as the type of fee and whether the fee goes to the creditor or their affiliate) and basically is calculated in one of three “buckets” as follows: The zero tolerance bucket, the 10% bucket, and the unlimited bucket.  While these tolerance “buckets” have been around for since the inception of TRID, TRID 2.0 has placed an even greater emphasis on disclosing fees based on the best information reasonably available.

2019 Threshold for HPML Appraisal Exemption

Adam Witmer
Regulation Z, Regulatory Update

On November 21, 2018, the Agencies announced the 2019 threshold for smaller loan exemption from appraisal requirements for higher-priced-mortgage loans (HPMLs).  The Dodd-Frank Act amended the Truth in Lending Act to add special appraisal requirements for higher-priced mortgage loans, including a requirement that creditors obtain a written appraisal based on a physical visit to the home’s interior before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less and also provide that the exemption threshold will be adjusted annually to reflect inflation increases.

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