Most of the small-entity participants in the review processes run by the CFPB before it came out with four major mortgage rules felt they were hurried by the process and unsatisfied with the final results, the Government Accountability Office said in a recent report. The GAO took a look at the experience of the 69 Small Business Regulatory Enforcement Fairness Act (SBREFA) panel participants involved in evaluating the likely effects of the CFPB’s TILA/RESPA Integrated Disclosure rule (TRID), the mortgage servicing regulation, its loan originator compensation rule, and the Home Mortgage Disclosure Act regulation. Of the 57 small-entity representatives GAO interviewed, “two-thirds stated not enough time was allotted to discuss at least one of the topics on the panel agenda ...

New legal requirements enacted in the state of New York in the wake of the financial crisis pose particular compliance challenges for mortgage servicers, according to a new report by analysts at S&P Global Ratings. The S&P team recently reviewed a series of laws the state legislature passed in June that attempts to address several issues related to “zombie” foreclosures, which refers to the phenomenon of a servicer initiating foreclosure on a vacant property but not going so far as to actually take title. Urban community activists complain such properties languish unsold for a prolonged period of time, contributing to neighborhood blight in communities least able to handle it – hence, state lawmakers decided to act.One resulting requirement “imposes conditions ...

One mortgage lender recently inquired of Michael Goldhirsh, director of legal and regulatory compliance for the Lenders Compliance Group, as to whether the definition of “application” in the CFPB’s TILA/RESPA Integrated Disclosure rule (TRID) triggers or otherwise affects reporting under the Home Mortgage Disclosure Act. In a recent blog posting, he replied: “The short answer is that receipt of some or all of the six pieces of TRID application information does not necessarily trigger an application for purposes of HMDA reporting.” Goldhirsh went on to explain that Regulation C defines an application for HMDA reporting purposes as an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with ...

The CFPB is considering whether to propose a rule that would require registration of nonbank financial institutions, according to a Request for Information (RFI) the bureau posted on the Federal Business Opportunity website recently. As part of this process, the bureau is considering whether to procure a comprehensive and interactive online web-based registration system. “Such a system would allow nonbank financial institutions supervised or regulated by the CFPB to apply for, amend, update, or renew a registration online using a single set of uniform applications and would allow the CFPB to process these registration applications and amendments through automated workflows,” according to the RFI. Such a potential registration system might also be used to collect financial and operational data as ...

The Federal Deposit Insurance Corp. last week released on its website updated technical assistance videos on the CFPB’s Ability-to-Repay/qualified mortgage rule. “The updated videos provide financial institution management, compliance officers and staff with resources for a better understanding of the current requirements of the ATR and QM rule,” it said. ... CFPB Director Richard Cordray last week responded to two members of the Senate Banking, Housing and Urban Affairs Committee who had recently pressed him to consider exempting small community banks and credit unions from as much of its rulemaking as possible...

The CFPB is not offering additional cure provisions in its proposed rule to update and clarify certain aspects of its Truth in Lending Act/Real Estate Settlement Procedures Act Integrated Disclosure rule, otherwise known as TRID. TRID “2.0” was released late last month, fulfilling the bureau’s promise to issue the proposal by the end of July. As widely anticipated, the proposed amendments also essentially codify the bureau’s informal guidance on various issues and include clarifications and technical amendments. (See additional stories on pages 3-6.) “The intent of this proposal is to integrate some of the bureau’s existing informal guidance, whether provided through webinar, compliance guide or otherwise, into the regulation text and commentary of Regulation Z where appropriate,” the agency said....

Perhaps the most significant change in the proposed rule the CFPB issued late last month to clarify its TRID rule is guidance on sharing disclosures with various parties involved in the mortgage origination process in light of privacy concerns. “The bureau has been asked repeatedly by creditors, settlement agents, and real estate agents about the sharing of the closing disclosure with third parties involved in the mortgage transaction,” the proposal stated. “These inquiries have largely concerned which third parties may receive a copy of the CD but have also concerned whether a combined CD form must be provided to the consumer and seller or whether separate CD forms may be provided to the consumer and the seller.” The CFPB provided ...

The biggest win for mortgage lenders in the CFPB’s proposal to clarify certain aspects of its integrated disclosure rule is the apparent closing of what’s known as the TRID’s “black hole.” The black-hole problem stems from the fact that, currently, the integrated disclosure rule requires that the creditor deliver or place in the mail the loan estimate no later than the third “general” business day after receipt of the consumer’s application, and the borrower must receive the final revised LE no later than four business days prior to consummation. Once the closing disclosure has been issued, the LE can no longer be provided. If there is a valid change of circumstance that delays closing and results in a fee change,...

One proposed rule change to the TRID could help the secondary mortgage market; that is, the creation of tolerances for the total of payments. As the proposal noted, the Truth in Lending Act establishes certain tolerances for accuracy in calculating the finance charge and disclosures affected by the finance charge. However, “In light of changes to certain underlying regulatory definitions, the bureau believes it would be helpful to establish tolerances for the total of payments to parallel the existing provisions regarding the finance charge,” the CFPB said. Under the proposed rule, the same tolerances that now apply for the finance charge would also apply to the total of payments. The bureau said it is concerned that, absent the explicit application ...

Another noteworthy part of the CFPB’s TRID 2.0 proposal would extend the applicability of a partial exemption that mainly affects housing finance agencies (HFAs) and nonprofits. The existing rule provides a partial exemption for certain non-interest bearing subordinate-lien transactions that provide downpayment and other homeowner assistance (housing assistance loans). The CFPB said it has learned that the exemption may not be operating as intended. “The bureau has received information that many HFAs are having difficulty finding lenders to partner with in making these loans,” the proposed rule stated. Following the introduction of the TILA/RESPA integrated disclosures, some vendors and loan originator systems no longer support the Real Estate Settlement Procedures Act disclosures. “Although the RESPA disclosures are still required for ...