CFPB Proposes Rules to Help Homeowners Avoid Foreclosure

The Consumer Financial Protection Bureau (CFPB) recently proposed new rules to make it easier for homeowners to get help when they are struggling to pay their mortgage. The proposal, if finalized, would require mortgage servicers to focus on helping borrowers, not foreclosing, when a homeowner asks for help. The proposed changes would also make it simpler for servicers to offer assistance by reducing paperwork requirements, improve communication with borrowers, and ensure critical information is provided in languages borrowers understand. 

The new provisions would not apply to small servicers. All existing requirements remain in effect until the effective date of a final rule.

CFPB: Methodology for Determining Average Prime Offer Rates

The Consumer Financial Protection Bureau (CFPB) announced a revised version of its “Methodology for Determining Average Prime Offer Rates.” The revised methodology describes the calculations used to determine average prime offer rates (APOR) for purposes of federal mortgage rules. APORs are annual percentage rates derived from average interest rates, points, and other loan pricing terms currently offered to consumers by a representative sample of creditors for mortgage loans that have low-risk pricing characteristics.

The methodology statement has been revised to address the upcoming unavailability of certain data the CFPB previously relied on to calculate APORs. On or after April 21, 2023, the CFPB began using ICE Mortgage Technology data and the CFPB’s revised methodology to calculate APORs.

Notice of Availability of Revised Methodology for Determining Average Prime Offer Rates

Methodology for Determing Average Prime Offer Rates

What's New? 2023 Dollar Thresholds for Reg Z

The Consumer Financial Protection Bureau, the Federal Reserve Board, and the Office of the Comptroller of the Currency today announced that the 2023 threshold for exempting loans from special appraisal requirements for higher-priced mortgage loans will increase from $28,500 to $31,000.

The threshold amount will be effective January 1, 2023, and is based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers, known as CPI-W, as of June 1, 2022.

The Dodd–Frank Wall Street Reform and Consumer Protection Act added special appraisal requirements for higher-priced mortgage loans, including that creditors obtain a written appraisal based on a physical visit to the interior of the home before making a higher-priced mortgage loan. The rules implementing these requirements contain an exemption for loans of $25,000 or less, adjusted annually to reflect CPI-W increases.

Read more about the Appraisal Rule in The Gold Book under Higher Priced Mortgages in the Truth-in-Lending (Reg. Z) chapter.

What's New? PPP Borrower Appeals

The Small Business Administration has issued a final rule, effective September 14, 2021, outlining procedures for borrowers to appeal final SBA Paycheck Protection Program loan review decisions. Read more in The Gold Book.

What's New? SBA PPP Servicing Procedures

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, as amended by the Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act, the American Rescue Plan Act of 2021, and the PPP Extension Act of 2021, authorized SBA to guarantee loans under the Paycheck Protection Program (PPP), a new temporary 7(a) program, through June 30, 2021. PPP loans made under sections 7(a)(36) and (37) of the Small Business Act are referred to as “First Draw PPP Loans” and “Second Draw PPP Loans,” respectively. (Both are hereinafter referred to as “PPP loan” or “loan”.) The purpose of this Notice is to remind PPP Lenders of their servicing responsibilities and to advise PPP Lenders of the guaranty purchase process for SBA to honor its 100% guaranty on a PPP loan. The servicing rules effective July 15, 2021 may be found here in The Gold Book. 

OCC to Reconsider CRA June 2020 Rule

The Office of the Comptroller of the Currency (OCC) published in the Federal Register on June 5, 2020, a final rule (June 2020 rule) to modernize the agency’s regulations under the Community Reinvestment Act (CRA). The OCC has determined that it will reconsider the June 2020 rule. While this reconsideration is ongoing, the OCC will not object to the suspension of the development of systems for, or other implementation of, provisions with a compliance date of January 1, 2023, or January 1, 2024, under the 2020 CRA rule. At this time, the OCC also does not plan to finalize the December 4, 2020, proposed rule that requested comment on an approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the June 2020 rule. 

Read more on CRA in The Gold Book. 

Qualified Mortgage Final Rule Extended

The Consumer Financial Protection Bureau has issued a final rule to extend the mandatory compliance date of the General QM Final Rule from July 1, 2021 to October 1, 2022.

The final rule is available at: www.consumerfinance.gov/rules-policy/final-rules/qualified-mortgage-definition-under-truth-lending-act-regulation-z-general-qm-loan-definition-delay-mandatory-compliance-date/

The Bureau has also issued an executive summary and an unofficial redline of the rule and has updated other compliance aids related to the ATR/QM Rule. The resources are available at: www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/ability-repay-qualified-mortgage-rule/.

Read more in The Gold Book.

What's New? 2021 Regulation Z Exemption Threshold

Based on the annual percentage increase in the CPI-W as of June 1, 2020, the protections of the Truth in Lending Act and the Consumer Leasing Act generally will apply to consumer credit transactions and consumer leases of $58,300 or less in 2021. This exemption amount remains unchanged from 2020. However, private education loans and loans secured by real property (such as mortgages) are subject to the Truth in Lending Act regardless of the amount of the loan.

Read more in The Gold Book. 

Mortgage Forbearance FAQs

Under the CARES Act, borrowers in a federally backed mortgage loan experiencing a financial hardship due, directly or indirectly, to the COVID-19 emergency, may request forbearance by making a request to their mortgage servicer and affirming that they are experiencing a financial hardship during the COVID–19 emergency. In response, servicers must provide a CARES Act forbearance, that allows borrowers to defer their mortgage payments for up to 180-days and possibly longer.

The Consumer Financial Protection Agency has provide FAQs related to the COVID-19 Emergency - Click Here.

What's New? COVID-19 Mortgage Relief

The Office of the Comptroller of the Currency (OCC), along with the Board of Governors of the Federal Reserve System (Federal Reserve) and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies), recognize the potential for Coronavirus Disease (also referred to as COVID-19) to adversely affect the customers and operations of financial institutions. The agencies encourage financial institutions to work with affected customers and communities, particularly those that are low- and moderate-income. The agencies recognize that such efforts—when consistent with safe and sound banking practices and applicable laws, including consumer protection laws—serve the long-term interests of these communities and the financial system.

See more in The Gold Book in the Community Reinvestment Act section and the Mortgage Servicing Rules section.

Also: New York Rules and New Jersey Rules.

What's New? Revised “A Guide to HMDA Reporting: Getting It Right!”

The Task Force on Consumer Compliance of the Federal Financial Institutions Examination Council recently developed a revised version of “A Guide to HMDA Reporting: Getting It Right!” (Guide). The updated Guide is intended to assist financial institutions in complying with the Home Mortgage Disclosure Act (HMDA) as implemented by the Consumer Financial Protection Bureau’s (CFPB) Regulation C. This Guide applies to HMDA data that financial institutions are required to collect beginning on January 1, 2020 and must submit by March 1, 2021. The Guide provides helpful background information and an easy-to-use summary of certain key requirements, including those relating to institutional coverage, transactional coverage, and data collection, reporting, and disclosure requirements.

Read more in The Gold Book.

Quick link to the guide.

What's New? 2020 Annual CRA Asset-Size Threshold Adjustments

The federal bank regulatory agencies announced the annual adjustment to the asset-size thresholds used to define small bank, small savings association, intermediate small bank, and intermediate small savings association under the Community Reinvestment Act (CRA) regulations.

The annual adjustments are required by the CRA rules.  Financial institutions are evaluated under different CRA examination procedures based upon their asset-size classification.  Those meeting the small and intermediate small institution asset-size thresholds are not subject to the reporting requirements applicable to large banks and savings associations unless they choose to be evaluated as a large institution.

Annual adjustments to these asset-size thresholds are based on the change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Read more on Bank Size Criteria in The Gold Book.

What's New? New Appraisal Thresholds

The FDIC, the Federal Reserve and the Office of the Comptroller of the Currency  have amended the Appraisal Rule and created a new definition of, and a separate category for, residential real estate transactions and raises the threshold for requiring an appraisal for such transactions from $250,000 to $400,000. Read more here in The Gold Book. 

What's New? Private Flood Insurance

A final rule under the Biggert-Waters Flood Insurance Reform Act of 2012 permits regulated lending institutions to accept flood insurance provided by private insurers that does not meet the statutory definition of “private flood insurance,” subject to certain conditions. The final rule takes effect on July 1, 2019.

Further information may be found in The Gold Book.

Debt Collections Proposed Rule

The Consumer Financial Protection Bureau issued a Notice of Proposed Rulemaking to implement the Fair Debt Collection Practices Act. The proposal would provide consumers with clear protections against harassment by debt collectors and straightforward options to address or dispute debts. It would also set clear, bright-line limits on the number of calls debt collectors may place to reach consumers on a weekly basis; clarify how collectors may communicate lawfully using newer technologies, such as voicemails, emails and text messages, that have developed since the FDCPA’s passage in 1977; and require collectors to provide additional information to consumers to help them identify debts and respond to collection attempts.

Read more about the Fair Debt Collection Practices Act in The Gold Book.

The proposed rule may be found here:

https://files.consumerfinance.gov/f/documents/cfpb_debt-collection-NPRM.pdf

HMDA Updated Charts and Timeline

On Sept. 28, 2017, the Bureau updated the 2018 HMDA institutional coverage chart , the 2018 HMDA transactional coverage chart , and the key dates timeline . The updated documents reflect the changes in the Bureau’s 2017 HMDA final rule  amending Regulation C. 

What's New? Dollar Thresholds in Regulations Z and M for Exempt Consumer Credit and Lease Transactions

The Federal Reserve Board and the Consumer Financial Protection Bureau (CFPB) announced the dollar thresholds in Regulation Z (Truth in Lending) and Regulation M (Consumer Leasing) that will apply for determining exempt consumer credit and lease transactions in 2016. These thresholds are set pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amendments to the Truth in Lending Act and the Consumer Leasing Act that require adjusting these thresholds annually based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Click here to see details in The Gold Book.

What's New? Flood Insurance Escrow Requirements

On June 22, the federal banking agencies issued a joint final rule that modifies the mandatory purchase of flood insurance regulations to implement some provisions of the Biggert-Waters and Homeowner Flood Insurance Affordability Acts.

Notable highlights include that the final rule, among other things: (i) expands escrow requirements for lenders who do not qualify for a small lender exception, (ii) clarifies the detached structure exemption, (iii) introduces new and revised sample notice forms and clauses relating to the escrow requirement and the availability of private flood insurance, and (iv) clarifies the circumstances under which lenders and servicers may charge borrowers for lender-placed flood insurance coverage.

The escrow provisions and sample notice forms will become effective on January 1, 2016, and all other provisions will become effective October 1, 2015. The agencies reminded that the escrow provisions in effect on July 5, 2012, the day before Biggert-Waters was enacted, will remain in effect and be enforced through December 31, 2015.

Read more in The Gold Book, chapter Flood Insurance Escrow Requirements.

What's New? Updated Flood Insurance Rules

On June 22, 2015, five federal regulatory agencies announced the approval of a joint final rule that modifies regulations that apply to loans secured by properties located in special flood hazard areas.  The final rule implements provisions of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) relating to the escrowing of flood insurance payments and the exemption of certain detached structures from the mandatory flood insurance purchase requirement.  The final rule also implements provisions in the Biggert-Waters Flood Insurance Reform Act of 2012 (the Biggert-Waters Act) relating to the force placement of flood insurance.

The Gold Book has been updated accordingly here.

What's New? Your Home Loan Banking Toolkit

The Consumer Financial Protection Bureau (CFPB) has released a toolkit, "Your Home Loan Banking Toolkit" to replace the Special Information Booklet prepared by HUD to assist borrowers in understanding the nature and cost of real estate settlement. The toolkit is designed to be used in connection with the new Loan Estimate and Closing Disclosure forms that will be effective on August 1, 2015. Creditors must provide the toolkit to mortgage applicants as a part of the application process. Read more in The Gold Book here.