Proposed Amendments to RESPA and TIL

The Consumer Financial Protection Bureau (CFPB) is proposing amendments to certain mortgage servicing rules regarding force-placed insurance notices, policies and procedures, early intervention, and loss mitigation requirements under Regulation X's servicing provisions; and periodic statement requirements under Regulation Z's servicing provisions. 

The proposed amendments may be found in the Federal Register, here.

What's New? Residential Mortgage Foreclosure Actions

New rules clarifying the settlement conferences in residential mortgage foreclosure actions in New York State have been approved. See new material under Practices During Foreclosure.

NYS MLO Regulations Adopted on an Emergency Basis

The Department of Financial Services published a notice of Emergency Rulemaking to implement license, financial responsibility, education and test requirements for mortgage loan originators (MLOs) to comply with Banking Law and to conform the regulation of MLOs in New York to federal legislation. 

Click here for the Department of Financial Services notice on the rule.

What's New? Know Before You Owe

Consumer Financial Protection Bureau (CFPB) has issued rules and forms that combine certain disclosures that consumers receive in connection with applying for and closing on a mortgage loan under the Truth in Lending Act and the Real Estate Settlement Procedures Act. 

The new forms use clear language and design to make it easier for consumers to locate key information, such as interest rate, monthly payments, and costs to close the loan. The forms also provide more information to help consumers decide whether they can afford the loan and to compare the cost of different loan offers, including the cost of the loans over time.

The rule is effective August 1, 2015. See Know Before You Owe in The Gold Book for more information. 

What's New? NYS MLO Requirements

The Department of Financial Services published a notice of Emergency Rulemaking to implement license, financial responsibility, education and test requirements for mortgage loan originators (MLOs) to comply with Article 12-E of the Banking Law, amended in order to conform the regulation of MLOs in New York to federal legislation.

The rule requires that individuals engaging in mortgage loan origination must be licensed by the Superintendent of Financial Services and that MLOs, including those already engaged in the business of originating mortgage loans, must complete new education, testing and bonding requirements for licensure.

The new regulation is substantially similar to the prior rule on the same matter. This rule will expire on February 12, 2014.

See also the SAFE Act information in The Gold Book. 

What's New? New Law - NYS Unsolicited Loan Checks

On November 13, 2013, Governor Cuomo signed A.3601/S43012, which became Chapter 467 of the Laws of 2013.  The law adds a new section 520-d to the General Business Law to aid in consumer protection.  The new law is effective as of the signing date.

The new law removes liability on the part of the payee unless the payee has accepted the check or the account against which the check is issued. 

See Unsolicited Mail Loan Checks in The Gold Book for additional information.

What's New? Fair Housing Act - New Guidance

New guidance released on April 30, 2013, by the U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Justice,  reinforces the Fair Housing Act requirement that multifamily housing be designed and constructed so as to be accessible to persons with disabilities.

More information about Fair Housing Act may be found in The Gold Book. 

What's New? New Gold Book Section on Lending Discrimination

The Gold Book Compliance Chapter now contains a section on Lending Discrimination Laws and Regulations.  A federal Interagency Policy Statement on Fair Lending serves as guidance for the Consumer Financial Protection Bureau, and is a benchmark for use in fair lending examination procedures. Read federal rules here and NYS rules here.

What's New? Reg Z Dollar Thresholds Increased for 2013

The Federal Reserve Board and the Consumer Financial Protection Bureau announced 2013 increases in the dollar thresholds for Regulation Z (Truth-in-Lending) and Regulation M (Consumer Leasing) for exempt consumer credit and lease transactions. 

The following sections of The Gold Book are updated:

High-Cost Mortgages

Truth-in-Lending (Regulation Z) Coverage

Truth-in-Lending (Regulation Z) Exemptions

NYS Law Abolishes Yield Spread Premiums

Effective August 17, 2012, Governor Cuomo signed A.7329/S.886, which became Chapter 404 of the Laws of 2012.  The law adds Banking law Section 3-a, which states that a person who makes or brokers a home loan may not receive compensation based on, or varies with, any of the loan terms.  Compensation based on the loan amount (principal) is permitted.

The amendment also bans yield spread premiums - compensation paid by a lender to a mortgage loan broker based on the difference between a stated interest rate or loan yield preferred by the lender.

Brokers being paid on the basis of a yield spread premium, as opposed to a percentage of the loan amount or points, may be inclined to steer applicants to lenders offering loans at higher rates, thus acting in their own or the lender’s interests and not the interest of their applicant-client.

CFPB Proposal Requires Free Appraisal Reports

The CFPB issued a proposed rule that would require creditors to inform consumers of their right to receive a free copy of appraisal reports and home-value estimates within three days of applying for a mortgage loan. Creditors then would be required to provide the reports to consumers as promptly as possible, but no later than three days before closing -- regardless of whether credit is extended, denied, incomplete or withdrawn.

New Appraisal Requirements Proposed

The regulatory agencies issued a proposed rule under Dodd-Frank that would establish new appraisal requirements for “higher-risk mortgage loans.”

The proposal would require creditors to use a licensed or certified appraiser to prepare a written report based on a physical inspection of the property’s interior. The proposal also would mandate that creditors disclose information about the appraisal’s purpose and provide consumers with a free copy of the appraisal report.

CFPB Proposes Mortgage Servicing Rules

The Consumer Financial Protection Bureau proposed two sets of rules aimed at mortgage servicers. The first set, issued under the Truth in Lending Act, would require servicers to provide monthly mortgage statements that include a breakdown of payments by principal, interest, fees, and escrow; the amount of and due date of the next payment; recent transaction activity; and notices about fees. It also would require more advanced warning about interest rate adjustments on most adjustable-rate mortgages; advanced notice and pricing information before charging customers for “force-placed” insurance; and earlier information and alternatives for avoiding foreclosure. The second set of rules, issued under the Real Estate Settlement Procedures Act, would govern the handling of consumer accounts, correcting errors, and evaluating borrowers for alternatives to avoid foreclosure.  Comments are due October 9, with final rules expected in January 2013.

CFPB Issues Proposed Mortgage Regulation

The Consumer Financial Protection Bureau has issued two new proposed rules.  The first consolidates the mortgage disclosures required by the Truth in Lending Act and RESPA. This proposal impacts both application and closing disclosures and seeks to simplify loan terms and cost information.  Comments on this proposal must be submitted by either September 7, 2012 (for certain sections of the proposal) or November 6, 2012.

The second proposal deals with high cost mortgages and homeownership counseling requirements. Its comment period ends on September 7, 2012.

For more information on these proposed rules, visit http://www.consumerfinance.gov/

Mortgage Loan Escrow Accounts

The General Obligations Law, the Banking Law and New York State Banking Board General Regulation Part 10 specifically requires a lender to pay 2% on mortgage loan escrow accounts.  Institutions are expected to pay 2% on these accounts even if they offer other interest bearing accounts at 2% or less. It is important to remember that for mortgage loan escrow accounts, the customer is not a depositor but a borrower.

Banks require an escrow balance for the payment of taxes and insurance and to protect the lien against a tax foreclosure.  The bank requires the deposit as an incident to the loan and the bank must pay the statutory rate (not the prevailing rate).

Board to Hold Four Public Hearings on Home Mortgage Disclosure Act

The Federal Reserve Board has announced that it will hold four public hearings, beginning in July, on potential revisions to Regulation C, which implements the Home Mortgage Disclosure Act. The act requires mortgage lenders to provide detailed annual reports of their mortgage lending activity to regulators and the public. Consumers, community and consumer organizations, mortgage lenders and other interested parties will be invited to participate in the hearings.

The hearings will serve three objectives. First, the Board will gather information to evaluate whether the 2002 revisions to Regulation C, which required lenders to report mortgage pricing data, helped provide useful and accurate information about the mortgage market. Second, the hearings will provide information that will help the Board assess the need for additional data and other improvements. Finally, the hearings will help identify emerging issues in the mortgage market that may warrant additional research.

All hearings will include panel discussions by invited speakers.

Proposed Rules to Protect Credit Card Users

The Federal Reserve Board has proposed a rule amending Regulation Z (Truth in Lending) to protect credit card users from unreasonable late payment and other penalty fees and to require credit card issuers to reconsider increases in interest rates.

Among other things, the proposed rule would:

• Prohibit credit card issuers from charging penalty fees (including late payment fees and fees for exceeding the credit limit) that exceed the dollar amount associated with the consumer's violation of the account terms. For example, card issuers would no longer be permitted to charge a $39 fee when a consumer is late making a $20 minimum payment. Instead, the fee could not exceed $20.


• Ban inactivity fees, such as fees based on the consumer's failure to use the account to make new purchases.


• Prevent issuers from charging multiple penalty fees based on a single late payment or other violation of the account terms.


• Require credit card issuers to inform consumers of the reasons for increases in rates.


• Require issuers that have increased rates since January 1, 2009, to evaluate whether the reasons for the increase have changed and, if appropriate, to reduce the rate.

The proposed rule represents the third stage of the Federal Reserve's implementation of the Credit Card Accountability Responsibility and Disclosure Act of 2009 (Credit Card Act), which was enacted in May 2009. The provisions of the Credit Card Act addressed in this proposal will go into effect on August 22, 2010. In July 2009, the Board issued a rule implementing the provisions of the Credit Card Act that went into effect on August 20, 2009. In January 2010, the Board issued a rule to implement the provisions of the Credit Card Act that went into effect on February 22, 2010.

Online Consumer Guide to Credit Cards

The Federal Reserve Board launched a new interactive website to help consumers better understand the new credit card protections that will took effect on February 22. These rules ban several harmful practices and require greater transparency in the disclosure of the terms and conditions of credit card accounts.

The site, which can be found at www.federalreserve.gov/creditcard, summarizes the main provisions of the rules and explains how they will affect credit card users. Two interactive features will allow consumers to learn more about the terms and fees of credit card offers and about the new features of their monthly statements.

Information about recent changes in credit card rules forms the core of the site, but basic facts about common credit card options, interest rates, and fees are also provided. Consumers will find a glossary of common credit card terms for quick reference. A list of federal credit protection laws provides a basic guide for those who want to learn more about their rights.

The site also provides information about common credit card problems--such as lost or stolen cards--and links to resources for consumers who are experiencing problems with their accounts.

Some of the material on the site, such as the "5-Tips" publications, is available in Spanish. The Board will continue to build the site during the coming months to include additional credit card information, features, and Spanish translations.

The web address for the Federal Reserve's guide to credit cards will appear on the solicitations consumers receive from credit card issuers.

What's New: Agencies Announce Availability of 2008 HMDA Data

The Federal Financial Institutions Examination Council (FFIEC) has announced the availability of data on mortgage lending transactions at 8,388 U.S. financial institutions covered by the Home Mortgage Disclosure Act (HMDA). Covered institutions include banks, savings associations, credit unions, and mortgage companies.

The HMDA data cover 2008 lending activity—applications for loans, loan originations, loan denials, and purchases of loans. The data also include disclosure statements for each financial institution, aggregate data for each metropolitan statistical area (MSA), nationwide summary statistics regarding lending patterns, and Loan Application Registers (LAR) for each financial institution (LARs modified for borrower privacy).

The FFIEC prepares and distributes this information on behalf of its member agencies (Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency, and Office of Thrift Supervision) and the Department of Housing and Urban Development.

Financial institution disclosure statements, individual institutions' LAR data, and MSA and nationwide aggregate reports are available at http://www.ffiec.gov/hmda. Refer to the HMDA data products at http://www.ffiec.gov/hmda/hmdaproducts.htm for the item descriptions and formats.

For further information see HMDA FAQs.