Spring Regulatory Changes – April Compliance Newsletter

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STATE

Connecticut Adopts Electronic Recording Regulations. Sections 7-35ee-1 to 7-35ee-10 specifically permit town clerks to accept electronic recordings for real property, providing for definitions such as Electronic Recording, Electronic Signature, and Electronic Document Delivery System that shall dictate the processes and requirements necessary for the acceptance of electronic real property recordings throughout Connecticut.  Effective 3/27/13.

Colorado Proposed Regulations. Colorado Department of Regulatory Agencies, Division of Real Estate, Mortgage Loan Originators and Mortgage Companies will be affected by proposed rules amending 4 CCR 725-3. The purpose of these proposed rules is to define terms pertaining to the practices of mortgage loan originators and mortgage companies, to clarify advertising requirements of mortgage loan originators and companies, and to clarify the process to dispute information entered into the National Mortgage Licensing System and Registry.

Arkansas Amends Fair Mortgage Lending Act.  SB 871 revises The Fair Mortgage Lending Act, extending the definition of “exempt persons” to operating subsidiaries of State Chartered Banks regulated by the State Bank Department.  Also, it identifies certain prohibited activities by Servicers such as failure to make timely payments from escrow, and identifying the terms of when forced placed insurance can be issued. Effective 7/18/13.

Arkansas Permits Scriveners Affidavit for Error Correction.  SB 1137 details the circumstances of, and contents for, a Scriveners Affidavit in the event a corrections to Instruments affecting Real Property must be made.  Effective 7/18/13.

North Dakota.  SB 2128 revises county recording fees. Effective 8/1/13.

Mississippi SB 2696 was signed by Gov. Phil Bryant on 4/18/13. This revises various fee structures; revises the contents of the mortgage broker and lender applications; requires licensees who are involved in civil actions to notify the NMLS; and requires each licensee to maintain a journal of serviced loans at their principal place of business for all Mississippi residential loans that the licensee owns and/or services. Effective 7/1/13.

Kansas Increases Mortgage Interest Rate Cap. On 4/4/13, Kansas enacted SB 52, which increases the maximum annual interest rate for certain mortgages from 1.5 percentage points to no more than 3.5 percentage points above a specified monthly floating rate set by Freddie Mac.

FEDERAL

FFIEC Updates HMDA Guide. The Federal Financial Institutions Examination Council (FFIEC) published the 2013 Guide to HMDA Reporting on 4/18/13. This updated edition identifies the transfer of HMDA and Regulation C authority to the CFPB, as well as updates the previously announced asset-size threshold exemption adjustments, and also includes minor technical changes.

NCUA Issues Notice of Proposed Rulemaking.  The proposed rule shall impact 12 CFR Part 701, specifically regarding the Federal Credit Union Ownership of Fixed Assets. The Board proposes to: (1) Amend the regulatory text using plain language; (2) add an introductory section to define the scope of the regulation; (3) reorganize the existing definitions; (4) add several new definitions; and (5) clarify the processes for obtaining waivers from NCUA. The proposed amendments do not make any substantive changes to the regulatory requirements. Rather, they clarify the rule and improve its overall organization, structure, and readability.

DEPARTMENT OF VETERANS AFFAIRS (VA) Circular 26-13-5 4/8/13:  LATE REPORTING OF GUARANTY. The purpose of this circular is to remind lenders of their responsibility to enter guaranty requests in the Department of Veterans Affairs (VA) webLGY system within 60 days of loan closing.

HUD Mortgagee Letter 2013-11, 4/11/13.  This Mortgagee Letter amends guidance provided in Mortgagee Letters 2012-23 and 2012-28 for the origination and servicing of FHA-insured loans in Presidentially-Declared Major Disaster Areas (PDMDA). Effective 4/11/13.

HUD Mortgagee Letter 2013-10, 4/10/13.  This Mortgagee Letter explains enhancements to the Lender Insurance program based on a Final Rule published in the Federal Register on January 25, 2012 (See 77 Fed. Reg. 3598 or http://www.gpo.gov/fdsys/pkg/FR-2012-01-25/pdf/2012-1508.pdf).  Effective 4/10/13.

USDA AN 4714 (1980-D) Single Family Housing Guaranteed Loan Program Standardized Income, Origination and Closing Templates Lender and Agency Documentation, March 20, 2013.  The purpose of this Administrative Notice (AN) is to provide lenders a standardized method of documenting and submitting supporting documentation to the Agency, when applying for loan note guarantees. The result will improve processing times by promoting efficiency and consistency in delivery of the Single Family Housing Guaranteed Loan Program (SFHGLP) pursuant to 7 CFR 1980, Subpart D (also known as RD Instruction 1980-D). This AN is provided in advance of the May 1, 2013 effective date to allow lenders and stakeholders sufficient time to prepare for its implementation.

Dodd-Frank/CFPB

ATR/QM Small Entity Compliance Guide.  On 4/10/13 the CFPB published the Ability-to-Repay and Qualified Mortgage Rule Small Entity Compliance Guide to assist smaller institutions in understanding the ATR/QM requirements. This Guide is part of a series of plain language educational materials the CFPB will provide to educate the industry on the number of Final Rules recently promulgated.

2013 Escrows Final Rule, Proposed “Technical Amendments”. On 4/12/13 the CFPB proposed “clarifying and technical amendments” to the 2013 Escrows Final Rule that is currently scheduled to take effect on 6/1/13. The modifications would ensure that certain ATR provisions related to HPML remain in effect until the CFPB’s new ATR/QM final rule becomes effective next year. Also, this proposed “Technical Amendment” to the 2013 Escrows Final Rule clarifies the determination method for the bureau’s “rural” and “underserved” designations.

Proposed clarifications of the ATR/QM and Mortgage Servicing Rule.  On 4/19/13 the CFPB published a proposed clarification to issues and questions that arose as a result of the promulgation of the 2013 ATR/QM Final Rule and the 2013 Servicing Final Rule.  Specifically, these amendments attempt to clarify or correct provisions on (1) the relation to State law of Regulation X’s servicing provisions; (2) the small servicer exemption from certain servicing rules; (3) the use of government-sponsored enterprise and Federal agency purchase, guarantee or insurance eligibility for determining qualified mortgage status; and (4) the determination of debt and income for purposes of originating qualified mortgages.

TILA Escrow Rule Small Entity Compliance Guide.  On 4/19/13, the CFPB released the latest in a series of promised compliance guides intended to help smaller institutions comply with the agency’s new mortgage rules. The most recent is the TILA Escrow Rule Small Entity Compliance Guide, addressing the escrow rule set to take effect on 6/1/13. The rule amends existing regulations that require creditors to establish and maintain escrow accounts for at least one year after originating a higher-priced mortgage loan, to require generally that the accounts be maintained for at least five years.

Tracking to Future Dodd-Frank Requirement Effective Dates:

1. Qualified Mortgage (QM) / Ability to Repay (ATR) – Effective January 14, 2014 (App. Date)

2. HOEPA / Counseling – Effective Janaury 10, 2014 (App. Date)

3. LO Comp Rule (Reg. Z) –

a. Mandatory Arbitration & Credit Life restrictions – Effective June 1, 2013 (App. Date)

4. Servicing Final Rule (TILA & RESPA) – Effective January 10, 2014

5. Appraisal Joint Rule (TILA Reg. Z – HPML) – January 18, 2014

6. Appraisal Copy Rule (ECOA) – Janaury 18, 2014 (App. Date)

7. Escrow Rule

a. (Smaller Creditor Exemption) – June 1, 2013 (App. Date)

b. (Reg. Z – HPML) – January 18, 2014 (App. Date)

8. Qualified Residential Mortgage (QRM) – Final Rule expected in the next 60 days.

9. Know Before You Owe / Integrated Disclosures (TILA / RESPA) – Final Rule Expected in September 2013.

10. Expanded Finance Charge Definition “All in APR” – Expected to be in KBYO / ID Final Rule, do not be surprised if made effective concurrent with HOEPA obligation above.

About jlevonick

Chief Compliance Officer
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