You probably don’t think of financial institution regulators as movie stars. Well, they aren’t exactly movie stars, but they are making YouTube videos.
Last month the NCUA released a three-part consumer protection update series on its YouTube channel. The NCUA has also released supervisory committee training videos that you may find helpful. The CFPB, not to be outdone by the NCUA, issued videos related to the new mortgage rules. So, if you are tired of reading and you want a different way to obtain compliance information, check out these You Tube videos.
But don’t expect to find the regulators on the red carpet anytime soon….although other players in financial reform have been spotted there (most notably Chris Dodd of the Dodd-Frank Act).
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No, it’s not the day that Dodd-Frank gets repealed, but nice try. The CFPB finally released the homeownership counseling “tool” that will assist credit unions in meeting the requirement to provide mortgage applicants with a list of local homeownership counseling organizations.
However, along with the tool comes some additional provisions regarding the list, specifically if credit unions decide to build their own list and not use the “tool.” I would suggest that credit unions use the tool if at all possible, rather than build your own list.
Here are some highlights of the “interpretative rule.”
- The list must contain ten HUD-approved housing counseling agencies
- You must provide counseling organizations in the loan applicant’s location. You should use the borrower’s zip code related to his/her current address to generate a list of the ten closest HUD-approved housing counseling agencies.
- The credit union will comply if it provides the following data fields for each housing counseling agency on the list to the extent that they are available through the HUD API: agency name, phone number, street address, city, state, zip code, website URL, email address, counseling services provided, and languages spoken. (The “tool” will generate this information.)
- The list must contain the following disclosure: The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. This list shows you several approved agencies in your area. You can find other approved counseling agencies at the Consumer Financial Protection Bureau’s (CFPB) website: consumerfinance.gov/mortgagehelp or by calling 1-855-411-CFPB (2372). You can also access a list of nationwide HUD-approved counseling intermediaries at http://portal.hud.gov/hudportal/HUD?src=/ohc_nint. (Again, the CFPB’s tool will generate a list that has this disclosure.)
So, start preparing for the January 10, 2014 deadline by determining how you will provide the list and what policies, processes and operations need to change in order to do so.
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In case you missed it, the CFPB issued more “guidance” this week related to the mortgage rules. The guidance includes a bulletin as well as a webinar hosted by the Mortgage Bankers Association. The webinar indicates that it is “unofficial guidance” on the servicing rules. And, I almost forgot, the CFPB also issued an interim final rule. As a reminder, this is our” new normal” for compliance as the CFPB will continue to issue information and interpretations that may change how you implement these new rules.
Another resource that you might want to utilize with all of these changes is BankersOnline Alphabet Soup. This is a great resource for seeing all the changes to the rules in one place. They have just made some enhancements to Alphabet Soup and already have the October 15 interim final rule posted.
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If you are a person who loves compliance, we might have the right job for you. PolicyWorks is hiring a compliance officer to live in the lovely city of Des Moines, Iowa. Did I mention that Des Moines tops the Forbes list of “Best Places for Business and Careers.” If you are interested, please view the job posting here. If you are not interested because you love your job at your credit union, that’s ok too! Stay tuned and we’ll be back to regularly scheduled compliance information by Thursday!
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The Federal Reserve and several other regulatory agencies, NOT including the NCUA, released a proposed rule on “QRM” yesterday (not to be confused with the QM rule). You can read more about the rule here. The rule raises a lot of questions for credit unions because although not directly subject to the rule, there is concern that the rule will affect credit unions indirectly through the secondary market. We will all take some time to digest the rule and provide more information in the near future.
I also wanted to raise some additional questions that have come up during the implementation of some other rules.
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For those of you who have been involved in a training session with me, you know that I like to take compliance session attendees back to high school civics class by asking, what are the three branches of government? Because in compliance, we sometimes forget about the effect of the judicial branch on regulations given that we are too busy dealing with the other branches of government.
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Yesterday the CFPB released ANOTHER final rule that amends the rules they issued in January. The final rule addresses, among several other things, the “eligible loans” exception under the QM provisions (also known as “the patch”). Below is some information from the new final rule regarding eligible loans. We will be discussing implementation aspects of the ATR/QM rule in excruciating detail next Thursday if you want to learn more about how this is really going to work . We will also discuss the CFPB’s recent amendments.
The temporary exception from the QM underwriting criteria (monthly payment, income or assets and debts, and DTI) requires that the covered transaction meet the QM product requirements and be an “eligible loan.” An eligible loan is a covered transaction that is eligible to be purchased, guaranteed, or insured by Fannie or Freddie, HUD, VA, USDA, or RHS except with regard to matters wholly unrelated to ability to repay.
The amended commentary to the rule indicates that the loan must be eligible, including satisfying any requirements regarding consideration and verification of a consumer’s income or assets, credit history, deb-to-income ratio or residual income, and other credit risk factors, but not any requirements regarding matters “wholly unrelated to ability to repay.”
Wholly unrelated are those matters that are wholly unrelated to credit risk or the underwriting of the loan, which may include:
- Status of the creditor rather than the loan
- Requirements related to selling, securitizing, or delivering the loan
- Any requirement that the creditor must perform after the loan is sold, guaranteed, or endorsed for insurance such as document custody, quality control, or servicing
Confused yet? Join us Thursday, July 18. We’ll try to clear it all up!
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