PENDING LENDING ISSUES

Can we see the light at the end of the tunnel? Maybe faintly.

Truth-in-Lending/RESPA Integrated Disclosures (TRID) – The biggest pending issue is the TRID rules that are effective August 1, 2015. Some vendors have delivered updates to loan origination software for testing. Policies, procedures, and training need to be completed. But it is appears likely that most lending institutions will complete all required tasks by the deadline. Some, like the banker I talked to the other day who did not have even the slightest grasp of what TRID entailed,  will miss the deadline and may not even be aware that the deadline flew right by them. 

Home Mortgage Disclosure Act (HMDA) – Major revisions to Regulation C were proposed on July 23, 2014 to implement changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) and changes from the Consumer Financial Protection Bureau (CFPB) that are intended to modernize and simplify the reporting requirements. The comment period closed on October 29, 2014. Final regulations are expected soon.

If final rules are published by April 1, 2015, they are scheduled to be effective on January 1, 2016. If the final rules are published after that date they are scheduled to be effective on January 1, 2017. The Dodd-Frank Act states, “Institutions shall not be required to report new data under paragraph (5) or (6) of subsection (b) before the first January 1 that occurs after the end of the 9-month period beginning on the date on which regulations are issued by the Bureau in final form with respect to such disclosures.”

Flood Insurance – On October 30, 2014 the federal financial institution regulatory agencies jointly published proposed revisions to flood insurance regulations. The proposal would amend flood insurance regulations to implement certain provisions of the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA), which amends some of the changes to the Flood Disaster Protection Act of 1973 mandated by the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters).

The Agencies proposed to revise their respective flood insurance regulations to incorporate HFIAA’s provisions exempting certain detached structures on residential property from the mandatory flood insurance purchase requirement and to implement the statute’s provisions requiring the escrow of flood insurance premiums and fees.

The Agencies plan to address proposed regulations dealing with private flood insurance and force-placed flood insurance in a separate rulemaking.

The Comment period ended on December 29, 2014. Final regulations are expected soon.

HPML Appraisal Rules – Manufactured Home Exemption – Currently a transaction secured in whole or in part by a manufactured home (MH) is exempt from the appraisal rules applicable to higher-priced mortgage loans as detailed in § 1026.35(c). Effective July 18, 2015 not all transactions secured by a  MH are exempt from the requirements.

Escrow Cancellation Notices – Effective August 1, 2015 § 1026.20(e) requires a creditor to provide an escrow cancellation notice in a closed-end consumer credit transaction secured by a first lien on real property or a dwelling for which an escrow account was established in connection with the transaction and will be cancelled. The timing of the required notice varies depending on whether the cancellation occurred as a result of the consumer’s request or not.

Streamlining Inherited Regulations – On December 5. 2011 the Consumer Financial Protection Bureau published a notice and request for information requesting specific suggestions from the public for streamlining regulations it recently inherited from other Federal agencies (the Streamlining Notice).  Comments on the Streamlining Notice were due March 5, 2012. The comment was later extended to June 4, 2012.

There is no published plan for completing this monumental effort, but it will likely string out for a few years.

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