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  • CFPB Updates Guide to TRID Forms

    Agency Rule-Making & Guidance

    On December 6, the CFPB published an updated version of the TILA-RESPA Integrated Disclosure Guide to the Loan Estimate and Closing Disclosure Forms. The updated guide reflects the amendments issued by the CFPB on July 7 of this year (previously covered by a Buckley Sandler Special Alert). These include changes resolving a number of significant ambiguities that generated concerns about the liability of lenders and purchasers of mortgage loans.

    Agency Rule-Making & Guidance CFPB TRID TILA RESPA

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  • Senate Banking Committee Approves Financial Regulatory Relief Bill

    Federal Issues

    On December 5, the Senate Banking Committee approved bill S.2155, Economic Growth, Regulatory Relief, and Consumer Protection Act, which would alter certain financial regulations under the Dodd-Frank Act of 2010. While not as sweeping as previous legislative relief proposals (see previous InfoBytes coverage on House Financial CHOICE Act of 2017), the bill was introduced and passed the Committee with bipartisan support. The bill’s highlights include, among other things:

    • Consumer Access to Credit. The bill deems mortgage loans held in portfolios by insured institutions with less than $10 billion in assets to be “qualified mortgages” under TILA, and removes the three-day waiting period for TILA-RESPA Integrated Disclosures if the second credit offer is a lower rate. The bill also instructs the CFPB to provide “clearer, authoritative guidance” on certain issues such as the applicability of TRID to mortgage assumptions and construction-to-permanent loans. Additionally, the bill eases appraisal requirements on certain mortgage loans and exempts small depository institutions with low mortgage originations from certain HMDA disclosure requirements.
    • Regulatory Relief for Certain Institutions. The bill exempts community banks from Section 13 of the Bank Holding Company Act if they have, “[i] less than $10 billion in total consolidated assets, and [ii] total trading assets and trading liabilities that are not more than five percent of total consolidated assets” – effectively allowing for exempt banks to engage in the trading of, or holding ownership interests in, hedge funds or private equity funds. Additionally, the bill raises the threshold of the Federal Reserve’s Small Bank Holding Company Policy Statement and the qualification for certain banks to have an 18-month examination cycle from $1 billion to $3 billion.
    • Protections for Consumers. Included in an adopted “manager’s amendment,” the bill requires credit bureaus to provide consumers unlimited free security freezes and unfreezes. The bill also limits certain medical debt information that can be included on veterans’ credit reports.
    • Changes for Bank Holding Companies. The bill raises the threshold for applying enhanced prudential standards from $50 billion to $250 billion.

    The bill now moves to the Senate, which is not expected to take up the package before the end of this year.

    Federal Issues Senate Banking Committee Dodd-Frank Federal Legislation TILA RESPA TRID Federal Reserve OCC FDIC Mortgages HMDA Credit Reporting Agency

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  • CFPB Publishes Updated TRID Small Entity Compliance Guide; ABA Submits Comments on CFPB’s Proposal to Fix TRID’s “Black Hole” Issue

    Lending

    On October 6, the CFPB released an updated version of its TILA-RESPA Integrated Disclosure Rule (Final Rule) small entity compliance guide. The updated guide reflects amendments issued July 7, previously discussed in a Buckley Sandler Special Alert, that the CFPB made to the Final Rule. The guide also provides a version log to outline incorporated changes.

    Separately, on October 10, the American Bankers Association (ABA) issued a comment letter regarding the CFPB’s proposal to address an aspect of the Final Rule concerning a “black hole” issue that prevents creditors from resetting tolerances using the Closing Disclosure except in very limited circumstances. (See previous InfoBytes coverage here.) The proposal was issued August 11, the same day the CFPB published the Final Rule. In its letter, the ABA requested additional clarification on certain areas of the proposal, but stated that it supports the removal of the “four-business-day limit for providing Closing Disclosures for purposes of resetting tolerances” because it “is an effective and very efficient approach to addressing the ‘black hole’ problem while preserving adequate consumer protections that will avoid bait-and-switch tactics or unjustified fee increases.” Furthermore, the ABA believes, “the use of [Closing Disclosures], whether initial or corrected, as a vehicle for correcting and ‘re-baselining’ fee disclosures, is a straightforward approach to returning regulatory order and compliance clarity on this provision.”

    Lending Agency Rule-Making & Guidance CFPB ABA TRID Compliance

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  • Illinois Governor Enacts Amendments to Predatory Lending Database Article

    State Issues

    On September 15, Illinois Governor Bruce Rauner signed into law amendments to the state’s Residential Real Property Disclosure Act to change provisions under its Predatory Lending Database Article. Public Act 100-0509 sets forth the following changes, among others: (i) certificates of compliance or certificates of exemption must now contain at least “one of the borrower’s names on the mortgage loan and the property index number for the subject property”; (ii) amends the definitions of “counseling” by removing the reference to “telephone counseling” and “originator” to reference “mortgage loan originator”; (iii) eliminates the requirement that originators shall provide information regarding affiliated or third party service providers or monies received from a broker or originator for inclusion in the predatory lending database; and (iv) provides additions to the information that must be collected and submitted by the title insurance company or closing agent for inclusion in the predatory lending database, such as a detailed list of all notices provided to the borrower at closing, including information in connection with the Integrated Closing Disclosure and the Integrated Loan Estimate Disclosure required under TILA-RESPA. The amendments took effect September 15, 2017.

    State Issues State Legislation Anti-Predatory Lending Mortgages TRID TILA RESPA GFE Mortgage Origination

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  • CFPB Issues Summary of Changes and Clarifications to 2017 TILA-RESPA Rule

    Agency Rule-Making & Guidance

    On August 30, the CFPB released “2017 TILA-RESPA Rule: Detailed Summary of Changes and Clarifications” to assist the mortgage industry in implementing the disclosure requirements of the CFPB’s recently finalized TILA-RESPA Rule. The summary provides an in-depth outline of modifications to the rule, and explains and corrects certain provisions.

    Topics covered by the summary include:

    • “Effective date and mandatory compliance date”;
    • “Coverage,” specifically with respect to cooperative units, trusts, and housing assistance loans;
    • “Good faith requirement (i.e., tolerances) and revised disclosures”;
    • “Shopping for settlement services”;
    • “Disclosure of principal reductions (also known as principal curtailments)”;
    • “Total of payments disclosure”;
    • “Simultaneous subordinate lien loans”;
    • “Construction loans”;
    • “Use of positive and negative numbers for certain disclosures in the Loan Estimate and Closing Disclosure”;
    • “Rounding”;
    • “Calculating cash to close”;
    • “Disclosure of payoffs of existing liens, and unsecured debt”;
    • “Disclosure of estimated value when no sales price or appraised value”;
    • “Separation of consumer and seller information on Closing Disclosures”;
    • “Other disclosures in the Loan Estimate”;
    • “Other disclosures in the Closing Disclosure”; and
    • “Other minor changes” (including correcting typographical errors).

    In addition to the summary, the CFPB also provided additional reference materials to help industry participants to comply with the rule. The rule becomes effective on October 10.

    Agency Rule-Making & Guidance CFPB RESPA TILA TRID Mortgages

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  • Amendments and Proposal to TRID Rule Published in Federal Register, Comments Due October 10

    Agency Rule-Making & Guidance

    As previously reported in a Special Alert, the CFPB issued amendments to its TILA/RESPA Integrated Disclosure rule, which importantly included a concurrent proposal to address the “black hole” issue that prevents creditors from resetting tolerances using the Closing Disclosure except in very limited circumstances. On August 11, the Bureau published the amendments in a final rule and the proposal in the Federal Register. The final rule takes effect October 10, 2017 with mandatory compliance by October 1, 2018. Comments on the proposal are due October 10, 2017.

    Agency Rule-Making & Guidance CFPB TRID RESPA TILA Federal Register

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  • Buckley Sandler Insights: CFPB Updates Rulemaking Agenda

    Consumer Finance

    On July 20, the CFPB released its Spring 2017 rulemaking agenda. The agenda was last updated in Fall 2016. The summer release date, and the fact that certain deadlines listed in the updated agenda have already passed, indicates that the agenda’s release may have been delayed after the CFPB drafted it. The following aspects of the updated agenda are particularly noteworthy:

    • Regulation Reviews: The Bureau plans to begin “the first in a series of reviews of existing regulations that we inherited from other agencies through the transfer of authorities under the Dodd-Frank Act,” noting that “other federal financial services regulators have engaged in these types of reviews over time, and believe that such an initiative would be a natural complement to our work to facilitate implementation of new regulations.” The Bureau has formed “an internal task force to coordinate and deepen the agency’s focus on concerns about regulatory burdens and projects to identify and reduce unwarranted regulatory burdens….” The agenda lists “pre-rule activities” as continuing through September 2017. Separately, the Bureau notes its ongoing assessments of the effectiveness of the Mortgage Servicing Rules, the Ability-to-Repay/Qualified Mortgage Rule, and the Remittance Transfer Rule pursuant to the Dodd-Frank Act’s five-year lookback provision.
    • Small Dollar Lending: The Bureau reports that it received more than one million comments on its June 2016 proposed rule to impose ability-to-repay requirements for payday, vehicle title, and similar installment loans. The Bureau states that it “continue[s] to believe that the concerns articulated in the [proposed rule] are substantial” but does not provide an expected release date for a final rule.
    • “Larger Participants” in Installment Lending: The agenda lists September 2017 as the expected release date for “a proposed rule that would define non-bank ‘larger participants’ in the market for personal loans, including consumer installment loans and vehicle title loans.” Designation as a larger participant brings a non-bank entity within the CFPB’s supervisory jurisdiction. The agenda indicates that a companion rule requiring payday, vehicle title lenders, and other non-bank entities to register with the Bureau is also underway, as noted below.
    • Debt Collection: In July 2016, the Bureau released an outline of proposals under consideration for debt collection and convened a panel under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. The Bureau notes that, “[b]uilding on feedback received through [that] panel, we have decided to issue a proposed rule later in 2017 concerning debt collectors’ communications practices and consumer disclosures.” The agenda states that a proposed rule is expected in September 2017. The Bureau also states that, in a departure from the July 2016 outline of proposals, the Bureau “intend[s] to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.”
    • Overdrafts: The Bureau states that the current opt-in regime “produces substantially different opt-in rates across different depository institutions” and that its “supervisory and enforcement work indicates that some institutions are aggressively steering consumers to opt in.” The Bureau reports that it is “engaged in consumer testing of revised opt-in forms and considering whether other regulatory changes may be warranted to enhance consumer decision making.” The agenda lists “pre-rule activities” as continuing through June 2017.
    • Small Business Lending: The agenda lists “pre-rule activities” on the implementation of the small business data reporting provisions of the Dodd-Frank Act as continuing through June 2017. Specifically, the agenda states that, at this juncture, the CFPB “is focusing on outreach and research to develop its understanding of the players, products, and practices in the small business lending market and of the potential ways to implement section 1071.”
    • HMDA & ECOA Amendments: The agenda lists October 2017 as the expected release date for the April 2017 proposed ECOA amendments to clarify requirements for collecting information on ethnicity, race, and sex, but does not list an expected release date for finalization of the April 2017 proposed technical corrections to the 2015 HMDA rule, or the July 2017 proposed amendments to the 2015 HMDA rule’s requirements for reporting home equity lines of credit. 
    • TRID/Know Before You Owe Amendments: The agenda lists March 2018 as the expected release date for finalization of the July 2017 proposed rule addressing the “black hole” issue, which is discussed in our special alert.
    • Mortgage Servicing Amendments: The Bureau states that it expects to issue a proposal in September 2017 “to make one or more substantive changes to the rule in response to . . . concerns” raised by the industry. 
    • Arbitration: Interestingly, the agenda states that the Bureau’s final rule on mandatory arbitration clauses, which was released this month to significant controversy, was not expected until August.
    • Non-Bank Registration: The Bureau states that it is “considering whether rules to require registration of [installment lenders] or other non-depository lenders would facilitate supervision, as has been suggested to us by both consumer advocates and industry groups.”
    • Prepaid Cards: The agenda does not provide an expected release date for finalization of the June 2017 proposed amendments addressing error resolution and limitations on liability, application of the rule’s credit-related provisions to digital wallets, and other issues. 
    • Credit Card Agreement Submission: The Bureau is “considering rules to modernize our database of credit card agreements to reduce burden on issuers that submit credit card agreements to us and make the database more useful for consumers and the general public.” The agenda lists “pre-rule activities” as continuing through October 2017.

    Consumer Finance Agency Rule-Making & Guidance CFPB Regulator Enforcement Lending Installment Loans Debt Collection Overdraft Small Business Lending HMDA ECOA TRID Mortgages Arbitration Prepaid Cards Credit Cards

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  • CFPB Publishes Fall 2016 Rulemaking Agenda

    Federal Issues

    On December 2, the CFPB published its Fall 2016 Statement of Regulatory Priorities, and its Fall 2016 rulemaking agenda, addressing current and future rulemakings in accordance with its obligations under the Regulatory Flexibility Act. In its Agenda, the Bureau notes, among other things, that: (i) publication of a final Arbitration rule is expected in February 2017; (ii) the Bureau intends to finalize proposed amendments to TRID by March 2017; and (iii) the Bureau plans to release in March 2017 a proposed set of technical corrections to the HMDA reporting requirements and proposed amendments to Regulation B “to clarify how financial institutions and creditors subject to Regulation C and Regulation B may comply with both regulations.” There was no next step identified for the proposed rule on payday loans and deposit advance products.

    In a corresponding blog post, the Bureau provided a brief status update and overview of its various rulemakings, which are grouped into pre-rule, proposed rule, final rule, long-term, and completed stages. The CFPB noted that it anticipates that the next “larger participant” rulemaking will focus on the markets for consumer installment loans and vehicle title loans, including whether to impose registration requirements on non-depository lenders.

    Federal Issues Consumer Finance CFPB HMDA TRID Agency Rule-Making & Guidance

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  • ABA and CBA Lend Perspective on CFPB's Proposed TRID Revisions

    Lending

    On October 18, the American Banking Association (ABA) and Consumer Bankers Association (CBA) submitted a joint comment letter responding to a recent proposal by the CFPB seeking to codify informal guidance and clarifications to the Know Before Your Owe TILA-RESPA Integrated Disclosure (TRID) rule. Of particular concern among lenders and investors was the lack of clarity about liability for unintentional mistakes and technical noncompliance with TRID. To help address these concerns, the Associations urged the CFPB to, among other things, (i) publish the specific statutory provisions it relied upon for each disclosure item or requirement identified in the recent proposal; (ii) grant a “safe harbor” for model forms issued by the bureau; (iii) grant an extension of the “good faith” compliance examination policy pending the CFPB’s proscribed deadlines for the proposed rules; and (iv) develop a formal process to address ongoing compliance and legal issues related to TRID.

    The Associations also expressed appreciation for “the numerous amendments offered in th[e] proposal,” including those allowing corrected closing disclosures to reset applicable good faith tolerances for creditors. The Associations further explained that their “preliminary analysis reflects that this proposed rule will resolve multiple ambiguities that banks deem significant” and “urged that the bureau . . . allow for the correction of previous non-compliance caused by the interpretive ambiguity that the bureau is now fixing” (emphasis added).

    Mortgages CFPB TILA RESPA Miscellany TRID Agency Rule-Making & Guidance

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  • CFPB Releases Updated TRID Compliance Guide

    Federal Issues

    On October 12, the CFPB issued an updated version of its small entity compliance guide on the Know Before You Owe TILA-RESPA Integrated Disclosure (TRID) Rule. The updated TRID compliance guide incorporates guidance from CFPB webinars on various topics, including (i) record retention; (ii) Loan Estimate and Closing Disclosure requirements, including format and delivery; (iii) good faith standards and determinations; (iv) disclosures related to seller-paid costs; and (v) construction loans. The newly released TRID compliance guide replaces the CFPB’s July 2015 guide. The CFPB also issued a separate revised guide for completing the Loan Estimate and Disclosure forms.

    Federal Issues Mortgages Consumer Finance CFPB TILA RESPA TRID

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