Written by Steve Van Beek

A couple of additional items before the weekend.  Reminder: NAFCU’s offices will be closing early today and will be closed until Tuesday.  

Regulation B Appraisal Finalized.  The CFPB released their final rule for free copies of appraisals under Regulation B.  The press release is here^[1].  There is a consumer summary^[2] as well as a detailed summary^[3].    

The special page for the Regulation B final rule is located here^[4].   

Effective Date:  January 18, 2014.  

***

Appraisals for Higher-Risk Mortgages.  As expected, the CFPB issued their own information regarding the interagency final rule on appraisals for higher-risk mortgages.  Their press release is here^[5].  They also released a consumer summary^[6] as well as a detailed summary^[7].  Effective Date: January 18, 2014.    

The special page for the Appraisals for Higher-Priced Mortgages* is located here^[8].

*Note: The final rule adopts the term “higher-priced” for these loans to help align the rule with the existing “higher-priced” mortgage loan requirements (including escrows).  

NCUA also issued a press release^[9] and a link to the final rule on their website^[10].  

So where will credit unions need to look for this requirement?  NCUA’s rule or the CFPB’s?

Here is from the final rule:

“The NCUA and FHFA adopt the rules as published in the Bureau’s
Regulation Z at 12 CFR 1026.35(a) and (c), by cross-referencing these rules in
12 CFR 722.3 and 12 CFR Part 1222, respectively.”

Thus, after the rules are in the Electronic Code of Federal Regulations, credit unions will need to use 12 CFR 1026 – Regulation Z – as NCUA’s rule will simply tell them to go find the requirements in 12 CFR 1026.35. 

Just for fun, here is the wonderful legalese that will be located in 12 CFR 722.3(f):

“(f)  Higher-priced mortgage loans.  A credit union may not extend credit to a
consumer in the form of a “higher-priced mortgage loan” as defined in 12 CFR
1026.35(a)(1), without meeting the requirements of section 129H of the Truth in
Lending Act, 15 U.S.C. 1639h, and its implementing regulations in Regulation Z,
12 CFR 1026.35(c).”

Say that five times fast.  

***

More on Mortgage Servicing.  There has been quite a bit of discussion in the news about the 5000 transaction exemption for mortgage servicing.  Unfortunately, some of it has the potential to cause confusion.  When you are reading news stories or summaries of the mortgage servicing rule, remember that the 5000 transaction exemption does not cover all the new requirements.  For example, the requirements for error resolution and information requests procedures will apply to all credit unions performing mortgage servicing.  And, it looks like the force-placed insurance requirements will apply as well.  

“The Bureau agrees that additional exemptions are appropriate
for certain of the rulemakings.  As
discussed in more detail below, the Bureau has determined not to implement these
additional exemptions to those regulations that principally implement
requirements set forth in the Dodd-Frank Act. 
These include the requirements in §§ 1024.35 (Error Resolution Procedures),
1024.36 (Information Requests), and 1024.37 (Force-Placed Insurance).  With respect to error resolution procedures
and information requests, those provisions build upon the existing Qualified
Written Request procedures, which are currently applicable to the servicers discussed
above.  Providing an exemption to these
requirements would have removed a currently existing consumer protection.”  Page 90-91 of the Reg X/RESPA Mortgage Servicing Final Rule^[11].

There could be more.  For now, if a colleague starts celebrating that you are under 5000 transactions and not subject to the mortgage servicing rule – just remind them of these six words that compliance officers know too well: “the devil is in the details.”