You may have also seen the CFPB released another proposal intended to provide additional clarification on the Final Ability to Repay/Qualified Mortgage and Mortgage Servicing Rules.  The proposal addresses the preemption of state laws; the determination of a small servicer, including when loans are serviced on a charitable basis; the government program eligibility status for certain loans to qualify as special qualified mortgages; and the requirements for qualified mortgages under Appendix Q.  The proposal does not include any significant changes, but it could lessen the burden a little bit.  I guess we’ll take what we can get, right?  We will continue to monitor this proposal to see how and when it is finalized.

While the CFPB does not consider reading the guide an acceptable substitute for reading the rule itself, it is intended to be more reader-friendly.  It provides an overall summary of the rule and is intended to provide assistance in implementing the requirements.

The goal of the delay is to allow the CFPB a chance to clarify the circumstances in which credit insurance premiums could be paid periodically, rather than financed. The Rule applies to all consumer closed-end transactions secured by a dwelling and also open-end lines of credit when secured by the consumer’s principal dwelling.

It will be interesting to see how this develops.  The CFPB will need to move quickly once the comment period ends and the current effective date of June 1^st.

The Matrix provides a “snapshot” of the risk, requirements, and prohibitions for closed-end consumer purpose mortgage loans under the Ability to Repay and Qualified Mortgage Standards Final Rule. 

We hope you will find this to be an invaluable tool for training your personnel in anticipation of the January 10, 2014, changes, as well as in your daily operations once January rolls around.  We feel this matrix will be key to ensuring your institution meets the requirements, regardless of whether you choose to originate a Non-Qualified Mortgage or one of the different types of Qualified Mortgages.

This Matrix is a supplemental tool and does not replace any existing tools, such as our Real Estate Loan Matrix.  This Matrix focuses entirely on the changes coming in January with regards to the Ability to Repay Requirements and Qualified Mortgage Standards.  We also plan to provide further details in an upcoming newsletter article.  Enjoy! 

It appears the only “changes” have been to update the asset threshold for determining HMDA applicability ($42 million) and to change references from the Federal Reserve Board to the Consumer Financial Protection Bureau (CFPB).

The publication states it is to be used for 2013 calendar year data (due March 1, 2014).  This means that Appendix F was not updated with the recent MSA changes (see our April 13^th blog).  We would expect a new version to be released sometime in the future to address these changes.

Areas designated as Metropolitan Statistical Areas (MSAs) are one of the key components in determining whether you bank is subject to the Home Mortgage Disclosure Act (HMDA).  HMDA is one of the most difficult compliance regulations.  It takes A LOT of training for your personnel, process/procedure development and imposes civil money penalties for non-compliance.

The announcement contains many different lists of information; however, you should be mostly concerned with “List 2”.  It provides information such as the MSA’s codes, principal cities, counties, etc.  If your bank has locations in more than one state, you will want to check the MSAs for each state.

Let’s look at an example for the state of Nebraska, as that is where our home office is located.

List 2 shows three MSAs for Nebraska (see below).  These are Grand Island, NE, Lincoln, NE and Omaha, NE/Council Bluffs, IA.  You will notice that each MSA includes not only the city but also the county and even some surrounding counties.

                        24260  Grand Island, NE  Metropolitan Statistical Area

                                    Principal City: Grand Island

                                    Hall County, Hamilton County, Howard County, Merrick County

*This MSA is new for 2014

                        30700  Lincoln, NE  Metropolitan Statistical Area

                                    Principal City: Lincoln

                                    Lancaster County, Seward County

                        36540  Omaha-Council Bluffs, NE-IA  Metropolitan Statistical Area

                                    Principal Cities: Omaha, NE; Council Bluffs, IA

Harrison County, IA; Mills County, IA; Pottawattamie County, IA; Cass County, NE; Douglas County, NE; Sarpy County, NE; Saunders County, NE; Washington County, NE

If a bank has assets of $42 million or more (this threshold changes periodically) AND has a main office or branch located in one of these MSAs, the bank is subject to HMDA.

The revisions were effective immediately; however banks brand new to HMDA (as a result of the revisions) will begin collecting and reporting HMDA data on applications taken on or after January 1, 2014.

Now is the time to determine if these revisions will affect you.  If they do, you need to begin learning all you can about HMDA and developing a plan to train your personnel.

This change only removes the “on or at” the machine requirement.  The on-screen or paper disclosure requirement remains.

While this is good news, you need to be sure to check your state law as it may still require an “on the machine” notice.

The bulletin addresses:

1. Force Placement (effective 7/6/12)
2. Civil Money Penalties – $2,000 per violation with no cap (effective 7/6/12)
3. Private Flood Insurance – acceptable standards and disclosures (not effective until regulations are issued).
4. Escrows – clarification this only applies to residential real estate and the exemption for banks that are 1) < $1 billion AND 2) not required to and don’t require escrows (not effective until regulations are issued; however, the law requires this beginning 7/6/14).
5. Clarification about 3 of the proposed FAQs pertaining to force placement.  One will be dropped and the other two will be reviewed after new regulations are issued.

Apparently, the regulators will be issuing new regulations to adopt the Biggert-Waters Act changes.  In the past, FEMA has been slow and issued few regulations regarding the Flood Insurance Act.  However, it appears we may see much needed clarification soon – just don’t hold your breath!

For a complete listing of items required to be included in the public file, please refer to Sections 345.43 (FDIC), 228.43 (FRB), and 25.43 (OCC).

The following items are commonly missed:

• Any branches opened or closed by the financial institution in the current year and each of the prior two calendar years;
• Current services offered by the financial institution;
• Up to date transaction fees charged by the financial institution; and,
• For small and intermediate small financial institutions only, an up to date loan to deposit ratio for each quarter of the prior calendar year.

The branch file must include:

• A copy of the public section of the bank's most recent CRA Performance Evaluation and a list of services provided by the branch; and,
• Within five calendar days of the request, all the information in the public files relating to the assessment area in which the branch is located.