CFPB Finalizes April Clarifications and Changes

Clarificationsrnand updates proposed by the Consumer Financial Protection Bureaurn(CFPB) for the new Truth in Lending Act (TILA) and RESPA rules were<bfinalized by the Bureau today. The final rule addresses severalrnconcerns regarding qualified mortgages, mortgage servicing, andrnhigher-priced mortgage loans (HPMLs) expressed earlier by interestedrnparties. </p

Mostrnof the changes are technical in nature but of more general interestrnmay be the following changes and interpretations. The new rule:</p<ul<li

Clarifiesrnhow to determine a consumer’s debt-to-income ratio under the mainrndefinition of qualified mortgages. These changes make more explicitrnhow the lender should evaluate stability of income, analysis ofrnovertime and bonus income, Social Security and self-employmentrnincome, and non-earned income such as from rental property or trustrnfunds</p</li<li

Clarifiesrnthe eligibility standard for certain loans that receive qualifiedrnmortgage status because they are eligible for purchase, insurance,rnor guarantee by certain Federal agencies, Fannie Mae, or Freddie Macrnrn</p</li<li<pMakes clear thatrnCFPB's RESPA regulations do not preempt the field of servicingrnregulation.</p</li<li

Establishesrnwhich mortgage loans to consider in determining status under thernsmall servicer exemption from certain servicing regulations. Inrnaddition to other provisions the new rule provides that mortgagernloans voluntarily serviced for an unaffiliated entity withoutrnrenumberation, reverse mortgages, and mortgages secured byrntimeshares will not be considered in the small servicerrndetermination. </p</li<li

Clarifiesrnthe continuation of certain exclusions regarding HPMLs, i.e. thatrnconstruction and bridge loans and reverse mortgages are not subjectrnto requirements regarding repayment abilities and prepaymentrnpenalties.</p</li</ul

Full “New Rule” available HERE.</p<ul

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