Well, today is the day we’ve all been anxious about for the past year; the CFPB’s new Ability-to-Repay and Qualified Mortgage rules have gone into effect. Mortgage brokers – do you know how your funding lenders are going to handle non-QM loans, if at all? Are you prepared to review points-and-fees upfront to avoid the need for last minute changes or – worse – fatal compliance issues within the rubrics of your funding lenders? Mortgage bankers, do you have a plan to handle loans that “fall out” of QM because of issues with points-and-fees calculations or investor interpretations? Tammy Butler over at Optimal Blue has some excellent advice on having a “Plan B” for the mortgage bankers and depositories out there. You can check out her latest blog here.
For those of you doing VA loans, the VA issued a circular yesterday indicating that all TILA requirements regarding ATR/QM will apply to VA loans until the VA has issued its own ATR/QM regulations, which it anticipates doing “in the near future.” Note that any loan that is NOT a QM but meets VA eligibility requirements will still be guaranteed by the VA.
Remember that HUD’s FHA QM definition – implementing rebuttable presumption and safe-harbor thresholds for FHA loans – also goes into effect today. HUD released a summary of that rule back on December 11 and you can find the actual text of the rule in the Federal Register.
Finally, I’m interested in hearing about your experiences with ATR/QM as we venture into this brave new world together! If you have any difficulties – or good experiences – that you’d like to share as these new applications make their way to the closing table, feel free to leave a comment below. (Just keep it clean!) or send me an email.
As widely expected, the Consumer Financial Protection Bureau (CFPB) today issued the final rules to implement the “unified disclosures” required under the Dodd-Frank Act. Rules will go into effect on August 1, 2015. Readers who have been following this blog will recall that getting to this point has been a relatively long and in-depth process, with the agency issuing several draft documents and soliciting comment from the public and industry in a process it named “know before you owe.”
The big surprise today, however, was the length of time the agency gave to industry to implement these new requirements. A 20-month implementation period comes as a surprise, especially in light of the compressed time period the industry has been working under to implement the oft-amended ability-to-repay and qualified mortgage rules.
In a very brief overview of the final rule (I’ll be getting much more in-depth into it over the next few months to prepare next year’s CE course), it becomes apparent the reasoning behind the extended implementation widow becomes apparent:
- There is no exemption from the rule given to small creditors, despite heavy involvement from the Independent Community Bankers of America and various State Community Bankers Associations.
- The fairly controversial provision in the proposed rule requiring borrowers to receive the new Closing Disclosure (replacement for the current HUD-1 and final TIL disclosure) three days before closing was not removed from the final rule – over the objections and warnings of many industry trade groups.
Such a long window of preparation is likely to make beleaguered technology vendors struggling with the QM/ATR implementation – such as LOS providers like Ellie Mae and Calyx – as well as compliance consulting companies, loan pricing engines and mortgage law firms, breathe a long sigh of relief.
You can find a narrative description of the disclosure initiative, as well as links to the final disclosures and the rule itself, at:
Additionally, the CFPB will be publishing the rule in the Federal Register as required by law.