Subtitle A Residential Mortgage Loan Origination Standards. Subtitle B Minimum Standards for Mortgages. Subtitle C High-Cost Mortgages

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1 This is the secnd f a series f user guides that will be published by Mrrisn & Ferster. The user guides prvide an in depth discussin n specific tpics raised by the Ddd-Frank Act. Fr ur Ddd-Frank verview and brief alerts, please see ur dedicated website at: gulatry-refrm/. Intrductin This is a user guide fr the residential mrtgage lan riginatin-related prvisins f the Ddd-Frank Wall Street Refrm and Cnsumer Prtectin Act, Pub. L. N ( Ddd-Frank Act ). Mre specifically, it cvers the fllwing prvisins f Title XIV f the Ddd-Frank Act, all f which are part f the Mrtgage Refrm and Anti- Predatry Lending Act, as well as the fllwing sectins frm Title X that affect mrtgage riginatins: Subtitle A Residential Mrtgage Lan Originatin Standards Subtitle B Minimum Standards fr Mrtgages Subtitle C High-Cst Mrtgages Subtitle D Office f Husing Cunseling Subtitle F Appraisal Activities Sectins 1032(f), 1076, 1083, 1094, 1098, and 1100A The remainder f Title XIV f the Ddd-Frank Act Subtitle E (Mrtgage Servicing), Subtitle G (Mrtgage Reslutin and Mdificatin), and Subtitle H (Miscellaneus Prvisins) will be cvered by a separate user guide t be issued at a later time. 1 Attrney Advertising

2 Use f this Guide This guide is designed fr use by executives and managers wh are respnsible fr the mrtgage lan riginatin activities f banks, thrifts, and mrtgage cmpanies. It is intended t be a pragmatic reference piece relating t the implementatin f the mrtgage riginatin prvisins f the Ddd-Frank Act. When regulatins are issued fr the mrtgage riginatin prvisins f the Ddd-Frank Act, the guidance prvided by this guide will need t be refined accrdingly. This guide des nt prvide legal advice and shuld nt be relied upn as such. Organizatin f this Guide Fr ease f reference, this guide will be rganized by the varius subtitles and sectins f Titles X and XIV f the Ddd-Frank Act. With each prvisin, we summarize the critical issues under the new law, discuss linkages t existing law, and analyze sme f the mre imprtant ramificatins fr residential mrtgage lenders. Nte that certain federal agencies cnsumer prtectin authrities under the Enumerated Cnsumer Laws will eventually be transferred t the new Bureau f Cnsumer Financial Prtectin ( Bureau ). These transfers f authrity are nt reflected in this guide. The Enumerated Cnsumer Laws are listed in Sectin 1002(12) f the Ddd-Frank Act. Sectin 1032(f). Cmbined Mrtgage Lan Disclsure (f) Cmbined Mrtgage Lan Disclsure Nt later than 1 year after the designated transfer date, the Bureau shall prpse fr public cmment rules and mdel disclsures that cmbine the disclsures required under the Truth in Lending Act and sectins 4 and 5 f the Real Estate Settlement Prcedures Act f 1974, int a single, integrated disclsure fr mrtgage lan transactins cvered by thse laws, unless the Bureau determines that any prpsal issued by the Bard f Gvernrs and the Secretary f Husing and Urban Develpment carries ut the same purpse. Analysis. Sectin 1032(f) directs the new Bureau t prpse a single integrated mdel disclsure that cmbines the disclsures required by the federal Truth-in-Lending Act ( TILA ) with the gd faith estimate, the Department f Husing and Urban Develpment ( HUD ) special infrmatin bklet, and the HUD-1 r HUD-1A settlement statement required by Sectins 4 and 5 f the federal Real Estate Settlement Prcedures Act f 1974 ( RESPA ). The Bureau is t d this within ne year after the designated transfer date, unless the Bureau determines that any prpsal issued by the Bard f Gvernrs f the Federal Reserve System ( Bard ) and HUD carries ut the same purpse. The designated transfer date will be established by the Treasury Secretary, fllwing cnsultatin with ther federal fficials, within 60 days fllwing enactment f the Ddd-Frank Act. The designated transfer date will be n earlier than 180 days, and n later than 12 mnths, fllwing enactment. The Treasury Secretary can establish a designated transfer date beynd the 12-mnth perid by fllwing certain prcedures, but the designated transfer date may nt be mre than 18 mnths fllwing enactment. See Sectin These rather lengthy timeframes reflect Cngress s recgnitin that it will take cnsiderable time t rganize the Bureau, which will be respnsible fr issuing a large number f regulatins. This is nt the first time that Cngress has encuraged the integratin f TILA and RESPA disclsures. The last time, representatives frm the Bard and HUD cncluded that it was nt pssible t d s under the existing statutry regimes. Many f the same challenges remain in place. Further, nte that the tw statutes require the giving f certain disclsures at different times. Whether a single integrated disclsure is prduced by the Bureau, r by the Bard and HUD, the result will be anther massive verhaul f pre-clsing disclsures fr mrtgage lans. It remains t be seen whether the Bureau will restrict its disclsure integratin effrts t clsed-end lans, r whether it als will attempt t establish an integrated disclsure fr pen-end lans. The latter will require an even mre ambitius effrt. The requirement f an integrated disclsure has als been written int TILA and RESPA. See Sectins 1098 and 1100A, discussed belw. 2 Attrney Advertising

3 Sectin Reverse Mrtgage Study and Regulatins (a) Study Nt later than 1 year after the designated transfer date, the Bureau shall cnduct a study n reverse mrtgage transactins. (b) Regulatins (1) IN GENERAL If the Bureau determines thrugh the study required under subsectin (a) that cnditins r limitatins n reverse mrtgage transactins are necessary r apprpriate fr accmplishing the purpses and bjectives f this title, including prtecting brrwers with respect t the btaining f reverse mrtgage lans fr the purpse f funding investments, annuities, and ther investment prducts and the suitability f a brrwer in btaining a reverse mrtgage fr such purpse. (2) IDENTIFIED PRACTICES AND INTEGRATED DISCLOSURES The regulatins prescribed under paragraph (1) may, as the Bureau may s determine (A) identify any practice as unfair, deceptive, r abusive in cnnectin with a reverse mrtgage transactin; and (B) prvide fr an integrated disclsure standard and mdel disclsures fr reverse mrtgage transactins, cnsistent with sectin 4302(d), that cmbines the relevant disclsures required under the Truth in Lending Act (15 U.S.C et seq.) and the Real Estate Settlement Prcedures Act, with the disclsures required t be prvided t cnsumers fr Hme Equity Cnversin Mrtgages under sectin 255 f the Natinal Husing Act. (c) Rule f Cnstructin This sectin shall nt be cnstrued as limiting the authrity f the Bureau t issue regulatins, rders, r guidance that apply t reverse mrtgages prir t the cmpletin f the study required under subsectin (a). Analysis. The Bureau is t undertake a study f reverse mrtgages and determine if additinal regulatins are necessary t prtect cnsumers. The regulatins are t identify unfair and deceptive acts and practices, and t prvide fr an integrated disclsure that cmbines the disclsures required by TILA, RESPA, and the HUD regulatins fr hme equity cnversin mrtgages ( HECMs ). The Bureau may issue ther regulatins as it sees fit. The study is t be cmpleted within ne year fllwing the designated transfer date. Fr a discussin f the designated transfer date, see Sectin 1032(f), abve. The integratin f HECM disclsures int thse required by TILA and RESPA will be even mre challenging than the integratin f TILA and RESPA disclsures required fr mrtgages that are nt reverse mrtgages. See discussin at Sectin 1032(f), abve. Sectin Amendments t the Alternative Mrtgage Transactin Parity Act f 1982 (a) In General The Alternative Mrtgage Transactin Parity Act f 1982 (12 U.S.C et seq.) is amended (1) in sectin 803 (12 U.S.C. 3802(1)), by striking `1974' and all that fllws thrugh `described and defined' and inserting the fllwing: `1974), in which the interest rate r finance charge may be adjusted r renegtiated, described and defined'; and (2) in sectin 804 (12 U.S.C. 3803) (A) in subsectin (a) (i) in each f paragraphs (1), (2), and (3), by inserting after `transactins made' each place that term appears `n r befre the designated transfer date, as determined under sectin 1062 f the Cnsumer Financial Prtectin Act f 2010,'; (ii) in paragraph (2), by striking `and' at the end; (iii) in paragraph (3), by striking the perid at the end and inserting `; and'; and (iv) by adding at the end the fllwing new paragraph: `(4) with respect t transactins made after the designated transfer date, nly in accrdance with regulatins gverning alternative mrtgage transactins, as issued by the Bureau f Cnsumer Financial Prtectin fr federally chartered husing creditrs, in accrdance with the rulemaking authrity granted t the Bureau f Cnsumer Financial Prtectin with regard t federally chartered husing creditrs under prvisins f law ther than this sectin.'; (B) by striking subsectin (c) and inserting the fllwing: `(c) Preemptin f State Law An alternative mrtgage transactin may be made by a husing creditr in accrdance with this sectin, ntwithstanding any State cnstitutin, law, r regulatin that prhibits an alternative mrtgage transactin. Fr purpses f this subsectin, a State cnstitutin, law, r regulatin that prhibits an alternative mrtgage transactin des nt include any State cnstitutin, law, r regulatin that regulates mrtgage transactins generally, including any restrictin n prepayment penalties r late charges.'; and 3 Attrney Advertising

4 (C) by adding at the end the fllwing: `(d) Bureau Actins The Bureau f Cnsumer Financial Prtectin shall `(1) review the regulatins identified by the Cmptrller f the Currency and the Natinal Credit Unin Administratin, (as thse rules exist n the designated transfer date), as applicable under paragraphs (1) thrugh (3) f subsectin (a); `(2) determine whether such regulatins are fair and nt deceptive and therwise meet the bjectives f the Cnsumer Financial Prtectin Act f 2010; and `(3) prmulgate regulatins under subsectin (a)(4) after the designated transfer date. `(e) Designated Transfer Date As used in this sectin, the term `designated transfer date' means the date determined under sectin 1062 f the Cnsumer Financial Prtectin Act f 2010.'. (b) Effective Date This sectin and the amendments made by this sectin shall becme effective n the designated transfer date. (c) Rule f Cnstructin The amendments made by subsectin (a) shall nt affect any transactin cvered by the Alternative Mrtgage Transactin Parity Act f l982 (12 U.S.C et seq.) and entered int n r befre the designated transfer date. Analysis. Significant changes have been made t the Alternative Mrtgage Transactin Parity Act f 1982 ( AMTPA ). In general, the AMTPA allws state husing creditrs t riginate adjustable rate mrtgages ( ARMs ) and ther alternative mrtgage transactins under the same regulatins t which their federal cunterparts are subject. Fr example, the AMTPA allws a state cmmercial bank t make ARMs using the natinal bank ARM regulatins designated by the Office f the Cmptrller f the Currency ( OCC ). T the extent that state laws wuld therwise prhibit the state bank frm making these ARMs, thse state laws are preempted. The states have the right t pt ut frm the AMTPA, and a small number f states have dne s. The AMTPA des nt apply t natinal banks, federal savings banks, r federal credit unins, but des apply t their subsidiaries and affiliates. In General. The AMTPA is nw limited t lans in which the interest rate r payments may be adjusted r renegtiated. This wuld appear t exclude reverse mrtgages, balln payment lans, shared appreciatin mrtgages, and ther nntraditinal mrtgages whse interest rates r payments are nt adjusted r renegtiated. Fr state lenders, these lans are nw permissible nly if allwed by state law. Bureau Regulatins. On r befre the designated transfer date, state husing creditrs will use the regulatins designated by the applicable federal banking agency t make ARMs and ther alternative mrtgages. Fllwing the designated transfer date, state husing creditrs will use the regulatins designated by the Bureau t make ARMs. Preemptin f State Law. The preemptin affrded by the AMTPA has been cut back. Previusly, any state law that was incnsistent with the designated federal regulatins was preempted. With this amendment, nly state laws that prhibit the ARM allwed by the designated federal regulatins are preempted. State laws regulating mrtgage transactins generally, such as laws gverning prepayment penalties and late charges, are nt preempted by the AMTPA. Fr example, the existing OCC regulatin at 12 C.F.R allws state cmmercial banks t make alternative mrtgage lans in accrdance with the prvisins f this subpart, which means that when thse lans are made by thse state banks, any state laws that restrict r prhibit prepayment penalties are preempted (see 12 C.F.R ). This will n lnger be the case. (Histrical Nte: A frmer Office f Thrift Supervisin ( OTS ) regulatin under the AMTPA gave state savings assciatins, mrtgage cmpanies and finance cmpanies the benefit f federal preemptin f state prepayment penalty and late charge laws. The validity f this regulatin was upheld in Natinal Hme Equity Mrtgage Assciatin v. Face, 239 F.3d 633 (4th Cir. 2001). The OTS subsequently repealed this part f its AMTPA regulatin.) Bureau Actins OCC and NCUA. The Bureau is directed t review the regulatins identified by the OCC and the Natinal Credit Unin Administratin ( NCUA ) under the AMTPA as f the designated transfer date, and t determine if thse regulatins are fair, nt deceptive, and meet the bjectives f the Ddd-Frank Act. Apprpriate regulatins will be issued as necessary. Designated Transfer Date/Effective Date/Rule f Cnstructin. The amendment t the AMTPA will be effective n the designated transfer date. This indicates that alternative mrtgage transactins f all kinds made n r 4 Attrney Advertising

5 prir t the designated transfer date in accrdance with the applicable federal agency AMTPA regulatins shuld cntinue t receive the preemptin benefits f the AMTPA. This is cnfirmed by the rule f cnstructin set frth in Sectin 1083(c) f the Ddd-Frank Act. Fr a discussin f the designated transfer date, see Sectin 1032(f), abve. Sectin Amendments t the Hme Mrtgage Disclsure Act f 1975 The Hme Mrtgage Disclsure Act f 1975 (12 U.S.C et seq.) is amended (1) by striking `Bard' each place that term appears, ther than in sectins 303, 304(h), 305(b) (as amended by this sectin), and 307(a) (as amended by this sectin) and inserting `Bureau'. (2) in sectin 303 (12 U.S.C. 2802) (A) by redesignating paragraphs (1) thrugh (6) as paragraphs (2) thrugh (7), respectively; and (B) by inserting befre paragraph (2) the fllwing: `(1) the term `Bureau' means the Bureau f Cnsumer Financial Prtectin;'; (3) in sectin 304 (12 U.S.C. 2803) (A) in subsectin (b) (i) in paragraph (4), by inserting `age,' befre `and gender'; (ii) in paragraph (3), by striking `and' at the end; (iii) in paragraph (4), by striking the perid at the end and inserting a semicln; and (iv) by adding at the end the fllwing: `(5) the number and dllar amunt f mrtgage lans gruped accrding t measurements f `(A) the ttal pints and fees payable at riginatin in cnnectin with the mrtgage as determined by the Bureau, taking int accunt 15 U.S.C. 1602(aa)(4); `(B) the difference between the annual percentage rate assciated with the lan and a benchmark rate r rates fr all lans; `(C) the term in mnths f any prepayment penalty r ther fee r charge payable n repayment f sme prtin f principal r the entire principal in advance f scheduled payments; and `(D) such ther infrmatin as the Bureau may require; and `(6) the number and dllar amunt f mrtgage lans and cmpleted applicatins gruped accrding t measurements f `(A) the value f the real prperty pledged r prpsed t be pledged as cllateral; `(B) the actual r prpsed term in mnths f any intrductry perid after which the rate f interest may change; `(C) the presence f cntractual terms r prpsed cntractual terms that wuld allw the mrtgagr r applicant t make payments ther than fully amrtizing payments during any prtin f the lan term; `(D) the actual r prpsed term in mnths f the mrtgage lan; `(E) the channel thrugh which applicatin was made, including retail, brker, and ther relevant categries; `(F) as the Bureau may determine t be apprpriate, a unique identifier that identifies the lan riginatr as set frth in sectin 1503 f the S.A.F.E. Mrtgage Licensing Act f 2008; `(G) as the Bureau may determine t be apprpriate, a universal lan identifier; `(H) as the Bureau may determine t be apprpriate, the parcel number that crrespnds t the real prperty pledged r prpsed t be pledged as cllateral; `(I) the credit scre f mrtgage applicants and mrtgagrs, in such frm as the Bureau may prescribe; and `(J) such ther infrmatin as the Bureau may require.'; (B) by striking subsectin (h) and inserting the fllwing: `(h) Submissin t Agencies `(1) IN GENERAL The data required t be disclsed under subsectin (b) shall be submitted t the Bureau r t the apprpriate agency fr the institutin reprting under this title, in accrdance with rules prescribed by the Bureau. Ntwithstanding the requirement f 5 Attrney Advertising

6 subsectin (a)(2)(a) fr disclsure by census tract, the Bureau, in cnsultatin with ther apprpriate agencies described in paragraph (2) and, after ntice and cmment, shall develp regulatins that `(A) prescribe the frmat fr such disclsures, the methd fr submissin f the data t the apprpriate agency, and the prcedures fr disclsing the infrmatin t the public; `(B) require the cllectin f data required t be disclsed under subsectin (b) with respect t lans sld by each institutin reprting under this title; `(C) require disclsure f the class f the purchaser f such lans; `(D) permit any reprting institutin t submit in writing t the Bureau r t the apprpriate agency such additinal data r explanatins as it deems relevant t the decisin t riginate r purchase mrtgage lans; and `(E) mdify r require mdificatin f itemized infrmatin, fr the purpse f prtecting the privacy interests f the mrtgage applicants r mrtgagrs, that is r will be available t the public. `(2) OTHER APPROPRIATE AGENCIES The apprpriate agencies described in this paragraph are `(A) the apprpriate Federal banking agencies, as defined in sectin 3(q) f the Federal Depsit Insurance Act (12 U.S.C. 1813(q)), with respect t the entities that are subject t the jurisdictin f each such agency, respectively; `(B) the Federal Depsit Insurance Crpratin fr banks insured by the Federal Depsit Insurance Crpratin (ther than members f the Federal Reserve System), mutual savings banks, insured State branches f freign banks, and any ther depsitry institutin described in sectin 303(2)(A) which is nt therwise referred t in this paragraph; `(C) the Natinal Credit Unin Administratin Bard with respect t credit unins; and `(D) the Secretary f Husing and Urban Develpment with respect t ther lending institutins nt regulated by the agencies referred t in subparagraph (A) r (B). `(3) RULES FOR MODIFICATIONS UNDER PARAGRAPH (1) `(A) APPLICATION A mdificatin under paragraph (1)(E) shall apply t infrmatin cncerning `(i) credit scre data described in subsectin (b)(6)(i), in a manner that is cnsistent with the purpse described in paragraph (1)(E); and `(ii) age r any ther categry f data described in paragraph (5) r (6) f subsectin (b), as the Bureau determines t be necessary t satisfy the purpse described in paragraph (1)(E), and in a manner cnsistent with that purpse. `(B) STANDARDS The Bureau shall prescribe standards fr any mdificatin under paragraph (1)(E) t effectuate the purpses f this title, in light f the privacy interests f mrtgage applicants r mrtgagrs. Where necessary t prtect the privacy interests f mrtgage applicants r mrtgagrs, the Bureau shall prvide fr the disclsure f infrmatin described in subparagraph (A) in aggregate r ther reasnably mdified frm, in rder t effectuate the purpses f this title.'; (C) in subsectin (i), by striking `subsectin (b)(4)' and inserting `subsectins (b)(4), (b)(5), and (b)(6)'; (D) in subsectin (j) (i) by striking paragraph (3) and inserting the fllwing: `(3) CHANGE OF FORM NOT REQUIRED A depsitry institutin meets the disclsure requirement f paragraph (1) if the institutin prvides the infrmatin required under such paragraph in such frmats as the Bureau may require'; and (ii) in paragraph (2)(A), by striking `in the frmat in which such infrmatin is maintained by the institutin' and inserting `in such frmats as the Bureau may require'; (E) in subsectin (m), by striking paragraph (2) and inserting the fllwing: `(2) FORM OF INFORMATION In cmplying with paragraph (1), a depsitry institutin shall prvide the persn requesting the infrmatin with a cpy f the infrmatin requested in such frmats as the Bureau may require.'; and (F) by adding at the end the fllwing: `(n) Timing f Certain Disclsures The data required t be disclsed under subsectin (b) shall be submitted t the Bureau r t the apprpriate agency fr any institutin reprting under this title, in accrdance with regulatins prescribed by the Bureau. Institutins shall nt be required t reprt new data under paragraph (5) r (6) f subsectin (b) befre the first January 1 that ccurs after the end f the 9- mnth perid beginning n the date n which regulatins are issued by the Bureau in final frm with respect t such disclsures.'; (4) in sectin 305 (12 U.S.C. 2804) (A) by striking subsectin (b) and inserting the fllwing: `(b) Pwers f Certain Other Agencies `(1) IN GENERAL Subject t subtitle B f the Cnsumer Financial Prtectin Act f 2010, cmpliance with the requirements f this title shall be enfrced 6 Attrney Advertising

7 `(A) under sectin 8 f the Federal Depsit Insurance Act, the apprpriate Federal banking agency, as defined in sectin 3(q) f the Federal Depsit Insurance Act (12 U.S.C. 1813(q)), with respect t `(i) any natinal bank r Federal savings assciatin, and any Federal branch r Federal agency f a freign bank; `(ii) any member bank f the Federal Reserve System (ther than a natinal bank), branch r agency f a freign bank (ther than a Federal branch, Federal agency, and insured State branch f a freign bank), cmmercial lending cmpany wned r cntrlled by a freign bank, and any rganizatin perating under sectin 25 r 25A f the Federal Reserve Act; and `(iii) any bank r State savings assciatin insured by the Federal Depsit Insurance Crpratin (ther than a member f the Federal Reserve System), any mutual savings bank as, defined in sectin 3(f) f the Federal Depsit Insurance Act (12 U.S.C. 1813(f)), any insured State branch f a freign bank, and any ther depsitry institutin nt referred t in this paragraph r subparagraph (B) r (C); `(B) under subtitle E f the Cnsumer Financial Prtectin Act f 2010, by the Bureau, with respect t any persn subject t this subtitle; `(C) under the Federal Credit Unin Act, by the Administratr f the Natinal Credit Unin Administratin with respect t any insured credit unin; and `(D) with respect t ther lending institutins, by the Secretary f Husing and Urban Develpment. `(2) INCORPORATED DEFINITIONS The terms used in paragraph (1) that are nt defined in this title r therwise defined in sectin 3(s) f the Federal Depsit Insurance Act (12 U.S.C. 1813(s)) shall have the same meanings as in sectin 1(b) f the Internatinal Banking Act f 1978 (12 U.S.C. 3101).'; and (B) by adding at the end the fllwing: `(d) Overall Enfrcement Authrity f the Bureau f Cnsumer Financial Prtectin Subject t subtitle B f the Cnsumer Financial Prtectin Act f 2010, enfrcement f the requirements impsed under this title is cmmitted t each f the agencies under subsectin (b). T facilitate research, examinatins, and enfrcement, all data cllected pursuant t sectin 304 shall be available t the entities listed under subsectin (b). The Bureau may exercise its authrities under the Cnsumer Financial Prtectin Act f 2010 t exercise principal authrity t examine and enfrce cmpliance by any persn with the requirements f this title.'; (5) in sectin 306 (12 U.S.C. 2805(b)), by striking subsectin (b) and inserting the fllwing: `(b) Exemptin Authrity The Bureau may, by regulatin, exempt frm the requirements f this title any State-chartered depsitry institutin within any State r subdivisin theref, if the agency determines that, under the law f such State r subdivisin, that institutin is subject t requirements that are substantially similar t thse impsed under this title, and that such law cntains adequate prvisins fr enfrcement. Ntwithstanding any ther prvisin f this subsectin, cmpliance with the requirements impsed under this subsectin shall be enfrced by the Office f the Cmptrller f the Currency under sectin 8 f the Federal Depsit Insurance Act, in the case f natinal banks and Federal savings assciatins, the depsits f which are insured by the Federal Depsit Insurance Crpratin.'; and (6) by striking sectin 307 (12 U.S.C. 2806) and inserting the fllwing: `SEC COMPLIANCE IMPROVEMENT METHODS. `(a) In General `(1) CONSULTATION REQUIRED The Directr f the Bureau f Cnsumer Financial Prtectin, with the assistance f the Secretary, the Directr f the Bureau f the Census, the Bard f Gvernrs f the Federal Reserve System, the Federal Depsit Insurance Crpratin, and such ther persns as the Bureau deems apprpriate, shall develp r assist in the imprvement f, methds f matching addresses and census tracts t facilitate cmpliance by depsitry institutins in as ecnmical a manner as pssible with the requirements f this title. `(2) AUTHORIZATION OF APPROPRIATIONS There are authrized t be apprpriated, such sums as may be necessary t carry ut this subsectin. `(3) CONTRACTING AUTHORITY The Directr f the Bureau f Cnsumer Financial Prtectin is authrized t utilize, cntract with, act thrugh, r cmpensate any persn r agency in rder t carry ut this subsectin. `(b) Recmmendatins t Cngress The Directr f the Bureau f Cnsumer Financial Prtectin shall recmmend t the Cmmittee n Banking, Husing, and Urban Affairs f the Senate and the Cmmittee n Financial Services f the Huse f Representatives, such additinal legislatin as the Directr f the Bureau f Cnsumer Financial Prtectin deems apprpriate t carry ut the purpse f this title.'. Analysis. Sectin 1094 f the Ddd-Frank Act amends the Hme Mrtgage Disclsure Act ( HMDA ) t greatly increase the types f infrmatin that must be reprted by banks and ther financial institutins. Because HMDA infrmatin is made available t the public, this will allw the Bureau, ther federal regulatrs, cnsumer grups, and the plaintiff s bar t access, analyze and ptentially challenge a far wider set f lending behavirs. This is a classic sleeper statute althugh the amendments t HMDA did nt receive particular attentin while the Ddd- Frank Act was being negtiated by the Senate/Huse Cnference Cmmittee, these amendments have the ptential t create cnsiderable mischief. 7 Attrney Advertising

8 Cllectin f Additinal Infrmatin. The number and dllar amunts f mrtgage lans, gruped accrding t measurements f the fllwing, must be reprted: The ttal pints and fees payable at riginatin. The difference between the annual percentage rate ( APR ) f the lan and a benchmark rate r rates fr all lans. The term in mnths f any prepayment penalty r similar fee. Other infrmatin required by the Bureau. In additin, the number and dllar amunts f mrtgage lans and cmpleted applicatins, gruped accrding t measurements f the fllwing, must be reprted: The value f the real prperty cllateral. The duratin f any intrductry interest rate perid. Lan terms that wuld allw the brrwer t pay less than a fully amrtizing payment. Term f the lan in mnths. The channel thrugh which the applicatin was made retail, brker, r certain thers. The unique identifier f the lan riginatr under the S.A.F.E. Mrtgage Licensing Act f 2008 ( SAFE Act ), if the Bureau s requires. A universal lan identifier, if the Bureau s requires. The security prperty s parcel number, if the Bureau s requires. Each brrwer s credit scre, in the frm required by the Bureau. Other infrmatin required by the Bureau. Althugh the language f the statute is unclear, the implementing regulatins will likely require the submissin f all f the freging infrmatin t the gvernment n a lan-by-lan basis. Submissin t Agencies. Currently, HMDA data is submitted t the financial institutin s federal supervisry agency. Under the amended statute, HMDA data will be submitted either t that agency r the Bureau, as the Bureau determines. The Bureau is directed t issue regulatins, in cnsultatin with certain designated federal agencies, t d the fllwing: Prescribe the frmat f disclsure and related husekeeping issues. Fr lans that are sld, t require the cllectin f the same data that is cllected in cnnectin with the lan riginatin prcess. Require disclsure f the classificatin f the lan purchaser. 8 Attrney Advertising

9 Permit the financial institutin t reprt additinal data relating t the lan riginatin r purchase decisin. Prvide fr the mdificatin f itemized infrmatin t prtect the privacy f the mrtgage applicant r brrwer with respect t the public. This will include credit scres and certain ther infrmatin. Timing f Certain Disclsures. Financial institutins will nt be required t begin submitting the new HMDA data until the first January 1 that ccurs after the end f the nine-mnth perid fllwing the issuance f the Bureau s final regulatins. Cmpliance Imprvement Methds. The Bureau, with the assistance f certain ther federal agencies and ther persns selected by the Bureau, is t develp r imprve the methds f matching addresses and census tracts t facilitate cmpliance by financial institutins n an ecnmical basis. Sectin Amendments t the Real Estate Settlement Prcedures Act f 1974 The Real Estate Settlement Prcedures Act f 1974 (12 U.S.C et seq.) is amended (1) in sectin 3 (12 U.S.C. 2602) (A) in paragraph (7), by striking `and' at the end; (B) in paragraph (8), by striking the perid at the end and inserting `; and'; and (C) by adding at the end the fllwing: `(9) the term `Bureau' means the Bureau f Cnsumer Financial Prtectin.'; (2) in sectin 4 (12 U.S.C. 2603) (A) in subsectin (a), by striking the first sentence and inserting the fllwing: `The Bureau shall publish a single, integrated disclsure fr mrtgage lan transactins (including real estate settlement cst statements) which includes the disclsure requirements f this sectin and sectin 5, in cnjunctin with the disclsure requirements f the Truth in Lending Act that, taken tgether, may apply t a transactin that is subject t bth r either prvisins f law. The purpse f such mdel disclsure shall be t facilitate cmpliance with the disclsure requirements f this title and the Truth in Lending Act, and t aid the brrwer r lessee in understanding the transactin by utilizing readily understandable language t simplify the technical nature f the disclsures.'; (B) by striking `Secretary' each place that term appears and inserting `Bureau'; and (C) by striking `frm' each place that term appears and inserting `frms'; (3) in sectin 5 (12 U.S.C. 2604) (A) by striking `Secretary' each place that term appears and inserting `Bureau'; and (B) in subsectin (a), by striking the first sentence and inserting the fllwing: `The Bureau shall prepare and distribute bklets jintly addressing cmpliance with the requirements f the Truth in Lending Act and the prvisins f this title, in rder t help persns brrwing mney t finance the purchase f residential real estate better t understand the nature and csts f real estate settlement services.'; (4) in sectin 6(j)(3) (12 U.S.C. 2605(j)(3)) (A) by striking `Secretary' and inserting `Bureau'; and (B) by striking `, by regulatins that shall take effect nt later than April 20, 1991,'; (5) in sectin 7(b) (12 U.S.C. 2606(b)) by striking `Secretary' and inserting `Bureau'; (6) in sectin 8(c)(5) (12 U.S.C. 2607(c)(5)), by striking `Secretary' and inserting `Bureau'; (7) in sectin 8(d) (12 U.S.C. 2607(d)) (A) in the subsectin heading, by inserting `Bureau and' befre `SECRETARY'; and (B) by striking paragraph (4), and inserting the fllwing: `(4) The Bureau, the Secretary, r the attrney general r the insurance cmmissiner f any State may bring an actin t enjin vilatins f this sectin. Except, t the extent that a persn is subject t the jurisdictin f the Bureau, the Secretary, r the attrney general r the insurance cmmissiner f any State, the Bureau shall have primary authrity t enfrce r administer this sectin, subject t subtitle B f the Cnsumer Financial Prtectin Act f 2010.'; 9 Attrney Advertising

10 (8) in sectin 10(c) (12 U.S.C. 2609(c) and (d)), by striking `Secretary' and inserting `Bureau'; (9) in sectin 16 (12 U.S.C. 2614), by inserting `the Bureau,' befre `the Secretary'; (10) in sectin 18 (12 U.S.C. 2616), by striking `Secretary' each place that term appears and inserting `Bureau'; and (11) in sectin 19 (12 U.S.C. 2617) (A) in the sectin heading by striking `SECRETARY' and inserting `BUREAU'; (B) in subsectin (a), by striking `Secretary' each place that term appears and inserting `Bureau'; and (C) in subsectins (b) and (c), by striking `the Secretary' each place that term appears and inserting `the Bureau'. Analysis. Sectin 1032(f) f the Ddd-Frank Act, discussed abve, requires the Bureau t prpse a mdel disclsure that cmbines the disclsures required by TILA with certain disclsures required by RESPA. Sectin 1098 amends RESPA t require the Bureau t d the same thing. The Bureau als is t revise the existing HUD special infrmatin bklet t jintly address cmpliance with RESPA and TILA. This is interesting because Sectin 1450 f the Ddd-Frank Act, discussed belw, als directs the Bureau t revise the HUD special infrmatin bklet, using cmpletely different language. Presumably, the Bureau will find a way t accmmdate bth sets f directins. Nte that HUD mst recently revised its special infrmatin bklet effective July 15, It is currently entitled Shpping fr Yur Hme Lan HUD s Settlement Cst Bklet. Sectin 1100A. Amendments t the Truth In Lending Act The Truth in Lending Act (15 U.S.C et seq.) is amended (1) in sectin 103 (15 U.S.C. 1602) (A) by redesignating subsectins (b) thrugh (bb) as subsectins (c) thrugh (cc), respectively; and (B) by inserting after subsectin (a) the fllwing: `(b) Bureau The term `Bureau' means the Bureau f Cnsumer Financial Prtectin.'; (2) by striking `Bard' each place that term appears, ther than in sectin 140(d) and sectins 105(i) and 108(a), as amended by this sectin, and inserting `Bureau'; (3) by striking `Federal Trade Cmmissin' each place that term appears, ther than in sectin 108(c) and sectin 129(m), as amended by this Act, and ther than in the cntext f a reference t the Federal Trade Cmmissin Act, and inserting `Bureau'; (4) in sectin 105(a) (15 U.S.C. 1604(a)), in the secnd sentence (A) by striking `Except in the case f a mrtgage referred t in sectin 103(aa), these regulatins may cntain such' and inserting `Except with respect t the prvisins f sectin 129 that apply t a mrtgage referred t in sectin 103(aa), such regulatins may cntain such additinal requirements,'; and (B) by inserting `all r' after `exceptins fr'; (5) in sectin 105(b) (15 U.S.C. 1604(b)), by striking the first sentence and inserting the fllwing: `The Bureau shall publish a single, integrated disclsure fr mrtgage lan transactins (including real estate settlement cst statements) which includes the disclsure requirements f this title in cnjunctin with the disclsure requirements f the Real Estate Settlement Prcedures Act f 1974 that, taken tgether, may apply t a transactin that is subject t bth r either prvisins f law. The purpse f such mdel disclsure shall be t facilitate cmpliance with the disclsure requirements f this title and the Real Estate Settlement Prcedures Act f 1974, and t aid the brrwer r lessee in understanding the transactin by utilizing readily understandable language t simplify the technical nature f the disclsures.'; (6) in sectin 105(f)(1) (15 U.S.C. 1604(f)(1)), by inserting `all r' after `frm all r part f this title'; (7) in sectin 105 (15 U.S.C. 1604), by adding at the end the fllwing: `(i) AUTHORITY OF THE BOARD TO PRESCRIBE RULES Ntwithstanding subsectin (a), the Bard shall have authrity t prescribe rules under this title with respect t a persn described in sectin 1029(a) f the Cnsumer Financial Prtectin Act f Regulatins prescribed under this subsectin may cntain such classificatins, differentiatins, r ther prvisins, as in the judgment f the Bard are necessary r prper t effectuate the purpses f this title, t prevent circumventin r evasin theref, r t facilitate cmpliance therewith.'; 10 Attrney Advertising

11 (8) in sectin 108 (15 U.S.C. 1604), by adding at the end the fllwing: (A) by striking subsectin (a) and inserting the fllwing: `(a) Enfrcing Agencies Subject t subtitle B f the Cnsumer Financial Prtectin Act f 2010, cmpliance with the requirements impsed under this title shall be enfrced under `(1) sectin 8 f the Federal Depsit Insurance Act, by the apprpriate Federal banking agency, as defined in sectin 3(q) f the Federal Depsit Insurance Act (12 U.S.C. 1813(q)), with respect t `(A) natinal banks, Federal savings assciatins, and Federal branches and Federal agencies f freign banks; `(B) member banks f the Federal Reserve System (ther than natinal banks), branches and agencies f freign banks (ther than Federal branches, Federal agencies, and insured State branches f freign banks), cmmercial lending cmpanies wned r cntrlled by freign banks, and rganizatins perating under sectin 25 r 25A f the Federal Reserve Act; and `(C) banks and State savings assciatins insured by the Federal Depsit Insurance Crpratin (ther than members f the Federal Reserve System), and insured State branches f freign banks; `(2) the Federal Credit Unin Act, by the Directr f the Natinal Credit Unin Administratin, with respect t any Federal credit unin; `(3) the Federal Aviatin Act f 1958, by the Secretary f Transprtatin, with respect t any air carrier r freign air carrier subject t that Act; `(4) the Packers and Stckyards Act, 1921 (except as prvided in sectin 406 f that Act), by the Secretary f Agriculture, with respect t any activities subject t that Act; `(5) the Farm Credit Act f 1971, by the Farm Credit Administratin with respect t any Federal land bank, Federal land bank assciatin, Federal intermediate credit bank, r prductin credit assciatin; and `(6) subtitle E f the Cnsumer Financial Prtectin Act f 2010, by the Bureau, with respect t any persn subject t this title.'; and (B) by striking subsectin (c) and inserting the fllwing: `(c) Overall Enfrcement Authrity f the Federal Trade Cmmissin Except t the extent that enfrcement f the requirements impsed under this title is specifically cmmitted t sme ther Gvernment agency under any f paragraphs (1) thrugh (5) f subsectin (a), and subject t subtitle B f the Cnsumer Financial Prtectin Act f 2010, the Federal Trade Cmmissin shall be authrized t enfrce such requirements. Fr the purpse f the exercise by the Federal Trade Cmmissin f its functins and pwers under the Federal Trade Cmmissin Act, a vilatin f any requirement impsed under this title shall be deemed a vilatin f a requirement impsed under that Act. All f the functins and pwers f the Federal Trade Cmmissin under the Federal Trade Cmmissin Act are available t the Federal Trade Cmmissin t enfrce cmpliance by any persn with the requirements under this title, irrespective f whether that persn is engaged in cmmerce r meets any ther jurisdictinal tests under the Federal Trade Cmmissin Act.'; and (9) in sectin 129 (15 U.S.C. 1639), by striking subsectin (m) and inserting the fllwing: `(m) Civil Penalties in Federal Trade Cmmissin Enfrcement Actins Fr purpses f enfrcement by the Federal Trade Cmmissin, any vilatin f a regulatin issued by the Bureau pursuant t subsectin (l)(2) shall be treated as a vilatin f a rule prmulgated under sectin 18 f the Federal Trade Cmmissin Act (15 U.S.C. 57a) regarding unfair r deceptive acts r practices.'; and (10) in chapter 5 (15 U.S.C et seq.) (A) by striking `the Bard' each place that term appears and inserting `the Bureau'; and (B) by striking `The Bard' each place that term appears and inserting `The Bureau'. Analysis. Sectin 1032(f) f the Ddd-Frank Act, discussed abve, requires the Bureau t prpse a mdel disclsure that cmbines the disclsures required by TILA with certain disclsures required by RESPA. Sectin 1100A amends TILA t require the Bureau t d the same thing. Sectin Shrt Title; Designatin As Enumerated Cnsumer Law (a) Shrt Title This title may be cited as the `Mrtgage Refrm and Anti-Predatry Lending Act'. (b) Designatin as Enumerated Cnsumer Law Under the Purview f the Bureau f Cnsumer Financial Prtectin Subtitles A, B, C, and E and sectins 1471, 1472, 1475, and 1476, and the amendments made by such subtitles and sectins, shall be enumerated cnsumer laws, as defined in sectin 1002, and cme under the purview f the Bureau f Cnsumer Financial Prtectin fr purpses f title X, including the transfer f functins and persnnel under subtitle F f title X and the savings prvisins f such subtitle. (c) Regulatins; Effective Date (1) REGULATIONS The regulatins required t be prescribed under this title r the amendments made by this title shall (A) be prescribed in final frm befre the end f the 18-mnth perid beginning n the designated transfer date; and (B) take effect nt later than 12 mnths after the date f issuance f the regulatins in final frm. 11 Attrney Advertising

12 (2) EFFECTIVE DATE ESTABLISHED BY RULE Except as prvided in paragraph (3), a sectin, r prvisin theref, f this title shall take effect n the date n which the final regulatins implementing such sectin, r prvisin, take effect. (3) EFFECTIVE DATE A sectin f this title fr which regulatins have nt been issued n the date that is 18 mnths after the designated transfer date shall take effect n such date. Analysis. Sectin 1400 is a husekeeping sectin that des the fllwing: Designatin f Enumerated Cnsumer Law Under the Purview f the Bureau. Subtitles A (Residential Mrtgage Lan Originatin Standards), B (Minimum Standards fr Mrtgages), C (High-Cst Mrtgages), and E (Mrtgage Servicing), and Sectins 1471 (prperty appraisal requirements), 1472 (appraiser independence requirements), 1475 (RESPA prvisins relating t appraisal fees), and 1476 (Gvernment Accuntability Office ( GAO ) study regarding effectiveness f varius appraisal methds) are designated as enumerated cnsumer laws that cme under the jurisdictin f the new Bureau. This means that the Bureau will issue the implementing regulatins fr these prvisins and will have enfrcement authrity with respect t these prvisins fr depsitry institutins with mre than $10 billin in assets, mrtgage-related businesses, and certain larger participants in financial services. Regulatins. Regulatins t implement Title XIV must be issued in final frm within 18 mnths fllwing the designated transfer date. The regulatins must take effect within 12 mnths after they are issued. Fr a discussin f the designated transfer date, see Sectin 1032(f), abve. Regulatins; Effective Date. The prvisins f Title XIV will take effect n the dates stated in the final implementing regulatins. Hwever, if final regulatins have nt been issued within 18 mnths fllwing the designated transfer date, the crrespnding statutry prvisins will becme effective at that time. Given the lack f details in many f the statutry prvisins, this wuld result in havc. As a result, the Bureau and ther federal banking agencies shuld be well mtivated t issue the implementing regulatins prir t the 18-mnth deadline. Subtitle A Residential Mrtgage Lan Originatin Standards Sectin Definitins Sectin 103 f the Truth in Lending Act (15 U.S.C. 1602) is amended by adding at the end the fllwing new subsectin: `(cc) Definitins Relating t Mrtgage Originatin and Residential Mrtgage Lans `(1) COMMISSION Unless therwise specified, the term `Cmmissin' means the Federal Trade Cmmissin. `(2) MORTGAGE ORIGINATOR The term `mrtgage riginatr' `(A) means any persn wh, fr direct r indirect cmpensatin r gain, r in the expectatin f direct r indirect cmpensatin r gain `(i) takes a residential mrtgage lan applicatin; `(ii) assists a cnsumer in btaining r applying t btain a residential mrtgage lan; r `(iii) ffers r negtiates terms f a residential mrtgage lan; `(B) includes any persn wh represents t the public, thrugh advertising r ther means f cmmunicating r prviding infrmatin (including the use f business cards, statinery, brchures, signs, rate lists, r ther prmtinal items), that such persn can r will prvide any f the services r perfrm any f the activities described in subparagraph (A); `(C) des nt include any persn wh is (i) nt therwise described in subparagraph (A) r (B) and wh perfrms purely administrative r clerical tasks n behalf f a persn wh is described in any such subparagraph, r (ii) an emplyee f a retailer f manufactured hmes wh is nt described in clause (i) r (iii) f subparagraph (A) and wh des nt advise a cnsumer n lan terms (including rates, fees, and ther csts); `(D) des nt include a persn r entity that nly perfrms real estate brkerage activities and is licensed r registered in accrdance with applicable State law, unless such persn r entity is cmpensated by a lender, a mrtgage brker, r ther mrtgage riginatr r by any agent f such lender, mrtgage brker, r ther mrtgage riginatr; 12 Attrney Advertising

13 `(E) des nt include, with respect t a residential mrtgage lan, a persn, estate, r trust that prvides mrtgage financing fr the sale f 3 prperties in any 12-mnth perid t purchasers f such prperties, each f which is wned by such persn, estate, r trust and serves as security fr the lan, prvided that such lan `(i) is nt made by a persn, estate, r trust that has cnstructed, r acted as a cntractr fr the cnstructin f, a residence n the prperty in the rdinary curse f business f such persn, estate, r trust; `(ii) is fully amrtizing; `(iii) is with respect t a sale fr which the seller determines in gd faith and dcuments that the buyer has a reasnable ability t repay the lan; `(iv) has a fixed rate r an adjustable rate that is adjustable after 5 r mre years, subject t reasnable annual and lifetime limitatins n interest rate increases; and `(v) meets any ther criteria the Bard may prescribe; `(F) des nt include the creditr (except the creditr in a table-funded transactin) under paragraph (1), (2), r (4) f sectin 129B(c); and `(G) des nt include a servicer r servicer emplyees, agents and cntractrs, including but nt limited t thse wh ffer r negtiate terms f a residential mrtgage lan fr purpses f renegtiating, mdifying, replacing and subrdinating principal f existing mrtgages where brrwers are behind in their payments, in default r have a reasnable likelihd f being in default r falling behind. `(3) NATIONWIDE MORTGAGE LICENSING SYSTEM AND REGISTRY The term `Natinwide Mrtgage Licensing System and Registry' has the same meaning as in the Secure and Fair Enfrcement fr Mrtgage Licensing Act f `(4) OTHER DEFINITIONS RELATING TO MORTGAGE ORIGINATOR Fr purpses f this subsectin, a persn `assists a cnsumer in btaining r applying t btain a residential mrtgage lan' by, amng ther things, advising n residential mrtgage lan terms (including rates, fees, and ther csts), preparing residential mrtgage lan packages, r cllecting infrmatin n behalf f the cnsumer with regard t a residential mrtgage lan. `(5) RESIDENTIAL MORTGAGE LOAN The term `residential mrtgage lan' means any cnsumer credit transactin that is secured by a mrtgage, deed f trust, r ther equivalent cnsensual security interest n a dwelling r n residential real prperty that includes a dwelling, ther than a cnsumer credit transactin under an pen end credit plan r, fr purpses f sectins 129B and 129C and sectin 128(a) (16), (17), (18), and (19), and sectins 128(f) and 130(k), and any regulatins prmulgated thereunder, an extensin f credit relating t a plan described in sectin 101(53D) f title 11, United States Cde. `(6) SECRETARY The term `Secretary', when used in cnnectin with any transactin r persn invlved with a residential mrtgage lan, means the Secretary f Husing and Urban Develpment. `(7) SERVICER The term `servicer' has the same meaning as in sectin 6(i)(2) f the Real Estate Settlement Prcedures Act f 1974 (12 U.S.C. 2605(i)(2)).'. Analysis. Sectin 1401 f the Ddd-Frank Act adds new definitins t TILA relating t residential mrtgage lan riginatins. Tw f the mre critical definitins are discussed belw. Mrtgage Originatr. Basic Definitin. A mrtgage riginatr is any persn wh, fr (r in the expectatin f) direct r indirect cmpensatin r gain: (i) takes a residential mrtgage lan applicatin; (ii) assists a cnsumer in btaining r applying t btain a residential mrtgage lan (e.g., advising n lan terms, preparing lan packages, r cllecting infrmatin n behalf f the cnsumer with regard t a residential mrtgage lan); (iii) ffers r negtiates terms f a residential mrtgage lan; r (iv) represents t the public that he/she can r will perfrm any f such services. Relatin t the SAFE Act. The definitin f mrtgage riginatr which includes peple such as mrtgage brkers and mrtgage lan fficers at banks and mrtgage banking cmpanies expands upn the definitin f a lan riginatr in the SAFE Act. The SAFE Act definitin is limited t persns wh perfrm the services described in (i) and (iii) abve. Mst f the state laws that implement the SAFE Act define the term t include persns wh perfrm the services described in (i) r (iii) abve. In any event, a mrtgage riginatr under Title XIV, Subtitle A f the Ddd-Frank Act will cver mre individuals than are cvered by the SAFE Act. This means that there will be sme individuals wh will be subject t the new TILA restrictins relating t mrtgage riginatrs (discussed belw) but wh will nt be required t be licensed r registered in accrdance with the SAFE Act. 13 Attrney Advertising

14 Basic Exclusins. The definitin f mrtgage riginatr excludes (i) a persn wh perfrms purely administrative r clerical tasks fr a mrtgage riginatr, r an emplyee f a retailer f manufactured hmes, s lng as he/she des nt advise a cnsumer n lan terms and (ii) a persn wh perfrms nly real estate brkerage activities and is licensed/registered under state law t d s, s lng as he/she is nt cmpensated by a lender, mrtgage brker, mrtgage riginatr, r their agents. These exclusins are similar t thse cntained in the SAFE Act. Exclusin f Creditrs. The term mrtgage riginatr als generally excludes the creditr itself, ther than a creditr in a table-funded transactin. This means that a table-funding lender will be treated as a mrtgage riginatr fr purpses f the new TILA restrictins n mrtgage riginatrs, even thugh that lender will be treated as the creditr that is respnsible fr prviding TILA disclsures. The same lender will be treated as a mrtgage brker fr purpses f RESPA and Regulatin X and will be treated as a creditr fr purpses f the federal Equal Credit Opprtunity Act ( ECOA ) and Regulatin B. Exclusin f Seller-Financings. There is als an exclusin frm the definitin f mrtgage riginatr fr seller-financings f three prperties in any 12-mnth perid. Presumably, this will be interpreted t mean up t three prperties in any 12-mnth perid. This exclusin is limited t financing prvided by a persn, estate r trust that is nt the builder r cntractr fr the prperty. T qualify fr the exclusin, the lan must be fully amrtizing, the lender must determine in gd faith that the buyer has a reasnable ability t repay the lan, which determinatin must be dcumented, the lan must carry a fixed rate r an adjustable rate that is nt adjustable fr at least five years (and must be subject t reasnable annual and lifetime rate caps), and meet any ther criteria prescribed by the Bard. There is n equivalent exclusin frm the definitin f a lan riginatr in the SAFE Act, althugh many f the implementing state laws d prvide a less rigrus exclusin fr seller-financed mrtgage riginatrs. That being the case, it is pssible that sme individuals wh effect credit sales f their wn hmes will nt be lan riginatrs under state laws implementing the SAFE Act, but will be mrtgage riginatrs fr purpses f the new TILA prvisins. Many f the details n this exclusin must await the issuance f regulatins by the Bard. Fr example, the Bard may impse the same ability t repay standards here that it will impse under new 129C f TILA, but it is equally pssible that a lesser standard will be impsed. Exclusin f Lan Mdificatins. Finally, there is an exclusin fr lan servicers and their emplyees and agents. This exclusin is directed t thse wh ffer r negtiate terms in cnnectin with renegtiating, mdifying, replacing and subrdinating principal f existing lans fr brrwers wh are delinquent, in default, r have a reasnable likelihd f defaulting. Fr example, the exclusin shuld cver lan servicing persnnel wh negtiate lan mdificatins under the U.S. Treasury Department s Hme Affrdable Mdificatin Prgram ( HAMP ). Many f the state laws implementing the SAFE Act als cntain exclusins fr thse wh renegtiate the terms f existing lans. Residential Mrtgage Lan Basic Definitin. A residential mrtgage lan is a cnsumer credit transactin that is secured by a mrtgage, deed f trust r equivalent cnsensual security interest n a dwelling r n residential real prperty that includes a dwelling. Under Regulatin Z, a dwelling means a residential structure that cntains 1-4 units, whether r nt the structure is attached t real prperty. Examples include cndminium units, cperative units, mbile hmes, and trailers r bats used as residences. Lans secured by any f these are residential mrtgage lans that are subject t the new TILA rules. Nte that the residence is cvered whether r nt it is the brrwer s principal residence. Exclusin f Open-End Plans. An pen-end credit plan is excluded frm the definitin f residential mrtgage lan, which means that hme equity lines f credit and ther pen-end credit plans are nt subject t any f the new TILA prvisins gverning residential mrtgage lans. Hwever, pen-end 14 Attrney Advertising

15 credit plans are subject t ther prvisins f Title XIV. Exclusin f Certain Timeshares. Lans t finance certain timeshares are excluded frm cverage by sme f the mst imprtant f the new TILA prvisins, including thse relating t lan riginatins (TILA 129B), minimum standards (TILA 129C), new disclsures (TILA 128(a)(16)-(19)), peridic statements (TILA 128(f)), and defense t freclsure (TILA 130(k)). Extensins f credit secured by such timeshares are als excluded frm the definitin f lan riginatr under the SAFE Act. Sectin Residential Mrtgage Lan Originatin (a) In General Chapter 2 f the Truth in Lending Act (15 U.S.C et seq.) is amended (1) by redesignating the 2nd f the 2 sectins designated as sectin 129 (15 U.S.C. 1639a) (relating t duty f servicers f residential mrtgages) as sectin 129A; and (2) by inserting after sectin 129A (as s redesignated) the fllwing new sectin: `Sec. 129B. Residential mrtgage lan riginatin `(a) Finding and Purpse `(1) FINDING The Cngress finds that ecnmic stabilizatin wuld be enhanced by the prtectin, limitatin, and regulatin f the terms f residential mrtgage credit and the practices related t such credit, while ensuring that respnsible, affrdable mrtgage credit remains available t cnsumers. `(2) PURPOSE It is the purpse f this sectin and sectin 129C t assure that cnsumers are ffered and receive residential mrtgage lans n terms that reasnably reflect their ability t repay the lans and that are understandable and nt unfair, deceptive r abusive. `(b) Duty f Care `(1) STANDARD Subject t regulatins prescribed under this subsectin, each mrtgage riginatr shall, in additin t the duties impsed by therwise applicable prvisins f State r Federal law `(A) be qualified and, when required, registered and licensed as a mrtgage riginatr in accrdance with applicable State r Federal law, including the Secure and Fair Enfrcement fr Mrtgage Licensing Act f 2008; and `(B) include n all lan dcuments any unique identifier f the mrtgage riginatr prvided by the Natinwide Mrtgage Licensing System and Registry. `(2) COMPLIANCE PROCEDURES REQUIRED The Bard shall prescribe regulatins requiring depsitry institutins t establish and maintain prcedures reasnably designed t assure and mnitr the cmpliance f such depsitry institutins, the subsidiaries f such institutins, and the emplyees f such institutins r subsidiaries with the requirements f this sectin and the registratin prcedures established under sectin 1507 f the Secure and Fair Enfrcement fr Mrtgage Licensing Act f 2008.'. (b) Clerical Amendment The table f sectins fr chapter 2 f the Truth in Lending Act is amended by inserting after the item relating t sectin 129 the fllwing new items: `129A. Fiduciary duty f servicers f pled residential mrtgages. `129B. Residential mrtgage lan riginatin.'. Analysis. Sectin 1402 f the Ddd-Frank Act adds a new 129B t TILA, which is the first f several sectins that regulate the substantive terms f residential mrtgage lan transactins. Histrically, TILA was a disclsure statute and did nt regulate the substantive terms f lans. While this cncept has erded ver the years, the Ddd-Frank Act will bring abut a sea change in hw TILA regulates the residential mrtgage lan business. Finding and Purpse. This reflects the cnventinal wisdm that the cllapse f the residential mrtgage market triggered the mst severe recessin since the Great Depressin f the 1930s. Cngress has respnded by impsing ability t repay standards n mrtgage lenders, prhibiting mrtgage lans that are unfair, deceptive r abusive, and enhancing disclsure requirements. Duty f Care. A new duty f care is impsed n all mrtgage riginatrs (see discussin f mrtgage riginatr definitin in Sectin 1401, abve). This duty is in additin t any duty impsed by ther applicable federal and state laws. A mrtgage riginatr is required t be licensed r registered, as applicable, when therwise required t d s under the state and federal laws that implement the SAFE Act. That prvisin merely reiterates existing law. A mrtgage lan riginatr is als required t be qualified, but an explanatin f that 15 Attrney Advertising

16 term will need t await implementing regulatins. Presumably, this means that the lan riginatr must meet sme basic standards f cmpetence and integrity. Fr depsitry institutins, it may be pssible t demnstrate that a reasnable belief that a mrtgage riginatr is qualified by undertaking apprpriate due diligence n the mrtgage riginatr (r by engaging a third party t d s n behalf f the institutin). Mrtgage riginatrs are required t include n all lan dcuments any unique identifier f the mrtgage riginatr that is prvided by the Natinwide Mrtgage Licensing System and Registry ( Natinwide Registry ). Since the Natinwide Registry will nly issue unique identifiers t thse individuals wh are lan riginatrs under the SAFE Act, nly thse individuals shuld be subject t this requirement. There is n explanatin f which lan dcuments are subject t this requirement. In thery, this culd mean the applicatin, mrtgage, nte, lan disclsures, and the like, which culd include dzens f dcuments. A mre reasnable apprach wuld be t limit the requirement t the nte and mrtgage. Presumably, this issue will be reslved in the final regulatins, and cmpliance undubtedly will present peratinal challenges. Cmpliance Prcedures Required. All depsitry institutins will be subject t new Bard regulatins requiring them t establish and maintain prcedures that are reasnably designed t assure and mnitr cmpliance by thse institutins, their subsidiaries, and their respective emplyees with the duty f care requirements and the SAFE Act s licensing/registratin prcedures. In practice, these requirements are mst likely declarative f an bligatin t which depsitry institutins are already subject. Sectin Prhibitin n Steering Incentives Sectin 129B f the Truth in Lending Act (as added by sectin 1402(a)) is amended by inserting after subsectin (b) the fllwing new subsectin: `(c) Prhibitin n Steering Incentives `(1) IN GENERAL Fr any residential mrtgage lan, n mrtgage riginatr shall receive frm any persn and n persn shall pay t a mrtgage riginatr, directly r indirectly, cmpensatin that varies based n the terms f the lan (ther than the amunt f the principal). `(2) RESTRUCTURING OF FINANCING ORIGINATION FEE `(A) IN GENERAL Fr any mrtgage lan, a mrtgage riginatr may nt receive frm any persn ther than the cnsumer and n persn, ther than the cnsumer, wh knws r has reasn t knw that a cnsumer has directly cmpensated r will directly cmpensate a mrtgage riginatr may pay a mrtgage riginatr any riginatin fee r charge except bna fide third party charges nt retained by the creditr, mrtgage riginatr, r an affiliate f the creditr r mrtgage riginatr. `(B) EXCEPTION Ntwithstanding subparagraph (A), a mrtgage riginatr may receive frm a persn ther than the cnsumer an riginatin fee r charge, and a persn ther than the cnsumer may pay a mrtgage riginatr an riginatin fee r charge, if `(i) the mrtgage riginatr des nt receive any cmpensatin directly frm the cnsumer; and `(ii) the cnsumer des nt make an upfrnt payment f discunt pints, riginatin pints, r fees, hwever denminated (ther than bna fide third party charges nt retained by the mrtgage riginatr, creditr, r an affiliate f the creditr r riginatr), except that the Bard may, by rule, waive r prvide exemptins t this clause if the Bard determines that such waiver r exemptin is in the interest f cnsumers and in the public interest. `(3) REGULATIONS The Bard shall prescribe regulatins t prhibit `(A) mrtgage riginatrs frm steering any cnsumer t a residential mrtgage lan that `(i) the cnsumer lacks a reasnable ability t repay (in accrdance with regulatins prescribed under sectin 129C(a)); r `(ii) has predatry characteristics r effects (such as equity stripping, excessive fees, r abusive terms); `(B) mrtgage riginatrs frm steering any cnsumer frm a residential mrtgage lan fr which the cnsumer is qualified that is a qualified mrtgage (as defined in sectin 129C(b)(2)) t a residential mrtgage lan that is nt a qualified mrtgage; `(C) abusive r unfair lending practices that prmte disparities amng cnsumers f equal credit wrthiness but f different race, ethnicity, gender, r age; and `(D) mrtgage riginatrs frm `(i) mischaracterizing the credit histry f a cnsumer r the residential mrtgage lans available t a cnsumer; 16 Attrney Advertising

17 `(ii) mischaracterizing r subrning the mischaracterizatin f the appraised value f the prperty securing the extensin f credit; r `(iii) if unable t suggest, ffer, r recmmend t a cnsumer a lan that is nt mre expensive than a lan fr which the cnsumer qualifies, discuraging a cnsumer frm seeking a residential mrtgage lan secured by a cnsumer's principal dwelling frm anther mrtgage riginatr. `(4) RULES OF CONSTRUCTION N prvisin f this subsectin shall be cnstrued as `(A) permitting any yield spread premium r ther similar cmpensatin that wuld, fr any residential mrtgage lan, permit the ttal amunt f direct and indirect cmpensatin frm all surces permitted t a mrtgage riginatr t vary based n the terms f the lan (ther than the amunt f the principal); `(B) limiting r affecting the amunt f cmpensatin received by a creditr upn the sale f a cnsummated lan t a subsequent purchaser; `(C) restricting a cnsumer's ability t finance, at the ptin f the cnsumer, including thrugh principal r rate, any riginatin fees r csts permitted under this subsectin, r the mrtgage riginatr's right t receive such fees r csts (including cmpensatin) frm any persn, subject t paragraph (2)(B), s lng as such fees r csts d nt vary based n the terms f the lan (ther than the amunt f the principal) r the cnsumer's decisin abut whether t finance such fees r csts; r `(D) prhibiting incentive payments t a mrtgage riginatr based n the number f residential mrtgage lans riginated within a specified perid f time.'. Analysis. Sectin 1403 f the Ddd-Frank Act, which adds a new 129B(c) t TILA, is designed t prhibit the payment f yield spread premiums ( YSPs ) and ther steering incentives. Prhibitin n Steering Incentives. In General. Mrtgage riginatrs may nt receive, and n persn may pay, any cmpensatin that varies based n the terms f a residential mrtgage lan, ther than the principal amunt f the lan. This is designed t prhibit YSPs and ther payments that are tied t the interest rate, pints, r ther fees relating t the lan. Cnsumer grups have lng been ppsed t YSPs, and YSPs have been the surce f RESPA, TILA and ther types f litigatin. After many years f fighting ver this issue, the cnsumer grups have wn. This is nt a surprise given that the Bard itself prpsed an amendment t Regulatin Z n August 26, 2009 that wuld ban YSPs. Scpe f Prhibitin. Given the brad definitin f mrtgage riginatr (see Sectin 1401, abve), the prhibitin n steering incentives applies, amng thers, t all mrtgage brkers and mrtgage lan fficers at banks and mrtgage banking cmpanies. The prhibitin is limited t clsed-end residential mrtgage lans. Impact. The prhibitin n the payment f YSPs will bring abut substantial changes. Histrically, YSPs have represented a majr cmpnent f cmpensatin fr mrtgage brkers and lan fficers. A new, cmpliant cmpensatin structure will be required. Restructuring f Financing Originatin Fee. In General. If a mrtgage riginatr is receiving any cmpensatin directly frm the cnsumer/brrwer, he/she may nt als receive any cmpensatin frm the lender r any ther persn. Similarly, neither the lender nr any ther persn may pay any cmpensatin t the mrtgage riginatr if it knws r has reasn t knw that the mrtgage riginatr is receiving fees directly frm the cnsumer. Hwever, it is permissible t pay bna fide third party charges, s lng as they are nt retained by the creditr, mrtgage riginatr, r any f their respective affiliates. Exceptin. There is an exceptin t the new rule, which allws the mrtgage riginatr t receive cmpensatin frm the creditr r ther persn if (i) the mrtgage riginatr is nt receiving any cmpensatin directly frm the cnsumer, and (ii) the cnsumer des nt make any upfrnt payment f discunt pints, riginatin pints, r fees (althugh bna fide third party charges are permissible s 17 Attrney Advertising

18 lng as they are nt retained by the creditr, mrtgage riginatr, r any f their respective affiliates). The Bard has the authrity t waive r prvide exemptins frm item (ii). Under prir practice, mrtgage brkers custmarily received fees frm bth the cnsumer and the lender. Under the new rule, the mrtgage riginatr must be paid by the cnsumer, r the creditr, but nt bth. If the creditr pays, the cnsumer cannt be required t pay riginatin r similar fees t the creditr at the inceptin f the transactin. Given the strict limitatins n pints and fees that may be impsed if a lan is t be treated as a qualified mrtgage (see Sectin 1412, belw), it may well be the case that the industry will migrate tward a practice f having mrtgage riginatrs (r, at least, thse wh are mrtgage brkers) being cmpensated slely by the cnsumers. Regulatins. The Bard is directed t issue regulatins that prhibit: (i) mrtgage riginatrs frm steering a cnsumer t a lan that he/she des nt have a reasnable ability t repay (see Sectin 1411, belw) r that has predatry characteristics (e.g., equity stripping, excessive fees, r abusive terms); (ii) mrtgage riginatrs frm steering a cnsumer frm a lan he/she is qualified fr and that is a qualified mrtgage t a lan that is nt a qualified mrtgage; (iii) abusive/unfair lending practices that prmte discriminatin n the basis f race, ethnicity, gender r age; (iv) mrtgage riginatrs frm mischaracterizing a cnsumer s credit histry, the lans available t the cnsumer, r the appraised value f the prperty (r encuraging a misappraised value); r (v) mrtgage riginatrs frm discuraging a cnsumer frm seeking a lan frm anther mrtgage riginatr if the first mrtgage riginatr is unable t suggest, ffer, r recmmend a lan that is nt mre expensive than a lan fr which the cnsumer qualifies. This prvisin is designed t prtect against the mst egregius practices that the mrtgage brkerage industry has been accused f during the years leading up t the recent residential mrtgage crises. Creditrs will need t adpt apprpriate plicies and prcedures t implement these prvisins, and t mnitr against vilatins. The Bard s prpsal frm August 2009 t prhibit certain steering practices indicates that the agency is well capable f prmulgating effective regulatins in this area. The regulatins are likely t paraphrase the statutry prvisins and then prvide examples f prhibited cnduct. Rules f Cnstructin. There are a few clarificatins that will prvide sme relief t mrtgage lenders. First, 129B(c) des nt limit r affect the amunt f cmpensatin that a creditr can receive upn the sale f a cnsummated lan. This is smewhat analgus t the bna fide secndary market exceptin t RESPA (see 24 C.F.R (b)(7)). The clarificatin shuld give a bna fide lan crrespndent sme flexibility when it sets its wn pricing, althugh it will remain subject t the 129B(c) restrictins relating t the cmpensatin f its wn mrtgage riginatrs. It is highly unlikely that this clarificatin will apply t the riginal creditrs in table-funding transactins. Secnd, at the ptin f the cnsumer, creditrs may capitalize int the lan any riginatin fees r csts that are therwise permitted. This includes the creditr s ability t pay the fees s capitalized t the mrtgage riginatr, subject t the prhibitins discussed abve, prvided that the fees and csts d nt vary based n the lan terms (ther than the principal amunt f the lan). Alternatively, the creditr can cver thse fees r csts by increasing the interest rate f the lan. Hwever, capitalizing riginatin fees and csts may be prhibited by sme state laws, particularly state laws gverning high rate r high fee lans. In additin, there are strict limitatins n pints and fees that may be impsed if a lan is t be treated as a qualified mrtgage. Further, increasing the interest rate culd mve sme lans int the high-cst mrtgage r higher-priced mrtgage lan categries, which wuld impse ther restrictins n the lans. Third, the prhibitin n paying steering incentive payments t a mrtgage riginatr des nt prhibit paying a mrtgage riginatr extra fees based n the number f mrtgage lans riginated within a particular perid f time. At first glance, it wuld appear that, ging frward, this clarificatin is likely t serve as a significant element in the design f cmpensatin prgrams fr mrtgage brkers and lan 18 Attrney Advertising

19 fficers. Hwever, nte that vlume-based cmpensatin prgrams fr mrtgage brkers may raise significant issues under Sectin 8 f RESPA. See, e.g., HUD Statement f Plicy , 64 Fed. Reg. 10,080 (Mar. 1, 1999). In this regard, Sectin 1415 makes clear that the fact that such cmpensatin is permissible under TILA des nt mean that it is permissible under Sectin 8 f RESPA. Nte that a similar RESPA Sectin 8 cncern wuld nt arise with respect t the payment f cmpensatin based n the number f lans riginated where the mrtgage riginatr is a bna fide emplyee f the creditr, s lng as the cmpensatin falls within RESPA s emplyer-emplyee exemptin. See 24 C.F.R (g)(1)(vii). Sectin Liability Sectin 129B f the Truth in Lending Act is amended by inserting after subsectin (c) (as added by sectin 1403) the fllwing new subsectin: `(d) Liability fr Vilatins `(1) IN GENERAL Fr purpses f prviding a cause f actin fr any failure by a mrtgage riginatr, ther than a creditr, t cmply with any requirement impsed under this sectin and any regulatin prescribed under this sectin, sectin 130 shall be applied with respect t any such failure by substituting `mrtgage riginatr' fr `creditr' each place such term appears in each such subsectin. `(2) MAXIMUM The maximum amunt f any liability f a mrtgage riginatr under paragraph (1) t a cnsumer fr any vilatin f this sectin shall nt exceed the greater f actual damages r an amunt equal t 3 times the ttal amunt f direct and indirect cmpensatin r gain accruing t the mrtgage riginatr in cnnectin with the residential mrtgage lan invlved in the vilatin, plus the csts t the cnsumer f the actin, including a reasnable attrney's fee.'. Analysis. Sectin 1404 f the Ddd-Frank Act adds a new 129B(d) t TILA, t extend the civil liability prvisins f TILA t mrtgage riginatrs. In General. New 129B(d) f TILA applies the civil liability prvisins f TILA t mrtgage riginatrs by substituting the term mrtgage riginatr fr creditr wherever the latter term appears in 130 f TILA. As amended by the Ddd-Frank Act, 130 f TILA impses civil liability fr actual damages, statutry damages equal t twice the finance charge (with a minimum f $400 and a maximum f $4,000 in an individual actin fr a credit transactin nt under an pen-end credit plan that is secured by real prperty r a dwelling, and a maximum f the lesser f $1,000,000 r 1% f the creditr s net wrth in a class actin), csts and reasnable attrneys fees. Fr a vilatin f the high-cst lan, prhibitin n steering incentives, r ability t repay rules, there is liability equal t all finance charges and fees paid by the cnsumer, unless the creditr demnstrates that the failure t cmply was nt material. Maximum. The maximum liability under this prvisin is the greater f actual damages r an amunt equal t three times the ttal amunt f direct and indirect cmpensatin r gain accruing t the mrtgage riginatr in the lan transactin in questin, plus csts and reasnable attrneys fees. The technique f substituting the term mrtgage riginatr fr creditr has facilitated the drafting f this sectin at the expense f clarity. Several prvisins f 130 fcus n the prviding f Regulatin Z disclsures by creditrs, a cncept that generally shuld be inapplicable t mrtgage riginatrs. In additin, mst curts have held that actual damages under 130 are limited t thse incurred by the cnsumer slely by relying upn the disclsures f the creditr. Again, this cncept may be difficult t apply t mrtgage riginatrs. Will the cure defense, bna fide errr defense, defense by gd faith reliance upn Bard rule r cmmentary, ther defenses, statute f limitatins, and ther prvisins f 130 apply t mrtgage riginatrs? Presumably, they shuld, but the determinatin f these issues will likely need t play ut in the curts. What liability will a creditr have shuld it vilate the new rules relating t steering and the like? Since these will be vilatins f TILA, the creditr will presumably have civil liability under 130. Again, it may be mre difficult t apply 130 t the new rules given that 130 was written in cntemplatin f a statute that is disclsure riented. 19 Attrney Advertising

20 Sectin Regulatins (a) Discretinary Regulatry Authrity Sectin 129B f the Truth in Lending Act is amended by inserting after subsectin (d) (as added by sectin 1404) the fllwing new subsectin: `(e) Discretinary Regulatry Authrity `(1) IN GENERAL The Bard shall, by regulatins, prhibit r cnditin terms, acts r practices relating t residential mrtgage lans that the Bard finds t be abusive, unfair, deceptive, predatry, necessary r prper t ensure that respnsible, affrdable mrtgage credit remains available t cnsumers in a manner cnsistent with the purpses f this sectin and sectin 129C, necessary r prper t effectuate the purpses f this sectin and sectin 129C, t prevent circumventin r evasin theref, r t facilitate cmpliance with such sectins, r are nt in the interest f the brrwer. `(2) APPLICATION The regulatins prescribed under paragraph (1) shall be applicable t all residential mrtgage lans and shall be applied in the same manner as regulatins prescribed under sectin 105. `(f) Sectin 129B and any regulatins prmulgated thereunder d nt apply t an extensin f credit relating t a plan described in sectin 101(53D) f title 11, United States Cde.'. (b) Disclsures Ntwithstanding any ther prvisin f this title, in rder t imprve cnsumer awareness and understanding f transactins invlving residential mrtgage lans thrugh the use f disclsures, the Bard may, by rule, exempt frm r mdify disclsure requirements, in whle r in part, fr any class f residential mrtgage lans if the Bard determines that such exemptin r mdificatin is in the interest f cnsumers and in the public interest. Analysis. Sectin 1405 f the Ddd-Frank Act adds a new 129B(e) t TILA. In General. Sectin 1405 directs the Bard t issue additinal regulatins t prhibit mrtgage practices that it finds t be abusive, unfair, deceptive, r predatry. The Bard regulatins als are required t ensure that respnsible, affrdable mrtgage credit remains available t cnsumers in a manner cnsistent with [ 129B and 129C f TILA]. As in the case f the regulatins t implement the steering prhibitins in 129B(c) f TILA, this sectin will prbably lead t a sample list f prhibited practices frm the Bard. Creditrs will need t adpt apprpriate plicies and prcedures t implement these prvisins, and t mnitr against vilatins. Sectin 129B(e) represents a secnd effrt by Cngress t get the Bard t issue regulatins that prhibit predatry practices. Existing 129(l)(2) f TILA directs the Bard t issue regulatins r rders that prhibit acts and practices with respect t mrtgage lans that the Bard finds t be unfair, deceptive, r designed t evade 129, as well as acts and practices relating t the refinancing f mrtgage lans that the Bard finds t be assciated with abusive lending practices r that therwise are nt in the interests f the brrwer. Until recently, the Bard did nt issue regulatins t implement 129. With the enactment f 129B(e) and in the current plitical envirnment, the Bard will almst certainly issue regulatins this time. Applicatin. The new Bard regulatins will apply t all residential mrtgage lans, whether r nt the security prperty is wner-ccupied. Timeshares. Once again, the timeshare industry has received a free pass under 129B(f), neither these regulatins nr 129B itself are applicable t certain lans t finance timeshare units. Disclsures. Under Sectin 1405(b), the Bard is authrized t prvide full r partial exemptins frm disclsure requirements fr any class f residential mrtgage lans if it finds that this is in the interests f cnsumers and the public interest. The Bard currently hlds a smewhat similar exemptive authrity under 129(l)(1) f TILA, which it has nt used. In the current plitical envirnment, it is nt anticipated that the Bard will exercise its new exemptive authrity any time sn. 20 Attrney Advertising