U.S. - Structured Finance

Size: px
Start display at page:

Download "U.S. - Structured Finance"

Transcription

1 U.S. - Structured Finance Special Report RMBS Report Date Analysts Jonathan Riber Vice President Quincy Tang Managing Director Kathleen Tillwitz Managing Director Claire Mezzanotte Group Managing Director Qualified Mortgage and Ability-to-Repay Rules Table of Contents Highlights 1 QM Safe Harbor Loans to Rule the Market 5 Summary 1 Securitization Outlook 5 Understanding the QM and ATR Rules 2 Rating Considerations 6 QM Safe Harbor Loans 3 Origination Controls and Procedures 6 QM Rebuttable Presumption Loans 3 Residual Income Determination 7 Non-QM Loans 3 Third-Party Due Diligence Review 8 Other Loans Affected 4 Representations and Warranties Framework 9 Discussions with Market Participants 5 What DBRS Expects 9 Noteworthy Market Comments 5 Highlights In this special report, DBRS: Discusses the Qualified Mortgage (QM) and Ability-to-Repay (ATR) rules issued by the Bureau of Consumer Financial Protection (the Bureau). Highlights its discussions with market participants who have shared their interpretations and opinions of the new rules and their implications. Offers perspective on how it will generally evaluate new private-label residential mortgagebacked security (RMBS) transactions under the QM and ATR rules. Summary Much of the mortgage industry s attention has been focused on understanding the upcoming QM and ATR rules (the Rules) issued by the Bureau. The Rules require lenders to demonstrate that they have made a good faith determination, based on verified and documented information, and that a borrower has a reasonable ability to repay his or her loan according to its terms. For years, the absence of such a determination was quite commonplace, and this is now considered a key factor in the creation of the housing bubble and its bursting that began in The Rules, which implement provisions in the Dodd- Frank Act, take effect on January 10, 2014, and are aimed at making a reoccurrence of a risky real estate bubble much less likely. Because certain components of the Rules are somewhat vague and open to interpretation, market participants are still trying to fully grasp how they will be affected. Main items of concern revolve around the treatment of loans that do not fall under the safe harbor rules, exposure to borrower claims and defenses, underwriting and documentation standards as they relate to determining a borrower s residual income under ATR standards and rating agency considerations. Since most of what is being originated today already meets the standards of the Rules, DBRS believes that the real challenge lies in unequivocally demonstrating QM and ATR compliance to the market and establishing confidence in the soundness of the systems and procedures that will be used to determine and ensure compliance.

2 Understanding the QM and ATR Rules To meet the new standards, lenders must consider, verify and document that the consumer has sufficient income and assets to repay the loan, generally considering the following eight underwriting criteria: 1. Current or reasonably expected income or assets; 2. Current employment status; 3. Monthly payment on the covered transaction; 4. Monthly payment on any simultaneous loan; 5. Monthly payment for mortgage-related obligations; 6. Current debt obligations, alimony and child support; 7. Monthly debt-to-income (DTI) ratio or residual income; and 8. Credit history. The following are the general characteristics of a QM loan: Limits on Loan Features - No interest only loans - No negative amortization loans - No deferral of principal - No balloon loans - Interest rate that does not exceed the average prime offer rate (APOR) for comparable transactions by 1.5% or more (for first liens) - Maximum term of 30 years - No reverse mortgages or home equity lines of credit (HELOCs) Underwriting Requirements - Based on verified current or reasonable expected income or assets and current debt obligations, alimony and child support - Monthly DTI ratio may not exceed 43% - Underwritten based on the maximum interest rate during the first five years Points and Fees - Generally points and fees may not exceed 3% of the total loan amount - Higher caps allowed for loans less than $100,000 DBRS expects that lenders will have policies, procedures and internal controls that ensure compliance with each of these eight factors, in addition to documenting how these factors are considered in their underwriting process. The Rules generally prohibit loans with negative amortization, interest-only payments, balloon payments or terms exceeding 30 years from being a QM. Additionally, no-doc loans cannot be a QM. Further, a loan generally cannot be a QM if the points and fees paid by the consumer exceed 3% of the total loan amount. The standards provide guidance on the calculation of points and fees and include higher percentage thresholds for smaller balance loans. The points and fees definition generally includes all fees known at or before consummation and fees paid to the originator, creditor and affiliates. Certain lenders have expressed concern, stating that a 3% cap leaves little room for unanticipated costs, and have been contemplating whether to discontinue affiliated services such as title insurance and appraisals. While affiliate charges have always been included for Home Ownership and Equity Protection Act (HOEPA) purposes, they become much more significant given the lower points and fees threshold in the QM definition. The Rules also establish general underwriting criteria for QMs, which the Bureau believes will protect consumers by safeguarding affordability. The Rules require that the consumer have a DTI ratio that is less than or equal to 43%. Monthly payments must be calculated based on the highest payment that will apply in the first five years of the loan. 2 Special Report - Structured Finance: U.S. RMBS

3 The Rules provide that making a QM loan that adheres to these specified product guidelines and underwriting standards offers legal protections to lenders that the loan has satisfied the ATR requirements. This is important since a failure to meet the ATR requirements can result in significant liability, including assignee liability, which generally includes up to three years of finance charges, attorney fees and claims that may be brought at foreclosure (commonly known as recoupment) for the life of the mortgage. The implementation of the Rules creates a new template for those involved in residential mortgage lending by creating three new categories of loan underwriting standards with differing risk implications and legal treatments: (1) QM Safe Harbor loans, (2) QM Rebuttable Presumption loans and (3) Non-QM loans. QM Safe Harbor Loans A safe harbor is provided for prime loans meeting the QM requirements. First-lien loans that have an annual percentage rate (APR) that is less than 1.5% above the APOR (and subordinate lien loans with an APR less than 3.5% above the APOR) will qualify as a QM Safe Harbor loan. The legal safe harbor provides a level of assurance that QM Safe Harbor loans meet the ATR requirements when originated, which results in loans that are better insulated from claims and defenses by borrowers. Future litigation risk is mitigated and lenders need only demonstrate that the loan was originated according to QM standards. For example, a borrower could claim that in originating a mortgage the lender did not make a reasonable and good faith determination of the borrower s ability to repay and therefore violated the ATR rule. If a court finds that the loan met the QM requirements and was not higher priced, the borrower would lose this claim. Even if the borrower attempts to show that the DTI was miscalculated and exceeds 43%, therefore violating the ATR standards, as long as the loan is a QM and is not higher priced, the borrower has no recourse. QM Rebuttable Presumption Loans Loans where the APR exceeds the QM Safe Harbor threshold but otherwise meet the QM requirements gain a rebuttable presumption of compliance. These higher-priced QM Rebuttable Presumption loans have less legal protections than QM Safe Harbor loans because such loans give borrowers a greater ability to contest a lender s compliance with the ATR standards. Such loans are eligible for ATR damages and defenses and are subject to higher litigation risk than safe harbor loans as well as additional expenses due to longer liquidation timelines. Even if a borrower cannot demonstrate that a QM Rebuttable Presumption loan did not meet the QM requirements, the borrower can still challenge the loan by proving that the lender did not make a reasonable and good faith determination of the borrower s ability to repay. The borrower must show that based on the information available to the lender at the time the mortgage was originated, the borrower did not have enough residual income left to meet living expenses after paying the mortgage and other debts. Non-QM Loans While Non-QM loans are not required to meet the 43% DTI threshold required of QM loans, they must adhere to the ATR standards as set forth in the Rules. Therefore, when underwriting Non-QM loans, lenders also need to consider the eight specified underwriting factors when determining a borrower s 3 Special Report - Structured Finance: U.S. RMBS

4 ability to repay. Non-QM loans will have the benefit of neither protection that QM Safe Harbor and QM Rebuttable Presumption loans have, which leaves lenders open to greater challenges in the ATR analysis used in qualifying a borrower. As liability risk will be greater than with both QM Safe Harbor and QM Rebuttable Presumption loans, an originator must consider whether it wishes to originate Non-QM loans and, if it does, whether it will be in a position to demonstrate that it made a proper and supportable ATR determination. Given the risk-averse and conservative spirit of the Rules, underwriting standards for Non-QM loans will likely favor prime high net worth borrowers. ATR rules state that in order for a Non-QM loan to satisfy the ability to repay, the lender must use underwriting standards that have historically resulted in comparatively low rates of default during adverse economic conditions and it must be shown that the creditor used underwriting standards based on empirically derived, demonstrably and statistically sound models. In other words, a lender s underwriting standards must be conservative. While DBRS expects that most lenders will be initially reluctant to make Non-QM loans, certain lenders such as large banks catering to the needs of high net worth borrowers have expressed that Non-QM loans are a necessary part of their business strategy and that they will continue originating such loans at current volumes. For example, a large slice of the Non-QM loan market will likely be jumbo prime loans made to such high net worth borrowers, many of whom desire interest-only loans and/or have DTI ratios exceeding 43%. QM Safe Harbor QM Rebuttable Presumption Non-QM Legal Protection Liability Risk and Loss Severity Conclusively Presumed that ATR is Satisfied Borrower Can Rebut the ATR Presumption by Showing Inadequate Residual Income No Legal Protection Lowest Middle Highest DTI/Residual Income 43% 43% No Maximum DTI Requirement Appendix Q Yes Yes No ATR Consideration Eight Underwriting Factors Eight Underwriting Factors Eight Underwriting Factors Must Satisfy Broader ATR Rule Documentation of Sufficient Assets and Income Yes Yes Yes Yes Yes Yes Points and Fees Limit 3% 3% N/A Other Loans Affected In general, loans that have a DTI greater than 43% may be considered QMs as long as they are eligible to be purchased, guaranteed or insured by certain government entities, such as Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs; are made by certain small creditors; or are balloon loans that qualify as being in certain rural or underserved areas. In general, such loans must meet all QM loan standards except for the 43% DTI requirement. 4 Special Report - Structured Finance: U.S. RMBS

5 Discussions with Market Participants Noteworthy Market Comments The following summarizes the most noteworthy points of discussion based on DBRS s conversations with originators, loan aggregators, investment bankers, third-party due diligence providers and legal counsel. Due to the increased legal risks and liabilities associated with QM Rebuttable Presumption and Non-QM loans, many lenders will restrict mortgage originations to QM Safe Harbor Loans, at least initially. Lenders will consider increasing the origination of QM Rebuttable Presumption and Non-QM loans once precedent is established as to how the courts will handle borrower claims and more transparency is established regarding certain subjective components of the Rules. Certain lenders, namely some large banks, have stated that they will not be hesitant to originate QM Rebuttable Presumption and Non-QM loans as they are very comfortable with their origination and servicing capabilities, systems, compliance and residual income calculations. Maintaining documentary evidence of compliance with residual income calculations and DTI ratios will be crucial in order to avoid successful borrower challenges. Certain components of the ATR standards and Appendix Q are vague and open to interpretation, further limiting the origination of Rebuttable Presumption and Non-QM loans. Due diligence firms will have a large role in ensuring compliance with the Rules and in the ratings process. QM Safe Harbor Loans to Rule the Market The risks of not satisfying ATR criteria will likely drive lenders to limit originations, at least initially, to mostly QM Safe Harbor loans. Further, the increased liabilities related to QM Rebuttal Presumption and Non-QM loans, in addition to higher loss severities upon liquidation, will further motivate lenders to focus on QM Safe Harbor loans. As a result of lenders being able to comfortably hold QM Safe Harbor loans in their portfolios or sell such loans via whole loan sales or securitization at competitive pricing (due to lower litigation risk and compliance costs), there will likely be an increase in price competition among lenders, which should benefit prime QM borrowers. For borrowers who do not meet the ATR standards, lenders are expected to greatly reduce originations and may assess higher risk premiums, resulting in decreased credit availability and increased borrowing costs, especially in the high-cost or subprime sector. Further, lenders may initially subject QM Rebuttable Presumption or Non-QM loans to more stringent/conservative underwriting standards than the QM rules actually require, thereby providing a cushion in the event that a borrower challenges compliance with ATR standards. Over time, QM Rebuttable Presumption and Non-QM loan originations will likely increase as court precedents are set and greater certainty around liabilities and damages is established, in addition to lenders gaining more confidence with their underwriting standards and compliance with the Rules. The uncertainty surrounding QM Rebuttable Presumption and Non-QM loans may impair the liquidity and marketability of these loans, thus affecting pricing and valuations. As investors gain more acceptance and lenders more clearly understand the benefits, costs and trade-offs of originating these types of loans, lending should increase. Securitization Outlook The Rules will impact the ability to securitize loans. QM Safe Harbor loans are safer and more homogeneous and thus may be more easily securitized. Securitization is expected to be more difficult for 5 Special Report - Structured Finance: U.S. RMBS

6 QM Rebuttable Presumption and Non-QM loans, as these loans are not homogeneous and may face more legal uncertainties over time. Further, uncertainties related to deal economics based on rating agency treatment, in addition to the premium investors will charge for loans and bonds backed by non-safe harbor loans, has left certain lenders and RMBS issuers unsure of their future borrower universe and securitization volumes. In order to provide a level of comfort to the market, lenders and aggregators have stated that they will generally employ a tighter credit box, in addition to relegating originations to higher-quality prime jumbo borrowers. This will help to ensure that affirmative challenges seeking damages for alleged violations of the ATR rule and defaults are minimal. As well, employing third-party due diligence firms to appropriately scrub the origination standards of the loans will further reassure investors and DBRS. As a result, DBRS expects that the risk of a borrower raising a defense to foreclosure will be minimal within these securitizations. Liability to the securitization trust will mainly be assignee liability through a defense to foreclosure, meaning that the borrower must have defaulted and be in foreclosure. Issuers should anticipate all potential liability and damages that could be imposed, and properly consider if certain expenses, such as legal fees, could be passed through the securitization trust to investors. Other potential costs and timeline carries (such as servicer advances and property maintenance) of an ATR challenge should also be considered but will initially be difficult to anticipate. Rating Considerations DBRS rating considerations with respect to QM and ATR compliance will focus on three primary components: 1. Assessment of originator s controls and procedures. Maintaining documentary evidence of compliance with the ATR and QM standards. Residual income determination as per the standards outlined in Appendix Q 1 to the Rules. 2. Review of third-party due diligence results to verify compliance with the Rules. Proper categorization of QM Safe Harbor, QM Rebuttable Presumption and Non-QM loans. Confirmation of loans meeting the DTI requirements per Appendix Q and points and fees limits. A review of lender s residual income analysis. 3. Evaluation of representations and warranties framework in RMBS securitizations relating to compliance with the Rules. Representations and warranties with respect to the proper categorization of QM Safe Harbor, QM Rebuttable Presumption and Non-QM loans included in the securitization. The loan was originated in compliance with the ATR standards and has a mortgage file that contains all necessary records, evidence and documentation to demonstrate such compliance. The rating considerations are further detailed below. Origination Controls and Procedures Adherence to QM and ATR requirements will be the focal point of DBRS s ratings analysis. As part of the originator review, DBRS will focus on the following as they pertain to compliance with the Rules: 1 In order to satisfy the requirements for a QM, a lender must use the standards in Appendix Q to verify and document a consumer's income and debt and calculate the DTI ratio. 6 Special Report - Structured Finance: U.S. RMBS

7 Quality of internal procedures, processes and controls; Product and underwriting guidelines; Documentation and record retention standards; Enhancements to systems, technology and training; and Quality control. The Rules have raised concerns related to origination practices. Maintaining documentary evidence of compliance with the ATR and QM standards is deemed to be of paramount importance. In order to successfully challenge and confute borrower complaints, originators are expected to focus on accurate loan documentation that proves compliance with the ATR standards. DBRS expects that issuers will be able to capture all the data needed to prove ATR and QM compliance at origination and during the underwriting process, and that data collection, loan application and approval processes have all been updated and are in compliance. All steps and decisions throughout the underwriting process should be evidenced, including all calculations and any judgment calls made by underwriting. Being prepared for the new rules does not appear to be as big of a concern for the large banks as it is for smaller banks, newer lenders and/or aggregators. One large bank stated that it is comfortable complying with the new rules and that the standards are not as impactful as initially feared, as the bank already has existing ability-to-repay standards in place, and that the new requirements are basically an extension of the bank s current processes. Further, most large bank lenders have had robust systems and protocols in place that capture all documents related to borrower assets and income. Therefore, preparing for the Rules is seen as just a build-out and refinement of procedures already implemented. While some lenders have expressed confidence in complying with the Rules, many lenders have recently urged the Bureau to delay January s final implementation. These lenders have stated that software vendors and other compliance specialists that are relied upon are in different stages of product development are only now releasing necessary programs. Many lenders are still awaiting these products and training procedures. Testing of new software and systems, in addition to training employees, will add more time to the process. Additionally, certain originators and aggregators have noted that enforcement of the new processes may present additional concerns since it may involve the originators relationships with origination partners such as brokers or correspondents, or arrangements they may have with other banks, for example, who will fund the loans. Residual Income Determination Market participants have expressed concern with the Rules relating to residual income determination and calculating the borrower DTI ratio as detailed in Appendix Q. Although Appendix Q is very detailed and prescriptive, certain components regarding how to consider and calculate residual income are open to interpretation and may rely on judgment calls by the underwriter. Certain lenders may mitigate these risks by underwriting to a DTI less than 43%, thereby creating a cushion that provides greater certainty that loans are in compliance. Large bank lenders are not expected to lower DTI requirements much below 43%, if at all, as they have already proven compliance with their existing DTI requirements and are more comfortable with their documentation standards than other smaller institutions. Some lenders to whom DBRS has spoken to have incorporated additional quality control procedures and stricter sign-off authority as a way to further mitigate underwriting errors. One concern among market participants is that borrowers may omit certain expenses that, if included, would result in their DTI ratios exceeding the 43% maximum. If a borrower files an ATR claim, lenders are concerned these unrevealed expenses (e.g., medical expenses) might be brought up in a dispute. 7 Special Report - Structured Finance: U.S. RMBS

8 Additionally, lenders have stated that unforeseen expenses that occur after a loan is originated (such as divorce) should not subject the lender to damages based on the ability to repay. Lenders expressed that they will utilize methods to quickly disprove and invalidate a borrower s claim. An executed Borrower Affidavit that confirms the completeness of the provided documentation and attests to the validity and accuracy of the residual income calculation is expected to be the most common method. Lenders have also contemplated recording oral statements, phone calls or other borrower interactions to mitigate risk, although it was noted that such audio recordings may be in violation of certain laws and may actually increase liability down the road. To mitigate liability, lenders have agreed that written scripts must be used while utilizing any recording medium. Additionally, to lower borrower disputes, lenders are making proper borrower education a priority and ensuring that borrowers are more aware of the financial risks before obtaining a mortgage. Third-Party Due Diligence Review When evaluating the quality of a securitization pool, DBRS will assess third-party due diligence results to verify compliance with the Rules and to gauge the quality of an originator s underwriting standards. DBRS will view more favorably an originator or issuer that provides the following: Sufficient evidence that loans are properly categorized as being QM Safe Harbor, QM Rebuttable Presumption or Non-QM; Confirmation that loans meet the DTI requirements per Appendix Q (or qualify for an agency/gse exemption); A review of the lender s residual income analysis; Confirmation that each loan does not exceed the points and fees limits; and Any exceptions. For QM loans, when evaluating adherence to ATR standards, namely DTI calculations and residual income, due diligence firms will likely perform a re-underwriting of loans based on a review of the lender s documentation and determine whether the lender made an appropriate ATR decision in accordance with Appendix Q. For Non-QM loans, which do not provide for a specified DTI ratio but must adhere to ATR standards, due diligence firms will be expected to determine whether documentation is sufficient to meet the eight specified underwriting criteria and that the borrower s ATR was determined pursuant to a lender s guidelines and based upon the maximum payment during the first five years of the loan. Documentation should be able to provide enough data so as to determine the borrower's expenses, income, residual income and DTI. Rather than just confirming that lender documentation is sufficient, or recalculating compliance with ATR standards based on lender guidelines, certain market participants have expressed interest in due diligence firms determining compliance based on their own independent interpretations of the Rules. Generally, DBRS expects points and fees to be re-calculated by the diligence firms. Initially, DBRS expects that loan level due diligence will be performed on 100% of a mortgage pool, including loans deemed QM Safe Harbor. Over time, as the originators demonstrate the ability to comply with the QM and ATR requirements, DBRS may accept lower sample sizes in a securitization. As stated, DBRS will consider the accuracy of a loan s QM designation in addition to the quality of a lender s compliance with the Rules. Due diligence firms are expected to provide an attestation for each transaction covering the review performed. Diligence firms may also be looked upon to review any recordings with the borrower. 8 Special Report - Structured Finance: U.S. RMBS

9 RMBS issuers will be expected to provide satisfactory representations and warranties related to Representations and Warranties Framework compliance with a loan s QM designation which would be subject to repurchase obligations. DBRS expects representations and warranties to state the proper categorization of QM Safe Harbor, QM Rebuttable Presumption and Non-QM loans included in the securitization, and that the loan was originated in compliance with the ATR standards and has a mortgage file that contains all necessary records, evidence and documentation to demonstrate such compliance. DBRS will also review the enforcement mechanisms and remedies for curing any breaches, coupled with an evaluation of the financial condition of the party providing the representations and warranties. What DBRS Expects RMBS pool review encompasses default and loss severity analysis. Under the Rules, default probability will already have been assessed based on the characteristics of each loan (e.g., higher DTI ratios and interest-only loans generally result in increased default assumptions). As such, DBRS does not anticipate assigning additional penalties to default probability as a result of the Rules. However, DBRS expects that the Rules may have an impact on its loss severity analysis as a result of potential increased litigation risk or delays in the liquidation process. The QM Safe Harbor loans are deemed to meet the QM and ATR requirements and are therefore better protected from future claims and defenses. As a result, DBRS does not anticipate that QM Safe Harbor loans will warrant additional loss severity adjustments in its rating analysis. The higher priced QM Rebuttable Presumption loans give borrowers a greater ability to contest a lender s compliance with the ATR standards, and therefore contain greater liability risk, although DBRS believes the actual litigation occurrence on QM Rebuttable Presumption loans will be limited. While Non-QM loans are also required to adhere to the ATR standards as set forth in the Rules, such loans have no liability protection from the Rules, which leaves lenders open to greater challenges in the ATR analysis used in qualifying a borrower. DBRS anticipates that the QM Rebuttable Presumption and Non-QM loans may warrant additional rating adjustments that affect loss severity and, as such, loss expectation in its rating analysis. Nonetheless, such increased risk and the resulting rating adjustment to the QM Rebuttable Presumption and Non-QM loans may be mitigated by a satisfactory originator and third-party due diligence review that focuses on the aspects DBRS outlined in this report, as well as a strong representations and warranties framework. 9 Special Report - Structured Finance: U.S. RMBS

10 Note: All figures are in U.S. dollars unless otherwise noted. This report is based on information as of November 2013, unless otherwise noted. Subsequent information may result in material changes to the rating assigned herein and/or the contents of this report. Copyright 2013, DBRS Limited, DBRS, Inc. and DBRS Ratings Limited (collectively, DBRS). All rights reserved. The information upon which DBRS ratings and reports are based is obtained by DBRS from sources DBRS believes to be accurate and reliable. DBRS does not audit the information it receives in connection with the rating process, and it does not and cannot independently verify that information in every instance. The extent of any factual investigation or independent verification depends on facts and circumstances. DBRS ratings, reports and any other information provided by DBRS are provided as is and without representation or warranty of any kind. DBRS hereby disclaims any representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability, fitness for any particular purpose or noninfringement of any of such information. In no event shall DBRS or its directors, officers, employees, independent contractors, agents and representatives (collectively, DBRS Representatives) be liable (1) for any inaccuracy, delay, loss of data, interruption in service, error or omission or for any damages resulting therefrom, or (2) for any direct, indirect, incidental, special, compensatory or consequential damages arising from any use of ratings and rating reports or arising from any error (negligent or otherwise) or other circumstance or contingency within or outside the control of DBRS or any DBRS Representative, in connection with or related to obtaining, collecting, compiling, analyzing, interpreting, communicating, publishing or delivering any such information. Ratings and other opinions issued by DBRS are, and must be construed solely as, statements of opinion and not statements of fact as to credit worthiness or recommendations to purchase, sell or hold any securities. A report providing a DBRS rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. DBRS receives compensation for its rating activities from issuers, insurers, guarantors and/or underwriters of debt securities for assigning ratings and from subscribers to its website. DBRS is not responsible for the content or operation of third party websites accessed through hypertext or other computer links and DBRS shall have no liability to any person or entity for the use of such third party websites. This publication may not be reproduced, retransmitted or distributed in any form without the prior written consent of DBRS. ALL DBRS RATINGS ARE SUBJECT TO DISCLAIMERS AND CERTAIN LIMITATIONS. PLEASE READ THESE DISCLAIMERS AND LIMITATIONS AT ADDITIONAL INFORMATION REGARDING DBRS RATINGS, INCLUDING DEFINITIONS, POLICIES AND METHODOLOGIES, ARE AVAILABLE ON 10 Special Report - Structured Finance: U.S. RMBS

Consumer Financial Protection Bureau Issues Ability-to-Repay and Qualified-Mortgage Standards Implementing Dodd-Frank

Consumer Financial Protection Bureau Issues Ability-to-Repay and Qualified-Mortgage Standards Implementing Dodd-Frank January 14, 2013 Consumer Financial Protection Bureau Issues Ability-to-Repay and Qualified-Mortgage Standards Implementing Dodd-Frank On January 10, 2013, the Consumer Financial Protection Bureau ( CFPB

More information

CFPB Issues Much Anticipated Final Rules: Ability to Repay, Qualified Mortgages, Escrow Requirements and Homeownership Counseling

CFPB Issues Much Anticipated Final Rules: Ability to Repay, Qualified Mortgages, Escrow Requirements and Homeownership Counseling CFPB Issues Much Anticipated Final Rules: Ability to Repay, Qualified Mortgages, Escrow Requirements and Homeownership Counseling The Consumer Financial Protection Bureau ( CFPB ) issued their much anticipated

More information

Dodd Frank Mortgage Reform 2014

Dodd Frank Mortgage Reform 2014 Dodd Frank Mortgage Reform 2014 Business Partner Deck v1 12.16.13 Overview RULE EFFECTIVE DATE Loan Originator Compensation - TILA Loans closed and paid on or after 1/01/14 Ability to Repay/Qualified Mortgages

More information

Section 1026.43. Ability-to-Repay (ATR) 1026.43(c)(1) and Qualified Mortgage (QM) 1026.43(e), (f)

Section 1026.43. Ability-to-Repay (ATR) 1026.43(c)(1) and Qualified Mortgage (QM) 1026.43(e), (f) Section 1026.43 Ability-to-Repay (ATR) 1026.43(c)(1) and Qualified Mortgage (QM) 1026.43(e), (f) Effective January 10, 2014 As of 10/15/2013- By Venessa Snell This section applies to any consumer credit

More information

Early Summary of Ability to Repay and Qualified Mortgage Rules under Dodd-Frank Wall Street Reform and Consumer Protection Act.

Early Summary of Ability to Repay and Qualified Mortgage Rules under Dodd-Frank Wall Street Reform and Consumer Protection Act. Early Summary of Ability to Repay and Qualified Mortgage Rules under Dodd-Frank Wall Street Reform and Consumer Protection Act January 11, 2013 OVERVIEW - On January 10, 2013, the Consumer Financial Protection

More information

ESCROW REQUIREMENTS UNDER TILA

ESCROW REQUIREMENTS UNDER TILA Overview Escrow Requirements Reg. Z High Cost Mortgage and Counseling - Reg. Z & X Ability to Repay & Qualified Mortgages Reg. Z & X Mortgage Servicing Reg. Z & X Loan Originator Compensation Reg. Z Copies

More information

The Consumer Financial Protection Bureau (Bureau) is issuing a final rule to implement

The Consumer Financial Protection Bureau (Bureau) is issuing a final rule to implement SUMMARY OF THE ABILITY-TO-REPAY AND QUALIFIED MORTGAGE RULE AND THE CONCURRENT PROPOSAL The Consumer Financial Protection Bureau (Bureau) is issuing a final rule to implement laws requiring mortgage lenders

More information

GLOSSARY OF TERMS. Amortization Repayment of a debt in regular installments of principal and interest, rather than interest only payments

GLOSSARY OF TERMS. Amortization Repayment of a debt in regular installments of principal and interest, rather than interest only payments GLOSSARY OF TERMS Ability to Repay (ATR) The Ability to Repay rule protects consumers from taking on mortgages that exceed their financial means, by mandating the documentation / proof of income and assets.

More information

The CFPB s Qualified Mortgage Requirements from the ATR/QM Final Rule (12 CFR 1026.43)

The CFPB s Qualified Mortgage Requirements from the ATR/QM Final Rule (12 CFR 1026.43) The CFPB s Qualified Mortgage Requirements from the ATR/QM Final Rule (12 CFR 1026.43) This has been updated to include changes from the CFPB final rule issued on September 13, 2013. In addition, this

More information

A Strategic Guide to the ATR/QM Rules

A Strategic Guide to the ATR/QM Rules A Strategic Guide to the ATR/QM Rules Managing the Regulatory Options, Risk Exposures and Legal Responsibilities for the New Ability-to-Repay and Qualified Mortgage Rules June 2013 Authors American Bankers

More information

The Consumer Financial Protection Bureau s Ability-to-Repay and Qualified Mortgage Rule

The Consumer Financial Protection Bureau s Ability-to-Repay and Qualified Mortgage Rule ADVISORY February 2013 The Consumer Financial Protection Bureau s Ability-to-Repay and Qualified Mortgage Rule On January 10, 2013, the Consumer Financial Protection Bureau ( CFPB ) issued its final Ability-to-Repay

More information

CUNA s SUMMARY OF THE CFPB s MORTGAGE LENDING RULES Spring 2013

CUNA s SUMMARY OF THE CFPB s MORTGAGE LENDING RULES Spring 2013 MANDATORY ESCROW ACCOUNTS Effective: June 1, 2013 REGULATION Requires escrow accounts be maintained for five years (rather than the current one year) for higher-priced mortgage loans. A higher-priced mortgage

More information

Ability to Repay/Qualified Mortgage Rule

Ability to Repay/Qualified Mortgage Rule Ability to Repay/Qualified Mortgage Rule Note: This document was used in support of a live discussion. As such, it does not necessarily express the entirety of that discussion nor the relative emphasis

More information

CFPB FINAL RULES SUN WEST IMPLEMENTATION GUIDE

CFPB FINAL RULES SUN WEST IMPLEMENTATION GUIDE CFPB FINAL RULES SUN WEST IMPLEMENTATION GUIDE January 02, 2015 In case of any queries regarding the information available in this guide, please reach us at qmteam@swmc.com. Sun West Mortgage Company,

More information

Title 9-A: MAINE CONSUMER CREDIT CODE

Title 9-A: MAINE CONSUMER CREDIT CODE Maine Revised Statutes Title 9-A: MAINE CONSUMER CREDIT CODE Article : 8-506. ENHANCED RESTRICTIONS ON CERTAIN CREDITORS In addition to the compliance requirements of section 8-504, subsection 1, unless

More information

CFPB issues ability-to-repay and qualified mortgage rules

CFPB issues ability-to-repay and qualified mortgage rules 1 FEBRUARY 4, 2013 CFPB issues ability-to-repay and qualified mortgage rules By Raymond J. Gustini, Lloyd H. Spencer, Tiana M. Butcher, Courtney L. Lindsay II, and Pierce Han No standard is perfect, but

More information

The Impact of the CFPB s New Mortgage Rules on the Closing Process

The Impact of the CFPB s New Mortgage Rules on the Closing Process The Impact of the CFPB s New Mortgage Rules on the Closing Process March 11, 2014 Banking & Finance Practice Escrow Account Rule 4 Escrow Account Rule Effective June 1, 2013. Extends current rule from

More information

MLO COMPENSATION, REGULATION Z, AND DODD-FRANK ACT

MLO COMPENSATION, REGULATION Z, AND DODD-FRANK ACT MLO COMPENSATION, REGULATION Z, AND DODD-FRANK ACT Vermont Mortgage Bankers Association & Mortgage Bankers/Brokers Association of NH Mortgage Compliance Conference Thursday, March 3, 2011 Sean P. Mahoney

More information

The CFPB s New Mortgage Rules: Is Your Financial Institution Ready?

The CFPB s New Mortgage Rules: Is Your Financial Institution Ready? BSA COMPLIANCE LOAN REVIEW VENDOR REVIEW MORTGAGE REVIEW The CFPB s New Mortgage Rules: Is Your Financial Institution Ready? September 18, 2013 Presented by: David Senior, Director of Enterprise Risk Management

More information

Uncertainty Regarding Fed Proposal and CFPB Action on Minimum Underwriting Standards for Consideration of a Consumer s Ability to Repay

Uncertainty Regarding Fed Proposal and CFPB Action on Minimum Underwriting Standards for Consideration of a Consumer s Ability to Repay June 2011 Uncertainty Regarding Fed Proposal and CFPB Action on Minimum Underwriting Standards for Consideration of a Consumer s Ability to Repay BY KEVIN L. PETRASIC, HELEN Y. LEE & AMANDA M. JABOUR Comments

More information

Ability to Repay & QM Regulations

Ability to Repay & QM Regulations Ability to Repay & QM Regulations 2013 Rushmore Loan Management Services LLC. All Rights Reserved. This is intended as educational material only. It does not provide legal advice. Revised December 2013

More information

CFPB Regulations on Ability to Repay and Qualified Mortgages. MDDCCUA Training

CFPB Regulations on Ability to Repay and Qualified Mortgages. MDDCCUA Training CFPB Regulations on Ability to Repay and Qualified Mortgages MDDCCUA Training October 30, 2013 E. Andrew Keeney, Esq. Kaufman & Canoles, P.C. Ability-to-Repay and Qualified Mortgage Rules E. Andrew Keeney,

More information

By - Nitin J. Dave 25-Year Veteran of FannieMae ATR / QM Agency Prospective Effectively Manage Repurchases, Make-Wholes & Indemnifications

By - Nitin J. Dave 25-Year Veteran of FannieMae ATR / QM Agency Prospective Effectively Manage Repurchases, Make-Wholes & Indemnifications By - Nitin J. Dave 25-Year Veteran of FannieMae ATR / QM Agency Prospective Effectively Manage Repurchases, Make-Wholes & Indemnifications Effective with Loan Applications on or after January 10, 2014

More information

The New Mortgage Servicing Rules. FMS East Coast Regional Conference September 17, 2013

The New Mortgage Servicing Rules. FMS East Coast Regional Conference September 17, 2013 The New Mortgage Servicing Rules FMS East Coast Regional Conference September 17, 2013 What are the new Mortgage Servicing Rules? Ability to Repay/Qualified Mortgage Rule 2013 HOEPA Rule Loan Originator

More information

WHAT TO EXPECT WITH DODD-FRANK AND WHY QM DOESN T MATTER.

WHAT TO EXPECT WITH DODD-FRANK AND WHY QM DOESN T MATTER. WHAT TO EXPECT WITH DODD-FRANK AND WHY QM DOESN T MATTER. JANUARY 8, 2014 finance.car.org (213) 739-8383 financehelpline@car.org BACKGROUND ON THE LENDING ENVIRONMENT Sara Sutachan Manager of Broker &

More information

Example Scenario #1 - Points & Fees Scenario... 17

Example Scenario #1 - Points & Fees Scenario... 17 Table of Contents Dodd Frank Act Legislative History... 3 Covered & Excluded Loan Types... 3 Definitions - Terms to Know... 6 Ability to Repay (ATR)... 6 Qualified Mortgage (QM)... 6 Temporary QM... 6

More information

Break Out Session: Mortgage Loan Underwriting and Pricing

Break Out Session: Mortgage Loan Underwriting and Pricing Break Out Session: Mortgage Loan Underwriting and Pricing Agenda Ability to Repay (ATR)/Qualified Mortgages (QMs) Effective Date: Applications received on or after January 10, 2014 2013 Home Ownership

More information

The New Residential Mortgage Origination and Servicing Regulatory Landscape

The New Residential Mortgage Origination and Servicing Regulatory Landscape The New Residential Mortgage Origination and Servicing Regulatory Landscape September 27, 2013 Robert R. Davis American Bankers Association 1120 Connecticut Avenue, NW Washington, DC 20036 (202) 663 5588

More information

New Loan Origination and Mortgage Servicing Rules

New Loan Origination and Mortgage Servicing Rules 5/15/ New Loan Origination and Mortgage Servicing Rules Personal Finance Seminar for Professionals University of Maryland Extension Presenter: Diane Cipollone, Esq. Director of Training National Fair Housing

More information

Ability to Repay and Qualified Mortgages. Dave Loyst SVP Financial Institutions Group Stearns Lending, Inc.

Ability to Repay and Qualified Mortgages. Dave Loyst SVP Financial Institutions Group Stearns Lending, Inc. Ability to Repay and Qualified Mortgages Dave Loyst SVP Financial Institutions Group Stearns Lending, Inc. 1 Effective Date CFPB issued Final QM Rule January 2013 First revision to the final rule: May

More information

CFPB Ability-to- Repay Standard An analysis of the Consumer Financial Protection Bureau s Ability-to-Repay and Qualified Mortgage rule

CFPB Ability-to- Repay Standard An analysis of the Consumer Financial Protection Bureau s Ability-to-Repay and Qualified Mortgage rule www.pwcregulatory.com www.pwc.com/consumerfinance CFPB Ability-to- Repay Standard An analysis of the Consumer Financial Protection Bureau s Ability-to-Repay and Qualified Mortgage rule January 2013 A joint

More information

Client Alert. CFPB Ability to Repay Rules Issued. January 28, 2013. By Thomas J. Noto, Leonard N. Chanin, and Joseph Gabai

Client Alert. CFPB Ability to Repay Rules Issued. January 28, 2013. By Thomas J. Noto, Leonard N. Chanin, and Joseph Gabai January 28, 2013 CFPB Ability to Repay Rules Issued By Thomas J. Noto, Leonard N. Chanin, and Joseph Gabai SUMMARY On January 10, 2013, the Consumer Financial Protection Bureau issued much-anticipated

More information

Ability-to-Repay and Qualified Mortgage Rule

Ability-to-Repay and Qualified Mortgage Rule APRIL 10, 2013 Ability-to-Repay and Qualified Mortgage Rule SMALL ENTITY COMPLIANCE GUIDE 1 Please refer to our concurrent proposal about the changes we have proposed to this rule. This notice proposes

More information

QM - Qualified Mortgages. Internal Training Use only July 1, 2014 #T014

QM - Qualified Mortgages. Internal Training Use only July 1, 2014 #T014 QM - Qualified Mortgages Internal Training Use only July 1, 2014 #T014 Rules & Terms to Know QM ATR HPML High Cost Rebuttable Presumption Safe Harbor Excludable Discount Pts History of QM & ATR Rules The

More information

CLIENT AND FRIENDS BANKING UPDATE SILVER, FREEDMAN & TAFF, L.L.P. 3299 K STREET, N.W., SUITE 100, WASHINGTON, D.C.

CLIENT AND FRIENDS BANKING UPDATE SILVER, FREEDMAN & TAFF, L.L.P. 3299 K STREET, N.W., SUITE 100, WASHINGTON, D.C. CLIENT AND FRIENDS BANKING UPDATE SILVER, FREEDMAN & TAFF, L.L.P. 3299 K STREET, N.W., SUITE 100, WASHINGTON, D.C. 20007 (202) 295-4500 (202) 337-5502 www.sftlaw.com A DETAILED SUMMARY OF THE CFPB S FINAL

More information

ACTION ITEM REVISIONS AND MODIFICATIONS TO UNIVERSITY OF CALIFORNIA LOAN PROGRAM POLICIES AND PROCEDURES EXECUTIVE SUMMARY

ACTION ITEM REVISIONS AND MODIFICATIONS TO UNIVERSITY OF CALIFORNIA LOAN PROGRAM POLICIES AND PROCEDURES EXECUTIVE SUMMARY F9 Office of the President TO MEMBERS OF THE COMMITTEE ON FINANCE: For Meeting of November 14, 2013 ACTION ITEM REVISIONS AND MODIFICATIONS TO UNIVERSITY OF CALIFORNIA LOAN PROGRAM POLICIES AND PROCEDURES

More information

JANUARY 2014. Shopping for a mortgage? What you can expect under federal rules

JANUARY 2014. Shopping for a mortgage? What you can expect under federal rules JANUARY 2014 Shopping for a mortgage? What you can expect under federal rules You ll be offered a mortgage that s set up to be affordable. When you apply for a mortgage, you may struggle to understand

More information

New Mortgage Rules Update

New Mortgage Rules Update New Mortgage Rules Update 1 OBJECTIVES To provide information regarding the new mortgage rules, in particular: Ability-to-Repay/Qualified Mortgages; Mortgage Loan Origination Compensation; High-Cost Loans

More information

by: Stephen King, JD, AMLP

by: Stephen King, JD, AMLP Community Bank Audit Group Dodd-Frank Lending Issues June 2, 2014 by: Stephen King, JD, AMLP MEMBER OF PKF NORTH AMERICA, AN ASSOCIATION OF LEGALLY INDEPENDENT FIRMS 2013 Wolf & Company, P.C. Today s Agenda

More information

NEW CFPB RULES FOR HIGH COST MORTGAGES AND HOMEOWNERSHIP COUNSELING February 3, 2013

NEW CFPB RULES FOR HIGH COST MORTGAGES AND HOMEOWNERSHIP COUNSELING February 3, 2013 NEW CFPB RULES FOR HIGH COST MORTGAGES AND HOMEOWNERSHIP COUNSELING February 3, 2013 On January 10, 2013, the Consumer Financial Protection Bureau ( CFPB ) issued a final rule that carries out changes

More information

NCUA New Dodd-Frank Remittances and Mortgage Lending Rules Webinar. Part 2, December 18, 2013. Questions and Answers

NCUA New Dodd-Frank Remittances and Mortgage Lending Rules Webinar. Part 2, December 18, 2013. Questions and Answers NCUA New Dodd-Frank Remittances and Mortgage Lending Rules Webinar Topics covered: Regulation Z Mortgage Lending Rules Part 2, December 18, 2013 Questions and Answers Regulations X and Z Homeownership

More information

JULY 2015 METHODOLOGY. Canadian Surveillance Methodology for CDOs of Large Corporate Credit

JULY 2015 METHODOLOGY. Canadian Surveillance Methodology for CDOs of Large Corporate Credit JULY 2015 METHODOLOGY Canadian Surveillance Methodology for CDOs of Large Corporate Credit PREVIOUS RELEASE: JULY 2014 Canadian Surveillance Methodology for CDOs of Large Corporate Credit DBRS.COM 2 Contact

More information

Ability-to-Repay and Qualified Mortgage Rule

Ability-to-Repay and Qualified Mortgage Rule OCTOBER 17, 2013 Ability-to-Repay and Qualified Mortgage Rule SMALL ENTITY COMPLIANCE GUIDE 1 The Bureau recently finalized changes to this rule. The June 2013 ATR/QM Concurrent Final Rule, July 2013 Final

More information

How To Get A Mortgage In The United States

How To Get A Mortgage In The United States AUGUST 14, 2013 Ability-to-Repay and Qualified Mortgage Rule SMALL ENTITY COMPLIANCE GUIDE The Bureau recently finalized changes to this rule. The June 2013 ATR/QM Concurrent Final Rule and July 2013 Final

More information

EXPLOSION OF NEW MORTGAGE REGULATION

EXPLOSION OF NEW MORTGAGE REGULATION EXPLOSION OF NEW MORTGAGE REGULATION ABILITY TO REPAY/QUALIFIED MORTGAGE RULE Mortgage Regulation Teleseminar Series January 24, 2013 FINANCIAL SERVICES REGULATORY GROUP Leonard A. Bernstein lbernstein@reedsmith.com

More information

Single-Family Legal Essentials: CFPB Rules. Part 1

Single-Family Legal Essentials: CFPB Rules. Part 1 Single-Family Legal Essentials: CFPB Rules Part 1 2 Introduction & Background Dodd-Frank Act Rulemaking Mandate Established CFPB and transferred authority over TILA, RESPA, and other consumer financial

More information

The New Mortgage Lending Process: A 2014 Check-Up and 2015 Planning

The New Mortgage Lending Process: A 2014 Check-Up and 2015 Planning The New Mortgage Lending Process: A 2014 Check-Up and 2015 Planning Copyright 2012 Tata Consultancy Services Limited No Legal Advice, Opinions, or Services Provided This presentation does not constitute

More information

Federal Reserve Issues Proposed Ability-to-Repay Rule

Federal Reserve Issues Proposed Ability-to-Repay Rule April 28, 2011 Federal Reserve Issues Proposed Ability-to-Repay Rule By Joseph Gabai On April 19, 2011, the Federal Reserve Board ( Board ) issued a proposed rule to implement ability-to-repay requirements

More information

ABILITY TO REPAY AND QUALIFIED MORTGAGE UNDERWRITING REFERENCE

ABILITY TO REPAY AND QUALIFIED MORTGAGE UNDERWRITING REFERENCE ABILITY TO REPAY AND QUALIFIED MORTGAGE UNDERWRITING REFERENCE October 29, 2014 In case of any queries regarding the information available in this guide, please reach us at qmteam@swmc.com. Sun West Mortgage

More information

High-Cost, Higher-Priced What s the Difference? Comparison of the Similarities and Differences of Terms in Regulation Z

High-Cost, Higher-Priced What s the Difference? Comparison of the Similarities and Differences of Terms in Regulation Z High-Cost, Higher-Priced What s the Difference? Comparison of the Similarities and Differences of Terms in Regulation Z Regulation Z uses the terms high-cost mortgage, higher-priced mortgage and higher-priced

More information

The CFPB s Ability-to-Repay Regulation Z Rules: (12 CFR 1026.43)

The CFPB s Ability-to-Repay Regulation Z Rules: (12 CFR 1026.43) The CFPB s Ability-to-Repay Regulation Z Rules: (12 CFR 1026.43) This has been updated to include changes from the CFPB final rule issued on September 13, 2013. In addition, this CompNOTES only covers

More information

Methodology. Rating Funds Backed by Corporate Credit Request for Comment

Methodology. Rating Funds Backed by Corporate Credit Request for Comment Methodology Rating Funds Backed by Corporate Credit Request for Comment CONTACT INFORMATION Mudasar Chaudhry Vice President European Structured Credit Tel. +44 (0)20 7855 6613 mchaudhry@dbrs.com Jerry

More information

4/20/2015. Dodd Frank Sections 1411 and 1412. Defines pretty specifically the terms and dimensions of each. On this one, you can't blame the CFPB

4/20/2015. Dodd Frank Sections 1411 and 1412. Defines pretty specifically the terms and dimensions of each. On this one, you can't blame the CFPB Ability To Repay and Qualified Mortgages Presented by: TriComply, a Temenos Product Presenter: Blair Rugh, Compliance Director Florida Banker's Association, Annual Consumer Compliance Seminar April 29

More information

Higher Priced Mortgage Loans Higher Priced Covered Transactions Qualified Mortgages High Cost Mortgage Loans Total Points and Fees

Higher Priced Mortgage Loans Higher Priced Covered Transactions Qualified Mortgages High Cost Mortgage Loans Total Points and Fees Seeded and Actual Questions from our Dodd Frank Act Mortgage Regulations Implementation Workshops Fort Walton Beach, Orlando, and Tampa September 2013 Ability to Repay Lending Questions 1. We are not sure

More information

Credit Acceptance Auto Loan Trust 2013-2

Credit Acceptance Auto Loan Trust 2013-2 Presale Report Analysts Lain Gutierrez +1.212.806.3922 lgutierrez@dbrs.com Chris O Connell +1.212.806.3253 coconnell@dbrs.com Credit Acceptance Auto Rating Debt Class Size Coupon Rating Rating Action Class

More information

CFPB proposes amendments to the ability-to-repay and qualified mortgage rules

CFPB proposes amendments to the ability-to-repay and qualified mortgage rules 1 MARCH 15, 2013 CFPB proposes amendments to the ability-to-repay and qualified mortgage rules By Raymond J. Gustini and Lloyd H. Spencer The Consumer Financial Protection Bureau ( CFPB or the Bureau )

More information

MAY 2016 METHODOLOGY. Rating Credit Funds

MAY 2016 METHODOLOGY. Rating Credit Funds MAY 2016 METHODOLOGY Rating Credit Funds Rating Credit Funds DBRS.COM 2 Contact Information Mudasar Chaudhry Vice President European Structured Credit Tel. +44 (0)20 7855 6613 mchaudhry@dbrs.com Jamie

More information

CFPB Mortgage Amendments. Get Caught Up!

CFPB Mortgage Amendments. Get Caught Up! CFPB Mortgage Amendments Get Caught Up! Agenda HPML Appraisal Requirements High Cost Mortgage QM Points and Fees QM Cure Provision HPML Escrow Requirements HMDA Revisions Loan Estimate Form Closing Disclosure

More information

Regulatory Practice Letter February 2013 RPL 13-07

Regulatory Practice Letter February 2013 RPL 13-07 Regulatory Practice Letter February 2013 RPL 13-07 High Cost Mortgages and Homeownership Counseling; Escrow Requirements - CFPB Final Rules Executive Summary The Bureau of Consumer Financial Protection

More information

1/22/2013. Mortgage U, Inc. Copyright 2012 Mortgage U, Inc. Copyright 2012 Mortgage U, Inc. Copyright 2012 Mortgage U, Inc.

1/22/2013. Mortgage U, Inc. Copyright 2012 Mortgage U, Inc. Copyright 2012 Mortgage U, Inc. Copyright 2012 Mortgage U, Inc. Mortgage U, Inc Compliance Is A New World Consumer Financial Protection Bureau Qualified Mortgage QM final rule Points and fees amendment High Cost Mortgage Rules High Cost Appraisal Rules ECOA & HMDA

More information

Minnesota Credit Union Network

Minnesota Credit Union Network Minnesota Credit Union Network MnCUN CoMpliaNCe RefeReNCe GUide CFPB Mortgage Rules Summary Ability-to-Repay Rule Qualified Mortgage Rule Loan Originator Rule Home Ownership & Equity Protection Act Appraisals

More information

ABILITY TO REPAY/QUALIFIED MORTGAGE RULE

ABILITY TO REPAY/QUALIFIED MORTGAGE RULE ABILITY TO REPAY/QUALIFIED MORTGAGE RULE Overview Information contained in this document is proprietary to Quicken Loans Inc. and may not be reproduced or disclosed without written authorization. This

More information

Comparison of Section 35(HPML) & Section 32(HOEPA) Regulations Including CFPB 2013 & 2014 Updates As of 01/07/2014

Comparison of Section 35(HPML) & Section 32(HOEPA) Regulations Including CFPB 2013 & 2014 Updates As of 01/07/2014 Comparison of Section 35(HPML) & Section 32(HOEPA) Regulations Including CFPB 2013 & 2014 Updates As of 01/07/2014 General Consumer Loan Type Not Applicable HPML (12 CFR 1026.35) A closed-end consumer

More information

Dodd Frank Act: Mortgage Rules

Dodd Frank Act: Mortgage Rules Dodd Frank Act: Mortgage Rules Karen M. Neeley 2012, Cox Smith Matthews Incorporated 1 Save the date! The following is a summary of the CFPB rules implementing Dodd Frank Act mortgage requirements. The

More information

Appendix D: Questions and Answers Section 120. Questions and Answers on Risk Weighting 1-to-4 Family Residential Mortgage Loans

Appendix D: Questions and Answers Section 120. Questions and Answers on Risk Weighting 1-to-4 Family Residential Mortgage Loans Questions and Answers on Risk Weighting 1-to-4 Family Residential Mortgage Loans 1. When do 1-to-4 family residential mortgages receive 100% risk weight? Any 1-to-4 family residential mortgage loan that

More information

Ability to Repay/Qualified Mortgages FAQ

Ability to Repay/Qualified Mortgages FAQ The Ability to Repay (ATR)/Qualified Mortgages (QM) provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act require lenders to make a reasonable, good faith determination of a borrower

More information

TILA Higher-Priced Mortgage Loans (HPML) Escrow Rule

TILA Higher-Priced Mortgage Loans (HPML) Escrow Rule JANUARY 6, 2014 TILA Higher-Priced Mortgage Loans (HPML) Escrow Rule SMALL ENTITY COMPLIANCE GUIDE This guide has been updated for the following changes - the May 2013 Final Rule and October 2013 Final

More information

Ability to Repay and Qualified Mortgage Rule

Ability to Repay and Qualified Mortgage Rule Ability to Repay and Qualified Mortgage Rule The Consumer Financial Protection Bureau adopted a rule that implements the Ability to Repay and Qualified Mortgage ( ATR/QM ) provisions of the Dodd-Frank

More information

Standards for Determining Monthly Debt and Income Appendix Q

Standards for Determining Monthly Debt and Income Appendix Q Standards for Determining Monthly Debt and Income Appendix Q October 2014 2012 Genworth Financial, Inc. All rights reserved. Agenda What we will cover General Income Requirements Documentation Requirements

More information

Mortgage Lending in the Near Term: The Good, the Bad and the Ugly. Douglas Winn President Wilary Winn LLC

Mortgage Lending in the Near Term: The Good, the Bad and the Ugly. Douglas Winn President Wilary Winn LLC Mortgage Lending in the Near Term: The Good, the Bad and the Ugly Douglas Winn President Wilary Winn LLC Agenda Today s Topics 1. Regulatory environment CFPB and Proposed Risk Based Capital rules 2. Expected

More information

ATR and QM Effective Date

ATR and QM Effective Date The Consumer Financial Protection Bureau (CFPB) has issued the final regulations to implement the Ability to Repay (ATR) and Qualified Mortgage (QM) provisions under the Dodd-Frank Act. Greenbox Loans

More information

Mortgage Lending laws and how it affects you, the REALTOR. Presented by Anders Hostelley and Leonard Loventhal

Mortgage Lending laws and how it affects you, the REALTOR. Presented by Anders Hostelley and Leonard Loventhal Mortgage Lending laws and how it affects you, the REALTOR. Presented by Anders Hostelley and Leonard Loventhal Secure and Fair Enforcement for Mortgage Licensing Act Title V of P.L. 110-289, the Secure

More information

CFPB Mortgage Rules: Planning for Upcoming Deadlines

CFPB Mortgage Rules: Planning for Upcoming Deadlines CFPB Mortgage Rules: Planning for Upcoming Deadlines Amy Avitable Director of Regulatory Compliance, TCS BaNCS Copyright 2012 Tata Consultancy Services Limited 1 Amy Avitable, JD, CPA Amy Avitable is a

More information

VIA OVERNIGHT MAIL, FACSIMILE TRANSMISSION: (2 0 2) 4 5 2-3 8 1 9 & E-MAIL: REGS.COMMENTS@FEDERALRESERVE.GOV

VIA OVERNIGHT MAIL, FACSIMILE TRANSMISSION: (2 0 2) 4 5 2-3 8 1 9 & E-MAIL: REGS.COMMENTS@FEDERALRESERVE.GOV WEINER BRODSKY SIDMAN KIDER PC 1 3 0 0 19th Street N W 5th Floor Washington DC 2 0 0 3 6-1 6 0 9 office: 2 0 2 6 2 8 2 0 0 0 facsimile: 2 0 2 6 2 8 2 0 1 1 www.wbsk.com July 19, 2011 VIA OVERNIGHT MAIL,

More information

National Banker Call

National Banker Call National Banker Call Loan Originator Compensation and HOEPA Final Rules Thursday, June 6, 2013 The information contained in this presentation is for informational purposes only and is provided as a public

More information

MORTGAGE PARTICIPATING LENDER AGREEMENT

MORTGAGE PARTICIPATING LENDER AGREEMENT MORTGAGE PARTICIPATING LENDER AGREEMENT This Agreement, entered into this day of, by and between the South Dakota Housing Development Authority ( SDHDA ), 3060 East Elizabeth Street, Pierre, South Dakota,

More information

24-1.1E. Restrictions and limitations on high-cost home loans.

24-1.1E. Restrictions and limitations on high-cost home loans. 24-1.1E. Restrictions and limitations on high-cost home loans. (a) Definitions. The following definitions apply for the purposes of this section: (1) "Affiliate" means any company that controls, is controlled

More information

VA Authorized Agent Agreement

VA Authorized Agent Agreement VA Authorized Agent Agreement This VA Authorized Agent Agreement (the Agreement ), entered into this day of, 20 (the Effective Date ) by and between Data Mortgage Inc., d/b/a Essex Mortgage ( Lender )

More information

Methodology. Subscription Loan (Capital Call)

Methodology. Subscription Loan (Capital Call) Methodology Subscription Loan (Capital Call) november 2009 contact information Matthew La Capra, CPA Senior Vice President - Structured Finance +1 212 806 3259 mlacapra@dbrs.com Jerry Van Koolbergen Senior

More information

Dodd Frank Act Mortgage Rules FAQs

Dodd Frank Act Mortgage Rules FAQs Dodd Frank Act Mortgage Rules FAQs Qualified Mortgage (QM) Criteria 3% Fee Cap What goes in to the calculation of fees? The same test is used for HOEPA and for QM. It includes everything that goes in to

More information

Ch. 46 PROPER CONDUCT OF LENDING 10 46.1 CHAPTER 46. PROPER CONDUCT OF LENDING AND BROKERING IN THE MORTGAGE LOAN BUSINESS

Ch. 46 PROPER CONDUCT OF LENDING 10 46.1 CHAPTER 46. PROPER CONDUCT OF LENDING AND BROKERING IN THE MORTGAGE LOAN BUSINESS Ch. 46 PROPER CONDUCT OF LENDING 10 46.1 CHAPTER 46. PROPER CONDUCT OF LENDING AND BROKERING IN THE MORTGAGE LOAN BUSINESS Sec. 46.1. Definitions. 46.2. Proper conduct of lending and brokering in the mortgage

More information

The New Ability-to-Pay Rules; Qualified Mortgage Lending under the Dodd-Frank Act

The New Ability-to-Pay Rules; Qualified Mortgage Lending under the Dodd-Frank Act The New Ability-to-Pay Rules; Qualified Mortgage Lending under the Dodd-Frank Act October 2011 Scott D. Samlin Partner T +1 212-398-5819 scott.samlin@snrdenton.com Stephen F. J. Ornstein Partner T +1 202-408-9122

More information

Dodd Frank Act Mortgage Regulations Implementation Gap Analysis

Dodd Frank Act Mortgage Regulations Implementation Gap Analysis POLICY CHANGES POL1 POL2 POL3 POL4 POL5 POL7 POL8 HPML & Reg B Appraisals HPML Appraisals Consumer (MH) Commercial & other consumer lenders compensation Tellers/Retail referral program Policy and/or SAFE

More information

Changes in Mortgage Regulation in 2013 Katie Wechsler December, 2012

Changes in Mortgage Regulation in 2013 Katie Wechsler December, 2012 Changes in Mortgage Regulation in 2013 Katie Wechsler December, 2012 In 2011 and 2012 the Federal banking agencies proposed several regulations to the mortgage industry, none of which have been finalized,

More information

NMLS #1820 TILA and Regulation Z Ability-to-Repay and Qualified Mortgage Rules TRUTH-IN-LENDING/REGULATION Z POLICY

NMLS #1820 TILA and Regulation Z Ability-to-Repay and Qualified Mortgage Rules TRUTH-IN-LENDING/REGULATION Z POLICY OVERVIEW TRUTH-IN-LENDING/REGULATION Z POLICY ABILITY TO REPAY (APPENDIX Q UNDERWRITING GUIDELINES) AND QUALIFIED MORTGAGE PROTECTIONS The Truth-In-Lending Act (TILA), in addition to requiring extensive

More information

Proposed Amendments to the Ability to Repay Standards under the Truth in Lending Act

Proposed Amendments to the Ability to Repay Standards under the Truth in Lending Act BILLING CODE: 4810-AM-P BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB-2013-0002] RIN 3170-AA34 Proposed Amendments to the Ability to Repay Standards under the Truth in Lending

More information

MORTGAGE REFORM AND THE IMPACT ON FINANCING AND FORECLOSURES

MORTGAGE REFORM AND THE IMPACT ON FINANCING AND FORECLOSURES MORTGAGE REFORM AND THE IMPACT ON FINANCING AND FORECLOSURES Lauren E. Winters, Senior Policy Analyst (503) 947-7039 Department of Consumer and Business Services, March 20, 2013 IMPORTANT INFORMATION ABOUT

More information

Mortgage Bankers and Brokers Association of New Hampshire

Mortgage Bankers and Brokers Association of New Hampshire Mortgage Bankers and Brokers Association of New Hampshire March 24, 2014 Ken Markison, MBA Regulatory Counsel Presented by David H. Stevens President, Mortgage Bankers Association Introduction Seven weeks

More information

Comparison of Section 35(HPML) & Section 43(HPCT) Regulations

Comparison of Section 35(HPML) & Section 43(HPCT) Regulations Comparison of Section 35(HPML) & Section 43(HPCT) Regulations As of 01/07/2014-VS General Consumer Loan Type Not Applicable A closed-end consumer credit transaction secured by the consumer s principal

More information

Summary of 2013 Mortgage Rules Issued by the Consumer Financial Protection Bureau

Summary of 2013 Mortgage Rules Issued by the Consumer Financial Protection Bureau Summary of 2013 Mortgage Rules Issued by the Consumer Financial Protection Bureau Promontory Financial Group, LLC 801 17th Street, NW, Suite 1100 Washington, DC 20006 +1 202 384 1200 promontory.com Contents

More information

TITLE I-RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS

TITLE I-RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS TITLE I-RESIDENTIAL MORTGAGE LOAN ORIGINATION STANDARDS Residential Mortgage Origination: Adds a number of new regulations and requirements to mortgage loan originators. The bill requires originators to

More information

Re: Docket No. CFPB-2013-0002 Proposed Amendments to the Ability-to-Repay Standards under the Truth in Lending Act (Regulation Z)

Re: Docket No. CFPB-2013-0002 Proposed Amendments to the Ability-to-Repay Standards under the Truth in Lending Act (Regulation Z) February 25, 2013 Monica Jackson Office of the Executive Secretary Consumer Financial Protection Bureau 1700 G Street, NW Washington, DC 20552 Re: Docket No. CFPB-2013-0002 Proposed Amendments to the Ability-to-Repay

More information

ATR/QM FAQs. Table of Contents. General

ATR/QM FAQs. Table of Contents. General Table of Contents General... 1 Ability to Repay (ATR)/Qualified Mortgage (QM)... 2 ATR Eligibility... 2 Qualifying Ratios... 3 Employment/Income... 4 Verifying Employment History (Employment Gaps)... 4

More information

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2009 SESSION LAW 2009-457 HOUSE BILL 1222

GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2009 SESSION LAW 2009-457 HOUSE BILL 1222 GENERAL ASSEMBLY OF NORTH CAROLINA SESSION 2009 SESSION LAW 2009-457 HOUSE BILL 1222 AN ACT TO UPDATE THE RATE SPREAD AND HIGH-COST HOME LOANS STATUTES, AND TO MAKE A CONFORMING CHANGE TO THE EMERGENCY

More information

DBRS Criteria: Rating Parent/Holding Companies and Their Subsidiaries

DBRS Criteria: Rating Parent/Holding Companies and Their Subsidiaries DBRS Criteria: Rating Parent/Holding Companies and Their Subsidiaries march 2010 CONTACT INFORMATION Peter Schroeder Manager Director Rating Committee +1 212 806 3284 ps@dbrs.com Kent Wideman, CFA Chief

More information

The Reconstruction of Mortgage Lending The Impact of the New CFPB and GSE Reform

The Reconstruction of Mortgage Lending The Impact of the New CFPB and GSE Reform The Reconstruction of Mortgage Lending The Impact of the New CFPB and GSE Reform UNC Banking Institute 2014 Thomas P. Vartanian thomas.vartanian@dechert.com 202-758-8137 2014 Dechert LLP Speakers Tom Vartanian

More information

BROKER AGREEMENT. NOW THEREFORE, in consideration of promises, covenants and agreements hereinafter contain, the parties agree as follows:

BROKER AGREEMENT. NOW THEREFORE, in consideration of promises, covenants and agreements hereinafter contain, the parties agree as follows: THIS AGREEMENT is entered into in the State of California this day of 2006, between Crestline Funding Corporation, hereinafter referred to as Crestline Funding, and, hereinafter referred to as Broker.

More information

Final Rule - The Mortgage Loan Without Ability to Repay

Final Rule - The Mortgage Loan Without Ability to Repay February 2013 Complying with the CFPB s Qualified Mortgage Rule: Issues for Implementation BY KEVIN L. PETRASIC & MICHAEL A. HERTZBERG On January 30, 2013, the Consumer Financial Protection Bureau ( CFPB

More information

Comparison of Section 32(HOEPA) Regulation; Current Rules vs. January 10, 2014 CFPB Changes As of 10/16/14

Comparison of Section 32(HOEPA) Regulation; Current Rules vs. January 10, 2014 CFPB Changes As of 10/16/14 Comparison of Section 32(HOEPA) Regulation; Current Rules vs. January 10, 2014 CFPB Changes As of 10/16/14 General Loan Type 1994 TILA amendments apply to homeowners that already owned their homes and

More information

MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another.

MORTGAGE TERMS. Assignment of Mortgage A document used to transfer ownership of a mortgage from one party to another. MORTGAGE TERMS Acceleration Clause This is a clause used in a mortgage that can be enforced to make the entire amount of the loan and any interest due immediately. This is usually stipulated if you default

More information