Homeownership Counseling (12 CFR )

Transcription

1 (12 CFR ) The Consumer Financial Protection Bureau s (CFPB) new mortgage rules include new requirements for providing federally-related mortgage loan applicants with a list of homeownership counseling resources. These requirements must be implemented by January 10, November 11, 2013 For the latest information please see CUNA s eguide to Federal Laws and Regulations Colleen Kelly Regulatory Compliance CREDIT UNION NATIONAL ASSOCIATION

2 1 TABLE OF CONTENTS Types of Mortgages Covered 2 Homeownership Counseling Requirement 2 RESPA Homeownership List 2 Timing and Delivery of RESPA Homeownership List 2 Data Instructions 3 Combined Notices 3 List Provided by Mortgage Broker or Dealer 4 Delivery Methods 4 Open-End Lines of Credit 4 When the List is Not Required 4 Joint Applicants 5 Joint Lenders 5 Exemptions 5

3 2 Types of mortgages covered by the RESPA homeownership counseling rule The types of mortgages affected by the RESPA homeownership counseling rule include all federally related mortgage loans (first and subordinate liens on residential real property designed for one to four families). This includes refinancings and loans on manufactured homes. Exceptions: loans on property of 25 acres or more, reverse mortgages, business loans, temporary financing, vacant land, assumptions without lender approval, loan conversions, or secondary market transactions. Homeownership Counseling In additional to the pre-loan counseling requirement for high-cost mortgages (HOEPA), the Dodd-Frank Act included two other counseling provisions: Pre-loan counseling for negative-amortization loans made to first-time borrowers (Truth in Lending, Regulation Z); and A requirement that all federally-related loan applicants receive a reasonably complete or updated list of homeownership counselors who are HUD certified (RESPA, Regulation X). This report addresses the new RESPA (Regulation X) homeownership counseling requirements. RESPA Homeownership List The RESPA homeownership counseling provisions require you only to provide members with a list of counseling resources near the loan applicant. It is up to the member to decide if he or she wants to get counseling the rule does not require them to do so. Timing and Delivery of List Not later than three business days after a credit union receives a mortgage application, or information sufficient to complete an application, the credit union must provide the member with a clear and conspicuous written list of homeownership counseling organizations that provide relevant counseling services in the loan applicant s location. This list must be obtained no more than 30 days prior to the time when the list is provided to the member from either: (1) A tool developed and maintained by the CFPB for lenders to use to comply with this requirement; or (2) Data made available by the CFPB or HUD for lenders to use to comply with this requirement, provided the data is used as directed by the accompanying instructions. The CFPB notes that the use of the data in accordance with the data instructions will produce a list consistent with what would be generated if the tool was used. [Lenders choosing this method and running up against the January 10, 2014 compliance date, may, while they are building their systems, direct borrowers to the CFPB s housing counseling agency website to obtain a list of housing counselors. According to the Bureau, this would achieve the goals of the regulation and would not raise supervisory or enforcement concerns. The following text should be used for this interim procedure:

4 3 Housing counseling agencies approved by the U.S. Department of Housing and Urban Development (HUD) can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost. If you are interested in contacting a HUD-approved housing counseling agency in your area, you can visit the Consumer Financial Protection Bureau s (CFPB) website, and enter your zip code. You call also access HUD s housing counseling agency website via For additional assistance with locating a housing counseling agency, call the CFPB at CFPB (2372). Regardless of the method the lender chooses to use, only HUD-approved counseling agencies may appear on the list. Data Instructions HUD maintains a free and publicly available application programming interface (API) containing data on HUDapproved housing counseling agencies (HUD API). Although it may appear on this site that a token is required to utilize this data, credentials are not required to access and use the data. The CFPB will make a summary of the data instructions available on the Bureau s website, along with a link to the publicly available housing counseling agency data. Lenders are required to provide a list of ten (10) HUD-approved housing counseling agencies. (This is the same number generated by the CFPB s tool). The Bureau believes that listing ten housing counseling agencies will ensure fairness and equity among the agencies by offering borrowers a thorough and diverse list of counseling options. Lenders are required to use the borrower s current five-digit zip code to generate a list of the ten closest HUDapproved housing counseling agencies, in descending order of proximity to the centroid of the zip code area. Lenders may offer borrowers, but are not required to, the option of generating the list from a zip code different than their home address, or from a more precise geographic marker such as a street address. Lenders are required to provide the following data fields for each housing counseling agency on the list to the extent that they are available through the HUD API: agency name, phone number, street address (preferable to mailing address, as available) city, state, zip code, website URL, address, counseling services provided (should be translated into its definitional meaning according to the Data Dictionary, available on HUD s website), and

5 4 languages spoken (should be translated into its definitional meaning according to the Data Dictionary, available on HUD s website). Lenders must also include the following language: The counseling agencies on this list are approved by the U.S. Department of Housing and Urban Development (HUD), and they can offer independent advice about whether a particular set of mortgage loan terms is a good fit based on your objectives and circumstances, often at little or no cost to you. This list shows you several approved agencies in your area. You can find other approved counseling agencies at the Consumer Financial Protection Bureau s (CFPB) website; consumerfinance.gov/mortgagehelp or by calling at CFPB (2372). You can also access a list of nationwide HUD-approved counseling intermediaries at Lenders should provide borrowers with the link to HUD-approved national counseling intermediaries, which offer phone counseling and online counseling services. These services are particularly useful to borrowers in remote areas or areas with few counseling agencies. Including this additional information will ensure that lendergenerated lists are consistent with information accompanying the lists generated by the CFPB s website. Combined Notices The list may be combined and provided with other Truth in Lending (Regulation Z) mortgage loan disclosures, unless specifically prohibited. Mortgage broker or dealer If a mortgage broker or dealer has already provided the list to your member, the credit union is not required to provide an additional list. However, the credit union, as the lender, is ultimately responsible for ensuring that the list is provided to the credit union member applying for the mortgage loan. Delivery Methods If the member has not received the list in person by either the credit union lender, the mortgage broker or mortgage dealer, then the credit union must mail or deliver the list to the member by some other means. It may be provided electronically, subject to compliance with consumer consent and other applicable ESIGN requirements. Open-end lines of credit (home equity plans) You may comply with the timing and delivery requirements above, or you may comply with Truth in Lending s Regulation Z, Requirements for home equity plans. Section states that the lender must provide the list at the time an application is provided to the member. The list may be delivered or placed in the mail not later than three business days following receipt of the application in the case of applications contained in magazines or other publications, or when the application is received by telephone or through an intermediary agent or broker. When the list is not required

6 5 (1) If, before the end of the three-business-day period from when the credit union receives the application, the credit union denies the loan application or the member withdraws the application the credit union is not required to provide the list of homeownership counseling organizations. (2) For an applicant of a reverse mortgage transaction; (3) For an applicant of a mortgage loan secured by a timeshare. Joint Applicants If there is more than one loan applicant, the required list of homeownership counselors or counseling organizations may be provided to any applicant with primary liability on the mortgage obligation. Joint Lenders If a mortgage loan involves more than one lender, only one list may be given to the loan applicant. The lenders must agree among themselves which lender will be required to comply with this requirement. Exemptions: Reverse mortgages Timeshare plans