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July 13, 2012
As the CFPB races to finalize the ability to repay rule by year's end, a key House subcommittee took up the issue Wednesday at a hearing that brought together industry and consumer groups. Testifying on behalf of MBA, chairman-elect Debra Still, CMB, stressed that consumers would benefit from a final rule that defined qualified mortgages (QM) broadly, with clear and unambiguous standards and a legal safe harbor. Still and other witnesses also urged Congress to pass the Consumer Mortgage Choice Act, which would make important changes to the way the three percent cap on "points and fees" is calculated in the final QM rule.
In this Issue:
MBA Chairman-Elect Debra Still Testifies on Qualified Mortgage Rulemaking
On Wednesday, July 11, 2012, MBA Chairman-Elect Debra Still, CMB, testified on behalf of the Association before the House Financial Services Subcommittee on Financial Institutions and Consumer Credit during a hearing entitled "The Impact of Dodd-Frank's Home Mortgage Reforms: Consumer and Market Perspectives." Still underlined the widespread consequences of the qualified mortgage (QM) rule and the already present tightness of credit referenced by Chairman Ben Bernanke of the Federal Reserve and Secretary Shaun Donovan of the Department of Housing and Urban Development, urging for a broad definition, clear and unambiguous standards, and a strong legal safe harbor. Still also voiced MBA's support for the Consumer Mortgage Choice Act, a bipartisan bill that would provide necessary clarity to the industry. For more information, please contact Dion Spencer, (202) 557-2741 Ken Markison , (202) 557-2930, or Len Wolfson, (202) 557-2712.
New Ability to Repay/Qualified Mortgage Comment Letter
On Monday, July 9, 2012, MBA filed a comment letter, in response to the Bureau of Consumer Financial Protection (CFPB) reopening the comment period on the Ability-to-Repay/Qualified Mortgage rule (Regulation Z), specifically requesting comments on FHFA data on debt-to-income (DTI) ratios and foreclosure rates as well as the potential litigation costs involved with the qualified mortgage (QM) rule. MBA expressed the view that while DTI ratios could be useful in combination with other variables, the threshold should be set at 46 or higher. The letter notes that some states set their ability to repay thresholds at DTIs of 50. MBA also reiterated support for a broad QM with clear, objective standards and urged the CFPB to adopt a safe harbor, pointing out that litigation costs under a rebuttable presumption would be unpredictable and expensive. The result of a rebuttable presumption would be tighter underwriting standards that would shut out qualified borrowers and higher costs for all borrowers. There were several attachments to the letter including Legal Opinions from Ballard Spahr, Goodwin Proctor and Buckley Sandler. If you have questions, please contact Ken Markison, (202) 557-2980, or Justin Wiseman, (202) 557-2854.
New Proposed RESPA-TILA Integration Rule
On Monday, July 9 2012, the Bureau of Consumer Financial Protection (CFPB) released its RESPA-TILA integration rule and associated forms. The proposed rule would establish new forms including: a "Loan Estimate," which would combine HUD's good faith estimate and the early Truth-in-Lending (TIL) disclosures and a "Closing Disclosure" combining the HUD-1 and revised TIL disclosures. The proposed rule would establish several important rule changes including: a mandatory three-day waiting period between the provision of the Closing Disclosure and closing, a new "all-in APR" calculation for the finance charge, new zero tolerances for services provided by a lender or its affiliates, and several other new rules. Comments on the rule are due September 6 regarding changes to the finance charge and exemptions from Dodd-Frank disclosure requirements and November 6 for the remainder of the rule. Attached is MBA's preliminary summary of the proposed rule, as well as exhibits A & B as referenced in the summary. Attached is MBA's Early Summary of Key Points in CFPB's New Proposed RESPA-TILA Integration Rule and Association Forms. If you have questions, please contact Ken Markison, (202) 557-2980, or Justin Wiseman, (202) 557-2854.
CFPB Proposes New High-Cost Mortgage Rule
On Monday, July 9, 2012, the Bureau of Consumer Financial Protection Bureau (CFPB) issued a proposed rule, implementing high-cost mortgage and homeownership counseling provisions of Dodd-Frank that amend the Truth in Lending Act (TILA) and the Real Estate Settlement and Procedures Act (RESPA). The proposed rule expands the mortgage loans that are subject to the Home Ownership and Equity Projection Act (HOEPA) by lowering the percentage rate triggers for coverage, tightening the points and fees test and establishing a new prepayment penalty trigger. Loans would be HOEPA loans if: (1) their APR exceeds 6.5 percentage points over the average prime offer rate for a first-lien loan or eight percentage points for a second-lien loan; (2) the total points and fees payable by the consumer at or before closing exceeds five percentage points of the total loan amount; or (3) prepayment penalties extend beyond 36 months or exceed two percent of the loan amount. Also, the Proposed Rule would require lenders to provide a list of homeownership counselors or counseling organizations to applicants for high-cost loans and requiring creditors to obtain documentation that a first-time borrower of a negatively amortizing loan has received homeownership counseling. Attached is MBA's preliminary summary of the proposed rule. If you have questions, please contact Ken Markison, (202) 557-2980, or Justin Wiseman, (202) 557-2854.
MBA Signs Joint Trade Association Letter to CFPB
On Wednesday, July 11, 2012, the Consumer Financial Protection Bureau received a joint trade association letter and exhibits, signed by the American Financial Services Association, Consumer Mortgage Coalition, and the Residential Servicing Coalition, regarding its April 9 SBREFA outline of future servicing rules under consideration and the prototypes of a periodic mortgage statement under section 1420 of the Dodd-Frank Act. The letter included a general set of principles for CFPB to consider while drafting the Notice of Proposed Rulemaking and Final Rule and addressed, as well, lender-placed insurance, prompt crediting of payments, pay-off amounts, error resolution, interest rate adjustment notices, the Springside prototype monthly statement, early intervention for troubled or delinquent borrowers and continuity of contact. For more information, please contact Vicki Vidal, (202) 557-2861, or Sandra Troutman, (202) 557-2858.
House Financial Services Subcommittee Holds Hearing on Dodd-Frank Act
On Tuesday, July 10, 2012, the House Financial Services Subcommittee on Capital Markets and GSEs held a hearing entitled "The Impact of Dodd-Frank on Customers, Credit, and Job Creators." Testimonies outlined the economic impediments created by implementation of Dodd-Frank, yet Representative Brad Miller (D-NC) maintained that those in support of a repeal are "planting seeds for the next final crisis." Testimonies cited Dodd-Frank as an economic impediment, but when directly asked, all seven of those testifying did not support repeal. July 21, 2012 will mark the anniversary of Dodd-Frank's enactment. For more information, please contact Dion Spencer, (202) 557-2741, or Len Wolfson, (202) 557-2712.
Congressional Hearings:
July:
19 House Financial Services Subcommittee on Oversight and Investigations: Who's in Your Wallet? Dodd-Frank's Impact on Families, Communities, and Small Businesses
House Financial Services Subcommittee on Financial Institutions and Consumer Credit: The Impact of Dodd-Frank on Consumer Choice and Access to Credit.
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Mortgage Bankers Association of Metropolitan Washington PO Box 1522, Olney, MD 20830-1522 (301)924-0633 fax (301)924-4124 info@mbamw.org www.mbamw.org   
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