Mortgage Procedures And Regulations

Report
Mortgage Procedures And
Regulations
The continuing foreclosure crisis, increased governmental
regulation of the real estate and financial industries, and a
steady and high degree of media interest in Habitat’s work
make it critical to the continued success of the ministry that
Habitat partner family mortgages, both in their origination and
servicing, are of the highest quality and meet all relevant
standards.
The Mortgage Procedures and Regulations (MPAR) initiative
offers affiliates several distinct, but related, resource
collections that will be useful in improving the origination and
servicing of mortgage loans.
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MPAR Initiative
MPAR – who makes this possible
Legal
HFHI
Mortgage
Mavens
MPAR
Affiliate
Financial
Services
Government
Relations &
Advocacy
2
2
Setting our baseline
The CFPB?
4
Why you SHOULD be paying attention
• Increased government regulation
• Increased scrutiny
• Impact beyond regulators:
– Donors
– Media
– Families & general public
– Community partners (banks, governments, etc.)
Why you really, really SHOULD be
paying attention
CFPB COMPLAINT PORTAL
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Federal anti-money laundering
• Issued by the Treasury Department’s Financial
Crimes Enforcement Network, effective as of
August 2012
• Does not exempt any affiliate, regardless of size
or capacity
• Non-compliance carries severe criminal and civil
penalties
• Requires adoption and implementation of
affiliate-level policies & procedures
Federal anti-money laundering
1. Board review and adoption of AML Policy and
Procedures (template on MPAR page)
2. Designate a Compliance Officer
3. Conduct Risk Analysis according to template
4. Be prepared to file suspicious activities
reports (SARs) in accordance with your policy
and procedure
5. Be prepared to train all necessary staff and
volunteers
REMEMBER,
YOU AREN’T TOO
BIG TO JAIL!!!
See AML page on my.habitat for templates, FAQs and resources
Qualified Mortgage
• Ability-to-repay (ATR) rule & corollary Qualified
Mortgage (QM) set the floor for mortgages receiving
beneficial treatment by government
• Loans meeting QM standards are considered to
automatically meet ATR and have reduced liabilities
• Financial institutions have argued that they will
necessarily limit their products to QM
• Habitat was concerned that our loans wouldn’t meet
standard & we would lose donors and partners
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Qualified Mortgage continued
• The ability-to-repay rule sets a “ground floor” for what
constitutes a reliable mortgage, providing minimum
requirements for originators. A creditor must consider an
applicants:
–
–
–
–
–
–
–
–
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current or reasonably expected income or assets;
current employment status;
the monthly payment on the covered transaction;
the monthly payment on any simultaneous loan;
the monthly payment for mortgage-related obligations;
current debt obligations, alimony and child support;
the monthly debt-to-income ratio or residual income; and
credit history.
Qualified Mortgage continued
Exemption:
• Released May 29th, rule goes into effect January 10th.
• Proposed for nonprofits with Habitat in mind
– Not all nonprofits; only those focused on low and moderate
income
– 200 extensions of credit annual limit
• Banking partners will need to learn and feel comfortable
with exemption
• Still a number of moving parts
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New federal servicing rules: A brave
new world?
CFPB established national mortgage servicing standards
• Cannot emphasize enough how big a change that is
– New expenses, new consumer protections & liabilities
– Will shift the servicing landscape
• Changes go into effect on January 10, 2014
• Small servicers were provided certain exemptions
– If you use third-party servicers who service over 5,000 loans,
servicing exemptions do not apply
• States, mortgage settlements, and other regulators may
add in additional requirements
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New federal servicing rules &
exemptions
9 new requirements (50,000 foot version)
1.Mortgage periodic statements UNDER 5000 EXEMPT
2.Interest rate adjustments NOT APPLICABLE
3.Prompt credit of payments NOT EXEMPT
4. Force-placed insurance NOT EXEMPT
5.Error resolution procedures & info requests NOT EXEMPT
6.General servicing policies and procedures EXEMPT
7.Early intervention for delinquent borrowers EXEMPT
8.Continuity of contact with delinquent borrowers EXEMPT
9.Loss mitigation procedures EXEMPT – WITH EXCEPTIONS
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The Safe Act – It won’t die!
However, in response to the concerns of the bona fide
nonprofit organization, the Bureau emphasizes that the
TILA qualification standards do not change existing law
regarding which entities or individuals must be licensed
under Federal or State law.
Accordingly, for instance, the standards for States to
determine whether a particular organization is a bona fide
nonprofit and whether to require such a nonprofit’s
employees to be licensed under the SAFE Act and
Page 350
of the
Regulation H are not affected by the final
rule.
The SAFE ACT
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CFPB Final Rule
The Safe Act – It won’t die!
New Requirements:
1.
2.
3.
Background checks
Criminal information
Other things
• Regardless of your affiliate’s exemption status
• Two different timelines, which will differ depending on your
state’s laws & regulations
• Doesn’t need to be sent to CFPB, state, etc. BUT, you need
to have it on file & available.
• Must be part of your affiliate’s policies & procedures. I.e.
your board should be aware.
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QRM… Why waste new letters?
QRM is an additional new rule addressing securitization of
loans
It is unclear what its standards will be; may end up same as
QM, may be more strict
It is unclear whether and how it will impact affiliates
Ultimately, rumors are that it will likely mirror QM
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State mortgage and foreclosure laws
• You ABSOLUTELY need to know about your state’s current
mortgage laws
– In 2011, 28 states enacted legislation regarding mortgages &
foreclosures. 44 states considered legislation.
– If you are not engaged in the conversation around these laws, you
are doing a disservice to your families and to Habitat.
• Oregon BIG foreclosure law changes:
– 175 foreclosed property threshold
– Exemptions require affidavits before or at the time of filing notice of
default.
– For more info:
www.doj.state.or.us/consumer/pages/foreclosure_mediation.aspx
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How are HFHI & MPAR team
helping affiliates to be prepare?
• Working directly with CFPB on guidance for Habitat
affiliates (QM, appraisals, etc.)
• Templates & timelines from Weiner, Brodsky, Kider, PC
• Trainings at all SSO conferences, affiliate summits, and
through MPAR My.Habitat page
• American Bankers Assoc. online trainings on all of the
major financial issues facing Habitat affiliates
• Assistance in coordinating with: 3rd party servicing;
origination; and coordination with large banks, community
banks, and state housing finance agencies
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