Before I pick up where I left off, I do want to clarify something that I said in last week's newsletter. I made the statement, "There is no effective date..." in discussing the changes to the QM rules, HMDA and the HPML escrow rules. While it is true that the law became effective on May 24, 2018, when President Trump put the pen to paper and signed "Bill," there is no guidance or regulation for institutions to follow so we cannot advise that the rules are in effect if there is no regulation to tell you how to comply with the law. Make sense? I understand the confusion and frustration that many of you are feeling, when the point of the law IS regulatory relief, but be patient... it IS coming. The Agencies began working on the Volcker Rule last week and, on Monday, jointly issued a proposal that would amend the Rule to provide banking entities with clarity about what activities are prohibited, improve supervision and implementation of the Rule, and simplify compliance. We can hope that some of the compliance provisions, such as HMDA or HPML escrow, will be addressed soon, but it is anybody's guess at this point.
Now, let's look at some more provisions in the new law:
- Title 1, Section 106 amends the S.A.F.E. Mortgage Licensing Act of 2008 to revise the Act's civil liability immunity provisions and to temporarily allow loan originators that meet specified requirements to continue to originate loans after moving:
- From one state to another, or
- From a depository institution to a non-depository institution.
- Title 1, Section 109 will amend the TRID rules to remove the 3-day waiting period requirement if the consumer received a second offer of credit from the same lender with a lower rate. It also expresses the "Sense of Congress" that the Bureau should issue clearer guidance on the application of TRID in relation to mortgage assumptions, construction-perm loans, and the reliability of the Bureau's model disclosures.
- Title 2, Section 210 amends the FDIC Act to raise eligibility for the 18-month exam cycle for those institutions with $3 billion in assets (increasing from the previous $1 billion in assets). Guidance will need to be provided to explain how those institutions currently scheduled for an exam will be handled (Will they still be examined this fall as originally planned on the 12 month schedule or do the regulators plan on re-doing their schedules and, thus, changing the dates of any currently scheduled exams?).
- Title 3 Section 301 amends the FCRA to increase the length of time a consumer reporting agency (CRA) must include a fraud alert in a consumer's file. It also: Requires a CRA to provide a consumer with free credit freezes and to notify a consumer of their availability;
- Establishes provisions related to the placement and removal of these freezes; and
- Creates requirements related to the protection of the credit records of minors.
- Title 3 Section 313 amends the Honoring America's Veterans and Caring for Camp Lejeune Families Act of 2012 to make permanent the one-year grace period during which a servicemember is protected from foreclosure after leaving military service. This protection is covered in the SCRA (HUD) past due notice that you give to your past due mortgage customers.
That wraps up this two-part series on our good friend "Bill" who made his journey all the way across Capitol Hill and actually became a law. I know everyone is excited to see what "Bill's future holds as regulatory relief cannot come soon enough, but think of it this way... You already have the processes in place and, as far as the older requirements go, it should be easy to continue to do so until you are told to do differently. With HMDA, many of you have just spent a good deal of money to get your systems ready to be able to collect and report under the new requirements. Can you even go back to doing so under the old rules without having to spend more money? Take some time to breathe and relax. As I keep saying, it is coming. They have no choice now. So, be patient and just keep doing what you have been doing until we are told to do differently.