Mortgage Legal and Compliance Report: January 2018

New Year, New Disclosures

Texas mortgage lenders have several new, noteworthy disclosures to provide borrowers in the new year. Effective January 7, 2018, the Texas Mortgage Company Disclosure is changing. The revised Texas Mortgage Company Disclosure replaces the current version found in section 80.200(a) of the Texas Administrative Code, and must be provided to loan applicants with their initial application by a residential mortgage loan originator sponsored by a Texas licensed residential mortgage company. The revised disclosure simplifies the current disclosure language, provides consistency with the Texas Mortgage Banker Disclosure in 7 TAC § 81.200(a), and clarifies that residential mortgage loan originators will be paid in accordance with Regulation Z. This new disclosure can be found here.

In addition, two new disclosures accompany the new Texas home equity lending constitutional amendments voted into law by Texas voters this past November.[1] First, there is a new section 50(g) or “12-day” disclosure that must be provided to borrowers at least 12 days before closing any home equity loan governed by section 50(a)(6) of the Texas Constitution. Originators with home equity borrowers in their pipeline must provide these new disclosures and wait at least 12 days before closing any home equity refinances in 2018.  Second, a different and new disclosure must be provided by those originators wishing to take advantage of the new constitutional provisions permitting the refinance of a home equity loan as a non-home equity, rate and term refinance. This new disclosure, required by section 50(f)(2)(D), must be provided within three business days of a borrower’s application (similar to the LE) and at least 12 days before closing.[2]

CFPB Eases HMDA Concerns

The CFPB recently published a Public Statement regarding HMDA data collected in 2018 and its intentions to reconsider certain aspects of the HMDA rule, available here. Beginning on January 1, 2018, financial institutions will submit HMDA data collected in 2017 and beyond using the CFPB’s new online platform.  The CFPB stated that it does not intend to require data re-submission unless data errors are material or assess penalties with respect to errors in data collected in 2018 and reported in 2019, and that any examinations of 2018 HMDA data will be diagnostic to help institutions identify compliance weaknesses and will credit good-faith compliance efforts. Furthermore, the CFPB announced it intends to open a rulemaking to reconsider various aspects of the 2015 HMDA rule, such as the institutional and transactional coverage tests and the rule’s discretionary data points. In a news release published the same day, the CFPB elaborated that this rule making may re-examine lending-activity criteria that determine whether institutions are required to report mortgage data; may look at adjusting the new requirements to report certain types of transactions; and may re-assess the additional information that the rule requires beyond the new data points specified under the Dodd-Frank Act.

The FDIC and OCC have also issued very similar statements with respect to how their examination staff will treat HMDA data, available here and here.

CFPB Updates Guide to TRID Disclosure Forms

The Consumer Financial Protection Bureau recently issued an updated version of the TILA-RESPA Integrated Disclosure (“TRID”) Guide to the Loan Estimate and Closing Disclosure forms. The revised Guide incorporates the changes to the TRID rule that were issued in July 2017 and published in the August 11, 2017 Federal Register.

 

[1] For a summary of these new amendments, review our November 2017 Legal and Compliance Update here.

[2] For a copy of these home equity disclosures, e-mail steven@kubiklawfirm.com