Topics In This Issue
• Federal Issues
• Firm News
• Consumer Finance
• E-Financial Services
• Privacy/Data Security
• Criminal Enforcement Action
Federal Reserve Proposes Rule Under Regulation Z Concerning a Consumer’s Ability to Repay. On April 18, the Federal Reserve Board proposed a new rule under Regulation Z that would require creditors to determine a consumer’s ability to repay a mortgage before making a loan and establish minimum mortgage underwriting standards. Promulgated in response to the Dodd-Frank Wall Street and Consumer Protection Act, the proposed rule would apply to all consumer mortgages except home equity lines of credit, timeshare plans, reverse mortgages, or temporary loans. It would provide creditors four ways to comply with the ability-to-repay requirement: (i) consider and verify specified underwriting factors, such as the consumer’s income or assets; (ii) make a "qualified mortgage," which provides the creditor with special protection from liability provided the loan does not have certain features; (iii) make a balloon-payment qualified mortgage if operating in a rural or underserved area; or (iv) refinance a "non-standard mortgage" with risky features into a more stable "standard mortgage" with a lower monthly payment. Comments on the proposed rule will be accepted until July 22, 2011. For a copy of the press release, please click here.
HUD Revises Mortgagee Advertising Guidelines. On April 15, HUD issued Mortgagee Letter 2011-17, which updates the advertising restrictions placed on FHA-approved mortgagees. Under the updated guidelines, an FHA-approved mortgagee may only use the official "FHA Approved Lending Institution" logo in advertisements if it is displayed in a discreet manner and is accompanied by conspicuous disclaimers that the mortgagee is not acting on behalf of HUD, the FHA or the federal government. Advertisements also must clearly identify the mortgagee’s name, location and contact information.
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