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April Clarifications To CFPB Mortgage Rules Made Final

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WASHINGTON (7/11/13)--The Consumer Financial Protection Bureau (CFPB) Wednesday finalized corrections, clarifications, and amendments to its Ability-to-Repay and mortgage servicing rules that were proposed in April.

The clarifications are meant to address questions that have been posed in the months since the rules were first issued in January.

CFPB Director Richard Cordray said in a release, "We know that effective implementation helps our rules deliver their intended value to consumer. We are listening closely to feedback on our rules, and today's clarifications show our willingness to make appropriate adjustments to achieve that goal."

The final rule:
  • Clarifies how to determine a consumer's debt-to-income (DTI) ratio;
  • Explains that CFPB's Real Estate Settlement Procedures Act (RESPA) rule does not preempt the field of servicing regulation by states;
  • Establishes which mortgage loans to consider in determining small servicer status for an exemption from some requirements; and
  • Clarifies the eligibility standard of the temporary Qualified Mortgage  provision under the Ability-to-Repay rule.
Use the resource link below for details on the CFPB's corrections, clarifications, and amendments.

More plain language compliance resources and updates of official regulatory interpretations, examination procedures and other materials addressing CFPB mortgage regulations will be unveiled in the coming months, the CFPB has said.

New: House GSE Reform Bill Is Unveiled

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WASHINGTON (7/11/13, UPDATE 12:34 P.M. ET)--The chairman of the House Financial Services Committee, Rep. Jeb Hensarling (R-Texas), and others of the committee's leadership unveiled a bill today they say is intended to "create a sustainable housing finance system."

The Protecting American Taxpayers and Homeowners--or PATH--Act would:
  • Phase out government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac within five years;
  • Increase competition by ending the federal government's domination of the housing finance market; and
  • Give consumers more choices in determining which mortgage product best suits their needs.
Hensarling also announced today the Financial Services Committee will meet on Thursday, July 18 to hold a hearing on the PATH Act.

On the Senate side last month, several senators co-sponsored bipartisan legislation that would wind down Fannie Mae and Freddie Mac and replace them with a new mortgage guarantor, the Federal Mortgage Insurance Corporation (FMIC). 

It was introduced by Sens. Bob Corker (R-Tenn.), Mark Warner (D-Va.), Mike Johanns (R-Neb.), Jon Tester (D-Mont.), Dean Heller (R-Nev.), Heidi Heitkamp (D-N.D.), Jerry Moran (R-Kan.) and Kay Hagan (D-N.C.).

Watch News Now Friday for more on the bill.

CUNA, World Council Back Bill To Repeal FATCA Provisions

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WASHINGTON (7/11/13)--Rep. Bill Posey's (R-Fla.) H.R. 2299, which would repeal the Internal Revenue Service's recent expansion of United States credit union and bank reporting rules with respect to interest on deposits paid to nonresident aliens, "would be instrumental in eliminating an unnecessary and unduly burdensome rule for credit unions," the Credit Union National Association and the World Council of Credit Unions wrote in a joint letter.

Posey's bill was introduced last month and has three co-sponsors.

CUNA President/CEO Bill Cheney and World Council President/CEO Brian Branch in the letter said they strongly oppose the IRS regulations that require U.S. financial institutions to report interest paid to nonresident aliens. This requirement, which is codified at 26 C.F.R. Sections 1.6049-4(b)(5), 1.6049-8, places an extraordinary burden on credit unions, the letter noted.

"Credit unions believe that while some reporting requirements can be justified, the IRS has not shown that this non-resident alien interest income reporting rule is necessary to implement any such statutory requirements, nor has it provided a compelling reason why the expanded reporting requirements are necessary," the credit union leaders wrote.

Posey noted the burdens that credit unions and banks would face thanks to this IRS requirement in a recent letter to Treasury Secretary Jack Lew. (See July 10 News Now story: House Member Pens Concerns Re: FATCA Compliance Cost, More.)

The legislator in his letter called for The Foreign Account Tax Compliance Act (FATCA) to be "either substantially amended or repealed, and replaced with a cooperative scheme that penalizes actual tax evasion without harming the innocent."

FATCA is designed to create a tax information reporting and withholding system for certain payments that are made to foreign financial institutions (FFIs) and other entities. Some provisions would apply to U.S. credit unions that make international payments. U.S. credit unions would also be required to identify and withhold on so-called "pass-thru payments" to FFIs involving transfers of U.S.-sourced investment or interest income an FFI that has not yet been subject to taxation.

Portions of FATCA that impact Form 1042-S filings are already in effect. Other provisions will be phased in between January 2014 and January 2017.

For the CUNA/World Council letter, use the resource link.

NCUA, Agencies Propose Mortgage Appraisal Exemption

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WASHINGTON (7/11/13)--Loans of $25,000 or less, certain "streamlined" refinancings, and certain loans secured by manufactured housing would be exempted from Dodd-Frank Act appraisal requirements for higher-priced mortgage loans under a proposed rule released by the National Credit Union Administration and fellow regulators on Wednesday.

"The proposed exemptions are intended to save borrowers time and money and to promote the safety and soundness of creditors," the NCUA, Consumer Financial Protection Bureau, Federal Reserve, Federal Deposit Insurance Corp., Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a joint release.

Comments on the proposal will be accepted until Sept. 9. However, the agencies said comments regarding a related Paperwork Reduction Act analysis will be due 60 days after the rule is published in the Federal Register.

Under the terms of the higher-priced mortgage loan regulations, mortgage lenders will have to hire licensed appraisers to perform a physical inspection of a home's interior before making a loan that falls within the definition of a higher-priced mortgage loan. Lenders must provide homebuyers with a free copy of the resulting home appraisal report.

High-priced mortgages will be considered non-qualified residential mortgages that are secured by a principal dwelling with annual percentage rates that exceed the average prime offer rate by 1.5% for first-lien loans, 2.5% for first-lien jumbo loans, and 3.5% for junior lien loans.

The rule provides a safe harbor for compliance purposes, as well as exemptions for several types of transactions, including "qualified mortgages" and reverse mortgages. The higher-risk mortgage appraisal requirements will go into effect on Jan. 18, 2014.

For more on the joint agency proposed rule, use the resource link.

Autoland Service Purchased By Mission FCU

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WASHINGTON (7/11/13)--Mission FCU, San Diego, Calif., purchased national car-buying credit union service organization Autoland on Wednesday, the National Credit Union Administration announced.

The NCUA held an interest in Autoland due to its role as liquidating agent of the former Telesis Community CU. The agency had operated the Chatsworth, Calif.-based auto buying service since May 2012.

Autoland was founded in 1971 and currently serves more than 200 credit unions nationwide. The firm reported a 17% year-over-year increase in sales in the first quarter of 2013 as credit union members continued to take advantage of available credit to replace aging vehicles.

For the full NCUA release, use the resource link.

CFPB Fights Harmful Debt Collection Practices

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WASHINGTON (7/11/13)--Look out harmful-debt-collection-practitioners, the Consumer Financial Protection Bureau has you in its sights. On Tuesday,  the CFPB issued two bulletins putting companies on notice about harmful debt collection practices, released new consumer tools to deal with problem debt collectors, and started taking complaints about debt-collection problems related to any consumer debt, including credit cards, mortgages and student loans.
 
In its first bulletin, the bureau explains that under the Dodd-Frank Wall Street Reform and Consumer Protection Act, debt collectors are statutorily prohibited from committing unfair, deceptive, or abusive acts or practices. The bulletin serves to clarify what such practices are.
 
The second bulletin serves as guidance to creditors, debt buyers, and third-party collectors about compliance with the Fair Debt Collection Practices Act  and sections of the Dodd-Frank Act  "when making representations about the impact that payments on debts in collection may have on credit reports and credit scores."
 
The CFPB also released a new tool to help consumers faced with debt-collection woes--a compilation  of five letters they can use when replying to collectors: The letters may help consumers get valuable information about claims being made against them, or may help them protect themselves from "inappropriate or unwanted collection activities."
 
Use the resource link for more details of the CFPB's actions.

Data Privacy Scrutinized At House CFPB Hearing

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WASHINGTON (7/11/13)--As the data collection practices of the National Security Administration continue to come under broad-based scrutiny, the House Financial Services financial institutions and consumer credit subcommittee this week held a hearing to examine the Consumer Financial Protection Bureau's own consumer data collection practices.

Subcommittee Chairman Shelley Moore Capito (R-W.Va.) in her opening remarks cited news reports that indicated data on as many as 10 million Americans is held by the CFPB.

The CFPB maintains a database of consumer complaints related to credit cards, deposit accounts, mortgage loans, student loans and consumer loans, and plans to add consumer complaints on other types of financial products over time.

Steve Antonakes, the bureau's acting deputy director, in a prepared statement said access to data containing personal identifiers is sometimes necessary for the CFPB to fulfill its broader mission to protect consumers.

Moore Capito also said she is concerned about the use and storage of personally identifiable information when collecting consumer data files, noting that the U.S. Government Accountability Office and others have found serious deficiencies with the CFPB's systems and controls for the data the bureau and contracted entities are collecting.

"Despite the clear intent of Congress for the CFPB to not collect personally identifiable information, the CFPB acknowledged in a fall 2012 system of records notice that the agency will be collecting personally identifiable information that will be held indefinitely to match data files with other records in order to provide the CFPB with more comprehensive data sets to analyze...We simply do not know the extent to which the CFPB is collecting, storing, or having outside contractors collect and store consumers personally identifiable information," she added.

The Credit Union National Association has expressed concern that the public data release could have unintended consequences and has worked with the bureau to address concerns.

CUNA has warned that sensitive or confidential business or consumer information could be inadvertently disclosed when consumer complaints are filed in the database. "The bureau should take steps to minimize privacy risks and other unintended consequences," CUNA has said in a series of comment letters.