NYMBA Talks to Congress

NYMBA members from across the country came went to Washington last week for the 2018 National Advocacy Conference to meet with elected officials and policymakers on behalf of the real estate finance industry.

Nearly 400 industry advocates from more than 40 states attended the MBA National Advocacy Conference last week. The program featured a slate of congressional and administration speakers, including Senate Banking Committee Chairman Mike Crapo, R-Idaho; HUD Deputy Secretary Pamela Patenaude; Sen. Bob Menendez, D-N.J., and House Financial Services Committee members French Hill, R-Ark.; Denny Heck, D-Wash.; and Trey Hollingsworth, R-Ind. On Apr. 25, more than 360 attendees participated in 230 official constituent meetings with their senators and representatives on Capitol Hill.

Source: Steve O’Connor soconnor@mba.org; Bill Killmer at (202) 557-2746 bkillmer@mba.org

Clearer Ruling is Good News, Borrowers / Lenders

The Bureau of Consumer Financial Protection (Bureau) is amending Federal mortgage disclosure requirements under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) that are implemented in Regulation Z. The amendments relate to when a creditor may compare charges paid by or imposed on the consumer to amounts disclosed on a Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith.

The TILA-RESPA Rule requires creditors to provide consumers with good faith estimates of the loan terms and closing costs required to be disclosed on a Loan Estimate. Under the rule, an estimated closing cost is disclosed in good faith if the charge paid by or imposed on the consumer does not exceed the amount originally disclosed, subject to certain exceptions. In some circumstances, creditors may use revised estimates, instead of the estimate originally disclosed to the consumer, to compare to the charges actually paid by or imposed on the consumer for purposes of determining whether an estimated closing cost was disclosed in good faith. If the conditions for using such revised estimates are met, the creditor generally may provide revised estimates on a revised Loan Estimate or, in certain circumstances, on a Closing Disclosure. However, under the current rule, circumstances may arise in which a cost increases but the creditor is unable to use an otherwise permissible revised estimate on either a Loan Estimate or a Closing Disclosure for purposes of determining whether an estimated closing cost was disclosed in good faith. This situation, which may arise when the creditor has already provided a Closing Disclosure to the consumer when it learns about the cost increase, occurs because of the intersection of timing rules regarding the provision of revised estimates. This has been referred to in industry as a “gap” or “black hole” in the TILA-RESPA Rule.

The Bureau understands that these circumstances have led to uncertainty in the market and created implementation challenges that may have consequences for both consumers and creditors. If creditors cannot pass increased costs to consumers in the specific transactions where the costs arise, creditors may spread the costs across all consumers by pricing their loan products with added margins. The Bureau also understands that some creditors may be denying applications, even after providing the Closing Disclosure, in some circumstances where the creditor cannot pass otherwise permissible cost increases directly to affected consumers, which can have negative effects for those consumers. For these reasons, in July 2017, the Bureau proposed to address the issue by specifically providing that creditors may use Closing Disclosures to reflect changes in costs for purposes of determining if an estimated closing cost was disclosed in good faith, regardless of when the Closing Disclosure is provided relative to consummation (2017 Proposal or “the proposal”).  The Bureau is finalizing those amendments as proposed, with minor clarifying changes. To view the complete ruling, click here.

CFPB closes “gap” in TILA-RESPA Rule

The Bureau of Consumer Financial Protection (Bureau) is amending Federal mortgage disclosure requirements under the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) that are implemented in Regulation Z. The amendments relate to when a creditor may compare charges paid by or imposed on the consumer to amounts disclosed on a Closing Disclosure, instead of a Loan Estimate, to determine if an estimated closing cost was disclosed in good faith.

The TILA-RESPA Rule requires creditors to provide consumers with good faith estimates of the loan terms and closing costs required to be disclosed on a Loan Estimate. Under the rule, an estimated closing cost is disclosed in good faith if the charge paid by or imposed on the consumer does not exceed the amount originally disclosed, subject to certain exceptions. In some circumstances, creditors may use revised estimates, instead of the estimate originally disclosed to the consumer, to compare to the charges actually paid by or imposed on the consumer for purposes of determining whether an estimated closing cost was disclosed in good faith. If the conditions for using such revised estimates are met, the creditor generally may provide revised estimates on a revised Loan Estimate or, in certain circumstances, on a Closing Disclosure. However, under the current rule, circumstances may arise in which a cost increases but the creditor is unable to use an otherwise permissible revised estimate on either a Loan Estimate or a Closing Disclosure for purposes of determining whether an estimated closing cost was disclosed in good faith. This situation, which may arise when the creditor has already provided a Closing Disclosure to the consumer when it learns about the cost increase, occurs because of the intersection of timing rules regarding the provision of revised estimates. This has been referred to in industry as a “gap” or “black hole” in the TILA-RESPA Rule.

The Bureau understands that these circumstances have led to uncertainty in the market and created implementation challenges that may have consequences for both consumers and creditors. If creditors cannot pass increased costs to consumers in the specific transactions where the costs arise, creditors may spread the costs across all consumers by pricing their loan products with added margins. The Bureau also understands that some creditors may be denying applications, even after providing the Closing Disclosure, in some circumstances where the creditor cannot pass otherwise permissible cost increases directly to affected consumers, which can have negative effects for those consumers. For these reasons, in July 2017, the Bureau proposed to address the issue by specifically providing that creditors may use Closing Disclosures to reflect changes in costs for purposes of determining if an estimated closing cost was disclosed in good faith, regardless of when the Closing Disclosure is provided relative to consummation (2017 Proposal or “the proposal”).  The Bureau is finalizing those amendments as proposed, with minor clarifying changes. To view the complete ruling, click here.

MBA Submits Comment Letter on CFPB RFI on Civil Investigative Demands

On Apr. 26, MBA submitted comments on the Consumer Financial Protection Bureau’s Request for Information on Civil Investigative Demands. MBA’s comments communicated many of the industry’s concerns with the CID process. In addition to offering comments related to the CID process, MBA reiterated its support for a broad reexamination of Bureau practices as detailed in MBA’s CFPB 2.0: Advancing Consumer Protection white paper.

CIDs are used by the Bureau to request information that may be relevant to a potential violation of consumer financial protection law. Responding to a CID is a very burdensome process that can involve significant resources and reputational harm. The letter describes aspects of the current CID process that are unfair, including the overly broad notification of purpose statements, the low threshold of initiating an investigation, the inadequate CID challenge process, and the unrealistic timelines. These and other aspects of the current CID process contribute to an imbalance between the Bureau and CID recipient that’s contrary to due process protections. The comment letter offers suggestions to correct this imbalance in a way that recognizes the costs and reputational risks to CID recipients.

Source and for more information please contact Justin Wiseman at (202) 557-2854 jwiseman@mba.org; or Blake Chavis at (202) 557-2930 bchavis@mba.org.

2018 NYMBA Convention–It’s a Wrap!

We had a great event at the 2018 “Exceeding the Vision” Annual Convention!  Great speakers, relevant topics and prime networking opportunities.  Check it out–we had a blast!

Click here to see some highlights of the 2018 Convention in Albany.