1099 pages...are you kidding me!!!???

No pictures today, instead a brief note about something all of us will be effected. Here is a brief breakdown: Yesterday, the Consumer Financial Protection Bureau (CFPB) released a 1099-page Proposed Rule on combining required disclosures under TILA and RESPA and a Proposed HOEPA Rule, both of which were mandated by the Dodd-Frank Act. Public comments for most provisions in the proposed RESPA-TILA rule are due November 6, 2012, with certain exceptions (see below). Comments on the proposed HOEPA rule are due on September 7, 2012. The CFPB is proposing to impose a "zero tolerance" on (1) charges for services provided by an affiliate of the lender or broker; and (2) charges for services for which the lender or broker does not permit the consumer to shop. This means that the final charges at closing cannot exceed those provided in the Loan Estimate (combined GFE and early TILA disclosure) that is provided no later than three (3) business days after a consumer submits a loan application. Exceptions to the application of these zero tolerances could arise when: (1) the consumer asks for a change; (2) the consumer chooses a service provider not identified by the lender; (3) information provided at application was inaccurate or becomes inaccurate; or (4) the Loan Estimate expires. With respect to closed-end loans, the the CFPB proposes to include most fees in the current definition of “finance charge” under TILA that previously were excluded. This is important because the "finance charge" is counted towards the 3% "points and fees" threshold that determines whether a loan is a Qualified Mortgage (QM) under the Dodd-Frank Abiity to Repay standards and towards the 5% "points and fees" threshold that determines whether a loan is a HOEPA loan,. Therefore, if the CFPB includes these additional fees in the “finance charge”, a greater percentage of affiliated loans would exceed the 3%-5% “points and fees” thresholds and not qualify as a QM or qualify as a HOEPA loan. Affiliated loans would be particularly hard hit since Dodd-Frank and HOEPA already require that lenders count many affiliated settlement services -- but not unaffiliated settlement services -- towards these "points and fees" thresholds. The CFPB stated in its proposed rule that this new definition of “finance charge” would potentially cause more loans to hit the "points and fees" triggers, and proposed two different methods of reconciling the expanded definition of the finance charge with the points-and-fees triggers. The rule would replace the HUD-1 with the Closing Disclosure, and would require that the Closing Disclosure be provided to the consumer no later than three (3) business days before the consumer closes on the loan. If changes occur between provision of the Closing Disclosure and closing, the consumer generally must be given a new, updated Closing Disclosure and the closing must be delayed for another three (3) business days in order to give the consumer time to review the Closing Disclosure (with some exceptions, such as changes resulting from negotiations between the buyer and the seller or changes that result in less than $100) in increased costs. Additionally, the CFPB has proposed two alternatives for who may provide the Closing Disclosure. Under the first alternative, the lender alone may deliver the document. Under the second alternative, the lender may rely on the settlement agent to provide the document; in that event, however, the lender would still be responsible for the accuracy of the Closing Disclosure. Here is the link for the Proposed Rule: http://files.consumerfinance.gov/f/201207_cfpb_proposed-rule_integrated-mortgage-disclosures.pdf Remember, it is only 1099 pages....happy reading. HAVE A GREAT DAY!! Kevin M. Breeland Residential Mortgage, LLC breelandk@residentialmtg.com