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M ortgage P rocedures A nd R egulations

M ortgage P rocedures A nd R egulations.

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M ortgage P rocedures A nd R egulations

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  1. Mortgage Procedures And Regulations The continuing foreclosure crisis, increased governmental regulation of the real estate and financial industries, and a steady and high degree of media interest in Habitat’s work make it critical to the continued success of the ministry that Habitat partner family mortgages, both in their origination and servicing, are of the highest quality and meet all relevant standards. The Mortgage Procedures and Regulations (MPAR) initiative offers affiliates several distinct, but related, resource collections that will be useful in improving the origination and servicing of mortgage loans. MPAR Initiative

  2. MPAR – who makes this possible Legal HFHI MPAR Affiliate Financial Services Mortgage Mavens Government Relations & Advocacy 2

  3. Setting our baseline

  4. The CFPB?

  5. Why you SHOULDbe paying attention • Increased government regulation • Increased scrutiny • Impact beyond regulators: • Donors • Media • Families & general public • Community partners (banks, governments, etc.)

  6. Why you really, really SHOULD be paying attention CFPB COMPLAINT PORTAL

  7. Federal anti-money laundering Issued by the Treasury Department’s Financial Crimes Enforcement Network, effective as of August 2012 Does not exempt any affiliate, regardless of size or capacity Non-compliance carries severe criminal and civil penalties Requires adoption and implementation of affiliate-level policies & procedures

  8. Federal anti-money laundering REMEMBER, YOU AREN’T TOO BIG TO JAIL!!! See AML page on my.habitat for templates, FAQs and resources Board review and adoption of AML Policy and Procedures (template on MPAR page) Designate a Compliance Officer Conduct Risk Analysis according to template Be prepared to file suspicious activities reports (SARs) in accordance with your policy and procedure Be prepared to train all necessary staff and volunteers

  9. Qualified Mortgage • Ability-to-repay (ATR) rule & corollary Qualified Mortgage (QM) set the floor for mortgages receiving beneficial treatment by government • Loans meeting QM standards are considered to automatically meet ATR and have reduced liabilities • Financial institutions have argued that they will necessarily limit their products to QM • Habitat was concerned that our loans wouldn’t meet standard & we would lose donors and partners

  10. Qualified Mortgage continued • The ability-to-repay rule sets a “ground floor” for what constitutes a reliable mortgage, providing minimum requirements for originators. A creditor must consider an applicants: • current or reasonably expected income or assets; • current employment status; • the monthly payment on the covered transaction; • the monthly payment on any simultaneous loan; • the monthly payment for mortgage-related obligations; • current debt obligations, alimony and child support; • the monthly debt-to-income ratio or residual income; and • credit history.

  11. Qualified Mortgage continued Exemption: • Released May 29th, rule goes into effect January 10th. • Proposed for nonprofits with Habitat in mind • Not all nonprofits; only those focused on low and moderate income • 200 extensions of credit annual limit • Banking partners will need to learn and feel comfortable with exemption • Still a number of moving parts

  12. New federal servicing rules: A brave new world? CFPB established national mortgage servicing standards • Cannot emphasize enough how big a change that is • New expenses, new consumer protections & liabilities • Will shift the servicing landscape • Changes go into effect on January 10, 2014 • Small servicers were provided certain exemptions • If you use third-party servicers who service over 5,000 loans, servicing exemptions do not apply • States, mortgage settlements, and other regulators may add in additional requirements

  13. New federal servicing rules & exemptions 9 new requirements (50,000 foot version) • Mortgage periodic statements • Interest rate adjustments • Prompt credit of payments • Force-placed insurance • Error resolution procedures & info requests • General servicing policies and procedures • Early intervention for delinquent borrowers • Continuity of contact with delinquent borrowers • Loss mitigation procedures UNDER 5000 EXEMPT NOT APPLICABLE NOT EXEMPT NOT EXEMPT NOT EXEMPT EXEMPT EXEMPT EXEMPT EXEMPT – WITH EXCEPTIONS

  14. The Safe Act – It won’t die! However, in response to the concerns of the bona fide nonprofit organization, the Bureau emphasizes that the TILA qualification standards do not change existing law regarding which entities or individuals must be licensed under Federal or State law. Accordingly, for instance, the standards for States to determine whether a particular organization is a bona fide nonprofit and whether to require such a nonprofit’s employees to be licensed under the SAFE Act and Regulation H are not affected by the final rule. Page 350 of the CFPB Final Rule The SAFE ACT

  15. The Safe Act – It won’t die! New Requirements: • Background checks • Criminal information • Other things • Regardless of your affiliate’s exemption status • Two different timelines, which will differ depending on your state’s laws & regulations • Doesn’t need to be sent to CFPB, state, etc. BUT, you need to have it on file & available. • Must be part of your affiliate’s policies & procedures. I.e. your board should be aware.

  16. QRM… Why waste new letters? QRM is an additional new rule addressing securitization of loans It is unclear what its standards will be; may end up same as QM, may be more strict It is unclear whether and how it will impact affiliates Ultimately, rumors are that it will likely mirror QM

  17. State mortgage and foreclosure laws • You ABSOLUTELY need to know about your state’s current mortgage laws • In 2011, 28 states enacted legislation regarding mortgages & foreclosures. 44 states considered legislation. • If you are not engaged in the conversation around these laws, you are doing a disservice to your families and to Habitat. • Oregon BIG foreclosure law changes: • 175 foreclosed property threshold • Exemptions require affidavits before or at the time of filing notice of default.  • For more info: www.doj.state.or.us/consumer/pages/foreclosure_mediation.aspx

  18. How are HFHI & MPAR team helping affiliates to be prepare? • Working directly with CFPB on guidance for Habitat affiliates (QM, appraisals, etc.) • Templates & timelines from Weiner, Brodsky, Kider, PC • Trainings at all SSO conferences, affiliate summits, and through MPAR My.Habitat page • American Bankers Assoc. online trainings on all of the major financial issues facing Habitat affiliates • Assistance in coordinating with: 3rd party servicing; origination; and coordination with large banks, community banks, and state housing finance agencies

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