High-Cost (HOEPA) Mortgage Transaction secured by High-cost (HOEPA) mortgage loans Standard TILA liability, plus: an amount New definitions in Reg. Z §32 need careful consumer’s principal dwelling are subject to additional disclosure equal to the sum of all finance charges and consideration Loans that meets either the APR requirements and limits on loan terms fees paid by the consumer (unless creditor 78 Fed. Reg. 6857 (1/31/13) Consider effect of lowering the APR or points & fees demonstrates that failure to comply is not “trigger” Effective Date: January 10, 2014 “triggers” or new prepayment fee material) “trigger” Consider effect of lowering the points & “trigger” 3year statute of limitations for private fees and expanding the scope of “trigger” Exclusions: reverse mortgage; actions points & fees construction loan State A.G. may bring action under a 3year Note: Applies to HELOCs statute of limitations Significant assignee liability Ability to Repay/Qualified Loan secured by a dwelling Prohibits making loan unless lender Standard TILA liability, plus: an amount Consider if non-qualified mortgage Mortgage makes determination of borrower’s equal to the sum of all finance charges and will be made ability to repay (“ATR”) fees paid by the consumer (unless creditor 78 Fed. Reg. 6408 (1/30/13) Underwriters need to begin understanding Exclusions: HELOC; reverse demonstrates that failure to comply is not Effective Date: January 10, 2014 Creditor is deemed to have complied ATR obligations and mortgage” “qualified mortgage; bridge loan; material) with ATR obligation if loan is not obligations construction loan; priced” and complies with 3year statute of limitations for private “higher construction phase (12 months or mortgage” requirements actions “qualified less) of (called harbor”) “safe A.G. may bring action under a 3year loan Creditor is presumed to have complied statute of limitations with ATR obligation if loan is “higher priced” and complies with “qualified mortgage” requirements Exceptions: No ATR obligation for certain refinancing of “non-standard” to mortgage loan; certain “standard” balloon-payment loans can be mortgages” but only if made “qualified by rural lender” “small,
High-Cost (HOEPA) Mortgage Loans 78 Fed. Reg. 6857 (1/31/13) Effective Date: January 10, 2014 Transaction secured by consumer’s principal dwelling that meets either the APR “trigger” or points & fees “trigger” or new prepayment fee “trigger” Exclusions: reverse mortgage; construction loan Note: Applies to HELOCs High-cost (HOEPA) mortgage loans are subject to additional disclosure requirements and limits on loan terms Standard TILA liability, plus: an amount equal to the sum of all finance charges and fees paid by the consumer (unless creditor demonstrates that failure to comply is not material) 3year statute of limitations for private actions State A.G. may bring action under a 3year statute of limitations Significant assignee liability New definitions in Reg. Z §32 need careful consideration Consider effect of lowering the APR “triggers” Consider effect of lowering the points & fees “trigger” and expanding the scope of points & fees Ability to Repay/Qualified Mortgage 78 Fed. Reg. 6408 (1/30/13) Effective Date: January 10, 2014 Loan secured by a dwelling Exclusions: HELOC; reverse mortgage; bridge loan; construction loan; construction phase (12 months or less) of loan Prohibits making loan unless lender makes determination of borrower’s ability to repay (“ATR”) Creditor is deemed to have complied with ATR obligation if loan is not “higher priced” and complies with “qualified mortgage” requirements (called “safe harbor”) Creditor is presumed to have complied with ATR obligation if loan is “higher priced” and complies with “qualified mortgage” requirements Exceptions: No ATR obligation for certain refinancing of “non-standard” to “standard” mortgage loan; certain balloon-payment loans can be “qualified mortgages” but only if made by “small, rural lender” Standard TILA liability, plus: an amount equal to the sum of all finance charges and fees paid by the consumer (unless creditor demonstrates that failure to comply is not material) 3year statute of limitations for private actions A.G. may bring action under a 3year statute of limitations Consider if non-qualified mortgage will be made Underwriters need to begin understanding ATR obligations and “qualified mortgage” obligations
DoddFrankMortgageRules.docx