CFPB Bulletin – Social Security Disability Income Verification
The CFPB issued a compliance bulletin regarding the obligations of creditors under the Equal Credit Opportunity Act and Regulation B (together, “ECOA”) regarding the consideration of public assistance income and relevant standards and guidelines regarding social security disability insurance and supplemental security income (together, “social security disability income”).
The bulletin discusses the verification requirements relative to social security disability income under various provisions, including Appendix Q under the Qualified Mortgage Rule, and FHA, VA, Fannie Mae and Freddie Mac underwriting guidelines. The bulletin provides that these standards and guidelines may help creditors avoid unnecessary documentation requests relative to social security disability income.
Fannie Mae and Freddie Mac Conforming Loan Limits for 2015
The Federal Housing Finance Agency (FHFA) has released the 2015 conforming loan limits. The maximum loan limits for 2015 remain unchanged from 2014; however, a number of high-cost area county limits have increased. The maximum conforming loan limits for one-unit properties are $417,000 for most locations, but may be as high as $625,500 in certain high-cost areas. The 2015 limits apply to loans originated after October 1, 2011 and delivered to Fannie Mae or Freddie Mac in 2015. An excel spreadsheet detailing the limits by county is available at http://www.fhfa.gov/DataTools/Downloads/Documents/Conforming-Loan-Limits/Counties_with_increases_cy2015.pdf.
HUD’s Qualified Mortgage Rule: HUD’s Notice of CFPB’s Final Rule
The CFPB issued a final rule revising certain provisions under the qualified mortgage rule. Specifically, the final rule includes a post-consummation “cure mechanism” for loans that exceed the applicable points and fees threshold, revises the definition of “small servicer” to include certain nonprofit entities servicing loans for a fee, and revises the nonprofit exemption from the ability to repay requirement to exclude certain subordinate lien loans. The final rule was effective November 3, 2014 and applies to transactions consummated on or after that date.
HUD released a notice stating that HUD is not adopting the new points and fees cure provision adopted by the CFPB, but is providing guidance to mortgagees on curing points and fees errors prior to insurance endorsement. FHA approved lenders have the ability to cure errors that occur in origination before submission for insurance endorsement. FHA-approved mortgagees may continue to cure errors and resubmit mortgages for insurance endorsement, provided all eligibility criteria are met at the time of insurance endorsement.
FHA Mortgagee Letter 2015-01 – Reduced Annual Mortgage Insurance Premiums
The Department of Housing and Urban Development has issued FHA mortgagee letter 2015-01, which reduces the annual mortgage insurance premium (MIP) for most Title II Single Family forward mortgages. The revised MIP amounts are effective for case numbers assigned on or after January 26, 2015.
The mortgagee letter reduces the rate for annual MIP for all Title II forward mortgages with terms greater than 15 years, except for (1) single family forward streamline refinance transactions that are refinancing existing FHA loans endorsed on or before May 31, 2009; and (2) Section 247 mortgages (Hawaiian Homelands).
The mortgagee letter also provides that for loans in process with active FHA case numbers, FHA will temporarily approve cancellation requests within 30 days of the effective date of the letter.
U.S. Supreme Court Ruling – Exercise of Extended Rescission Right under Truth in Lending Act
The United States Supreme Court recently issued a ruling addressing how a borrower must exercise an extended right of rescission under the Truth in Lending Act (TILA). Specifically, the Court addressed whether a borrower must file a lawsuit before the three-year period elapses, or if written notice to the lender is sufficient. The Court held that a borrower exercising his right to rescind under TILA need only provide written notice to his lender within the three-year period, not file suit within that period.