by Henry Meier
I hope everyone had a nice break and you can be forgiven this morning for thinking that 2013 is shaping up a lot like 2012 with continued political uncertainty making legislative action that much more difficult to achieve and compliance requirements more burdensome. One cliff that will not be averted is what I am dubbing the compliance cliff. January 21, 2013 is the deadline by which the CFPB has to finalize some of the most important mortgage regulations mandated by the Dodd-Frank Act. It is not an exaggeration to say that much of what you think you know about mortgages is about to become obsolete and that if you haven’t already budgeted more money for your mortgage related activities you should do so because costs related to legally providing mortgages will inevitably increase. Among the most important regulations to be finalized in the coming weeks are:
- A definition of what constitutes a qualified mortgage. The federal government is essentially mandating minimum underwriting requirements. The key issue for the industry is the extent of protection mortgage providers will receive for providing such mortgages.
- Integrated Truth-in-Lending and RESPA disclosures. That’s right, you will now be required to provide new forms to homeowners making the new forms you provided to them just a few years ago obsolete. The good news is that the integrated disclosures are in many ways an improvement over the existing HUD-1 and GFE. The bad news is that this proposal goes far beyond what is required to integrate closing documents by, among other things, amending Regulation Z to expand the definition of a finance charge.
- New servicing requirements that will mandate new disclosures and error resolution procedures.