New Mortgage Regulations from Fed to be Analyzed

Mortgage market players and other interested parties will get a detailed look at the Federal Reserve’s significant new mortgage regulations being implemented under the Truth in Lending Act and the Home Ownership and Equity Protection Act at an audio conference being hosted by Inside Mortgage Finance next week. This important event, scheduled for 3 pm Sep. 11, will feature a Fed attorney as well as two of the top mortgage legal experts in the country. Click here for more info.

Fed Official to Explain New Mortgage Regulations

An official with the Federal Reserve will be explaining how the agency’s new amendments to the Truth in Lending Act and the Home Ownership and Equity Protection Act will impact mortgage market players at an important new audio conference that will be hosted by Inside Mortgage Finance on September 11 at 3 pm. Joining the Fed official will be two of the leading legal experts on mortgage regulations in the U.S. Click here for more info on this important event.

Mortgage Industry Prepares for Increased Regulation

Federal regulators, looking to prevent future mortgage lending abuses, are tightening the rules all lenders must follow in making nonconforming – particularly subprime – mortgages. The most visible example of the new, tougher mortgage lending regime is the Federal Reserve’s release of a major final rule tightening the mortgage lending requirements under the Truth in Lending Act and the Home Ownership and Equity Protection Act.

Inside Mortgage Finance is hosting an audio conference on the Fed’s new rule and what it will mean for the mortgage industry on September 11 at 3 pm. Click here for more info on this important event.

The New HOEPA Rules: How Strict New Rules From the Fed Will Impact Your Mortgage Business in 2008

While Congress and the Bush administration grapple with problems in the mortgage market and propose long-term solutions, the eventual outlook for their reforms is hazy at best. Only one major overhaul of mortgage market regulations is guaranteed to be finalized this year: the Federal Reserve’s revision of the Home Ownership and Equity Protection Act (HOEPA).

The proposed revision will cause the biggest shift in mortgage regulation in two decades as it addresses practices in origination, loan terms, servicing and advertising. Furthermore, the rules will apply to all lenders, not just those examined and supervised by the Federal Reserve.

The Fed is expected to use its authority to transform guidance on nontraditional and subprime lending into regulation. The regulator also confirmed that some Alt A mortgages will fall under the regulation’s strict rules for subprime mortgages.

In February 2008, an audio conference sponsored by Inside Mortgage Finance Publications brought together one of the authors of the Fed’s proposed HOEPA revision as well as two legal experts looking to pick the regulation apart. Paul Mondor, an attorney in the Fed’s division of consumer and community affairs, noted that the regulator is considering strengthening the income verification requirements detailed in the proposed revision of HOEPA.

Subprime and some Alt A mortgages would be subject to increased regulation, including a requirement for lenders to verify the income and assets relied upon to make a loan, including expected income. For higher-priced loans under the revised HOEPA triggers, lenders would also be required to consider borrowers’ ability to repay, limit prepayment penalties and require escrows for taxes and insurance.

Donald Lampe, a partner at Womble Carlyle Sandridge & Rice, noted that the rule might be finalized by September and become effective at the beginning of 2009. During the audio conference, the Fed’s Mondor did not object to the projection. “The intent is to act very quickly at comment closing,” he said.

Meanwhile, Laurence Platt, a practice area leader at K&L Gates, compared the Fed’s proposed HOEPA revision with other HOEPA bills in Congress. He determined that the Fed’s HOEPA rule may be a lot easier for the industry to deal with than predatory lending legislation pending in Congress.

The Fed’s stance on originator liability, for example, is generally favorable to lenders. Mondor said the Fed will require a pattern-of-practice provision in its ability-to-repay provisions, because a standard that allowed individual borrowers to bring lawsuits would “chill the living heck out of the market.”

The panelists also discussed which servicing practices will be prohibited under the new rules, new conditions for the use of yield-spread premiums, new requirements for prepayment penalties and the seven misleading or deceptive advertising practices that would be banned under the proposal.

To order a copy of the conference CD, click here.

Brandon Ivey
Editor
Inside Mortgage Finance Publications, Inc.
April 2008