Major Mortgage Issues Still To Be Resolved
by. Henry Meier
Let’s face it, everyone is in a bad mood the first day back after vacation; the President of the United States is apparently no exception. He used his first day back on the job after hobnobbing with the beautiful people to gather together the nation’s financial regulators, including NCUA’s own Debbie Matz, Federal Reserve Chairman Ben Benanke, and CFPB’s Richard Cordray, to nudge them to get a move on to finalize regulations implementing the Dodd-Frank Act.
Although the so-called big-ticket items, such as implementing the Voelker Rule, got most of the press attention, there’s plenty of crucial stuff left for the CFPB to finalize before lenders can fully begin to implement a post-Dodd-Frank consumer mortgage rule. In fact, when it comes to the issues that are going to most directly affect the American consumer on a day-to-day basis, Richard Cordray , and not the President, was the most important guy in the room.
Here are some of the key issues the CFPB still needs to finalize:
- How are points and fees ultimately going to be defined? It’s great to say that to make a qualified mortgage, lenders will have to limit points and fees to 3% of the mortgage. However, there is no final definition yet of what must be included under the 3% cap.
- Until we know exactly what the finance charge is, we really won’t know what federal disclosures are required. For example, under the Dodd-Frank Act, a loan is defined as a HOEPA loan if it exceeds certain thresholds. However, as the Bureau itself has explained in a regulatory preamble, “because new categories of charges would be included in the calculation of points and fees. . .the more inclusive finance charge, which would also include most third-party charges would result in more loans being classified as high-cost loans.”