Legislative and Regulatory Affairs Specialist

 Ability to Repay / Qualified Mortgages
 Loan Originator Compensation
 Valuations and Appraisal Requirements
 HOEPA Rules
 Mortgage Servicing
 Escrow Rules / HPMLs
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Ability to Repay/Qualified Mortgage
What types of loans are covered?
 Closed end secured by a dwelling
 First or second lien
 Not limited to primary residences
What types of loans are excluded?
 Open end plans (HELOCs)
 Time-share plans
 Reverse Mortgage
 Temporary or bridge loan (12 months or less)
 Construction phase of 12 months or less of a construction-to-permanent loan

Effective January 10, 2014
At a minimum creditors must consider 8 underwriting factors:
(1) Current or reasonably expected income or assets;
(2) Current employment status;
(3) Monthly payment on the covered transaction;
(4) Monthly payment on any simultaneous loan secured by same property;
(5) Monthly payment for mortgage-related obligations;
(6) Current debt obligations, alimony, and child support;
(7) Monthly debt-to-income ratio or residual income; and
(8) Credit history
Must use reasonably reliable third-party records to verify the information they use to evaluate the factors.
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 Four types of Qualified Mortgages
– General and Temporary – can be originated by ALL creditors
– Small Creditor and Balloon-Payment – originated by small creditors.
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To meet the general QM category :
 Underwrite based on fully-amortizing schedule using the maximum rate permitted during the first five years after the date of the first periodic payment.
 Consider and verify the consumer’s income or assets, current debt obligations, alimony and child support obligations.
 Determine total monthly debt-to-income ratio is no more than 43%.

To meet the temporary QM definition one of these requirements must apply:
 Eligible for purchase or guarantee by Fannie Mae or
Freddie Mac
 Eligible for FHA insurance

Eligible to be guaranteed by the US Dept. of Veterans
Affairs
 Eligible to be guaranteed by the USDA
 Eligible to be insured by the Rural Housing Service

What is a small creditor?
 Assets below $2 billion; AND
 You and your affiliates together originated no more than
500 first lien, closed end residential mortgages that are subject to the ATR requirements in the preceding calendar year.
“Affiliate”: means any company that controls, is controlled by, or is under common control with another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C 1841 et seq.
). The Bank Holding
Company Act describes “control” as: “Any company has control over a bank or over any company if -
(A) the company directly or indirectly or acting through one or more other persons owns, controls, or has power to vote 25 per centum or more of any class of voting securities of the bank or company;
(B) the company controls in any manner the election of a majority of the directors or trustees of the bank or company; or
(C) the Board determines, after notice and opportunity for hearing, that the company directly or indirectly exercises a controlling influence over the management or policies of the bank or company.”

To meet the Small Creditor QM requirements:
 Underwrite based on a fully amortizing schedule – use max rate first five years.

Loan NOT subject to forward commitment
 Consider and verify income, assets, debt, alimony and child support.
 Consider DTI or residual income, although no specific threshold.
 Points and fees cannot exceed QM limits.
* Generally lose QM status if you sell or transfer less than 3 years after consummation

On or before January 10, 2016 , small creditors can make balloon payment QMs regardless of where the small creditor operates (after that date, credit unions must operate predominately in rural and underserved areas).
 No negative amortization or interest only features, must comply with points and fee limits (3%)
 Fixed interest rate and periodic payments (other than the balloon) that would fully amortize the loan over 30 years or less.
 Term of 5 years or longer.
 Not subject to forward commitment.
 Determine member will be able to make scheduled periodic payments and obligations other than the balloon payment.
 Consider and verify income, assets, debt, alimony and child support.
 Consider DTI, no specific threshold.

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For a loan to be a QM, the points and fees cannot exceed:
Loan Amount Points and Fees Limit
$100,000 or more
$60,000 - $99,999.99
$20,000 - $59,999.99
$12,500 - $19,999.99
$12,499.99 or less
3%
$3,000
5%
$1,000
8%

To calculate the points and fees you will add together the amounts paid in connection with the transaction including:
1. Finance charges
– Charges that can be excluded:
 Interest or time-price differential
 Mortgage insurance premiums (MIP)
– Federal or State government sponsored MIP (up front and annual FHA premiums, VA funding fees, etc.)
– PMI premiums (exception for FHA loans)
 Bona fide third party charges not retained by the creditor, LO or affiliate of either

1. Finance charges (cont’d):
– Charges that can be excluded:
 Bona fide discount points
– Exclude up to 2 points IF the interest rate before the discount does not exceed the APOR for a comparable transaction by more than 1% point
– Exclude up to 1 point IF the interest rate before the discount does not exceed the APOR for a comparable transaction by more than 2% points.
2. LO Compensation
– Include compensation paid directly or indirectly by a member or a creditor to a loan originator OTHER than compensation paid by a mortgage broker, creditor or retailer of manufactured homes to an employee.

3. Real Estate Related Fees
– Charges can be excluded IF:
 The charge is reasonable;
 The credit union receives no direct or indirect compensation in connection with the charge; and
 The charge is not paid to an affiliate of the credit union.
If one or more of those conditions is NOT satisfied you must include these charges, even if they would be excluded from the finance charge:
 Fees for title examination (abstract of title, title insurance, etc.)
 Fees for preparing loan-related docs (deeds, mortgages)
 Notary and credit report fees
 Property appraisal or inspection fees

Amounts paid into escrow (that are not otherwise included in finance charge)

4. Premiums for credit insurance (life, accident, credit property)
– Include for these types of insurance that are payable at or before consummation even if they are rolled into the loan amount (if permitted by law)
– No need to include if paid after consummation (monthly premiums)
– No need to include premiums for life, accident, health or loss of income insurance if the member (or another person designated by the member) is the sole beneficiary of the insurance.

5. Maximum Prepayment penalty
6. Prepayment penalty paid in a refinance

Prepared Remarks of CFPB Director Cordray at the American Mortgage Conference:
“One further illustration of our data-driven decision-making is our treatment of smaller creditors under the rule. Through extensive discussions with community banks and credit unions, we came to recognize that most of their traditional lending practices should not be put into question by the Ability-to-Repay rule. Especially where smaller institutions make loans that they keep in their own portfolios, they have every incentive to pay close attention to the borrower’s ability to repay the loan. They are more immediately subject to community norms, and their underwriting standards did not deteriorate in the heady days before the financial crisis; indeed, they often lost market share to those engaged in the more irresponsible lending practices of that era.
So we avoided a “one-size-fits-all” approach by proposing and then finalizing specific provisions to meet the special circumstances of smaller mortgage lenders.
Qualified mortgages cover the vast majority of loans made in today’s market, but they are by no means all of the mortgage market. This point is important and it should not be misunderstood. There are plenty of good loans made every year that are non-QM. For example, loans made to borrowers with considerable other assets may not meet the 43 percent debt-to-income ratio, be eligible for purchase by the government-sponsored enterprises (GSEs), or qualify under the small creditor exemption, but nonetheless are based on sound underwriting standards and routinely perform well over time.
Lenders that have long upheld such standards have little to fear from the Ability-to-Repay rule; the strong performance of their loans demonstrates the care they have taken in underwriting to borrowers who have the ability to repay. Nothing about their traditional lending model has changed, and they should continue to offer the same kinds of mortgages to borrowers whom they evaluate as posing reasonable credit risk – whether or not they meet the criteria to be classified as qualified mortgages .”

Mandatory Arbitration Clauses
Effective June 1, 2013
Prohibition on mandatory arbitration clauses and waivers of certain consumer rights (for consumer credit transaction secured by a dwelling, including HELOCs):
– No terms that require arbitration
– No language to bar a consumer from bringing a claim in court in connection with any alleged violation of Federal law.
(under Loan Originator Compensation Amendments)

Effective January 1, 2014
Definition of a Loan Originator??
“A person who, in expectation of direct or indirect compensation or other monetary gain or for direct or indirect compensation or other monetary gain, performs any of the following activities: takes an application, offers, arranges, assist a consumer in obtaining or applying to obtain, negotiates or otherwise obtains or makes and extension of credit for another person; or through advertising or other means of communication represents to the public that such person can or will perform any of these activities.”

AS OF 9/13/13 “Managers and administrative staff” exemption. Loan originator does not include:
 Credit union employee who provides a credit application form from the credit union to the member for completion, without assisting in completing the credit application, processing or analyzing the information, or discussing particular credit terms that are or may be available from the credit union based on the member's financial characteristics.
 Delivers the credit application from a member to a loan originator.

AS OF 9/13/13 Responding to Member Inquires.
Loan originator does not include:
 Employees that provide general explanations, information or descriptions in response to member queries, such as explaining credit terminology or lending policies or who confirm written offer terms already transmitted to the member.
 Employees who provide LO contact information for employee of the credit union, provided particular terms are not discussed and the employee does not direct the member, based on his/her assessment of the member’s financial characteristics to a particular loan originator.

AS OF 9/13/13 Responding to Member Inquires.
Loan originator does not include:
 Employee describing product-related services (optional monthly payment methods, availability and features of online account access, etc.)

Employees explaining or describing steps that a member would need to take to obtain an offer of credit, including general guidance on qualifications or criteria (not specific to member’s circumstances).

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 The interest rate
 The annual percentage rate
 The collateral type (e.g., condominium, cooperative, detached home, or manufactured housing)
 The product type
 The origination points or fees paid to the creditor or loan originator
 Fees for creditor-required title insurance

 MLO’s must be registered according to the SAFE Act.
 *MLO’s AND CREDIT UNIONS must include their name and NMLS ID on the following loan documents:
– Credit application
– Note or loan contract
– Security instrument
Generally include on documents that require a member’s signature.
*The MLO primarily responsible for origination of the loan.

Effective January 10, 2014
 Closed-end consumer credit transactions secured by a dwelling and openend loans secured by the member’s principal dwelling.
 Prohibits the financing (directly or indirectly) of any premium, but excludes premiums that are calculated and paid-in-full on a monthly basis.
 Financing is the right to defer payment of a credit insurance premium owed by the consumer beyond the monthly period in which the premium is due.

TILA – Effective January 18, 2014
 Applies to first lien or subordinate lien closed end loans secured by a member’s principal dwelling.

Higher Priced Mortgage Loan (HPML):
– First lien with an APR that exceeds the APOR by 1.5% or more
– First lien jumbo loan with an APR that exceeds the APOR by
2.5% or more.
– Subordinate lien with an APR that exceeds the APOR by 3.5% or more
 http://www.ffiec.gov/ratespread/newcalc.aspx

Loans EXEMPT from appraisal requirements:
 Qualified Mortgages (QMs)
 Reverse mortgages
 Bridge loans (for 12 months or less and intended to be used to acquire a new principal dwelling)
 Loans for initial construction of a dwelling (not limited to loans of 12 months or less)
 Loans secured by new manufactured homes
 Loans secured by boats, trailers, and mobile homes
 loans:

Appraisal Requirements:
 Disclose to members within three business days after receiving the members’ applications that they are entitled to a free copy of any appraisal the credit union orders and also they can hire their own appraiser at their own expense for their own use.
 Obtain a written appraisal performed by certified or licensed appraiser in conformity with the USPAP and Title XI of FIRREA and its implementing regulations.
 Have the appraiser visit the interior of the property and provide a written report.
 Deliver copies of appraisals to applicants no later than three business days before consummation.

Equal Credit Opportunity Act (ECOA) Valuations
Effective January 10, 2014
 Covers closed-end or open-end secured by 1 st lien on a dwelling, including:
– Loans for business purposes, investment or vacation property, or consumer purposes (regular mortgage loan)
– Loss mitigation transactions; loan modifications, short sales, etc.
– Loans secured by mobile or manufactured homes
– Reverse Mortgages
– Time-share loans, if covered by ECOA

ECOA Valuations Requirements:
 Within three business days of receiving a member’s application, notify the applicant of the right to receive a copy of appraisals/valuations.
 Promptly share copies of appraisals and other written valuations with the applicant.
– Promptly means upon completion or at least three business days before consummation (for closed end) or account opening
(for open end), whichever is earlier.
 The member can waive the right to receive copies of the appraisal/valuations in advance of closing, but you must still deliver the copies at or prior to consummation or account opening.

Disclosure Requirement (Appendix C – Form C-9)
“We may order an appraisal to determine the property’s value and charge you for this appraisal. We will promptly give you a copy of any appraisal, even if your loan does not close. You can pay for an additional appraisal for your own use at your own cost.”

What is considered a valuation or appraisal?
 An appraiser’s report (whether licensed or certified), including estimate of the property’s value or opinion of value.
 Document prepared by staff that assigns value to the property.
 Report approved by a GSE for describing to the applicant an estimate developed by the GSE’s proprietary methodology or mechanism.
 Automated valuation model reports use to estimate the property’s value.
 Broker’s opinion prepared by a real estate broker, agent or sales person to estimate the property’s value.

 If credit union does not close a loan, you still have to give the applicant a copy of appraisals/valuations
“promptly upon completion”.
 Mail copies to the last known address (can send electronically if comply with E-Sign).
 Cannot charge for copying or postage.
– You can charge for developing an appraisal or written valuation, except as otherwise prohibited by law.
 Only need to provide copy to one applicant.

High-Cost Mortgages
Effective January 10, 2014
What transactions are covered?
 Purchase-money mortgages
 Refinances
 Closed-end home equity loans
 Open-end credit plans (i.e., HELOCs)
Rule applies to consumer credit transactions secured by a principal dwelling.

High-Cost Mortgages – APR TEST
Is the mortgage considered “high cost” under the rule?
 APR (as of the date the interest rate for the transaction is set or locked) exceeds the APOR for a comparable transaction on that date by more than:
– 6.5% for first lien generally
– 8.5% for first lien less than $50K and secured by personal property (RV, houseboats, etc.)
– 8.5% for junior lien
HELOC APR compared to the APOR for the most closely comparable closed-end transaction.

High-Cost Mortgages – POINTS AND FEES TEST
 A transaction is high-cost if its points and fees exceed:
– 5% of the total loan amount for a loan greater than or equal to
$20,000
– 8% of the total loan amount or $1,000 (whichever is less) for a loan amount less than $20,000
 What is included in points and fees calculation?
– Closed end – same as for QM/ATR rule.
– Open end – same as closed-end, but also include participation fees, fees you may charge for draws (assuming at least 1 draw).

High-Cost Mortgages –
PREPAYMENT PENALTY COVERAGE TEST
 A transaction is high cost if you charge a prepayment penalty:
– More than 36 months after consummation or account opening; or
– In an amount more than 2% of the amount prepaid.

High-Cost Mortgages - Special disclosures
 Provided 3 days prior to consummation or account opening.

In writing and a form the member can keep, including:
– Loan will not be effective until consummation or account opening occurs.
– Explain consequences of default.
– Disclose loan terms such as APR, amount borrowed and monthly payment.
– Variable rate – explain maximum monthly payment that may be required.
Regulation Z – Appendix H (Sample H-16)

High-Cost Mortgages – Restriction on Terms
The rule bans certain loan features:
 Balloon payments – except in 3 circumstances:
– Payment schedule is adjusted to accommodate member’s seasonal or irregular income.
– Short term bridge loan to finance new home purchase for member selling existing home.
– Credit union serving predominately rural or underserved areas and meets the ATR/QM rule.
 Prepayment Penalties
 Due on Demand Features

High-Cost Mortgages –
Additional Restrictions and Prohibitions
 Credit unions are prohibited from recommending default on an existing loan to be refinanced by high-cost mortgage.

Credit unions, servicers and assignees cannot charge a fee to modify, defer, renew, extend or amend a high-cost mortgage.
 Late fees are restricted to 4% of the past due payment and pyramiding of late fees is prohibited.

High-Cost Mortgages –
Additional Restrictions and Prohibitions (cont’d)
 Fees for generating payoff statements are generally banned.
 Points and fees cannot be financed. You can finance closing charges excluded from the definition of points and fees (bona fide third party charges).
 Cannot purposely structure a transaction to evade
HOEPA coverage (splitting loan into 2 loans to divide loan fees to avoid points and fee thresholds).

High-Cost Mortgages – Ability to Repay
Requirement to make an ability to repay determination prior to consummation or account opening:

Closed-end – Follow the ATR/QM rule
 Open-end – since these transactions are not covered under the ATR/QM rule, you must consider the member’s:
– Current and reasonably expected income or assets (verified with W-2s, tax returns, etc.)
– Current obligations, including any mortgage related obligations such as property, taxes, required insurance, etc.

High-Cost Mortgages –
Required Homeownership Counseling
 Prior to making a high-cost mortgage , you must receive written certification that the member has received homeownership counseling on the advisability of the mortgage from a HUD approved counselor or state housing finance authority, if permitted by HUD.
– The counselor must confirm that the member received ALL of the high-cost mortgage / RESPA disclosures before they can issue the certificate.

High-Cost Mortgages –
Required Homeownership Counseling – HOW????
 The counselor must confirm that the member received
ALL of the high-cost mortgage / RESPA disclosures before they can issue the certificate.

2 stage process:
– First, member receives counseling on the mortgage after receipt of initial GFE or HELOC TILA disclosures.
– Second, member has second contact with counselor so the counselor can confirm receipt of additional required disclosures prior to issuing certificate.

Homeownership Counseling Requirements
 Negative Amortization Counseling – credit union must receive documentation of homeownership counseling for first time borrowers prior to making closed-end, dwelling secured loans that permit negative amortization.
 Credit unions must give applicants for federally related mortgages (whether or not it is high-cost) a written list of homeownership counseling organizations within 3 business days of receiving the application.

Mortgage Servicing Rules – Regulation X (RESPA)
Effective January 10, 2014
 Error resolution and information requests
 Force-placed insurance
 General servicing policies, procedures and requirements
 Early intervention with delinquent members
 Continuity of contact with delinquent members

Loss mitigation

Mortgage Servicing Rules – Regulation Z (TILA)
Effective January 10, 2014
 Interest rate adjustment notices for ARMs
 Prompt crediting of payments and responses to requests for payoff amounts
 Periodic statements for mortgage loans

Small Servicer Exemption
 The credit union, together with any affiliates, service
5,000 or fewer mortgage loans, and the credit union (or affiliate) are the creditor or assignee for all of them.
 You are a Housing Finance Agency (HFA).
*When a loan is subserviced, both the master and subservicer must meet the small servicer requirements to qualify for the exemption. However, even if the subservicer does not qualify, the master servicer may still be eligible for loans it services in house.

Small Servicer Exemption
Exempt from these mortgage servicing rules:
 Periodic statements
 Prohibition on forced-place insurance where a servicer could continue the member’s existing hazard insurance by advancing funds to escrow under certain conditions
 General servicing policies and procedures requirements
 Early intervention provisions
 Continuity of contact provisions
 Some Loss mitigation provisions

Periodic Statements (small servicer exempt)
Credit unions must provide members with a statement each billing cycle (not more than monthly) OR a coupon book!
 Statements must be mailed or delivered within a
“reasonably prompt” (4 days) time after the payment due date or end of any courtesy period.
 Statements have format requirements (Regulation Z,
Appendix H, H-30) – follow the safe harbor!

Coupon Books
Book with a page for each billing cycle during a set period.
You can use a coupon book instead of periodic statement as long as:
– The member has a fixed-rate loan (doesn’t include ARMs)
– Your coupon book includes certain information (due date, amount due, etc.)
– You make certain information available to the consumer upon request (payment amount, total fees imposed, etc.)
– You provide certain information to consumers who are 45 days of more delinquent (date delinquent, risks and expenses, etc.)

ARM Interest Rate Adjustments (no exemption)
Disclosures required for the initial reset of an ARM and each time an interest rate adjusts resulting in a payment change.
 Initial adjustment required for first adjustment – provided to a member between 210 and 240 days before first payment is due at the new rate.
 Ongoing rate adjustments – provided between 60 and
120 days before first payment at new rate is due.

Prompt Payment Crediting
Payoff Statements (no exemption)
 Periodic payments promptly credited as of the day of receipt (principal, interest and escrow).
– Partial payments – credit return or hold in suspense account
(dependent on your loan contracts)
 Payoff Statements – for written requests, credit union must provide the statement within 7 business days.

Force-Placed Insurance (small servicer - limited exemption for members with escrow accounts)
 Before charging for forced place insurance, credit union must have a reasonable belief that the member failed to maintain required hazard insurance.
– First notice sent to member at least 45 days before charging for force placed insurance.
– Second notice at least 30 days after the first notice.
 If nothing received from member, can assess a force placed fee 15 days or more after sending the second notice.
 Model forms in RESPA, Appendix MS-3

Force-Placed Insurance (small servicer - limited exemption for members with escrow accounts)
 If the member has an escrow account for payment of hazard insurance, you may not obtain force-placed insurance unless you are unable to maintain the member’s existing hazard coverage.
– You are not considered “unable” just because a member’s loan is overdue or the escrow account has insufficient funds.
– Generally you will have to advance funds through escrow to maintain coverage or otherwise seek reimbursement from the consumer for the funds you advance.
 If you are a small servicer you may purchase force-placed insurance for a member with an escrow account whose loan is more than 30 days overdue, if the cost of the force-placed insurance is less than the amount the small servicer would need to disburse from the member’s escrow account to pay the hazard insurance premium.

Error Resolution / Information Requests (no exemption)
Establishes requirements for responding to written information requests and complaints of errors.

Not applicable to HELOCs
 Notice of error incudes the name of the member, information to identify the mortgage loan, the error the member believes has occurred (same for information request).

Error Resolution / Information Requests (no exemption)
 Generally, credit union must provide the member a written response acknowledging receipt of notice within 5 days.
 No later than *30 days after receipt of the notice, either provide requested information or correct the error and provide written notice of correction or conduct a reasonable investigation and provide the member with written notice that no error occurred.
 If member requests documents used to determine no error, you have to respond within 15 days of that request.
For 60 days after notice of error, you may not furnish adverse information to any CRA regarding payment subject to the notice of error.

Policies/Procedures and Requirements
(small servicer exempt)
 Establish policies and procedures to achieve these requirements:
– Accessing and providing timely and accurate information
– Properly evaluating loss mitigation applications
– Facilitating oversight of, and compliance by service providers
– Facilitating transfer of information during servicing transfers
– Informing consumers of written error resolution and information request procedures
– Record Retention / Servicing File creation

Early Intervention with Delinquent Members
(small servicer exempt)
 Establish or make good faith efforts to establish LIVE contact with members by the 36 th day of delinquency and promptly notify of loss mitigation options.

Provide the members with written confirmation about any available loss mitigation options by 45 th day of delinquency.
 Model language is available (RESPA – Appendix MS-4)
 Does not apply to HELOCs

Continuity of Contact (small servicer exempt)
The credit union must have policies and procedures to ensure:
 An employee is assigned to delinquent members by the time you send written notice.
 Members can reach the assigned employee by phone to assist with inquiries and pursing loss mitigation options or the current status of applications.
 Employee needs to be able to retrieve the member’s records in a timely manner.
 Employee must provide a timely live response to members who call.

Loss Mitigation Procedures
(limited small servicer exemption)
The credit union will be required to:
 Work with members to complete timely applications for loss mitigation options.
 Evaluate complete and timely loss mitigation applications within 30 days for all options available to applicant.
 Inform members of whether the servicer will offer the member a loss mitigation option and if the member is denied, the reasons.
 Independent review of timely appeals by member.
 Refrain from starting foreclosure process when a member is being evaluated for a loss mitigation option.

Loss Mitigation Procedures
 Loss Mitigation Applications – if received 45 days or more before foreclosure:
– Determine if the application is complete, provide notice with 5 days stating that you will be contacting them for loss mitigation options.
– If incomplete, provide notice within 5 days to member acknowledging receipt of application and the additional information needed, as well as the date most beneficial to the member for it to be submitted for consideration.

Loss Mitigation Procedures
Loss Mitigation
Applications (cont’d)
 If the credit union denies a member’s complete loss mitigation application received more than 37 days before a foreclosure sale, the notice must state:
– Specific reason for decision
– If based on net present value calculation, include the specific inputs you used in your calculation.
– Information and deadline on member’s right to appeal.
 Member has to respond to loss mitigation offers:
– When an application is submitted 90 days or more before a foreclosure sale, 14 days to accept or reject offer.
– When an application is submitted less than 90 days, but more than 37 days before foreclosure sale, 7 days to accept or reject.

Loss Mitigation Procedures
Loss Mitigation
Applications (cont’d)
Appeals :
 Credit unions must allow the member to appeal decisions regarding loss mitigation applications received 90 days or more before a foreclosure.
 The same employee cannot review the loss mitigation application.
Supervisors can review as long as they were not directly involved in the initial evaluation.
 Within 30 days of the member appealing, you must notify them of your decision to offer or reject. You must then provide another 14 days to accept or reject any new option resulting from the independent evaluation.

Foreclosure
 Credit unions cannot make the first notice or filing for any judicial or non-judicial foreclosure process until the member is more than 120 days delinquent. (small servicers must comply)
 If a member submits a complete loss mitigation application before foreclosure is started, you cannot start the process until:
– You send the member notice that they are not eligible for a loss mitigation option.
– The member rejects all options offered
– The member fails to perform under an agreement on a loss mitigation option.

Foreclosure (cont’d)
 If a member submits a complete loss mitigation application after you have made the first notice of filing for the foreclosure process, but more than 37 days before a foreclosure sale, you must not move for foreclosure judgment or order of sale or conduct a foreclosure sale until one of the following occurs:
– You send the member notice that they are not eligible for a loss mitigation option.
– The member rejects all options offered.
– The member fails to perform under an agreement on a loss mitigation option.
Small servicers cannot move for foreclosure judgment or order of sale if a member is performing pursuant to the terms of a loss mitigation agreement.

Escrow Rules - TILA
Effective June 1, 2013
Credit unions must establish and maintain escrow accounts for first-lien higher-priced mortgage loans for at least 5 years .

Small Creditor Exemption:
– More than half of loans made to members in rural or underserved counties.
– Your credit union, together with affiliates do not originate more than 500 first lien covered transactions in the preceding calendar year.
– Less than $2bn in assets.
– The credit union and affiliates cannot maintain escrows on any loans serviced.

Higher-Priced Mortgage Loan (HPML)
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Glory LeDu –
Legislative & Regulatory Affairs Specialist
(800) 262-6285 ext. 459
Glory.LeDu@MCUL.org
Sarah Stevenson Legislative & Regulatory Affairs Specialist
(800) 262-6285, ext. 494
Sarah.Stevenson@MCUL.org