CFPB Moves Forward on Data Collection and Reporting Requirements for Women-owned, Minority-Owned and Small Business Credit Applications

On September 15th, the CFPB announced that it is in the process of writing regulations to implement Section 1071 of the Dodd-Frank Act.  These are the long-awaited and much-discussed requirements to collect and report data for women-owned, minority-owned and small business credit applications.

As with most rules, there will be key terms that need defined, including the applications and institutions that will be covered.  In addition, while the Act lays out mandatory data points, it also allows the CFPB to require collection and reporting of any additional data points that it feels would be helpful.  What those data points may be and when that data collection is to occur are all items that the CFPB is looking to address.  The CFPB also needs to address safeguarding that data (and accompanying disclosures); an applicant’s right to not provide certain information; and the collecting, maintaining, and reporting process. 

The CFPB has provided some insight into some of the different options it is considering to implement these requirements.  A High-Level Summary as well as a more detailed Outline have been made available, as well as a Discussion Guide for Small Entity Representatives.

We plan to look at this in more detail in our upcoming October edition of Banking on BCC.

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CFPB Proposes New QM Definition

The CFPB has released a proposed rule that would create a new Qualified Mortgage (QM) category for first-lien, fixed-rate loans meeting certain “performance requirements” over a 36-month timeframe while held “in-house”.  These “seasoned QMs” would need to have fully amortizing payments; applicants’ debts and income considered and verified; and meet current restrictions on the loan term (cannot exceed 30 years) and points and fees.  Seasoned QMs would also need to meet the following restrictions during a 36-month “seasoning period” that begins with the first payment due date:

  • No more than two delinquencies of 30 days or more
  • No delinquencies of 60 days or more

There would be a $50 “payment tolerance” that could be used up to three times during the seasoning period.  In other words, creditors could decide not to treat a payment as late if it’s within $50 of the amount due.  The proposal also allows any seasoning period to resume after a payment accommodation made in connection with a disaster or pandemic-related national emergency, if certain conditions are met.

There have been a few different proposals in the ATR/QM arena lately.  If you remember, proposals were also released to revise the standard QM definition and to extend the temporary QM category for loans eligible for purchase or guarantee by Fannie or Freddie.  That temporary category of QMs will otherwise expire no later than January 10, 2021.  These proposals are all related to each other, as the CFPB does not want to see the temporary category of QMs for Fannie/Freddie loans expire without other QM options in place for those loans.  Again, these are just proposals but it’s probably safe to say there will be changes affecting the Ability to Repay and QM requirements and restrictions.


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The CFPB recently updated its HMDA FAQs to emphasize that credit score(s), DTI (debt-to-income), CLTV (combined loan-to-value), income and property value MUST be reported whenever those items are relied on in making a credit decision.  In other words, even if different or additional factors ultimately led to the credit decision, these fields are to be reported, when considered in your decision.  Small Filers would have an exemption for these fields, except income.

HMDA continues to cause challenges!  To help, we have training specific to Covered Transactions, Large Filers, Small Filers, Demographic Information, and Action Taken.  Check out our Store or give us a call to see what may best fit your needs!


Remittance Transfer FAQs on COVID-19

The CFPB recently issued FAQs on remittance transfer errors in light of COVID-19 and government-mandated closings.  This guidance states if a remittance transfer is not delivered to the recipient by the disclosed date of availability due to such closings, it’s not an error if it’s the result of extraordinary circumstances outside the remittance transfer provider’s control that could not have been reasonably anticipatedHowever, if the provider should have been able to anticipate the delay because, for example, the closings had already been announced at the time the remittance transfer was sent, it would be an error subject to the remittance transfer error resolution requirements.

In a May 12th blog, we alerted you to the fact that the threshold to determine whether you are  subject to the remittance transfer rule will increase from 100 to 500, effective July 21, 2020.  If you originated no more than 500 remittance transfers in the previous and current calendar year, you will not be subject to the rule come July 21st.  However, if you had been covered under the rule (because you sent more than 100 remittance transfers in the previous or current calendar year), you still need to apply the applicable requirements to those transfers where payment was made prior to July 21st.  This would include the requirements for error resolution.

Check out our June 2020 edition of Banking on BCC for more on the Remittance Transfer Rule Changes.


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New CHARM Booklet and Preparing to Say Goodbye to LIBOR

In the Management Minute portion of our January 2020 Banking on BCC magazine, we alerted you to the fact that LIBOR (London Interbank Offered Rate) will be going away for good.  It’s not known exactly when that will happen but it will likely be sometime within the next 18 months.  The CFPB is already preparing for this and, if you make closed-end Adjustable Rate Mortgages (ARMs), their recent changes will impact you whether you use LIBOR or not.

The most immediate change is that the CFPB has issued a revised Consumer Handbook on Adjustable-Rate Mortgages (CHARM) booklet.  While you can continue to use your existing supply, you should then transition to the “new” version.  In other words, don’t print any more copies of the previous version.  If your software or lenders use a link to pull up the booklet, make sure it’s going to the version dated 6/20 on the last page.

If you currently use LIBOR, the CFPB is proposing some changes to Regulation Z to address the transition and have issued some “Fast Facts” on the proposed changes.  The proposal addresses items like the timing and selection of replacement indices.  Comments on the proposal are due by August 4, 2020.  Remember, though, that while you have the regulatory requirements to contend with, you must also stay in line with your loan contracts and open-end agreements.  If you use LIBOR, you may want to add looking at how those contracts address replacement indices to your “to-do” list, as well.

The CFPB also issued LIBOR Transition FAQs to provide additional guidance for this upcoming change.

We’re here to help you stay on top of these changes.  Stay Tuned!