The CFPB has issued a Final Rule that allows a creditor (or assignee) to “cure” a loan into Qualified Mortgage (QM) status after closing when points and fees exceed QM limits. Creditors or assignees would be allowed to provide a refund to “cure” the loan, if other QM requirements have been met.
The following requirements must also be met:
- Set policies and procedures are followed for reviewing points and fees after closing and for providing refunds.
- Refunds are made within 210 days after closing and prior to:
- Institution of any action by the consumer in connection with the loan;
- Receipt of a written notice from the consumer that the points and fees exceeded any QM limit; or,
- The obligation being 60 days past due.
The “cure” amount must be at least equal to the sum of the excess points and fees and any interest accrued on that amount.
There were also some changes made to definitions and exemptions for nonprofit entities. The changes will allow a nonprofit entity that services loans for an associated organization to potentially still qualify as a small servicer. Also, nonprofit entities looking to be exempt from the Ability to Repay (ATR) requirements do not need to count certain interest-free, contingent, subordinate lien loans towards the credit extension limit.
The Final Rule generally became effective upon publication in the Federal Register on November 3, 2014. The cure allowance will only be available for loans closed on or after November 3, 2014 through January 10, 2021.
Diane joined Banker’s Compliance Consulting with over 10 years of compliance experience and over 15 years of experience within the financial industry. Diane is a Certified Regulatory Compliance Manager (CRCM) and has a Bachelor’s Degree in Sociology with a concentration in Criminal Justice. She is a graduate of the Schools of Banking Compliance School and has participated in various other training opportunities throughout her career. Diane understands firsthand the struggles banks face in building and maintaining successful compliance programs. Her experience and common sense approach to consumer compliance is a great asset to our clients.
Diane and her husband have two kids who keep them busy. She enjoys running and other sports and is a big Bugs Bunny fan! She’s a bit crazy in that she does enjoy reading some of these regulations and she’s a “crazy cat lady!” Her cat tales are hilarious!