In our February Newsletter we alerted you to the fact that many banks could lose their Small Creditor status as of April 1, 2016. Due to a recent interim Final Rule (effective March 31, 2016); however, we have good news for once.
The CFPB has amended one of the Small Creditor criteria, specifically the Service Area Test. The Service Area Test is just one of the tests a creditor must meet to be able to originate Small Creditor Balloon Payment Qualified Mortgages and to be exempt from the HPML Escrow Requirements
Under the current rule, more than 50% of a bank’s consumer purpose, closed-end, first-lien dwelling secured loans originated in the prior year must be secured by properties located in rural or underserved areas. The interim Final Rule; however, states that for applications received on or after March 31, 2016, a creditor must have originated at least ONE consumer purpose, closed-end, first-lien loan secured by a dwelling, located in a rural or underserved area, in the preceding calendar year.
As we mentioned above, this is just one of the tests a creditor must meet to be considered a Small Creditor. For example, to be able to originate a Small Creditor Balloon Payment QM the bank must meet a Loan Volume Test, an Asset Size Test AND the Service Area Test. To be exempt from the HPML escrow requirement a bank must meet a Loan Volume Test, an Asset Size Test, the Service Area Test AND an escrow account test.
Be sure to check our April Newsletter for more on this interim Final Rule.
Amy brings many years of banking and compliance experience to Banker’s Compliance Consulting. She has worked for both large and small financial institutions and spent time working in every area of a bank. She started out as a teller in college and eventually became a branch manager.
Her love, however, was always compliance. Amy began her career with Banker’s Compliance Consulting in 2000. Her knowledge and experiences have allowed her to develop a well-rounded and practical approach to regulatory compliance. Amy is CRCM certified, has a Bachelor’s Degree in Business Administration, and is a graduate of the ABA Compliance School.
Amy & her husband have two children at home and stay busy following their activities. They spend a lot of time in the bleachers!