As many of you have no doubt have read in the papers, President Obama signed the the massive Dodd-Frank Wall Street Reform and Consumer Protection Act (“Consumer Financial Protection Act of 2010”). One component of the Act “Mortgage Reform and Anti-Predatory Lending Act” which amends Title XIV.
The regulations required by Title XIV must be issued in final form within 18 months of the designated transfer date and must take effect within a year of that. A few of the highlights of Title XIV are:
- NO steering incentives – payments to mortgage originators that vary based on the rate or terms of the loan;
- Mortgage originators are subject to civil liability for failing to comply with the anti-steering provisions;
- No residential mortgage lending without a good faith determination based on verified and documented information that the consumer has the ability to repay the loan;
- Pretty much FULL DOC Loans – Income and assets must be verified by reviewing W-2 forms, tax returns, payroll receipts, or financial records that provide reliable evidence;
- As a defense to foreclosure, a consumer can assert a violation of the anti-steering or ability to repay provisions;
- Prepayment penalties for the most part are prohibited;
- TILA’s “high-cost” mortgage provisions are expanded to include any loan secured by the consumer’s principal dwelling other than a reverse mortgage, including purchase money loans and open-end lines of credit;
- “Higher Risk” Mortgages require the appraiser to physically visit the property (no desktop);
- The cap on TILA civil liability is doubled.