Loan Originator Compensation Requirements under the Truth in Lending Act (Regulation Z) Final Rule

This final rule, published February 15, 2013 and effective January 10, 2014, implements requirements and restrictions imposed by the Dodd-Frank Act concerning loan originator compensation; qualifications of, and registration or licensing of loan originators; compliance procedures for depository institutions; mandatory arbitration; and the financing of single-premium credit insurance. The final rule provides additional commentary on Regulation Z’s restrictions on loan originator compensation, including application of these restrictions to prohibitions on dual compensation and compensation based on a term of a transaction or a proxy for a term of a transaction, and to recordkeeping requirements. The final rule also establishes tests for when loan originators can be compensated through certain profits-based compensation arrangements. This final rule is designed primarily to protect consumers by reducing incentives for loan originators to steer consumers into loans with particular terms and by ensuring that loan originators are adequately qualified. Mandatory arbitration prohibition is effective June 1, 2013. On Learning Link™, the course “Focus on Compliance” has been updated with relevant content in the module “Focus on Truth in Lending.” On Banker's Academy LMS™, the course “Regulation Z: Truth in Lending Act” topic 1 “Truth in Lending Act” has been updated with relevant content.

Appraisals for Higher-Priced Mortgage Loans Final Rule

The CFPB jointly with the FRB, FDIC, FHFA, NCUA, and OCC issued this rule implementing TILA. Published February 13, 2013 and effective January 18, 2014, these revisions implement a new provision requiring appraisals for “higher-risk mortgages.” For mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the final rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used. On Learning Link™, the course “Focus on Compliance” has been updated with relevant content in the module “Focus on Truth in Lending,” topic “Higher-Priced Loans.” On Banker's Academy LMS™, the course “Regulation Z” topic 8 “Higher-Priced Loans” has similarly been updated.

Ability to Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z) Final Rule

This rule, published January 30, 2013 and effective January 10, 2014, implements sections of the Dodd-Frank Act, which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding an open-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages.” The final rule also implements section 1414 of the Dodd-Frank Act, which limits prepayment penalties. Finally, the final rule requires creditors to retain evidence of compliance with the rule for three years after a covered loan is consummated. On Learning Link™, the course “Focus on Compliance” has been updated with relevant content in the module “Focus on Truth in Lending,” topic “Higher-Priced Loans.” On Banker's Academy LMS™, the course “Regulation Z” topic 8 “Higher-Priced Loans” has similarly been updated.

High-Cost Mortgage and Homeownership Counseling Amendments to the Truth in Lending Act (Regulation Z) and Homeownership Counseling Amendments to the Real Estate Settlement Procedures Act (Regulation X) Final Rule

The final rule, published January 10, 2013 and effective January 10, 2014, amends Regulation Z (Truth in Lending) by expanding the types of mortgage loans that are subject to the protections of the Home Ownership and Equity Protections Act of 1994 (HOEPA), revising and expanding the tests for coverage under HOEPA, and imposing additional restrictions on mortgages that are covered by HOEPA, including a pre-loan counseling requirement. The final rule also amends Regulation Z and Regulation X (Real Estate Settlement Procedures Act) by imposing certain other requirements related to homeownership counseling, including a requirement that consumers receive information about homeownership counseling providers. On Learning Link™, the course “Focus on Compliance” has been updated with relevant content in the module “Truth in Lending,” topic “Higher-Priced Loans” as well as in the module “Focus on RESPA.” On Banker's Academy LMS™, the courses “Regulation Z: Truth in Lending Act” and “Real Estate Settlement Procedures Act” have similarly been updated.

Truth in Lending (Reg Z) Final Rule

Regulation Z generally limits the total amount of fees that a credit card issuer may require a consumer to pay with respect to an account to 25 percent of the credit limit in effect when the account is opened. Regulation Z previously stated that this limitation applies prior to account opening and during the first year after account opening. This final rule, published and effective March 28, 2013, amends Regulation Z to apply the limitation only during the first year after account opening. On Learning Link™, the course “Focus on Compliance” has been updated with relevant content in the module “Truth in Lending,” topic “Credit CARD Act.” On Banker's Academy LMS™, the topic “Regulation Z: Truth in Lending Act” has similarly been updated.