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Qualified Mortgage Rule May Come in Early January

housingwire.comJanuary 13, 2013

By Kerri Ann Panchuk

Mortgage lenders and servicers are preparing for an "unprecedented" period in January when they will be forced to analyze some of the Consumer Financial Protection Bureau's final lending, servicing and appraisal rules scheduled for release next month.

The rules do not take effect immediately, but will set in motion a yearlong frenzy as servicers and lenders analyze the guidelines, revamp their tech and regulatory strategies and, in some cases, change their product offerings to stave off litigation risks.

Richard Andreano Jr., a partner at Ballard Spahr, says the most watched of those rules – the qualified mortgage rule that defines guidelines for determining a borrower's ability-to-repay a mortgage – could come as early as Jan. 9.

The Jan. 9th date emerged as a possible drop-date for the final QM rule since the CFPB scheduled public hearings to collect feedback on Jan. 10 and Jan. 17, according to Andreano. Nothing has been officially confirmed by the CFPB, but the scheduling of those hearings is a suggestion the rules will be released right before the feedback sessions.

The month of January will bring final CFPB rules on ability-to-repay (qualified mortgage), loan originator compensation, servicing practices, appraisals, high-cost mortgages and escrow issues, Andreano said.

But the ability-to-repay rule is getting the most attention with it having the potential to change the product offerings of some lenders, especially smaller players in the market, Andreano told HousingWire. The effects of the rule hinge on how broadly or narrowly a qualified mortgage is defined.

"Overall, I don't think there has ever been a period of time where an industry has had to implement so many wide-reaching changes," Andreano said. "The interesting thing is going to be what is the mortgage marketplace going to look like after this in terms of who is still in the marketplace making mortgage loans."

Andreano added, "Because of the amount of increased complexities, a lot of small banks were rethinking whether they want to be in the mortgage business." He says after the final rules are released, the effects on small banks will be watched closely.

Andreano believes the rules may be released as "interim final rules," leaving the CFPB open to make additional changes. And while the rules will be released in January, the CFPB can allow for lengthy implementation periods, Andreano said.

"In talking with some of the supervisory folks over there (CFPB), they were well aware of the fact that it's going to be typically burdensome on the industry, and they are not going to flip the switch and implement everything."


Back to January 2013 Archive

CFLA was founded by the Nation's Leading Foreclosure Defense Attorneys back in 2007 to serve the Foreclosure Defense Industry and fight pervasive Bank Fraud. Since opening our virtual doors, CFLA has rapidly expanded to become the premier online legal destination for small businesses and consumers. But as the company continues to grow, we're careful to hold true to our original vision. For us, putting the law within reach of millions of people is more than just a novel idea—it's the founding principle, just ask Andrew P. Lehman, J.D.. With convenient locations in Houston and Los Angeles, you can contact Our National Account Specialist and General Manager / Member Damion W. Emholtz at 888-758-2352 for a free Mortgage Fraud Analysis or to obtain samples of work product, including cutting edge Bloomberg Securitization Audits, Litigation Support, Quiet Title Packages, and for more information about our Nationally Accredited and U.S. Department of Education Approved "Mortgage Securitization Analyst Training Certification" Classes (3 days) 24 hours for approved CLE & MCLE Credit (Now Available Online).

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