The Federal Reserve issued the final mortgage rules are effective April 1, 2011, to provide mortgage lenders and loan originators time to develop new originating models and implement necessary changes to their loan originating systems. The final rules, which apply to closed-end mortgage loans secured by a consumer’s dwelling, will:
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Among other provisions, Section 1403 of the Reform Act creates new TILA Section 129B(c). The Board intends to implement Section 129B(c) in a future rulemaking after notice and opportunity for further public comment. Here are a few discrepancies…
- The Reform Bill gets a bit more specific with the definition of “steering, but the final rules issued today already impose restrictions preventing the originator from steering borrower into loans that are not in their best interest.
- The final rule issued today does not include a provision in the Reform Bill (TILA Section 129B(c)(2)) that says the borrower may not make any upfront payment to the lender for points or fees on the loan other than certain bona fide third-party charges. Make sure you read that closely, it says UPFRONT. Some mortgage lenders charge an appraisal fee disguised an “application fee” and will not refund it if the borrower goes with another lender before the home inspection is completed. This regulation eliminates the borrower paying an “application fee” right after they are issued the GFE.
- It is unclear whether or not the Reform Bill’s revisions will affect a home equity credit line as well because they are not considered “Closed End Credit”.
The Lead Planet posted an interesting take on the YSP banning > Fed Bans Lenders from Paying YSP to Mortgage brokers
