Meeting Today's CFPB Initiatives with CLARIFIRE®

Be prepared for operational and regulatory disruption, position your financial institution to innovate and explore, while managing change with CLARIFIRE Technology.

The post financial crisis world continues to present challenges as the mortgage industry moves from chaos to calm to disruption. Diligently working under the regulatory oppression mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, lenders and servicers have implemented innumerable operational changes that have impacted credit parameters, key documents, regulatory compliance and endless associated rules. Under today's challenges, the industry is now faced with unraveling much of the work that has consumed manpower and technical development for over a decade.

As your financial institution strives to stay abreast of continued disruption, you'll need a thorough chain of communication and events, documented adherence to today's rules versus yesterday's requirements, as well as a robust workflow system. CLARIFIRE provides automated workflow that bridges system gaps and adds process flexibility and oversight, helping lenders and servicers transcend the challenge of disruption. CLARIFIRE products provide workflow functionality that meets or exceeds operational and regulatory requirements through configurable business rules.


SOLVING FOR CHANGING CFPB REQUIREMENTS

The examples provided are representative of changes included in recent rulemaking. This information is not intended to be a full and complete depiction of the rule, but rather exemplify highlighted areas and the benefit of workflow when addressing the addition, modification and/or deletion of agency rules.


TILA-RESPA Integrated Disclosure (TRID) Final Rule (2017 Rule)

Issued by the CFPB in order to clarify and amend mortgage disclosure requirements. Effective October 10, 2017 under an Optional Compliance period. Mandatory adherence on applications dated on or after October 1, 2018.

  1. Negative prepaid interest must be entered into the total Interest Percentage (TIP) calculation as a negative value - OR - must not be included in the TIP calculation.
  2. Transfer taxes and recording fees are no longer included under 1% total costs payable cap, assisting consumers with lower balance loans secure QM eligibility.
  3. Co-ops, regardless of state classification, must receive disclosures as a closed-end transaction; not including reverse mortgages.
  4. Consumers can shop for servicers offered by providers that are NOT on the Service Provider List; charges must be estimated based on "best information reasonably available."
  5. Good faith 10% cumulative tolerance applies to aggregate charges based on "best information reasonably available" for lenders title insurance, property taxes, property/homeowner's insurance premiums, as well as amounts in escrow, impound or reserve.
  6. A purchase transaction including a Simultaneous Subordinate Lien is subject to new requirements based on clarification, including but not limited to the following:
    a. The Summary of Seller’s Transaction table does not have to be included on Closing Disclosure for subordinate lien.
    b. The sales price is not reflected in Calculating Cash to Close calculations for the subordinate lien on the Loan Estimate or Closing Disclosure.
    c. Instructions have been detailed for using positive or negative numbers on the Calculating Cash to Close tables.
  7. In response to requests, clarification on proper disclosure for single and multi-phase Construction Loans is reflected but not limited to the following:
    a. Finance charge amounts, points and fees that would not be present if there wasn't a construction phase, must be allocated and disclosed only under the construction phase.
    b. Appendix D of the 2017 rule is used to calculate period payments for disclosures; requirements for construction phase may differ from permanent phase, as well as when disclosed as a single transaction.
    c. Reflected in the Loan Terms table and Adjustable Payments table, the maximum payment is calculated using the maximum outstanding principal balance during the construction phase.
    d. Clarification is provided for disclosing disbursement date (purchase and non-purchase), construction and handling costs (before and after consummation), as well as determining costs disclosed on the Calculating Cash to Close table, and revised disclosure requirements.

Mortgage Servicing Rules Under the Truth In Lending Act (Regulation Z)

The CFPB issued amendments to Reg Z 2016 mortgage servicing rules on timing of periodic statements and coupon books for consumers in bankruptcy. Interim final rule became effective on October 9, 2017; The final rule is effective April 19, 2018.

  1. The window for providing the modified Early Intervention Notice to delinquent borrowers that have exercised cease communication rights under FDCPCA is extended from exactly day 180 to a 10-day window beginning on day 180.
  2. The single-billing-cycle exemption available when a triggering event occurs will change, from 14 days or less post event, to the "next" periodic statement or coupon, regardless of billing cycle.
  3. Modified periodic statement must include all payments received, pre-petition and post-petition, as well as post-petition fees and charges (imposed and paid) on the transaction activity.
  4. Payments made to the trustee should not be disclosed on the transaction activity; necessitating that disclosures state that periodic statements may not match trustee records.
  5. Coupon books sent to borrowers in chapter 12 or 13 bankruptcy must include the 45-day delinquent disclosure if the borrower is more than 45 days delinquent on post-petition payments.

Home Mortgage Disclosure Act (Regulation C), Final Rule

Amends 2015 HMDA Final Rule to make corrections and clarify terms, requirements and improve reporting that became effective on October 9, 2017. The final HMDA rule, including amendments, takes effect on January 1, 2018, January 1, 2019 and January 1, 2020.

  1. Reporting exemption for open-end lines of credit threshold increases to 500+ open-end lines of credit, covering two calendar years of activity (2018 and 2019).
  2. Transition rules for loan purpose and unique loan identifier (ULI) data is not required for reporting if loans were purchased and originated prior to the regulatory effective date of January 2018.
  3. Check digit computation factor corrected from .97 to 97 (check digit tool available on CFPB website)
  4. Unique Loan Identifier (ULI) may be used to restart the application process or in the instances of assumption.
  5. Incorporate credit scoring model(s) used for single or composite scoring, as well as report whether the score used is not applicable to the applicant, or co-applicant.
  6. Reporting the comparison of Annual Percentage APR to Average Prime Offer Rate APOR (rate spread reporting) is now required on applications and covered loans that are approved not accepted, excluding assumptions, purchase covered loans and reverse mortgages.

Learn More

See why Clarifire is a leader in delivering robust workflow management software to customers with complex compliance management needs. Click here to view additional details on TRID compliance and requirements.

Available via enterprise-wide license or by subscription, CLARIFIRE technology makes CFPB's deadlines doable. Schedule a CLARIFIRE Demo today and see why it truly is BRIGHTER AUTOMATION®.



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