The FDIC recently released interagency consumer compliance examination procedures for the mortgage rules issued pursuant to the Dodd-Frank Act. These procedures are intended to help financial institutions seek a better understanding of the areas that the FDIC will focus on as part of the examination process. These procedures apply to Financial Institutions under $1 Billion in Total Assets. Please refer to FIL-9-2014 on the FDIC website as follows: FDIC Website
The FDIC has indicated that examiners will use the revised interagency procedures to evaluate the institution’s compliance with the following residential mortgage loan rules issued pursuant to the Dodd-Frank Act. This list is not all-inclusive, but highlights a few important areas:
- Ability-to-Repay/Qualified Mortgage Rule – requires creditors to make a reasonable and good faith determination that the consumer has a reasonable ability to repay a mortgage loan.
- Loan Originator Compensation Rule – regulates loan originator compensation and establishes qualification and training requirements.
- Mortgage Servicing Rules – implements amendments to the Real Estate Settlement Procedures Act (RESPA) and the Truth in Lending Act (TILA) regarding mortgage loan servicing.
- High-Cost Mortgage and Homeownership Counseling Amendments Rule – implements the Dodd-Frank Act provisions amending TILA and RESPA concerning consumer protections associated with high-cost mortgages and homeownership counseling.
- Higher-Priced Mortgage Loan (HPML) Escrow Rule – requires creditors to establish and maintain, for a minimum of five years, escrow accounts for certain HPMLs.
- HPML Appraisal Rule – requires appraisals for certain HPMLs.
- Equal Credit Opportunity Act (ECOA) Appraisal Rule – requires creditors to provide a copy of an appraisal or other property valuation as a matter of course, rather than providing copies only upon an applicant’s request.
As with any regulatory changes, the FDIC examiners will expect institution personnel to be familiar with mortgage rules’ requirements and have a plan for implementing the requirements. Valuation Management Group (VMG) Senior Management conducted several training sessions on some of the above noted rule changes ahead of the FDIC release. Please refer to VMG’s Blog titled Understanding New Appraisal Regulation in 2014 for more information.
Valuation Management Group is a national, full service appraisal management company that manages the appraisal process for community banks, mortgage bankers and credit unions. We take the process from ordinary to extraordinary.