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August 15, 2008

  ||  Feature Story

Final Reg Z Rule a Realtiy
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The FRB issued its Final Rule amending the mortgage lending provisions of Regulation Z and the Commentary The purpose of the changes is to provide additional consumer protections for mortgage and home-equity loans. Importantly, the rules apply to all creditors, including nonbank mortgage lenders and brokers. The Rule includes a new category of loan known as a higher-priced mortgage loan 9HPML). Also, the pattern or practice rule for assessing violations for the failure to determine the applicant’s ability to repay has been removed. This means violations may occur after one such incident and thereby trigger an enforcement action. Effective dates are staggered with the majority of the Rule being effective October 1, 2009 .

What's  New

Most Common Violations Increase 
Each year the Federal Reserve Board and other agencies, including the FCIC, OCC, and OTS, compile a report of the most common violations found by examiners. The 2007 report was issued in April 1008 and covered July 1, 2006 to June 30, 2007 . It reveals an increase in compliance violations over 2006. Reg Z ad Reg DD topped the list with the largest increases.

Reg C Amendment Proposed Due to  Reg Z Changes
With the changes being made by the Final Rule to Reg Z affecting mortgage loans, changes to Reg C are required to ensure accuracy and consistency in HMDA reporting. This Proposed Rule explains the changes and makes the required implementation date January 1, 2009 .

Operation Malicious Mortgage Results in national Takedown of Fraudster
Mortgage fraud can occur any time; however, in times of downturns in the residential real estate market occurrences often escalate. Operation Malicious Mortgage was a nationwide crackdown on mortgage fraud violations. Additionally the 2007 Mortgage Fraud Report has been released by the FBI and details the latest findings.

HELOC Risks Lead to Suggested Best Practices 
As the decline in home values continues across the U.S. , many borrowers are experiencing financial difficulties. Some financial institutions are finding it necessary to reduce or suspend HELOCs. The FDIC Guidance, which is applicable to all financial institutions, provides guidance on best practices in making and executing these decisions.

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