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MHI Weighs in on CFPB Housing Finance Proposed Rules

MHI or the Manufactured Housing Industry has worked to represent the concerns of our industry over the past few months in response to a number of proposed housing finance rule makings.  These proposals were release by the Consumer Financial Protection Bureau or CFPB.

A previous article mentioned that, “MHI is concerned that a number of new regulations currently being developed by the CFPB could further limit access to and the availability of credit in the already finance-constrained manufactured housing market. In addition to efforts to amend the Dodd-Frank law through legislative measures in the House and Senate (H.R. 3489 & S. 3484), MHI is actively advocating the industry’s concerns before key staff at the CFPB.”

The next section highlights some of the most significant rules that MHI has the most concern with.  MHI wants you to know that, “MHI staff is working to ensure final rules adequately reflect the price sensitivities and unique challenges inherent to the manufactured housing market.”

(The following is from the MHI news wire.  The information is quite important so please read further)…

Appraisal Requirements for Higher-Risk Mortgages

Implements Dodd-Frank provisions that an appraisal (including a physical inspection of the interior of a home) be conducted on homes with mortgages considered “higher-risk.” Under the law, qualified mortgages (QMs) would be exempt from the “higher-risk mortgage” definition and thereby exempt from appraisal requirements. In general, if the loan is not a QM and has an APR that is 1.5 percentage points over prime, it is considered “higher-risk.” Based on input from MHI, the rules proposed by the CFPB and others would exempt any loan “solely secured by a residential structure,” such as manufactured homes, from the higher-risk mortgage definition. Based on the unique difficulties of appraising manufactured homes, MHI is working to expand this definition to include any manufactured home loan secured by real property.

Click here to view the proposed rule.
Click here to view MHI’s comments.
Click here to view a summary of the appraisal proposed rule.

Equal Credit Opportunity Act Amendments— Requires creditors to provide consumers free copies of all written appraisals and valuations developed in connection with an application for a mortgage. The proposal would require creditors to notify applicants in writing of the right to receive a copy of each written appraisal or valuation at no additional cost. With respect to new manufactured homes, most lenders develop a maximum loan amount based on the manufactured home’s invoice price. In the proposed rule, the CFPB indicates that “valuations such as manufacturer’s invoices for mobile homes” would not be considered a “written appraisal or valuation” and would not have to be provided to consumers by lenders. In addition, publicly available valuation lists (such as published sales prices or mortgage amounts, tax assessments and retail price ranges) are not items considered that must be provided to consumers.

Click here to view the proposed rule.
Click here to view MHI’s comments.

HOEPA High-Cost Mortgage Revisions — Dodd-Frank expands the types of mortgages subject to the protections of the Home Ownership and Equity Protection Act (HOEPA); revises and expands the triggers for coverage under HOEPA; and imposes additional restrictions on HOEPA “high-cost mortgage” loans, including a pre-loan counseling requirement. Because the fixed costs (such as servicing and origination) and the lack of secondary market access, low balance manufactured home loans are particularly susceptible to classification as high-cost under the revised HOEPA guidelines. Due to liabilities associated with a high-cost/HOEPA mortgage, lenders will not originate these loans—potentially further stifling the availability of credit in the manufactured housing market. MHI has urged the CFPB to significantly broaden the APR and origination points thresholds that define HOEPA high-cost loans and ensure that fewer low-balance manufactured home loans are captured by triggers that currently do not fully account for the price pressures in the manufactured housing market.

Click here to view the proposed rule.
Click here to view MHI’s comments.

Loan Originator Compensation Rules —Implements changes made by Dodd-Frank to Regulation Z’s current loan originator compensation provisions, including a new additional restriction on the imposition of any upfront discount points, origination points, or fees to consumers under certain circumstances. The rule implements a very narrow exemption for manufactured housing retailers to “exclude employees of a manufactured home retailer who assists a consumer in obtaining or applying to obtain consumer credit, provided such employees do not take a consumer credit application, offer or negotiate terms of a consumer credit transaction, or advise a consumer on credit terms (including rates, fees, and other costs).” Unfortunately, the provision provides no meaningful relief to the industry.

MHI has maintained the position that the exemption for manufactured home retailers should be based upon the compensation received in the home sale. If the compensation received is no greater than what the retailer would have received in an all-cash transaction, then the individual retailer/seller should not be considered a loan originator. Unless clarifications are made, MHI is concerned that lenders may be forced to consider sales commissions earned by a manufactured home retailer as compensation and gain for purposes of calculating a loan’s APR or points and fees. This may cause the loan to fail the test for a “qualified mortgage” or a HOEPA/high-cost mortgage.

Click here to view the proposed rule.
Click here to view MHI’s comments.

RESPA & TILA Mortgage Servicing Guidelines – The rules implement Dodd-Frank provisions regarding mortgage loan servicing. Specifically, this proposal implements Dodd-Frank sections addressing initial rate adjustment notices for adjustable-rate mortgages (ARMs), periodic statements for residential mortgage loans, and prompt crediting of mortgage payments and response to requests for payoff amounts. The proposed rule would provide an exemption to small servicers—defined as those that service 1,000 or fewer mortgage loans and service only mortgage loans that they originated or own—for the periodic statement requirements.

Click here to view the RESPA proposed rules.
Click here to view the TILA proposed rules.
Click here to view MHI’s comments.
Click here to view a summary of the new servicing requirements.

For more information, contact MHI Vice President of Government Affairs Jason Boehlert at  jboehlert@mfghome.org.

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November 21, 2012 - Posted by | Financial Information | , , , , , , , , ,

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