Mortgage Lending Regulations
During this session of Compliance School we will cover laws and regulations that govern mortgage lending.
Regulation Z: Regulation Z is enormous in scope, easy to violate and has changed dramatically in the last few years, especially for mortgage loans. We’ll discuss rules that apply to mortgages and HELOCs, including the January 2014 rule changes.
Equal Credit Opportunity: We will briefly recap ECOA and Reg B rules and discuss mortgage specific issues.
Fair Housing Act: The purpose of the FHA is to regulate a number of practices in the area of housing—the most relevant to credit unions being the prohibition against unlawful discrimination in housing-related lending activities. The FHA is similar to ECOA in scope and requirements. We will also cover the NCUA’s non-discrimination regulations.
Real Estate Settlement Procedures Act: We will spend quite a bit of time on this important but oftentimes confusing regulation that requires lenders to provide borrowers with certain information about expenses involved in the real estate settlement process for “federally related mortgage loans.” We will also briefly cover upcoming rule changes.
Flood Disaster Protection Act: The purpose of this act is to mandate the purchase of flood insurance as a condition of a real estate loan whenever a lender “makes, increases, extends or renews” any loan secured by improved property located or to be located in a special flood hazard area (SFHA).
The Homeowner’s Protection Act: The HPA permits a borrower to cancel or requires termination of private mortgage insurance (PMI) when the level of equity in a home reaches a certain level. We will discuss borrowers’ rights and lenders’ obligations.
Mortgage Licensing and Registrations: We will discuss the requirement for all mortgage loan originators to register with the Nationwide Mortgage Licensing System (SAFE ACT).
Home Mortgage Disclosure Act: This regulation doesn’t apply to many of our smaller credit unions, but it can be a significant reporting burden for those credit unions that must comply. HMDA requires the collection and reporting of extensive mortgage loan data to aid in fair lending compliance. We’ll save this topic for the very last so CUs that are not HMDA reporters can leave early.