October Compliance Roundup: URLA, Regulation Z, and California Privacy Laws

October saw several national and state rules and revisions announced, many of which go into effect in early 2020. In addition to an update to Regulation Z, Fannie Mae continued to provide minor updates to the URLA. However, lenders still do not have a timeframe for implementing the new applications and forms. In addition, California confirmed the details of its privacy law, which goes into effect in January. This law could impact some loan documents, so see below for additional details.

Remember, you can always find the most current compliance information on our compliance blog.

State and Investor Compliance News

Here is a look at what happened in October.

CFPB. As October was ending, the CFPB published the final rules regarding the Regulation Z exemption threshold. The Bureau increased the dollar amount of the threshold from $57,200 to $58,300. The Bureau (and certain other federal agencies) also published final (joint) rules increasing the dollar amount used to determine if a higher-priced mortgage loan is a higher-risk mortgage. These increases take effect on January 1, 2020. Learn more.

Fannie Mae. Last year, FNMA announced revisions to their Form 1008 (Uniform Underwriting and Transmittal Summary), with a mandatory effective date of July 1, 2019. Last month, FNMA announced it was extending the mandatory use date for the revised Form 1008. Lenders may use it immediately but won’t be required to use it on/after Feb. 1, 2020, as previously announced. Learn more.

Fannie Mae and Freddie Mac.  In late October, FNMA and FHLMC published a notice concerning updates to the Redesigned 1003 and posted directly on the FNMA Redesigned 1003 website: “Changes have been made to the Borrower Information, Additional Borrower Information, Lender Loan Information, Continuation Sheet, and Unmarried Addendum components. The Rendering Design Options document has been updated and reposted to reflect these changes.” The announcement did not contain an implementation timeline for the Redesigned 1003, which we expect to see by year’s end. Learn more.

California. “The California Consumer Privacy Act of 2018” signed into law last year is scheduled to take effect on January 1, 2020. Last month, the California Secretary of State’s office indicated that all five amendments to the Act have become law. We are currently reviewing these changes to determine any impact to our document library. Learn more.

Montana and Texas.  Federal Regulation Z permits, but does not require, signature lines to appear on the Loan Estimate and Closing Disclosure forms. Due to requirements in two states, Montana and Texas, we will be globally mapping “Closing Disclosure Signature Lines Indicator” (FI 95191) to “Yes” for loans secured by property located in Texas and also globally mapping “Loan Estimate Signature Lines Indicator” (FI 95190) to “Yes” for loans secured by property located in Montana. Learn more.

Washington. The Washington Department of Financial Institutions finalized amendments to its regulations administrating the “Consumer Loan Act” and “Mortgage Broker Practices Act” in October. Changes include a new version of the model “Rate Lock Agreement.” We are currently reviewing this change to determine any impact to our document library. Learn more.

Document Changes

In addition, our document library saw several revisions in October. They’ve been summarized below with links to the full descriptions of the updates.

• DC Real Property Recordation and Transfer Tax Form FP 7-C was recently updated by the DC Office of Tax and Revenue. We have updated our copy of Form FP 7-C (Cx2485) to more closely match the model form posted on their website. Learn more.
• Our copy of the Redesigned 1003 Uniform Residential Loan Application, which is currently only in use for testing, will be modified to reflect the revisions recently announced by Fannie Mae and Freddie Mac (referenced above). In particular, there are several text and formatting updates that will be made throughout the document. The updates to Cx20667 will be made available for testing as they are completed over the course of the next few weeks. Learn more.
• Changes have been made to form Cx11242, a duplicate of Rhode Island’s Tangible Net Benefit disclosure form to better meet certain requirements handed down by the state and to take a conservative approach for loans where a Closing Disclosure will not exist. In addition, the logic has been modified behind the checkbox for a selection statement on the disclosure. Learn more.
• We are making some configuration adjustments to trigger Cx3715, Texas Insurance Notice to Applicant, based on a “prepaid single premium basis” as required by the Texas Finance Code. The configuration is being updated to trigger for Texas Initial disclosures when “Upfront Credit Insurance” (FI 99934) = Yes and certain other options for “Credit Life, Accident and Health and Unemployment Insurance” (FI 40265) are selected. Learn more.
• USDA’s form Rural Development 3555-21 (Cx18893) has been modified to match the latest version published by the Agency. The most notable change is the removal of Lines 2a and 2b (regarding interest rate locks and floats). Learn more.
• Generic Florida Interest Rate Lock Agreement, form Cx13498, has been modified to take a more conservative approach given that the state law does not specify whether discount points are to be paid by the borrower or seller. The new form discloses both borrower-paid and seller-paid discount points (if they exist). Learn more.

You can always get the latest information from the industry’s very best compliance team on our compliance blog.