Taking the Bait

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Th e M Rep o RT | 47 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t SERVICING the latest Can loan servicing be personal? Using modern, cloud- based technology and dedicated support teams, we shape our operations to how our clients do business. Learn more at The new standard for performance. 972.347.4350 cFPB amends mortgage rules for nonprofits Nonprofits get different rules from the agency. t he Consumer Financial Protection Bureau (CFPB) announced it is proposing "minor changes" to its mortgage rules to assist nonprofit organizations in getting loans to underserved communities. "Our mortgage rules are now helping to protect consumers all across the country from debt traps, runarounds, and surprises," said CFPB director Richard Cordray in a statement. "Today's proposal would maintain those strong protections, while making minor changes to ensure consumers have access to credit." Included in the released proposals is an amendment to expand the definition of a "small servicer"—a group exempt from the bu- reau's new mortgage servicing rules—to include certain 501(c)(3) nonprofits. Since the first proposed draft of CFPB's ser- vicing guidelines, the small servicer exemption has included firms servicing 5,000 or fewer mortgages. However, because some nonprofits service loans for other associated lenders, the bureau cited concerns they may not be able to consolidate their activities and still meet those traditional requirements. Also proposed is an amendment to the agency's Ability-to-Repay rule, which imple- ments guidelines for creditors to make "reason- able and good faith determination[s]" as to a borrower's ability to pay back a loan before lending. While the original rule granted ex- emptions to groups making no more than 200 mortgages a year, CFPB's amended guideline would also carve out a spot for some nonprof- its to aid in opening up credit access for low- to moderate-income borrowers. The final proposal would lay out "limited circumstances" through which a lender could refund points and fees beyond the 3 percent cap established in the bureau's Qualified Mortgage (QM) provisions, creating a little more wiggle room for lenders to provide credit to consumers on loans that push the limit for points and fees. As always, CFPB is seeking public comment on the newly released proposals, as well as input on other questions regarding the impact of its rules and their potential effect on larger lenders that fall outside the "small creditor" category. For nonprofits, the agency's new proposals are a delivery on a promise the agency made when it started accepting comments last year on its then-proposed mortgage guidelines. "When they were first putting out rules for QM, I saw where there was some conflict," said Paul Turney, EVP for Texas' Brazos Valley Affordable Housing Corp. "They promised there would be a grace period . . . but now it's in writing." Included in the released proposals is an amendment to expand the definition of a "small servicer"

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