Exceptions and Exemptions: Keeping them all straight in the new

Presented by: Carl Pry




Understanding the deluge of new mortgage regulations is proving to be a monstrous challenge. Figuring out what is covered and then what is required takes hours of concentration and mental gymnastics most of us don't possess. But what about what is not covered?

It's easy to say that traditionally, most of the mortgage rules exclude home equity lines of credit. They're a separate animal, after all. And in fact, they're indeed exempt from the ability-to-repay rules. But wait a minute - the new rules expanding the reach of HOEPA and Section 32 don't exclude HELOCs anymore! The rules are not uniform at all; some loans are covered by certain provisions, and others are not, and the types of loans within this maze of requirements, exceptions, and exemptions are not equal.

Some other examples of differing exceptions and exemptions, you ask? How about these:

• Certain temporary or bridge loans, or construction loans, are exempt from only some of the ability-to-repay obligations, such as the repayment ability, Qualified Mortgage, and balloon payment sections.
• Balloon loans generally are exempted from being considered QMs, except for those creditors that can meet the "rural or underserved" test. Also, to make it more fun, QM balloon loans are exempt from the general DTI restriction.
• Mortgage loans having DTI ratios above 43% cannot be Qualified Mortgages: except when the alternative GSE or government agency test is met.
• QMs generally enjoy a safe harbor when the lender's ability-to-repay is challenged; except when the loan is considered a higher-priced mortgage loan.
• Fees and charges excluded from the finance charge calculation are excluded from the "points and fees" test for determining whether a loan is a QM, except where the fee is paid to an affiliate of the creditor, for instance.
• Escrows are required for certain loans if the APR exceeds a threshold, except if the creditor meets the small creditor in a rural or underserved area test.
• New appraisal requirements apply to non-QM higher-priced mortgage loans, except if the loan is a construction loan, a bridge loan, or a reverse mortgage.

There are many more, and the ones listed aren't complete as it is. But it gives you an idea of the complexity in trying to figure out exactly what rule applies to what type of loan. We'll provide as much helpful information we can to allow you to properly classify how you must treat various loan types.

This session is designed for anyone involved in the mortgage loan process, including compliance professionals, auditors, legal staff, management, product development, and others.

About the Speaker: Carl Pry, a Senior Director of Treliant Risk Advisors, is a seasoned executive with banking law, corporate finance, and regulatory compliance experience in Fortune 500 institutions, regional banks and industry consulting firms. Carl advises clients on commercial compliance, fair lending, corporate treasury and risk management. Over the last 18 years, Carl has held senior leadership positions including Senior Vice President and Compliance Manager for the Compliance and Control Division at KeyBank, Manager of Finance and Performance Management Service Line at Accenture, and Vice President of Regulatory Services at Kirchman Corporation. With strong knowledge and experience as a banking attorney and officer, Carl is a frequent contributor to and currently serves on the Editorial Advisory Board for the ABA Bank Compliance magazine. As a featured speaker for numerous banking, compliance, and state bar associations, he has led training sessions across the country. Carl has served as an instructor at FDIC examiner school and back-up instructor for NCUA examiner school. He has authored training programs covering consumer and commercial compliance, audit, quality control, tax, privacy and risk management. Carl is a columnist for ABA Bank Compliance and ABA Bank Marketing magazines. He has authored scores of articles on financial issues and developed testing and support materials for BAI's Anti-Money Laundering Professional certification and served as subject matter expert for web-based compliance and audit educational testing programs for banking training firms. He is the author of Internet Banking Manual, a comprehensive guide to business planning, risk analysis and maintaining a presence for financial institutions on the Internet. For LexisNexis, he also authored The New RESPA Rule: Navigating New Disclosures and The Evolution of Reg. Z: Increased Duties and Responsibilities for Lenders. Carl holds a JD and an MBA from the University of Toledo and a BSBA from Bowling Green State University. He is also a Certified Regulatory Compliance Manager and Certified Risk Professional.


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CD-ROM includes:

• Complete presentation (including slides and audio)
• Written Materials
• Follow-up Q & A

You have the right under this license agreement for this CD-ROM to use this presentation on a single-workstation. Use on a network is in violation of the copyright agreements. CD may be used by multiple users at a given institution but may not be placed on a network or in any other multi-user environment.

This program was recorded in its entirety in May 2013. The CD-ROM includes program slides, materials (if available) and follow-up Q & A document.