Non-Traditional Mortgage Guidance Updates
In the past month, Pennsylvania, Tennessee, Texas, and Virginia have each adopted the Guidance on Nontraditional Mortgage Product Risks ("Guidance") in some capacity. The Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators issued this Guidance to address the growing risks of nontraditional mortgage products.
Like many other states in this country, Pennsylvania and Tennessee have adopted the Guidance in entirety.
In the state of Texas, other government offices have previously adopted the guidance. The most recent office to adopt the entire Guidance is the Office of Consumer Credit.
Finally, Virginia recently issued an administrative letter regarding nontraditional mortgage products. This letter details the practices that mortgage lenders and brokers should follow in the nontraditional mortgage market. Even though the letter does not explicitly state that it adopts the Guidance issued by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators, the practices stated are noticeably similar.
Rhode Island Home Loan Protection Act Update
Over the past few months, the state of Rhode Island has been struggling with the language of an emergency regulation called the Home Loan Protection Act. After months of analysis and review, the state has adopted a permanent version of the regulation.
The permanent adoption of the Home Loan Protection Act came at the right time, because the emergency regulation was set to expire on May 1, 2007. The permanent regulation is not an exact copy of the emergency version. The permanent regulation has made critical changes to disclosure content, timing requirements, recordkeeping requirements, and definitions.
The permanent regulation is effective May 1, 2007. However, Rhode Island's Department of Business Regulation has delayed enforcement until June 1, 2007.
New Electronic Recording Regulations Introduced
Over the past month, Arkansas, New Mexico, and Maryland each passed bills allowing for the electronic recording of documents.
The Arkansas and New Mexico bills were both passed pursuant to the Uniform Real Property Electronic Recording Act (URPERA). In general, URPERA gives county clerks and recorders legal authority to prepare the electronic recording of documents. This act also authorizes land records officials to search and retrieve these land records. The Arkansas and New Mexico bills are both effective at the beginning of July 2007.
The Maryland bill did not create a permanent program for the electronic filing of documents. Instead, the bill allows Maryland's Administrative Office of the Courts to establish a pilot program for the electronic filing of land records. Even though the long-term future of the program is uncertain, the bill assures that any land record that is filed electronically through the program will remain valid whether or not the pilot program is modified or terminated. The Maryland bill becomes effective on June 1, 2007.
The Fed Proposes Amendments to Regulation Z
On April 30, 2007, the Board of Governors of the Federal Reserve System proposed numerous amendments to Regulation Z.
The Board proposed to amend Regulation Z and the official staff commentary by withdrawing portions of the 2001 interim final rule on electronic disclosures that restate or cross-reference provisions of the E-Sign Act; withdrawing other portions of the interim final rule that the Board now believes may impose undue burdens on electronic banking and commerce and may be unnecessary for consumer protection; and retaining the substance of certain provisions of the interim final rule that provide regulatory relief or guidance regarding electronic disclosures.
Furthermore, the amendment includes the implementation of certain provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act. These provisions relate to the TILA and electronic disclosures.
Even though these are only proposed amendments, they may substantially affect the disclosures you are required to provide. Keeping yourself informed of these proposed legislative changes is the best way to prepare yourself the changes you will have to make with your forms and disclosures.
