First Title Compliance Solutions
Ability-to-Repay and Qualified Mortgage RuleOn May 29th, 2013, the Consumer Financial Protection Bureau (CFPB) issued an update to the new Qualified Mortgage (QM) Rule, under the Dodd Frank Reform Act, requiring the consideration of a consumer’s ability to repay a loan prior to being extended credit. The rule stipulates that a loan to qualify as a “Qualified Mortgage”, all points and fees, including those associated with an affiliated title company, can’t exceed three percent of the mortgage value. The three percent calculation applies to all title and closing services revenue, regardless of the amount of the financial interest owned by a particular lender in an associated title insurance provider. The new rule goes into effect on January 10, 2014. Link to full compliance PDF: Ability to Repay/Qualified Mortgage
Direct LendersFirst Title & Escrow can assist lenders that own affiliated title companies to work through the QM issue. We can evaluate your company coverage areas for potential high cost states where the 3% threshold may be hit, and implement our innovative solutions. First Title utilizes operational planning, process optimization, and proprietary software to bring value to our clients, putting them in control of the entire process. Choosing First Title as your centralized title solutions provider, guarantees that your team will be able to:
- Obtain customized reports to meet your specifications
- Through our integration with most major LOS systems, use your current loan platform for title ordering, instant GFE and Closing Cost calculations, as well as product delivery
- Access our web-based HUD delivery module and Transaction Management Dashboard
- View real-time statistics from time of order placement to title curative, closing scheduling, and disbursement, through recordation and policy production
TPO and Branch NetworksThird party origination fees will be included in the three percent cap. With the new QM rule in place, it will become increasingly difficult for decentralized lenders to manage the title process using affiliated title providers. First Title is aware of the challenge and ready to assist lenders now. Our innovative and customer-oriented solutions are essential for lenders that need to centralize title without utilizing their affiliate. We can facilitate your title work, while operating outside of the three percent fee calculation. It’s the optimal solution for any decentralized lenders hoping to improve their financial situation by ensuring that TPO compensation isn’t impaired as a result, bringing more opportunity to your organization.
New CFPB Third Party Vetting RequirementsThe new requirements added a responsibility to all banks and lending institutions relating to proper oversight of third-party providers they employ. As further clarification of that regulation, the CFPB issued a list of steps institutions should be taking in regulating their third party vendors, which included:
- An understanding of providers’ “Polices, Procedures, Internal Controls and Training Materials to ensure that the service provider conducts appropriate training and oversight of employees” that have consumer contact and compliance responsibilities.
- Verifiability of a service provider’s capability to comply with Federal consumer financial law.
- Establishing clear expectations about compliance in the service provider contract, along with suitable consequences for compliance violations.
- Acting quickly to fully address any issues identified through the monitoring process.