CLE Alabama. Banking Law Update. Embassy Suites Hoover Hotel Birmingham, Alabama Friday, February 19, Washington / CFPB Update

CLE Alabama Banking Law Update Embassy Suites Hoover Hotel Birmingham, Alabama Friday, February 19, 2016 Washington / CFPB Update Benjamin K. Olson and Brandy A. Hood BuckleySandler LLP Washington, DC

Washington / CFPB Update Benjamin K. Olson and Brandy A. Hood BuckleySandler LLP Washington, DC I. Know Before You Owe: TILA-RESPA Integrated Disclosure ( TRID ) Rule Update On October 3, 2015, the Consumer Financial Protection Bureau s ( CFPB or Bureau ) long-awaited rule combining the mortgage disclosures consumers receive under the Truth in Lending Act ( TILA ) and the Real Estate Settlement Procedures Act ( RESPA ) went into effect. This marked the end of 30 years of separate, overlapping disclosures under TILA and RESPA for most mortgages, and the beginning of the Loan Estimate and Closing Disclosure. A. Key Changes Effective October 3rd, the Good Faith Estimate ( GFE ) and initial Truth in Lending ( TIL ) statement were replaced with the Loan Estimate ( LE ). Under the new rule, the items constituting an application are narrowed, requiring lenders to provide earlier disclosures based on more limited information. In addition, the tolerances imposed by HUD in 2010 under RESPA that limit changes in estimated costs have been tightened and are now subject to CFPB enforcement and a TILA private right of action. Also effective October 3rd, the HUD-1/1A and final TIL were replaced with the Closing Disclosure ( CD ). The Closing Disclosure must be provided three days before closing, Olson - 1

requiring additional work earlier in process. The lender will also responsible for errors in the settlement agent s preparation of the settlement disclosures, creating private liability and vendor management risk. B. Liability The new TILA-RESPA Integrated Disclosures ( TRID ) rule integrates two different statutes with two different liability schemes. 1. Liability Before TRID Before TRID (and today for transactions that still require non-trid TILA disclosures), TILA section 130 applied to violations of the requirement to provide an initial and final TIL. For violations of the initial and final TIL disclosure requirements, TILA section 130 provides: A private right of action permitting the borrower can sue for actual damages with attorney s fees and costs; and Statutory penalties of up to $4,000 for failure to properly provide certain disclosures (including finance charge and APR). RESPA governs the GFE and HUD-1/HUD-1A disclosures. There is no private right of action for any violations of the requirement to provide GFE and HUD-1/HUD-1A disclosures. Olson - 2

The Consumer Financial Protection Bureau ( CFPB ) also has enforcement authority under section 1055 of the Dodd-Frank Act. Under this authority, the CFPB can institute civil money penalties of $5,000 per day per violation, $25,000 per day for reckless violations, and $1,000,000 per day for knowing violations. 2. Liability Under TRID Congress mandated that the TILA and RESPA disclosures be integrated, but neither Congress nor the CFPB clearly defined liability for the new integrated TILA and RESPA disclosures. Instead, the CFPB states only that each provision of the rule carries the same liability as the statute on which it is based. [78 Fed. Reg. 79730, 79757 (Dec. 31, 2013).] This means that TILA liability will apply to all requirements that are based on TILA and RESPA liability will apply to all requirements that are based on RESPA. However, the analysis does not end there. TILA is split into several subchapters and parts, and a borrower may only sue a creditor or assignee for violations of Part B, D, or E of Subchapter I. [15 U.S.C. 1640(a).] The CFPB relied on provisions in TILA Part A or Parts A and B in adopting each provision of the TRID Rule. Where the CFPB only relied on provisions of Part A, a private right of action should not apply, but where the CFPB also relied on Part B, a private right of action likely does apply. The CFPB s enforcement authority will remain the same. That is, the CFPB will have the authority under the Dodd-Frank Act to institute civil money penalties of $5,000 per day per Olson - 3

violation, $25,000 per day for reckless violations, and $1,000,000 per day for knowing violations. 3. Example Tolerance Violations In 2010, HUD interpreted the good faith estimate requirement in RESPA to limit variations between estimated settlement charges on the GFE and actual settlement charges on the HUD-1. [See, e.g., 78 Fed. Reg. at 79816.] These variations are referred to as tolerances. Unfortunately, implementation of these limits has proved to be extraordinarily challenging for the industry, so it has resulted in extensive compliance issues and remediation. The CFPB nevertheless adopted tolerances under TILA s good faith estimate requirement, creating a private right of action for tolerance violations even though no private right of action existed before. [See, e.g., 78 Fed. Reg. at 79817.] C. Initial Compliance Concerns and CFPB Response 1. Initial Compliance Concerns The industry has expressed a great deal of concern about the TRID rule for a number of reasons, including because (1) liability is unclear; and (2) the rule includes a number of highly technical requirements that have proven difficult to interpret and implement. Initial findings from quality control vendors assessing compliance have only increased those concerns. Quality control vendors are reporting errors in the double digits for each loan file, and private investors Olson - 4

are rejecting a high percentage of loans due to reported violations of the rule s requirements, some of which are technical and some are not. In addition, after nearly a decade of litigation among market participants (and governmental entities) related to alleged loan defects, investors are wary that any TRID violation no matter how minor or technical and regardless of whether it carries a private right of action or assignee liability could give rise to an indemnification or repurchase demand based on an unqualified contractual representation that the loan was originated in compliance with law. It appears that these concerns will wane only if the contractual agreements themselves are modified to exclude specified technical violations from the representations and warranties or to otherwise limit indemnification and repurchase demands based on such violations. 2. CFPB Response to Initial Compliance Concerns The CFPB has repeatedly indicated that it believes industry s concerns are overblown. On December 29, 2015, CFPB Director Richard Cordray issued a letter in response to concerns raised by the Mortgage Bankers Association ( MBA ) regarding violations of the CFPB s new TILA-RESPA Integrated Disclosure ( TRID ) rule, also known as the Know Before You Owe rule. [Cordray Letter available at http://mba.informz.net/mba/data/images/cfpb%20reponse%20to%20mba%20trid%20lette r.pdf; MBA Letter available at http://mba.informz.net/mba/data/images/ltr%20to%20cfpb%20re%20trid%20cure%20gui dance.pdf] In an effort to address concerns that technical TRID violations are resulting in extraordinarily high rejection rates by secondary market purchasers of mortgage loans, Director Olson - 5

Cordray acknowledged that, despite best efforts, there inevitably will be inadvertent errors in the early days. However, he suggested that rejections based on formatting and other minor errors are an overreaction to the initial implementation of the new rule and that the risk to private investors from good-faith formatting errors and the like is negligible. He expressed hope that this issue will dissipate as the industry gains experience with closings, loan purchases, and examinations. There is no indication that the letter was issued as an official interpretation under either Section 130(f) of the Truth in Lending Act ( TILA ) or Section 19 of the Real Estate Settlement Procedures Act ( RESPA ) and as a result it would not appear that Director Cordray s statements are binding on the CFPB, other regulators, or courts. [See, e.g., Decision of the Director (Public Version), In the Matter of PHH, et al., File No. 2014-CFPB-0002, at 17-19 (concluding that HUD letter responding to industry concerns regarding RESPA compliance was not in such a form as to be binding on any adjudicator and provided no protection to PHH in this proceeding because it was not an official interpretation published in the Federal Register).] Of course, the CFPB could issue an official interpretation specifying the liability or lack thereof associated with violations of individual TRID provisions or adjust the underlying authority to ensure that the CFPB, not the courts, is responsible for assessing compliance with formatting and other technical issues. Unfortunately, Director Cordray s letter does not and cannot address what may be the primary deterrent for secondary market purchasers and securitizers of mortgage loans: the risk that any TRID violation no matter how minor or technical will violate unqualified contractual representations that the loans were originated in compliance with law. After nearly a decade of litigation among market participants (and governmental entities) related to alleged loan Olson - 6

defects, investors are wary that any TRID violation could lead to a repurchase or indemnification demand down the road. As a result, even though Director Cordray s letter addresses a lender s or assignee s direct liability under TILA for TRID violations, it cannot address how loan purchasers, securitization trustees, and federal agencies enforcing the False Claims Act or the Financial Institutions Reform, Recovery, and Enforcement Act ( FIRREA ) will react to the discovery of technical violations. To address that risk, the CFPB would need to formally declare that, for some period of time, formatting and other minor errors are not, in fact, violations. Director Cordray made several statements about the availability of statutory and class action damages for TRID violations. First, his letter states that statutory damages are limited to the failure to provide a closed-set of disclosures. This appears to be a reference to TILA s restriction on statutory damages for violations of the mortgage disclosure requirements in 15 U.S.C. 1638. Specifically, TILA limits statutory damages for such violations to a subset of the 1638 disclosures, including the Annual Percentage Rate and finance charge. [See the unnumbered paragraph following 15 U.S.C. 1640(a)(4).] Second, the letter states that the 1638 disclosures that give rise to statutory and class action damages do not include either the RESPA disclosures [incorporated into TRID] or the new Dodd-Frank Act disclosures [added to 1638], including the Total Cash to Close and Total Interest Percentage. It further states that [f]ormatting errors and the like are unlikely to give rise to private liability unless the formatting interferes with the clear and conspicuous disclosure of one of the disclosures listed as giving rise to statutory and class action damages. The letter concludes that the risk to private investors from good-faith formatting errors and the like is negligible and that investors rejecting loans on that basis would be rejecting loans for reasons unrelated to potential liability associated with the Know Before You Owe [i.e., Olson - 7

TRID] mortgage disclosures. However, the letter appears to address only the liability associated with violations of TRID requirements adopted under 1638, whereas some TRID requirements are adopted under other Part B provisions and TILA liability extends to all of Part B of the Act. [See 15 U.S.C. 1640(a) (stating that, [e]xcept as otherwise provided in this section, any creditor who fails to comply with any requirement imposed under this part [Part B of TILA] with respect to any person is liable to such person ).] Furthermore, liability under 1638 is not limited to statutory damages because borrowers may recover actual damages and attorney s fees. [See 15 U.S.C. 1640(a).] Finally, even though Director Cordray s letter addresses a lender s or assignee s direct liability under TILA for TRID violations, it does not and cannot address how loan purchasers, securitization trustees and federal agencies enforcing the False Claims Act or the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA) will react to the discovery of technical violations. D. Curing Errors Even when a TRID violation carries a private right of action, it is possible to cure that violation through prompt corrective action in many cases. The TRID rule allows lenders and by extension investors to avoid liability in the following circumstances: The creditor discovers a non-numeric clerical error on the Closing Disclosure and provides a corrected Closing Disclosure within 60 days after consummation. [12 C.F.R. 1026.19(f)(2)(iv).] Olson - 8

The consumer pays amounts in excess of the tolerances (limitations) on increases in closing costs, but the creditor refunds the excess amounts and provides a corrected Closing Disclosure to the consumer no later than 60 days after consummation. [12 C.F.R. 1026.19(f)(2)(v).] TILA provides additional mechanisms for lenders and investors to limit their liability for certain errors. Specifically, TILA states that a creditor or assignee can: Avoid civil, administrative, and criminal liability under TILA for any failure to comply with any requirement imposed under [Part B] if the creditor or assignee: (a) notifies the consumer of the error within 60 days of discovery (but before an action has been instituted or the borrower notifies the creditor of the error in writing); and (b) makes whatever adjustments in the appropriate account are necessary to assure that the person will not be required to pay an amount in excess of the charge actually disclosed, or the dollar equivalent of the annual percentage rate actually disclosed, whichever is lower. [15 U.S.C. 1640(b).] Avoid civil liability or an extended right to rescind under TILA if the creditor or assignee shows by a preponderance of evidence that the violation was not intentional and resulted from a bona fide error notwithstanding the maintenance of procedures reasonably adapted to avoid any such error. Examples of a bona fide error include, but are not limited to, clerical, calculation, computer malfunction and programing, and printing errors, except that an error of legal Olson - 9

judgment with respect to a person's obligations under this subchapter is not a bona fide error. [15 U.S.C. 1640(c).] However, these provisions of TILA predate TRID so lenders and investors should perform a careful examination of their application by courts when developing their policies on TRID corrections. Notably, in his letter on TRID liability, CFPB Director Cordray stated that, consistent with existing [TILA] principles, liability for statutory and class action damages would be assessed with reference to the final closing disclosure issued, not to the loan estimate, meaning that a corrected closing disclosure could, in many cases, forestall any such private liability. Read broadly, this statement could suggest that, in the CFPB s view, many TILA violations on the Loan Estimate or Closing Disclosure which are significant issues for early TRID loans may be cured with a corrected Closing Disclosure. While potentially very helpful to resolving concerns about TRID liability, it remains to be seen if courts or regulators will interpret TILA and TRID in this fashion. Regardless, because the TRID and TILA cure provisions are generally conditioned on prompt corrective action, lenders, and investors should continue to perform targeted quality control reviews on closed loans to identify and address errors. II. CFPB Origination Examination Priorities In remarks to the California Mortgage Bankers Association, Calvin Hagins, the Deputy Assistant Director for Originations in the CFPB s Office of Supervision Policy, outlined the Olson - 10

Bureau s mortgage origination examination priorities in 2016. According to Mr. Hagins, CFPB examiners will spend a lot of time in 2016 looking at compliance in the following four areas. A. TRID/KBYO Mortgage Disclosures Compliance with the TRID rule will likely be an area of CFPB concern in 2016. The rule does not include a hold harmless period for errors, although (in addition to the Cordray letter discussed above) the CFPB, OCC, and FDIC have all issued statements that, while not identical, establish their expectation that lenders will make good faith efforts to comply with the TRID Rule s requirements in a timely manner. These agencies have also stated that their examiners will consider the lender s examination plan, including actions taken to update policies, procedures, and processes, its training of appropriate staff, and its handling of early technical problems or other implementation challenges. It is likely that the CFPB will require remediation back to the rule s compliance date when it identifies tangible consumer harm, but it is unlikely that the Bureau will bring enforcement actions initially based on technical issues where there is no tangible consumer harm. GSEs have also issued letters stating they will not perform TRID/KBYO compliance file reviews at the beginning of the implementation period. The GSEs further stated that they will not exercise their repurchase and other remedies unless (1) a required form is not used or (2) a practice would impair their enforcement of their rights against borrowers. In contrast, the FHA has stated that it expects lenders to comply with all federal, state, and local laws, rules, and requirements applicable to the mortgage transaction as outlined in [the] FHA Handbook. Olson - 11

B. Loan Originator Compensation The CFPB s Loan Originator Compensation Rule, which was originally adopted by the Federal Reserve, prohibits payments to mortgage loan originators based on transaction terms, proxies for transaction terms, and mortgage profits. Although the rule was intended to reduce incentives to steer borrowers into unfavorable loans, steering need not be proven to establish a violation, which carries a private right of action and limited assignee liability. The CFPB has been aggressive in applying the rule. In 2015, the CFPB took several public and non-public actions enforcing the limitations on loan originator compensation in Regulation Z, including a $20 million consent order against RPM Mortgage, Inc. and its chief executive officer. [See, e.g., http://www.consumerfinance.gov/newsroom/cfpb-orders-rpmmortgage-to-pay-19-million-for-steering-consumers-into-costlier-mortgages/.] C. Marketing Services Agreements and RESPA Enforcement The CFPB set forth a strong position in October 2015 regarding Section 8 of RESPA, which generally prohibits kickbacks in connection with the referral of settlement services. [See CFPB Compliance Bulletin 2015-05.] Through enforcement actions, the CFPB has taken a broad interpretation of the term thing of value, finding that the opportunity to participate in a business even if market rates are paid for services can itself constitute a thing of value sufficient to create Section 8 liability for kickbacks. This calls into question the legality of marketing services agreements (MSAs) generally. While the CFPB has stated that it does not view MSAs as per se illegal and has acknowledged Olson - 12

that it does not have the authority to declare them per se illegal without a formal rulemaking process, it is possible that the Bureau may pursue further public enforcement actions regarding MSAs if it does not see institutions pulling back from using them. State examiners are also aware of the issue and may refer nonbank entities that they supervise to the CFPB if they see issues with MSA usage. Courts are getting the opportunity to weigh in on these RESPA issues, through the appeal to the D.C. Circuit of the PHH enforcement action and the 9th Circuit s reversal of the district court s refusal to certify the class in Edwards v. FAC. D. Examination Enforcement Trends and UDAAP The CFPB has heighted its focus on vendor management, scrutinizing vendor products and services during examinations (including the marketing of these products and services as well as the value they add), and will bring enforcement actions or court cases where it finds issues. Biweekly payments are one area of heighted scrutiny, as the CFPB has been skeptical of the value added by this service. The Bureau has also focused on loss mitigation contracts that suggest that a borrower has waived rights in connection with receiving the modification. III. CFPB Rulemaking In November 2015, the CFPB updated its rulemaking agenda for 2016. While the agenda is not binding on the CFPB and the listed deadlines often slip later, the agenda provides valuable insight into the CFPB s priorities and expected timing. The following is key information about some of the most important rulemakings listed on the CFPB s agenda. Olson - 13

A. Arbitration Arbitration clauses in many contracts for consumer financial products and services require consumers and financial institutions to resolve any disputes that may arise between them through a private arbitration process, instead of going to court. The Dodd-Frank Act banned such arbitration clauses in contracts for mortgage loans, directed the CFPB to study the use of arbitration agreements in connection with other consumer financial products or services, and gave the CFPB the authority to restrict their use. For credit cards, deposit accounts, payday loans and various other consumer financial products or services, the CFPB is considering prohibiting arbitration agreements that block class action lawsuits. The CFPB is also considering whether to require that arbitration filings and awards be submitted to the CFPB. The CFPB initiated a pre-proposal consultation process under the Small Business Regulatory Enforcement Fairness Act (the SBREFA process ) for this rulemaking in October 2015. A proposed rule was expected in December 2015. B. Payday, Auto Title, and Similar Lending Products The CFPB has expressed concern that lenders offering payday, auto title, and similar lending products are offering these products without assessing the consumer s ability to repay, thereby forcing consumers to choose between reborrowing, defaulting, or falling behind on other Olson - 14

obligations. The CFPB is also concerned about certain payment collection practices that can subject consumers to substantial fees and increase risk of account closure. The CFPB initiated the SBREFA process for this rulemaking in March 2015 and expects to release the proposal in the first quarter of 2016. C. Prepaid Accounts The CFPB has stated that general purpose reloadable cards and other similar prepaid products are increasingly being used by consumers in place of traditional checking accounts or credit cards, but they do not always carry important consumer protections. In December 2014, the CFPB proposed that prepaid accounts receive certain protections that are similar to those that exist now for debit and payroll cards and that prepaid cards that access overdraft services or ofer certain credit features receive many of the CARD Act protections. The CFPB expects to issue the final rule in spring 2016. D. Overdraft The Bureau is preparing for a rulemaking concerning overdraft programs on checking accounts. The CFPB has expressed concerns regarding how consumers consent (or opt in ) to overdraft coverage for certain electronic transactions, overdraft coverage limits, transaction posting order practices, overdraft and insufficient funds fee structures, and involuntary account closures. They have noted that but opt in rates under the 2010 rule vary widely. The CFPB is conducting additional research and has begun consumer testing related to the opt in process. It is expected to begin the SBREFA process in early to mid 2016. Olson - 15

E. Debt Collection The CFPB has repeatedly stated that debt collection is the single largest source of complaints to the federal government of any industry. It issued an advanced notice of proposed rulemaking in November 2013 seeking to gather additional information and is currently analyzing the results of a nationwide survey related to consumers experiences with debt collection. [ Debt Collection Survey from the Consumer Credit Panel, 79 Fed. Reg. 42764 (July 23, 2014), http://www.regulations.gov/#!documentdetail;d=cfpb-2014-0017-0001.] The CFPB is also engaged in consumer testing initiatives to determine what information would be useful for consumers to have about debt collection and their debts and how that information should be provided to them. It is expected to begin the SBREFA process in early to mid 2016. F. Larger Participants and Non-depository Lender Registration The Dodd-Frank Act authorizes the CFPB to extend its supervision jurisdiction over nonbank financial services providers by designating them as larger participants in specific markets for consumer financial products and services. The CFPB has defined larger participants in several markets, most recently auto lending and leasing. [ Defining Larger Participants of the Automobile Financing Market and Defining Certain Automobile Leasing Activity as a Financial Product or Service, 79 Fed. Reg. 60762 (Oct. 8, 2014), https://www.federalregister.gov/articles/2014/10/08/2014-23115/defining-larger-participants-ofthe-automobile-financing-market-and-defining-certain-automobile.] The CFPB next expects to define larger participants in markets for consumer installment loans and vehicle title loans. It Olson - 16

also expects to consider whether rules to require registration of lenders in these markets or other non-depository lenders would facilitate the CFPB s supervision of such entities. Action is not expected until the Fall of 2016. G. Women-owned, Minority-owned, and Small Businesses Data Collection The Dodd-Frank Act requires the CFPB to develop rules to implement a requirement that financial institutions report information about lending to women-owned, minority-owned, and small businesses. The CFPB has stated that it is beginning work on this project, building off the Home Mortgage Disclosure Act ( HMDA ) rule. It has further stated that the first stage will focus on outreach and research, followed by developing proposed rules concerning the data to be collected and appropriate procedures, information safeguards, and privacy protections for information-gathering. Action is not expected until the Fall of 2016. H. Mortgage Servicing In December 2014, the CFPB proposed to amend its 2013 mortgage servicing rules to, among other things, address loss mitigation and other requirements as applied to successors in interest and consumers in bankruptcy. The CFPB has been conducting testing of periodic statements for consumers in bankruptcy. The CFPB expects to issue the final rule in mid-2016. Olson - 17

I. Home Equity Lines of Credit ( HELOCs ), Reverse Mortgages, and Rescission (long term) Before its authority transferred to the CFPB, the Federal Reserve Board proposed to amend the disclosure requirements for HELOCs and closed-end mortgage loans, the rules governing rescission, and the distinction between modifications and new transactions. The CFPB has stated [m]any of the disclosure aspects of these proposals have been superseded by [TRID] but that it is evaluating further action regarding the [Federal Reserve] proposals. J. Credit Reporting (long term) The CFPB has stated that it is monitoring the credit reporting market and will evaluate possible policy responses to issues identified, including potential additional rules or amendments to existing rules governing consumer reporting. It has identified as a potential topic the accuracy of credit reports, including the processes for resolving consumer disputes. K. Student Loan Servicing (long term) The CFPB has stated that [s]tudent loan servicers are a critical link between borrowers and lenders, yet there are no consistent, market-wide federal standards for student loan servicing. In September 2015, the CFPB released a report identifying issues and suggesting a framework to improve student loan servicing. [CFPB Student Loan Servicing Report, http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf.] The CFPB has also made it a priority to take action against companies that are engaging in illegal servicing Olson - 18

practices, and that ongoing work includes addressing many of the problems outlined in this report. [CFPB Supervisory Highlights - Fall 2015, http://files.consumerfinance.gov/f/201510_cfpb_supervisory-highlights.pdf.] The CFPB has stated that possible topics for rulemaking might include specific acts or practices and consumer disclosures. IV. Other Priorities and Changes A. Revised Mandatory Purchase of Flood Insurance Rules The federal banking agencies (the Agencies ), which are charged with implementing the mandatory purchase of flood insurance requirements, have on various occasions coordinated efforts to publish consistent flood insurance regulations and guidance. The most recent rulemaking effort resulted in a new joint final regulation that implemented revisions required by the Homeowner Flood Insurance Affordability Act of 2014 ( HFIAA ) and the Biggert-Waters Flood Insurance Reform Act of 2012 ( Biggert-Waters ). The new rule: Clarifies the lender-placed flood insurance ( LPI ) requirements that became effective upon Biggert-Waters enactment (July 6, 2012), as of October 1, 2015; Clarifies HFIAA s detached structures exemption. Although HFIAA s detached structures exemption originally became effective on March 21, 2014, some lenders and servicers declined to recognize it pending the Agencies issuance of further guidance. The new rule s detached structures provisions became effective on October 1, 2015; and Olson - 19

Implements the escrow requirements from Biggert-Waters and HFIAA. These requirements are slated to become effective on January 1, 2016. The Final Flood Rule generally applies to federally regulated and insured lenders, as well as servicers acting on their behalf. B. Home Mortgage Disclosure Act ( HMDA ) On October 15, the CFPB a final rule that will expand the scope of the Home Mortgage Disclosure Act (HMDA) data reporting requirements while seeking to streamline certain existing requirements. Although some of the new data points the Bureau is requiring are expressly mandated by the Dodd-Frank Act, the Bureau is also requiring a significant number of new data points based on discretionary rulemaking authority granted by the Act. Highlights include: Expanded data-collection under the revised rule will begin on January 1, 2018, and reporting will begin in 2019. The Bureau would have been allowed under Dodd-Frank to require data-collection beginning in 2017 (at least nine months after issuance of the rule) but responded to industry requests for more time to convert systems to meet the extensive new data-collection requirements of the amended rule. The amended rule substantially expands the number of data points collected from financial institutions, including requiring reporting of rate spreads on most originated Olson - 20

loans and lines of credit, not just higher-cost closed-end loans. However, the Bureau still has not decided the extent to which this information, which includes sensitive personal data such as credit scores, will be publicly available. It will solicit additional public input on privacy concerns before it determines how much of the information will be disclosed. The amended rule will require financial institutions to report home equity lines of credit (HELOCs) and reverse mortgages. However, in response to widespread criticism by industry commenters, the CFPB did not adopt its proposal to require reporting of all commercial-purpose loans secured by a dwelling. The amended rule does not make significant substantive changes to the definition of an application or to the broker rule, but it does reorganize and clarify existing Commentary provisions on those issues. The amended rule requires both depository and nondepository institutions that originated at least 25 closed-end mortgage loans or at least 100 open-end lines of credit in each of the two preceding calendar years to report HMDA data, so long as the institution meets all of the other tests for coverage of that type of institution. Olson - 21

Appendix A Additional Materials CFPB Blogpost: CFPB Sends Industry Letter on Know Before You Owe Mortgage Disclosure Rule Compliance : http://www.consumerfinance.gov/newsroom/cfpb-sendsindustry-letter-on-know-before-you-owe-mortgage-disclosure-rule-compliance/. CFPB HMDA Implementation page: http://www.consumerfinance.gov/regulatoryimplementation/hmda/. CFPB Student Loan Servicing Report: http://files.consumerfinance.gov/f/201509_cfpb_student-loan-servicing-report.pdf. CFPB Title XIV Rule Implementation page: http://www.consumerfinance.gov/regulatory-implementation/title-xiv/. CFPB TRID Rule Implementation page: http://www.consumerfinance.gov/regulatoryimplementation/tila-respa/. Fannie Mae Lender Letter LL-2015-06 (Oct. 6, 2015): https://www.fanniemae.com/content/announcement/ll1506.pdf. Freddie Mac Letter, Information Related to the Know Before You Owe TILA-RESPA Integrated Mortgage Disclosure Rule (Oct. 6, 2015): http://www.freddiemac.com/singlefamily/guide/bulletins/pdf/iltr100615.pdf. FDIC Financial Institution Letter FIL-43-2015 (Oct. 2, 2015): https://www.fdic.gov/news/news/financial/2015/fil15043.pdf. Letter from Richard Cordray, Director, CFPB to David Stevens, President and CEO, Mortgage Bankers Assoc. (dated Dec. 29, 2015): http://static.ow.ly/docs/director%20cordray%20to%20david%20stevens%20mba%20 2015.12.29%20copy_49CV.pdf. Olson - 22

Letter from Thomas J. Curry, Comptroller of the Currency, to Frank Keating, Am. Bankers Assoc. (Oct. 1, 2015): https://www.aba.com/tools/function/mortgage/documents/occ-response-trid- Guidance.pdf. TRID Will Be A Dominant Issue In 2016, Article by Benjamin K. Olson and Brandy A. Hood published in Law360: http://www.buckleysandler.com/news-detail/trid-liabilitywill-be-a-dominant-issue-in-2016. Olson - 23

Appendix B Sample Forms Olson - 24

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