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✒ Military Lending Act Regulations Effective in October nmp news flash continued from page 16 FHFA Previews New High LTV Refi Offering By Gavin T. Ales E APRIL 2016 n National Mortgage Professional Magazine n NationalMortgageProfessional.com 36 ffective Oct. 3, 2016, the Department of Defense revised regulations pertaining to the Military Lending Act (MLA) to align its applicability with most consumer credit as defined in Regulation Z, which implements the Truth-in-Lending Act (TILA). With this revision, the MLA regulations now apply to consumer credit, both closed- and open-end - such as consumer loans and credit cards. Specifically, the MLA regulations will apply to credit offered or extended to a covered borrower primarily for personal, family, or household purposes, and that is (i) subject to a finance charge, or (ii) payable by a written agreement in more than four installments. Both the MLA and the revised regulations maintain a general exclusion for "residential mortgages" from the definition of consumer credit, which is defined in the revised regulation as "any credit transaction secured by an interest in a dwelling, including a transaction to finance the purchase or initial construction of the dwelling, any refinance transaction, home equity loan or line of credit, or reverse mortgage." However, the definition of "residential mortgages" does not include loans secured by vacant real property (that is not intended to construct a dwelling, which is excluded). Accordingly, while most residential mortgage lending falls under the MLA regulations' definition of "residential mortgages," and thus would be excluded from the MLA, any transaction secured by vacant land is still covered under the MLA regulations. (Note: some industry groups have proposed to the DOD a solution by expanding the definition of residential mortgages to exclude any "credit transaction secured by an interest in real property or a dwelling ...") Coverage under the MLA requirements for loans secured by vacant land requires lenders to have in place a program for identifying covered borrowers (i.e. members of the armed forces serving on active duty or Active Guard or Reserve duty, or their dependents), limitation of a covered loan's Military APR (MAPR) to a maximum of 36 percent and additional disclosure requirements to the covered borrower. The MAPR uses the APR calculation provided under Regulation Z, but with specific inclusions of certain types of charges and provides that some exceptions for inclusion in the APR calculation provided by Regulation Z are inapplicable to the MAPR calculation. For loans governed by the MLA regulations, lenders must also provide the covered borrower a Statement of the MAPR and a Payment Schedule outlining the payment obligations of the borrower. Gavin T. Ales is chief compliance officer with Torrance, Calif.-based DocMagic Inc. He may be reached by phone at (800) 649-1362, ext. 6446 or e-mail Gavin@DocMagic.com. SPONSORED EDITORIAL The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac are readying a new refinance offering aimed at borrowers with high loan-to-value (LTV) ratios. According to the FHFA, this new streamlined refinance offering is more targeted than the Home Affordable Refinance Program (HARP), with no eligibility cut-off dates connected and the ability to use the program more than once. Borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of the traditional refinance products offered by Fannie Mae and Freddie Mac. The refinance offering will not be available to borrowers until October 2017. The FHFA stated it is "creating a bridge" to this new offering by extending HARP through Sept. 30, 2017. "Providing a sustainable refinance opportunity for high LTV borrowers who have demonstrated responsibility by remaining current on their mortgage makes financial sense both for borrowers and for the GSEs," said FHFA Director Mel Watt. "This new offering will give borrowers the opportunity to refinance when rates are low, making their mortgages more affordable and thus reducing credit risk exposure for Fannie Mae and Freddie Mac." CFPB Acknowledges Workplace Discrimination After years of ignoring public charges of workplace discrimination, the Consumer Financial Protection Bureau (CFPB) made a rare admission that it discriminated against one of its staff. According to a Daily Caller report, the CFPB's Office of Civil Rights and Office of Equal Opportunity and Fairness sent a notice to the U.S. Consumer Coalition, an advocacy group, stating that the bureau "violated the Rehabilitation Act when it failed to provide an employee with an effective accommodation for disability-related limitations, when it discouraged the employees from requesting leave as a type of reasonable accommodation, when it gave the employee a negative midyear performance evaluation that referenced the employee's inability to do job duties because of the employee's disability, and when it penalized the employee for needing and using disabilityrelated leave. Additionally, the Bureau violated Title VII of the Civil Rights Act of 1964 when it retaliated against the employee because the employee spoke out against discrimination." The CFPB has previously been targeted by employees that complained of racial and gender discrimination, and these charges have been the subject of congressional hearings, a Government Accountability Office report and unflattering media coverage. However, the agency has never previously admitted any such problem existed, and the CFPB Web site avoided any mention of the subject. In making the CFPB's admission public, U.S. Consumer Coalition President Brian J. Wise welcomed the statement as the beginning of internal change in how the CFPB operates. "This finding is a huge step forward in reforming the CFPB and holding them accountable for their actions," said Wise. "This shows they have no respect for their employees and confirms the dozens of reports of harassment, discrimination, and retaliation that we have received from current and former CFPB employees. In order for the CFPB to accomplish its original mandate from the DoddFrank Act, and restore credibility to this agency, we must see a change in leadership, structure, and culture at the CFPB, not with the employees, but with the management." MBA Chief Wavers on Support of Mortgage Interest Deduction The head of the mortgage industry's largest trade group has suggested that the mortgage interest deduction could be http://www.NationalMortgageProfessional.com

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