The New HMDA Rule from the CFPB

In an effort to improve the information reported by lending institutions on residential mortgages, the Consumer Financial Protection Bureau (CFPB) finalized a new rule for the Home Mortgage Disclosure Act (HMDA) in October of 2015. The Bureau hopes this will simplify the process of reporting this vital information for banks and other lenders. In addition to working with other federal agencies to better assemble and organize information from financial institutions, the Bureau has requested public feedback on the submission process, error thresholds, consequences for exceeding these thresholds, and how the process may be improved with technology.

Changes to HMDA data reporting

Improved monitoring of fair lending: Banks and other lenders are now required to further detail the underwriting practices and how these practices affect a borrower's interest rate and other fees. The rule requires more information on how lenders analyze an applicant's deb-to-income ratio. Ensuring fair lending practices to all people in every community is one of the primary reasons the CFPB was formed after the collapse of the housing market. The new rule stipulates that lenders must report, with a few exceptions, applicant information on any loan that uses the applicant's dwelling as collateral. That includes home purchase loans, reverse mortgages, and open lines of credit.

Data lenders are required to report is updated: The new information that now must be reported includes loan duration, the duration of any incentive teasers or introductory interest rates, the details of any prepayment penalty and the property value. The additional data will improve the analysis of area market conditions and help regulatory agencies and the public identify any possible discriminatory lending.

Streamlining the reporting process

Aligning data requirements with industry standards: Banks and other financial institutions were previously collecting the same data required for HMDA compliance for their own internal processing and to prepare the loans for sale on the secondary market. The new rule updates data requirements to align with recognized and common industry standards. The CFPB hopes this will make data reporting easier for lenders by using definitions recognized by practically all financial institutions and people in the mortgage sector.

Lighten reporting burden on small banks: The new rule also eases the reporting burden for credit unions and small banks that operate outside the market of a large metropolitan area. Additionally, small depository corporations with a low volume are no longer required to report HMDA data. It is estimated that this one change alone reduces the total number of financial institutions required to report HMDA data by 22 percent. It also helps lower compliance costs for these small organizations that have few people on staff.

The CFPB is primarily focused on protecting consumers and making sure they have all the information needed to make informed financial decisions in all areas of their life. The CFPB provides consumers with resources free of charge at the CFPB site. Financial institutions will be required to collect data according to the new rule on January 1, 2018. After necessary modifications are made to protect borrower privacy, the data will be made available to the public in 2019.

Public participation is a part of how the HMDA protects all consumers. The information collected under the HMDA is analyzed by consumer groups, regulators, research organizations, educational institutions, and more. For the HMDA to remain effective, it requires quality data on home loans and the individuals who are applying for credit. In an ongoing effort to improve the function of the CFPB, the Bureau recently announced that it is accepting applications for 23 seats on the Advisory Board and Councils that will become available later in 2016.

CFPB Asks for Feedback on Home Mortgage Disclosure Act

The Consumer Financial Protection Bureau (CFPB) is requesting feedback from the public on resubmission of mortgage lending data that is reported under the Home Mortgage Disclosure Act (HMDA). The federal agency finalized a new reporting requirement for the HMDA in October of 2015. Due to the new requirements, the resubmission guidelines may also need changing. This is why the Bureau is asking the public for help on what changes may be best.

The Home Mortgage Disclosure Act

Congress originated the HMDA in 1975. Enforcement fell under the Federal Reserve Board's Regulation C. in  2011. Authority to write rules for Regulation C was transferred to the CFPB when it was formed by the Consumer Protection Act of 2010 (Dodd-Frank Act). The HMDA stipulates that lenders must report data about the home loan applications they receive, purchase, and originate. This allows regulators and the public to monitor whether or not lenders are properly serving the housing needs for the communities in which they are located. It also helps with the distribution of public-sector investing and brings additional private investments when needed. One of the primary purposes of the HMDA is to prevent discriminatory lending practices by identifying any inappropriate patterns in the origination of home loans.

It is imperative that the information gathered is accurate to fulfill the purposes of the HMDA. The CFPB conducts examinations to ensure the data reported is accurate and establishes resubmission guidelines that detail when the lending institutions will correct and resubmit data.

Request for public feedback

Some have asked the CFPB if its guidelines for resubmission of mortgage lending data would be changed to reflect the additional data submission required under the new rules. The Bureau is asking the public to comment on any changes to the resubmission guidelines needed under the new regulations. More specifically, the CFPB's resubmission error thresholds and how these thresholds should be calculated. The Bureau also asks for comments on whether or not the thresholds should change according to the size of a submission or the type of data in the submission. The CFPB also would like to know public opinion on what the consequences of exceeding a threshold should be. Other points in the request for information are about how the CFPB reviews lending data, processes that can be carried out by technology, improvements to the data collection process, and any input that will help the Bureau reduce errors in the HMDA data. The request for information is open for 60 days after its publication in the Federal Register. More information about the request for information is available at the Consumer Financial Protection Bureau website.

An ongoing effort to improve the mortgage industry

Richard Cordray is director of the CFPB. He reiterated the importance of the HMDA to protect the public from discriminatory lending practices and provide accurate information about home lending in communities across the country. The purpose of the Bureau is to make regulations and guidelines clear and streamlined for consumers. In addition to protecting the public by establishing and enforcing rules for lenders, the Bureau takes complaints from consumers, promotes mortgage education, studies consumer behavior, monitors the housing and mortgage market for an new risks to borrowers and home buyers, and strives to eliminate any unfair or abusive lending practices.

The Consumer Financial Protection Bureau was established as a result of the housing market collapse. That market collapse resulted in hundreds of thousands of foreclosures and even more properties with title problems. It is essential that all home buyers are aware they can turn to the CFPB with any question or concerns and that they have a personal title insurance policy in addition to the policy required by their lender.

How a Land Survey Protects Home Buyers

Purchasing a home involves a lot of different processes all taking place during the same time frame. Once a contract is executed, it puts in motion several actions that must be completed prior to the closing. All of these things take time and require professionals who are knowledgeable and experienced in their particular field. The typical home buyer is a novice to all of this. That is why they need expert counsel by a caring REALTOR who will guide them through the process and explain the importance of things like title insurance and land surveys. Without understanding the purpose of having these things, many home buyers will feel overwhelmed and opt to skip some items to save a little money upfront. Here are a few basics about land surveys and how having one done will help prevent future costs and headaches for home buyers.

What is a survey?

A survey is the official and documented opinion of a certified surveyor on the location of a property's boundaries, buildings, structures, easements, right of way and encroachments. It records projections, variations, easements, boundary lines and is a legal representation of what the home buyer is actually purchasing. A survey is crucial when purchasing title insurance to protect the home buyer.

Why do home buyers need a survey?

The housing market collapse resulted in banks, lending companies, and property management companies receiving a huge volume of properties that they never intended to own and were not prepared to handle. Attorneys and courts were overwhelmed by the number of foreclosures they had to process. For paralegals and and other people in the process, it created mountains of paperwork and massive tangles of red tape (both digital and hard copy) that they had to work through quickly and under ongoing stress. To reduce costs, many essential aspects of proper land transfer were eliminated. These led to many properties being put back on the market with encroachments and other discrepancies in the legal description. Some properties that fell into foreclosure were situated on parcels that were part of large family-owned properties. Banks that made loans to construct homes on these parcels did not always make sure there was proper legal access in place. As a result, the people who purchased the homes from the bank had a costly and tiresome legal process to set things right and have legal access.
Differences between tax maps and survey lines is also a possibility. The property taxes a home owner pays are based on the the size of the property and what is included within the property boundaries. Too often, home buyers pull up tax maps or, even worse, some other online aerial view of property to determine property lines based on fences, trees, the amount of lawn mowed, or driveway locations. This method and taking the word of home sellers, agents, or neighbors is unreliable and will almost certainly lead to confusion and disputes at some time in the future. The only way for a home buyer to know what they are really buying and to protect their purchase is to have a survey done by a certified surveyor and have their own title insurance policy that is in addition to the policy required by lenders.

The cost of a survey

Surveyors typically charge based on how much time it takes to do the survey. Factors like terrain of the property, access to records and size of the parcel all influence the cost. Some surveys do not need a printed map of the property. It reduces costs if all the buyer needs is flags and corner markers. If the buyer uses the same surveyor who did the previous survey, it is typically less costly than hiring someone unfamiliar with the property. Buyers can also reduce the amount of time a surveyor will spend doing their field work by making sure property lines are clear. Much like title insurance, the initial cost is minimal compared to the value of the protection and peace of mind a survey provides.

What's In Store for the 2016 Housing Market?

While the constant headlines of home foreclosure numbers are now a distant memory, the housing market has still not quite returned to its pre-recession strength. New home starts spent this past spring idling in hope that millennials would soon dive full force into home ownership. But a lot of the millennials opted to continue renting and pay down some debt. The federal government enacted numerous rules and laws aimed at protecting home buyers from predatory lending. And mortgage rates remained at historic lows. One positive that has come from the housing market collapse is that more home buyers are aware of the importance of title insurance. This came from the large number of bank-owned (REO) properties that had to be reabsorbed into the market before any substantive market growth could begin. But, what do industry analysts anticipate for 2016?

Many consumers remain pessimistic

Trulia commissioned Harris Poll to survey Americans about their view of the current and future housing market. Business Insider reported the results. Their research found that 80 percent of people in the important millennial demographic hope to someday own their own home. They found that 75 percent of people in all age brackets still hold onto the American dream of home ownership. About 22 percent of respondents believe it will be more difficult to obtain a home loan in 2016 than it was in the preceding years, due primarily to rising interest rates. Thirty-one percent of those millennials say they do plan to purchase a home by 2018. Their job status and how much money they have saved for a down payment will determine whether they pursue that goal in 2016 or later.

Fannie Mae and FHA try to make obtaining a loan easier

In addition to more buyers understanding the importance of title insurance, home buyers are more cautious about getting a home loan. In an effort to draw some of the qualified buyers who are still sitting on the sidelines into the market, the Federal Housing Administration (FHA) lowered premiums on mortgage insurance below the traditional 0.85 percent to 1.35 percent. That is enough to save home buyers about $900 each year on their mortgage insurance. Additionally, Fannie Mae is also trying to make the path to home ownership smoother for buyers. Buyers qualified in other ways can get a home with as little as 3 percent down.

Another effort to make buying easier is the HomeReady mortgage program. HomeReady takes into consideration the income of other people living in the home, without these people being listed as a borrower on the mortgage. This means if a person represents at least 30 percent of the household income, their earnings can count toward the loan qualification. This program can also be used to include persons not living under the roof, like the parents of millennials who are willing to help their children with some monetary assistance.

Boomerang buyers may be coming back into market

While the first-time buyers get the most attention, it is the boomerang buyers who are likely to determine the overall strength of the 2016 housing market. The Northwestern University Institute for Policy Research estimates that  approximately seven million people across the United States lost their home to foreclosure during the recession. While the lenders may be reluctant to lend money to anyone who has a foreclosure in their past, the National Association of Realtors (NAR) says almost one million of those people who lost a home previously are looking to buy again. The housing market will never fully recover until this demographic is once again allowed to borrow money to get their American dream back.


It is important that all home buyers be more prudent with their purchase decision. This includes being sure they can comfortably afford their mortgage. They should also have a thorough home inspection, and purchase title insurance for their own protection, in addition to the title insurance that protects the lender.

Older Homes Have Hidden Value Along With Hidden Costs

 When the housing market is discussed in the news, the new home start numbers and building permit numbers are used to indicate the strength or weakness of the market. Fannie Mae predicts a strong housing market for 2016 and the increase in housing starts that many Realtors have been hoping for since the United States began pulling out of the Great Recession.

Title insurance for old and new homes

Many buyers don't understand the need for Title Insurance on new constructions. Even though they are the original owner of the home, they still need Title Insurance to protect against possible hidden problems with the land or existing liens. With older homes, the need for title insurance is more clear. These homes have had many owners and possibly fell into foreclosure at some time. But these older homes can be hidden gems that still have many benefits for buyers of every age group.

Quality construction of older homes

Someone is going to say it anytime a Realtor is showing an older home to potential buyers: "They don't build them like this anymore." It is true. Homes constructed 50 or more years ago were built with old growth trees. That wood is not in ample supply these days, and the vast majority of new homes have wood from hemlock fir hybrid trees. These trees are scientifically engineered to grow quickly. However, the wood lacks the character of the wood used in older homes and does not have the same durability. A lot of wood used in new homes is what's called "construction grade." It is designed to be covered by paint.
Construction has improved in many areas over the years. Builders began incorporating features like energy-efficient windows during the energy crisis of the 1970s. Modern windows save homeowners thousands of dollars each year in energy costs and are virtually maintenance free. These multi-pane windows are metal or vinyl clad, easy to keep clean, and easy to repair if broken.
It is possible to get the best of both worlds in an older home that has been upgraded. But, potential buyers should know that most tax credits that were available for making energy-efficient improvements to existing homes have expired.

Other difficulties with existing homes

Older homes have those tiny bathrooms and small kitchens. People like being comfortable in every room of their home these days. Even mobile homes and homes in the lower prices ranges have luxurious bathrooms and kitchens with islands, plenty of counter space and outlets for small appliances. Buyers need to consider possible structural limitations to remodeling older homes. And a complete upgrade of the electrical system is often necessary.

Some things that can't be changed

Many millennials prefer being located near the city and are willing to trade having a spacious yard for having the convenient location. The municipal parks are enough recreational space for them. For home buyers who have a large lot with existing shade trees as a top priority, older homes are probably their only option. Homes that are more than 40 years old have trees in the yard that are over 40 years old. These stately trees are a mixed blessing. They do provide a canopy of shade to keep the house cool and enhance the enjoyment of outdoor activities, but they produce a large quantity of gutter-clogging leaves and the large limbs can be a liability. Each year these old trees damage homes (and neighbor's homes) when they succumb to high winds or loose limbs due to disease. Like people, trees are more prone to disease as they get older.

Upfront savings can cost a lot over time

Many first-time buyers are anxious to get as much house as they can possibly afford. A new construction will cost about 15 percent to 30 percent more than an older home with comparable square footage. But, the new home comes with adequate insulation and a new, highly efficient HVAC system to save on monthly bills. It will have vinyl exterior that does not require painting and new appliances.
Novice buyers often take on more than they can handle when they buy an older home with the intention of doing much of the needed work themselves. According to the NAR report Real Estate in a Digital Age, 68 percent of first-time buyers are millennials and 32 percent of all home buyers are between the ages of 25 and 34. With the vast majority of first-time home buyers being young professionals with busy lives, older homes are typically the right choice for just a small percentage of buyers who understand the costs and responsibilities that come with them.

Home owners, winter storms and falling trees

During the fall and winter months, hundreds of trees will be falling in yards and on houses across America. The problem begins during hurricane season and continues through winter. Heavy snows and ice storms frequently get the best of century-old trees. The odds of your home (and you) been struck by a falling tree increase based on the age of the trees nearest your house. Here are a few other things to know and to help you in the event your house is struck by a falling tree.

Who is responsible?

If a tree falls on your house, most likely your homeowners insurance will have to pay for damages. If a tree falls in your yard and does not damage your home, most likely you will be responsible for the clean up out-of-pocket. Even if the tree was located on your neighbor's property, you could still have to make the claim on your policy, pay the deductible, and be responsible for any cost not covered by your policy. If your insurance policy is basic and for your residence only, it may not cover damage done to outbuildings, fencing, pools, or your lawn. The reverse is typically true if a tree from your yard falls on a neighbor's house. The exceptions are when the tree fell due to disease or was properly documented as being a hazard.

Identifying diseased trees

Just like people, as trees age, they become more susceptible to disease and falls. During the first 25 years of a tree's life, it should not lose a notable amount of limbs. As it gets older, limbs fall off more frequently and the size of the falling limbs increases. This is why the Arbor Day Foundation recommends having a trained arborist inspect older trees and advise on proper care. Some basic identifiers indicate a diseased tree:

Uneven growth patterns: previous damage from storms or wind can cause trees to grow lopsided and be a higher risk for falling.

Decay: Because decay often begins inside the tree, look for signs like mushrooms, fungi, and soft crumbly wood. Mistletoe is also a fungus. Its presence indicates some internal decay.

Dead wood: Occasional dead branches are normal for any mature tree. Any large branches that show signs of dryness and bark loss should be removed immediately.

Cracks: Deep splits in limbs or spots with missing bark indicate the tree's structure is failing.
Documenting a hazardous tree

Start by discussing your concern with your neighbor. It is a good idea to document your request that they remove a hazardous tree. Additionally, photos and an assessment of the situation by a tree professional may help your case in the event the problem tree does tumble. It is still possible your home insurance will have to pay for damages, but having the documentation improves the likelihood that your neighbor will have to foot the bill. It is far better than just you saying "I knew it was going to fall" after the fact.

If a tree falls on your home

Falling trees may also bring down power lines. If you are inside the home, cautiously exit the structure. The weight of the tree against your house is causing continuous pressure. The roof and other support structures do not always give way immediately. If power lines are down, call the police, power company, and then your insurance company.

Do not try to make repairs during a storm or rescue personal items. Understand that emergency services are stretched thin during inclement weather, and there are numerous other people in a similar situation. If a tree falls on your automobile, it is going to be a matter for your auto insurance and probably covered by comprehensive insurance. When it comes to falling trees, a few hundred dollars in prevention can be worth tens of thousands of dollars in repair.