Regulation Z - Abiilty to Repay Proposal

There's an Outlook Live Webinar today by the FRB on the above topic. I'm not sure if it's going to be available in an archived version, but if anyone attends it would be appreciated if you could post any significant news. I've got a copy of the slides, but that's sometimes only half the story.

I listned to it. Didn't learn too much. I concentrated on Compliance Option #3: Balloon-Payment Qualified Mortage as that is all we do. From what I get, a 3 year balloon will be out, only can do 5 year. My thing I am trying to figure out now is the list of counties the Board approves as rural or underserved as that is a requirement for that option. They really didn't deviate much from the slides.

Most convoluted, rambling bit of proposed rulemaking i've had the displeasure to sit through so far.

Ditto. It was absolutely mind numbing!

Definitions of Rural or Underserved
A county is desiginated as “rural” if it is categorized under
ERS urban influence code 7, 10, 11, or 12.
http://www.ers.usda.gov/Data/UrbanInfluenceCodes/2003/
7 out of 102 counties in Illinois have these codes.

The test for “underserved” in proposed § 226.43(f)(2)(ii), described above, is based on the Board’s judgment that, where no more than two creditors are significantly active(measured by extending mortgage credit at least five times in a year)
2 of the 7 counties in Illinois have less than 3 banking offices

They didn't sound too happy with it either!

Don't really understand how this proposal can do anything but restrict mortgage credit available to consumers.

I agree.

I listened, but still don't understand why this rule has to be so complicated.

So consumers can sue the bank years later claiming that the bank should have known when they made the loan that the consumer wasn't going to be able to pay it back.

That's what I got out of it too - assuming they go with the rebuttable presumption of compliance or whatever it what is called.

Pretty soon they will automate the process and no humans will be involved at all. you pass you pay. oh but then your note will have clauses that you don't have to pay if you become sick,loose your job, or any other circumstance changes in your life since the loan....... I think I ranted there sorry.

Rant away, Peach.....won't bother any of us.

Another piece of misguided legislation that will ultimately restrict mortgage-secured credit and hurt the very same consumers they were attempting to help. Maximum 80% LTV on a purchase QRM with no gift nor PMI allowed (nor piggyback financing) - ??? - I think I remember seeing one of those loans but it was a LONG time ago...!

So basically 99% of banks don't fall into these areas and can forget about that option for compliance. This really hurts small banks - regardless of whether they are located in these rural or underserved areas.

Ditto to all! This proposal is absolutely ridiculous on many levels. It seems like landmines are being put in the way of banks so that even when compling with these confusing options, bankers will still trip up and end up reimbursing consumers or paying huge fines. Don't they realize that this could end up hurting the consumer even more if banks decide to get out of consumer mortgage lending or if banks' credit standards are tightened so that only an elite category of borrowers are able to borrow money?

I think I need to start my second career at my local lawn and garden store!

That's what I've ALWAYS wanted to do!! No better time than the present!!!

We must all admit that we've been through some troubling times in the past few years. I remember sitting in on a presentation about piggy back loans up to 125% ltv years ago and thinking it was a crazy idea. And, hey, what about NINAs and the rest of the stated or non stated incomes? I also remember disqualifying a loan because it was supposed to be a NINA and I accidentally put pay stubs in the file! I don't know how the rest of you feel, but things had to change because the bubble popped. What I gathered from the Webinar is we're going back to 80% loans and all that goes with them. They're back....

That's my husband's retirement plan. Selling petunias to little old ladies - or he wants to volunteer at the Smokey Mountain National Park. He's a banker, too.

Not to hijack this thread....but I was planning on a visit to the Great Smokies...never been there. But I could not get a reservation at the lodge to which I wanted hike....Leconte Lodge. You can only get there on foot...shortest distance, 5 miles.