Company: BLNE
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024044
Chunk: 39

Company: Beeline Holdings, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 8
Chunk 39
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 CFPB determines have violated the laws and regulations it enforces.

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Beeline Holdings, Inc.

Notes to Consolidated Financial Statements

June 30, 2025

(Unaudited)

Effective
October 1, 2022, the CFPB revised the definition of a qualified mortgage (“QM”) which permits mortgage lenders to gain a
presumption of compliance with the CFPB’s ability to repay requirements if a loan meets certain underwriting criteria. Lenders
are now required to comply with a new QM definition in order to receive a safe-harbor or rebuttable presumption of compliance under the
ability-to-repay requirements of the Truth in Lending Act (“TILA”) and its implementing Regulation Z. The revision to the
QM definition created additional compliance burdens and removed some of the legal certainties afforded to lenders under the prior QM
definition. Specifically, the revised QM rule eliminated the previous requirement limiting QMs to a 43% debt-to-income ratio (“DTI”)
and replaced it with pricing-based thresholds. Loans at 150 basis points or less over the average prime offer rate (“APOR”)
as of the date the interest rate is set, receive a safe harbor presumption of compliance, while loans between 151 and 225 basis points
over the APOR benefit from a rebuttable presumption of compliance. The new rule also created new requirements for a lender to “consider”
and “verify” a borrower’s income and debts and associated DTI, along with several other underwriting requirements.
Additionally, the new QM definition eliminated a path to regulatory compliance that was available for originating loans that were eligible
to be sold to GSEs, which was heavily relied upon by a large segment of the mortgage industry. Due to the transition to the new QM definition,
there may be residual compliance and legal risks associated with the implementation of these new underwriting obligations.

The
CFPB’s loan originator compensation rule prohibits compensating loan originators based on a term of a transaction, prohibits loan
originators from receiving compensation directly from a consumer or another person in connection with the same transaction, imposes certain
loan originator qualification and identification requirements, and imposes certain loan originator compensation recordkeeping requirements,
among other things.

Beeline
Financial is also supervised by regulatory agencies under state law. From time-to-time, Beeline Financial receives examination requests
from the states in which Beeline Financial is licensed. State attorneys general, state mortgage licensing regulators, state insurance