Company: BLNE
Filing Date: 2025-05-20
Form Type: 10-Q
Source: 0001641172-25-011724
Chunk: 116

Company: Beeline Holdings, Inc.
Filing Date: 2025-05-20
Form: 10-Q
Item: Part I, Item 8
Chunk 116
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 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
departments, and state and local consumer protection offices have authority to investigate consumer complaints and to commence investigations
and other formal and informal proceedings regarding Beeline Financial’s operations and activities. In addition, the government-sponsored
enterprises, or GSEs, the Federal Housing Authority (the “FHA”), the Federal Trade Commission (the “FTC”), and
others subject Beeline Financial to periodic reviews and audits. This broad and extensive supervisory and enforcement oversight will
continue to occur in the future.

Beeline
Financial maintains dedicated staff on the legal and compliance team to ensure timely responses to regulatory examination requests and
to investigate consumer complaints in accordance with regulatory regulations and expectations.

18.