Source: https://www.law.cornell.edu/wex/dodd-frank_title_xiv
Timestamp: 2018-12-10 10:51:32
Document Index: 647226734

Matched Legal Cases: ['§ 1639', '§ 1639', '§ 1402', '§ 1639', '§ 1403', '§ 1405', '§ 1602', '§ 1431', '§ 1639', '§ 1432', '§ 1433', '§ 1638', '§ 1461', '§ 1462', '§ 2605', '§ 1463', '§ 1639', '§ 1471', '§ 1471', '§ 3341', '§ 1473', '§ 1476', '§ 1491', '§ 1492', '§ 2703', '§ 5301', '§ 1496', '§ 1701', '§ 1498']

Title XIV amends the Truth in Lending Act (15 U.S.C. 1631) to establish a duty of care for all mortgage originators, which would require them to be properly qualified, registered and licensed as needed, and to comply with any regulations designed by the Federal Reserve Board to monitor their operations. See 15 U.S.C. § 1639(a), 15 U.S.C. § 1639(b) (Dodd-Frank § 1402). Mortgage originators are prohibited from receiving compensation that is correlated to the face amount of the loan, which should diminish incentives for such originators to steer borrowers towards residential mortgage loans that the borrower cannot repay. See 15 U.S.C. § 1639(b) (Dodd-Frank Act § 1403). Further authority to prohibit deceptive, unfair or predatory loan terms is given to the Federal Reserve Board, which can regulate all residential mortgages to ensure that terms are in the interest of consumers and the public. See id. (Dodd Frank Act § 1405).
High cost mortgages include first mortgages with an interest rate that is more than 6.5% higher than the average prime offer rate, or a second mortgage with an interest rate more than 8.5% higher than the average prime offer rate, as well as other enumerated definitions. See 15 U.S.C. § 1602 (Dodd-Frank Act § 1431). Additionally, to keep payments on high-cost mortgages lower, this Title prohibits “balloon payments” that rapidly increase so that scheduled payments are eventually twice as large as the average of earlier payments. See 15 U.S.C. § 1639 (Dodd-Frank Act § 1432). Additionally, creditors may not recommend or encourage default on prior loans, impose large late fees, accelerate debt, finance prepayment fees or penalties, points, or fees or structure a loan to avoid such requirements. See id. (Dodd Frank Act § 1433).
Subtitle E first requires creditors to establish five-year escrow or impound accounts to pay taxes, hazard insurance and any other necessary insurances in most situations. See 15 U.S.C. § 1638 (Dodd Frank Act § 1461). For consumers that waive escrow services, the creditor must provide the consumer with disclosures that clearly explain the consumers’ responsibilities. See id. (Dodd-Frank Act § 1462). Mortgage servicers are also prohibited from obtaining force-placed insurance without reasonable basis to believe the borrower has not maintained property insurance, charging fees for responding to valid written requests, failing to promptly respond to requests about errors in payment allocation, failing to respond within 10 business days to a request to provide information about the loan owner or failing to comply with any other obligations. See 12 U.S.C. § 2605 (Dodd-Frank Act § 1463).
Subtitle F requires creditors to get a written appraisal of the property before extending a higher-risk mortgage to a borrower. See 12 U.S.C. § 1639h (Dodd-Frank Act § 1471). The appraisal must be done at the expense of the creditor, and cannot violate appraisal independence by inappropriate influence or compensation between the creditor and appraiser. See id. (Dodd-Frank Act §§ 1471–72). Subtitle F also provides for annual reports from the Appraisal Subcommittee of the Bureau of Consumer Financial Protection, and regulations to supervise the quality of appraisals, qualifications of appraisal companies, fees, and reporting. See 12 U.S.C. § 3341 (Dodd-Frank Act § 1473). In addition, the Government Accountability Office (“GAO”) is to conduct a study on various appraisal methods, valuation models and the impact on the home valuation code of conduct and the appraisal subcommittee. See Dodd-Frank Act at § 1476.
Congress first states that the effort to reform residential mortgage credit practices and protections should include meaningful structural reforms of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). See Dodd-Frank Act at § 1491. Additionally, the Subtitle commissions a GAO study on government efforts to catch mortgage foreclosure rescue scams and loan modification fraud, and a Housing and Urban Development study on drywall presence in foreclosures. See id. at § 1492, 1494. The Emergency Homeowners’ Relief Fund is made available beginning October 1, 2010, as is additional funding for neighborhood stabilization programs. See 12 U.S.C. § 2703, 42 U.S.C. § 5301 (Dodd-Frank Act § 1496–97). Finally, this Subtitle establishes a program to provide foreclosure legal assistance to low- and moderate-income homeowners and tenants. See 12 U.S.C. § 1701x-2 (Dodd-Frank Act § 1498).
Title XIV was implemented in order to provide standards for the level of disclosure required for borrowers, so that individuals getting a mortgage would be aware of the obligations and the risks. The Title prohibits certain predatory lending tactics that were used frequently during the real estate bubble, and also establishes certain provisions for loan modifications which will help to change and reduce mortgages that are completely out of the borrower’s ability to repay.
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