Several lawyers who specialize in finance regulations say the “wait and see” approach behind an onslaught of new regulations has mortgage lenders on edge.
Companies are starting to staff up their internal legal and compliance departments as new federal examinations and lending regulations come into play, said Stephanie Robinson, a partner at K&L Gates, a firm that represents numerous banks, lenders and consumer finance companies.
Especially for companies that aren’t accustomed to federal examinations, such as non-bank mortgage lenders and servicers, CFPB examinations are like nothing they’ve experienced before. It’s a lot of work to digest rules, understand them and figure out how to implement, but it’s also hard when the regulations might drastically change the way you do business, said David Tallman, also a partner at the firm.
“I think the problem is that it’s unclear how everything is going to play out,” Tallman said.
For example, lenders have to ascertain whether they have issues with respect to the tight definition for qualifying to be QM
under points and fees.
“The cap for points and fees is essentially 3%, which is a pretty low and narrow window and doesn’t provide a lot of space to operate in when you factor in the universe of people whose compensation could be brought in under it,” Tallman said.
The regulations are going to require some big changes, both structurally and in the payment and documentation process, said Tallman, who said his clients are investing in the creation of robust compliance programs now to avoid issues later.