CFPB Issues New Rules for High-Cost Mortgages and Homeownership Counseling

January.25.2013

On January 10, 2013, the Consumer Financial Protection Bureau issued a final rule (the "Rule") that amends Regulation Z (Truth in Lending) to implement changes to the Home Ownership and Equity Protection Act ("HOEPA") made by the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). The Rule expands the types of loans subject to HOEPA, revises the tests for whether a loan is "high-cost" and therefore subject to HOEPA, imposes new restrictions on high-cost loans, and requires new disclosures. Because of the special requirements for loans that meet HOEPA's high-cost tests, the HOEPA threshold has acted as a de facto usury ceiling for the vast majority of mortgage originators. With the Rule's extension of HOEPA to more types of loans, and the lowering of the HOEPA thresholds, this ceiling will now affect a broader segment of consumers seeking mortgage loans than before. The Rule also implements two additional Dodd-Frank provisions that are not amendments to HOEPA related to homeownership counseling.

Authors

Jeffrey Naimon Partner, Financial & Fintech Advisory, Strategic Advisory & Government Enforcement (SAGE)

Washington, D.C.

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Financial & Fintech Advisory
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Jeffrey Naimon Partner

Washington, D.C.

He defends financial services companies facing complex examination or enforcement matters before the Consumer Financial Protection Bureau (CFPB), the Federal Trade Commission (FTC), and federal and state banking regulators, with a focus on fair lending, unfair, deceptive or abusive acts and practices (UDAAP), loan servicing, privacy and credit reporting, debt collection, servicemember protections and other consumer protection issues.

He assists banks and nonbanks (including fintech entities) structure, negotiate and operate a variety of partnerships, outsourcing programs and other third-party arrangements, including performing due diligence, negotiating transactions and advising on ongoing oversight protocols to meet regulatory expectations for third-party arrangements.

Jeff also assists in negotiating acquisition, capital markets and servicing transactions, advising on how best to structure the transaction to reduce risk and expedite deal closure, performing due diligence and assisting in obtaining the necessary change of control and other regulatory approvals.

Jeff is consistently recognized as a leading lawyer in Financial Services Regulation: Consumer Finance (Compliance) in Chambers USA, which praised him for his "extremely high intellect regarding compliance matters and negotiation skills. There's none better at arguing a disputed point." He is also a Fellow of the American College of Consumer Financial Services Lawyers.

He currently serves as the Co-chair of the Professional Development Task Force and previously served as Co-chair (2011-2013) and Co-vice Chair (2008-2010) of the Truth in Lending Subcommittee of the American Bar Association’s Consumer Financial Services Committee and has authored numerous articles on consumer financial services.

Prior to joining Orrick, Jeff was a partner at Buckley LLP.

Clinton Rockwell Partner, Financial & Fintech Advisory, Strategic Advisory & Government Enforcement (SAGE)

Santa Monica; San Francisco

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Clinton Rockwell Partner

Santa Monica; San Francisco

Clint leads Orrick’s Financial & Fintech Advisory practice, a team that delivers synthesized regulatory, enforcement and transactional advice to more than 700 fintech market participants, as well as other leading financial institutions and funds.

Since 2010, Clint has been featured as a leading advisor in Chambers USA in the area of Financial Services Regulation: Consumer Finance (Compliance). Chambers has described him as "very adept at seeing legal issues from a business perspective and very good at protecting the interests of his client … a phenomenal lawyer." He is a member of the American Bar Association Consumer Financial Services Committee, the University of London Post Graduate Law Society and the Bentham Society at University College London.

Clint was one of the original members of Buckley Kolar LLP and served as Co-Managing Partner and a member of the partner board at Buckley LLP. Prior to joining Buckley, he was with Goodwin Procter LLP in Washington, D.C.

Joseph Kolar Partner, Financial & Fintech Advisory, Strategic Advisory & Government Enforcement (SAGE)

Washington, D.C.

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Joseph Kolar Partner

Washington, D.C.

In addition to closely monitoring the regulatory and enforcement activity of the Consumer Financial Protection Bureau (CFPB), Joe advises on Federal Housing Administration-insured and Department of Veterans Affairs-guaranteed single-family loan programs, Ginnie Mae guaranteed securities programs and the programs and policies of Fannie Mae and Freddie Mac as they relate to loan origination, servicing, and secondary market transactions. In addition, Joe frequently represents mortgage lenders and others in negotiating joint ventures, marketing and internet origination agreements, vendor agreements, as well as other contracts used or needed by a wide variety of financial services companies.

He is a member of the Consumer Financial Services Committee of the American Bar Association, where he is a past Co-chair of the Housing Finance and RESPA Subcommittee, and a member of the American College of Consumer Financial Services Lawyers. Prior to practicing law, Joe worked as a staff member for former U.S. Representative Jim Leach (R-IA).

Joe currently serves on the Board of Directors of the Legal Counsel for the Elderly, which is associated with AARP, and of Samaritan Ministry of Greater Washington. He was President of the Kolar Charitable Foundation at Buckley.

John Kromer Partner, Financial & Fintech Advisory, Strategic Advisory & Government Enforcement (SAGE)

Washington, D.C.

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D:+1 202 349 8040
E: [email protected]

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Strategic Advisory & Government Enforcement (SAGE)
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John Kromer Partner

Washington, D.C.

John helps clients navigate the complex maze of federal and state laws and regulations. He regularly counsels clients on compliance with regulations issued by the Consumer Financial Protection Bureau (CFPB) as well as examination and enforcement actions by the bureau, federal banking agencies, state regulators and other enforcement agencies. He advises on the laws governing licensing and chartering, usury, advertising, disclosures, privacy, lending and servicing practices, and laws prohibiting unfair, deceptive, or abusive acts or practices (UDAAP).

He advises financial services firms on new product and business line development, including structuring and negotiating commercial relationships, joint ventures and partnership agreements. He also assists financial and strategic purchasers of fintechs and financial services firms on regulatory matters, including due diligence of companies, assets and portfolios, and transactional structuring in light of federal and state licensing and regulatory requirements.

John is recognized by Chambers USA as a leading attorney in the field of Consumer Finance Compliance and has been noted by The Legal 500, in the practice areas of Financial Services Regulation, Cyber Law (including Data Protection and Privacy), and Fintech. He frequently speaks at industry conferences on legal issues affecting consumer finance companies. John is a co-author of a number of publications, including Residential Mortgage Lending: State Regulation Manual; Residential Mortgage Lending: Brokers; Pratt’s State Regulation of Second Mortgages and Home Equity Loans; Mortgage Bankers Guide to Regulatory Compliance and The Law of Electronic Signatures and Records, and has written numerous articles for consumer financial services industry publications.

John is Fellow of the American College of Consumer Financial Services Lawyers, served on the Advisory Council of the American Association of Residential Mortgage Regulators from 1998-2018, was a Board member of the Online Lending Policy Institute from 2016-2021 and is a past Chair of the Housing Finance Subcommittee of the Consumer Financial Services Committee of the Business Law Section of the American Bar Association.

Prior to joining Orrick, John was a partner at Buckley LLP. He served as Buckley’s Co-Managing Partner from 2009-2019 and was a member of the firm’s partner board from 2019-2022.