The nature of new regulations is typically meant to be restrictive in nature. However, the new rules will give some mortgage and housing companies more options.
"Principally, the Bureau does not want access to credit to be overly restricted for the populations targeted by the Proposal," according to a client update from Dechert law firm. "The Bureau felt that the specified organizations benefit the community as a whole."
The specified proposals mentioned by Dechert are those mortgage companies exempt from the ability-to-repay standards proposed by the Qualified Mortgage. The new CFPB rules come into force January 2014 and remain subject to adjustment.
Primarily, they are exemptions galore for federal-linked housing companies. However, some other firms will likely see a relief as well.
It's what Dechert called the creation of an additional, more protected class of mortgage finance firms under the QM.
"This category would consist of certain loans made by a small creditor that had total assets of $2 billion or less at the end of the previous calendar year, which together with all affiliates, originated 500 or fewer first-lien covered transactions during the previous calendar year, and had more than 50% of its total covered transactions during the preceding calendar year secured by properties that are in rural or underserved areas," the law firm explained.
Additionally, Jennifer Jozity, assistant vice president of the inspection department at Safeguard Properties, said that the new servicing requirements from the CFPB, also in force January 2014, can provide more business opportunities in her field.
And, as with the QM exemptions, the new options come under the mandate of providing community service. Under the new servicing guidelines, mortgage servicers must make good faith efforts to make contact with distressed borrowers.
"National field service companies employ a large network of contractors throughout the U.S. who can support borrower outreach in the process of performing routine inspections on defaulted properties," said Jozity.
"Contractors can help disseminate information to defaulted borrowers regarding their loss mitigation options and foreclosure alternatives, and include a servicer point of contact for easy follow up," she added.