Money Talk: National Realtor Association Warns Members About New Mortgage Disclosure Rules

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NATIONAL REALTOR ASSOCIATION WARNS MEMBERS ABOUT NEW MORTGAGE DISCLOSURE RULES
Just as the Arkansas and national housing market begins to heat up, the National Association of Realtors (NAR) issued a warning to its members last week concerning upcoming Dodd-Frank changes to mortgage disclosure rules that critics say could douse momentum on the rising housing market.

On its website, NAR told members that “major changes are coming” to real estate transactions begin on Aug. 1, 2015, that will affect paperwork and disclosure requirements involved in the mortgage lending process.

Under provisions of the Dodd-Frank Wall Street Reform Act, the so-called Truth-in-Lending Act disclosure rules, or TRID, creates timing requirements for information that lenders need to make to consumers, while also requiring that any transaction involving a mortgage will use new disclosure forms created by the Consumer Financial Protection Bureau (CFPB).

“Not only will the new forms be used in transactions, the relationship between the lender and other parties like the closing agent and the mortgage broker is now altered because the lender can be liable if certain costs exceed the tolerance limitations set forth in the TRID,” said National Association of Realtors President Chris Polychron.

NAR has posted a video with Senior Counsel Finley Maxson reviewing the upcoming changes, which some critics have said could force smaller lenders out of the mortgage business.

Last week, NAR also said that pending homes sales in March rose to their highest level in months. Home sales in Arkansas’ four largest markets rose an impressive 15.33% in March after being up 2.4% in February and down more than 2% in January.

BLACKS, HISPANICS MORE LIKELY TO BE ‘CREDIT INVISIBLE,’ CFPB SAYS
A recent report by the Consumer Financial Protection Bureau (CFPB) found that black, Hispanic and other consumers in low-income neighborhoods are more likely to have no credit history with a nationwide consumer reporting agency or not enough current credit history to produce a credit score.

The 27-page report, released earlier this month by the newly created federal consumer protection agency, indicates that 26 million or one out of every 10 American adults are “credit invisible,” or do not have any credit history with a nationwide consumer reporting agency.

“A limited credit history can create real barriers for consumers looking to access the credit that is often essential to meaningful opportunities such as getting an education, starting a business, or buying a house. Further, some of the most economically vulnerable consumers are more likely to be credit invisible,” said CFPB Director Richard Cordray.

The three nationwide consumer reporting agencies, also called credit bureaus, generate credit reports that track a consumer’s credit history. Credit reports and the three-digit credit scores that are based on those reports play an increasingly important role in the lives of American consumers. Most decisions to grant credit and set interest rates for loans are made based on information contained in credit reports. As a result, those consumers who have a limited or nonexistent credit history face greater hurdles in getting credit.

To see further details of the report, click here.

REX NELSON JOINS SIMMONS FIRST AS DIRECTOR OF CORPORATE COMMUNICATIONS
Rex Nelson has joined Pine Bluff-based Simmons First National Corp. as director of corporate communications. Nelson has previously served as president of the Arkansas’ Independent Colleges and Universities (AICU). He is also a former communications director for then-Gov. Mike Huckabee and he is a former political editor for the Arkansas Democrat-Gazette. Nelson also serves as president of the Political Animals Club of Central Arkansas.

SEC APPROVES ‘TICK SIZE’ PILOT PROGRAM ON TRADING FOR SMALLER COMPANIES
The Securities and Exchange Commission (SEC) recent approved a proposal by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) for a two-year pilot program that would widen the minimum quoting and trading increments – or tick sizes – for stocks of some smaller companies. The SEC plans to use the pilot program to assess whether wider tick sizes enhance the market quality of these stocks for the benefit of issuers and investors.

The SEC modified several provisions of the proposal submitted by the exchanges and FINRA that take into account input from commenters. For example, the SEC extended the pilot to two years rather than one, removed the venue limitation from the trade – a prohibition that would have required price matching executions to occur where the person’s quotation was displayed, and reduced the size of block transactions eligible for the exception to better reflect trading in smaller-cap stocks.

The tick size pilot will begin by May 6, 2016. It will include stocks of companies with $3 billion or less in market capitalization, an average daily trading volume of one million shares or less, and a volume weighted average price of at least $2.00 for every trading day. Click here to learn more.