The Securities Industry and Financial Markets Association (SIFMA) and the American Securitization Forum (ASF) offered comments today on the Federal Reserve Board of Governors’ Proposed Rule to Amend the Home Mortgage Provisions of Regulation Z.

Both SIFMA and the ASF said that while they support the proposal’s focus on enhanced disclosure to borrowers, the groups suggested several revisions. These include defining both the thresholds used to determine which loans are considered higher-priced mortgage loans and the new standard for the borrower's ability to repay these loans.

The organizations also support imposing state licensing standards for mortgage brokers and noted that, while they continue to support increased and clearer disclosure to borrowers, they oppose the method by which the Federal Reserve proposes to implement this change. This method involves expanding assignee liability and, as a result, hold subsequent buyers of mortgage loans responsible “for the actions of brokers and originators.”

The groups suggested that the new regulations on appraisals, advertising and mortgage brokers go into effect in six months, and that the changes related to higher priced mortgage loans, escrows and disclosures go into effect one year from now.

Both groups are also calling for more enhanced borrower education. SIFMA and the ASF also made additional comments on the proposal’s extension of remedies available under HOEPA and the potential to impose extraordinary penalties for violations of largely technical requirements. Both organizations support a provision allowing the right to cure a violation that would currently result in the cancellation of a contract under the proposal, prohibit borrowers who obtain loans through fraud or deception from being awarded significant monetary damages for a violation of the rule’s requirements, and do not extend enhanced monetary damages under HOEPA violations to the newly defined higher priced mortgage loans.

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