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Follow on Google News | Stricter New Mexico Law Expected to Fundamentally Change How Mortgage Lenders Does Business- Lenders reassess compliance controls in anticipation of more restrictive requirements affecting a majority of loans in the state -
By: ComplianceEase® The modified legislation, a full 97 pages in length, greatly broadens the influence of the existing New Mexico Home Loan Protection Act (HLPA), one of the stricter state “high-cost” With most loans in the state expected to see impact from the new law, many lenders have been scrambling to figure out what changes they need to make in order to stay compliant. ComplianceAnalyzer® With the new law’s provisions focused on specific loan features such as when and by how much rates can adjust, it is expected that the law will have a noticeable impact on the types of loan programs that can legally be offered to borrowers in the state. Don Lampe, who is a partner at Womble Carlyle Sandridge & Rice, PLLC and worked closely with New Mexico lawmakers on the original HLPA, weighed in on the impact the changes could have on doing business in New Mexico, “The changes to the law apply a strict set of restrictions to a very broad category of loans. Historically, when a mortgage lending law has done that, it has had a dramatic effect on how companies conduct business in the state.” With the law likely to require that the mortgage industry make changes to the loan products they offer, it is not surprising that lenders turned to automated compliance technology that was ready for the new requirements well ahead of time. Lampe added, “There’s no question that loan product availability will be impacted by the new law, so lenders need to plan ahead.” With nearly all residential mortgages in New Mexico set to be affected, lenders that relied solely on trying to keep their fees and rates below the established thresholds in order to steer clear of additional restrictions will have to rethink that strategy. Among the broader restrictions that lenders will need to deal with are what amounts to a complete ban on prepayment penalties, a loan feature used extensively by Wall Street firms during the mortgage boom to keep initial “teaser” interest rates low. Lenders will also be compelled by law to verify borrowers' abilities to repay for all "home loans." The law prescribes that assessing ability to repay must include taking into account "teaser rates" on adjustable rate loans as well as considering the borrower's complete monthly payment, including taxes and insurance. Aside from tougher restrictions on loans, a seemingly minor addition to enforcement of the law may expose lenders to new liability by proclaiming that a violation of the HLPA can actually be considered as an “unfair or deceptive trade practice” under the state’s existing Unfair Practices Act. By continuously monitoring changes to laws and making them available for users of the ComplianceAnalyzer system in advance of new laws’ effective dates, ComplianceEase helps to take the burden off of financial institutions’ # # # About ComplianceEase ComplianceEase, is a premier provider of intelligent business solutions to the financial services industry. ComplianceEase's patented platform includes ComplianceAnalyzer – the mortgage industry's leading automated compliance solution. ComplianceEase combines industry and regulatory compliance expertise with innovative technology to power beginning-to- End
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