Thursday, April 18, 2024

October 2012 Legal Briefs

  • Reg Z, Late Fees and the Single Pay Note
  • New Safe Deposit Law
  • The Second Appraisal
  • Proposed Homeownership Counseling Changes
  • Tips for Reading the Proposals

By Pauli D. Loeffler

Reg Z, Late Fees and the Single Pay Note

For the last several months, I have gotten at least 3 questions a week about late fees: What is the maximum late charge on consumer loans in Oklahoma? – The GREATER of 5% of the amount of the unpaid installment or the amounts as set by the Administrator of the Oklahoma Dept. of Consumer Credit (or as provided by law) currently $23.50. What language should we use to allow the late fee to adjust if it increases as provided under the Oklahoma U3C? – See the prior answer. What is the maximum we can charge on non-consumer loans? – You are free to contract for any amount provided it does not “shock the conscience” of the court. Can we charge a late fee on a single pay note? — No, because it is not a loan payable in installments. The answers to these questions are covered in greater detail in the June 2012 Legal Update.
At least I thought I had covered all these questions until I was made aware of a provision in the Commentary to Reg Z that I had previously overlooked but which a software forms provider indicates serves as the basis for choosing to disclose a late fee on a single pay note. In light of this, it seems the issue of charging a late fee on a single pay consumer note needs to be revisited.
For closed-end credit, Section 1026.18 Content of Disclosures provides:
[T]he creditor shall disclose the following information as applicable to the loan:
(l) Late payment. Any dollar or percentage charge that may be imposed before maturity due to a late payment, other than a deferral or extension charge.
The Commentary to this states:
18(l) Late Payment
1. Definition. This paragraph requires a disclosure only if charges are added to individual delinquent installments by a creditor who otherwise considers the transaction ongoing on its original terms.

Late payment charges do not include:
i. The right of acceleration.
ii. Fees imposed for actual collection costs, such as repossession charges or attorney’s fees.
iii. Deferral and extension charges.
iv. The continued accrual of simple interest at the contract rate after the payment due date. However, an increase in the interest rate is a late payment charge to the extent of the increase.
2. Content of disclosure. Many state laws authorize the calculation of late charges on the basis of either a percentage or a specified dollar amount, and permit imposition of the lesser or greater of the 2 charges. The disclosure made under §1026.18(l) may reflect this alternative. For example, stating that the charge in the event of a late payment is 5% of the late amount, not to exceed $5.00, is sufficient. Many creditors also permit a grace period during which no late charge will be assessed; this fact may be disclosed as directly related information. (See the commentary to §1026.17(a).)
At this point, you are asking yourself: If the Commentary to 18(l) specifically refers to “installments,” meaning more than one payment (not including a down payment), how can there be a late fee on a single pay note? This is where the provision I had previously overlooked comes into play.
Section 1026.17 contains the general disclosure requirements for closed-end credit. Section 1026.17 (a) provides:
(a) Form of disclosures. (1) …The disclosures shall be grouped together, shall be segregated from everything else, and shall not contain any information not directly related to the disclosures required under §1026.18…
It is the Commentary to subsection 17(a) that may possibly permit the imposition of a late fee on a single pay note. The comment itself is part of the various examples of information “directly related” under §1026.18:
5. Directly related. The segregated disclosures may, at the creditor’s option, include any information that is directly related to those disclosures. The following is directly related information:
i. A description of a grace period after which a late payment charge will be imposed. For example, the disclosure given under §1026.18(l) may state that a late charge will apply to “any payment received more than 15 days after the due date.”
xv. A late-payment fee disclosure under §1026.18(l) on a single payment loan.
Granted I have been providing legal and compliance advice for the OBA in excess of 8 years, but I had never read this particular comment. It is this provision that the software provider cites while acknowledging how exceptionally rare it is to invoke this provision:
While most single pay loans do not impose late charges before maturity, the section 1026.17(a)(5)(xv) of the Official Staff Commentary on Regulation Z creates an exception to this rule. Under this exception, creditors are allowed to disclose late payment fees on single payment loans as "directly related information.” (Emphasis added)
But before, you start including a late fee disclosure on each and every one of your single pay notes based on 17(a)(5)(xv) of the Commentary disclosure, there are still some issues to address. The first is that the loan must be one that is excluded from coverage under the Title 14A, the Oklahoma version of the Uniform Consumer Credit Code (“U3C”).
As indicated in the June 2012 Legal Briefs, the Oklahoma U3C allows for a late fee on any installment not paid in full within ten (10) days after its scheduled due date. (Tit. 14A O.S. Section 3-203). It also specifically defines “payable in installments” in Tit. 14A O.S. Section 1-301 (13) to require two or more periodic payments (other than a down payment) when interest is charged. A single pay loan is NOT an installment loan under the U3C, so no late fee can be imposed on any single pay loan subject to its provisions. If the loan is not subject to the Oklahoma U3C, only then we would consider the Reg Z Commentary with regard to disclosures and the imposition of late fees. So what loans would come under Reg Z but not the UC3? In addition to commercial loans, there are:
1. Loans made to enable the debtor to build or purchase a residence or to refinance such loan when made by a lender whose loans are supervised by an agency of the United States or made by a Federal Housing Administration approved mortgagee unless the loan is made subject to this act by agreement ("residential mortgage transaction"). [Tit. 14A O.S. Section 1-202].

2. A "loan primarily secured by an interest in land", if at the time the loan is made the value of this collateral is substantial in relation to the amount of the loan, and the loan finance charge does not exceed thirteen percent (13%) per year calculated according to the actuarial method on the unpaid balances of the principal on the assumption that the debt will be paid according to the agreed terms and will not be paid before the end of the agreed term. [Tit. 14A O.S. Section 3-105].

3. Credit that exceeds the threshold amount (same as for Reg Z as adjusted) unless a private education loan or secure by land [Tit. 14A O.S. Section 3-104]. However, a loan over the threshold amount secured solely by a mobile home (no land) that is the principal dwelling does not come under the OK U3C.
Now even if the loan is not subject to the U3C (and this would include commercial loans), but the late fee language states that the fee may be imposed whenever an installment is not paid in full “x” days following the due date, we still have problems. By using the term “installment,” the note or loan agreement would need to include language to modify the ordinary and generally accepted meaning of the term “installment” to include a loan with only one required payment.
More problematical is whether the language of Section 1026.18(l), emphasized in the explanation from the software provider, above, can even apply with regard to a single pay note except in a limited number of situations. As indicated, in order to impose a late charge on a single pay note, it must be before the loan has matured per the language of the subsection: the charge that may be imposed before maturity due to a late payment…
Maturity is generally defined as the date on which the outstanding principal (and interest) of a note, draft, acceptance bond, or other debt instrument becomes due and payable.
If a single pay note has not matured (the due date for the single payment is still in the future), then the note will have to provide an alternative of “maturity” to be a date after the actual due date of the loan in order for the late fee disclosed under Reg Z to be assessed. You will need to look carefully at your loan agreements for a single pay loan and an installment loan to see if there is a difference in the late fee disclosures between the two. If they are identical, I would be leery of imposing a late fee on a single pay note. In any event, you should consult your legal counsel whether such language clearly and unambiguously provides for imposition of a late fee on a single pay note.
So does 17(a)(5)(xv) of the Reg Z Commentary REALLY allow the imposition of a late fee on a single pay note at all? Maybe. Let’s say you had a purchase or refinance of a dwelling with new money out and a single pay note so that the U3C does not apply. AND you know that payment of the note will be delayed due to right of rescission, or the need to provide a revised TIL, or some other reason. Provided the disclosure either does not use the term “installment” or defines it to mean any payment regardless of number required per the terms of the loan, then it is possible. Otherwise, I don’t see how Reg Z allows the imposition of a late fee on a single pay note.

New Safe Deposit Law

Your customer, who has rented a safe deposit box, dies. The next thing you know, his adult children or siblings or parents are in the bank and would like to be able to remove the contents. You repeat what you’ve been saying for decades: “We’re sorry, but other than the search procedure after death under Section 1308 of the State Banking Code which would permit someone to look in the box for a copy of a will of the decedent, a deed to a burial plot, life insurance policies on the deceased customer, or any trust he might have had, we cannot otherwise open the box when the sole remaining renter has passed away until and unless a personal representative has been appointed for the estate. We can then permit entry by the personal representative”

In recent years, that speech has changed a little bit because a new section 1301.2 was added to the Banking Code in 2006, to allow a renter to grant authorization for one or more persons to have access to that safe deposit box upon the death of the lessee, and the financial institution in which the safe deposit box is located is required to grant such access, subject to certain conditions, which include requirements that:
– The last surviving lessee of the box has died;
– The person seeking access provide an affidavit that he is the same person named in the authorization, and he must attach a copy of the authorization;
– The authorization must not have been revoked; and
– The affidavit indicates the affiant believes no estate proceeding will be commenced with respect to the estate of the deceased lessee.
If those conditions are satisfied, the bank may allow the person named in the authorization to enter the box and, presumably, remove any contents. The bank is protected from liability. It prevents the box from just hanging around, and it allows the bank to move on.
Obviously, for that statute to work, the renter must think ahead and proactively execute an authorization while he is still alive. Unless your bank has educated your safe deposit renters about the availability of this method of allowing access after death, it’s likely your customers know nothing about it and you have few instances where an authorization has been documented.
Fast forward to the most recent legislative session. A bill was filed that would have required a bank, upon request from the heirs, to open a deceased renter’s safe deposit box, inventory the contents, and value the contents. If the value of the contents was under $20,000, the bank could turn the contents over to the heirs. I could imagine shrieking throughout Oklahoma safe depositland as I read the proposal. We worked so hard to eliminate the post-death inventory requirement from the statute. We certainly didn’t want it back.

And having the bank value the contents? Are you kidding? You are smart folks, but how would you realize the penny you are looking at in the box is a rare 1943S that is one of the few not made of zinc and steel and it is therefore worth over a million dollars? How would you recognize that the stamp on the ordinary-looking envelope is the 15 cent Lincoln stamp that, even used, is worth $20,000? Do you really want to research baseball cards, jewelry, historic documents? Weigh the gold in the teeth being stored in the box and calculate what it’s worth based on that day’s spot price for gold? Heavens, no.

The OBA got involved immediately. The authors really wanted there to be a procedure for getting the contents of the box into the hands of heirs. That’s a good thing from the bank’s point of view, too, so we gutted the bill and rewrote it. The resulting piece of legislation, HB 2787, was signed into law by the governor and will take effect November 1, 2012.

It amends Section 906 of the State Banking Code. That is the section of law that deals with what happens when the owner of a deposit account dies. Just to review, if a person with a sole ownership account dies without having designated payable-on-death beneficiaries and the amount in the account at the time of death is $20,000 or less (for years it read “$5,000 or less”) the bank may transfer the funds to the known heirs of the deceased upon receipt of an affidavit sworn to by the known heirs of the deceased which establishes jurisdiction and relationship and states that the owner of the account left no will. The affidavit shall be sworn to and signed by the known heirs of the deceased. The new legislation creates a subsection (A)(2) to Section 906.

Here is how the new section reads:

Upon the death of an individual who is the sole renter of a safe deposit box in a bank or credit union, the bank or credit union may open the box in the presence of all known heirs and transfer or release the contents to such heirs upon receipt of an affidavit which establishes jurisdiction and relationship to the deceased and states that the renter of the safe deposit box left no will or that the contents of the safe deposit box are the only known assets of the deceased renter. The affidavit shall be sworn to and signed by the known heirs of the deceased and the same shall swear that the facts set forth in the affidavit establishing jurisdiction, heirship and intestacy or that the contents of the safe deposit box are the only asset of the deceased are true and correct. Every known heir shall either be present in person or by a duly authorized agent. If any known heir is unable to be physically present for the opening of the box and transfer of the contents, such heir may appoint an agent by executing authorization in writing in the following form: “I hereby authorize (name of person) to act as my agent at the opening and transfer of contents of safe deposit box (number or other identification) at (name of financial institution.” The authorization form shall be signed and dated by the heir and notarized. The bank or credit union may impose its standard fee for drilling the box if the heirs cannot provide the key for opening.

Unlike a deposit account, safe deposit contents are unique and you have no idea from one box to another what they are going to be. Requiring all of the heirs to be present for the opening of the box allows you to obtain the affidavit, count noses, open the box, then let THEM work out who gets what. If one or more of the heirs cannot be present at the box opening, they can execute the very simple language for appointing an agent to represent them for that purpose. Don’t open the box under this section unless all the parties and/or their agents are there. If the parties don’t think they’ll be able to work out the who-gets-what aspect of it all, they need to go to court instead. This is a procedure that only works when all the parties are willing and able to play nice.

Unlike the deposit account statute, which only comes into play if the person died within a will, this new section of law for safe deposit boxes is actually broader. It can be used either with a renter who died without a will, or with a renter who did leave a will, but didn’t leave any known assets other than the contents of the safe deposit box.

If you have to drill the box because none of the heirs can provide a key, you may charge your standard fee for drilling the box.

There is protection against liability for you if you release the contents following the provisions of this statute in good faith reliance on the affidavit.

Let’s say the deceased individual’s only assets consisted of old gold coins in the safe deposit box. He left a will that specified everything is to go to his secret mistress. He left a wife who’s mad as, well, you know what. The wife can submit the affidavit to you if she is the sole heir and can get the contents of the box. Does she then have any legal duty to give them to the person named in the will? Truly, it’s not your concern. If there were known assets other than the contents of the box, the estate (including the safe deposit box contents) would need to go through probate. If the box contents are the only known estate asset, this procedure may instead be followed.
This provides a new option for you. No inventory, no valuation, just a simple handoff procedure.

The Second Appraisal

Many of you have heard about proposed rules that would implement the Dodd-Frank Act’s provisions on second appraisals, and you know that on these particular appraisals, you are not allowed to charge the customer.

What you may not understand is the context for these requirements.

There is a new category of mortgage loan under Dodd-Frank that is called a “higher-risk mortgage loan.” A higher risk mortgage loan is a closed end consumer credit transaction (which means it is to a consumer, primarily for a personal, family, or household purpose) that trips certain rate triggers and is secured by the consumer’s principal dwelling.
There are two rate triggers for first lien loans (there’s one for jumbo loans –2.5% over the APOR, and one for non-jumbo loans – 1.5% or more over the APOR) and there’s one rate trigger for subordinate lien loans (3.5% or more over the APOR).

Even if the loan trips the rate triggers, is covered by Reg Z as a consumer credit transaction, is closed end, and would be secured by a lien on the consumer’s principal dwelling, it could fall within an exception to the definition of higher-risk mortgage loan if it meets the test for being a “qualified mortgage.” Of course, we don’t yet know exactly what a “qualified mortgage” is because that term is being defined in a separate rulemaking – the ability to repay proposal. We do know some general parameters, however. A qualified mortgage is one secured by lien on a dwelling that meets a laundry list of requirements and doesn’t have any of the “bad stuff” attendant to it (no negative amortization, no balloon payment unless the creditor meets the “rural or underserved areas criteria, no interest only, limits on prepayment penalties, limits on points and fees, limit on term to 30 years, except in high cost areas, etc.)

If the dwelling doesn’t include a mortgage on real estate, you’re also going to escape coverage.

If a loan you’re making does fit all the elements necessary for it to be a higher-risk mortgage loan and it doesn’t fit within the qualified mortgage exemption, you cannot make the loan unless you first:

• Obtain a written appraisal performed by a certified or licensed appraiser who conducts a physical property visit of the interior of the property (even if the transaction amount is under what would normally require the use of a certified or licensed appraiser).

• Obtain an additional appraisal from a different certified or licensed appraiser if the purpose of the higher-risk mortgage loan is to finance the purchase or acquisition of a mortgaged property from a seller within 180 days of the purchase or acquisition of the property by that seller at a price that was lower than the current sale price of the property. The additional appraisal must analyze the difference in sale prices, changes in market conditions, and any improvements made to the property between the date of the previous sale and the current sale.

• Provide the applicant, at the time of the initial mortgage application, with a statement that any appraisal prepared for the mortgage is for the sole use of the creditor, and that the applicant may choose to have a separate appraisal conducted at the applicant’s expense.

• Provide the applicant with one copy of each appraisal conducted in accordance with TILA section 129H without charge, at least three (3) days prior to the transaction closing date.

The “additional” appraisal is only needed if you have a situation where one person acquires or purchases it, then sells it to another – your prospective borrower – who is seeking financing from you to acquire it as his principal dwelling at a price greater than what the seller paid within 180 days or less of the seller’s purchase or acquisition of the property.

The fact is, you may not have many of the types of loans that require the additional appraisal, but if you have any higher-risk mortgage loans being made to allow someone to finance the purchase of his principal dwelling, you have to exercise reasonable diligence to ascertain what the underlying facts are about when the seller acquired the property. That inquiry will need to be performed on every higher-risk mortgage loan. And if you find that you’re dealing with a “flip” – something that meets the 180 days or less test – you’re going to have to dig deeper to ferret out purchase price and all the rest.

If an additional appraisal is triggered, you must obtain it from a different certified or licensed appraiser.

This statutory mandate would be implemented through proposed § 1026.XX(b)(3). Note that an appraisal previously obtained in connection with the seller’s acquisition or the financing of the seller’s acquisition of the property cannot be used as one of the two required appraisals

The intent of this requirement is to discourage property flipping scams, a practice in which a seller resells a property at an artificially inflated price within a short time period after purchasing it, typically after some minor renovations and frequently relying on an inflated appraisal to support the increase in value.

Under the proposal, the additional appraisal must be obtained prior to the consummation of the higher-risk mortgage loan. The additional appraisal must also be done by a certified or licensed appraiser who conducts a physical visit of the interior of the property. Plus, it must include an analysis of:

• The difference in sale prices;

• Changes in market conditions; and

• Any improvements made to the property between the date of the previous sale and the current sale.

They are considering an exemption for higher-risk mortgage loans in “rural” areas where there might be particular difficulty finding two competent appraisers.

They are thinking about using the new “Transaction Coverage Rate” instead of the APOR as the benchmark for comparison if they tinker with the finance charge definition and exclusions, so nothing is set in stone yet, but you might want to have someone in your bank run the numbers and see if you have loans that would meet the definition of higher-risk mortgage loan if it were applicable today, examine them to see if you think they might qualify as “qualified mortgages” and try to get a sense for the extent to which this part of Dodd-Frank would even affect you. My guess is not much. I hope I’m right.

Proposed Homeownership Counseling Changes

Dodd-Frank contains several requirements related to homeownership counseling. They consist of both amendments to RESPA and amendments to TILA. Regulations are required for implementation. The CFPB has the rulemaking authority.

The goal of these provisions is to facilitate getting consumers connected with qualified counselors who can assist them in improving their housing conditions and in meeting the responsibilities of tenancy or homeownership. The counselors can also help borrowers evaluate whether interest rates may be unreasonably high or repayment terms unaffordable, and ultimately, the hope is that this may help reduce the risk of defaults and foreclosures.

The Consumer Financial Protection Bureau proposed amendments to Regulation X (RESPA) and Regulation Z (TILA) on August 15, 2012 to implement the homeownership counseling requirements of Dodd-Frank.

Under these proposals, you’ll be providing a new disclosure early in the loan process. Applicants for federally related mortgage loans (as that term is defined in RESPA) will be notified of the availability of homeownership counseling early in the loan application process via a list of homeownership counselors that is to be included with a “home buying information booklet” prepared by CFPB. There is an exception for Home Equity Conversion Mortgage apps.

The term “federally related mortgage loans” includes purchase money mortgage loans, subordinate mortgages, refinancings, closed-end home-equity mortgage loans, home-equity lines of credit, and reverse mortgages.

In addition, pre-consummation counseling is actually required in connection with certain types of applications. You may find, however, that you do not make either one of the types of loans to which the pre-consummation counseling requirements occur. The two types of loans which trigger the pre-consummation counseling are l) HOEPA-covered loans (aka Section 32, or high cost loans) and 2) instances where you are making a loan to a first-time borrower and the loan may involve negative amortization. In that instance, the first-time borrower must obtain pre-consummation homeownership counseling. Take a look at your loan portfolio to see if you have loans that would trigger the required counseling under either one of those scenarios.

The list provided by the lender must include only homeownership counselors or counseling organizations from either the most current list of homeownership counselors or counseling organizations made available by the Bureau for use by lenders in complying with § 1024.20, or the most current list maintained by HUD of homeownership counselors or counseling organizations certified by HUD, or otherwise approved by HUD.

The required list is to include five homeownership counselors or counseling organizations located in the zip code of the loan applicant’s current address, or, if there are not the requisite five counselors or counseling organizations in that zip code, then counselors or organizations within the zip code or zip codes closest to the loan applicant’s current address.

To facilitate compliance with the proposed list requirement, the Bureau is expecting to develop a Web site portal that would allow lenders to type in the loan applicant’s zip code to generate the requisite list, which could then be printed for distribution to the loan applicant.

The list must include:
• each counselor’s or organization’s name, business address, telephone number and, if available from the Bureau or HUD, other contact information; and
• contact information for the Bureau and HUD.

The lender will be required to provide the list no later than three business days after the lender, mortgage broker or dealer receives a loan application (or information sufficient to complete an application). The proposal also allows a mortgage broker or dealer to provide the list to those applicants from whom it receives or for whom it prepares applications. Where a mortgage broker or dealer provides the list, the lender is not required to provide an additional list but remains responsible for ensuring that the list has been provided to the loan applicant and satisfies the requirements.

Proposed § 1024.20(a) sets out the requirements for providing the list to the loan applicant. It can be done in person, by mail, or by other means of delivery. The list may be provided to the loan applicant in electronic form, if done in compliance with E-SIGN.

The lender is not required to provide the list if, before the end of the three business day period, the lender denies the loan application or the loan applicant withdraws the application.

Open end credit is affected, too, but the timing is a little different. For applications for open-end home-secured lines of credit covered under TILA, the timing and methods of delivery set out in Regulation Z, 12 CFR 1026.40, for disclosures involving such loans may be used instead of the requirements in proposed § 1024.20. Under proposed § 1024.20(a), there would also be flexibility in the requirements for providing the list when there are multiple lenders and multiple applicants in a mortgage loan transaction.

In connection with those two categories of loans where counseling is actually required, the creditor must receive certification that a consumer has obtained counseling on the advisability of the mortgage from a HUD-approved counselor, or at the discretion of HUD’s Secretary, a State housing finance authority.

In terms of the certification, the certification form must include:
• the name(s) of the consumer(s) who obtained counseling;
• the date(s) of counseling;
• the name and address of the counselor;
• a statement that the consumer(s) received counseling on the advisability of the high-cost mortgage based on the terms provided in either the good faith estimate or the high-cost loan disclosures; [This content requirement applies only on the high cost morgages.] and
• a statement that the counselor has verified that the consumer(s) received the § 1026.32(c) disclosures or the disclosures required by RESPA with respect to the transaction.

The counseling required for a high-cost mortgage shall not be provided by a counselor who is employed by or affiliated with the creditor extending the high-cost mortgage.

The application can be processed while awaiting the certification of counseling; the loan simply can’t be consummated.

The CFPB is proposing a two stage process in which counseling would occur prior to and separately from the receipt of the high-cost mortgage disclosures, after which the counselor would confirm receipt of the disclosures, answer any additional questions from the consumer, and issue the certification. Under these circumstances, a consumer obtaining a high-cost mortgage would have at least two separate contacts with his housing counselor, the first to receive counseling on the advisability of the high-cost mortgage, and the second to verify with the counselor that the consumer has received the applicable disclosure. This is specific to high-cost loans because of the additional disclosures that are given in connection with such applications. The two stage process doesn’t come into play with the other type of loan for which pre-consummation counseling is required (first-time borrower entering into a possible negative amortization loan).

For open-end credit plans subject to § 1026.32, the proposal permits receipt of either the good faith estimate required by RESPA or the disclosures required under § 1026.40 to allow counseling to occur, because 12 CFR 1024.7(h) permits the disclosures required by § 1026.40 to be provided in lieu of a good faith estimate, in the case of an open-end credit plan.

It is permissible for a creditor to pay the fees of a counselor or counseling organization for high-cost mortgage counseling. However, to address potential conflicts of interest, the Bureau is also proposing that a creditor may not condition the payment of these fees on the consummation of the high-cost mortgage.

Tips for Reading the Proposals

Have you been putting off reading all the Dodd-Frank-related proposed rules because you are too intimidated by the sheer size of the stacks? Well, young grasshopper, I have good news for you. You can chop through an enormous amount of that verbiage and conquer the task by ignoring the parts that are not worthy of your time or simply redundant. I’m not saying it will make the task easy, but it certainly will make it easier.

1. Read the summary. It gives you the macro view of the proposal. Unless you do that, you’ve just got pieces of the puzzle and you haven’t seen the picture on the box, so you don’t know what you’re trying to put together. You need to start with the big picture.

2. Read the statutory background only if you’re new to the particular law. If you are not an experienced compliance officer, it’s great for helping you understand the law behind the regulations. If you’re a seasoned compliance officer, however, you already know what RESPA, TILA and ECOA do. Skip the basics.

3. Notice that several of these proposed rules came out in pairs, such as the appraisal-related changes to Reg B and the higher-risk mortgage appraisal requirements in Reg Z. For some reason, the Bureau thought it needed to tell you about the Reg Z stuff in the Reg B proposal and vice versa. Skip that part. Focus only on what is pertinent to the exact proposal you’re trying to read, not its brothers and sisters.

4. Once you’ve read the “Other Rulemakings” section in one of the proposals we’re talking about, you don’t need to read it again. It’s totally redundant. Apparently, they fear you are going to read one of these proposals all by itself and you won’t know that it is part of a bigger whole, so they feel the need to fill you in and tell you about other spawn of Dodd-Frank.

5. The Outreach and Consumer Testing narrative tells you about the testing process they went through to get a feel for what consumers do and do not understand. While I may not totally agree with their assumptions and methodology, I have better things to do than read this part – and so do you.

6. Legal authority – they have it. You don’t need to read about it.

7. After you’re done reading the summary, concentrate on the Section-by-Section Analysis. It’s where the real meat is. You find out not only what they’re doing and why, but you also gain insight into what they decided not to do, and knowing about that will sometimes help you avoid reading the gray areas the wrong way.

8. Potential Benefits and Costs and the segments of text after it dealing with impact can be skipped without needing to lose sleep.

9. The part about “Additional analysis being considered and request for information” hones in on what might possibly be tinkered with a bit further before finalization, so it deserves some study and review.

10. If you’re giving more than a cursory glance at the Regulatory Flexibility Act and Paperwork Reduction Act info, you have too much time on your hands.