certain “qualified mortgages.” Most significantly, the new standards limit the total points and fees that the Bank  and/or a broker may charge on conforming and jumbo loans to 3% of the total loan amount. In addition, the Dodd- Frank Act generally requires lenders or securitizers to retain an economic interest in the credit risk relating to loans  that the lender sells and other asset-backed securities that the securitizer issues if the loans have not complied with  the ability-to-repay standards. The risk retention requirement generally will be 5%, but could be increased or  decreased by regulation.  On January 10, 2013, the CFPB issued a final rule, effective January 10, 2014, which implements the Dodd- Frank Act’s ability-to-repay requirements and clarifies the presumption of compliance for “qualified mortgages.” In  assessing a borrower’s ability to repay a mortgage-related obligation, lenders generally must consider eight  underwriting factors: (i) current or reasonably expected income or assets; (ii) current employment status; (iii)  monthly payment on the subject transaction; (iv) monthly payment on any simultaneous loan; (v) monthly payment  for all mortgage-related obligations; (vi) current debt obligations, alimony, and child support; (vii) monthly debt-to- income ratio or residual income; and (viii) credit history. The final rule also includes guidance regarding the  application of, and methodology for evaluating, these factors. Further, the final rule also clarifies that qualified mortgages do not include “no-doc” loans and loans with  negative amortization, interest-only payments, balloon payments, terms in excess of 30 years, or points and fees paid  by the borrower that exceed 3% of the loan amount, subject to certain exceptions. In addition, for qualified  mortgages, the monthly payment must be calculated on the highest payment that will occur in the first five years of  the loan, and the borrower’s total debt-to-income ratio generally may not be more than 43%. The final rule also  provides that certain mortgages that satisfy the general product feature requirements for qualified mortgages and that  also satisfy the underwriting requirements of Fannie Mae and Freddie Mac (while they operate under federal  conservatorship or receivership) or the U.S. Department of Housing and Urban Development, Department of  Veterans Affairs, or Department of Agriculture or Rural Housing Service are also considered to be qualified  mortgages. This second category of qualified mortgages will phase out as the aforementioned federal agencies issue  their own rules regarding qualified mortgages, the conservatorship of Fannie Mae and Freddie Mac ends, and, in any  event, after seven years.  As set forth in the Dodd-Frank Act, subprime (or higher-priced) mortgage loans are subject to the ability-to- repay requirement, and the final rule provides for a rebuttable presumption of lender compliance for those loans. The  final rule also applies the ability-to-repay requirement to prime loans, while also providing a conclusive presumption  of compliance ( i.e. , a safe harbor) for prime loans that are also qualified mortgages. Additionally, the final rule  generally prohibits prepayment penalties (subject to certain exceptions) and sets forth a 3-year record retention  period with respect to documenting and demonstrating the ability-to-repay requirement and other provisions. Changes to Mortgage Loan Originator Compensation. Effective April 2, 2011, previously existing  regulations concerning the compensation of mortgage loan originators were amended. As a result of these  amendments, mortgage loan originators may not receive compensation based on a mortgage transaction’s terms or  conditions other than the amount of credit extended under the mortgage loan. Further, the new standards limit the  total points and fees that a bank and/or a broker may charge on conforming and jumbo loans to 3% of the total loan  amount. Mortgage loan originators may receive compensation from a consumer or from a lender, but not both. These  rules contain requirements designed to prohibit mortgage loan originators from “steering” consumers to loans that  provide mortgage loan originators with greater compensation. In addition, the rules contain other requirements  concerning recordkeeping.  Foreclosure and Loan Modifications. Federal and state laws further impact foreclosures and loan  modifications, with many of such laws having the effect of delaying or impeding the foreclosure process on real  estate secured loans in default. Mortgages on commercial property can be modified, such as by reducing the  principal amount of the loan or the interest rate, or by extending the term of the loan, through plans confirmed under  Chapter 11 of the U.S. Bankruptcy Code. In recent years, legislation has been introduced in the U.S. Congress that  would amend the Bankruptcy Code to permit the modification of mortgages secured by residences, although at this  time the enactment of such legislation is not presently proposed. The scope, duration and terms of potential future  legislation with similar effect continue to be discussed. The Company cannot predict whether any such legislation  will be passed or the impact, if any, it would have on its business.  24 