The following question was submitted by ACUMA Member Leslie Creech from Virginia CU in Richmond VA. 

Section 32 of Reg Z is changing beginning October 1, 2009.  We will no longer use the Treasuries + 8% test – it will change to the Freddie Mac PMMS +1.5% test.  We have run this test on all loans closed in 2009 and so far 7 loans <would> have failed primarily due to the Loan Level Price Adjustments instituted by the GSE’s.  HUD admitted that Jumbo loans would likely be considered High Cost under this test but our loans are conforming cash-out refinances to members with lower credit scores.  We are afraid that we will not have a choice but to not offer cash-out refinances to those members with less than a 700 credit score.