WASHINGTON (4/15/13)--Proposed clarifications and technical amendments to the Consumer Financial Protection Bureau's new escrow regulations were issued by the agency on Friday.
The CFPB's escrow rule, issued in January, generally extends the required duration of a mortgage loan escrow account to five years, up from one year. Lenders that work in rural or underserved areas will be exempt from the escrow changes, provided they meet certain other criteria. The proposals issued Friday would not substantially alter this rule.
One of the proposed clarifications is intended to ensure that an existing rule that provides protections regarding assessments of consumers' ability to repay and prepayment penalties on certain "higher-priced" mortgage loans remains in effect until January 2014.
A CFPB release explains that portions of its January escrow rule, as currently written, "can be read to cut off the old protections before the new expanded protections take effect." Such a reading could result in a six-month gap where consumers would not be adequately protected, the agency said.
The proposals also further clarify how the agency determines whether or not a county is considered "rural" or "underserved" for exemption purposes. A preliminary list of CFPB-approved rural and underserved areas, covering counties in 46 states and Puerto Rico, was released last month. (Use the resource link to read March 14 News Now story: Small Creditor Escrow Relief Previewed By CFPB.)
Credit Union National Association staff will review the proposed rule, and the CFPB said it will accept comment on the proposal for 15 days after it is published in the Federal Register.
Additional guidance and clarifications on other mortgage regulations will be released later this month, the CFPB said.
For the full CFPB release, use the resource link.