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CFPB Releases Mortgage Final Rule Changes
WASHINGTON (9/16/13)--The Consumer Financial Protection Bureau on Friday released another final rule amending its Ability-to-Repay, Mortgage Servicing and Mortgage Loan Originator Rules, which were originally finalized in January of this year.

The CFPB in a release said the changes answer questions that have been identified during the implementation process. The rule "amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers," CFPB Director Richard Cordray said.

A number of changes CUNA sought were addressed by the CFPB.  The agency said that the final rule changes:
  • Exempt all small creditors, even those that do not operate predominantly in rural or underserved counties, from the ban on high-cost balloon mortgages, as long as the loan meets certain restrictions;
  • Make it easier for certain small creditors to continue qualifying for an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans;
  • Clarify that credit insurance premiums are "financed" by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due;
  • Explain how the rule applies to "level" or "levelized" premiums, where the monthly premium is the same each month rather than decreasing along with the loan balance;
  • State that servicers will be allowed to send certain early delinquency notices required under state law to borrowers that may provide beneficial information about legal aid, counseling, or other resources;
  • Outline specific procedures for servicers to follow if they fail to identify and inform a borrower upon an initial review that certain information is missing from a borrower's loss mitigation application;
  • Detail modifications that make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. Servicers, upon reviewing an incomplete loss mitigation application, may provide a 6-month forbearance to a borrower who is suffering a short-term, temporary hardship;
  • Provide more specific details on how to inform borrowers about the address for error resolution documents by listing it on certain documents, such as an initial notice and a periodic statement or coupon book, if applicable;
  • Clarify the circumstances under which a loan originator's or creditor's administrative staff acts as loan originators;
  • Clarify what compensation must be included in certain thresholds for points and fees under the Ability-to-Repay and high-cost mortgage rules for retailers of manufactured homes and their employees, and when such employees may be considered loan originators; and
  • Move the effective date for certain provisions of the Mortgage Loan Originator Compensation final rule from Jan. 10, 2014 to Jan. 1, 2014, in order to simplify compliance since compensation plans, training, and licensing and registration are often structured on an annual basis.
For a CFPB release on the final rule, use the resource link. CUNA members can access the last link for a compilation of CUNA resources available to help credit unions work through what all the regulations require of them.
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