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Washington
CFPB extends finance charge mortgage test comment deadline
WASHINGTON (9/4/12)--The comment period for potential changes to the Consumer Financial Protection Bureau's (CFPB) definition of "finance charge" as it relates to mortgage loans and the agency's high-cost mortgage coverage test under the Home Owners Equity Protection Act has been extended until Nov. 6, the CFPB said on Friday.

The agency was scheduled to end the comment period for these proposed changes on Sept. 7.

"Stakeholders, including credit unions, leagues and CUNA will appreciate the additional time to review and consider how the proposals affect credit union operations," Credit Union National Association (CUNA) Deputy General Counsel Mary Dunn said following the announcement.

Under the CFPB's finance charge proposal, lenders would be required to include most up-front costs associated with a mortgage in the finance charge disclosed to borrowers. Loan charges or fees would need to be included in the finance charge, but late fees, delinquency or default charges, seller's points, some escrow payments and most insurance premiums would not need to be included.

The CFPB said it wants the APR "to be a more accurate reflection of the overall cost of credit."

CUNA in a July comment call asked credit unions which fees should be removed from or added into the proposed finance charge structure, and whether the proposed changes to the finance charge structure would create financial or compliance burdens for credit unions. For the comment call, use the resource link.

The CFPB's high-cost mortgage rulemaking would alter the coverage test for high-cost mortgages to account for the higher APRs that could be caused by the finance definition changes.

Both of these proposed changes are part of the CFPB's ongoing mortgage reform efforts, which include a project that would combine Truth in Lending Act and Real Estate Settlement Procedures Act disclosures into a single document.

"Last week, CFPB Director Richard Cordray told a CUNA audio conference that the agency wants to be mindful of concerns credit unions raise about the impact of their rulemakings, and the decision to delay the comment deadline is a small but positive step in that direction," Dunn added.
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