is featuring a post focusing on a rule that bans financing of any premiums or fees for payment protection products in connection with a consumer credit transaction secured by a dwelling, but allows the products to be paid for on a monthly basis.
Guest blogger David Tomar of CUNA Mutual Group offers "a few points to keep in mind" regarding the Dodd-Frank Act revision of Section 1414 of the Truth in Lending Act. CompBlog
is a highly regarded source of compliance information provided by the Credit Union National Association to its members.
Tomar notes the Consumer Financial Protection Bureau created an implementing rule in January. It goes into effect June 1.
Tomar writes that taking a moment to understand what types of mortgage loans are affected is important.
- A creditor may not finance, directly or indirectly, any premiums or fees for [payment protection] in connection with a consumer credit transaction secured by a dwelling (including a home equity line of credit secured by the consumer's principal dwelling). This prohibition does not apply to credit insurance for which premiums or fees are calculated and paid in full on a monthly basis. 12 C.F.R. 1026.36(i).
Credit unions can expect this rule might change over time, reflecting the CFPB's philosophy that the regulatory system needs to be flexible, as well proactive, the blog post warns.
"That is why we can expect the bureau to continually evolve and develop its positions on this and other issues. Exactly how that will occur is difficult to predict. What we do know is that we will have to learn and adjust along with the bureau," Tomar writes.
CUNA members can access the link below to read five points to keep in mind about the rule.