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CFPB Offers Escrow Rule Help, More Mortgage Clarifications
WASHINGTON (4/22/13)--An escrow rule summary, and tips to help small issuers and their business partners implement that rule, were released by the Consumer Financial Protection Bureau late last week. The CFPB also released a proposal to address questions regarding qualified mortgages and servicing.

The escrow rule guide provides a plain language overview of the rule, and a list of frequently asked questions. These documents will make the content of the rule "more accessible and consumable for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff," the CFPB said in a release. "The guide summarizes the TILA Escrow Rule, but it is not a substitute for the rule. Only the rule and its Official Interpretations can provide complete and definitive information regarding its requirements," the agency stressed.

Organizations that originate higher-priced mortgage loans secured by principal dwellings, servicing market participants, software providers, and other companies that serve as business partners to creditors may all find the new guidance useful, the CFPB said.

The guide, according to the agency, will help those entities determine whether the mortgages they originate would fall under the rule, and what their compliance obligations are. The guide also addresses:

  • Exceptions to the rule that may apply to a given mortgage originator;
  • Special rules for loans made by certain small creditors operating predominantly in rural or underserved markets; and
  • Special rules for loans secured by condominiums and other multi-unit developments.
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. Proposed clarifications and technical amendments to the escrow regulations were issued earlier this month. (Use the resource link to read April 14 News Now story: CFPB Releases Escrow Rule Tweaks, Clarifications.)

The CFPB's ability to repay/qualified mortgages and mortgage servicing rule clarifications, released on Friday, are meant to address questions that have been posed in the months since the rules were first issued.

The clarifications address:
  • Small servicer exemptions;
  • Debt-to-income ratios;
  • Contract variances and the temporary QM provision;
  • Purchase, guarantee or insurability status and the temporary QM; and
  • Field preemption under Regulation X.
The mortgage clarification proposal will be published in the Federal Register soon, the CFPB said. The agency plans to accept comments on the proposal for 30 days after it is published.

CUNA is analyzing the CFPB escrow guidance and the proposed clarifications.

More plain language compliance resources and updates of official regulatory interpretations, examination procedures and other materials addressing CFPB mortgage regulations will be unveiled in the coming months, the CFPB said.

For the new escrow guide and the proposed qualified mortgage and servicing clarifications, use the resource links.
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