The Consumer Financial Protection Bureau (CFPB) has released a second set of amendments and clarifications to the mortgage rules introduced January 2013, thus finalizing revisions introduced in June.
The changes reflect input from industry stakeholders and are intended to clarify interpretive issues and facilitate compliance for both lenders and servicers – however this set of clarifications pertains mostly to rules affecting servicers.
As per a CFPB press release, the revised rules include the following changes:
- The ruling prohibiting servicers from certain activities during the first 120 days of a delinquency is amended to allow sending borrowers certain early delinquency notices required under state law that may provide beneficial information about legal aid, counseling or other resources.
- Procedures are outlined for servicers to follow when they fail to identify or inform a borrower about missing information from loss mitigation applications.
- Modifies procedures to simplify the offer of short-term forbearance plans to borrowers suffering only temporary hardships.
- Clarifies best practices for informing borrowers about the address for error resolution documents.
- Exempts all small creditors, even those that do not operate predominantly in rural or underserved area from a new ban on high-cost mortgages featuring balloon payments until a re-examination of the definitions of ‘rural’ or ‘underserved’ are completed by the Bureau over the next two years.
- Clarifies the definition of ‘financing’ of credit insurance premiums to make clear that these premiums are ‘financed’ when the creditor allows the consumer to defer payment of the premium past the month in which it is due. The rule also explains how the rule applies to ‘level’ or ‘levelized’ premiums.
- Clarifies the definition of a loan originator to make clear the circumstances under which tellers or other administrative staff may act as loan originators.
- Clarifies the points and fees thresholds and loan originator compensation rules for manufactured housing employees.
- Revises effective dates of many loan originator compensation rules from January 10, 2014 to January 1, 2014.
‘Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace,’ says CFPB Director Richard Cordray, adding that the amendments and clarifications help ‘ensure a smoother implementation process, which is helpful to both businesses and consumers.’
To download the complete set of amendments and clarifications, click here.