|June 18, 2013|
Previously published on June 17, 2013
On June 7th, the CFPB published small entity compliance guides for its loan originator and mortgage servicing rules.1 The CFPB cautioned that the guides are not a substitute for the underlying rules but merely provide a user-friendly overview to assist those entities with limited resources in compliance. 2 The small entity compliance guides consistently note the official citation when discussing particular provisions and remind the reader to review the Official Interpretations for each rule.
The CFPB notes that the loan originator small entity compliance guide is primarily intended for: (1) loan originators that receive compensation for originating closed-end mortgage loans; (2) third parties that pay compensation to loan originators; (3) creditors of closed-end mortgage loans; and (4) creditors of HELOCs secured by a lien on the consumer’s principal dwelling. Among other things, the loan originator small entity compliance guide summarizes the following aspects of the new rule: (1) the type of loans covered; (2) what constitutes compensation to loan originators; (3) mandatory qualifications for loan originators; (4) recordkeeping requirements; (5) policies and procedures that creditors must institute to monitor compliance; (6) permissibility of arbitration and federal claims waiver; (7) the scope of the prohibition on financing credit insurance premiums; and (8) general compliance considerations.
The mortgage servicing small entity compliance guide is directed at creditors, servicers and assignees of mortgage loans and notes the mortgage servicing rules “generally apply to mortgage loans.” The guide provides an initial overview of the major changes to Regulation Z (TILA) and Regulation X (RESPA) and the small servicer exemption. The guide then reviews in detail the mortgage servicing rules as to (1) periodic statements; (2) interest rate adjustment notices; (3) prompt payment crediting and payoff statements; (4) force-placed insurance; (5) error resolution and information requests; (6) general servicing policies and procedures; (7) early intervention with delinquent consumers; (8) continuity of contact with delinquent consumers; (9) loss mitigation procedures; and (10) general compliance considerations.
Earlier this year the CFPB published small entity compliance guides for (1) the ability to repay and qualified mortgage rules and (2) HOEPA.
1 The small entity compliance guides can be found here and here.
2 The CFPB issued the loan originator rule (12 CFR § 1026.25 and 12 § CFR 1026.36) and mortgage servicing rule (Regulation X at 78 FR 10696; Regulation Z at 78 FR 10902) on January 17-18, 2013.