• CFPB Issues Final Amendments to Mortgage Rules
  • September 19, 2013 | Authors: David N. Anthony; Jarrod F. Loadholt; John C. Lynch; S. Mohsin Reza; Alan D. Wingfield
  • Law Firms: Troutman Sanders LLP - Richmond Office ; Troutman Sanders LLP - Washington Office ; Troutman Sanders LLP - Virginia Beach Office ; Troutman Sanders LLP - Tysons Corner Office ; Troutman Sanders LLP - Richmond Office
  • On Friday, September 13, 2013, the Consumer Financial Protection Bureau (CFPB) released the finalized amendments to the lending and servicing regulations that were rolled out earlier this year. The CFPB clarified some of the final mortgage rules, which will go into effect in January 2014.

    The final amendments adopt with some revisions and clarifications the amendments that the CFPB proposed in June 2013. The final amendments serve as a reminder of the multifaceted and expansive effect of the new mortgage rules. The final amendments include:

    • Modifications to provisions of Regulation X adopted by the 2013 Mortgage Servicing Final Rules, including those related to error resolution procedures and information requests, and loss mitigation. With respect to loss mitigation, two of the revisions concern the requirement that a servicer review a borrower’s loss mitigation application within five days and provide a notice to the borrower acknowledging receipt and informing the borrower whether the application is complete or incomplete.

    • Clarifications and revisions of the definition of points and fees for purposes of the qualified mortgage points and fees cap and the high-cost mortgage points and fees threshold, as adopted in the 2013 ATR Final Rule and the 2013 HOEPA Final Rule.

    • Revisions to two exceptions available under the 2013 Title XIV Final Rules to small creditors operating predominantly in “rural” or “underserved” areas pending the CFPB’s re-examination of the underlying definitions of “rural” or “underserved” over the next two years, as it recently announced it would do in Ability-to-Repay and Qualified Mortgage Standards Under the Truth in Lending Act (Regulation Z) (May 2013 ATR Final Rule).

    • Revisions to various provisions of the 2013 Loan Originator Compensation Final Rule, including changing the definition of “loan originator,” further clarification on the meaning of “credit terms,” and additional clarifications regarding when employees of manufactured housing retailers may be classified as loan originators.

    • Clarifications and revisions to three aspects of the rules implementing the Dodd-Frank Act prohibition on creditors financing credit insurance premiums in connection with certain consumer credit transactions secured by a dwelling.

    • Change to the effective date for certain provisions under the 2013 Loan Originator Compensation Final Rule, so they take effect on January 1, 2014, rather than January 10, 2014, as originally provided.

    The release of the final rule follows on the CFPB’s emphatic statements that there will be no extension of the effective date of new mortgage rules despite pleas for additional time from the mortgage industry. By rejecting the calls for extensions of the deadlines, the CFPB’s actions suggest that the Bureau believes that financial institutions have been given enough guidance to ensure compliance with the mortgage rules and enough time to implement them. Given that non-compliance with some of the new rules can create unexpected civil liability, and that the CFPB has made clear that it sees no reason why lenders and originators cannot be in full compliance, the industry is being given little choice other than to make full compliance on the regulator’s timeframe the objective.