On April 12, the CFPB issued a proposed rule clarifying and making technical amendments to the 2013 Escrows Final Rule issued in January relating to mandatory escrow requirements for certain mortgage loans. Comments on the proposed rule must be received within 15 days of publication in the Federal Register. CFPB Proposed Rule.
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CFPB Proposed Rule for Nonbank Student Loan Servicers
On March 14, the CFPB proposed a rule that would allow it to federally supervise certain nonbank student loan servicers. The CFPB currently oversees student loan servicing at larger banks. The rule would define certain nonbank student loan servicers as “larger participants” and would allow the Bureau to oversee their activity for compliance with federal consumer financial laws. CFPB Release.
CFPB Bulletin on Servicers’ Obligations During Loan Transfers
February 11, the CFPB issued a bulletin advising mortgage companies about their legal obligations that protect consumers during loan transfers between mortgage servicers. The guidance also indicates that the CFPB will look at: (i) how a servicer has prepared for the transfer of servicing rights or responsibilities; (ii) how the new servicer handles the files it receives through a transfer; and (iii) what policies the servicers have to prevent borrower harm for loans with loss mitigations in process. CFPB Release. CFPB Bulletin.
CFPB Implementation Plan for Mortgage Rules
On February 13, the CFPB announced a plan it will implement over the next year for the mortgage industry’s compliance with consumer protections that go into effect January 2014. Among the new rules are the “ability-to-pay” rule and new mortgage servicing rules. In implementing the rules, the CFPB will: (i) coordinate with other agencies; (ii) publish plain-language guides; (iii) publish updates to financial interpretations; (iv) publish readiness guides; and (v) educate consumers. CFPB Release.
CFPB Rule on Originator Compensation
On January 20, the CFPB issued a final rule implanting the requirements and restrictions imposed by the Dodd-Frank Act on: (i) loan originator compensation; (ii) qualifications of, and registration or licensing of loan originators; (iii) compliance procedures for depository institutions; (iv) mandatory arbitration; and (v) the financing of single-premium credit insurance. The rules relating to arbitration and credit insurance will be effective on June 1, with the remaining provisions of the rule becoming effective on January 10, 2014. CFPB Release. CFPB Summary. CFPB Final Rule.
CFPB Final Rule on Written Appraisals
On January 18, the CFPB issued a final rule, effective January 18, 2014, which amends the Equal Credit Opportunity Act to require mortgage loan creditors to: (i) automatically provide applicants with a copy of appraisal reports and other written valuations prepared in connection with first lien loans secured by a dwelling and (ii) provide applicants with a disclosure at the beginning of the application process. CFPB Release. CFPB Final Rule. CFPB Summary.
Joint Rule on Appraisals for Higher-Priced Mortgage Loans
On January 18, the Fed, CFPB, FDIC, FHFA, NCUA and OCC issued a joint final rule, effective January 18, 2014, which establishes new appraisal requirements for “higher-priced mortgage loans”. For these loans, the rule requires creditors to: (i) use a licensed or certified appraiser who prepares a written appraisal report based on a physical visit of the interior of the property and (ii) disclose to applicants information about the purpose of the appraisal and provide consumers with a free copy of any appraisal report. Joint Release. Final Rule.
CFPB Final Rule on Mortgage Servicing Standards
On January 18, the CFPB released final rules, effective January 10, 2014, which set forth national mortgage loan servicing standards. The final rules address, among other things, servicers’ obligations to: (i) correct errors asserted by borrowers; (ii) provide protections in connection with ‘force-placed’ insurance; (iii) establish reasonable policies and procedures; (iv) provide information about loss mitigation options to borrowers; and (v) evaluate applications for available loss mitigation options. CFPB Release. CFPB Final Rule. CFPB Fact Sheet. CFPB Summary.
CFPB Final Rules on High-Cost Mortgages
On January 10, the CFPB issued final rules that: (i) amend HOEPA to provide protections relating to risky loan features, such as prepayment penalties and to require homeownership counseling and (ii) require escrow accounts to be established for a minimum of 5 years for certain higher-priced mortgage loans, effective June 1. CFPB Release. CFPB Final HOEPA Rule. CFPB Guide on HOEPA Rule. CFPB Final Escrow Rule. CFPB Guide on Escrow Rule.
CFPB Rules on Ability-to-Repay and Qualified Mortgages
On January 10, the CFPB issued a final rule, effective January 10, 2014, requiring mortgage lenders to consider consumers’ ability to repay mortgage loans and regarding the “qualified mortgage” (QM) definition. The rule sets forth underwriting factors that must be considered (at a minimum) in making ability-to-repay determinations, which are: (i) current or reasonably expected income or assets; (ii) current employment status; (iii) the monthly payment on the covered transaction; iv) the monthly payment on any simultaneous loan; (v) the monthly payment for mortgage-related obligations; (vi) current debt obligations, alimony, and child support; (vii) the monthly debt-to-income ratio or residual income; and (viii) credit history. In addition, the rule implements product-feature prerequisites and affordability underwriting requirements for qualified mortgages, including that a consumer must have a total (back-end) DTI ratio of less than or equal to 43%. CFPB Release. CFPB Final Rule. CFPB Summary of Final Rule. CFPB Fact Sheet.
In addition, on January 10, the CFPB issued a concurrent proposed rule amendment to the ability-to-repay rule which would, among other things, include exemptions for: (i) certain nonprofit creditors; (ii) certain homeownership stabilization programs; and (iii) certain Fannie Mae and Freddie Mac refinancing programs. Comments on the proposed rule must be submitted by February 25. CFPB Proposed Rule.