Consumer Financial Protection Bureau (CFPB) today announced five steps it will
take to assist the mortgage industry to comply with new consumer protection rules
going into effect in January 2014.
"Our plan is to work with the mortgage industry to
ensure that the CFPB's new rules are implemented accurately and expeditiously,"
said CFPB Director Richard Cordray. "Both consumers and industry will win when
the new rules are understood, applied, and carried out evenly and effectively.
Mortgage borrowers, who have dealt with much heartache since the financial
crisis, deserve this level of attentiveness."
The new rules involve provisions of the Dodd-Frank Wall
Street Reform and Consumer Protection Act.
One, the Ability-to-Repay rule, protects consumers from irresponsible
mortgage lending by requiring that lenders make a reasonable, good faith
determination that prospective borrowers have the ability to repay their
mortgage. The rule also protects borrowers from risky lending practices, such
as underwriting loans based only on low introductory "teaser" interest rates which
contributed to many loan defaults and foreclosure. Also coming on line in 2013 are new mortgage
servicing rules which establish strong protections for all homeowners and rules
that address appraisals, escrow accounts, protections for high-cost mortgages,
and compensation and qualifications for loan originators.
Under its plan the Bureau will:
with other federal government regulators to ensure all regulators have a shared understanding of the
CFPB's new rules. This will help promote a consistent regulatory experience for
summarizing the regulations in both
written and video form. The guides, available in the spring, will be
particularly helpful to smaller businesses with limited staff for compliance.
updates to the official interpretations to provide
guidance on how to comply with the rules. These updates will allow the CFPB to
address important questions raised by industry, consumer groups, or other
agencies. The Bureau expects to issue the first one in the spring and additional
updates, as needed.
readiness guides to help mortgage originators and servicers prepare to comply
with the new rules with check-lists for such items as revising policies and
procedures and finalizing training plans for staff. More in-depth examination
procedures are expected to be published later this year by the Federal
Financial Institutions Examination Council.
consumers with information about their new protections under these rules
through a broad-reaching consumer education campaign.