Consumer Financial Protection Bureau (CFPB) is again proposing a few minor
modifications to its new mortgage rules, suggesting changes designed to
eliminate hurdles some nonprofit organizations might encounter in providing
access to credit and servicing and slightly easing one regulation regarding high-priced mortgages .
issued proposed amendments late Wednesday and each seems to address limited
instances of unintended consequences arising from the larger rules. One proposed amendment would apply to some
small servicers which, while exempt from new mortgage servicing rules because
they service 5,000 or fewer loans, also service loans for a fee from associated
nonprofit housing providers and may not be able to restructure their overall activities
to meet the small servicer exemption.
The new proposal offers an alternative definition of small servicers
which would apply to certain 501(c) (3) nonprofit
organizations and will allow them to consolidate servicing activities and
maintain their current exemption from some servicing rules.
proposed change would apply to an existing exemption from the Ability-to-Repay
rule for organizations that make fewer than 200 mortgages a year. The change would apply only to certain 501(c)
(3) nonprofits groups such as Habitat for Humanity and would allow them to
extend certain interest-free, forgivable loans or "soft seconds" without regard
to the 200-loan limit
Under the Ability-to-Repay rule a
consumer cannot be charged points and fees on a Qualified Mortgage that exceeds
3 percent of the loan principal. If a
lender finds it has mistakenly charged in excess of that amount a third
proposed change lays out limited circumstances where the excess can be refunded
to the consumer and still allow the loan meet the legal requirements of a
Qualified Mortgage. The change specifies
that the refund must occur within 120 days after the loan is made and the
lender must maintain and follow policies and procedures for reviewing the loans
and providing refunds to consumers. CFPB said the change is designed to
encourage lenders to provide access to credit to consumers seeking loans that
are at or near the points and fees limit.
"Our mortgage rules are now helping to protect
consumers all across the country from debt traps, runarounds, and surprises,"
said CFPB Director Richard Cordray. "Today's proposal would maintain those
strong protections, while making minor changes to ensure consumers have access
to credit. This includes helping nonprofits that provide working families with
important pathways to affordable homeownership."
CFPB is seeking public comment on
the changes which can be review in their entirety here. It is also seeking input on other questions
relating to the impact of the Bureau's rules, including their effect on larger
lenders that do not meet the definition of small creditor.
One stakeholder immediately expressed
satisfaction with the change allowing refunds of excess fees. David H. Stevens, President
and CEO of the Mortgage Bankers Association (MBA) called them a positive
development for consumers which would expand access to safe, sustainable Qualified
is being considered," he said, "if a lender believes it has offered a QM loan
but later discovers the points and fees exceeded 3 percent of the loan amount, the
excess could be refunded to the borrower and the loan could still meet QM
requirements. MBA looks forward to commenting on this proposal and working with
the CFPB to ensure that these proposals work to benefit consumers to the
greatest extent possible."