A second set of amendments and clarifications to the Consumer Financial Protection Bureau's (CFPB) January 2013 mortgage rules will be released this afternoon. Today's release finalizes several changes announced by CFPB in June in response to questions and suggestions from industry participants and are intended to clarify interpretive issues and facilitate compliance.
Changes are as follows:
- The ruling prohibiting servicers from certain activities during the first 120 days of a delinquency is amended to allow sending borrowers certain early delinquency notices required under state law that may provide beneficial information about legal aid, counseling, or other resources.
- Procedures are outlined for servicers to follow when they fail to identify or inform a borrower about missing information from loss mitigation applications.
- Modifies procedures to simplify the offer of short-term forbearance plans to borrowers suffering only temporary hardships.
- Clarifies best practices for informing borrowers about the address for error resolution documents.
- Exempts all small creditors, even those that do not operate predominantly in rural or underserved area from a new ban on high-cost mortgages featuring balloon payments until a re-examination of the definitions of rural or underserved is completed by the Bureau over the next two years.
- Clarifies the definition of "financing" of credit insurance premiums to make clear that these premiums are "financed" when the creditor allows the consumer to defer payment of the premium past the month in which it is due. The rule also explains how the rule applies to "level" or "levelized" premiums.
- Clarifies the definition of a loan originator to make clear the circumstances under which tellers or other administrative staff may act as loan originators.
- Clarifies the points and fees thresholds and loan originator compensation rules for manufactured housing employees.
- Revises effective dates of many loan originator compensation rules from January 10, 2014 to January 1, 2014.
"Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace," said CFPB Director Richard Cordray. "Today's rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers."
The complete set of amendments and clarifications will be available here after 3 p.m. today.