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From Banking and Finance Law Daily, April 30, 2014

CFPB proposes revisions to 2013 mortgage rules

By Katalina M. Bianco, J.D.

The Consumer Financial Protection Bureau is proposing to make adjustments to its final 2013 mortgage rules, most of which took effect in January 2014. The revisions to the rules are intended to ensure access to credit. The bureau said that the changes are in response to concern over origination and servicing issues.

“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.”

Specifically, the bureau is proposing three amendments to the rules. The CFPB proposes to:

  1. provide an alternative definition of the term “small servicer” that would apply to certain nonprofit entities that service for a fee loans on behalf of other nonprofit chapters of the same organization. The bureau is proposing this amendment to Regulation Z but notes that the amendments also would affect provisions of Regulation X that cross-reference the Regulation Z small servicer exception;
  2. amend the Regulation Z ability-to-repay requirements to provide that certain interest-free, contingent subordinate liens originated by nonprofit creditors would not be counted towards the credit exemption limit that applies to the nonprofit exemption from the ability-to-repay requirements; and
  3. provide a limited, post-consummation cure mechanism for loans originated with the good faith expectation of qualified mortgage status but that actually exceed the points and fees limits for QMs.

Additional topics. The CFPB is seeking comments on whether and how to provide a limited, post-consummation cure or correction provision for loans originated with the good faith expectation of QM status but that actually exceed the 43-percent debt-to-income ratio limit that applies to certain QMs. The bureau also requests feedback and data from smaller creditors regarding implementation of certain provisions in the 2013 rules that are tailored to account for small creditor operations and how their origination activities have changed in light of the new rules.

Comments. Comments on the proposed changes and the additional topics described by the bureau will be due 60 days after the proposal is published in theFederal Register.

MainStory: TopStory CFPB Loans Mortgages TruthInLending

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