Tag Archives: richard cordray

Clarification of Mortgage Rules Comes From CFPB

20 Sep

The Consumer Financial Protection Bureau (CFPB) this month finalized amendments and clarifications to its January 2013 mortgage rules to help the industry comply and to better protect consumers.

In January of this year the CFPB introduced the Ability-to-Repay rule, requiring lenders to make a “reasonable, good-faith determination” that prospective borrowers have the ability to repay their loans.

 

On June 24, 2013, the CFPB proposed several amendments and clarifications to the mortgage rules adopted in the final rule, which is intended to clarify interpretive issues and facilitate compliance. One of the Bureau’s modifications is to clarify what servicer actives are prohibited in the first 120 days of delinquency. This rule prohibits servicers from making the “first notice or filing” under state law during the first 120 days a borrower is delinquent.

 

Under the rule, servicers will be allowed to send certain early delinquency notices required under state law to borrowers that may provide beneficial information about legal aid, counseling or other resources.

 

Another rule the CFPB aims to clarify is the definition of a loan originator.  Under the CFPB’s new rules, persons classified as loan originators are required to meet qualification requirements and are also subject to certain restrictions on compensation practices.

 

The provisions of the CFPB’s loan originator compensation rules that have not yet gone into effect were scheduled to take effect on January 10, 2014.  The  CFPB has changed the effective date for certain provisions of the rule 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.”

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