09/16/2013
Late last week, the Consumer Financial Protection Bureau finalized the amendments and clarifications to its January mortgage rules that the bureau proposed in June, including a number of changes sought by various industry groups.
The new rule provides specific procedures for servicers to follow if they fail to identify and inform a borrower upon an initial review that certain information is missing from the borrower’s loss mitigation application. One sought-for change permits a lender to notify its borrower by a “reasonable date” (as opposed to “by the earliest of four specified dates”) of items missing in a loss mitigation application.
Also finalized were exemptions from the CFPB’s prohibition against providing notices during the first 120 days after a mortgage goes delinquent. Under the final 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.
The CFPB also made permanent a revised definition of “loan originator” as well as clarifications through commentary that reduce the number of circumstances in which tellers, greeters and other lender employees are considered loan originators. Creditors and loan originators had expressed concern that tellers or other administrative staff could be unintentionally classified as loan originators for engaging in routine customer service activities, and thereby be subject to certain qualification requirements and certain restrictions on compensation.
The bureau also finalized a sought-for clarification on when credit insurance premiums are exempt from the prohibition from the financing of such premiums. Friday’s final rule makes clear that credit insurance premiums are “financed” by a creditor when the creditor allows the consumer to defer payment of the premium past the month in which it is due.
Certain provisions of the loan originator compensation rule – such as those having to do with record retention, compensation, anti-steering and compliance policies and procedures – kick in Jan. 1, 2014. Many other provisions are effective as of Jan. 10, 2014.
Look for detailed coverage in the Monday, Sept. 23, issue of Inside the CFPB.
