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Signaling that it means business, the newly opened Consumer Financial Protection Bureau undertook its first major stab at the rule-making process by issuing a proposed rule that would shift alternate mortgage origination from the state to federal level nationwide. The rule applies to Regulation D under the Alternative Mortgage Transaction Party Act. If enacted, it would enact a Dodd-Frank provision by allowing state-licensed mortgage originators to make alternative loans even states with laws that prohibit such loans.

CFPB Proposes First Rule

Signaling that it means business, the newly opened ""Consumer Financial Protection Bureau"":http://www.consumerfinance.gov (CFPB) undertook its first major stab at the rule-making process by issuing a ""proposed rule"":http://www.gpo.gov/fdsys/pkg/FR-2011-07-22/pdf/2011-18676.pdf that would shift alternate mortgage origination from the state to federal level nationwide.

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The rule applies to Regulation D under the Alternative Mortgage Transaction Party (AMPTA) Act. If enacted, it would enact a provision under the Dodd-Frank Act by allowing state-licensed mortgage originators to make alternative loans even states with laws that prohibit such loans.

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""Without this interim rule implementing the AMTPA amendments, state lenders would lose their ability ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô overnight ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô to rely on AMTPA to make alternative mortgages,"" the CFPB said in a ""Web post"":http://www.consumerfinance.gov/preserving-a-level-playing-field-and-access-to-mortgages/.

""That could hurt not just state lenders that rely on AMTPA, some of which may be small rural banks. It could also hurt consumers by reducing their access to mortgages from those lenders. And, all of this harm would occur quite suddenly.""

The rule follows the CFPB's official launch, which occurred yesterday. By formally opening, the bureau assumes such rule-making authority, with 18 enumerated consumer financial laws, some 40 rules, and ongoing investigations en route from seven federal regulatory agencies.

The rule prevents AMPTA's suspension by closing a regulatory gap under Dodd-Frank and extending federal charts to state-licensed mortgage originators across the board.

""The interim rule gives state lenders two choices: They can follow state law when they make alternative mortgages or they can follow some straightforward federal requirements that provide consumers basic protections,"" the CFPB added.

According to the post, the CFPB will allow public commentary on the proposed rule until September 22.

About Author: Ryan Schuette

Ryan Schuette is a journalist, cartoonist, and social entrepreneur with several years of experience in real-estate news, international reporting, and business management. He currently lives in the Washington, D.C., area, where he freelances for DS News and MReport.
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