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CFPB Finalizes Changes to Mortgage Rules

With months to go before the implementation of the ""Consumer Financial Protection Bureau's"":http://www.consumerfinance.gov/ (CFPB) qualified mortgage (QM) rules, the agency released Friday several finalized amendments and clarifications created to ease the process.


First handed down in January 2013, the QM guidelines include an ""Ability-to-Repay"" rule designed to ensure lenders ""make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans."" The bureau also introduced this year new loan officer compensation rules to remove incentivized ""steering"" toward certain products, servicing rules to establish protections for borrowers facing foreclosure, and strengthened consumer protections for high-cost mortgages.

The amendments and clarifications being adopted in September were first proposed in June.


""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.""

Among the points addressed: The definition of ""loan originator"" has been tightened due to concerns about the original rule's language inadvertently applying to bank tellers or other administrative staff who engage in routine customer service activities.

The agency also revised the effective dates of many of the loan originator compensation rule's provisions to January 1, 2014, in order to simplify compliance ""since compensation plans, training, and licensing and registration are often structured on an annual basis.""

In addition, CFPB made revisions to exclude employee compensation from points and fees for retailers of manufactured homes, reasoning ""including such compensation in points and fees does not provide a meaningful benefit to consumers.""

For servicers, CFPB amended its rule that prohibits servicers from making the ""first notice or filing"" for the foreclosure process until the borrower is at least 120 days delinquent. The new rule specifically excludes certain notices (required under state law) sent to borrowers that may provide information about legal aid, counseling, or other resources.


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