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CFPB Issues Additional Changes to Mortgage Rules

The CFPB released another final rule amending its Ability-to-Repay, Mortgage Servicing and Mortgage Loan Originator final rules, which were originally finalized in January of this year. The latest final rule provides:

  • An exemption which the Missouri Credit Union Association (MCUA) strongly advocated for all small creditors, even those that do not operate predominantly in rural or underserved counties, from the ban on high-cost balloon mortgages, as long as the loan meets certain restrictions;
  • CUNA-backed modifications that make it easier for servicers to offer short-term forbearance plans for delinquent borrowers who need only temporary relief without going through a full loss mitigation evaluation process. Servicers, upon reviewing an incomplete loss mitigation application, may provide a 6-month forbearance to a borrower who is suffering a short-term, temporary hardship;
  • 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 a borrower’s loss mitigation application. Such procedures will:

- Require the servicer to notify the borrower of the information gap and provide a reasonable amount of time for the borrower to supply the missing information;
- Specify how the regulations’ protections from foreclosures and various procedural rights apply to borrowers during the time period for gathering the additional information and once the information is provided;

  • Specific details on how to inform borrowers of the address for error resolution documents by listing it on certain documents, such as an initial notice and a periodic statement or coupon book, if applicable;
  • Provisions strongly urged by MCUA that make it easier for certain small creditors to continue qualifying for an exemption from a requirement to maintain escrows on certain higher-priced mortgage loans;
  • Clarifications 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;
  • Explanations of how the rule applies to “level” or “levelized” premiums, where the monthly premium is the same each month rather than decreasing along with the loan balance;
  • Clarifications which MCUA supported for the circumstances under which a loan originator’s or creditor’s administrative staff acts as loan originators;
  • Clarifications as to what compensation must be included in certain thresholds for points and fees under the Ability-to-Repay and high-cost mortgage rules for retailers of manufactured homes and their employees, and when such employees may be considered loan originators;
  • A MCUA supported change to the effective date for certain provisions of the Mortgage Loan Originator Compensation final rule from January 10 to January 1, 2014, in order to simplify compliance since compensation plans, training, and licensing and registration are often structured on an annual basis.


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