CFPB Proposes Amendments to Mortgage Rules

The Consumer Financial Protection Bureau (CFPB) on April 30th announced Amendments to the 2013 Mortgage Rules Under the Truth in Lending Act (Regulation Z) which took effect in January of this year. The proposed amendments were published in Vol 79, No. 87 of the Federal Register on May 6th, 2014, and comments are due on or before June 5th, 2014. The proposed rule would provide an alternative small servicer definition for nonprofit entities that meet certain requirements, amend the existing exemption from the ability- to-repay rule for nonprofit entities that meet certain requirements, and provide a limited cure mechanism for the points and fees limit that applies to qualified mortgages.

Specifically, the Bureau is proposing three amendments to the 2013 Title XIV Final Rules: [list line=”no” style=”style3″]

  • To provide an alternative definition of the term ‘‘small servicer,’’ that would apply to certain nonprofit entities that service for a fee loans on behalf of other nonprofit chapters of the same organization.
  • To amend the Regulation Z ability- to-repay requirements to provide that certain interest-free, contingent subordinate liens originated by nonprofit creditors will not be counted towards the credit extension limit that applies to the nonprofit exemption from the ability-to-repay requirements.
  • To provide a limited, post-consummation cure mechanism for loans that are originated with the good faith expectation of qualified mortgage status but that actually exceed the points and fees limit for qualified mortgages.

In addition, the CFPB is seeking comments on whether and how to provide a limited, post-consummation cure or correction provision for loans that are originated with the good faith expectation of qualified mortgage status but that actually exceed the 43-percent debt-to-income ratio limit that applies to certain qualified mortgages and feedback and data from smaller creditors regarding implementation of certain provisions in the 2013 Title XIV
Final Rules that are tailored to account for small creditor operations and how their origination activities have changed in light of the new rules.

Background on the Mortgage Rules and instructions for providing comments on any or all of the above proposed amendments are provided in the notice.

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