June 1, 2013 was the effective date for two provisions of the Dodd-Frank Act: Revised requirements for mandatory escrow accounts for Higher-Priced Mortgage Loans and a prohibition on mandatory arbitration agreements. Completing the implementation of these two requirements allows the industry to turn its attention to compliance with the next group of final rules, which are effective in January 2014. With less than 200 days left to prepare, the industry is working quickly to execute the operational changes needed to comply.
In addition to the rules published in January, the Consumer Financial Protection Bureau (CFPB) continues to publish new materials: proposed rules, final rules and implementation tools. We summarize some of the most recent developments below:
►On May 29, 2013, the CFPB finalized amendments to the Ability-to-Repay rule. The amendments create specific exemptions and modifications to the Ability-to-Repay rule for small creditors, community development lenders and housing stabilization programs, and revise rules on how to calculate loan originator compensation into the loan’s total points and fees.
►On June 4, 2013, the CFPB published the first update to its examination procedures for the new mortgage regulations issued in January 2013. The new examination procedures will help financial institutions and mortgage companies understand how they will be examined for compliance with a number of rules, including those that set qualification and screening standards for loan originators, prohibit steering incentives and dual compensation, protect borrowers of higher-priced mortgage loans, and require lenders to provide appraisal reports and valuations.
►On June 7, the CFPB published Small Entity Compliance Guides for the Loan Originator Compensation Rule and the Mortgage Servicing Rules. The CFPB’s goal is to provide an overview of the rules in a plain language and FAQ format, making the content more accessible and useful for a broad array of industry constituents, especially smaller businesses with limited legal and compliance staff.
►Last but not least, on June 13, the CFPB launched a new Regulatory Implementation Web page, which consolidates all the 2013 mortgage rules and related implementation materials in one easy-to-access location.
Expect the CFPB to finalize more proposed rules and publish additional implementation tools in the coming months.
Laurie Spira is chief compliance officer with Torrance, Calif.-based DocMagic Inc. She may be reached by phone at (800) 649-1362, ext. 6446 or e-mail [email protected]