CFPB proposes changes to new lending, servicing rules
The Consumer Financial Protection Bureau continues to revamp a slew of mortgage rules launched earlier this year.
With the rules scheduled to take effect in January 2014, the CFPB studied numerous points of confusion in regards to the qualified mortgage rule and recommended several modifications to streamline the rule and implementation process.
Other areas of concern addressed in the proposal include the calculation of loan originator compensation provisions and certain lending rules impacting rural areas that have been deemed either too onerous or restrictive.
As a result of this brainstorming, the CFPB released a proposal for how it hopes to tweak the rules in the coming months for the mortgage market’s review.
"When we published our mortgage rules, we pledged to be attentive to issues that arose through the implementation process," said CFPB Director Richard Cordray. "Today’s proposal revises and clarifies certain aspects of our rules to ease implementation and to pave the way for more effective consumer protections in the marketplace."
One of the proposed modifications is a change to the outlined procedures for servicers when following up on loss mitigation applications.
Currently, the CFPB’s servicing rules require a firm within five days of a loss mitigation application to acknowledge it and advise the borrower as to whether it’s complete or not.
If an app is not complete, a servicer under the current guidelines is required to give the borrower directions on how to complete it. However, the proposal would outline exact procedures for servicers to follow if they discover they do not have the information needed to process a loss mitigation application.
The modified rule also protects borrowers from losing certain foreclosure ban protections during the process or delay period.
The revamped guidlines also would make it easier for servicers to offer short-term forbearance plans for late borrowers who need temporary relief to get through the loss mitigation process.
Other proposed changes include plans to facilitate or protect lending in rural and underserved areas and clarifications on what type of party or mortgage firm employee can be appropriately classified as a loan originator.
Other suggested changes include clearer statements on the financing of credit insurance premiums, information on the points and fees for manufactured housing employees and revised effective dates for the loan originator rule and a ban on the financing of credit insurance.
Click here to read the entire proposal.