The Consumer Financial Protection Bureau released a second update to its exam procedures in connection with the new mortgage regulations that were issued in January 2013.
The temporary exam procedures provide important direction to financial institutions and mortgage companies on what the CFPB will expect as the rules go into effect.
“We are committed to transparency around our examination process,” said CFPB Director Richard Cordray. “So we have worked hard to provide industry with advance notice of what we will be expecting. That, in turn, will improve compliance and benefit consumers.”
In January 2013, several new regulations were issued by the CFPB to reform the mortgage market. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act directed a number of these new rules.
The rules cover the entire mortgage experience of a consumer — from shopping for a loan to paying it off. Most of the CFPB’s new rules will take effect in January 2014.
The procedures updated include the Ability-to-Repay/Qualified Mortgage rule, guidelines for high-cost mortgages, and appraisals for higher-priced mortgages. The update also includes new amendments tied to the escrow rule.
Recent changes to credit card rules are also covered in the update. The exam procedures now cover the Bureau’s mortgage origination rules issued through May 29, 2013, and mortgage servicing rules issued through July 10, 2013.
With the new data, financial institutions and mortgage firms will now be able to understand and prepare for potential CFPB inquiries.
By updating the applicable sections of the exam procedure manuals for the Truth in Lending Act and the Real Estate Settlement Procedures Act, the CFPB is sharing with the industry what exactly it will be looking for in its examinations, the CFPB said.
In a press release, the CFPB stated its plans to educate the public about their protections under the new rules and said it's coordinating with other federal regulators to ensure all parties have a shared understanding of the CFPB’s new rules.
A copy of the RESPA exam procedures released Thursday can be found here.