CFPBMortgageOriginationRegulatory

CFPB asks for public comment on Reg Z’s mortgage LO rules

The agency wants to assess the economic impact of the rules on smaller businesses

The Consumer Financial Protection Bureau (CFPB) on Friday issued an official request for comment as it conducts a review of Regulation Z’s mortgage loan originator rules. The CFPB is seeking to understand the economic impact the rules have on smaller businesses in the mortgage space.

Regulation Z is a broad-based rule that implements the Truth in Lending Act (TILA), imposing requirements on several facets of business in the mortgage space, including loan originator compensation; loan originator licensing; compliance procedures for depository institutions; mandatory arbitration guidelines; and the financing of single premium credit insurance.

“As part of this review, the Bureau is seeking comment on the economic impact of the Loan Originator Rules on small entities,” the CFPB said in an announcement. “These comments may assist the Bureau in determining whether the Loan Originator Rules should be continued without change, or amended or rescinded to minimize any significant economic impact of the rules upon a substantial number of such small entities, consistent with the stated objectives of applicable Federal statutes.”

The new request for comment seeks input from stakeholders on five key points, according to the document released by CFPB: continued need for the rules; complexity of the rules; the extent to which the rules overlap, duplicate or conflict with other federal or (in some cases) state rules; how technology or market conditions have influenced the ongoing enforcement of the rules; and any other relevant information.

CFPB Director Rohit Chopra did say in the request that in the Bureau’s experience, “there is little overlap, duplication, or conflict between Regulation Z’s Mortgage Loan Originator Rules and Federal, State, or other rules.”

The CFPB said it is performing this review under section 610 of the Regulatory Flexibility Act, which dictates “that each agency shall publish in the Federal Register a plan for the periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities.”

The public comment period will last 45 days after the request is published in the Federal Register, which has not yet occurred. In the meantime, interested parties can submit comments to a specialized email address with “Docket No. CFPB2023-0017” in the subject line, or through the federal rulemaking portal.

Submission of comments through traditional mail is also possible, but electronic submissions are encouraged.

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