MORE FINAL REVISED RULES – REGULATIONS B, X, AND Z

On September 13 the Consumer Financial Protection Bureau published it latest revisions to final rules that were published last January. The 274-page final rule:

  • Revises error resolution procedures and information requests (§§ 1024.35 and 1024.36), and loss mitigation (§ 1024.41). With respect to loss mitigation, two of the revisions concern the requirement in § 1024.41(b)(2)(i) that a servicer review a borrower’s loss mitigation application within five days and provide a notice to the borrower acknowledging receipt and informing the borrower whether the application is complete or incomplete. If the servicer does not deem the application complete, the servicer’s notice must also list the missing items and suggest the borrower provide the information by the earliest remaining of four dates specified in the regulation. The changes replace the four specified dates with a requirement that a servicer give a borrower a reasonable date by which the borrower should in which to provide the missing information.
  • Clarifies the treatment of charges paid by parties other than the consumer, including third parties, for purposes of the points and fees thresholds.
  • Extends an exception to the general prohibition on balloon features for high-cost mortgages under § 1026.32(d)(1)(ii)(C) to allow all small creditors, regardless of whether they operate predominantly in “rural” or “underserved” areas, to continue originating balloon high-cost mortgages if the loans meet the requirements for qualified mortgages under §§ 1026.43(e)(6) or 1026.43(f).
  • Amends an exemption from the requirement to establish escrow accounts for higher-priced mortgage loans under § 1026.35(b)(2)(iii)(A) for small creditors that extend more than 50 percent of their total covered transactions secured by a first lien in “rural” or “underserved” counties during the preceding calendar year. To prevent creditors that qualified for the exemption in 2013 from losing eligibility in 2014 or 2015 because of changes in which counties are considered rural while the Bureau is re-evaluating the underlying definition of “rural,” the Bureau is amending this provision to allow creditors to qualify for the exemption if they extended more than 50 percent of their total covered transactions in rural or underserved counties in any of the previous three calendar years (assuming the other criteria for eligibility are also met).
  • Clarifies the definition of loan originator under Regulation Z. such as provisions addressing when employees of a creditor or loan originator in certain administrative or clerical roles (e.g., tellers or greeters) may become “loan originators” and thus subject to the rule, upon providing contact information or credit applications for loan originators or creditors to consumers.
  • Clarifies what constitutes financing of credit insurance premiums by a creditor.
  • Clarifies when credit insurance premiums are considered to be calculated and paid on a monthly basis, for purposes of the statutory exclusion from the prohibition for certain credit insurance premium calculation and payment arrangements.
  • Clarifies when including the credit insurance premium or fee in the amount owed violates the rule.
  • Changes the effective date for certain provisions under the 2013 Loan Originator Compensation Final Rule, so they take effect on January 1, 2014, rather than January 10, 2014, as originally provided.

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