THE CFPB INHERITS REGULATION X

Congress enacted the Real Estate Settlement Procedures Act of 1974 (RESPA) based on findings that significant reforms in the real estate settlement process were needed to ensure that consumers are provided with greater and more timely information on the nature and costs of the residential real estate settlement process and are protected from unnecessarily high settlement charges caused by certain abusive practices that Congress found to have developed. In 1990, Congress amended RESPA by adding a new section 6 covering persons responsible for servicing mortgage loans and amending statutory provisions related to mortgage servicers’ administration of borrowers’ escrow accounts.

Historically, RESPA has been implemented in Regulation X of the Department of Housing and Urban Development (HUD), 24 CFR Part 3500. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for RESPA to the Consumer Financial Protection Bureau (CFPB), effective July 21, 2011. The CFPB has publishing for public comment an interim final rule establishing a new Regulation X (Real Estate Settlement Procedures Act),12 CFR Part 1024, implementing RESPA.

The interim final rule substantially duplicates HUD’s Regulation X as the CFPB’s new Regulation X making only certain non-substantive, technical, formatting, and stylistic changes. The interim final rule does not impose any new substantive obligations on regulated entities.

In future rulemakings, the CFPB expects to amend Regulation X to implement certain other changes to RESPA made by the Dodd-Frank Act, such as:

  • Preparing and distributing booklets that jointly address compliance with the requirements of the Truth in Lending Act and RESPA;
  • Combining certain disclosure requirements of the Truth in Lending Act, with certain disclosure requirements of RESPA;
  • Adopting regulations pertaining to practices of mortgage servicers; and
  • Issuing regulations to carry out the consumer purposes of RESPA.

The CFPB expects the content and format of HUD’s existing HUD-1/1A and GFE forms to be significantly revised or replaced by the rulemaking described above. The HUD-1/1A and GFE forms currently list HUD’s Office of Management and Budget (OMB) control number, 2502-0265, in order to satisfy certain information collection requirements of the Paperwork Reduction Act. Covered persons may continue to list HUD’s OMB control number on the HUD-1/1A and GFE forms until a final rule to the contrary takes effect. Covered persons also have the option of replacing HUD’s OMB control number with the CFPB’s OMB control number on the HUD-1/1A and GFE forms until a final rule to the contrary takes effect.

The CFPB has the authority to enforce RESPA and Regulation X pursuant to Subtitle E of Title X of the Dodd-Frank Act. Investigations undertaken by the CFPB will be conducted in accordance with 12 CFR Part 1080, and administrative adjudications will be conducted in accordance with 12 CFR Part 1081. Due to the removal of paragraphs (m) and (n) from § 3500.17, the “Discretionary payments” paragraph in HUD’s existing § 3500.17(o) is being recodified as § 1024.17(m) in this interim final rule.

A copy of revised Regulation X is located at: https://www.jackscomplianceresource.com/CFPB-Reg-X-Real-Estate-Settlement-Procedures-Act.html. The Federal Register copy is available at: https://www.jackscomplianceresource.com/CFPB-The-Inherited-Regulations.html.

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