Congress enacted section 626 of the Omnibus Appropriations Act (Omnibus Appropriations Act) on March 11, 2009 and directed the Federal Trade Commission (FTC) to commence a rulemaking proceeding within 90 days of enactment with respect to mortgage loans. On May 22, 2009, the enactment of the Credit Card Accountability Responsibility and Disclosure Act clarified the FTC’s rulemaking authority under the Omnibus Appropriations Act to specify that the FTC’s rulemaking based on its authority pursuant to the Omnibus Appropriations Act “shall relate to unfair or deceptive acts or practices regarding mortgage loans,” which may involve loan modification and foreclosure rescue services.
Prior to July 21, 2011, rulemaking authority for the Omnibus Appropriations Act was vested in the FTC. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for the Omnibus Appropriations Act to the Bureau of Consumer Financial Protection (CFPB), effective July 21, 2011. The CFPB is publishing for public comment an interim final rule establishing a new:
- Regulation N (Mortgage Acts and Practices—Advertising), 12 CFR Part 1014; and
- Regulation O (Mortgage Assistance Relief Services), 12 CFR Part 1015.
The interim final rules substantially duplicate the FTC’s Mortgage Acts and Practices – Advertising Rule as the CFPB’s new Regulation N and the FTC’s Mortgage Assistance Relief Services Rule as the CFPB’s new Regulation O, making only certain non-substantive, technical, formatting, and stylistic changes. The interim final rules do not impose any new substantive obligations on regulated entities.
In future rulemakings, the CFPB expects to amend Regulations N and O to implement certain other changes to the Omnibus Appropriations Act made by the Dodd-Frank Act, such as expanding the scope of Regulations N and O to include persons excluded from coverage under the FTC’s existing 16 CFR Parts 321and 322 due to the fact that they are not subject to the FTC’s enforcement jurisdiction.
Regulation N applies to institutions under the jurisdiction of the FTC; it does not apply directly to banks, but does provide valuable guidance for all lenders including banks. The rule prohibits any material misrepresentation in any commercial communication about the interest rate, fees and other aspects of a mortgage credit product.
Regulation O also applies to any person that provides, offers to provide, or arranges for others to provide, any mortgage assistance relief service; it does not apply directly to banks. The Federal Reserve’s Regulation O (Lending to Insiders) still exists.
A copy of revised Regulation N is located at: https://www.jackscomplianceresource.com/CFPB-Reg-N-Mortgage-Acts-and-Practices-Advertising.html. A copy of revised Regulation O is located at: https://www.jackscomplianceresource.com/CFPB-Reg-O-Mortgage-Assistance-Relief-Services.html. The Federal Register copy is available at: https://www.jackscomplianceresource.com/CFPB-The-Inherited-Regulations.html.