September 2013 A Regulatory & Legislative Advisory for Compliance Professionals
Inside . . .
2 Banks Squeezed by
2 ABA Urges Phase-In
3 Revised Risk
3 Other CFPB News
4 Guidance on
5 HMDA Data
5 Two Years to NFIP
6 Expedited Appeal
6 ABA Amicus in
Supreme Court Case
Bank Secrecy Act
6 Drop in Suspected
Mortgage Fraud SARs
7 Update to AMT/CFT
CFPB FINALIZES REVISIONS TO MORTGAGE RULES
The Consumer Financial Protection Bureau on September 13 approved several final
revisions to the mortgage rules taking effect in January. The changes include
provisions related to loan origination, rural and underserved areas, thresholds for
points and fees and servicing.
The revisions, among other things, clarify that tellers and other staff will not be
considered loan originators “for merely providing loan originator or creditor contact
information to the consumer," provided they do not direct the consumer to a particular
loan originator or creditor based on an assessment of the consumer’s financial
characteristics or discuss particular credit terms. This is a significant change that ABA
The final rule also clarifies that monthly insurance premium structures are not covered
by the loan originator compensation rule’s ban on financed premiums. ABA and its
American Bankers Insurance Association subsidiary had objected to language in the
preamble of the original rule suggesting that pay-as-you-go premiums were covered,
and they were instrumental in persuading the bureau to adopt this fix.
The rule also extends to all small creditors – regardless of whether they operate in a
predominantly “rural” or “underserved” area – the exemption from the ban on high-cost
mortgages featuring balloon payments, so long as the loans meet certain restrictions.
Similarly, the rule makes it easier for certain small creditors to continue qualifying for
an exemption from a requirement to maintain escrows on certain higher-priced
mortgage loans. These expanded exemptions will remain in place while the bureau re-examines the underlying definitions of “rural” or “underserved” over the next two years.
Read more. Read the final rule.
Final Mortgage Rule Amendments Impact Servicing
The September 13 amendments also included several changes related to servicing.
Clarify the foreclosure-related activities and communications that are
prohibited during the first 120 days of delinquency;
Allow servicers to provide troubled borrowers with short-term forbearance of
up to six months based on an incomplete loss mitigation application; and
Establish procedures for servicers to follow if they later find that a loss
mitigation application needs further information.
ABA generally considers these changes to be positive for the industry.