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CFPB Finalizes Modifications to Mortgage Rules
Monday, September 16, 2013 6:55 AM

The Consumer Financial Protection Bureau (CFPB) has finalized amendments and clarifications to its January 2013 mortgage rules in order to help industry comply and to better protect consumers. The changes made today answer questions that have been identified during the implementation process.

The CFPB finalized several mortgage rules in January 2013. Among these rules, the Ability-to-Repay rule protects consumers from irresponsible mortgage lending by requiring that lenders generally make a reasonable, good-faith determination that prospective borrowers have the ability to repay their loans. The mortgage servicing rules establish strong protections for homeowners facing foreclosure, and the loan originator compensation rules address certain practices that incentivized steering borrowers into risky or high-cost loans. The CFPB also finalized rules that strengthened consumer protections for high-cost mortgages, and instituted a requirement that escrow accounts be established for a minimum of five years for certain higher-priced mortgage loans.

On June 24, 2013, the agency proposed several amendments and clarifications to the mortgage rules that are being adopted by the Sept. 13 final rule. Friday’s final rule is intended to clarify interpretive issues and facilitate compliance. Among other things, the modifications:

  • Clarify what servicer activities are prohibited in the first 120 days of delinquency
  • Outline procedures for obtaining follow-up information on loss-mitigation applicationsFacilitate servicers’ offering of short-term forbearance plans
  • Clarify best practices for informing borrowers about the address for error resolution documents
  • Facilitate lending in rural or underserved areas
  • Make clarifications about financing of credit insurance premiums
  • Clarify the definition of a loan originator
  • Clarify the points and fees thresholds and loan originator compensation rules for manufactured housing employees
  • Revise effective dates of many loan originator compensation rule provisions

The Bureau has published a Regulatory Implementation website, which consolidates all of the new 2013 mortgage rules and related implementation materials, and can be found online, at

A copy of the final rule is available online.