The rules require credit unions to set up and maintain escrow accounts for five years after originating loans, an increase from the one year requirement under the current rule that is set to take effect on June 1.
As part of an effort to provide clarification and guidance, the CFPB proposed last month to clarify that lenders must continue to follow existing rules on borrowers’ ability to repay for higher-priced mortgages until the new ability-to-repay rule takes effect in January. The agency also proposed clarifications to “rural” and “underserved” in the escrow rule.
The National Association of Federal Credit Unions called on the CFPB again to redefine the terms. The CFPB said it will address the definitions after it finalizes proposed changes to the qualified mortgage and ability-to-repay rule next month.
NAFCU has also requested that the CFPB alter its four-part test for determining small-creditor exemptions to the escrow rule. In order to qualify for the exemption, an institution must have originated 500 or fewer first-lien mortgages in the previous calendar year and have less than $2 billion in assets at the end of that year.