The CFPB released a second update to its exam procedures on Thursday, providing guidance to financial institutions and mortgage firms on what the watchdog will be looking for after the new rules begin to take effect in January.
“We are committed to transparency around our examination process,” CFPB Director Richard Cordray said. “So we have worked hard to provide industry with advance notice of what we will be expecting. That, in turn, will improve compliance and benefit consumers.”
The Dodd-Frank-mandated rules issued in January cover a number of aspects of the consumer mortgage experience. The updates cover the ability-to-repay/qualified mortgages, high-cost mortgages and appraisals on higher-priced loans.
The updates also cover the escrow rule and recent changes to credit card rules. Exam procedures now cover the agency’s mortgage origination rules issued through May 29 and mortgage servicing rules issued through July 10.
New CFPB rules require lenders to evaluate a borrower’s ability to repay a loan; require servicers to provide monthly statements and disclosures; ban or limit certain risky features and fees; restrict dual-tracking; require access to servicing personnel and a fair review process; and require creditors to use a certified appraiser to prepare an appraisal report.
The CFPB has updated the exam procedure manuals for the Truth in Lending Act and Real Estate Settlement Procedures Act, which are designed for use by CFPB examiners in assessments of mortgage companies and other institutions subject to the new regulations.