The Consumer Financial Protection Bureau has released an interim final rule that addresses a regulatory gap caused by last year’s financial overhaul legislation.
The interim rule, which will be accepting public comments until Sept. 22, implements Dodd-Frank Act amendments to the Alternative Mortgage Transaction Parity Act, MortgageOrb.com reports.
Currently, the AMTPA authorizes state housing creditors to make alternative mortgage transactions in compliance with the federal law instead of the state law.
The interim final rule says that state licensed or chartered creditors are only able to make alternative mortgage transactions under the AMTPA if they comply with rules issued by the CFPB. It applies only to state housing creditors seeking to invoke federal preemption of state law under AMTPA and will be effective until July 22, 2012.
As of July 21, the rulemaking authority for the AMTPA was transferred to the CFPB, MortgageOrb reports.
“Accordingly, CFPB interim rules are needed immediately in order to avoid a suspension in the operation of AMTPA, which would prevent state housing creditors from making variable-rate loans and other alternative mortgage transactions in states where such loans are otherwise prohibited by state law,” according to the Federal Register’s overview of the interim rule, MortgageOrb.com reports.
In the Federal Register, the CFPB mandated that its interim final rule becomes effective immediately sans a notice-and-comment period “in order to avoid the risk of disrupting mortgage markets, placing state housing creditors at an inappropriate competitive disadvantage and reducing consumers' access to credit,” MortgageOrb.com reports.