Regulation

ABA, CMC request assistance from regulators on homeownership counseling disclosure

200px-American_Bankers_Association_LogoThe American Bankers Association and Consumer Mortgage Coalition requested late last month assistance from regulators in preparing a mandated homeownership counseling disclosure—a requirement set to take effect on Jan. 10.

Mortgage lenders will be required to provide a list of homeownership counseling associations to loan applicants. The list must be no more than 30 days old and must include the 10 closest counseling agencies to the borrower’s current zip code.

Lenders are required to obtain the list from the CFPB or from data released by the agency or the Department of Housing and Urban Development. In November, the CFPB said that lenders would be unable to develop systems capability to generate lists using data provided by HUD and that the agency would allow lenders to direct borrowers to the agency’s website in the meantime.

“This is only an interim procedure, however; lenders will need to be able to produce the lists for consumers,” the ABA said in its letter to HUD and the CFPB. “How lenders might do so is unclear.”

The ABA said that because lenders must provide the list within three days of receiving a loan application, they would not have adequate time to visit the HUD website on a loan-by-loan basis. The HUD site allows for individual searches of a database but does not provide a downloadable form of the data that can be used to automate list production.

Additionally, the ABA said that the HUD database is limited to searches by latitude and longitude, not by zip code or address, and the organization said it is unclear whether the HUD website’s search results always identify the closest 10 counseling organizations.

The ABA recommended that HUD provide a downloadable form of its data and that the CFPB share instructions for converting data into the lists provided by its website. The group also recommended that CFPB or HUD provide a table showing, by zip code, the 10 closest counseling groups to the central location.

“Lenders to date have encountered some problems in using the database,” the ABA said. “Some zip codes appear to be missing from the database, and the print-out format is inadequate. We recommend a meeting between IT officials from the CFPB and HUD…where the specific issues can be discussed.”

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