The CFPB finalized amendments and clarifications to its mortgage rules last week to help the industry comply with the rules, which are set to take effect in January.
“Our mortgage rules were designed to eliminate irresponsible practices and foster a thriving, more sustainable marketplace,” CFPB Director Richard Cordray said. “Today’s rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers.”
Under the final rule, mortgage servicers are allowed to send certain early delinquency notices required under state law that may provide information related to counseling, legal help or other resources during the first 120 days a borrower is delinquent.
The new rule also establishes procedures for servicers to follow if they fail to identify and inform a borrower that certain information is missing from a loss mitigation application.
Other interpretive changes clarify that a servicer may, upon reviewing an incomplete loss mitigation application, allow a six-month forbearance to a borrower facing a temporary hardship. The new rule also provides further clarification on how to inform borrowers about the address to which they should submit error complaints by listing it on certain documents.
Additionally, in order to facilitate lending in rural or underserved areas, the CFPB said it will exempt all small creditors, even those that do not operate in rural or underserved counties, from a new ban on high-cost mortgages with balloon payments if the loans meet certain restrictions.
The CFPB also attempted to clarify rules regarding credit insurance premiums. Credit insurance premiums are deemed to be “financed” when the creditor allows the consumer to defer payment of the premium past the month in which it is due.
Other amendments seek to clarify the definition of a loan originator, the points and fee thresholds and loan originator compensation rules for manufactured housing employees and to revise the effective dates of the LOC’s provisions.