Regulation

CFPB proposes changes to mortgage rules to ensure access to credit

Richard Cordray

Richard Cordray

The CFPB proposed changes on Wednesday designed to ensure access to credit under the agency’s recently implemented mortgage rules.

“Our mortgage rules are now helping to protect consumers all across the country from debt traps, runarounds, and surprises,” CFPB Director Richard Cordray said. “Today’s proposal would maintain those strong protections, while making minor changes to ensure consumers have access to credit. This includes helping nonprofits that provide working families with important pathways to affordable homeownership.”

The CFPB finalized several mortgage rules in 2013, most of which took effect this past January. The new mortgage rules established protections for homeowners and addressed issues in loan origination and servicing.

Under the proposed changes, certain nonprofit groups such as Habitat for Humanity will be able to continue to offer interest-free, forgivable loans—also known as “soft seconds”—without regard to the 200-mortgage loan limit specified under the ability-to-repay rule.

Additionally, under the ability-to-repay rule, fees and points charged to a consumer on a qualified mortgage are generally prohibited from exceeding three percent of the loan principal. If a lender, however, finds it has offered a QM but discovers the points and fees have exceeded the three percent cap, the proposal details circumstances in which the excess amount can be refunded, and the loan will still meet the requirements of a QM.

Comments on the changes will be due within 30 days after publication in the Federal Register.

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