CFPB Proposes Clarifying Changes to Final Escrow Rule

ThernConsumer Financial Protection Bureau (CFPB) has released a set of clarifyingrnand technical amendments to one of the several rules it released in Januaryrnunder authority of the Dodd-Frank Wall Street Reform and Consumer ProtectionrnAct.   The specific rule for whichrnclarifications and amendments are proposed is the Escrow Requirements Under thernTruth in Lending Act (Regulation Z).  CFPBrnis inviting public comment on the proposed changes.</p

ThernEscrow Regulations rule expanded on an existing Regulation Z requirement thatrncreditors maintain escrow accounts for higher-priced mortgage loans (HPMLs) butrncreated an exception for loans made by creditors that operate predominantly in “rural”rnor “underserved” areas, an exception also made in three of the other CFPB rulesrnissued in January.  </p

Thernproposed amendments address how to determine whether a county meets therndefinitions of rural or underserved for the applications of the escrowrnrequirements and other Dodd-Frank Act regulations.  The changes would utilize currentlyrnapplicable Urban Influence Codes (UICs) established by the Department ofrnAgriculture’s Economic Research Service (USDA-ERS) to define “rural” and thernHome Mortgage Disclosure Act (HMDA) data for defining “underserved.”</p

Thernproposed amendments would also restore certain existing Regulation Zrnrequirements related to the consumer’s ability to repay and prepaymentrnpenalties for HPMLS.  These were expandedrnto apply to most mortgage transactions in the 2013 Escrows Final Rule and inrndoing so the regulatory text providing these protections solely to HPMLs wasrnremoved and there is a time difference in when the rules are to bernimplemented.  To prevent any interruptionrnin applicable protections the proposal would establish a temporary provision tornensure that the protections remain in place for HPMLs until the expandedrnprovisions take effect in January 2014.

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