CPFB Announces Implementation Plan to Help Lenders Comply

ThernConsumer Financial Protection Bureau (CFPB) today announced five steps it willrntake to assist the mortgage industry to comply with new consumer protection rulesrngoing into effect in January 2014.</p

 “Our plan is to work with the mortgage industry tornensure that the CFPB’s new rules are implemented accurately and expeditiously,”rnsaid CFPB Director Richard Cordray. “Both consumers and industry will win whenrnthe new rules are understood, applied, and carried out evenly and effectively.rnMortgage borrowers, who have dealt with much heartache since the financialrncrisis, deserve this level of attentiveness.”</p

The new rules involve provisions of the Dodd-Frank WallrnStreet Reform and Consumer Protection Act. rnOne, the Ability-to-Repay rule, protects consumers from irresponsiblernmortgage lending by requiring that lenders make a reasonable, good faithrndetermination that prospective borrowers have the ability to repay theirrnmortgage. The rule also protects borrowers from risky lending practices, suchrnas underwriting loans based only on low introductory “teaser” interest rates whichrncontributed to many loan defaults and foreclosure.  Also coming on line in 2013 are new mortgagernservicing rules which establish strong protections for all homeowners and rulesrnthat address appraisals, escrow accounts, protections for high-cost mortgages,rnand compensation and qualifications for loan originators.</p

Under its plan the Bureau will:</p<ul class="unIndentedList"<liCoordinaternwith other federal government regulators to ensure all regulators have a shared understanding of thernCFPB’s new rules. This will help promote a consistent regulatory experience forrnindustry.</li<liPublishrnplain-language guides</bsummarizing the regulations in bothrnwritten and video form. The guides, available in the spring, will bernparticularly helpful to smaller businesses with limited staff for compliance.</li<liPublishrnupdates to the official interpretations to providernguidance on how to comply with the rules. These updates will allow the CFPB tornaddress important questions raised by industry, consumer groups, or otherrnagencies. The Bureau expects to issue the first one in the spring and additionalrnupdates, as needed. </li<liPublishrnreadiness guides to help mortgage originators and servicers prepare to complyrnwith the new rules with check-lists for such items as revising policies andrnprocedures and finalizing training plans for staff. More in-depth examinationrnprocedures are expected to be published later this year by the FederalrnFinancial Institutions Examination Council.</li<liEducaternconsumers with information about their new protections under these rulesrnthrough a broad-reaching consumer education campaign.</li