CPFB Announces Implementation Plan to Help Lenders Comply

The Consumer Financial Protection Bureau (CFPB) today announced five steps it will take to assist the mortgage industry to comply with new consumer protection rules going into effect in January 2014.

 "Our plan is to work with the mortgage industry to ensure that the CFPB's new rules are implemented accurately and expeditiously," said CFPB Director Richard Cordray. "Both consumers and industry will win when the new rules are understood, applied, and carried out evenly and effectively. Mortgage borrowers, who have dealt with much heartache since the financial crisis, deserve this level of attentiveness."

The new rules involve provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  One, the Ability-to-Repay rule, protects consumers from irresponsible mortgage lending by requiring that lenders make a reasonable, good faith determination that prospective borrowers have the ability to repay their mortgage. The rule also protects borrowers from risky lending practices, such as underwriting loans based only on low introductory "teaser" interest rates which contributed to many loan defaults and foreclosure.  Also coming on line in 2013 are new mortgage servicing rules which establish strong protections for all homeowners and rules that address appraisals, escrow accounts, protections for high-cost mortgages, and compensation and qualifications for loan originators.

Under its plan the Bureau will:

• Coordinate with other federal government regulators to ensure all regulators have a shared understanding of the CFPB's new rules. This will help promote a consistent regulatory experience for industry.
• Publish plain-language guides summarizing the regulations in both written and video form. The guides, available in the spring, will be particularly helpful to smaller businesses with limited staff for compliance.
• Publish updates to the official interpretations to provide guidance on how to comply with the rules. These updates will allow the CFPB to address important questions raised by industry, consumer groups, or other agencies. The Bureau expects to issue the first one in the spring and additional updates, as needed.
• Publish readiness guides to help mortgage originators and servicers prepare to comply with the new rules with check-lists for such items as revising policies and procedures and finalizing training plans for staff. More in-depth examination procedures are expected to be published later this year by the Federal Financial Institutions Examination Council.
• Educate consumers with information about their new protections under these rules through a broad-reaching consumer education campaign.