The Consumer Financial Protection Bureau (“CFPB”) has released updates to its exam procedures and to its “Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule” in connection with its new home mortgage regulations issued in January 2013. The CFPB’s interim exam procedures released on August 15 provide guidance to depository institutions and other mortgage lenders on what the CFPB will be considering during compliance exams when the rules become effective. The updates provide new guidance on the CFPB’s rules on Qualified Mortgages, the borrower’s ability-to-repay, high-cost mortgages and appraisals for higher-priced mortgage loans, as well as new amendments related to the CFPB’s escrow rule. The update also covers recent changes to credit card rules. The updated exam procedures now cover the CFPB’s mortgage origination rules issued through May 29, 2013 and mortgage servicing rules issued through July 10, 2013. Most of the CFPB’s new mortgage rules go into effect in January 2014. Banks and savings associations with assets of $10 billion or less are subject to the CFPB rules but are not subject to the CFPB’s examination authority. Smaller depository institutions will continue to be examined by their respective prudential regulators in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).
Nutter Notes: The CFPB’s update of its “Small Entity Compliance Guide for the Ability-to-Repay and Qualified Mortgage Rule” released on August 14 incorporates the changes made to the CFPB’s new mortgage lending rules in June and July. The updated guide includes a new section describing, and providing guidance on, the exemptions added in June for certain creditors and loan programs, such as designated community development organizations, certain nonprofit organizations, and loans made pursuant to housing finance agency programs. The updated guide also includes a new section covering the types of Qualified Mortgages that can be made by small creditors, in addition to general and temporary criteria for Qualified Mortgages. The updated guide includes changes to the section on the inclusion of loan originator compensation in the calculation of points and fees, deleting compensation paid by a creditor to a retail loan officer employee. The updated guide also reflects the additional temporary eligibility criteria for Qualified Mortgages related to home mortgage loans that are eligible for purchase, guaranty, or insurance by a government sponsored entity (such as Fannie Mae or Freddie Mac) or certain federal agencies.