On May 2, 2013, the Consumer Financial Protection Bureau (“CFPB”) issued three additional Small Entity Compliance Guides on the heels of other guides published in April. The CFPB has stated that the purpose of these publications is to make the content of the new regulations more accessible and consumable for a broad array of industry constituents. While not a substitute for reviewing the full underlying rules, institutions can access these publications and dialogue with compliance and legal to determine necessary changes to the institution’s rules and procedures.
The new compliance guides provide helpful information about the following final rules:
- 2013 HOEPA Rule (High Cost Mortgage Amendments to TILA and RESPA): The CFPB issued this final rule to implement Dodd-Frank’s amendments to TILA (Reg Z) by expanding the types of mortgage loans that are subject to the Home Ownership and Equity Protections Act (“HOEPA”). The amendments expand the tests for coverage under HOPEA and impose additional restrictions on mortgages covered by HOEPA, including a pre-loan counseling requirement. This rule also amends RESPA (Regs Z and X) by imposing other requirements related to home ownership counseling, including a new requirement that borrowers receive details about homeownership counseling providers.
- ECOA Valuations Rule: The CFPB issued a final rule related to appraisals and other valuations of properties. The rule amends Regulation B, which implements the Equal Credit Opportunity Act (“ECOA”), requiring financial instiituions to provide to applicants free copies of all appraisals and other written valuations associated with an application for a loan. This rule applies to loans that will be secured by a first lien on a residence, and require creditors to notify applicants in writing that copies of appraisals will be provided to them promptly
- TILA Higher-Priced Mortgage Loans Appraisal Rule: The CFPB issued this rule to amend Regulation Z jointly with the Federal Reserve Board, FDIC, FHFA, NCUA, and the OCC. The revisions to TILA within Dodd-Frank proscribe appraisals for “higher-risk mortgages.” The CFPB explains that for mortgages with an annual percentage rate that exceeds the average prime offer rate by a specified percentage, the final rule requires creditors to obtain an appraisal or appraisals meeting certain specified standards, provide applicants with a notification regarding the use of the appraisals, and give applicants a copy of the written appraisals used.
You should consult regulatory counsel to discuss the implications of these new rules on your institution.