Last Friday afternoon, the Consumer Financial Protection Bureau (CFPB) issued yet another round of revisions to the January 2013 mortgage rules that have significantly altered the landscape for mortgage originators and servicers. CFPB Director Richard Cordray stated, “Today’s rule amends and clarifies parts of our mortgage rules to ensure a smoother implementation process, which is helpful to both businesses and consumers.” The new revisions address some of the issues that entities impacted by the regulations drew to the attention of regulators.
Several key issues that financial institutions may find useful include:
- Clarification of what activities are permitted in the first 120 days of default – The new mortgage rule prohibits “first notice or filing” during the first 120 days of delinquency, which is a significant cycle time. The final rule permits the transmission of certain types of early delinquency notices and other materials.
- Facilitate offering of short-term forbearance plans – The most recent revisions authorize certain short-term measures for applications that do not rise to the level of full loss-mitigation evaluation procedures.
- Clarification of “loan originator” – The scope of the definition of “loan originator” in the new mortgage rules could extend to administrative staff for unintentionally engaging in routine customer-service tasks. Last week’s modifications provide clarification on this issue and when activities rise to the level of “loan originator.”
Other important updates are included in the final mortgage rule, and financial institutions should review the materials promulgated by the CFPB to verify compliance. Contact Spilman or other knowledgeable counsel with issues and questions about this latest round of important mortgage rule updates.