WASHINGTON — The Consumer Financial Protection Bureau issued a final interpretive rule Wednesday that clarifies its housing counseling requirements with respect to high-cost loans.

The Truth in Lending Act (Reg Z) requires pre-counseling before a lender can offer a borrower a mortgage with high fees and rates as defined by the Home Owners Equity Protection Act.

According to the agency, lenders can rely on Department of Housing and Urban Development-approved counselors to advise borrowers who are considering a high cost mortgage. HUD-approved counselors are required to go over the consumer's budget to see if they can afford the payments on a high cost mortgage.

"To the extent that a counselor from a HUD-approved counseling agency" fulfills that roll, "the housing counseling requirement is met," according to the final rule.

Lenders can use the CFPB's online tool to provide mortgage applicants with a list of local housing counselors or generate their own lists using the same HUD data that the CFPB uses to generate its lists.

The final rule, which goes into effect as soon as it is published in the Federal Register, includes instructions for lenders to build their own housing counseling lists.

Lenders are required to list at least ten housing counseling agencies to ensure loan applicants have a "thorough and diverse list of counseling options," the CFPB final rule says.

"Buying a home is often the largest financial decision in a consumer's lifetime, and we want to ensure that consumers can access the independent and informed advice they deserve before making that decision," CFPB Director Richard Cordray said in a press release. "Housing counselors are a crucial source of that helpful advice. We will continue to work to improve the home-buying experience for consumers, and today's interpretive rule will help industry comply with these important protections."

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