WASHINGTON The Consumer Financial Protection Bureau proposed several tweaks on Monday to its recently released mortgage regulations, including changing certain deadlines.
The agency said the proposed amendments are meant to address certain questions lenders had about the implementation process including in how to handle distressed borrowers, originator compensation, credit insurance premiums and small bank exemptions on high-priced mortgages.
"When we published our mortgage rules, we pledged to be attentive to issues that arose through the implementation process," said CFPB Director Richard Cordray in a press release. "Today's proposal revises and clarifies certain aspects of our rules to ease implementation and to pave the way for more effective consumer protections in the marketplace."
A handful of the amendments pertained to its new mortgage servicing rule and distressed borrowers.
Under the proposed change, a servicer has five days from when it receives a loss mitigation application to inform the borrower whether the application is complete or incomplete. If incomplete, the CFPB is proposing that the servicer must seek the missing information in order to complete the assessment. The servicer must also make sure the applicant still receives certain protections under the rule like no foreclosure during the first 120 days of delinquency until the borrower has had "reasonable time" to supply the documents.
The CFPB also proposed that servicers provide a two-month forbearance for those delinquent borrowers who only need temporary relief and not a full loss mitigation process.
The agency continued to amend its rules on exemptions for smaller lenders in what it deemed as operating in "rural" and underserved" areas. Previously, the CFPB temporarily removed those two requirements in certain cases and said it would evaluate the definitions during the next two years after receiving strong industry and political dissention. The proposals issued Monday further clarified the types of institutions that would be exempt in the near term for higher-priced mortgages. It also would create further exemptions on a rule that requires lenders to hold an escrow account on higher-priced mortgages even after the Agency reviews its rural definition so long as the small lender previously met certain requirements.
Under the CFPB's loan originator compensation rule, the agency has proposed clarifications on financing credit insurance premiums, compensation caps when it involves manufactured housing and when a creditor's staff are considered a loan originator.
Additionally, the CFPB is seeking to move the effective date of certain parts of its loan originator rule from January 10 to January 1.
"The bureau believes that having the rule take effect at the beginning of a calendar year may help compliance since compensation plans, training, and licensing and registration are often structured on an annual basis," the CFPB stated.
It also wants to set the effective date for its ban on financing credit insurance to Jan. 10 or earlier because of how much time creditors need to adjust to billing practices, the agency said. The date had previously been delayed.
The CFPB is taking comments on the proposals through July 22.