CFPB Issues Revisions for Mortgage Rules

The federal government has put a number of new regulations into place as a means of shielding consumers from potentially harmful financial products, and now, one watchdog agency has made a number of changes to rules it put into place in January.

The Consumer Financial Protection Bureau recently revised several rules in its Ability-to-Repay mortgage lending regulations, which, as the name implies, are designed to help ensure consumers can afford the home loans they seek, according to a report from the agency. It is hoped that the additional clarity for mortgage servicers and lenders will allow consumers to have more assurances of comprehensive protection under the recent regulatory changes by making it easier for those within the home loan industry to implement the proper measures.

“When we published our mortgage rules, we pledged to be attentive to issues that arose through the implementation process,” said CFPB Director Richard Cordray. “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.”

For one thing, when it comes to applications for loss mitigation assistance, mortgage servicers must now follow specific procedures for requesting additional information from consumers, the report said. This includes a clarification that additional data must be sought if servicers cannot complete consumer evaluations without it, and that the protections typically afforded them under the rule remain in place as the person in question tries to comply with the request.

In addition, the rule also clarified how lenders could finance credit insurance, especially where levelized premiums are concerned, the report said. These would make the premium the same each month regardless of how much balance remains on the loan itself. Further, the change also gives new guidance for how insurance premiums must be calculated and considered paid every month.

The CFPB has put numerous consumer safeguards on all kinds of financial products since it gained full regulatory power in 2011. Moreover, it has increased its purview to include more different types of businesses that may be participating in certain financial practices even if they are not specifically tied to lending. For instance, it is believed that the agency will continue to expand its reach in the near future to bring debt collections agencies under its regulatory authority as well.

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