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CFPB issues final rules on mortgage servicing, appraisals and loan originator compensation

Posted in Mortgages

The regulatory barrage continued last week with the CFPB issuing the last batch of mortgage-related rules it was required to finalize by the Dodd-Frank Act’s January 21 deadline.   

On January 17, the final rules implementing provisions of the Dodd-Frank Act that relate to mortgage servicing were issued. The servicing rules will take effect on January 10, 2014.    

On January 18,  the CFPB, the federal financial institution agencies (the FDIC, Fed, OCC, and NCUA),  and the Federal Housing Finance Agency adopted a joint final rule to implement Dodd-Frank appraisal requirements for higher-priced mortgage loans under the Truth in Lending Act. The final rule is effective on January 18, 2014. 

Another final appraisal rule issued by the CFPB on January 18 implements amendments to the Equal Credit Opportunity Act made by the Dodd-Frank Act that require creditors to automatically provide copies of appraisals and other written valuations for first lien mortgage loans.  The final rule will become effective on January 18, 2014. 

On January 20, the CFPB issued a final rule incorporating Dodd-Frank requirements into the existing Regulation Z loan originator compensation rule that applies to mortgage loans.  The final rule also implements Dodd-Frank qualification requirements for bank employee mortgage loan originators and the Dodd-Frank prohibition on mandatory arbitration clauses for mortgage agreements.  The final rule is effective January 10, 2014, except the mandatory arbitration prohibition is effective June 1, 2013. 

To provide further details, we have prepared legal alerts on the servicing rules, the higher-priced mortgages appraisal rule and the loan originator compensation rule.  We will also be issuing a legal alert on the ECOA appraisal rule. 

To assist the mortgage industry in implementing the CFPB’s new rules, Ballard Spahr’s Mortgage Banking Group will be conducting a series of webinars.  On January 30, we will hold a webinar on “Top 10 Takeaways from the Ability-to-Repay/QM, Servicing, and Loan Originator Compensation Rules.”   On February 5, the Mortgage Banking Group will hold a webinar on “The Ability-To-Repay/QM Rule—Important Regulatory and Litigation Considerations.” More information on the webinars and links to register are available here for our January 30 webinar and here for our February 5 webinar.