Residential: CFPB plans to revisit several major mortgage regulations this year

The Consumer Financial Protection Bureau’s (CFPB) Rulemaking Agenda, published at the end of May, could have a considerable impact on mortgage lending compliance.

“The CFPB is going to be revisiting some of the most significant regulations the mortgage industry faces today,” said Tom Cronin, Managing Director of The Collingwood Group, a Situs company. “Depending on the findings of pending assessments and the results of proposed amendments, mortgage lenders could see the regulatory landscape undergo major changes in the next two years.”

The Spring 2019 Rulemaking Agenda provided an outline of the CFPB’s planned initiatives from May 2019 through April 2020.

A year after the passage of the Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA), the CFPB continues to implement the legislation’s provisions. The CFPB says it will work to “achieve the consumer protection objectives” of the legislation, while also “minimizing regulatory burden on financial services providers, including facilitating industry compliance with rules.” As part of EGRRCPA implementation, the CFPB recently published a Notice of Proposed Rulemaking to clarify amendments to the Home Mortgage Disclosure Act (HMDA) and create new exemptions from data reporting requirements.

In addition to the EGRRCPA-mandated HMDA amendments, the CFPB has issued a Notice of Proposed Rulemaking to consider extending and/or adjusting the reporting thresholds for open- and closed-end lines of credit. Citing “consumer privacy interests,” the Rulemaking Agenda says the CFPB will likely issue a Notice of Proposed Rulemaking in the next year to change HMDA public disclosure practices.

“The mention of the patch for Fannie Mae and Freddie Mac loans in the rulemaking agenda has certainly captured the industry’s attention,” said Cronin.

The government-sponsored enterprise (GSE) patch for Qualified Mortgage (QM) requirements is scheduled to expire at the end of 2020 or when the GSEs come out of conservatorship – whichever comes first. The patch extends safe-harbor protections to loans purchased by the GSEs even if they do not conform to QM regulatory requirements. Between now and April 2020, the CFPB will decide whether to extend the patch, allow it to expire or amend the underlying Ability-to-Repay/QM rules.

“Mortgage disclosures are going to be under close examination in 2019 and 2020,” said Cronin. Under the mandate of two separate statutes – the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the Regulatory Flexibility Act – the CFPB will examine the Truth in Lending Act (TILA) and Real Estate Settlement and Procedures Act (RESPA) mortgage disclosures. The CFPB will assess the effectiveness of the disclosures and their impact on smaller lenders and credit unions.

Cronin said, “It looks like it’s going to be a reflective year for the CFPB. Revisiting major rulemakings, like RESPA, TILA mortgage disclosures, HMDA and QM, will require the CFPB to take a step back and really examine the bigger picture.”

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