COMMENT: CFPB proposed revision - TILA mortgage rules 2013 (ATR/QM/small servicer)
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When: 06/05/2014
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CFPB issues proposed rule to amend certain provisions of 2013 Mortgage Rules

The Consumer Financial Protection Bureau (CFPB) has announced proposed additional amendments to the 2013 Mortgage Rules which took effect in January 2014. The proposed amendments are in response to certain origination and servicing issues contained in the Truth in Lending Act (TILA, Reg. Z), and in particular, how they affect nonprofit housing providers.  Among the provisions of the proposed rule are the following:

Refining the definition of small servicer – amends the small servicer definition to include some nonprofit organizations that service loans, for a fee, on behalf of other nonprofit chapters of the same organization. The change would also affect several provision of Regulation X (RESPA). 

Nonprofit Ability-to-Repay (ATR) exemption amendment – tailors an amendment so that certain 501(c)(3) nonprofit groups, such as Habitat for Humanity, can continue to extend interest-free, contingent subordinate lien loans originated by nonprofit creditors that will not be counted towards the credit extension limit that applies to the nonprofit exemption from the ATR requirements.

Refunding of excess points and fees – If a lender believes it has, in good faith, offered a Qualified Mortgage (QM) loan, but afterwards discovers it has exceeded the three percent cap, provides limited circumstances under which the excess can be refunded to the borrower post-consummation and still meet QM requirements. 

Comments on the above will be due thirty days after publication in the Federal Register

In addition to the above proposed rule amendments, the CFPB is also seeking input and comments on questions relating to the impact of the 2013 Mortgage Rules as follows:

  • Whether, and how, to provide a limited post-consummation cure or correction provision for loans that are originated with the good faith expectation of QM status but that actually exceed the 43% debt to income (DTI) limit that applies to certain QMs; and
  • Feedback and data from smaller credit unions regarding implementation of certain provisions in the 2013 Mortgage Rules that are tailored to account for small creditor operations, particularly in light of how their origination activities have changed as a result of the new rules.

Comments on these issues will be due sixty days after publication in the Federal Register.

The CFPB’s press release, and the full text of the proposed rule, can be found on the CFPB’s website


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