The Consumer Financial Protection Bureau (CFPB) is conducting a review of Regulation Z’s mortgage loan originator rules pursuant to the Regulatory Flexibility Act (RFA). The bureau is seeking input from “small entities” on the economic impact of the rule.
The RFA requires each agency to consider the effect on small entities for certain rules it promulgates. Specifically, section 610 of the RFA provides each agency shall publish in the Federal Register a plan for the periodic review of the rules issued by the agency which have or will have a significant economic impact upon a substantial number of small entities.
The purpose of the review is to determine whether the rules should be continued without change, or should be amended or rescinded, consistent with the objectives of relevant statutes, to minimize any significant economic impact the rules may have on a substantial number of affected small entities.
Reg Z’s mortgage loan originator rules, derived from the Truth in Lending Act as amended by the Dodd-Frank Act, prohibit compensating loan originators based on a term of a mortgage transaction or a proxy for the term a transaction. It also prohibits dual compensation, steering practices that do not benefit a consumer, implementing licensing and qualification requirement for loan originators, and prescribe rules for recordkeeping and compliance.
The rules are designed primarily to protect consumers by reducing incentives for loan originators to steer consumers into loans with particular terms and by ensuring loan originators are adequately qualified.
The bureau is asking affected small entities to provide input on:
- The continued need for the rules.
- The complexity of the rules.
- The extent to which the rules overlap, duplicate or conflict with other federal rules, and to the extent feasible, with state and local government rules and laws.
- The degree to which technology, market conditions, or other factors have changed the relevant market since the rules were last evaluated.