Make no mistake, the Consumer Financial Protection Bureau (CFPB) may have “finalized” numerous important mortgage rules in January, but the tinkering continues.
The bureau proposed amendments to its new escrow rule on April 12. Unlike most of the CFPB’s recent final rules which go into effect in January 2014, the escrow rule kicks in this June. The proposed modifications would ensure that certain ability-to-repay provisions related to higher priced mortgage loans remain in effect until the CFPB’s new ability-to-repay/qualified mortgage (ATR/QM) final rule becomes effective next year. The proposal also clarifies the determination method for the bureau’s important “rural” and “underserved” designations.
On April 19, the CFPB proposed amendments to its ATR/QM rule along with other amendments impacting the bureau’s new servicing rules. Among other things, the proposal would provide clearer rules for determining a borrower’s debt-to-income ratio. The ATR/QM proposals are in addition to other amendments the bureau released when it finalized the ATR/QM rule in January.
The bureau also said it plans to release proposed amendments in June clarifying its loan originator compensation rule, as well as additional servicing rule amendments.
The CFPB has said its most recent proposals would implement largely clarifying and technical amendments intended to aid compliance. However, there is at least some evidence that more substantive changes are possible.
During a recent Senate Banking Committee hearing, CFPB Director Richard Cordray was asked whether the scope of the “rural” definition underlying an important ATR/QM rule exemption for balloon mortgages may be too narrow.
“We have heard further comments … to suggest that we could have written that [definition] even bigger,” Cordray said. “That’s something that we’re looking at and thinking about as we get more comments even after the rule has been finalized.”
The eight final rules released by the CFPB in January represented a tectonic shift in mortgage regulation. Maybe we should have expected a few aftershocks. However, even clarifying and technical amendments require industry review, which effectively shortens the amount of time companies have to implement the CFPB’s requirements.
And in case you were wondering, the bureau hasn’t said anything about pushing back that January 2014 deadline.