The Consumer Financial Protection Bureau (CFPB) ticked off the last to-do item on its mandatory rulemaking from the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), issuing a notice of proposed rulemaking on escrow rules around higher-priced mortgage loans.
The bureau said the proposed amendment would further the goals EGRRCPA by reducing costs associated with escrow requirements.
The rule will provide an exemption to institutions from establish escrow accounts for certain HPMLs. For the most part, first-lien HPMLs must have escrow accounts.
The proposed amendment generally would exempt:
- Institutions with assets of $10 billion or less;
- Institutions which, combined with its affiliates, originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and
- Certain other criteria are met. The Regulation Z provisions that the statute includes in the new exemption are:
- The requirement that the creditor extend credit in a rural or underserved area (§ 1026.35(b)(2)(iii)(A));
- The exclusion from exemption eligibility of transactions involving forward purchase commitments (§ 1026.35(b)(2)(v)); and
- The prerequisite that the institution and its affiliates not maintain an escrow account other than those established for HPMLs at a time when the creditor may have been required by the regulation to do so or those established after consummation as an accommodation to distressed consumers to assist such consumers in avoiding default or foreclosure.
Those institutions would not be required to establish escrow on any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer.
In other CFPB activity, the bureau announced that it had taken the step to ratify all regulatory actions taken by the bureau since Jan. 4, 2012, in light of the Supreme Court ruling regarding the bureau’s constitutionality.
The lone exceptions are the CFPB’s arbitration rule, which was rescinded through the Congressional Review Act, and the original payday lending rule, which the CFPB amended earlier in July by rescinding its ability to repay provisions.
“The bureau is taking action to ensure that consumers and market participants understand that the same rules continue to govern the consumer financial marketplace,” CFPB Director Kathy Kraninger said in a press release.